SOURCE: Polycom, Inc.

Polycom, Inc.

January 26, 2010 16:05 ET

Polycom Reports Fourth Quarter and Fiscal Year 2009 Earnings

Consolidated Fourth Quarter Revenues Return to Year-Over-Year Growth at $268 Million; Revenue Growth of 10 Percent Quarter-to-Quarter; Record Quarterly Operating Cash Flow of $68 Million

PLEASANTON, CA--(Marketwire - January 26, 2010) - Polycom, Inc. (NASDAQ: PLCM), the global leader in telepresence, video and voice communications solutions, today reported its earnings for the fourth quarter ended Dec. 31, 2009.

Fourth quarter 2009 consolidated net revenues were $268 million, compared to $263 million for the fourth quarter of 2008. Non-GAAP net income for the fourth quarter of 2009 was $28 million, or 33 cents per diluted share. This compares to Non-GAAP net income of $35 million, or 42 cents per diluted share, for the fourth quarter of 2008. GAAP net income for the fourth quarter of 2009 was $13 million, or 15 cents per diluted share, compared to $26 million, or 30 cents per diluted share, for the same period last year.

For the year ended Dec. 31, 2009, net revenues were $967 million, compared to $1,069 million for the year ended Dec. 31, 2008. Non-GAAP net income for the year ended Dec. 31, 2009 was $102 million, or $1.19 per diluted share, compared to $130 million, or $1.49 per diluted share, for the comparable period of 2008. GAAP net income for the year ended Dec. 31, 2009 was $50 million, or 58 cents per diluted share, compared to GAAP net income of $76 million, or 87 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 at the end of this release.

On a product line basis, consolidated net revenues for the fourth quarter of 2009 were comprised of:

--  70 percent video solutions, or $187 million (53 percent video
    communications, or $143 million, and 17 percent network systems, or $44
    million); and
--  30 percent voice communications, or $81 million.
    

On a product line basis, consolidated net revenues for the fourth quarter of 2008 were comprised of:

--  67 percent video solutions, or $176 million (54 percent video
    communications, or $142 million, and 13 percent network systems, or $34
    million); and
--  33 percent voice communications, or $87 million.
    

"Polycom's strategic investment plan announced last quarter has already yielded positive results, evidenced by double-digit sequential revenue growth and record backlog during the fourth quarter," said Robert Hagerty, Polycom chairman and CEO. "We added go-to-market coverage in key geographies and verticals and deepened our strategic partnerships, all of which helped to accelerate broad-based improvements in our revenue engine and solutions-selling capability. With our thriving go-to-market team and best of breed product portfolio, we are enabling our growing customer base to capture the benefits of Unified Collaboration in meeting rooms, at the desktop, and while mobile."

"A critical component of our investment plan is building an ecosystem of strategic partners to deliver customers the best and most integrated collaboration solutions. This increased investment in time and resources has resulted in several powerful partnerships, including Avaya, BT, IBM, Juniper and Siemens. In combination with our improved go-to-market capability, our strategic partnerships are enabling Polycom to deliver an open architecture solution that is easy to adopt and use. As the largest pure play Unified Collaboration company with an open platform, we are solidifying our role as the ecosystem's partner of choice," Hagerty concluded.

"Strong customer demand, supported by our investment plan, fueled our revenue growth and drove record order backlog and deferred revenues," said Michael Kourey, Polycom senior vice president, finance and administration, and CFO. "As a result of this operating performance and working capital management, we generated a record positive operating cash flow of $68 million, representing Polycom's 48th consecutive quarter of positive operating cash flow. We exited the quarter with $467 million in cash and investments and no debt."

About Polycom

Polycom, Inc. (NASDAQ: PLCM) is the global leader in telepresence, video, and voice solutions and a visionary in communications that empower people to connect and collaborate everywhere. Please visit www.polycom.com for more information.

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 results yielded by the Company's strategic investment plan and the Company's future role as the ecosystem's partner of choice. 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 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, including the continuation and prolonged impact of the crisis in the worldwide financial markets and the global recession, 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 and our sales organization that may cause disruption to the business, the impact of recent restructuring actions, and the impact of global conflicts such as those in the Middle East 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, 2009, 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. 25, 2010, Polycom will hold a conference call today, Jan. 26, 2010, at 5 p.m. EST/2 p.m. PST to discuss its fourth quarter earnings. Robert Hagerty, chairman, president and CEO, and Michael Kourey, chief financial officer, will host the conference call. You may participate by viewing the webcast at www.polycom.com or, for callers in the US and Canada, by calling 800.952.4629; and for callers outside of the US and Canada, by calling 212.231.2903, with the passcode 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 21455246. A replay of the call will also be maintained on our website for twelve months at www.polycom.com under Investor Relations - Earnings Calls-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.

© 2010 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.
         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 31,  December 31,  December 31,  December 31,
                        2009          2008          2009          2008
                    ------------  ------------  ------------  -------------

Revenues:
  Product
   revenues         $    220,840  $    222,067  $    791,508  $     913,760
  Service
   revenues               47,024        40,976       175,476        155,560
                    ------------  ------------  ------------  -------------
    Total Revenues       267,864       263,043       966,984      1,069,320
                    ------------  ------------  ------------  -------------

Cost of revenues:
  Cost of product
   revenues               88,946        87,072       318,889        357,608
  Cost of service
   revenues               21,023        18,233        79,482         73,003
                    ------------  ------------  ------------  -------------
    Total cost of
     revenues            109,969       105,305       398,371        430,611
                    ------------  ------------  ------------  -------------

Gross profit             157,895       157,738       568,613        638,709
                    ------------  ------------  ------------  -------------

Operating expenses:
  Sales and
   marketing              78,235        70,426       274,787        292,239
  Research and
   development            29,454        28,051       109,556        125,445
  General and
   administrative         12,414        13,334        46,545         52,153
                    ------------  ------------  ------------  -------------
    Total operating
     expenses            120,103       111,811       430,888        469,837
                    ------------  ------------  ------------  -------------

Operating income          37,792        45,927       137,725        168,872

Interest and other
 income (expense),
 net                         (92)       (2,067)       (2,087)         2,426
                    ------------  ------------  ------------  -------------

Income before
 provision for
 income taxes             37,700        43,860       135,638        171,298
Provision for
 income taxes              9,282         8,698        33,720         40,940
                    ------------  ------------  ------------  -------------
Non-GAAP net
 income             $     28,418  $     35,162  $    101,918  $     130,358
                    ============  ============  ============  =============

Basic net income
 per share          $       0.34  $       0.42  $       1.21  $        1.52
                    ============  ============  ============  =============
Diluted net income
 per share          $       0.33  $       0.42  $       1.19  $        1.49
                    ============  ============  ============  =============

Weighted average
 shares outstanding
 for basic net
 income per share         84,432        83,301        84,000         85,616
                    ============  ============  ============  =============

Weighted average
 shares outstanding
 for diluted net
 income per share         86,732        84,338        85,559         87,246
                    ============  ============  ============  =============


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 31,  December 31,  December 31,  December 31,
                        2009          2008          2009          2008
                    ------------  ------------  ------------  -------------


Revenues:
  Product
   revenues         $    220,840  $    222,067  $    791,508  $     913,760
  Service
   revenues               47,024        40,976       175,476        155,560
                    ------------  ------------  ------------  -------------
    Total revenues       267,864       263,043       966,984      1,069,320
                    ------------  ------------  ------------  -------------

Cost of revenues:
  Cost of product
   revenues               92,918        90,736       335,696        374,119
  Cost of service
   revenues               21,743        18,652        82,312         76,179
                    ------------  ------------  ------------  -------------
    Total cost of
     revenues            114,661       109,388       418,008        450,298
                    ------------  ------------  ------------  -------------

Gross profit             153,203       153,655       548,976        619,022
                    ------------  ------------  ------------  -------------

Operating
 expenses:
  Sales and
   marketing              81,707        71,971       285,312        303,436
  Research and
   development            32,043        29,397       117,575        135,288
  General and
   administrative         14,138        14,178        54,011         60,201
  Acquisition-
   related costs               -             -             -            162
  Amortization of
   purchased
   intangibles             1,456         1,686         5,800          7,098
  Restructuring
   costs                   4,459         1,480        15,935         10,316
  Litigation
   reserves and
   payments                    -             -           700          7,401
                    ------------  ------------  ------------  -------------
    Total operating
     expenses            133,803       118,712       479,333        523,902
                    ------------  ------------  ------------  -------------

Operating income          19,400        34,943        69,643         95,120

Interest and other
 income (expense),
 net                         (92)       (2,067)       (2,087)         2,426
                    ------------  ------------  ------------  -------------

Income before
 provision for
 income taxes             19,308        32,876        67,556         97,546
Provision for
 income taxes              6,485         7,170        17,677         21,850
                    ------------  ------------  ------------  -------------
Net income          $     12,823  $     25,706  $     49,879  $      75,696
                    ============  ============  ============  =============

Basic net income
 per share          $       0.15  $       0.31  $       0.59  $        0.88
                    ============  ============  ============  =============

Diluted net income
 per share          $       0.15  $       0.30  $       0.58  $        0.87
                    ============  ============  ============  =============

Weighted average
 shares outstanding
 for basic net
 income per share         84,432        83,301        84,000         85,616
                    ============  ============  ============  =============

Weighted average
 shares outstanding
 for diluted net
 income per share         86,732        84,338        85,559         87,246
                    ============  ============  ============  =============



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



                                               Three Months Ended
                                       -----------------------------------
                                                December 31, 2009
                                       -----------------------------------
                                         GAAP     Excluded       Non-GAAP
                                       ---------  ---------      ---------

Revenues:
  Product revenues                     $ 220,840  $       -      $ 220,840
  Service revenues                        47,024          -         47,024
                                       ---------  ---------      ---------
    Total revenues                       267,864          -        267,864
                                       ---------  ---------      ---------

Cost of revenues:
  Cost of product revenues                92,918      3,972 (a)     88,946
  Cost of service revenues                21,743        720 (b)     21,023
                                       ---------  ---------      ---------
    Total cost of revenues               114,661      4,692        109,969
                                       ---------  ---------      ---------

Gross profit                             153,203     (4,692)       157,895
                                       ---------  ---------      ---------

Operating expenses:
  Sales and marketing                     81,707      3,472 (b)     78,235
  Research and development                32,043      2,589 (c)     29,454
  General and administrative              14,138      1,724 (b)     12,414
  Acquisition-related costs                    -          -              -
  Amortization of purchased
   intangibles                             1,456      1,456              -
  Restructuring costs                      4,459      4,459              -
  Litigation reserves and
   payments                                    -          -              -
                                       ---------  ---------      ---------
    Total operating expenses             133,803     13,700        120,103
                                       ---------  ---------      ---------

Operating income                          19,400    (18,392)        37,792

Interest and other income (expense),
 net                                        (92)          -            (92)
                                       ---------  ---------      ---------

Income before provision for income
 taxes                                    19,308    (18,392)        37,700
Provision for income taxes                 6,485     (2,797)         9,282
                                       ---------  ---------      ---------
Net income                             $  12,823  $ (15,595)     $  28,418
                                       =========  =========      =========

Basic net income per share             $    0.15  $   (0.19)     $    0.34
                                       =========  =========      =========

Diluted net income per share           $    0.15  $   (0.18)     $    0.33
                                       =========  =========      =========

Weighted average shares outstanding
 for basic net income per share           84,432                    84,432
                                       =========                 =========

Weighted average shares outstanding
 for diluted net income per share         86,732                    86,732
                                       =========                 =========


                                               Twelve Months Ended
                                       -----------------------------------
                                                December 31, 2009
                                       -----------------------------------
                                         GAAP     Excluded       Non-GAAP
                                       ---------  ---------      ---------

Revenues:
  Product revenues                     $ 791,508  $       -      $ 791,508
  Service revenues                       175,476          -        175,476
                                       ---------  ---------      ---------
    Total revenues                       966,984          -        966,984
                                       ---------  ---------      ---------

Cost of revenues:
  Cost of product revenues               335,696     16,807 (d)    318,889
  Cost of service revenues                82,312      2,830 (b)     79,482
                                       ---------  ---------      ---------
    Total cost of revenues               418,008     19,637        398,371
                                       ---------  ---------      ---------

Gross profit                             548,976    (19,637)       568,613
                                       ---------  ---------      ---------

Operating expenses:
  Sales and marketing                    285,312     10,525 (b)    274,787
  Research and development               117,575      8,019 (e)    109,556
  General and administrative              54,011      7,466 (b)     46,545
  Acquisition-related costs                    -          -              -
  Amortization of purchased
   intangibles                             5,800      5,800              -
  Restructuring costs                     15,935     15,935              -
  Litigation reserves and
   payments                                  700        700              -
                                       ---------  ---------      ---------
    Total operating expenses             479,333     48,445        430,888
                                       ---------  ---------      ---------

Operating income                         69,643    (68,082)       137,725

Interest and other income (expense),
  net                                     (2,087)         -         (2,087)
                                       ---------  ---------      ---------

Income before provision for income
 taxes                                    67,556    (68,082)       135,638
Provision for income taxes                17,677    (16,043)        33,720
                                       ---------  ---------      ---------
Net income                             $  49,879  $ (52,039)     $ 101,918
                                       =========  =========      =========

Basic net income per share             $    0.59  $   (0.62)     $    1.21
                                       =========  =========      =========

Diluted net income per share           $    0.58  $   (0.61)     $    1.19
                                       =========  =========      =========

Weighted average shares outstanding
 for basic net income per share           84,000                    84,000
                                       =========                 =========

Weighted average shares outstanding
 for diluted net income per share         85,559                    85,559
                                       =========                 =========


(a) 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.

(b) Excluded amount represents stock-based compensation expense recorded
during the period.

(c) 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.

(d) 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.

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



                                               Three Months Ended
                                       -----------------------------------
                                                December 31, 2008
                                       -----------------------------------
                                         GAAP     Excluded       Non-GAAP
                                       ---------  ---------      ---------

Revenues:
  Product revenues                     $ 222,067  $       -      $ 222,067
  Service revenues                        40,976          -         40,976
                                       ---------  ---------      ---------
    Total revenues                       263,043          -        263,043
                                       ---------  ---------      ---------

Cost of revenues:
  Cost of product revenues                90,736      3,664  (a)    87,072
  Cost of service revenues                18,652        419  (b)    18,233
                                       ---------  ---------      ---------
    Total cost of revenues               109,388      4,083        105,305
                                       ---------  ---------      ---------

Gross profit                             153,655     (4,083)       157,738
                                       ---------  ---------      ---------

Operating expenses:
  Sales and marketing                     71,971      1,545  (b)    70,426
  Research and development                29,397      1,346  (b)    28,051
  General and administrative              14,178        844  (b)    13,334
  Acquisition-related costs                    -          -              -
  Amortization of purchased
   intangibles                             1,686      1,686              -
  Restructuring costs                      1,480      1,480              -
  Litigation reserves and
   payments                                    -          -              -
                                       ---------  ---------      ---------
    Total operating expenses             118,712      6,901        111,811
                                       ---------  ---------      ---------

Operating income                          34,943    (10,984)        45,927

Interest and other income (expense),
 net                                      (2,067)         -         (2,067)
                                       ---------  ---------      ---------

Income before provision for income
 taxes                                    32,876    (10,984)        43,860
  Provision for income taxes               7,170     (1,528)         8,698
                                       ---------  ---------      ---------
  Net income                           $  25,706  $  (9,456)     $  35,162
                                       =========  =========      =========

                                       ---------  ---------      ---------
Basic net income per share             $    0.31  $   (0.11)     $    0.42
                                       =========  =========      =========

                                       ---------  ---------      ---------
Diluted net income per share           $    0.30  $   (0.12)     $    0.42
                                       =========  =========      =========

Weighted average shares outstanding
 for basic net income per share           83,301                    83,301
                                       =========                 =========

Weighted average shares outstanding
 for diluted net income per share         84,338                    84,338
                                       =========                 =========


                                               Twelve Months Ended
                                       ------------------------------------
                                                December 31, 2008
                                       ------------------------------------
                                         GAAP     Excluded       Non-GAAP
                                       ---------- ---------      ----------

Revenues:
  Product revenues                     $  913,760 $       -      $  913,760
  Service revenues                        155,560         -         155,560
                                       ---------- ---------      ----------
    Total revenues                      1,069,320         -       1,069,320
                                       ---------- ---------      ----------

Cost of revenues:
  Cost of product revenues                374,119    16,511  (c)    357,608
  Cost of service revenues                 76,179     3,176  (b)     73,003
                                       ---------- ---------      ----------
    Total cost of revenues                450,298    19,687         430,611
                                       ---------- ---------      ----------

Gross profit                              619,022   (19,687)        638,709
                                       ---------- ---------      ----------

Operating expenses:
  Sales and marketing                     303,436    11,197  (b)    292,239
  Research and development                135,288     9,843  (b)    125,445
  General and administrative               60,201     8,048  (b)     52,153
  Acquisition-related costs                   162       162               -
  Amortization of purchased
   intangibles                              7,098     7,098               -
  Restructuring costs                      10,316    10,316               -
  Litigation reserves and
   payments                                 7,401     7,401               -
                                       ---------- ---------      ----------
    Total operating expenses              523,902    54,065         469,837
                                       ---------- ---------      ----------

Operating income                           95,120   (73,752)        168,872

Interest and other income (expense),
 net                                        2,426         -           2,426
                                       ---------- ---------      ----------

Income before provision for income
 taxes                                     97,546   (73,752)        171,298
  Provision for income taxes               21,850   (19,090)         40,940
                                       ---------- ---------      ----------
  Net income                           $   75,696 $ (54,662)     $  130,358
                                       ========== =========      ==========

                                       ---------- ---------      ----------
Basic net income per share             $     0.88 $   (0.64)     $     1.52
                                       ========== =========      ==========

                                       ---------- ---------      ----------
Diluted net income per share           $     0.87 $   (0.62)     $     1.49
                                       ========== =========      ==========

Weighted average shares outstanding
 for basic net income per share            85,616                    85,616
                                       ==========                ==========

Weighted average shares outstanding
 for diluted net income per share          87,246                    87,246
                                       ==========                ==========

(a) Excluded amount includes $3,331 related to the amortization of
purchased intangibles for core and existing technologies, $276 for
stock-based compensation expense recorded during the period and $57 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) Excluded amount includes $13,691 related to the amortization of
purchased intangibles for core and existing technologies, $2,378 for
stock-based compensation expense recorded during the period and $442
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,
                                             2009          2008
                                          ------------ ------------

ASSETS
Current assets
  Cash and cash equivalents                $   331,098 $    165,669
  Investments                                  123,686      152,407
  Trade receivables, net                       132,813      126,497
  Inventories                                   76,863       89,730
  Deferred taxes                                23,824       29,295
  Prepaid expenses and other current
   assets                                       24,299       34,207
                                          ------------ ------------
    Total current assets                       712,583      597,805

Property and equipment, net                     81,252       77,294
Long-term investments                           12,687        6,420
Goodwill                                       495,299      495,083
Purchased intangibles, net                      46,255       65,369
Deferred taxes                                  23,943       19,415
Other assets                                    13,882       16,298
                                          ------------ ------------
    Total assets                          $  1,385,901 $  1,277,684
                                          ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable                        $     87,233 $     57,731
  Accrued payroll and related
   liabilities                                  23,707       28,711
  Taxes payable                                    617            -
  Deferred revenue                              79,504       69,238
  Other accrued liabilities                     52,360       58,402
                                          ------------ ------------
    Total current liabilities                  243,421      214,082

Non-current liabilities
Deferred revenue                                46,787       43,285
Taxes payable                                   27,111       35,878
Deferred taxes                                   2,702        2,638
Other long-term liabilities                     12,027       13,459
                                          ------------ ------------
    Total liabilities                          332,048      309,342

Stockholders' equity                         1,053,853      968,342
                                          ------------ ------------
    Total liabilities and
     stockholders' equity                 $  1,385,901 $  1,277,684
                                          ============ ============



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



                                             Twelve Months Ended
                                          -------------------------
                                          December 31, December 31,
                                             2009         2008
                                          ------------ ------------

Cash flows from operating activities:
Net income                                $     49,879 $     75,696
Adjustments to reconcile net income
 to net cash provided by operating
 activities:
  Depreciation and amortization                 34,075       28,507
  Amortization of purchased intangibles         19,268       20,798
  Provision for doubtful accounts                  247        1,665
  Provision for excess and obsolete
   inventories                                   3,830        3,775
  Non-cash stock based compensation             30,358       34,635
  Excess tax benefits from stock-based
   compensation                                 (3,082)      (4,526)
  Write down of investments other than
   temporarily impaired                              -          981
  Loss on disposals of property and
   equipment                                       706          478

  Changes in assets and liabilities,
   net of the effect of acquisitions:
    Trade receivables                           (6,563)      10,145
    Inventories                                  9,037      (22,399)
    Deferred taxes                               2,223        1,133
    Prepaid expenses and other assets            8,474      (10,448)
    Accounts payable                            29,502      (18,018)
    Taxes payable                                2,222        2,794
    Other accrued liabilities                      588       41,801
                                          ------------ ------------
Net cash provided by operating
 activities                                    180,764      167,017
                                          ------------ ------------

Cash flows from investing activities:
  Purchase of property and equipment           (37,766)     (47,457)
  Purchases of investments                    (538,440)    (451,833)
  Proceeds from sale and maturity of
   investments                                 556,731      384,381
                                          ------------ ------------ 
Net cash used in investing activities          (19,475)    (114,909)
                                          ------------ ------------

Cash flows from financing activities:
  Proceeds from issuance of common stock
   under employee option and stock
   purchase plans                               36,497       52,075
  Repurchase of common stock                   (35,439)    (222,600)
  Excess tax benefits from stock-based
   compensation                                  3,082        4,526
                                          ------------ ------------
Net cash provided by (used in) financing
 activities                                      4,140     (165,999)
                                          ------------ ------------

Net increase (decrease) in cash and cash
 equivalents                                   165,429     (113,891)
Cash and cash equivalents, beginning
 of period                                     165,669      279,560
                                          ------------ ------------
Cash and cash equivalents, end of period  $    331,098 $    165,669
                                          ============ ============

Contact Information

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

    Press Contact:
    Caroline Japic
    Polycom, Inc.
    408-474-2265
    Email Contact