Fourth Quarter Revenue and Operating Results Exceed Guidance
Plantronics, Inc. (NYSE: PLT) today announced fourth quarter fiscal 2009
net revenues of $146.8 million compared with $208.7 million in the
fourth quarter of fiscal 2008. The Company’s GAAP operating loss for the
quarter was $11.4 million compared with a GAAP operating income of $19.0
million in the fourth quarter of the prior year. The non-GAAP operating
income for the quarter was $3.7 million compared with non-GAAP operating
income of $25.7 million in the fourth quarter last year. Plantronics’
GAAP loss per share was $0.23 in the fourth quarter of fiscal 2009
compared with diluted earnings per share of $0.36 in the same quarter of
the prior year. Non-GAAP diluted earnings per share for the current
quarter was $0.01 compared with $0.46 in the fourth quarter of fiscal
2008. The difference between GAAP and non-GAAP operating income and
earnings per share for the current quarter includes restructuring and
other related costs, purchase accounting amortization and the cost of
stock-based compensation.
Net revenues for fiscal year 2009 were $765.6 million, a decrease of
approximately 11% compared with $856.3 million for fiscal year 2008. The
GAAP operating loss for fiscal 2009 was $81.2 million compared with GAAP
operating income of $79.4 million in the prior year. Non-GAAP operating
income declined from $107.6 million in fiscal 2008 to $70.3 million for
fiscal 2009, a decrease of approximately 35%. The Company’s GAAP loss
per share was $1.34 for fiscal year 2009 compared with diluted earnings
per share of $1.39 in the prior fiscal year. The Company’s non-GAAP
diluted earnings per share was $1.02 for fiscal year 2009 compared with
$1.80 in the prior fiscal year.
“We are beginning to see signs of stabilization in many parts of our
business and are encouraged that demand for our products was stronger
than we forecasted for the quarter. During the last several months, we
took significant steps to reduce costs and improve efficiencies, and we
now believe our cost structure is aligned with current market
conditions,” stated Ken Kannappan, President & CEO. “We are entering
fiscal year 2010 with a strong balance sheet, a lean cost structure and
a better competitive position. We are committed to executing on our
goals for fiscal year 2010 to win in Unified Communications and to
improve profitability and return on invested capital from their current
levels.”
Audio Communications Group (ACG) Non-GAAP Results
(Office & Contact Center, Mobile, Gaming and Computer & Clarity)
Comparisons are to the Same Quarter in the Prior Year
Fourth quarter fiscal 2009 net revenues of $128.1 million were down 31%
compared with $185.4 million in the prior year quarter. General economic
weakness led to revenue declines in all major geographies and product
groups. Office and Contact Center revenue was $85.6 million, down 32%;
Bluetooth headset revenue was $28.7 million, down 31%; and Gaming &
Computer products revenue was $6.9 million, down 18%.
Gross margin in the fourth quarter of fiscal 2009 was 39.2% compared
with 45.6% in the fourth quarter last year. The lower gross margin was
primarily due to higher provisions for excess and obsolete inventory
primarily from Bluetooth products, lower rates of factory utilization,
and unfavorable foreign exchange impact offset in part by improved
product margins. Operating expenses declined by 24% from $54.9 million
to $41.9 million and were lower in all functions. Operating income
decreased to $8.4 million from $29.7 million, and the operating margin
was 6.5% compared with 16.0% in the prior year quarter.
The Company continues to believe that the implementation of Unified
Communications (”UC”) technologies by large corporations will be a
significant long-term driver of office headset adoption, and, as a
result, a key long-term driver of revenue and profit growth. During the
quarter, the Company disclosed that it expects an incremental revenue
opportunity from Unified Communications of $350 million annually by
fiscal 2015.
“We’ve had important wins in UC for large enterprise customers and
continue to see growing adoption of UC,” stated Kannappan.
Audio Entertainment Group (AEG) Non-GAAP Results
(Docking Audio, PC Audio, Other)
Comparisons are to the Same Quarter in the Prior Year
Fourth quarter fiscal 2009 net revenues of $18.7 million were down 20%
from $23.4 million in the prior year quarter driven by continued global
weakness in consumer spending, a product mix shift toward lower priced
products in addition to a negative foreign exchange impact. As a result,
all product line revenues were down versus the prior year quarter
despite better product placements. Domestic revenues were down 5% while
international revenues were down 34% as a result of weak international
retail sales.
Gross margin declined from $4.5 million, or 19.4%, in the prior year
quarter to $1.0 million, or 5.3%, in the current year quarter as a
result of a product mix shift to lower margin products, reduced sales of
previously reserved items and an unfavorable exchange rate impact.
Operating expenses declined by 33% from $8.5 million in the prior year
quarter to $5.7 million in the current quarter; and the operating loss
increased from $4.0 million to $4.7 million.
Business Outlook
The following statements are based on current expectations. As described
in “Safe Harbor” below, many of these statements are forward-looking.
Actual results are subject to a variety of risks and uncertainties and
may differ materially from the forward-looking statements.
Plantronics has a “book and ship” business model whereby it ships most
orders to customers within 48 hours of our receipt of those orders, and
therefore the Company cannot rely on the level of backlog to provide
visibility into potential future revenues. The business is inherently
difficult to forecast, and there can be no assurance that the incoming
orders Plantronics expects to receive over the balance of the quarter
will materialize. With increasing economic uncertainty, the Company’s
business is even more difficult to forecast than usual.
Revenues in the first quarter of fiscal year 2010 are expected to be
similar to the fourth quarter of fiscal year 2009, ranging from slightly
below to slightly above the reported net revenues of $146.8 million.
Gross margins are expected to improve by several points sequentially,
primarily as a result of lower provisions for excess and obsolete
inventory. On January 14, 2009 and March 26, 2009, the Company announced
a series of actions to lower its cost structure and improve
efficiencies. The measures announced in the fourth quarter were expected
to bring total non-GAAP operating expenses down to approximately $195
million in fiscal year 2010 and while the fourth quarter fiscal year
2009 run rate was slightly lower than that, the Company is continuing to
target approximately $195 million in non-GAAP operating expenses in
fiscal 2010.
Subject to the foregoing, we are currently expecting the following range
of financial results for the first quarter of fiscal year 2010:
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Net revenues of $145 - $150 million;
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Non-GAAP earnings per share of $0.08 - $0.12;
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Non-GAAP consolidated tax rate to be approximately 28%;
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The EPS cost of purchase accounting amortization of approximately
$0.01;
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The EPS cost of equity compensation pursuant to FAS 123(R) to be
approximately $0.05; and
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A small GAAP loss per share. GAAP loss per share is not estimable due
to tax rate and restructuring charge uncertainties.
Plantronics does not intend to update these targets during the quarter
or to report on its progress toward these targets. Plantronics will not
comment on these targets to analysts or investors except by its next
press release announcing its first quarter fiscal year 2010 results or
by other public disclosure. Any statements by persons outside
Plantronics speculating on the progress of the first quarter fiscal year
2010 will not be based on internal company information and should be
assessed accordingly by investors.
Conference Call Scheduled to Discuss Actual Financial Results
Plantronics has scheduled a conference call to discuss fourth quarter
results. The conference call will take place Tuesday, May 5 at 2:00 PM
(PDT). All interested investors and potential investors in Plantronics
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.” Participants from North America
should call (888) 301-8736 and other participants should call (706)
634-7260.
A replay of the call with the conference ID #86162125 will be available
for 72 hours at (800) 642-1687 for callers from North America and at
(706) 645-9291 for all other callers. The conference call will also be
simultaneously web cast at www.plantronics.com under Investor Relations,
and the web cast of the conference call will remain available at the
Plantronics Web site for thirty days.
Use of Non-GAAP Financial Information
Plantronics excludes non-recurring transactions and non-cash expenses
and charges such as restructuring and other related charges, certain tax
credits and the release of certain tax reserves, stock-based
compensation expenses related to stock options, awards and employee
stock purchases, purchase accounting amortization and goodwill and
long-lived asset impairment charges from non-GAAP net income, non-GAAP
earnings per diluted share, non-GAAP operating income, non-GAAP
operating margin and non-GAAP effective tax rate. Plantronics excludes
these expenses from its non-GAAP measures primarily because Plantronics
does not believe they are reflective of ongoing operating results and
are not part of its target operating model. Plantronics believes that
the use of non-GAAP financial measures provides meaningful supplemental
information regarding its performance and liquidity, and helps investors
compare actual results to its long-term target operating model goals.
Plantronics believes that both management and investors benefit from
referring to these non-GAAP financial measures in assessing its
performance and when planning, forecasting and analyzing future periods.
SAFE HARBOR
This release contains forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
including statements relating to (i) our restructuring plan, (ii) our
expectations that our non-GAAP operating expenses will be approximately
$195 million for fiscal year 2010, (iii) our objective to maintain our
profitability, be cash flow positive, increase our return on invested
capital, and increase our competitive position, (iv) our ability to
continue to focus on certain strategic initiatives, (v) the future of UC
technologies, including their implementation, growth in deployments, the
effect on headset adoption, and our expectation that our revenue
opportunity from UC will be $350 million annually by fiscal year 2015,
(vi) our position in the UC market, (vii) our estimate of revenue for
the first quarter of fiscal year 2010, and our statement that revenues
will be slightly down or slightly up and gross margins will improve, and
(viii) our estimate of GAAP and non-GAAP financial results for the first
quarter of fiscal year 2010 and related components of earnings (loss)
per share, as well as other matters discussed in this press release that
are not purely historical data. Plantronics does 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:
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Economic conditions in both the domestic and international markets;
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Work disruptions, factory or other facility closures, border closures
or delays, transportation interference or delays, or perceptions that
our product may make people sick related to the H1N1 “swine flu”
illness in Mexico or other places in the world;
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Fluctuations in foreign exchange rates;
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The bankruptcy of distributors or key customers, or the bankruptcy of
or reduction in capacity of our key suppliers;
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The effect of additional actions on GAAP results;
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Failure to match production to demand given long lead times and the
difficulty of forecasting unit volumes and acquiring the component
parts to meet demand without having excess inventory or incurring
cancellation charges;
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We have significant intangible assets and goodwill recorded on our
balance sheet. If the carrying value of our intangible assets and
goodwill is not recoverable, additional impairment losses must be
recognized which would adversely affect our financial results;
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We have experienced volatility in prices from our suppliers, including
our manufacturers located in China, this volatility could negatively
affect profitability and/or market share; and
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Additional risk factors include: interruption in the supply of
sole-sourced critical components, continuity of component supply at
costs consistent with our plans, the inherent risks of our substantial
foreign operations, and problems which might affect our manufacturing
facilities in Mexico, and unexpected delays and uncertainties
affecting our ability to realize targeted expense reductions and
annualized savings through implementation of our plan to outsource the
manufacturing of our Bluetooth products in China to GoerTek, Inc.
For more information concerning these and other possible risks, please
refer to the Company’s Annual Report on Form 10-K filed May 27, 2008,
quarterly reports filed on Form 10-Q and other filings with the
Securities and Exchange Commission as well as recent press releases.
These filings can be accessed over the Internet at
http://www.sec.gov/edgar/searchedgar/companysearch.html.
Financial Summaries
The following related charts are provided:
About Plantronics
In 1969, a Plantronics headset carried the historic fourth words from
the moon: “That’s one small step for man, one giant leap for mankind.”
Since then, Plantronics has become the headset of choice for
mission-critical applications such as air traffic control, 911 dispatch,
and the New York Stock Exchange. Today, this history of Sound
Innovation® is the basis for every product we build for the office,
contact center, personal mobile, entertainment and residential markets.
The Plantronics family of brands includes Plantronics, Altec Lansing,
Clarity, and Volume Logic. For more information, go to
www.plantronics.com or call (800) 544-4660.
Altec Lansing, Clarity, Plantronics, Sound Innovation, Volume Logic and
AudioIQ are trademarks or registered trademarks of Plantronics, Inc. All
other trademarks are the property of their respective owners.
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