SOURCE: Polycom, Inc.

January 23, 2008 16:05 ET

Polycom Reports Fourth Quarter and Fiscal Year 2007 Earnings

Revenue Growth of 41 Percent Year-Over-Year; Revenue Growth of 21 Percent Year-Over-Year Excluding SpectraLink; Record Operating Cash Flow of $55.8 Million

PLEASANTON, CA--(Marketwire - January 23, 2008) - Polycom, Inc. (NASDAQ: PLCM), the world's leading provider of unified collaborative communications solutions, today reported its earnings for the fourth quarter and fiscal year ended Dec. 31, 2007.

Fourth quarter 2007 consolidated net revenues were $263.3 million, compared to $186.5 million for the fourth quarter of 2006. SpectraLink contributed $37.2 million to net revenues for the fourth quarter of 2007. As previously reported, Polycom's acquisition of SpectraLink was completed on March 26, 2007. Non-GAAP net income in the fourth quarter of 2007 was $38.5 million, or 42 cents per diluted share. This compares to Non-GAAP net income of $32.0 million, or 35 cents per diluted share, for the fourth quarter of 2006. GAAP net income for the fourth quarter of 2007 was $22.8 million, or 25 cents per diluted share, compared to $25.8 million, or 28 cents per diluted share, for the same period last year.

For the year ended Dec. 31, 2007, net revenues were $929.9 million, compared to $682.4 million for the year ended Dec. 31, 2006. SpectraLink contributed $113.5 million to net revenues for the year ended Dec. 31, 2007. Non-GAAP net income for the year ended Dec. 31, 2007 was $128.9 million, or $1.37 per diluted share, compared to $98.1 million, or $1.09 per diluted share, for the comparable period of 2006. GAAP net income for the year ended Dec. 31, 2007 was $62.9 million, or 67 cents per diluted share, compared to GAAP net income of $71.9 million, or 80 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 entitled "GAAP to Non-GAAP Reconciliation" in this release.

On a product line basis, consolidated net revenues for the fourth quarter of 2007 were comprised of:

--  63 percent video solutions, or $164.9 million (49 percent video
    communications, or $129.2 million, and 14 percent network systems, or $35.7
    million); and
--  37 percent voice communications, or $98.4 million.
    

This compares to the fourth quarter of 2006, in which consolidated net revenues were comprised of:

--  72 percent video solutions, or $134.1 million (55 percent video
    communications, or $103.0 million, and 17 percent network systems, or $31.1
    million); and
--  28 percent voice communications, or $52.4 million.
    

"Unprecedented demand for Polycom's IP-based collaboration solution drove us to well over the $1 billion revenue run-rate for the first time in Q4," said Robert Hagerty, chairman and CEO. "Video collaboration has clearly emerged as a top priority due to its immediate cost savings benefits and rapid return on investment. At the same time, Polycom's HD quality, telepresence, and 'plug and play' IP connectivity are delivering an amazing customer experience. Polycom's leading HD video and voice over IP solutions are enabling this growth for our company worldwide."

Hagerty continued, "Our strategic partnerships with Avaya, Nortel, Cisco, and others are adding fuel to our business opportunities. In fact, revenues from our new VoIP relationship with Microsoft that we launched in October and our recent voice launch with 3COM provide yet another engine for revenue growth in 2008. These meaningful partnerships, coupled with strong execution from our sales and service teams, are driving increased traction and expansion on a global basis."

"2008 promises to be an exciting year for Polycom. Our HD video, voice, and content collaboration solutions solve real business problems across a broad range of industries. Adopting our solution yields fast returns and increases a customer's agility and cohesiveness -- and facilitates 'greener' corporate policies -- yet another critical driver in many geographies. The employees and partners of Polycom are ready to fulfill the growing demand of this market."

"We delivered strong operating results in the fourth quarter, including record revenues of $263.3 million and $55.8 million in operating cash flow," said Michael Kourey, senior vice president, finance and administration, and CFO. "In concert with these operating results, backlog and deferred revenues also grew to record levels. During the fourth quarter, we purchased $50 million in Polycom stock, exiting the quarter with a remaining $140 million authorization under the current share repurchase program."

About Polycom

Polycom, Inc. is the worldwide leader in unified collaborative communications (UCC) that maximize the efficiency and productivity of people and organizations by integrating the broadest array of high definition video, wired and wireless voice, and content solutions to deliver the ultimate collaborative experience. Polycom's high quality, standards-based conferencing and collaboration solutions are easy to deploy and manage, as well as intuitive to use. Supported by an open architecture, they integrate seamlessly with leading telephony, workplace wireless telephony, and presence-based networks. With its market-driving technologies, best-in-class products, alliance partnerships, and world-class service, Polycom is the smart choice for organizations seeking proven solutions and a competitive advantage from on-demand communications and collaboration. For additional information, call 800-POLYCOM or visit the Polycom web site at www.polycom.com.

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 anticipated contributions of Polycom's HD video and voice over IP solutions to Polycom's future growth, the impact that our strategic and other partnerships, including our new VoIP relationship with Microsoft and the other partnerships highlighted in this release, and our recent voice launch with 3COM, will have on Polycom's future revenues, the anticipated growing market demand for collaboration solutions in 2008 and Polycom's ability to address such demand through its product offerings and solutions, and the ability of our sales and services teams to execute effectively 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 effectiveness of our SpectraLink integration efforts, potential fluctuations in results and future growth rates, 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, the impact of global conflicts such as those in the Middle East, and risks associated with general economic conditions, including current negative macroeconomic indicators 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, 2007, 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 Jan. 14, 2008, Polycom will hold a conference call today, Jan. 23, 2008, at 5:00 p.m. ET/2:00 p.m. PT to discuss its fourth quarter earnings. 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, by calling 800.935.5014; and for callers outside of the US and Canada, by calling 212.231.2900, with the pass code 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 21370996. A replay of the call will also be maintained on our website for twelve months at www.polycom.com under Investor Relations - Financial Summaries - Financial Results 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.

Polycom, the Polycom logo, SpectraLink, and the SpectraLink logo are registered trademarks of Polycom in the U.S. and various countries. ©2008, Polycom, Inc. All rights reserved.

                              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   Twelve Months Ended
                                --------------------  --------------------
                                December   December   December   December
                                   31,        31,        31,        31,
                                  2007       2006       2007       2006
                                ---------  ---------- ---------  ----------

Revenues:
     Product revenues           $ 228,129  $  164,784 $ 806,482  $  600,703
     Service revenues              35,162      21,725   123,426      81,682
                                ---------  ---------- ---------  ----------
        Total revenues            263,291     186,509   929,908     682,385
                                ---------  ---------- ---------  ----------

Cost of revenues:
     Cost of product revenues      88,348      59,837   306,139     216,932
     Cost of service revenues      16,289      10,973    58,239      41,380
                                ---------  ---------- ---------  ----------
        Total cost of revenues    104,637      70,810   364,378     258,312
                                ---------  ---------- ---------  ----------

Gross profit                      158,654     115,699   565,530     424,073
                                ---------  ---------- ---------  ----------

Operating expenses:
     Sales and marketing           64,572      43,188   229,845     163,060
     Research and development      32,624      27,585   126,529     107,020
     General and administrative    13,344      10,287    50,516      39,409
                                ---------  ---------- ---------  ----------
        Total operating
         expenses                 110,540      81,060   406,890     309,489
                                ---------  ---------- ---------  ----------

Operating income                   48,114      34,639   158,640     114,584

Interest income, net                3,859       7,022    18,646      21,164
Other income (expense), net          (389)        139      (738)        540
                                ---------  ---------- ---------  ----------

Income before provision for
 income taxes                      51,584      41,800   176,548     136,288
Provision for income taxes         13,044       9,815    47,668      38,161
                                ---------  ---------- ---------  ----------
Non-GAAP net income             $  38,540  $   31,985 $ 128,880  $   98,127
                                =========  ========== =========  ==========

Basic net income per share      $    0.43  $     0.36 $    1.42  $     1.11
                                =========  ========== =========  ==========
Diluted net income per share    $    0.42  $     0.35 $    1.37  $     1.09
                                =========  ========== =========  ==========

Weighted average shares
 outstanding for basic
     net income per share          89,839      89,397    90,878      88,419
                                =========  ========== =========  ==========

Weighted average shares
 outstanding for diluted
     net income per share          92,521      91,880    94,391      90,373
                                =========  ========== =========  ==========


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   Twelve Months Ended
                                --------------------  --------------------
                                December   December   December   December
                                   31,        31,        31,        31,
                                  2007       2006       2007       2006
                                ---------  ---------- ---------  ----------


Revenues:
     Product revenues           $ 228,129  $  164,784 $ 806,482  $  600,703
     Service revenues              35,162      21,725   123,426      81,682
                                ---------  ---------- ---------  ----------
        Total revenues            263,291     186,509   929,908     682,385
                                ---------  ---------- ---------  ----------

Cost of revenues:
     Cost of product revenues      92,614      60,211   322,988     218,810
     Cost of service revenues      17,216      11,394    61,599      43,114
                                ---------  ---------- ---------  ----------
        Total cost of revenues    109,830      71,605   384,587     261,924
                                ---------  ---------- ---------  ----------

Gross profit                      153,461     114,904   545,321     420,461
                                ---------  ---------- ---------  ----------

Operating expenses:
     Sales and marketing           68,073      44,980   242,510     169,828
     Research and development      36,072      29,357   139,011     114,331
     General and administrative    16,113      11,717    60,994      45,410
     Acquisition-related costs      1,118          24     4,258         161
     Purchased in-process
      research and development          -           -     9,400           -
     Amortization and
      impairment of purchased
      intangibles                   5,323       2,812    11,546       7,452
     Restructuring costs              197         543       410       2,410
                                ---------  ---------- ---------  ----------
        Total operating
         expenses                 126,896      89,433   468,129     339,592
                                ---------  ---------- ---------  ----------

Operating income                   26,565      25,471    77,192      80,869

Interest income, net                3,859       7,022    18,646      21,164
Gain (loss) on strategic
 investments                            -         176    (7,400)        176
Other income (expense), net          (389)        139      (738)        540
                                ---------  ---------- ---------  ----------

Income before provision from
 income taxes                      30,035      32,808    87,700     102,749
Provision for income taxes          7,234       7,045    24,819      30,825
                                ---------  ---------- ---------  ----------
Net income                      $  22,801  $   25,763 $  62,881  $   71,924
                                =========  ========== =========  ==========

                                ---------  ---------- ---------  ----------
Basic net income per share      $    0.25  $     0.29 $    0.69  $     0.81
                                =========  ========== =========  ==========

                                ---------  ---------- ---------  ----------
Diluted net income per share    $    0.25  $     0.28 $    0.67  $     0.80
                                =========  ========== =========  ==========

Weighted average shares
 outstanding for basic
     net income per share          89,839      89,397    90,878      88,419
                                =========  ========== =========  ==========

Weighted average shares
 outstanding for diluted
     net income per share          92,521      91,880    94,391      90,373
                                =========  ========== =========  ==========




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





                    Three Months Ended            Twelve Months Ended
               ----------------------------  -----------------------------
                     December 31, 2007             December 31, 2007
               ----------------------------  -----------------------------
                 GAAP    Excluded  Non-GAAP    GAAP    Excluded   Non-GAAP
               --------  --------  --------  --------  ---------  --------

Revenues:
  Product
   revenues    $228,129  $      -  $228,129  $806,482  $       -  $806,482
  Service
   revenues      35,162         -    35,162   123,426          -   123,426
               --------  --------  --------  --------  ---------  --------
    Total
     revenues   263,291         -   263,291   929,908          -   929,908
               --------  --------  --------  --------  ---------  --------

Cost of
 revenues:
  Cost of
   product
   revenues      92,614  4,266(a)    88,348   322,988  16,849(c)   306,139
  Cost of
   service
   revenues      17,216    927(b)    16,289    61,599   3,360(b)    58,239
               --------  --------  --------  --------  ---------  --------
     Total
      cost
      of
      revenues  109,830     5,193   104,637   384,587     20,209   364,378
               --------  --------  --------  --------  ---------  --------
Gross profit    153,461    (5,193)  158,654   545,321    (20,209)  565,530
               --------  --------  --------  --------  ---------  --------

Operating
 expenses:
  Sales and
   marketing     68,073  3,501(b)    64,572   242,510  12,665(b)   229,845
  Research
   and
   development   36,072  3,448(b)    32,624   139,011  12,482(b)   126,529
  General
   and
   adminis-
   trative       16,113  2,769(b)    13,344    60,994  10,478(b)    50,516
  Acquisition-
   related
   costs          1,118     1,118         -     4,258      4,258         -
  Purchased
   in-process
   research
   and
   development        -         -         -     9,400      9,400         -
  Amortization
   and
   impairment of
   purchased
   intangibles    5,323     5,323         -    11,546     11,546         -
  Restructuring
   costs            197       197         -       410        410         -
               --------  --------  --------  --------  ---------  --------
    Total
     operating
     expenses   126,896    16,356   110,540   468,129     61,239   406,890
               --------  --------  --------  --------  ---------  --------

Operating
 income          26,565   (21,549)   48,114    77,192    (81,448)  158,640

Interest
 income, net      3,859         -     3,859    18,646          -    18,646
Gain (loss) on
 strategic
 investments          -         -         -    (7,400)    (7,400)        -
Other income
 (expense), net    (389)        -      (389)     (738)         -      (738)
               --------  --------  --------  --------  ---------  --------

Income before
 provision
 from income
 taxes           30,035   (21,549)   51,584    87,700    (88,848)  176,548
Provision for
 income taxes     7,234    (5,810)   13,044    24,819    (22,849)   47,668
               --------  --------  --------  --------  ---------  --------
Net income     $ 22,801  $(15,739) $ 38,540  $ 62,881  $ (65,999) $128,880
               ========  ========  ========  ========  =========  ========

Basic net
 income per
 share         $   0.25  $  (0.18) $   0.43  $   0.69  $   (0.73) $   1.42
               ========  ========  ========  ========  =========  ========

Diluted net
 income per
 share         $   0.25  $  (0.17) $   0.42  $   0.67  $   (0.70) $   1.37
               ========  ========  ========  ========  =========  ========

Weighted
 average
 shares
 outstanding
 for basic
   net income
    per share    89,839              89,839    90,878               90,878
               ========            ========  ========             ========

Weighted
 average
 shares
 outstanding
 for diluted
   net income
    per share    92,521              92,521    94,391               94,391
               ========            ========  ========             ========

(a) Excluded amount includes $3,343 related to the amortization of
purchased intangibles for core and existing technologies, $733 for
stock-based compensation expense recorded in accordance with SFAS 123R,
"Share-Based Payment," during the period and $190 related to the effect of
stock-based compensation on warranty expense rates.

(b) Excluded amount represents stock-based compensation expense recorded in
accordance with SFAS 123R, "Share-Based Payment," during the period.

(c) Excluded amount includes $10,860 related to the amortization of
purchased intangibles for core and existing technologies, $2,674 for
stock-based compensation expense recorded in accordance with SFAS 123R,
"Share-Based Payment," during the period, $851 related to the effect of
stock-based compensation on warranty expense rates and $2,464 related to
purchase accounting adjustments made to inventory.





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





                    Three Months Ended            Twelve Months Ended
               ----------------------------- ------------------------------
                     December 31, 2006             December 31, 2006
               ----------------------------- ------------------------------
                 GAAP    Excluded  Non-GAAP    GAAP    Excluded   Non-GAAP
               --------- --------  --------- --------- ---------  ---------


Revenues:
  Product
   revenues    $ 164,784 $      -  $ 164,784 $ 600,703 $       -  $ 600,703
  Service
   revenues       21,725        -     21,725    81,682         -     81,682
               --------- --------  --------- --------- ---------  ---------
    Total
     revenues    186,509        -    186,509   682,385         -    682,385
               --------- --------  --------- --------- ---------  ---------

Cost of
 revenues:
  Cost of
   product
   revenues       60,211   374(a)     59,837   218,810  1,878(c)    216,932
  Cost of
   service
   revenues       11,394   421(b)     10,973    43,114  1,734(b)     41,380
               --------- --------  --------- --------- ---------  ---------
    Total
     cost of
     revenues     71,605      795     70,810   261,924     3,612    258,312
               --------- --------  --------- --------- ---------  ---------

Gross profit     114,904     (795)   115,699   420,461    (3,612)   424,073
               --------- --------  --------- --------- ---------  ---------

Operating
 expenses:
  Sales and
   marketing      44,980 1,792(b)     43,188   169,828  6,768(b)    163,060
  Research
   and
   development    29,357 1,772(b)     27,585   114,331  7,311(b)    107,020
  General
   and
   administrative 11,717 1,430(b)     10,287    45,410  6,001(b)     39,409
  Acquisition-
   related costs      24       24          -       161       161          -
  Amortization
   and
   impairment of
   purchased
   intangibles     2,812    2,812          -     7,452     7,452          -
  Restructuring
   costs             543      543          -     2,410     2,410          -
               --------- --------  --------- --------- ---------  ---------
    Total
     operating
     expenses     89,433    8,373     81,060   339,592    30,103    309,489
               --------- --------  --------- --------- ---------  ---------

Operating
 income           25,471   (9,168)    34,639    80,869   (33,715)   114,584

Interest
 income, net       7,022        -      7,022    21,164         -     21,164
Gain (loss) on
 strategic
 investments         176      176          -       176       176          -
Other income
 (expense),
 net                 139        -        139       540         -        540
               --------- --------  --------- --------- ---------  ---------

Income before
 provision
 from income
 taxes            32,808   (8,992)    41,800   102,749   (33,539)   136,288
Provision for
 income taxes      7,045   (2,770)     9,815    30,825    (7,336)    38,161
               --------- --------  --------- --------- ---------  ---------
Net income     $  25,763 $ (6,222) $  31,985 $  71,924 $ (26,203) $  98,127
               ========= ========  ========= ========= =========  =========

               --------- --------  --------- --------- ---------  ---------
Basic net
 income per
 share         $    0.29 $  (0.07) $    0.36 $    0.81 $   (0.30) $    1.11
               ========= ========  ========= ========= =========  =========

               --------- --------  --------- --------- ---------  ---------
Diluted net
 income per
 share         $    0.28 $  (0.07) $    0.35 $    0.80 $   (0.29) $    1.09
               ========= ========  ========= ========= =========  =========

Weighted
 average
 shares
 outstanding
 for basic
  net income
   per share      89,397              89,397    88,419               88,419
               =========           ========= =========            =========

Weighted
 average
 shares
 outstanding
 for diluted
  net income
   per share      91,880              91,880    90,373               90,373
               =========           ========= =========            =========

(a) Excluded amount includes $366 for stock-based compensation expense
recorded in accordance with SFAS 123R, "Share-Based Payment," during the
period and $8 related to the effect of stock-based compensation on warranty
expense rates.

(b) Excluded amount represents stock-based compensation expense recorded in
accordance with SFAS 123R, "Share-Based Payment," during the period.

(c) Excluded amount includes $1,474 for stock-based compensation expense
recorded in accordance with SFAS 123R, "Share-Based Payment," during the
period and $404 related to the effect of stock-based compensation on
warranty expense rates.




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



                                                December 31,  December 31,
                                                    2007          2006
                                                ------------- -------------
ASSETS
Current assets
   Cash and cash equivalents                    $     279,560 $     316,368
   Investments                                         62,663       157,345
   Trade receivables, net                             138,133        79,057
   Inventories                                         71,106        48,029
   Deferred taxes                                      43,295        22,459
   Prepaid expenses and other current assets           23,104        16,719
                                                ------------- -------------
      Total current assets                            617,861       639,977

Property and equipment, net                            57,610        39,426
Long-term investments                                  32,340       102,133
Goodwill                                              495,943       356,755
Purchased intangibles, net                             86,423        12,935
Deferred taxes                                          8,062        16,746
Other assets                                           14,687        22,043
                                                ------------- -------------
      Total assets                              $   1,312,926 $   1,190,015
                                                ============= =============



LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Accounts payable                             $      75,802 $      53,602
   Accrued payroll and related liabilities             29,518        22,182
   Taxes payable                                        3,790        58,092
   Deferred revenue                                    59,130        40,227
   Other accrued liabilities                           48,814        39,780
                                                ------------- -------------
      Total current liabilities                       217,054       213,883

Non-current liabilities
Deferred revenue                                       27,853        20,798
Taxes payable                                          34,899             -
Deferred taxes                                          4,709             -
Other long-term liabilities                            13,429         8,614
                                                ------------- -------------
      Total liabilities                               297,944       243,295

Stockholders' equity                                1,014,982       946,720
                                                ------------- -------------
      Total liabilities and stockholders'
       equity                                   $   1,312,926 $   1,190,015
                                                ============= =============



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


                                                    Twelve Months Ended
                                                --------------------------
                                                December 31,  December 31,
                                                    2007          2006
                                                ------------  ------------

Cash flows from operating activities:
Net income                                      $     62,881  $     71,924
Adjustments to reconcile net income
 to net cash provided by operating activities:
   Depreciation and amortization                      24,502        21,035
   Amortization and impairment of purchased
    intangibles                                       22,389         7,452
   Provision for doubtful accounts                       370           120
   Provision for excess and obsolete inventories         264         1,306
   Non-cash stock-based compensation                  41,659        23,288
   Excess tax benefits from stock-based
    compensation                                     (15,505)      (10,246)
   (Gain)/loss on strategic investments                7,400          (176)
   Purchase of in-process research and
    development                                        9,400             -
   Loss on disposals of property and equipment           175           116

   Changes in assets and liabilities, net of
    the effect of acquisitions:
        Trade receivables                            (41,689)       (9,774)
        Inventories                                   (3,743)       (3,568)
        Deferred taxes                                 6,893         9,264
        Prepaid expenses and other assets             (5,719)       (4,783)
        Accounts payable                              12,716         6,720
        Taxes payable                                 10,742         9,139
        Other accrued liabilities                     16,780        25,869
                                                ------------  ------------
Net cash provided by operating activities            149,515       147,686
                                                ------------  ------------

Cash flows from investing activities:
    Purchase of property and equipment               (30,050)      (23,475)
    Purchases of investments                        (380,598)     (660,668)
    Proceeds from sale and maturity of
     investments                                     544,113       669,812
    Net cash paid in purchase acquisitions          (275,917)         (188)
                                                ------------  ------------
Net cash used in investing activities               (142,452)      (14,519)
                                                ------------  ------------

Cash flows from financing activities:
    Proceeds from issuance of common stock
      under employee option and stock
       purchase plans                                 66,474        87,304
    Repurchase of common stock                      (125,850)     (103,620)
    Excess tax benefits from stock-based
     compensation                                     15,505        10,246
                                                ------------  ------------
Net cash used in financing activities                (43,871)       (6,070)
                                                ------------  ------------

Net increase (decrease) in cash and cash
 equivalents                                         (36,808)      127,097
Cash and cash equivalents, beginning of
 period                                              316,368       189,271
                                                ------------  ------------
Cash and cash equivalents, end of period        $    279,560  $    316,368
                                                ============  ============

Contact Information

  • Contact:
    Michael R. Kourey
    CFO
    Polycom, Inc.
    925-924-5742
    Email Contact