Revenue In-Line with Guidance, Non-GAAP Operating Income and EPS Exceed Guidance
Plantronics, Inc. (NYSE: PLT) today announced third quarter fiscal 2011
net revenues of $181.6 million, a 9% increase compared with net revenues
of $165.9 million in the third quarter of fiscal 2010. Net revenues were
within the guidance range of $180 million - $185 million provided on
November 2, 2010. Plantronics’ GAAP diluted earnings per share from
continuing operations was $0.64 in the third quarter of fiscal 2011
compared with $0.47 in the same quarter of the prior year. Non-GAAP
diluted earnings per share from continuing operations for the third
quarter of fiscal 2011 increased 32% to $0.66 from $0.50 in the same
quarter of the prior year. The difference between GAAP and non-GAAP
earnings per share from continuing operations for the third quarter of
fiscal 2011 includes stock-based compensation charges, restructuring and
other related costs, purchase accounting amortization, all net of
associated tax impact, and a tax benefit from expiration of certain
statutes of limitations.
“We continue to see growth in our core Office and Contact Center market
in all geographies as a result of improving global economic conditions,”
stated Ken Kannappan, President & CEO. ”We are increasingly well
positioned to benefit from expected strong growth in the Unified
Communications market over the next several years.”
“We generated approximately $29 million in cash flow from operations in
the current quarter and repurchased over 280,000 shares of our common
stock while maintaining a strong cash position with over $414 million in
cash, cash equivalents and short-term investments. We also had $18.1
million in long-term investments at the end of the quarter,” stated
Barbara Scherer, SVP Finance and Administration & CFO.
Improved economic conditions and the trend toward Unified Communications
(”UC”) drove a 19% increase in net revenues of Office and Contact Center
products compared to the third quarter of fiscal 2010. OCC net revenues
were $122.9 million in the third quarter of fiscal 2011, compared with
$103.1 million in the third quarter of fiscal 2010. Revenues of UC
products were $13.5 million for the quarter ended December 31, 2010 and
$36.6 million for the nine months ended December 31, 2010.
Mobile net revenues were $43.2 million in the third quarter of fiscal
2011, a decrease of 8% from $47.0 million in the third quarter of fiscal
2010. Gaming and Computer Audio net revenues were $10.5 million in the
third quarter of fiscal 2011, a decrease of 5% from $11.1 million in the
third quarter of fiscal 2010.
GAAP operating income in the third quarter of fiscal 2011 was $36.5
million, resulting in an operating margin of 20.1%. This compares to
GAAP operating income of $27.8 million and an operating margin of 16.7%
in the prior year quarter. Non-GAAP operating income in the third
quarter of fiscal 2011 was $40.6 million compared to previously provided
guidance of $37.5 million to $40.5 million and resulted in a non-GAAP
operating margin of 22.4%. In the prior year quarter, non-GAAP operating
income was $31.8 million with a non-GAAP operating margin of 19.2%.
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. In addition, our incoming order rate
tends to be low during the last two weeks of December and the first half
of January and then rises significantly into February and March.
Net revenues in the fourth quarter of fiscal 2011 are expected to be
lower than the third quarter of fiscal 2011 due to seasonally lower
demand for our consumer products. The March quarter has historically
been a weaker quarter for consumer products than the December quarter
and we expect that pattern to recur.
Subject to the foregoing, we are currently expecting the following range
of financial results for continuing operations for the fourth quarter of
fiscal 2011:
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Net revenues of $167 million - $172 million;
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Non-GAAP operating income of $40.0 million to $42.0 million inclusive
of a $5.1 million gain related to our agreement to dismiss litigation
involving the alleged theft of our trade secrets by a competitor and
in exchange for a full release and settlement of the claims;
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Non-GAAP diluted earnings per share of $0.58 - $0.62;
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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 $0.52 to $0.56.
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 fourth quarter fiscal 2011 results or by other
public disclosure. Any other statements speculating on the progress of
the fourth quarter fiscal 2011 will not be based on internal information
and should be assessed accordingly by investors.
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
March 10, 2011 to stockholders of record at the close of business on
February 22, 2011.
Conference Call Scheduled to Discuss Financial Results
Plantronics has scheduled a conference call to discuss third quarter
fiscal 2011 results. The conference call will take place on Tuesday,
February 1, 2011 at 2:00 PM (PST). 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 #23921083 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 website 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, 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) the UC market, including our position in the UC market,
(ii) our estimates of GAAP and non-GAAP financial results for the fourth
quarter of fiscal 2011, including revenue, operating income and earnings
per share; (iii) our estimated stock-based compensation expense for the
fourth quarter of fiscal 2011; (iv) trends and our predictions regarding
ordering patterns for the fourth quarter of fiscal 2011, 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 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
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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:
View
All
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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 Nine Months ended December 31, 2010 and December 31,
2009
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Summary Unaudited Statements of Operations and Related Data on a
Non-GAAP Basis for Continuing Operations
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.
