SOURCE: Plantronics, Inc.

Plantronics Logo

May 03, 2016 16:00 ET

Plantronics Announces Fourth Quarter & Fiscal Year 2016 Financial Results

Q4 Revenue at High-End of Guidance, EPS Exceeds; Driven by 25% Revenue Growth in Unified Communications

SANTA CRUZ, CA--(Marketwired - May 03, 2016) -  Plantronics, Inc. (NYSE: PLT) today announced fourth quarter and fiscal year 2016 financial results. Highlights of the fourth quarter include the following (comparisons are against the fourth quarter of fiscal year 2015; all constant currency comparisons are against the same Non-GAAP metric as reported in the fourth quarter of fiscal year 2015):

  • Net revenues were $209.8 million, an increase of 5% compared with $200.8 million, and within our guidance of $200 million to $210 million
    • Constant currency revenue grew by 6%, from $200.8 million to $213.7 million
  • GAAP gross margin was 50.9% compared with 54.4%
    • Non-GAAP gross margin was 51.3% compared with 54.7%
  • GAAP operating income was $17.9 million compared with $32.9 million
    • Non-GAAP operating income was $34.4 million compared with $40.4 million
    • Constant currency Non-GAAP operating income was $36.6 million compared with $40.4 million
  • GAAP diluted earnings per share ("EPS") was $0.39 compared with $0.61, and above our guidance of $0.21 to $0.31
    • Non-GAAP diluted EPS was $0.64 compared with $0.72, and above our guidance of $0.50 to $0.60
    • Constant currency Non-GAAP EPS was $0.67 compared with $0.72
   
Q4 Fiscal Year 2016 GAAP Results  
   
    Q4 2015   Q4 2016   Change (%)  
Net revenues   $ 200.8     million   $ 209.8     million   4.5 %
Operating income   $ 32.9     million   $ 17.9     million   (45.4 )%
  Operating margin     16.4 %         8.5 %          
Diluted EPS   $ 0.61         $ 0.39         (36.1 )%
                               
   
Q4 Fiscal Year 2016 Non-GAAP Results  
   
    Q4 2015   Q4 2016   Change (%)  
Operating income   $ 40.4     million   $ 34.4     million   (14.8 )%
  Operating margin      20.1 %         16.4 %          
Diluted EPS   $ 0.72         $ 0.64         (11.1 )%
                               
   
Fiscal Year 2016 GAAP Results  
   
    2015   2016   Change (%)  
Net revenues   $ 865.0     million   $ 856.9     million   (0.9 )%
Operating income   $ 149.1     million   $ 108.0     million   27.5 %
  Operating margin     17.2 %         12.6 %          
Diluted EPS   $ 2.63         $ 1.96         (25.5 )%
                               
   
   Fiscal Year 2016 Non-GAAP Results   
           
    2015   2016   Change (%)  
Operating income   $ 177.9     million   $ 157.7     million   (11.4 )%
  Operating margin     20.6 %         18.4 %          
Diluted EPS   $ 3.04         $ 2.82         (7.2 )%
                               

A reconciliation between our GAAP and non-GAAP results is provided in the tables at the end of this press release.

"Unified Communications remains our core growth driver and we anticipate incremental growth opportunities from as-a-service and Soundscaping revenues in the coming years. Our outlook for growth over the next several years has improved, and our recent restructuring has enhanced our ability to grow Non-GAAP operating margins," stated Ken Kannappan, President & CEO. "Given a stable market environment, we anticipate mid to high single digit percentage revenue growth annually provided there are not any significant fluctuations in currency exchange rates."

"Both Enterprise and Consumer delivered solid growth , despite continued currency headwinds and the loss of hedge gains compared to the prior year, which lowered our revenue growth by 190 basis points, while an extra week in the fourth quarter aided our growth rate," stated Pam Strayer, Senior Vice President and Chief Financial Officer. We remain committed to returning to our long-term profitability target of Non-GAAP operating margins of 20% to 23%. In Fiscal 2017, we expect to meet or exceed the Non-GAAP operating margins we recorded in fiscal year 2016."

Enterprise net revenues grew by 5% to $156.2 million in the fourth quarter of fiscal year 2016 compared with $148.7 million in the fourth quarter of fiscal year 2015. On a constant currency basis, Enterprise net revenues grew by 7%, from $148.7 million to $159.1 million year over year.

Consumer net revenues grew by 3% to $53.6 million in the fourth quarter of fiscal year 2016, up from $52.1 million in the fourth quarter of fiscal year 2015. On a constant currency basis, consumer revenues increased by 5% from $52.1 million to $54.6 million year over year.

Expense Reduction & Restructuring Charges

During the third quarter of fiscal year 2016 we initiated a restructuring plan to better align our expenses with our revenue and gross margin profile and position us for improved operating performance. Under that plan, we reduced costs through voluntary and involuntary elimination of certain positions throughout the organization in the U.S., Mexico, China and Europe. The restructuring actions resulted in pre-tax charges of approximately $7.7 million in fourth quarter of fiscal year 2016. Additional cost savings actions were taken subsequent to that announcement and are expected to further improve Non-GAAP operating margins in fiscal year 2017.

Plantronics Announces Quarterly Dividend of $0.15

We are also announcing that we have declared a quarterly dividend of $0.15 per common share, to be paid on June 10, 2016 to all shareholders of record as of the close of business on May 20, 2016.

Business Outlook

The following statements are based on our current expectations and many of these statements are forward-looking. Actual results are subject to a variety of risks and uncertainties and may differ materially from our expectations.

We have a "book and ship" business model whereby we fulfill the majority of orders received within 48 hours of receipt of those orders. However, our backlog is occasionally subject to cancellation or rescheduling by our customers on short notice with little or no penalty. Therefore, there is a lack of meaningful correlation between backlog at the end of a fiscal period and net revenues in a succeeding fiscal period.

Our business is inherently difficult to forecast, particularly with continuing uncertainty in regional economic conditions and currency fluctuations, and there can be no assurance that expectations of incoming orders over the balance of the current quarter will materialize.

Subject to the foregoing, we currently expect the following range of financial results for the first quarter of fiscal year 2017 (all amounts assuming currency rates remain stable):

  • Net revenues of $207 million to $217 million;
  • GAAP operating income of $27 million to $32 million;
  • Non-GAAP operating income of $35 million to $40 million, excluding the impact of $8 million from stock-based compensation and purchase accounting amortization;
  • Assuming approximately 33 million diluted average weighted shares outstanding:
    • GAAP diluted EPS of $0.45 to $0.55;
    • Non-GAAP diluted EPS of $0.63 to $0.73; and
  • Cost of stock-based compensation and purchase accounting amortization to be approximately $0.18 per diluted share.

Please see our updated Investor Relations Presentation available on our corporate website at www.plantronics.com/ir.

Conference Call and Prepared Remarks

Plantronics is providing a copy of prepared remarks in combination with its press release. These remarks are offered to provide shareholders and analysts with additional time and detail for analyzing results in advance of the company's quarterly conference call. The remarks will be available in the Investor Relations section of the Plantronics website in conjunction with the press release.

We have scheduled a conference call to discuss fourth quarter fiscal year 2016 financial results. The conference call will take place today, May 3rd at 2:00 PM (Pacific Time). All interested investors and potential investors in our stock are invited to participate. To listen to the call, please dial in five to ten minutes prior to the scheduled starting time and refer to the "Plantronics Conference Call." The dial-in from North America is (888) 301-8736 and the international dial-in is (706) 634-7260.

A replay of the call with the conference ID #68437284 will be available until June 3, 2016 at (855) 859-2056 or (800) 585-8367 for callers from North America and at (404) 537-3406 for all other callers. The conference call will also be simultaneously webcast in the Investor Relations section of our corporate website at www.plantronics.com/ir, and the webcast of the conference call will remain available on our website for one month. A reconciliation between our GAAP and non-GAAP results is provided in the tables at the end of this press release.

Upcoming Webcast Presentations

Plantronics will be webcasting presentations from the Jefferies Technology Conference on May 11, 2016 and the J.P. Morgan TMT Conference on May 24, 2016. For more information, please see the Investor Relations section of our corporate website at www.plantronics.com/ir.

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP measures of operating results, including non-GAAP operating income, non-GAAP net income and non-GAAP diluted EPS which exclude certain non-cash expenses and charges that are included in the most directly comparable GAAP measure. These non-cash charges and expenses include stock-based compensation related to stock options, restricted stock and employee stock purchases made under our employee stock purchase plan, purchase accounting amortization, accelerated depreciation, and early lease termination charges, all net of the associated tax impact, tax benefits from the release of tax reserves, transfer pricing, tax deduction and tax credit adjustments, and the impact of tax law changes. We exclude these expenses from our non-GAAP measures primarily because Plantronics' management does not believe they are part of our target operating model. We believe that the use of non-GAAP financial measures provides meaningful supplemental information regarding our performance and liquidity and helps investors compare actual results with our long-term target operating model goals. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods; however, non-GAAP financial measures are not meant to be considered in isolation or as a substitute for, or superior to, gross margin, operating income, operating margin, net income or EPS prepared in accordance with GAAP.

As a company with significant global operations and sales, fluctuations in foreign currency exchange rates may have a material effect on our reported results. Consequently, we also present supplemental metrics as identified in the reconciliation within this release "on a constant currency basis" which excludes the impact of currency exchange rate fluctuations. The constant currency presentation, which is a non-GAAP measure, is intended to supplement our reported operating results and, when considered in conjunction with the corresponding GAAP measures, facilitate a better understanding of changes in the metrics from period to period and the core operations of the Company. We calculate constant currency percentages by removing any hedge gains or losses from the particular metric in the current period and then converting our current period local currency financial results using the foreign currency exchange rates in effect during the prior year period and comparing these adjusted amounts to the corresponding current period metric.

Safe Harbor

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to (i) UC as a continued growth driver and our anticipation of incremental growth opportunities from as-a-service and Soundscaping revenues in the coming years; (ii) our outlook for growth improving over the next several years; (iii) our expectation that our recent restructuring and cost savings will position us for improved operating performance and enhance our ability to grow Non-GAAP operating margins in fiscal 2017; (iv) our ability to achieve mid to high single digit percentage revenue growth annually if there is a stable market environment and no significant fluctuations in currency exchange rates; (v) our ability to return to our long-term profitability target of Non-GAAP operating margins of 20% to 23%; (vi) our expectation that in fiscal 2017, we will meet or exceed the Non-GAAP operating margins we recorded in fiscal year 2016; (vii) estimates of GAAP and non-GAAP financial results for the first quarter of fiscal year 2017, including net revenues, operating income and diluted EPS; (viii) our estimates of stock-based compensation and purchase accounting amortization and other related charges, as well as the impact of these non-cash expenses on Non-GAAP operating income and diluted EPS for the first quarter of fiscal year 2017; and (ix) our estimate of weighted average shares outstanding for the first quarter of fiscal year 2017, in addition to other matters discussed in this press release that are not purely historical data. We do not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated by such statements. Among the factors that could cause actual results to differ materially from those contemplated are:

  • Micro and macro-economic conditions in our domestic and international markets;
  • our ability to realize and achieve positive financial results projected to arise from UC adoption could be adversely affected by a variety of factors including the following: (i) as UC becomes more widely adopted, the risk that competitors will offer solutions that will effectively commoditize our headsets which, in turn, will reduce the sales prices for our headsets; (ii) our plans are dependent upon adoption of our UC solution by major platform providers and strategic partners such as Microsoft Corporation, Cisco Systems, Inc., Avaya, Inc., and Alcatel-Lucent, and our influence over such providers with respect to the functionality of their platforms or their product offerings, their rate of deployment, and their willingness to integrate their platforms and product offerings with our solutions is limited; (iii) delays or limitations on our ability to timely introduce solutions that are cost effective, feature-rich, stable, and attractive to our customers within forecasted development budgets; (iv) our successful implementation and execution of new and different processes involving the design, development, and manufacturing of complex electronic systems composed of hardware, firmware, and software that works seamlessly and continuously in a wide variety of environments and with multiple devices; (v) our sales model and expertise must successfully evolve to support complex integration of hardware and software with UC infrastructure consistent with changing customer purchasing expectations; (vi) as UC becomes more widely adopted we anticipate that competition for market share will increase, particularly given that some competitors may have superior technical and economic resources; (vii) UC solutions generally, or our solutions in particular, may not be adopted with the breadth and speed in the marketplace that we currently anticipate; (viii) sales cycles for more complex UC deployments are longer as compared to our traditional Enterprise products; (ix) UC may evolve rapidly and unpredictably and our inability to timely and cost-effectively adapt to those changes and future requirements may impact our profitability in this market and our overall margins; and (x) our failure to expand our technical support capabilities to support the complex and proprietary platforms in which our UC products are and will be integrated;
  • failure to match production to demand given long lead times and the difficulty of forecasting unit volumes and acquiring the component parts and materials to meet demand without having excess inventory or incurring cancellation charges;
  • volatility in prices from our suppliers, including our manufacturers located in China, have in the past and could in the future negatively affect our profitability and/or market share;
  • fluctuations in foreign exchange rates;
  • with respect to our stock repurchase program, prevailing stock market conditions generally, and the price of our stock specifically;
  • the bankruptcy or financial weakness of distributors or key customers, or the bankruptcy of or reduction in capacity of our key suppliers;
  • additional risk factors including: interruption in the supply of sole-sourced critical components, continuity of component supply at costs consistent with our plans, and the inherent risks of our substantial foreign operations; and
  • seasonality in one or more of our product categories.

For more information concerning these and other possible risks, please refer to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 15, 2015 and other filings with the Securities and Exchange Commission, as well as recent press releases. The Securities and Exchange Commission 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 Unaudited Condensed Consolidated Financial Statements
  • Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
  • Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and Other Unaudited GAAP Data

About Plantronics

Plantronics is a global leader in audio communications for businesses and consumers. We have pioneered new trends in audio technology for over 50 years, creating innovative products that allow people to simply communicate. From Unified Communication solutions to Bluetooth headsets, we deliver uncompromising quality, an ideal experience, and extraordinary service. Plantronics is used by every company in the Fortune 100, as well as 911 dispatch, air traffic control and the New York Stock Exchange. For more information, please visit www.plantronics.com or call (800) 544-4660.

Plantronics is a registered trademark of Plantronics, Inc. The Bluetooth name and the Bluetooth trademarks are owned by Bluetooth SIG, Inc. and are used by Plantronics, Inc. under license. All other trademarks are the property of their respective owners.

PLANTRONICS, INC. / 345 Encinal Street / P.O. Box 1802 / Santa Cruz, California 95061-1802
831-426-6060 / Fax 831-426-6098

   
   
PLANTRONICS, INC.  
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  
($ in thousands, except per share data)  
   
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS  
   
      Three Months Ended       Twelve Months Ended  
      March 31,       March 31,  
      2015       2016       2015       2016  
Net revenues   $ 200,762     $ 209,797     $ 865,010     $ 856,907  
Cost of revenues     91,596       102,967       403,391       422,233  
Gross profit     109,166       106,830       461,619       434,674  
  Gross profit %     54.4 %     50.9 %     53.4 %     50.7 %
                                 
Research, development and engineering     22,347       23,794       91,627       90,408  
Selling, general and administrative     54,813       57,610       229,569       221,299  
Gain from litigation settlements     (846 )     (236 )     (8,662 )     (1,234 )
Restructuring and other related charges     -       7,727       -       16,160  
  Total operating expenses     76,314       88,895       312,534       326,633  
    Operating income     32,852       17,935       149,085       108,041  
    Operating income %     16.4 %     8.5 %     17.2 %     12.6 %
                                 
Interest expense     (32 )     (7,871 )     (241 )     (25,149 )
Other non-operating income and (expense), net     (2,119 )     1,309       (3,593 )     (716 )
Income before income taxes     30,701       11,373       145,251       82,176  
Income tax expense     4,877       (1,607 )     32,950       13,784  
    Net income   $ 25,824     $ 12,980     $ 112,301     $ 68,392  
                                 
    % of net revenues     12.9 %     6.2 %     13.0 %     8.0 %
                                 
Earnings per common share:                                
  Basic   $ 0.62     $ 0.40     $ 2.69     $ 2.00  
  Diluted   $ 0.61     $ 0.39     $ 2.63     $ 1.96  
                                 
Shares used in computing earnings per common share:                                
  Basic     41,606       32,466       41,723       34,127  
  Diluted     42,482       33,038       42,643       34,938  
                                 
Effective tax rate     15.9 %     (14.1 )%     22.7 %     16.8 %
                                 
                                 
                                 
 
PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
 
UNAUDITED CONSOLIDATED BALANCE SHEETS
      March 31,     March 31,
      2015     2016
ASSETS            
  Cash and cash equivalents   $ 276,850   $ 235,266
  Short-term investments     97,859     160,051
    Total cash, cash equivalents and short-term investments     374,709     395,317
  Accounts receivable, net     136,581     128,219
  Inventory, net     56,676     53,162
  Deferred tax assets     6,564     -
  Other current assets     28,124     20,297
      Total current assets     602,654     596,995
  Long-term investments     107,590     145,623
  Property, plant and equipment, net     139,413     149,735
  Goodwill and purchased intangibles, net     16,077     15,827
  Other assets     10,308     25,257
      Total assets   $ 876,042   $ 933,437
LIABILITIES AND STOCKHOLDERS' EQUITY            
  Accounts payable   $ 32,781   $ 39,133
  Accrued liabilities     62,041     70,034
      Total current liabilities     94,822     109,167
  Long-term debt, net of issuance costs     -     489,609
  Long-term income taxes payable     12,984     11,968
  Revolving line of credit     34,500     -
  Other long-term liabilities     6,339     10,294
      Total liabilities     148,645     621,038
  Stockholders' equity     727,397     312,399
      Total liabilities and stockholders' equity   $ 876,042   $ 933,437
             
             
   
   
PLANTRONICS, INC.  
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  
($ in thousands, except per share data)  
   
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS  
   
      Three Months Ended       Twelve Months Ended  
      March 31,       March 31,   
      2015       2016       2015       2016  
Cash flows from operating activities                                
  Net Income   $ 25,824     $ 12,980     $ 112,301     $ 68,392  
  Adjustments to reconcile net income to net cash provided by operating activities:                                
    Depreciation and amortization     4,736       5,304       18,711       20,142  
    Amortization of debt issuance cost     -       363       -       1,208  
    Stock-based compensation     7,472       8,666       28,594       33,265  
    Excess tax benefit from stock-based compensation     (532 )     (240 )     (3,520 )     (3,540 )
    Deferred income taxes     (2,634 )     (10,476 )     (980 )     (8,291 )
    Provision for excess and obsolete inventories     (61 )     1,111       931       2,430  
    Restructuring charges     -       7,727       -       16,160  
    Cash payments for restructuring charges     -       (10,385 )     -       (10,385 )
    Other operating activities     (1,672 )     1,784       (1,188 )     7,680  
  Changes in assets and liabilities:                                
    Accounts receivable, net     22,751       7,166       4,272       8,445  
    Inventory, net     1,048       1,709       128       1,357  
    Current and other assets     (688 )     (341 )     (5,368 )     (605 )
    Accounts payable     (2,457 )     (337 )     (62 )     5,407  
    Accrued liabilities     (2,964 )     8,839       500       4,998  
    Income taxes     3,239       8,976       119       206  
      Cash provided by operating activities     54,062       42,846       154,438       146,869  
                                 
Cash flows from investing activities                                
  Proceeds from sale of investments     23,565       45,627       96,129       102,517  
  Proceeds from maturities of investments     18,255       45,269       120,430       97,164  
  Purchase of investments     (43,256 )     (94,510 )     (216,013 )     (300,620 )
  Acquisitions, net of cash acquired     -       -       (150 )     -  
  Capital expenditures     (2,748 )     (9,684 )     (21,962 )     (30,661 )
    Cash used for investing activities     (4,184 )     (13,298 )     (21,566 )     (131,600 )
                                 
Cash flows from financing activities                                
  Repurchase of common stock     (85,496 )     (14,617 )     (112,939 )     (497,393 )
  Employees' tax withheld and paid for restricted stock and restricted                                
  stock units     (305 )     (264 )     (7,611 )     (11,068 )
  Proceeds from issuances under stock-based compensation plans     5,221       5,530       23,042       15,384  
  Proceeds from revolving line of credit     34,500       -       34,500       155,749  
  Repayments of revolving line of credit     -       -       -       (190,249 )
  Proceeds from bonds issuance, net     -       -       -       488,401  
  Payment of cash dividends     (6,434 )     (5,027 )     (25,730 )     (21,061 )
  Excess tax benefit from stock-based compensation     532       240       3,520       3,540  
    Cash used for financing activities     (51,982 )     (14,138 )     (85,218 )     (56,697 )
Effect of exchange rate changes on cash and cash equivalents     (1,396 )     765       (3,508 )     (156 )
    Net increase (decrease) in cash and cash equivalents     (3,500 )     16,175       44,146       (41,584 )
Cash and cash equivalents at beginning of period     280,350       219,091       232,704       276,850  
Cash and cash equivalents at end of period   $ 276,850     $ 235,266     $ 276,850     $ 235,266  
                                 
                                 
   
   
PLANTRONICS, INC.  
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES  
($ in thousands, except per share data)  
   
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA  
   
      Three Months Ended       Twelve Months Ended  
      March 31,       March 31,  
      2015       2016       2015       2016  
GAAP Gross profit   $ 109,166     $ 106,830     $ 461,619     $ 434,674  
  Stock-based compensation     695       837       2,583       3,306  
Non-GAAP Gross profit   $ 109,861     $ 107,667     $ 464,202     $ 437,980  
Non-GAAP Gross profit %     54.7 %     51.3 %     53.7 %     51.1 %
                                 
GAAP Research, development and engineering   $ 22,347     $ 23,794     $ 91,627     $ 90,408  
  Stock-based compensation     (2,119 )     (2,644 )     (8,053 )     (9,908 )
  Purchase accounting amortization     (63 )     (63 )     (238 )     (250 )
Non-GAAP Research, development and engineering   $ 20,165     $ 21,087     $ 83,336     $ 80,250  
                                 
GAAP Selling, general and administrative   $ 54,813     $ 57,610     $ 229,569     $ 221,299  
  Stock-based compensation     (4,655 )     (5,185 )     (17,955 )     (20,051 )
Non-GAAP Selling, general and administrative   $ 50,158     $ 52,425     $ 211,614     $ 201,248  
                                 
GAAP Operating expenses   $ 76,314     $ 88,895     $ 312,534     $ 326,633  
  Stock-based compensation     (6,774 )     (7,829 )     (26,008 )     (29,959 )
  Purchase accounting amortization     (63 )     (63 )     (238 )     (250 )
  Restructuring and other related charges     -       (7,727 )     -       (16,160 )
Non-GAAP Operating expenses   $ 69,477     $ 73,276     $ 286,288     $ 280,264  
                                 
                                 
 
 
PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands, except per share data)
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)
 
    Three Months Ended   Twelve Months Ended    
    March 31,   March 31,    
    2015       2016     2015       2016    
GAAP Operating income   $ 32,852       $ 17,935     $ 149,085       $ 108,041    
  Stock-based compensation     7,469         8,666       28,591         33,265    
  Purchase accounting amortization     63         63       238         250    
  Restructuring and other related charges     -         7,727       -         16,160    
Non-GAAP Operating income   $ 40,384       $ 34,391     $ 177,914       $ 157,716    
                                       
GAAP Net income   $ 25,824       $ 12,980     $ 112,301       $ 68,392    
  Stock-based compensation     7,469         8,666       28,591         33,265    
  Purchase accounting amortization     63         63       238         250    
  Restructuring and other related charges     -         7,727       -         16,160    
  Income tax effect of above items     (2,252 )       (6,004)       (8,506 )       (14,547 )  
  Income tax effect of unusual tax items     (489 ) (1)     (2,386) (2)     (2,864 ) (3)     (4,976 ) (2)
Non-GAAP Net income   $ 30,615       $ 21,046     $ 129,760       $ 98,544    
                                       
GAAP Diluted earnings per common share   $ 0.61       $ 0.39     $ 2.63       $ 1.96    
  Stock-based compensation     0.17         0.26       0.67         0.95    
  Restructuring and other related charges     -         0.23       -         0.46    
  Income tax effect     (0.06 )       (0.24)       (0.26 )       (0.55 )  
Non-GAAP Diluted earnings per common share   $ 0.72       $ 0.64     $ 3.04       $ 2.82    
                                       
Shares used in diluted earnings per common share                                      
calculation     42,482         33,038       42,643         34,938    
                                       
(1)   Excluded amount represents tax benefits from the release of tax reserves and tax credit adjustments.
(2)   Excluded amount represents tax benefits from the release of tax reserves and the impact of tax law changes.
(3)   Excluded amount represents tax benefits from release of tax reserves, transfer pricing, tax deduction and tax credit adjustments, and the impact of tax law changes.
     

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP measures of operating results, including non- GAAP operating income, non-GAAP net income and non-GAAP diluted EPS which exclude certain non-cash expenses and charges that are included in the most directly comparable GAAP measure. These non-cash charges and expenses include stock-based compensation related to stock options, restricted stock and employee stock purchases made under our employee stock purchase plan, purchase accounting amortization, accelerated depreciation, and early lease termination charges, all net of the associated tax impact, tax benefits from the release of tax reserves, transfer pricing, tax deduction and tax credit adjustments, and the impact of tax law changes. We exclude these expenses from our non-GAAP measures primarily because Plantronics' management does not believe they are part of our target operating model. We believe that the use of non-GAAP financial measures provides meaningful supplemental information regarding our performance and liquidity and helps investors compare actual results with our long-term target operating model goals. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods; however, non-GAAP financial measures are not meant to be considered in isolation or as a substitute for, or superior to, gross margin, operating income, operating margin, net income or EPS prepared in accordance with GAAP.

As a company with significant global operations and sales, fluctuations in foreign currency exchange rates may have a material effect on our reported results. Consequently, we also present supplemental metrics as identified in the reconciliation within this release "on a constant currency basis" which excludes the impact of currency exchange rate fluctuations. The constant currency presentation, which is a non-GAAP measure, is intended to supplement our reported operating results and, when considered in conjunction with the corresponding GAAP measures, facilitate a better understanding of changes in the metrics from period to period and the core operations of the Company. We calculate constant currency percentages by removing any hedge gains or losses from the particular metric in the current period and then converting our current period local currency financial results using the foreign currency exchange rates in effect during the prior year period and comparing these adjusted amounts to the corresponding current period metric.

 
 
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and other Unaudited GAAP Data
($in thousands, except per share data)
   
    Q115     Q215     Q315     Q415     Q116     Q216     Q316     Q416  
GAAP Gross profit   $ 114,710     $ 117,827     $ 119,916     $ 109,166     $ 107,358     $ 110,970     $ 109,516     $ 106,830  
  Stock-based compensation     535       668       685       695       779       879       811       837  
Non-GAAP Gross profit   $ 115,245     $ 118,495     $ 120,601     $ 109,861     $ 108,137     $ 111,849     $ 110,327     $ 107,667  
Non-GAAP Gross profit %     53.2 %     54.9 %     52.0 %     54.7 %     52.4 %     52.0 %     48.9 %     51.3 %
                                                                 
GAAP Operating expenses   $ 76,949     $ 79,969     $ 79,302     $ 76,314     $ 77,996     $ 76,874     $ 82,868     $ 88,895  
  Stock-based compensation     (5,770 )     (6,719 )     (6,745 )     (6,774 )     (7,271 )     (7,953 )     (6,906 )     (7,829 )
  Purchase accounting amortization     (50 )     (61 )     (64 )     (63 )     (62 )     (63 )     (62 )     (63 )
  Restructuring and other related charges     -       -       -       -       -       -       (8,433 )     (7,727 )
Non-GAAP Operating expenses   $ 71,129     $ 73,189     $ 72,493     $ 69,477     $ 70,663     $ 68,858     $ 67,467     $ 73,276  
                                                                 
GAAP Operating income   $ 37,761     $ 37,858     $ 40,614     $ 32,852     $ 29,362     $ 34,096     $ 26,648     $ 17,935  
  Stock-based compensation     6,305       7,387       7,430       7,469       8,050       8,832       7,717       8,666  
  Purchase accounting amortization     50       61       64       63       62       63       62       63  
  Restructuring and other related charges     -       -       -       -       -       -       8,433       7,727  
Non-GAAP Operating income   $ 44,116     $ 45,306     $ 48,108     $ 40,384     $ 37,474     $ 42,991     $ 42,860     $ 34,391  
Non-GAAP Operating income %     20.4 %     21.0 %     20.8 %     20.1 %     18.2 %     20.0 %     19.0 %     16.4 %
                                                                 
GAAP Income before income taxes   $ 38,781     $ 37,173     $ 38,596     $ 30,701     $ 26,336     $ 24,638     $ 19,829     $ 11,373  
  Stock-based compensation     6,305       7,387       7,430       7,469       8,050       8,832       7,717       8,666  
  Purchase accounting amortization     50       61       64       63       62       63       62       63  
  Restructuring and other related charges     -       -       -       -       -       -       8,433       7,727  
Non-GAAP Income before income taxes   $ 45,136     $ 44,621     $ 46,090     $ 38,233     $ 34,448     $ 33,533     $ 36,041     $ 27,829  
                                                                 
GAAP Income tax expense   $ 10,109     $ 9,752     $ 8,212     $ 4,877     $ 5,108     $ 6,742     $ 3,541       (1,607 )
  Income tax effect of above items     1,800       2,250       2,204       2,252       2,338       2,656       3,549     $ 6,004  
  Income tax effect of unusual tax items     273       74       2,028       489       994       177       1,419       2,386  
Non-GAAP Income tax expense   $ 12,182     $ 12,076     $ 12,444     $ 7,618     $ 8,440     $ 9,575     $ 8,509     $ 6,783  
Non-GAAP Income tax expense as a % of Non-GAAP                                                                
Income before income taxes     27.0 %     27.1 %     27.0 %     19.9 %     24.5 %     28.6 %     23.6 %     24.4 %
                                                                 
 
 
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and other Unaudited GAAP Data (Continued)
($ in thousands, except per share data)
    Q115     Q215     Q315     Q415     Q116     Q216     Q316     Q416  
GAAP Net income   $ 28,672     $ 27,421     $ 30,384     $ 25,824     $ 21,228     $ 17,896     $ 16,288     $ 12,980  
  Stock-based compensation     6,305       7,387       7,430       7,469       8,050       8,832       7,717       8,666  
  Purchase accounting amortization     50       61       64       63       62       63       62       63  
  Restructuring and other related charges     -       -       -       -       -       -       8,433       7,727  
  Income tax effect of above items     (1,800 )     (2,250 )     (2,204 )     (2,252 )     (2,338 )     (2,656 )     (3,549 )     (6,004 )
  Income tax effect of unusual tax items     (273 )     (74 )     (2,028 )     (489 )     (994 )     (177 )     (1,419 )     (2,386 )
Non-GAAP Net income   $ 32,954     $ 32,545     $ 33,646     $ 30,615     $ 26,008     $ 23,958     $ 27,532     $ 21,046  
                                                                 
GAAP Diluted earnings per common share   $ 0.68     $ 0.65     $ 0.71     $ 0.61     $ 0.55     $ 0.52     $ 0.49     $ 0.39  
  Stock-based compensation     0.15       0.17       0.18       0.17       0.21       0.26       0.24       0.26  
  Restructuring and other related charges     -       -       -       -       -       -       0.25       0.23  
  Income tax effect     (0.05 )     (0.05 )     (0.10 )     (0.06 )     (0.09 )     (0.08 )     (0.15 )     (0.24 )
Non-GAAP Diluted earnings per common share   $ 0.78     $ 0.77     $ 0.79     $ 0.72     $ 0.67     $ 0.7     $ 0.83     $ 0.64  
                                                                 
Shares used in diluted earnings per common share calculation     42,466       42,505       42,700       42,482       38,943       34,245       33,259       33,038  
                                                                 
                                                                 
SUMMARY OF UNAUDITED GAAP DATA                                                
($ in thousands)                                                
Net revenues from unaffiliated customers:                                                                
  Enterprise   $ 152,354     $ 156,680     $ 161,591     $ 148,660     $ 151,757     $ 160,468     $ 158,251     $ 156,190  
  Consumer     64,308       59,125       70,190       52,102       54,601       54,549       67,484       53,607  
    Total net revenues   $ 216,662     $ 215,805     $ 231,781     $ 200,762     $ 206,358     $ 215,017     $ 225,735     $ 209,797  
                                                                 
Net revenues by geographic area from unaffiliated customers:                                                                
  Domestic   $ 124,467     $ 123,697     $ 123,092     $ 116,351     $ 117,578     $ 123,803     $ 122,075     $ 119,166  
  International     92,195       92,108       108,689       84,411       88,780       91,214       103,660       90,631  
    Total net revenues   $ 216,662     $ 215,805     $ 231,781     $ 200,762     $ 206,358     $ 215,017     $ 225,735     $ 209,797  
                                                                 
                                                                 
Balance Sheet accounts and metrics:                                                                
Accounts receivable, net   $ 150,765     $ 140,427     $ 157,322     $ 136,581     $ 127,160     $ 139,939     $ 136,402     $ 128,219  
Days sales outstanding (DSO)     63       59       61       61       55       59       54       59  
Inventory, net   $ 60,968     $ 63,551     $ 57,724     $ 56,676     $ 55,918     $ 57,760     $ 55,650     $ 53,162  
Inventory turns     6.7       6.2       7.8       6.5       7.1       7.2       8.3       7.7  
   
   
   
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures  
($ in millions, except per share data)  
                         
Net Revenues   Q4'15 ($)     Q4'16 ($)     Change ($)     Change (%)  
  Net Revenues as reported (GAAP)   $ 200.8     $ 209.8     $ 9.0     5 %
    Less Hedge Gains             (0.3 )              
    Impact of Year over Year Foreign Currency Exchange Rate Movements             4.2                
  Constant Currency Revenues (Non-GAAP)           $ 213.7     $ 12.9     6 %
                               
                               
Enterprise Net Revenues   Q4'15 ($)     Q4'16 ($)     Change ($)     Change (%)  
  Net Revenues as reported (GAAP)   $ 148.7     $ 156.2     $ 7.5     5 %
    Less Hedge Gains             (0.2 )              
    Impact of Year over Year Foreign Currency Exchange Rate Movements             3.1                
  Constant Currency Revenues (Non-GAAP)           $ 159.1     $ 10.4     7 %
                               
                               
Consumer Net Revenues   Q4'15 ($)     Q4'16 ($)     Change ($)     Change (%)  
  Net Revenues as reported (GAAP)   $ 52.1     $ 53.6     $ 1.5     3 %
    Less Hedge Gains             (0.1 )              
    Impact of Year over Year Foreign Currency Exchange Rate Movements             1.1                
  Constant Currency Revenues (Non-GAAP)           $ 54.6     $ 2.5     5 %
                               
                               
Operating Income   Q4'15 ($)     Q4'15 (%)     Q4'16 ($)     Q4'16 (%)  
  Operating Income as reported (GAAP)   $ 32.9       16.4 %   $ 17.9     8.5 %
    Stock-based compensation & purchase accounting amortization     7.5               8.8        
    Restructuring and other related charges     -               7.7        
  Non-GAAP Operating Income   $ 40.4       20.1 %   $ 34.4     16.4 %
    Less Hedge Gains, net                     1.3        
    Impact of Year over Year Foreign Currency Exchange Rate Movements                     0.9        
  Constant Currency Operating Income (Non-GAAP)                   $ 36.6     17.1 %
                               
                               
Diluted Earnings per Common Share ("EPS")   Q4'15 ($)     Q4'16 ($)     Change ($)     Change (%)  
  Diluted EPS (GAAP)   $ 0.61     $ 0.39     $ (0.22 )   (36 ) %
    Stock-based compensation     0.17       0.26                
    Restructuring and other related charges     -       0.23                
    Income Tax Effect     (0.06 )     (0.24 )              
  Non-GAAP Diluted EPS   $ 0.72     $ 0.64     $ (0.08 )   (11 ) %
    Less Hedge Losses, net of tax             0.07                
    Impact of Year over Year Foreign Currency Exchange Rate Movements, net of tax             (0.04 )              
  Constant Currency Diluted EPS (Non-GAAP)           $ 0.67     $ (0.05 )   (7 ) %
                               
                               

Contact Information

  • MEDIA CONTACT:
    George Gutierrez
    Sr. Director, Global Communications & Content Strategy
    (831) 458-7537

    INVESTOR CONTACT:
    Greg Klaben
    Vice President of Investor Relations
    (831) 458-7533