Exhibit 99.1
| | | | |
| Investor Contact: | | Investor Relations | | |
| | Polycom, Inc. | | |
| | 925-924-5907 | | |
| | investor@polycom.com | | |
| | | | |
| Press Contact: | | Caroline Japic | | |
| | Polycom, Inc. | | |
| | 408-474-2265 | | |
| | caroline.japic@polycom.com | | |
Polycom Reports Fourth Quarter and Fiscal Year 2010 Earnings
Q4 Revenue Growth of 27 Percent Year-over-Year to a Record $340 Million;
2010 Revenue Growth of 26 Percent to a Record $1.2 Billion
PLEASANTON, Calif. – Jan. 20, 2011 – Polycom, Inc. (Nasdaq: PLCM), a global leader in unified communications (UC), today reported its earnings for the fourth quarter ended Dec. 31, 2010.
Fourth quarter 2010 consolidated net revenues were a record $340 million, compared to $268 million for the fourth quarter of 2009. GAAP net income for the fourth quarter of 2010 was $33 million, or 37 cents per diluted share, compared to $13 million, or 15 cents per diluted share, for the same period last year. Non-GAAP net income for the fourth quarter of 2010 was $43 million, or 49 cents per diluted share, compared to Non-GAAP net income of $28 million, or 33 cents per diluted share, for the fourth quarter of 2009.
For the year ended Dec. 31, 2010, net revenues were $1.2 billion, compared to $967 million for the year ended Dec. 31, 2009. GAAP net income for the year ended Dec. 31, 2010 was $68 million, or 78 cents per diluted share, compared to GAAP net income of $50 million, or 58 cents per diluted share, for the same period last year. Non-GAAP net income for the year ended Dec. 31, 2010 was $133 million, or $1.50 per diluted share, compared to $102 million, or $1.19 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 2010 were comprised of:
| • | | 53 percent Americas, or $181 million; |
| • | | 25 percent Europe, Middle East and Africa, or $86 million; and |
| • | | 22 percent Asia Pacific, or $73 million. |
On a geographic basis, consolidated net revenues for the fourth quarter of 2009 were comprised of:
| • | | 53 percent Americas, or $143 million; |
| • | | 26 percent Europe, Middle East and Africa, or $70 million; and |
| • | | 21 percent Asia Pacific, or $55 million. |
“The fourth quarter capped a transformative year for Polycom in which we successfully launched and executed an ambitious plan to seize the opportunities in UC and establish our presence as market leader and ecosystem partner of choice,” said Andrew Miller, Polycom president and CEO. “These efforts yielded impressive results for 2010, including accelerating revenue growth, market gains, breakthrough innovations, new strategic partnerships and expanding margins. Importantly, our momentum continued in the fourth quarter, driven by back-to-back gains in network infrastructure sales and broad-based revenue growth in each of our geographic theatres and major product lines.”
“As we turn to 2011, we believe Polycom is best positioned to deliver an intuitive UC experience at work, in the home, or while mobile. Through our Polycom Open Collaboration Network, we will continue to develop integrated UC solutions with leading platforms including Microsoft Lync, IBM Lotus Sametime, and HP Network Solutions. With the recent introduction of Polycom’s Open Exchange Consortium and our partnerships with AT&T, Verizon, BT, China Unicom and many other leading service providers, we will deliver a cloud-based solution, for not just enterprise and government, but also penetrate the significant opportunity in the small-to-medium business and connected home arena as well. Finally, expect to see Polycom’s UC solution present on many of the key mobile platforms as evidenced by our initial alliance with Samsung on its Galaxy Tab Android-based device.”
“In summary, 2011 promises to be a year of significant revenue growth, expanding operating margins, and Polycom’s delivery of what we refer to as UC Everywhere. With our customers demanding Polycom’s UC solution at unprecedented levels, coupled with our strong and growing brand and channel, we believe we are best positioned to be the go-to provider of UC solutions. Looking forward, we plan to continue to deliver innovations that transform the way that individuals and organizations communicate and collaborate both professionally and socially,” concluded Miller.
“We are pleased with another consecutive quarter of sharp revenue growth,” said Michael Kourey, Polycom executive vice president, finance and administration, and CFO. “Driven by network infrastructure growth of 20 percent sequentially and 25 percent year-over-year and record demand for Polycom’s entire solution, both gross and operating margins again expanded year-over-year. As a result of these strong operating results and effective working capital management, we generated fourth quarter positive operating cash flow of $42 million, exiting the fourth quarter with $536 million in cash and investments and no debt.”
About Polycom
Polycom, Inc. (Nasdaq: PLCM) is a global leader in unified communications solutions with industry-leading telepresence, video, voice and infrastructure solutions built on open standards. Polycom powers smarter conversations, transforming lives and businesses worldwide. Please visit www.polycom.com for more information or connect with Polycom onTwitter,Facebook, andLinkedIn.
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 our expectations for 2011, Polycom as being best positioned to deliver an intuitive UC experience and to be the go-to provider of UC solutions, the future development of integrated UC solutions with leading platforms, future cloud-based solutions and expansion into the small-to-medium business and home markets, future UC solutions on key mobile platforms, continued innovation, and significant revenue growth, expanding operating margins and the delivery of UCEverywheresm by Polycom. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the fact that the Company’s continuing strategic investment plan may not yield the intended results or may take longer than originally anticipated to achieve such results, 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 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 that may cause disruption to the business, any disruptive impact to the Company that may result from the 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 Sept. 30, 2010, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.
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.
Earnings Call Details
As has been noted on the Company’s web site since Jan. 6, 2011, Polycom will hold a conference call today, Jan. 20, 2011, at 5 p.m. EST/2 p.m. PST to discuss its fourth quarter earnings. Andrew Miller, president and CEO, and Michael Kourey, chief financial officer, will host the conference call. You may participate by viewing the webcast atwww.polycom.com/investors or, for callers in the US and Canada, by calling 800.769.7315; and for callers outside of the US and Canada, by calling 212.231.2900. The pass code for the call is “Polycom.” A replay of the call will also be available atwww.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 21506809. A replay of the call will also be available onwww.polycom.com for approximately 12 months.
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.
© 2011 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 | | | Twelve Months Ended | |
| | | December 31, 2010 | | | December 31, 2010 | |
| | | GAAP | | | Excluded | | | Non-GAAP | | | GAAP | | | Excluded | | | Non-GAAP | |
Revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
Product revenues | | $ | 282,607 | | | $ | — | | | $ | 282,607 | | | $ | 1,010,955 | | | $ | — | | | $ | 1,010,955 | |
Service revenues | | | 57,024 | | | | — | | | | 57,024 | | | | 207,534 | | | | — | | | | 207,534 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total revenues | | | 339,631 | | | | — | | | | 339,631 | | | | 1,218,489 | | | | — | | | | 1,218,489 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of product revenues | | | 109,856 | | | | 4,092 | (a) | | | 105,764 | | | | 401,319 | | | | 16,402 | (a) | | | 384,917 | |
Cost of service revenues | | | 26,830 | | | | 952 | (b) | | | 25,878 | | | | 101,220 | | | | 3,940 | (b) | | | 97,280 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total cost of revenues | | | 136,686 | | | | 5,044 | | | | 131,642 | | | | 502,539 | | | | 20,342 | | | | 482,197 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross profit | | | 202,945 | | | | (5,044 | ) | | | 207,989 | | | | 715,950 | | | | (20,342 | ) | | | 736,292 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Sales and marketing | | | 104,717 | | | | 5,928 | (b) | | | 98,789 | | | | 387,208 | | | | 26,586 | (b) | | | 360,622 | |
Research and development | | | 40,568 | | | | 2,479 | (b) | | | 38,089 | | | | 148,991 | | | | 10,266 | (b) | | | 138,725 | |
General and administrative | | | 19,034 | | | | 3,918 | (c) | | | 15,116 | | | | 74,661 | | | | 16,931 | (c) | | | 57,730 | |
Amortization of purchased intangibles | | | 1,380 | | | | 1,380 | | | | — | | | | 5,647 | | | | 5,647 | | | | — | |
Restructuring costs | | | 1,565 | | | | 1,565 | | | | — | | | | 8,139 | | | | 8,139 | | | | — | |
Litigation reserves and payments | | | — | | | | — | | | | — | | | | 1,235 | | | | 1,235 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 167,264 | | | | 15,270 | | | | 151,994 | | | | 625,881 | | | | 68,804 | | | | 557,077 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | | 35,681 | | | | (20,314 | ) | | | 55,995 | | | | 90,069 | | | | (89,146 | ) | | | 179,215 | |
| | | | | | |
Other income (expense), net | | | 159 | | | | — | | | | 159 | | | | (7,772 | ) | | | (5,324 | )(d) | | | (2,448 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income before provision for income taxes | | | 35,840 | | | | (20,314 | ) | | | 56,154 | | | | 82,297 | | | | (94,470 | ) | | | 176,767 | |
Provision for income taxes | | | 2,714 | | | | (10,200 | )(e) | | | 12,914 | | | | 13,888 | | | | (30,311 | )(e) | | | 44,199 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 33,126 | | | $ | (10,114 | ) | | $ | 43,240 | | | $ | 68,409 | | | $ | (64,159 | ) | | $ | 132,568 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic net income per share | | $ | 0.38 | | | $ | (0.12 | ) | | $ | 0.50 | | | $ | 0.80 | | | $ | (0.75 | ) | | $ | 1.55 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Diluted net income per share | | $ | 0.37 | | | $ | (0.12 | ) | | $ | 0.49 | | | $ | 0.78 | | | $ | (0.72 | ) | | $ | 1.50 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding for basic net income per share | | | 86,189 | | | | | | | | 86,189 | | | | 85,331 | | | | | | | | 85,331 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding for diluted net income per share | | | 89,148 | | | | | | | | 89,148 | | | | 88,185 | | | | | | | | 88,185 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (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.
GAAP to Non-GAAP Reconciliation
(In thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, 2009 | | | December 31, 2009 | |
| | | GAAP | | | Excluded | | | Non-GAAP | | | GAAP | | | Excluded | | | Non-GAAP | |
Revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
Product revenues | | $ | 220,840 | | | $ | — | | | $ | 220,840 | | | $ | 791,508 | | | $ | — | | | $ | 791,508 | |
Service revenues | | | 47,024 | | | | — | | | | 47,024 | | | | 175,476 | | | | — | | | | 175,476 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total revenues | | | 267,864 | | | | — | | | | 267,864 | | | | 966,984 | | | | — | | | | 966,984 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of product revenues | | | 92,918 | | | | 3,972 | (a) | | | 88,946 | | | | 335,696 | | | | 16,807 | (a) | | | 318,889 | |
Cost of service revenues | | | 21,743 | | | | 720 | (b) | | | 21,023 | | | | 82,312 | | | | 2,830 | (b) | | | 79,482 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total cost of revenues | | | 114,661 | | | | 4,692 | | | | 109,969 | | | | 418,008 | | | | 19,637 | | | | 398,371 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Gross profit | | | 153,203 | | | | (4,692 | ) | | | 157,895 | | | | 548,976 | | | | (19,637 | ) | | | 568,613 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Sales and marketing | | | 81,707 | | | | 3,472 | (b) | | | 78,235 | | | | 285,312 | | | | 10,525 | (b) | | | 274,787 | |
Research and development | | | 32,043 | | | | 2,589 | (c) | | | 29,454 | | | | 117,575 | | | | 8,019 | (c) | | | 109,556 | |
General and administrative | | | 14,138 | | | | 1,724 | (b) | | | 12,414 | | | | 54,011 | | | | 7,466 | (b) | | | 46,545 | |
Amortization of purchased intangibles | | | 1,456 | | | | 1,456 | | | | — | | | | 5,800 | | | | 5,800 | | | | — | |
Restructuring costs | | | 4,459 | | | | 4,459 | | | | — | | | | 15,935 | | | | 15,935 | | | | — | |
Litigation reserves and payments | | | — | | | | — | | | | — | | | | 700 | | | | 700 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 133,803 | | | | 13,700 | | | | 120,103 | | | | 479,333 | | | | 48,445 | | | | 430,888 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | | 19,400 | | | | (18,392 | ) | | | 37,792 | | | | 69,643 | | | | (68,082 | ) | | | 137,725 | |
| | | | | | |
Other expense, net | | | (92 | ) | | | — | | | | (92 | ) | | | (2,087 | ) | | | — | | | | (2,087 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income before provision for income taxes | | | 19,308 | | | | (18,392 | ) | | | 37,700 | | | | 67,556 | | | | (68,082 | ) | | | 135,638 | |
Provision for income taxes | | | 6,485 | | | | (2,797 | ) | | | 9,282 | | | | 17,677 | | | | (16,043 | ) | | | 33,720 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 12,823 | | | $ | (15,595 | ) | | $ | 28,418 | | | $ | 49,879 | | | $ | (52,039 | ) | | $ | 101,918 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Basic net income per share | | $ | 0.15 | | | $ | (0.19 | ) | | $ | 0.34 | | | $ | 0.59 | | | $ | (0.62 | ) | | $ | 1.21 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Diluted net income per share | | $ | 0.15 | | | $ | (0.18 | ) | | $ | 0.33 | | | $ | 0.58 | | | $ | (0.61 | ) | | $ | 1.19 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding for basic net income per share | | | 84,432 | | | | | | | | 84,432 | | | | 84,000 | | | | | | | | 84,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding for diluted net income per share | | | 86,732 | | | | | | | | 86,732 | | | | 85,559 | | | | | | | | 85,559 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | For the three months ended December 31, 2009, the excluded amount includes $3,404 related to the amortization of purchased intangibles for core and existing technologies, $449 for stock-based compensation expense recorded during the period and $119 related to the effect of stock-based compensation on warranty expense rates. For the twelve months ended December 31, 2009, the excluded amount includes $13,472 related to the amortization of purchased intangibles for core and existing technologies, $1,050 related to past license fees claims, $1,886 for stock-based compensation expense recorded during the period and $399 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 endeded December 31, 2009, the excluded amount includes $2,220 related to stock-based compensation expense recorded during the period and $369 related to severance, legal and other benefits due under the Severance Agreement and Release between the Company and Sunil K. Bhalla dated November 25, 2009. For the twelve months ended December 31, 2009, the excluded amount includes $7,650 related to stock based compensation expense recorded during the period and $369 related to severance, legal and other benefits due under the Severance Agreement and Release between the Company and Sunil K. Bhalla dated November 25, 2009. |
POLYCOM, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| | | | | | | | |
| | | December 31,
2010 | | | December 31,
2009 | |
ASSETS | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 324,188 | | | $ | 331,098 | |
Investments | | | 170,154 | | | | 123,686 | |
Trade receivables, net | | | 154,507 | | | | 132,813 | |
Inventories | | | 113,994 | | | | 76,863 | |
Deferred taxes | | | 32,357 | | | | 23,824 | |
Prepaid expenses and other current assets | | | 41,884 | | | | 24,299 | |
| | | | | | | | |
Total current assets | | | 837,084 | | | | 712,583 | |
| | |
Property and equipment, net | | | 110,321 | | | | 81,252 | |
Long-term investments | | | 41,316 | | | | 12,687 | |
Goodwill | | | 493,105 | | | | 495,299 | |
Purchased intangibles, net | | | 26,580 | | | | 46,255 | |
Deferred taxes | | | 18,388 | | | | 23,943 | |
Other assets | | | 20,611 | | | | 13,882 | |
| | | | | | | | |
Total assets | | $ | 1,547,405 | | | $ | 1,385,901 | |
| | | | | | | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable | | $ | 90,890 | | | $ | 87,233 | |
Accrued payroll and related liabilities | | | 35,222 | | | | 23,707 | |
Taxes payable | | | — | | | | 617 | |
Deferred revenue | | | 104,919 | | | | 79,504 | |
Other accrued liabilities | | | 54,651 | | | | 52,360 | |
| | | | | | | | |
Total current liabilities | | | 285,682 | | | | 243,421 | |
| | |
Non-current liabilities | | | | | | | | |
Deferred revenue | | | 55,292 | | | | 46,787 | |
Taxes payable | | | 16,690 | | | | 27,111 | |
Deferred taxes | | | 2,057 | | | | 2,702 | |
Other long-term liabilities | | | 12,714 | | | | 12,027 | |
| | | | | | | | |
Total liabilities | | | 372,435 | | | | 332,048 | |
| | |
Stockholders’ equity | | | 1,174,970 | | | | 1,053,853 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 1,547,405 | | | $ | 1,385,901 | |
| | | | | | | | |
POLYCOM, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31,
2010 | | | December 31,
2009 | | | December 31,
2010 | | | December 31,
2009 | |
Revenues: | | | | | | | | | | | | | | | | |
Product revenues | | $ | 282,607 | | | $ | 220,840 | | | $ | 1,010,955 | | | $ | 791,508 | |
Service revenues | | | 57,024 | | | | 47,024 | | | | 207,534 | | | | 175,476 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 339,631 | | | | 267,864 | | | | 1,218,489 | | | | 966,984 | |
| | | | | | | | | | | | | | | | |
Cost of revenues: | | | | | | | | | | | | | | | | |
Cost of product revenues | | | 109,856 | | | | 92,918 | | | | 401,319 | | | | 335,696 | |
Cost of service revenues | | | 26,830 | | | | 21,743 | | | | 101,220 | | | | 82,312 | |
| | | | | | | | | | | | | | | | |
Total cost of revenues | | | 136,686 | | | | 114,661 | | | | 502,539 | | | | 418,008 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 202,945 | | | | 153,203 | | | | 715,950 | | | | 548,976 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Sales and marketing | | | 104,717 | | | | 81,707 | | | | 387,208 | | | | 285,312 | |
Research and development | | | 40,568 | | | | 32,043 | | | | 148,991 | | | | 117,575 | |
General and administrative | | | 19,034 | | | | 14,138 | | | | 74,661 | | | | 54,011 | |
Amortization of purchased intangibles | | | 1,380 | | | | 1,456 | | | | 5,647 | | | | 5,800 | |
Restructuring costs | | | 1,565 | | | | 4,459 | | | | 8,139 | | | | 15,935 | |
Litigation reserves and payments | | | — | | | | — | | | | 1,235 | | | | 700 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 167,264 | | | | 133,803 | | | | 625,881 | | | | 479,333 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 35,681 | | | | 19,400 | | | | 90,069 | | | | 69,643 | |
| | | | |
Other income (expense), net | | | 159 | | | | (92 | ) | | | (7,772 | ) | | | (2,087 | ) |
| | | | | | | | | | | | | | | | |
Income before provision for income taxes | | | 35,840 | | | | 19,308 | | | | 82,297 | | | | 67,556 | |
Provision for income taxes | | | 2,714 | | | | 6,485 | | | | 13,888 | | | | 17,677 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 33,126 | | | $ | 12,823 | | | $ | 68,409 | | | $ | 49,879 | |
| | | | | | | | | | | | | | | | |
Basic net income per share | | $ | 0.38 | | | $ | 0.15 | | | $ | 0.80 | | | $ | 0.59 | |
| | | | | | | | | | | | | | | | |
Diluted net income per share | | $ | 0.37 | | | $ | 0.15 | | | $ | 0.78 | | | $ | 0.58 | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding for basic net income per share | | | 86,189 | | | | 84,432 | | | | 85,331 | | | | 84,000 | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding for diluted net income per share | | | 89,148 | | | | 86,732 | | | | 88,185 | | | | 85,559 | |
| | | | | | | | | | | | | | | | |
POLYCOM, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| | | | | | | | |
| | | Twelve Months Ended | |
| | | December 31,
2010 | | | December 31,
2009 | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 68,409 | | | $ | 49,879 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 41,440 | | | | 34,075 | |
Amortization of purchased intangibles | | | 18,994 | | | | 19,268 | |
Provision for doubtful accounts | | | — | | | | 247 | |
Provision for excess and obsolete inventories | | | 5,712 | | | | 3,830 | |
Non-cash stock-based compensation | | | 56,177 | | | | 30,358 | |
Excess tax benefits from stock-based compensation | | | (11,618 | ) | | | (3,082 | ) |
Write down of investments other than temporarily impaired | | | 6,530 | | | | — | |
Loss on disposals of property and equipment | | | 143 | | | | 706 | |
| | |
Changes in assets and liabilities: | | | | | | | | |
Trade receivables | | | (21,694 | ) | | | (6,563 | ) |
Inventories | | | (42,843 | ) | | | 9,037 | |
Deferred taxes | | | (3,537 | ) | | | 2,223 | |
Prepaid expenses and other assets | | | (29,537 | ) | | | 8,474 | |
Accounts payable | | | 3,657 | | | | 29,502 | |
Taxes payable | | | 2,770 | | | | 2,222 | |
Other accrued liabilities | | | 48,797 | | | | 588 | |
| | | | | | | | |
Net cash provided by operating activities | | | 143,400 | | | | 180,764 | |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Purchase of property and equipment | | | (69,331 | ) | | | (37,766 | ) |
Purchases of investments | | | (374,946 | ) | | | (538,440 | ) |
Proceeds from sale of investments | | | 102,079 | | | | 332,518 | |
Proceeds from maturity of investments | | | 199,622 | | | | 224,213 | |
| | | | | | | | |
Net cash used in investing activities | | | (142,576 | ) | | | (19,475 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Proceeds from issuance of common stock under employee option and stock purchase plans | | | 64,854 | | | | 36,497 | |
Repurchase of common stock | | | (84,206 | ) | | | (35,439 | ) |
Excess tax benefits from stock-based compensation | | | 11,618 | | | | 3,082 | |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | (7,734 | ) | | | 4,140 | |
| | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | (6,910 | ) | | | 165,429 | |
Cash and cash equivalents, beginning of period | | | 331,098 | | | | 165,669 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 324,188 | | | $ | 331,098 | |
| | | | | | | | |
