Record Fiscal Year Earnings Per Share and Cash Flow from Operations; 7,000,000 Share Repurchase Program Authorized
Plantronics, Inc. (NYSE: PLT) today announced fourth quarter fiscal year
2011 net revenues of $173.1 million, a 7% increase compared with net
revenues of $162.3 million in the fourth quarter of fiscal year 2010.
Net revenues were above the guidance range of $167 million - $172
million provided on February 1, 2011. Plantronics’ GAAP diluted earnings
per share from continuing operations was $0.55 in the fourth quarter of
fiscal year 2011 compared with $0.49 in the same quarter of the prior
year. Non-GAAP diluted earnings per share from continuing operations for
the fourth quarter of fiscal year 2011 increased 15% to $0.61 from $0.53
in the same quarter of the prior year. The difference between GAAP and
non-GAAP earnings per share from continuing operations for the fourth
quarter of fiscal year 2011 includes stock-based compensation charges,
purchase accounting amortization, including accelerated amortization due
to the abandonment of an intangible asset, all net of associated tax
impact, and a tax benefit from expiration of certain statutes of
limitations.
Net revenues for fiscal year 2011 increased 11% to $683.6 million
compared with $613.8 million for fiscal year 2010. Plantronics’ GAAP
diluted earnings per share from continuing operations increased by 44%
to $2.23 for fiscal year 2011 compared with $1.55 in fiscal year 2010.
Non-GAAP diluted earnings per share from continuing operations for
fiscal year 2011 increased by 32% to $2.44 compared with $1.85 in fiscal
year 2010.
“Our financial performance in fiscal year 2011 was excellent. Highlights
include record annual earnings per share and record generation of cash
flow from operations, while we achieved gross and operating margins
above our long-term objective,” stated Ken Kannappan, President & CEO.
“As we celebrate our 50th anniversary this year, we believe that our
best long-term revenue and profit opportunities are in front of us and
that we are well positioned for them.”
“We generated approximately $72 million in cash flow from operations in
the fourth quarter and approximately $158 million for the fiscal year.
We finished the year with a very strong financial position with $430
million in cash, cash equivalents and short-term investments. We also
had $39.3 million in long-term investments at the end of the fiscal
year,” stated Barbara Scherer, SVP Finance and Administration & CFO.
Improved economic conditions and the trend toward Unified Communications
(”UC”) drove an 18% increase in net revenues of Office and Contact
Center (”OCC”) products in the fourth quarter of fiscal 2011 compared to
the same period in the prior year. OCC net revenues were $132.0 million
in the fourth quarter of fiscal 2011 compared with $111.9 million in the
fourth quarter of fiscal year 2010. Sales of UC products were $16.6
million for the fourth quarter of fiscal year 2011 compared with $13.5
million in the third quarter of fiscal year 2011.
Mobile net revenues were $28.1 million in the fourth quarter of fiscal
year 2011, a decrease of 22% from $35.8 million in the fourth quarter of
fiscal year 2010, due primarily to weak category spending.
GAAP operating income in the fourth quarter of fiscal year 2011 was
$34.3 million, resulting in an operating margin of 19.8%, inclusive of a
$5.1 million gain related to an agreement to dismiss litigation
involving the alleged theft of our trade secrets by a competitor in
exchange for a full release and settlement of the claims. This compares
to GAAP operating income of $31.7 million and an operating margin of
19.5% in the same quarter of the prior year. Non-GAAP operating income
in the fourth quarter of fiscal year 2011 was $39.9 million which
resulted in a non-GAAP operating margin of 23.0% compared to previously
provided guidance of $40 million to $42 million. In the prior year
quarter, non-GAAP operating income was $35.8 million with a non-GAAP
operating margin of 22.1%.
Plantronics completed the sale of Altec Lansing, its Audio Entertainment
Group (”AEG”) segment, effective as of December 1, 2009. All results of
operations related to AEG (including the loss on the sale) were
classified as discontinued operations for all periods presented.
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.
Plantronics’ business is inherently difficult to forecast, particularly
with continuing uncertainty in global economic conditions, and there can
be no assurance that the incoming orders it expects to receive over the
balance of the current quarter will materialize.
Plantronics has a “book and ship” business model whereby it ships most
orders to customers within 48 hours of its receipt of those orders and,
therefore, the level of backlog does not provide reliable visibility
into potential future revenues.
Subject to the foregoing, we are currently expecting the following range
of financial results for continuing operations for the first quarter of
fiscal year 2012:
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Net revenues of $168 million - $173 million;
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Non-GAAP operating income of $34.0 million to $37.0 million;
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Assuming 49 million diluted average weighted shares outstanding:
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Non-GAAP diluted earnings per share of $0.52 - $0.56;
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EPS cost of stock-based compensation to be approximately $0.06; and
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GAAP diluted earnings per share of $0.46 to $0.50.
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 press
release announcing its first quarter fiscal year 2012 results or by
other public disclosure. Any other statements speculating on the
progress of the first quarter fiscal year 2012 will not be based on
internal information and should be assessed accordingly by investors.
“We are also updating our target business model,” said Barbara Scherer.
“For a number of years, we have believed that the right target business
model for us was an 18%-20% operating margin. We came out of the
economic recession with a lean cost structure and have experienced a
rebound of demand for our products as a result of stronger economic
conditions as well as the strength of our portfolio and our total value
proposition. We exceeded the 20% target in fiscal year 2011 even while
investing significantly in UC opportunities, and our financial plan for
fiscal year 2012 calls for a similar operating margin while continuing
to invest for growth. We have updated our market and financial models
and have concluded that a more appropriate target is a 20%-23% operating
margin.” Please see our new Investor Relations Presentation available on
our corporate website www.plantronics.com/ir.
Plantronics today announced in a separate press release that its Board
of Directors has authorized a 7,000,000 share repurchase program.
Dividend Announcement
Plantronics also announced that its Board of Directors declared a
quarterly dividend of $0.05 per share. The dividend will be payable on
June 10, 2011 to stockholders of record at the close of business on May
20, 2011.
Conference Call Scheduled to Discuss Financial Results
Plantronics has scheduled a conference call to discuss fourth quarter
fiscal year 2011 results. The conference call will take place today, May
3, 2011 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 #52161408 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 on the Plantronics website for 30 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, the release
of tax reserves due to the expiration of certain statutes of
limitations, stock-based compensation expenses related to stock options,
restricted stock and employee stock purchases, purchase accounting
amortization and impairment of goodwill and long-lived assets from
non-GAAP income from continuing operations, non-GAAP earnings per
diluted share from continuing operations, non-GAAP operating income,
non-GAAP gross margin, non-GAAP operating margin and non-GAAP effective
tax rate on continuing operations. 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
considered by management as part of Plantronics’ 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, but non-GAAP financial
measures are not meant to be considered in isolation or as a substitute
for, or superior to, income from operations, net income or earnings per
share prepared in accordance with GAAP.
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) our best long-term revenue and profit opportunities are
in front of us and that we are well positioned for them (ii) our
estimates of GAAP and non-GAAP financial results for the first quarter
of fiscal 2012, including revenue, operating income and earnings per
share; (iii) our estimated stock-based compensation expense for the
first quarter of fiscal 2012; (iv) our estimate of the diluted weighted
average shares outstanding in the first quarter of fiscal 2012, (v)
trends and our predictions regarding ordering patterns for the first
quarter of fiscal 2012, (vi) and our target market and financial model
update of our operating margin from 18%-20% to 20%-23%, 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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our ability to realize our UC plans and to achieve the financial
results projected to arise from UC adoption could be adversely
affected by the following factors: (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) UC solutions may not be adopted
with the breadth and speed in the marketplace that we currently
anticipate; (iii) the development of UC solutions is technically
complex and this may delay or obstruct our ability to introduce
solutions to the market on a timely basis and that are cost effective,
feature rich, stable and attractive to our customers; (iv) as UC
becomes more widely adopted we anticipate that competition for market
share will increase, and some competitors may have superior technical
and economic resources; and (v) our plans are dependent upon adoption
of our UC solution by major platform providers such as Microsoft
Corporation, Cisco Systems, Inc., Avaya, Inc., Alcatel-Lucent, and
IBM, and we have a limited ability to influence such providers with
respect to the functionality of their platforms, their rate of
deployment, and their willingness to integrate their platforms with
our solutions, and our support expenditures may substantially increase
over time due to the complex nature of the platforms developed by the
major UC providers as these platforms continue to evolve and become
more commonly adopted;
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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 and materials to meet demand without having excess inventory or
incurring cancellation charges;
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volatility in prices from our suppliers, including our manufacturers
located in China, have and could negatively affect our profitability
and/or market share;
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fluctuations in foreign exchange rates;
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the bankruptcy or financial weakness of distributors or key customers,
or the bankruptcy of or reduction in capacity of our key suppliers;
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additional risk factors including: 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
-
impairment losses on the carrying value of our intangible assets and
goodwill could be recognized if it is determined the value is not
recoverable which would adversely affect our financial results.
For more information concerning these and other possible risks, please
refer to Plantronics’ Annual Report on Form 10-K filed with the
Securities and Exchange Commission on June 1, 2010, 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:
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Summary Unaudited Condensed Consolidated Financial Statements
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Unaudited GAAP to Non-GAAP Statements of Operations Reconciliations
for the Three and Twelve Months ended March 31, 2011 and March 31, 2010
-
Summary Unaudited Statements of Operations and Related Data on a
Non-GAAP Basis for Continuing Operations
View
All
About Plantronics
Plantronics is a global leader in audio communications for businesses
and consumers. We have pioneered new trends in audio technology for 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, the logo design, and Clarity are trademarks or registered
trademarks 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.
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INVESTOR CONTACT:
Greg Klaben, 831-458-7533
Vice President of Investor Relations
or
MEDIA CONTACT:
Russell Castronovo, 831-458-7598
Director of Global Communications