PRESS RELEASE
Plantronics Reports First Quarter Fiscal 2004 Financial Results
19% Increase in EPS
FOR INFORMATION, CONTACT:
Jon Alvarado
Treasury and Investor Relations Manager (831) 458-7533 | FOR IMMEDIATE RELEASE
July 15, 2003 |
SANTA CRUZ, CA - July 15, 2003 - Plantronics, Inc. (NYSE: PLT) today announced revenues and earnings for its first quarter of fiscal year 2004. First quarter revenues increased approximately 15.5% to $92.8 million, in comparison to $80.3 million in the first quarter of fiscal 2003, and operating income increased from $13.6 million to $15.7 million. First quarter net income was $11.3 million compared to net income in the first quarter of fiscal 2003 of $10.2 million. Plantronics' diluted earnings per share increased 19% to $0.25 in comparison to $0.21 in the first quarter of fiscal 2003.
Ken Kannappan, President and Chief Executive Officer, noted, "Our results were generally in line with the high end of the guidance we issued on April 22, which called for revenues of $87 to $91 million, and earnings per share of $0.21 to $0.25. In comparison to the June quarter last year, all product groups exhibited some revenue growth with the largest increase coming from new headsets for mobile phones. Our Walker business, which includes products for the hearing-impaired sold under the brand names Walker, Clarity and Ameriphone, also grew solidly and turned in its best quarter ever on the strength of demand from state programs."
"In addition to our solid financial performance, I am very pleased with the progress we made pursuing our vision of enhancing personal communications with wireless headset technologies. During the quarter, we had in-depth meetings with our channel partners worldwide as well as with our sales teams, receiving first hand feedback on our new products, our product and technology roadmaps, and our associated marketing programs. The response was enthusiastic and revenues from new products that commenced shipping in the June quarter exceeded our expectations. For example, we launched the MX-150 mobile headset, based on our award-winning MX-100 design, and incorporated noise canceling technology to further enhance clarity in loud environments. The MX-150 demonstrates the principle of design efficiency and re-use that we have been working to achieve. This product was ramping even while sales of the MX-100 were also growing," Kannappan continued.
"While our internal work is less visible, we also continue to focus on improving efficiency and productivity. We elected to transition early to the new ISO 9000 - 2000 edition of the standard and worked to ready ourselves for the required comprehensive audits. Both the Santa Cruz headquarters as well as our manufacturing plants in Mexico passed these audits in June with the auditor commenting that Plantronics is doing better work than most other companies. This is only one part of the work we have underway to enable us to remain highly efficient, competitive, and able to deliver outstanding products and services to our customers at a fair price while earning good returns for our shareholders," Kannappan concluded.
Barbara Scherer, SVP and CFO, said "I'm pleased with our financial performance, particularly the level of cash flow from operations which amounted to $17.7 million. Cash collections on accounts receivable were excellent, and as a result, DSO dropped to 48 days from 52 in the March quarter. This is an unusually low level and we anticipate some growth in DSO in the September quarter. Inventory increased and inventory turns decreased somewhat from 5.3 at fiscal year-end to 5.0 as of the end of June. The increase in inventory was anticipated and was primarily the result of preparing for the launch of several new products this summer, as well as taking precautions in the event of SARS-related slowdowns in the supply chain."
During the quarter, we repurchased 122,800 shares of our common stock for approximately $1.8 million and had 142,600 shares remaining authorized for repurchase as of the end of the quarter. Although we intend to continue to repurchase stock, we note that the stock has been trading above the levels authorized for repurchase by our Board. A price cap on stock repurchase is set to help ensure that purchases of stock by the company are reasonably strongly accretive to earnings per share. The level of stock repurchase by the company has fluctuated in the past, and is likely to fluctuate substantially in the future as well. We continue to view stock repurchase programs as an important long-term use of excess cash flow.
Business Outlook
The following statements are based on current expectations. Many of these statements are forward-looking, and actual results may differ materially.
We recognize that although certain economic indicators have improved, the overall economic and geopolitical environment remain challenging and highly uncertain. Although we are cautiously optimistic about our own outlook primarily on the basis of expected demand for new products, we remain uncertain about the overall level of demand for our products and consequently, our level of future profitability. In particular, employment levels have not yet risen and we believe our business is heavily influenced by the level of employment and the percentage of workers unemployed. Related to this, our U.S. commercial distributors of contact center and office products reported a 5% decrease in the sell-through for the June quarter in comparison to the March quarter, and a 4% decrease compared to the year-ago comparable quarter.
Although we remain uncertain about the economic environment and see no signs of a pick-up in the contact center market, we are currently expecting:
- Revenues for the second quarter of fiscal 2004 to be in the range of $92 - $97 million.
- Earnings per share for the second quarter of fiscal 2004 to be in the range of $0.24 - $0.27.
Plantronics does not intend to update these targets and estimates during the quarter or to report on its progress toward these estimated results. Plantronics will not comment on these targets to analysts or investors except through publicly announced conference calls, press releases or other public disclosure. Any statements by persons outside Plantronics speculating on the progress of the quarter will not be based on internal Company information and should be assessed accordingly by investors. The statements do not reflect the potential impact of any mergers or acquisitions that may be completed after the date of this release.
Conference Call Scheduled to Discuss Financial Results
Plantronics has scheduled a conference call to discuss the contents of this release. The conference call will take place today, Tuesday, July 15 at 2:00 PM (PDT). All interested investors and potential investors in Plantronics stock are invited to participate. To listen, please dial in five to ten minutes prior to the scheduled starting time and refer to the "Plantronics Conference Call." Participants from North America should call (888) 301-8736 and international participants should call (706) 634-7260.
A replay of the call with the conference ID #1526002 will be available for 72 hours at (800) 642-1687 and at (706) 645-9291 for international callers. The conference call will also be simultaneously web cast at www.plantronics.com under Investor Relations, and the web cast of the conference call will remain available at the Plantronics Web site for thirty days.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:
Certain statements in this press release, including projections of revenues and earnings for the September quarter, and our current expectations regarding market acceptance of new products and improved manufacturing efficiency and productivity, and other statements under the caption "Business Outlook" above, are forward-looking statements based on current information and expectations. Achievement of the results projected above is subject to a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from those projected are:
- A further slowing in national or international economic growth or a "double-dip" recession resulting in a reduction in the overall level of demand for our products;
- A lessening of the level of market demand for our products within our core contact center market and/or in the newer office, mobile, computer and residential markets;
- If the national/international economy recovers, employment opportunities in the contact center or office markets may not increase commensurately but may remain flat or even decrease lessening the future demand for our products;
- The inability to successfully develop, manufacture and market new products;
- The demand for new wireless headset products may not develop as we anticipate and may lead to excess inventory and the inability to recover the associated development costs;
- A decrease in the liquidity of our customers caused by general economic conditions that may impact their ability to pay amounts due us;
- The actions of existing and/or new competitors, especially with regard to pricing and promotional programs;
- The entry of new competitors which could be spurred by changes in the regulatory environment, particularly laws requiring the use of hands-free devices by drivers when using cellular telephones;
- Greater sales in higher tax jurisdictions as compared to lower tax jurisdictions;
- Fluctuations in foreign exchange rates;
- Changes in the regulatory environment either as to headsets directly or as to the products, such as mobile phones, with which our products are used; and
- The impact on the U.S. economy due to the aftermath of the war with Iraq and geopolitical risk factors in the Middle East and North Korea.
Additional risk factors include: changes in the timing and size of orders from our customers, price erosion, increased requirements from retail customers for marketing and advertising funding, failure to match production to demand, interruption in the supply of sole-sourced critical components, continuity of component supply at costs consistent with our plans, failure of our distribution channels to operate as we expect, failure to develop products that keep pace with technological changes, the inherent risks of our substantial foreign operations, problems which might affect our principal manufacturing facility in Mexico or our contract manufacturing operations in China, further terrorist acts, our nations' response to terrorist attacks and the effects of these activities on capital and consumer spending, the effects of the "do not call" legislation may have a greater impact than we currently anticipate, and the loss of services of key executives and employees. For more information concerning these and o ther possible risks, please refer to the company's Form 10-K filed on June 2, 2003, filings on Form 10-Q and other filings with the Securities and Exchange Commission as well as recent press releases. These filings can be accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html.
Financial Summaries
The following related charts are provided:
- Summary of Condensed Consolidated Financial Statements
- Summary of Unaudited Income Statements and Related Data
About Plantronics
Plantronics introduced the first lightweight communications headset in 1962 and is recognized as the world leader in communications headsets. A publicly held company with approximately 2,700 employees, Plantronics is the leading provider of headsets to telephone companies and the business community worldwide. Plantronics headsets are used widely in many Fortune 500 corporations and have been featured in numerous motion pictures and high-profile events, including Neil Armstrong's historic "One small step for man" transmission from the moon in 1969. Plantronics, Inc., headquartered in Santa Cruz, California, was founded in 1961 and maintains offices in 20 countries. Plantronics products are sold and supported through a worldwide network of authorized Plantronics marketing partners. Information about the company and its products can be found at www.plantronics.com or by calling (800) 544-4660.
Plantronics is a registered trademark of Plantronics, Inc
PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended
______________________
June 30 June 30
2002 2003
__________ __________
Net sales $ 80,268 $ 92,786
Cost of sales 38,810 47,319
__________ __________
Gross profit 41,458 45,467
Gross profit % 51.6% 49.0%
Research, development and engineering 8,250 8,605
Selling, general and administrative 19,606 21,153
__________ __________
Total operating expenses 27,856 29,758
__________ __________
Operating income 13,602 15,709
Interest and other income, net 933 492
__________ __________
Income before income taxes 14,535 16,201
Income tax expense 4,361 4,860
__________ __________
Net income $ 10,174 $ 11,341
========== ==========
% to Sales 12.7% 12.2%
Diluted earnings per common share $ 0.21 $ 0.25
Shares used in diluted per share calculations 47,722 45,077
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30,
2003 2003
ASSETS
Cash and cash equivalents $ 54,704 $ 73,614
Marketable securities 5,021 --
__________ __________
Total cash and marketable securities 59,725 73,614
Accounts receivable, net 50,503 49,852
Inventory, net 33,758 37,510
Deferred income taxes 6,357 6,357
Other current assets 2,674 1,823
__________ __________
Total current assets 153,017 169,156
Property, plant and equipment, net 36,957 36,136
Intangibles, net 3,682 3,518
Goodwill, net 9,386 9,386
Other assets 2,167 2,190
__________ __________
$ 205,209 $ 220,386
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 13,596 15,071
Accrued liabilities 27,235 29,319
Income taxes payable 8,581 8,638
__________ __________
Total current liabilities 49,412 53,028
Deferred tax liability 8,867 8,867
__________ __________
Total liabilities 58,279 61,895
Stockholders' equity 146,930 158,491
__________ __________
$ 205,209 $ 220,386
========== ==========
Summary of Unaudited Income Statements and Related Data
________________________________________________________________________________________________________________________
FY02 Q103 Q203 Q303 Q403 FY03 Q104
Net sales 311,181 80,268 82,370 86,811 88,059 337,508 92,786
Cost of sales 163,336 38,810 40,735 44,290 44,730 168,565 47,319
Gross profit 147,845 41,458 41,635 42,521 43,329 168,943 45,467
Gross margin 47.5% 51.6% 50.5% 49.0% 49.2% 50.1% 49.0%
Research, development, and engineering 30,303 8,250 8,164 9,004 8,459 33,877 8,605
Selling, general and administrative 76,273 19,606 19,763 20,939 20,297 80,605 21,153
Operating expenses 106,576 27,856 27,927 29,943 28,756 114,482 29,758
Operating income 41,269 13,602 13,708 12,578 14,573 54,461 15,709
Operating margin 13.3% 16.9% 16.6% 14.5% 16.5% 16.1% 16.9%
Income before income taxes 43,200 14,535 13,980 13,144 15,101 56,760 16,201
Income tax expense 6,952 4,361 2,450 3,943 4,530 15,284 4,860
Income tax expense as a percent of
income before taxes 16.1% 30.0% 17.5% 30.0% 30.0% 26.9% 30.0%
Net income after taxes 36,248 10,174 11,530 9,201 10,571 41,476 11,341
Diluted shares outstanding 49,238 47,722 47,298 46,197 45,190 46,584 45,077
EPS 0.74 0.21 0.24 0.20 0.23 0.89 0.25
Net revenues from unaffiliated customers:
Office and contact center 237,505 61,568 59,742 58,644 64,404 244,358 62,080
Mobile and computer 61,387 12,730 16,208 21,824 17,820 68,582 23,981
Other specialty products 12,289 5,970 6,420 6,343 5,835 24,568 6,725
Net revenues by geographical area
from unaffiliated customers:
Domestic 213,655 55,614 57,426 57,013 58,889 228,942 64,924
International 97,526 24,654 24,944 29,798 29,170 108,566 27,862
Balance Sheet accounts affected:
Accounts receivable, net 43,838 44,714 51,303 51,927 50,503 50,503 49,852
Days Sales Outstanding 50 56 54 52 48
Inventory, net 36,103 37,695 35,659 34,884 33,758 33,758 37,510
Inventory turns 4.1 4.6 5.1 5.3 5.0
