SOURCE: Plantronics, Inc.

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November 05, 2015 16:00 ET

Plantronics Announces Second Quarter Fiscal Year 2016 Financial Results

Revenues & EPS Exceed Guidance

SANTA CRUZ, CA--(Marketwired - November 05, 2015) - Plantronics, Inc. (NYSE: PLT) today announced second quarter fiscal year 2016 financial results. Highlights of the second quarter include the following (comparisons are against the second quarter of fiscal year 2015):

  • Net revenues were $215.0 million compared with $215.8 million, and above our guidance of $202 million to $212 million
  • GAAP gross margin was 51.6% compared with 54.6%
    ◦ Non-GAAP gross margin was 52.0% compared with 54.9%
  • GAAP operating income was $34.1 million compared with $37.9 million
    ◦ Non-GAAP operating income was $43.0 million compared with $45.3 million
  • GAAP diluted earnings per share ("EPS") was $0.52 compared with $0.65, and above our guidance of $0.39 to $0.47
    ◦ Non-GAAP diluted EPS was $0.70 compared with $0.77, and above our guidance of $0.58 to $0.66

Q2 Fiscal Year 2016 GAAP Results

  Q2 2015 Q2 2016  Change (%)
Net revenues $ 215.8   million $ 215.0   million  (0.4 )%
Operating income $ 37.9   million $ 34.1   million  (10.0 )%
 Operating margin  17.6 %    15.9 %     
Diluted EPS $ 0.65     $ 0.52      (20.0 )%
            

Q2 Fiscal Year 2016 Non-GAAP Results

  Q2 2015  Q2 2016  Change (%)
Operating income $ 45.3   million  $ 43.0   million  (5.1 )%
 Operating margin  21.0 %     20.0 %     
Diluted EPS $ 0.77      $ 0.70      (9.1 )%
             

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

"Our stronger than expected second quarter results were driven by improved sales in Enterprise revenues offset by a decline in Consumer revenues and a continued significant currency headwind affecting both product groups," stated Ken Kannappan, President & CEO. "We achieved healthy operating margins while maintaining a significant investment in long-term strategic opportunities. Our new product introductions in major product categories have received a good response from customers and partners."

"In addition to currency headwinds, we recorded an unusually large revenue adjustment of $3.6 million related to our customer discount reserve as a result of increased visibility into the length of time our channel partners take to utilize approved discounts," stated Pam Strayer, Senior Vice President and Chief Financial Officer. "After adjusting for currency as well as this reserve, revenues grew by 5% year over year. Our Adjusted Non-GAAP operating margins for the quarter were 22% and Adjusted Non-GAAP earnings per share grew by 16%. We repurchased $189 million of our common stock in the quarter, using the remainder of the proceeds of our senior notes offering from the June quarter. We ended the quarter with cash, cash equivalents and investments of $506 million. The above Adjusted Non-GAAP metrics are calculated on a constant currency basis and exclude the effect of the reserve adjustment."

Enterprise net revenues were up slightly to $160.5 million in the second quarter of fiscal year 2016 compared with $156.7 million in the second quarter of fiscal year 2015.

Consumer net revenues were $54.5 million in the second quarter of fiscal year 2016, down from $59.1 million in the second quarter of fiscal year 2015, due primarily to a decline in mono Bluetooth demand.

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 December 10, 2015 to all shareholders of record as of the close of business on November 20, 2015.

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 third quarter of fiscal year 2016:

  • Net revenues of $225 million to $235 million;
  • GAAP operating income of $31 million to $36 million;
  • Non-GAAP operating income of $40 million to $45 million, excluding the impact of $9 million from stock-based compensation and purchase accounting amortization from GAAP operating income;
  • Assuming approximately 34 million diluted average weighted shares outstanding:
    • GAAP diluted EPS of $0.52 to $0.62;
    • Non-GAAP diluted EPS of $0.71 to $0.81; and
  • Cost of stock-based compensation and purchase accounting amortization to be approximately $0.19 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 second quarter fiscal 2016 financial results. The conference call will take place today, November 5th, 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 # 53970357 will be available until December 5, 2015 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.

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, which are adjusted to exclude certain non-cash expenses and charges from non-GAAP operating income, non-GAAP operating margin and non-GAAP diluted EPS, including 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.

We are also presenting additional "Adjusted Non-GAAP" metrics. These metrics are calculated on a constant currency basis and exclude the impact of our Q2 FY16 customer discount reserve adjustment. We have reconciled these Adjusted Non-GAAP metrics within the tables at the end of this press release.

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) estimates of GAAP and non-GAAP financial results for the third quarter of fiscal year 2016, including net revenues, operating income and diluted EPS; (ii) 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 third quarter of fiscal year 2016; and (iii) our estimate of weighted average shares outstanding for the third quarter of fiscal year 2016, 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 and the logo design are trademarks or registered trademarks of Plantronics, Inc. EncorePro, Voyager and Plantronics are trademarks of Plantronics, Inc. registered in the US and other countries, and Voyager Focus UC is 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.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
       
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS      
            
  Three Months Ended  Six Months Ended
  September 30,  September 30,
  2014  2015  2014  2015
Net revenues $215,805  $215,017  $432,467  $421,375
Cost of revenues  97,978   104,047   199,930   203,047
Gross profit  117,827   110,970   232,537   218,328
  Gross profit %  54.6 %   51.6 %   53.8 %   51.8 %
                
Research, development and engineering  23,769   22,609   46,289   45,803
Selling, general and administrative  60,350   54,296   116,779   109,974
Gain from litigation settlements  (4,150)   (31)   (6,150)   (907)
Total operating expenses  79,969   76,874   156,918   154,870
  Operating income  37,858   34,096   75,619   63,458
  Operating income %  17.5 %   15.9 %   17.5 %   15.1 %
                
Interest expense  (142)   (7,320)   (150)   (10,061)
Other non-operating income and (expense), net  (543)   (2,138)   485   (2,423)
Income before income taxes  37,173   24,638   75,954   50,974
Income tax expense  9,752   6,742   19,861   11,850
  Net income $27,421  $17,896  $56,093  $39,124
  % of net revenues  12.7 %   8.3 %   13.0 %   9.3 %
                
Earnings per common share:               
 Basic $0.66  $0.53  $1.35  $1.09
 Diluted $0.65  $0.52  $1.32  $1.07
                
Shares used in computing earnings per common share:               
 Basic  41,765   33,590   41,692   35,796
 Diluted  42,505   34,245   42,560   36,676
                
Effective tax rate  26.2 %   27.4 %   26.1 %   23.2 %
            
      
PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
 
UNAUDITED CONSOLIDATED BALANCE SHEETS
  March 31,  September 30,
  2015  2015
ASSETS     
 Cash and cash equivalents $276,850  $304,836
 Short-term investments  97,859   119,607
  Total cash, cash equivalents and short-term investments  374,709   424,443
 Accounts receivable, net  136,581   139,939
 Inventory, net  56,676   57,760
 Deferred tax assets  6,564   6,518
 Other current assets  28,124   30,464
  Total current assets  602,654   659,124
 Long-term investments  107,590   81,132
 Property, plant and equipment, net  139,413   143,188
 Goodwill and purchased intangibles, net  16,077   15,952
 Other assets  10,308   7,791
  Total assets $876,042  $907,187
LIABILITIES AND STOCKHOLDERS' EQUITY       
 Accounts payable $32,781  $43,172
 Accrued liabilities  62,041   60,764
  Total current liabilities  94,822   103,936
 Long-term debt, net of issuance costs  -   488,884
 Long-term income taxes payable  12,984   12,574
 Revolving line of credit  34,500   -
 Other long-term liabilities  6,339   8,831
  Total liabilities  148,645   614,225
 Stockholders' equity  727,397   292,962
  Total liabilities and stockholders' equity $876,042  $907,187
      
      
                 
PLANTRONICS, INC.  
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  
($ in thousands, except per share data)  
           
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS          
                 
  Three Months Ended   Six Months Ended  
  September 30,   September 30,  
  2014   2015   2014   2015  
Cash flows from operating activities                
 Net Income $27,421   $17,896   $56,093   $39,124  
 Adjustments to reconcile net income to net cash provided by operating activities:                    
  Depreciation and amortization  4,464    4,833    9,088    9,819  
  Amortization of debt issuance cost  -    362    -    483  
  Stock-based compensation  7,387    8,832    13,692    16,882  
  Excess tax benefit from stock-based compensation  (692 )  (759 )  (1,684 )  (3,150 )
  Deferred income taxes  (946 )  (1,339 )  1,769    2,807  
  Provision for excess and obsolete inventories  186    682    565    1,084  
  Other operating activities  (1,685 )  (1,500 )  (1,104 )  3,037  
 Changes in assets and liabilities:                    
  Accounts receivable, net  10,999    (11,404 )  (1,632 )  (2,825 )
  Inventory, net  (1,136 )  (2,524 )  (5,119 )  (2,166 )
  Current and other assets  (1,961 )  679    (2,931 )  (2,190 )
  Accounts payable  2,163    4,058    8,158    9,016  
  Accrued liabilities  (3,251 )  6,883    (7,771 )  671  
  Income taxes  (456 )  (3,725 )  2,907    (6,144 )
   Cash provided by operating activities  42,493    22,974    72,031    66,448  
                     
Cash flows from investing activities                    
 Proceeds from sale of investments  15,937    8,454    20,951    24,829  
 Proceeds from maturities of investments  30,375    14,980    81,275    40,405  
 Purchase of investments  (44,358 )  (17,757 )  (99,225 )  (61,591 )
 Acquisitions, net of cash acquired  (150 )  -    (150 )  -  
 Capital expenditures  (6,107 )  (9,126 )  (13,419 )  (13,092 )
  Cash used for investing activities  (4,303 )  (3,449 )  (10,568 )  (9,449 )
                     
Cash flows from financing activities                    
 Repurchase of common stock  (6,479 )  (188,776 )  (18,917 )  (473,220 )
 Employees' tax withheld and paid for restricted stock and restricted stock units  (448 )  (596 )  (6,235 )  (10,499 )
 Proceeds from issuances under stock-based compensation plans  8,592    5,994    11,424    9,071  
 Proceeds from revolving line of credit  -    -    -    155,749  
 Repayments of revolving line of credit  -    -    -    (190,249 )
 Proceeds from bonds issuance, net  -    (1,269 )  -    488,401  
 Payment of cash dividends  (6,447 )  (5,158 )  (12,836 )  (10,986 )
 Excess tax benefit from stock-based compensation  692    759    1,684    3,150  
 Cash used for financing activities  (4,090 )  (189,046 )  (24,880 )  (28,583 )
Effect of exchange rate changes on cash and cash equivalents  (1,121 )  (1,022 )  (1,058 )  (430 )
  Net increase (decrease) in cash and cash equivalents  32,979    (170,543 )  35,525    27,986  
Cash and cash equivalents at beginning of period  235,250    475,379    232,704    276,850  
Cash and cash equivalents at end of period $268,229   $304,836   $268,229   $304,836  
                
                
                  
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   Six Months Ended  
   September 30,   September 30,  
   2014   2015   2014   2015  
GAAP Gross profit  $117,827   $110,970   $232,537   $218,328  
 Stock-based compensation   668    879    1,203    1,658  
Non-GAAP Gross profit  $118,495   $111,849   $233,740   $219,986  
Non-GAAP Gross profit %   54.9 %  52.0 %  54.0 %  52.2 %
                      
GAAP Research, development and engineering  $23,769   $22,609   $46,289   $45,803  
 Stock-based compensation   (2,115 )  (2,619 )  (3,866 )  (4,978 )
 Purchase accounting amortization   (61 )  (63 )  (111 )  (125 )
Non-GAAP Research, development and engineering  $21,593   $19,927   $42,312   $40,700  
                      
GAAP Selling, general and administrative  $60,350   $54,296   $116,779   $109,974  
 Stock-based compensation   (4,604 )  (5,334 )  (8,623 )  (10,246 )
Non-GAAP Selling, general and administrative  $55,746   $48,962   $108,156   $99,728  
                      
GAAP Operating expenses  $79,969   $76,874   $156,918   $154,870  
 Stock-based compensation   (6,719 )  (7,953 )  (12,489 )  (15,224 )
 Purchase accounting amortization   (61 )  (63 )  (111 )  (125 )
Non-GAAP Operating expenses  $73,189   $68,858   $144,318   $139,521  
                 
                          
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     Six Months Ended     
  September 30,     September 30,     
  2014     2015     2014     2015     
GAAP Operating income $37,858     $34,096     $75,619     $63,458     
 Stock-based compensation  7,387      8,832      13,692      16,882     
 Purchase accounting amortization  61      63      111      125     
Non-GAAP Operating income $45,306     $42,991     $89,422     $80,465     
                              
GAAP Net income $27,421     $17,896     $56,093     $39,124     
 Stock-based compensation  7,387      8,832      13,692      16,882     
 Purchase accounting amortization  61      63      111      125     
 Income tax effect of above items  (2,250 )    (2,656 )    (4,050 )    (4,994 )   
 Income tax effect of unusual tax items  (74 )(1 ) (177 )(1 ) (347 )(1 ) (1,171 )(1 )
Non-GAAP Net income $32,545     $23,958     $65,499     $49,966     
                              
GAAP Diluted earnings per common share $0.65     $0.52     $1.32     $1.07     
 Stock-based compensation  0.17      0.26      0.32      0.46     
 Income tax effect  (0.05 )    (0.08 )    (0.10 )    (0.17 )   
Non-GAAP Diluted earnings per common share $0.77     $0.70     $1.54     $1.36     
                              
Shares used in diluted earnings per common share calculation  42,505      34,245      42,560      36,676     
                    
                              
                              
(1) Excluded amount represents tax benefits from the release of tax reserves.
   

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, which are adjusted to exclude certain non-cash expenses and charges from non-GAAP operating income, non-GAAP operating margin and non-GAAP diluted EPS, including 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. We are also presenting additional "Adjusted Non-GAAP" metrics. These metrics are calculated on a constant currency basis and exclude the impact of our Q2 FY16 customer discount reserve adjustment. We have reconciled these Adjusted Non-GAAP metrics within the tables at the end of this press release.

                          
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  
GAAP Gross profit  $114,710   $117,827   $119,916   $109,166   $107,358   $110,970  
 Stock-based compensation   535    668    685    695    779    879  
Non-GAAP Gross profit  $115,245   $118,495   $120,601   $109,861   $108,137   $111,849  
Non-GAAP Gross profit %   53.2 %  54.9 %  52.0 %  54.7 %  52.4 %  52.0 %
                                
GAAP Operating expenses  $76,949   $79,969   $79,302   $76,314   $77,996   $76,874  
 Stock-based compensation   (5,770 )  (6,719 )  (6,745 )  (6,774 )  (7,271 )  (7,953 )
 Purchase accounting amortization   (50 )  (61 )  (64 )  (63 )  (62 )  (63 )
Non-GAAP Operating expenses  $71,129   $73,189   $72,493   $69,477   $70,663   $68,858  
                                
GAAP Operating income  $37,761   $37,858   $40,614   $32,852   $29,362   $34,096  
 Stock-based compensation   6,305    7,387    7,430    7,469    8,050    8,832  
 Purchase accounting amortization   50    61    64    63    62    63  
Non-GAAP Operating income  $44,116   $45,306   $48,108   $40,384   $37,474   $42,991  
Non-GAAP Operating income %   20.4 %  21.0 %  20.8 %  20.1 %  18.2 %  20.0 %
                                
GAAP Income before income taxes  $38,781   $37,173   $38,596   $30,701   $26,336   $24,638  
 Stock-based compensation   6,305    7,387    7,430    7,469    8,050    8,832  
 Purchase accounting amortization   50    61    64    63    62    63  
Non-GAAP Income before income taxes  $45,136   $44,621   $46,090   $38,233   $34,448   $33,533  
                                
GAAP Income tax expense  $10,109   $9,752   $8,212   $4,877   $5,108   $6,742  
 Income tax effect of above items   1,800    2,250    2,204    2,252    2,338    2,656  
 Income tax effect of unusual tax items   273    74    2,028    489    994    177  
Non-GAAP Income tax expense  $12,182   $12,076   $12,444   $7,618   $8,440   $9,575  
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 %
                                
                                
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  
GAAP Net income  $28,672   $27,421   $30,384   $25,824   $21,228   $17,896  
 Stock-based compensation   6,305    7,387    7,430    7,469    8,050    8,832  
 Purchase accounting amortization   50    61    64    63    62    63  
 Income tax effect of above items   (1,800 )  (2,250 )  (2,204 )  (2,252 )  (2,338 )  (2,656 )
 Income tax effect of unusual tax items   (273 )  (74 )  (2,028 )  (489 )  (994 )  (177 )
Non-GAAP Net income  $32,954   $32,545   $33,646   $30,615   $26,008   $23,958  
                                
GAAP Diluted earnings per common share  $0.68   $0.65   $0.71   $0.61   $0.55   $0.52  
 Stock-based compensation   0.15    0.17    0.18    0.17    0.21    0.26  
 Income tax effect   (0.05 )  (0.05 )  (0.10 )  (0.06 )  (0.09 )  (0.08 )
Non-GAAP Diluted earnings per common share  $0.78   $0.77   $0.79   $0.72   $0.67   $0.70  
                                
Shares used in diluted earnings per common share calculation   42,466    42,505    42,700    42,482    38,943    34,245  
                                
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  
 Consumer   64,308    59,125    70,190    52,102    54,601    54,549  
  Total net revenues  $216,662   $215,805   $231,781   $200,762   $206,358   $215,017  
Net revenues by geographic area from unaffiliated customers:                               
 Domestic  $124,467   $123,697   $123,092   $116,351   $117,578   $123,803  
 International   92,195    92,108    108,689    84,411    88,780    91,214  
  Total net revenues  $216,662   $215,805   $231,781   $200,762   $206,358   $215,017  
                                
                                
Balance Sheet accounts and metrics:  
Accounts receivable, net  $150,765   $140,427   $157,322   $136,581   $127,160   $139,939  
Days sales outstanding (DSO)   63    59    61    61    55    59  
Inventory, net  $60,968   $63,551   $57,724   $56,676   $55,918   $57,760  
Inventory turns   6.7    6.2    7.8    6.5    7.1    7.2  
                         
                 
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures      
($ in millions, except per share data)                
                 
Net Revenues Q2'15 ($)   Q2'16 ($)   Change ($)   Change (%)  
Net Revenues as reported (GAAP) $215.8   $215.0   $(0.8 ) 0 %
 Less Hedge Gains  -    (2.2 )         
 Impact of Year over Year Foreign Currency Exchange Rate Movements  -    10.5           
Constant Currency Revenues (Non-GAAP)  -    223.3           
Impact of Customer Reserve Adjustment  -    3.6           
Adjusted Revenues (Non-GAAP) $215.8   $226.9   $11.1   5 %
                    
                    
Operating Income  Q2'15 ($)   Q2'15 (%)   Q2'16 ($)  Q2'16 (%)
Operating Income as reported (GAAP) $37.9    17.6 % $34.1   15.9 %
 Stock-based compensation & Purchase accounting amortization  7.4         8.9      
Non-GAAP Operating Income  45.3    21.0 %  43.0   20.0 %
 Less Hedge Gains, net  -         (1.0 )    
 Impact of Year over Year Foreign Currency Exchange Rate Movements  -         4.3      
Constant Currency Operating Income (Non-GAAP)  -         46.3   20.7 %
 Impact of Customer Reserve Adjustment  -         3.6      
Adjusted Operating Income (Non-GAAP) $45.3    21.0 % $49.9   22.0 %
                    
                    
Diluted Earnings per Common Share ("EPS")  Q2'15 ($)   Q2'16 ($)   Change ($)  Change (%) 
Diluted EPS (GAAP) $0.65   $0.52   $(0.13 ) -20 %
 Stock-based compensation  0.17    0.26           
 Income Tax Effect  (0.05 )  (0.08 )         
Non-GAAP Diluted EPS  0.77    0.70    (0.07 ) -9 %
 Less Hedge Gains, net of tax  -    (0.05 )         
 Impact of Year over Year Foreign Currency Exchange Rate Movements, net of tax  -    0.16           
Constant Currency Diluted EPS (Non-GAAP)  -    0.81           
 Impact of Customer Reserve Adjustment, net of tax  -    0.08           
Adjusted Diluted EPS (Non-GAAP) $0.77   $0.89   $0.12   16 %
               

Contact Information

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

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