SOURCE: Polycom

July 16, 2008 16:05 ET

Polycom Reports Second Quarter 2008 Earnings

Revenue Growth of 16 Percent Year-Over-Year to a Record $271.6 Million

PLEASANTON, CA--(Marketwire - July 16, 2008) - Polycom, Inc. (NASDAQ: PLCM), the global leader in telepresence, video and voice communications solutions, today reported its earnings for the second quarter ended June 30, 2008.

Second quarter 2008 consolidated net revenues were $271.6 million, compared to $233.9 million for the second quarter of 2007. Non-GAAP net income for the second quarter of 2008 was $30.7 million, or 35 cents per diluted share. This compares to Non-GAAP net income of $28.9 million, or 30 cents per diluted share, for the second quarter of 2007. GAAP net income for the second quarter of 2008 was $17.8 million, or 20 cents per diluted share, compared to $10.1 million, or 11 cents per diluted share, for the same period last year.

For the six months ended June 30, 2008, net revenues were $530.5 million, compared to $426.6 million for the first six months of 2007. Non-GAAP net income for the period was $63.4 million, or 71 cents per diluted share, compared to $57.5 million, or 60 cents per diluted share, for the first six months of 2007. GAAP net income for the six months ended June 30, 2008 was $32.0 million, or 36 cents per diluted share, compared to GAAP net income of $20.3 million, or 21 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 second quarter of 2008 were comprised of:

--  62 percent video solutions, or $169.2 million (52 percent video
    communications, or $141.2 million, and 10 percent network systems, or $28.0
    million); and
--  38 percent voice communications, or $102.4 million.
    

This compares to the second quarter of 2007, in which consolidated net revenues were comprised of:

--  62 percent video solutions, or $144.3 million (49 percent video
    communications, or $113.3 million, and 13 percent network systems, or $31.0
    million); and
--  38 percent voice communications, or $89.6 million.
    

"Sales of our video communications solutions accelerated in the second quarter," said Robert Hagerty, Polycom's chairman and CEO. "Soaring travel costs are becoming an increasingly important driver for the adoption of our unified collaboration solutions worldwide. In fact, due to the immersive experience of Polycom's high definition (HD) telepresence solutions, our customers can reduce travel while increasing productivity -- saving high out-of-pocket costs and eliminating the opportunity cost of being on the road. In addition to the substantial cost-savings benefits our customers can achieve, both commercial and public sector customers are utilizing Polycom's solutions to achieve carbon emission reductions and comply with environmental standards in key geographies throughout the world."

"As a result of Polycom's investments in global sales coverage and high-impact marketing, Polycom is becoming widely recognized for our innovations and market leadership. For example, Media and Entertainment giant Time Warner recently selected Polycom's RealPresence™ Experience (RPX™) immersive telepresence solution to facilitate increased communications between the CEOs of Time Warner, Turner Broadcasting, Warner Brothers, and AOL. Polycom's solution with its full screen, cinematic view and true-to-life people dimensions will help promote dynamic group interactions among all of Time Warner's executives while at the same time supporting Time Warner's commitment to social responsibility and goal to reduce its carbon footprint and conduct business in an environmentally sustainable manner. Another key example is Deloitte's recent selection of Nortel's Managed Global Telepresence Services, which is based on Polycom's RPX immersive telepresence and HDX 9000™ HD video solutions. Finally, in June, we received CIO Magazine's 2008 CIO 100 Award, recognizing Polycom as a company that exemplifies the highest level of operational and strategic excellence in information technology (IT). These are but a few examples of how fast-rising travel costs and green initiatives are driving the use of Polycom's leading solutions," Hagerty concluded.

"We generated 5 percent sequential revenue growth in Q2 with record revenues of $271.6 million," said Michael Kourey, Polycom's senior vice president, finance and administration, and CFO. "Fueled by this top-line growth, Polycom delivered $39.5 million in positive operating cash flow and improved Days Sales Outstanding (DSOs) by five days sequentially. In the second quarter, we repurchased $80 million of our common stock and have a remaining repurchase authorization of $300 million."

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 drivers for the adoption of our products. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact of competition on our product sales and for our customers and partners, potential fluctuations in results and future growth rates, the market acceptance of Polycom's products and changing market demands, including demands for differing technologies or product and services offerings, possible delays in the development, availability and shipment of new products, increasing costs and differing uses of capital, changes in key personnel, the impact of global conflicts such as those in the Middle East, and risks associated with general economic conditions, including current negative macroeconomic indicators in the United States and globally, 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 March 31, 2008, 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 July 9, 2008, Polycom will hold a conference call today, July 16, 2008, at 5:00 p.m. ET/2:00 p.m. PT to discuss its second 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 800.931.6358; and for callers outside of the US and Canada, by calling 212.231.2924, 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 21387502. 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.

Polycom and the Polycom logo are registered trademarks and HDX 9000, RealPresence and RPX are trademarks of Polycom in the U.S. and various countries. ©2008, Polycom, Inc. All rights reserved.

                              POLYCOM, INC.
         Non-GAAP Condensed Consolidated Statements of Operations
    Excluding Stock-based compensation expense, Effect of stock-based
   compensation expense on warranty rates, Impact to cost of sales from
 purchase accounting adjustments to inventory, Acquisition-related costs,
  Purchased in-process research and development costs, Amortization and
   impairment of purchased intangibles, Restructuring costs, Litigation
  reserves and payments, Gain (loss) on strategic investments, and Income
                  tax effect of the preceding adjustments
                 (In thousands, except per share amounts)
                                (Unaudited)


                                 Three Months Ended     Six Months Ended
                                --------------------  --------------------
                                June 30,   June 30,   June 30,   June 30,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------

 Revenues:
    Product revenues            $ 233,845  $ 201,902  $ 456,296  $ 371,374
    Service revenues               37,736     31,950     74,205     55,196
                                ---------  ---------  ---------  ---------
       Total revenues             271,581    233,852    530,501    426,570
                                ---------  ---------  ---------  ---------

 Cost of revenues:
    Cost of product revenues       93,758     75,280    179,451    137,661
    Cost of service revenues       18,933     15,187     36,117     26,443
                                ---------  ---------  ---------  ---------
       Total cost of revenues     112,691     90,467    215,568    164,104
                                ---------  ---------  ---------  ---------

 Gross profit                     158,890    143,385    314,933    262,466
                                ---------  ---------  ---------  ---------

 Operating expenses:
    Sales and marketing            72,508     58,764    143,199    107,176
    Research and development       33,618     33,164     65,638     61,262
    General and administrative     12,694     14,270     25,420     24,695
                                ---------  ---------  ---------  ---------
       Total operating expenses   118,820    106,198    234,257    193,133
                                ---------  ---------  ---------  ---------

 Operating income                  40,070     37,187     80,676     69,333

 Interest income, net               2,003      4,022      5,189     10,590
 Other expense, net                (1,067)      (470)        (7)      (534)
                                ---------  ---------  ---------  ---------

 Income before provision for
  income taxes                     41,006     40,739     85,858     79,389
 Provision for income taxes        10,299     11,814     22,409     21,863
                                ---------  ---------  ---------  ---------
 Non-GAAP net income            $  30,707  $  28,925  $  63,449  $  57,526
                                =========  =========  =========  =========

 Basic net income per share     $    0.36  $    0.32  $    0.73  $    0.63
                                =========  =========  =========  =========
 Diluted net income per share   $    0.35  $    0.30  $    0.71  $    0.60
                                =========  =========  =========  =========

 Weighted average shares
  outstanding for basic net
  income per share                 86,357     91,718     87,441     91,263
                                =========  =========  =========  =========

 Weighted average shares
  outstanding for diluted net
  income per share                 88,204     95,492     89,225     95,240
                                =========  =========  =========  =========



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     Six Months Ended
                                --------------------  --------------------
                                June 30,   June 30,   June 30,   June 30,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------

 Revenues:
    Product revenues            $ 233,845  $ 201,902  $ 456,296  $ 371,374
    Service revenues               37,736     31,950     74,205     55,196
                                ---------  ---------  ---------  ---------
       Total revenues             271,581    233,852    530,501    426,570
                                ---------  ---------  ---------  ---------

 Cost of revenues:
    Cost of product revenues       97,947     81,627    188,134    145,909
    Cost of service revenues       19,764     16,027     38,018     27,926
                                ---------  ---------  ---------  ---------
       Total cost of revenues     117,711     97,654    226,152    173,835
                                ---------  ---------  ---------  ---------

 Gross profit                     153,870    136,198    304,349    252,735
                                ---------  ---------  ---------  ---------

 Operating expenses:
    Sales and marketing            76,042     61,991    149,903    112,927
    Research and development       36,501     36,258     71,435     66,933
    General and administrative     15,028     16,742     29,922     29,218
    Acquisition-related costs           3      1,547        162      2,717
    Purchased in-process
     research and development           -          -          -      9,400
    Amortization of purchased
     intangibles                    1,810      2,376      3,637      3,807
    Restructuring costs               839          -      4,454        213
    Litigation reserves and
     payments                       1,163          -      7,401          -
                                ---------  ---------  ---------  ---------
       Total operating expenses   131,386    118,914    266,914    225,215
                                ---------  ---------  ---------  ---------

 Operating income                  22,484     17,284     37,435     27,520

 Interest income, net               2,003      4,022      5,189     10,590
 Loss on strategic investments          -     (7,400)         -     (7,400)
 Other expense, net                (1,067)      (470)        (7)      (534)
                                ---------  ---------  ---------  ---------

Income before provision for
 income taxes                      23,420     13,436     42,617     30,176
 Provision for income taxes         5,578      3,359     10,569      9,888
                                ---------  ---------  ---------  ---------
 Net income                     $  17,842  $  10,077  $  32,048  $  20,288
                                =========  =========  =========  =========

                                ---------  ---------  ---------  ---------
 Basic net income per share     $    0.21  $    0.11  $    0.37  $    0.22
                                =========  =========  =========  =========

                                ---------  ---------  ---------  ---------
 Diluted net income per share   $    0.20  $    0.11  $    0.36  $    0.21
                                =========  =========  =========  =========

 Weighted average shares
  outstanding for basic
    net income per share           86,357     91,718     87,441     91,263
                                =========  =========  =========  =========

 Weighted average shares
  outstanding for diluted
    net income per share           88,204     95,492     89,225     95,240
                                =========  =========  =========  =========





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


                                                 Three Months Ended
                                           ------------------------------
                                                   June 30, 2008
                                           ------------------------------
                                             GAAP    Excluded    Non-GAAP
                                           --------  --------    --------

 Revenues:
    Product revenues                       $233,845  $      -    $233,845
    Service revenues                         37,736         -      37,736
                                           --------  --------    --------
       Total revenues                       271,581         -     271,581
                                           --------  --------    --------

 Cost of revenues:
    Cost of product revenues                 97,947     4,189 (a)  93,758
    Cost of service revenues                 19,764       831 (b)  18,933
                                           --------  --------    --------
       Total cost of revenues               117,711     5,020     112,691
                                           --------  --------    --------

 Gross profit                               153,870    (5,020)    158,890
                                           --------  --------    --------

 Operating expenses:
    Sales and marketing                      76,042     3,534 (b)  72,508
    Research and development                 36,501     2,883 (b)  33,618
    General and administrative               15,028     2,334 (b)  12,694
    Acquisition-related costs                     3         3           -
    Purchased in-process research and
     development                                  -         -           -
    Amortization of purchased intangibles     1,810     1,810           -
    Restructuring costs                         839       839           -
    Litigation reserves and payments          1,163     1,163           -
                                           --------  --------    --------
       Total operating expenses             131,386    12,566     118,820
                                           --------  --------    --------

 Operating income                            22,484   (17,586)     40,070

 Interest income, net                         2,003         -       2,003
 Other expense, net                          (1,067)        -      (1,067)
                                           --------  --------    --------

Income before provision for income taxes     23,420   (17,586)     41,006
 Provision for income taxes                   5,578    (4,721)     10,299
                                           --------  --------    --------
 Net income                                $ 17,842  $(12,865)   $ 30,707
                                           ========  ========    ========

 Basic net income per share                $   0.21  $  (0.15)   $   0.36
                                           ========  ========    ========

 Diluted net income per share              $   0.20  $  (0.15)   $   0.35
                                           ========  ========    ========

 Weighted average shares outstanding for
  basic net income per share                 86,357                86,357
                                           ========              ========

 Weighted average shares outstanding for
  diluted net income per share               88,204                88,204
                                           ========              ========



                                                   Six Months Ended
                                            ------------------------------
                                                    June 30, 2008
                                            ------------------------------
                                              GAAP    Excluded    Non-GAAP
                                            --------  --------    --------

 Revenues:
    Product revenues                        $456,296  $      -    $456,296
    Service revenues                          74,205         -      74,205
                                            --------  --------    --------
       Total revenues                        530,501         -     530,501
                                            --------  --------    --------

 Cost of revenues:
    Cost of product revenues                 188,134     8,683 (c) 179,451
    Cost of service revenues                  38,018     1,901 (b)  36,117
                                            --------  --------    --------
       Total cost of revenues                226,152    10,584     215,568
                                            --------  --------    --------

 Gross profit                                304,349   (10,584)    314,933
                                            --------  --------    --------

 Operating expenses:
    Sales and marketing                      149,903     6,704 (b) 143,199
    Research and development                  71,435     5,797 (b)  65,638
    General and administrative                29,922     4,502 (b)  25,420
    Acquisition-related costs                    162       162           -
    Purchased in-process research and
     development                                   -         -           -
    Amortization of purchased intangibles      3,637     3,637           -
    Restructuring costs                        4,454     4,454           -
    Litigation reserves and payments           7,401     7,401           -
                                            --------  --------    --------
       Total operating expenses              266,914    32,657     234,257
                                            --------  --------    --------

 Operating income                             37,435   (43,241)     80,676

 Interest income, net                          5,189         -       5,189
 Other expense, net                               (7)        -          (7)
                                            --------  --------    --------

Income before provision for income taxes      42,617   (43,241)     85,858
 Provision for income taxes                   10,569   (11,840)     22,409
                                            --------  --------    --------
 Net income                                 $ 32,048  $(31,401)   $ 63,449
                                            ========  ========    ========

 Basic net income per share                 $   0.37  $  (0.36)   $   0.73
                                            ========  ========    ========

 Diluted net income per share               $   0.36  $  (0.35)   $   0.71
                                            ========  ========    ========

 Weighted average shares outstanding for
  basic net income per share                  87,441                87,441
                                            ========              ========

 Weighted average shares outstanding for
  diluted net income per share                89,225                89,225
                                            ========              ========

(a) Excluded amount includes $3,448 related to the amortization of
    purchased intangibles for core and existing technologies, $644 for
    stock-based compensation expense recorded in accordance with SFAS
    123R, "Share-Based Payment," during the period and $97 related to the
    effect of stock-based compensation on warranty expense rates.
(b) Excluded amount represents stock-based compensation expense recorded in
    accordance with SFAS 123R, "Share-Based Payment," during the period.
(c) Excluded amount includes $6,941 related to the amortization of
    purchased intangibles for core and existing technologies, $1,450 for
    stock-based compensation expense recorded in accordance with SFAS 123R,
    "Share-Based Payment," during the period and $292 related to the effect
    of stock-based compensation on warranty expense rates.





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


                                                 Three Months Ended
                                           ------------------------------
                                                   June 30, 2007
                                           ------------------------------
                                             GAAP    Excluded    Non-GAAP
                                           --------  --------    --------
 Revenues:
    Product revenues                       $201,902  $      -    $201,902
    Service revenues                         31,950         -      31,950
                                           --------  --------    --------
       Total revenues                       233,852         -     233,852
                                           --------  --------    --------

 Cost of revenues:
    Cost of product revenues                 81,627     6,347 (a)  75,280
    Cost of service revenues                 16,027       840 (b)  15,187
                                           --------  --------    --------
       Total cost of revenues                97,654     7,187      90,467
                                           --------  --------    --------

 Gross profit                               136,198    (7,187)    143,385
                                           --------  --------    --------

 Operating expenses:
    Sales and marketing                      61,991     3,227 (b)  58,764
    Research and development                 36,258     3,094 (b)  33,164
    General and administrative               16,742     2,472 (b)  14,270
    Acquisition-related costs                 1,547     1,547           -
    Purchased in-process research and
     development                                  -         -           -
    Amortization of purchased intangibles     2,376     2,376           -
    Restructuring costs                           -         -           -
    Litigation reserves and payments              -         -           -
                                           --------  --------    --------
       Total operating expenses             118,914    12,716     106,198
                                           --------  --------    --------

 Operating income                            17,284   (19,903)     37,187

 Interest income, net                         4,022         -       4,022
 Loss on strategic investments               (7,400)   (7,400)          -
 Other expense, net                            (470)        -        (470)
                                           --------  --------    --------

 Income before provision for income taxes    13,436   (27,303)     40,739
 Provision for income taxes                   3,359    (8,455)     11,814
                                           --------  --------    --------
 Net income                                $ 10,077  $(18,848)   $ 28,925
                                           ========  ========    ========

                                           --------  --------    --------
 Basic net income per share                $   0.11  $  (0.21)   $   0.32
                                           ========  ========    ========

                                           --------  --------    --------
 Diluted net income per share              $   0.11  $  (0.19)   $   0.30
                                           ========  ========    ========

 Weighted average shares outstanding for
  basic net income per share                 91,718                91,718
                                           ========              ========

 Weighted average shares outstanding for
  diluted net income per share               95,492                95,492
                                           ========              ========


                                                  Six Months Ended
                                           ------------------------------
                                                   June 30, 2007
                                           ------------------------------
                                             GAAP    Excluded    Non-GAAP
                                           --------  --------    --------
 Revenues:
    Product revenues                        $371,374  $      -    $371,374
    Service revenues                          55,196         -      55,196
                                            --------  --------    --------
       Total revenues                        426,570         -     426,570
                                            --------  --------    --------

 Cost of revenues:
    Cost of product revenues                 145,909     8,248 (c) 137,661
    Cost of service revenues                  27,926     1,483 (b)  26,443
                                            --------  --------    --------
       Total cost of revenues                173,835     9,731     164,104
                                            --------  --------    --------

 Gross profit                                252,735    (9,731)    262,466
                                            --------  --------    --------

 Operating expenses:
    Sales and marketing                      112,927     5,751 (b) 107,176
    Research and development                  66,933     5,671 (b)  61,262
    General and administrative                29,218     4,523 (b)  24,695
    Acquisition-related costs                  2,717     2,717           -
    Purchased in-process research and
     development                               9,400     9,400           -
    Amortization of purchased intangibles      3,807     3,807           -
    Restructuring costs                          213       213           -
    Litigation reserves and payments               -         -           -
                                            --------  --------    --------
       Total operating expenses              225,215    32,082     193,133
                                            --------  --------    --------

 Operating income                             27,520   (41,813)     69,333

 Interest income, net                         10,590         -      10,590
 Loss on strategic investments                (7,400)   (7,400)          -
 Other expense, net                             (534)        -        (534)
                                            --------  --------    --------

 Income before provision for income taxes     30,176   (49,213)     79,389
 Provision for income taxes                    9,888   (11,975)     21,863
                                            --------  --------    --------
 Net income                                 $ 20,288  $(37,238)   $ 57,526
                                            ========  ========    ========

                                            --------  --------    --------
 Basic net income per share                 $   0.22  $  (0.41)   $   0.63
                                            ========  ========    ========

                                            --------  --------    --------
 Diluted net income per share               $   0.21  $  (0.39)   $   0.60
                                            ========  ========    ========

 Weighted average shares outstanding for
  basic net income per share                  91,263                91,263
                                            ========              ========

 Weighted average shares outstanding for
  diluted net income per share                95,240                95,240
                                            ========              ========

(a) Excluded amount includes $3,357 related to the amortization of
    purchased intangibles for core and existing technologies, $690 for
    stock-based compensation expense recorded in accordance with SFAS 123R,
    "Share-Based Payment," during the period, $231 related to the effect of
    stock-based compensation on warranty expense rates and $2,069 related
    to purchase accounting adjustments made to inventory.
(b) Excluded amount represents stock-based compensation expense recorded in
    accordance with SFAS 123R, "Share-Based Payment," during the period.
(c) Excluded amount includes $4,168 related to the amortization of
    purchased intangibles for core and existing technologies, $1,216 for
    stock-based compensation expense recorded in accordance with SFAS 123R,
    "Share-Based Payment," during the period, $400 related to the effect of
    stock-based compensation on warranty expense rates and $2,464 related
    to purchase accounting adjustments made to inventory.





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


                                                    June 30,   December 31,
                                                      2008         2007
                                                  ------------ ------------

 ASSETS
 Current assets
    Cash and cash equivalents                     $    203,212 $    279,560
    Investments                                         96,870       62,663
    Trade receivables, net                             130,339      138,133
    Inventories                                         94,380       71,106
    Deferred taxes                                      34,437       43,295
    Prepaid expenses and other current assets           26,442       23,104
                                                  ------------ ------------
       Total current assets                            585,680      617,861

 Property and equipment, net                            63,724       57,610
 Long-term investments                                  17,045       32,340
 Goodwill                                              504,809      504,955
 Purchased intangibles, net                             77,011       86,423
 Deferred taxes                                         16,094        8,062
 Other assets                                           17,451       14,687
                                                  ------------ ------------
       Total assets                               $  1,281,814 $  1,321,938
                                                  ============ ============

 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities
    Accounts payable                              $     69,208 $     75,802
    Accrued payroll and related liabilities             29,411       29,518
    Taxes payable                                        1,441        3,790
    Deferred revenue                                    63,874       59,130
    Other accrued liabilities                           55,044       48,814
                                                  ------------ ------------
       Total current liabilities                       218,978      217,054

 Non-current liabilities
 Deferred revenue                                       41,716       27,853
 Taxes payable                                          34,594       34,899
 Deferred taxes                                          3,076        4,709
 Other long-term liabilities                            15,662       13,429
                                                  ------------ ------------
       Total liabilities                               314,026      297,944

 Stockholders' equity                                  967,788    1,023,994
                                                  ------------ ------------
       Total liabilities and stockholders' equity $  1,281,814 $  1,321,938
                                                  ============ ============






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


                                                      Six Months Ended
                                                  ------------------------
                                                    June 30,     June 30,
                                                      2008         2007
                                                  -----------  -----------
Cash flows from operating activities:
Net income                                        $    32,048  $    20,288
Adjustments to reconcile net income to net cash
 provided by operating activities:
   Depreciation and amortization                       13,472       11,656
   Amortization of purchased intangibles               10,567        7,976
   Provision for doubtful accounts                        245            -
   Provision for excess and obsolete inventories        1,197          320
   Non-cash stock-based compensation                   20,353       18,644
   Excess tax benefits from stock-based
    compensation                                       (2,075)     (11,645)
   Gain on strategic investments                            -        7,400
   Purchase of in-process research and
    development                                             -        9,400
   Loss on disposals of property and equipment             68           58

   Changes in assets and liabilities, net of the
    effect of acquisitions:
      Trade receivables                                 7,723      (18,038)
      Inventories                                     (24,471)        (805)
      Deferred taxes                                     (486)       3,405
      Prepaid expenses and other assets                (7,147)      (1,647)
      Accounts payable                                 (6,594)      (1,180)
      Taxes payable                                      (135)       3,519
      Other accrued liabilities                        31,001        2,384
                                                  -----------  -----------
Net cash provided by operating activities              75,766       51,735
                                                  -----------  -----------

Cash flows from investing activities:
   Purchase of property and equipment                 (19,056)     (14,500)
   Purchases of investments                          (206,649)    (201,859)
   Proceeds from sale and maturity of investments     183,973      313,292
   Net cash paid in purchase acquisitions                   -     (275,619)
                                                  -----------  -----------
Net cash used in investing activities                 (41,732)    (178,686)
                                                  -----------  -----------

Cash flows from financing activities:
   Proceeds from issuance of common stock
    under employee option and stock purchase plans     30,001       48,264
   Repurchase of common stock                        (142,458)     (25,732)
   Excess tax benefits from stock-based
    compensation                                        2,075       11,645
                                                  -----------  -----------
Net cash provided by (used in) financing
 activities                                          (110,382)      34,177
                                                  -----------  -----------

Net decrease in cash and cash equivalents             (76,348)     (92,774)
Cash and cash equivalents, beginning of period        279,560      316,368
                                                  -----------  -----------
Cash and cash equivalents, end of period          $   203,212  $   223,594
                                                  ===========  ===========

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