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8-K - FORM 8-K - POLYCOM INCd616379d8k.htm
EX-99.2 - EX-99.2 - POLYCOM INCd616379dex992.htm

Exhibit 99.1

 

LOGO

 

Investor Contact:    Laura Graves
   Polycom, Inc.
  

1.408.586.4271

laura.graves@polycom.com

Press Contact:    Shawn Dainas
   Polycom, Inc.
  

1.408.586.3768

shawn.dainas@polycom.com

Polycom Announces Revenues of $336 Million for Third Quarter 2013

•    Americas revenues grow 4 percent year-over-year

•    UC Personal Devices revenues grow 24 percent year-over-year

•    $400 million return of capital program initiated

SAN JOSE, Calif. – October 23, 2013 – Polycom, Inc. (Nasdaq: PLCM), the global leader in open, standards-based unified communication and collaboration (UC&C), today reported financial results for the third quarter ended September 30, 2013. Polycom reported third quarter 2013 net revenues of $336 million, non-GAAP net income of $19 million and non-GAAP earnings per diluted share of 11 cents. GAAP net income for the third quarter was a loss of $24 million, or 14 cents per share. A reconciliation of GAAP to non-GAAP results is provided in the tables at the end of this press release.

“Polycom’s financial performance in Q3 was on target with our expectations, driven by our U.S. Enterprise and voice related businesses, partially offset by a more challenging quarter in Asia Pacific,” stated Kevin Parker, Polycom’s Chairman and interim Chief Executive Officer. “We continue to prioritize those areas of the business that maximize growth, while also pursuing opportunities to reduce expenses and drive expanded profitability.”

“Our third quarter results demonstrate the diversity of our revenue base, including growth from voice and services,” continued Eric Brown, Polycom Chief Operating Officer and Chief Financial Officer. “We announced a new $400 million return of capital program, including a Term Loan A financing and a tender offer for our shares, and closed the quarter with trailing 12 month operating cash flow of $183 million.”

On a comparative basis, consolidated financial results were:

 

($ in millions, except per share data)    Q3 2013     Q2 2013      Q3 2012  

Revenues

   $ 336.5      $ 345.2       $ 335.4   

Non-GAAP Net Income

   $ 19.3      $ 25.9       $ 17.2   

Non-GAAP EPS

   $ 0.11      $ 0.15       $ 0.10   

GAAP Net Income (Loss)

   $ (24.0   $ 5.3       $ (14.8

GAAP EPS

   $ (0.14   $ 0.03       $ (0.08


On a geographic basis, consolidated net revenues were comprised of:

 

($ in millions)    Q3 2013     Q2 2013     Q3 2012     Sequential
Change
    Year-Over-
Year
Change
 

Americas

   $ 177.3      $ 175.6      $ 171.0        1     4

% of revenues

     53     51     51    

Europe, Middle East & Africa (EMEA)

     80.0        79.7        78.6        0     2

% of revenues

     24     23     23    

Asia Pacific

     79.2        89.9        85.9        -12     -8

% of revenues

     23     26     26    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Totals *

   $ 336.5      $ 345.2      $ 335.4        -3     0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* may not foot due to rounding

By product line, inclusive of its service component, consolidated net revenues were comprised of:

 

($ in millions)    Q3 2013     Q2 2013     Q3 2012     Sequential
Change
    Year-Over-
Year
Change
 

UC Group Systems

   $ 221.4      $ 233.0      $ 225.8        -5     -2

% of revenues

     66     67     67    

UC Personal Devices

     56.9        50.8        45.7        12     24

% of revenues

     17     15     14    

UC Platform

     58.2        61.4        63.9        -5     -9

% of revenues

     17     18     19    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Totals *

   $ 336.5      $ 345.2      $ 335.4        -3     0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* may not foot due to rounding

In Q3 2013, Polycom generated a total of $36 million in operating cash flow. Operating cash flow on a trailing 12 month basis was $183 million. Cash and investments at the end of Q3 2013 totaled $954 million following the close of the $250 million Term Loan A facility. Deferred revenue was $260 million. Polycom repurchased $18 million of common stock in Q3 2013. As of September 30, 2013, Polycom has $400 million remaining in share repurchase authorization, inclusive of the $250 million Tender Offer launched on September 13, 2013, which will expire on October 30, 2013, unless extended.

Earnings Call Details

Polycom will hold a conference call today, October 23, 2013, at 4:30 p.m. EST/1:30 p.m. PST to discuss its third quarter 2013 financial results. Kevin Parker, Chairman and interim CEO, and Eric Brown, Chief Operating Officer and Chief Financial Officer, will host the call. You may participate by viewing the webcast at www.polycom.com/investors or, for callers in the U.S. and Canada, you may participate by calling 1.800.741.5804 and for callers outside of the U.S. and Canada, by calling 1.212.231.2912. The pass code for the call is “Polycom.” A replay of the call will also be available at www.polycom.com or, for callers in the U.S. and Canada, at 1.800.633.8284 and, for callers outside of the U.S. and Canada, at 1.402.977.9140. The access number for the replay is 21675843. A replay of the call will be available on www.polycom.com for at least three months.

Forward Looking Statements and Risk Factors

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 growth, expense reduction and expanded profitability. 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 and any resulting loss of business; the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources


than we do; potential fluctuations in results and future growth rates; risks associated with global economic conditions and external market factors; the market acceptance of our products and changing market demands, including demands for differing technologies or product and services offerings; our ability to successfully integrate our acquisitions into our business; possible delays in the development, availability and shipment of new products due to engineering, manufacturing or other delays; increasing costs and differing uses of capital; changes in key personnel that may cause disruption to the business; the impact of restructuring actions; and the impact of global conflicts 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 June 30, 2013, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.

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.

GAAP to non-GAAP Reconciliation

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.

About Polycom

Polycom is the global leader in open, standards-based unified communications and collaboration (UC&C) solutions for voice and video collaboration, trusted by more than 415,000 customers around the world. Polycom solutions are powered by the Polycom® RealPresence® Platform, comprehensive software infrastructure and rich APIs that interoperate with the broadest set of communication, business, mobile and cloud applications and devices to deliver secure face-to-face video collaboration in any environment. Polycom and its ecosystem of over 7,000 partners provide truly unified communications solutions that deliver the best user experience, highest multi-vendor interoperability, and lowest TCO. Visit www.polycom.com or connect with us on Twitter, Facebook, and LinkedIn to learn how we’re pushing the greatness of human collaboration forward.

© 2013 Polycom, Inc. All rights reserved. POLYCOM®, the Polycom logo, and the names and marks associated with Polycom’s products are trademarks and/or service marks of Polycom, Inc. and are registered and/or common law marks in the United States and various other countries. All other trademarks are property of their respective owners.


POLYCOM, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2013
    September 30,
2012
    September 30,
2013
    September 30,
2012
 

Revenues:

        

Product revenues

   $ 242,515      $ 247,058      $ 740,066      $ 780,611   

Service revenues

     93,946        88,334        280,381        258,991   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     336,461        335,392        1,020,447        1,039,602   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Cost of product revenues

     102,830        102,235        309,994        316,863   

Cost of service revenues

     38,587        36,799        114,714        106,123   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     141,417        139,034        424,708        422,986   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     195,044        196,358        595,739        616,616   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Sales and marketing

     107,292        117,853        325,663        348,041   

Research and development

     54,220        53,997        164,782        153,425   

General and administrative

     28,468        27,376        76,461        72,375   

Amortization of purchased intangibles

     2,487        2,512        7,535        7,318   

Restructuring costs

     24,887        6,171        34,639        21,829   

Acquisition-related expenses

     39        6,334        3,411        11,793   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     217,393        214,243        612,491        614,781   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (22,349     (17,885     (16,752     1,835   

Interest expense

     (850     (287     (1,736     (470

Interest income and other income (expense)

     (784     57        (1,041     (2,540
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest and other income (expense), net

     (1,634     (230     (2,777     (3,010

Loss from continuing operations before provision for income taxes

     (23,983     (18,115     (19,529     (1,175

Provision for (benefit from) income taxes

     (5     (2,709     (2,963     105   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations

     (23,978     (15,406     (16,566     (1,280

Income from operations of discontinued operations, net of taxes

     —          645        —          7,710   

Gain from sale of discontinued operations, net of taxes

     —          —          459        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (23,978   $ (14,761   $ (16,107   $ 6,430   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income (loss) per share:

        

Loss per share from continuing operations

   $ (0.14   $ (0.09   $ (0.10   $ (0.01

Income per share from discontinued operations, net of taxes

   $ —        $ —        $ —        $ 0.04   

Gain per share from sale of discontinued operations, net of taxes

   $ —        $ —        $ —        $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income (loss) per share

   $ (0.14   $ (0.08   $ (0.09   $ 0.04   
  

 

 

   

 

 

   

 

 

   

 

 

 

Number of shares used in computation of net income (loss) per share:

        

Basic and diluted

     170,310        176,847        172,644        177,331   
  

 

 

   

 

 

   

 

 

   

 

 

 

Note:

Earnings per share amounts for continuing operations, discontinued operations and net income, as presented above, are calculated individually and may not sum due to rounding differences.

As a result of the net loss from continuing operations for all periods presented, all potentially issuable common shares have been excluded from the diluted shares used in the computation of earnings per share as their effect is anti-dilutive.

The tax provision and net income for the three and nine months ended September 30, 2012 have been revised from previously issued financial statements to correct an error. These adjustments were not considered material to previously issued financial statements. However, because of the significance of these adjustments to the current period, the Company has revised the prior periods contained herein. The adjustments had no impact on income before provision for income taxes or net cash flows.

 


POLYCOM, INC.

Reconciliation of GAAP to Non-GAAP Net Income

(In thousands, except per share amounts)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2013
    September 30,
2012
    September 30,
2013
    September 30,
2012
 

GAAP net income (loss)

   $ (23,978   $ (14,761   $ (16,107   $ 6,430   

Income from discontinued operations, net of taxes

     —          (645     —          (7,710

Gain from sale of discontinued operations, net of taxes

     —          —          (459     —     

Amortization of purchased intangibles

     3,735        4,421        11,279        13,044   

Restructuring costs

     24,887        6,171        34,639        21,829   

Acquisition-related expenses

     39        6,334        3,411        11,793   

Stock-based compensation expense

     17,202        24,823        53,300        65,071   

Effect of stock-based compensation on warranty rates

     120        169        421        541   

Severance costs associated with CFO retirement

     —          —          —          929   

Legal costs associated with the indemnification of a former officer

     —          121        —          236   

Costs associated with CEO separation and related SEC investigation

     2,107        —          2,107        —     

Income tax effect of non-GAAP exclusions

     (4,826     (9,396     (20,088     (21,038
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 19,286      $ 17,237      $ 68,503      $ 91,125   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP earnings per share

        

Basic and diluted

   $ (0.14   $ (0.08   $ (0.09   $ 0.04   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per share

        

Basic

   $ 0.11      $ 0.10      $ 0.40      $ 0.51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.11      $ 0.10      $ 0.39      $ 0.51   
  

 

 

   

 

 

   

 

 

   

 

 

 

Number of shares used in computation of GAAP earnings per share:

        

Basic and diluted

     170,310        176,847        172,644        177,331   

Number of shares used in computation of non-GAAP earnings per share:

        

Basic

     170,310        176,847        172,644        177,331   

Diluted

     173,992        178,292        176,241        179,276   

Note: As a result of the GAAP net loss from continuing operations for all periods presented, all potentially issuable common shares have been excluded from the diluted shares used in the computation of GAAP earnings per share as their effect is anti-dilutive


POLYCOM, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

     September 30,
2013
     December 31,
2012
 

ASSETS

     

Current assets

     

Cash and cash equivalents

   $ 712,694       $ 477,073   

Short-term investments

     161,339         197,196   

Trade receivables, net

     175,223         194,654   

Inventories

     107,681         99,960   

Deferred taxes

     48,562         48,916   

Prepaid expenses and other current assets

     66,861         52,539   
  

 

 

    

 

 

 

Total current assets

     1,272,360         1,070,338   

Property and equipment, net

     122,379         133,319   

Long-term investments

     79,776         50,333   

Goodwill and purchased intangibles

     605,411         608,802   

Deferred taxes

     26,702         28,406   

Other assets

     28,864         21,238   
  

 

 

    

 

 

 

Total assets

   $ 2,135,492       $ 1,912,436   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities

     

Accounts payable

   $ 91,136       $ 89,983   

Accrued payroll and related liabilities

     33,878         39,469   

Taxes payable

     4,880         4,736   

Deferred revenue

     172,056         158,482   

Current portion of long term debt

     6,250         —     

Other accrued liabilities

     71,592         63,018   
  

 

 

    

 

 

 

Total current liabilities

     379,792         355,688   

Non-current liabilities

     

Deferred revenue

     88,112         91,061   

Long term debt

     243,750         —     

Taxes payable

     14,926         15,598   

Deferred taxes

     229         236   

Other non-current liabilities

     34,381         22,079   
  

 

 

    

 

 

 

Total liabilities

     761,190         484,662   

Stockholders’ equity

     1,374,302         1,427,774   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 2,135,492       $ 1,912,436   
  

 

 

    

 

 

 

The tax provision and net income for the year ended December 31, 2012 have been revised from previously issued financial statements to correct an error. These adjustments were not considered material to previously issued financial statements. However, because of the significance of these adjustments to the current period, the Company has revised the prior periods contained herein. The adjustments had no impact on income before provision for income taxes or net cash flows.


POLYCOM, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

     Nine Months Ended  
     September 30,
2013
    September 30,
2012
 

Cash flows from operating activities:

    

Net income (loss)

   $ (16,107   $ 6,430   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Gain from sale of discontinued operations, net of tax

     (459     —     

Depreciation and amortization

     49,654        45,592   

Amortization of purchased intangibles

     11,335        15,878   

Amortization of debt issue costs

     52        —     

Write-down of excess and obsolete inventories

     5,625        5,297   

Provision for doubtful accounts

     —          800   

Stock-based compensation expense

     53,300        66,256   

Excess tax benefits from stock-based compensation

     (780     (9,587

Loss on disposals of property and equipment

     3,658        3,502   

Changes in assets and liabilities, net of the effect of acquisitions:

    

Trade receivables

     21,857        20,435   

Inventories

     (13,346     (13,858

Deferred taxes

     2,058        (12,947

Prepaid expenses and other assets

     (18,915     4,188   

Accounts payable

     (1,118     (31,552

Taxes payable

     (4,006     1,032   

Other accrued liabilities

     24,661        19,958   
  

 

 

   

 

 

 

Net cash provided by operating activities

     117,469        121,424   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (41,793     (51,979

Purchases of investments

     (200,945     (212,377

Proceeds from sale of investments

     21,802        37,794   

Proceeds from maturities of investments

     185,634        178,162   

Net cash received from sale of discontinued operations

     556        —     

Net cash paid in purchase acquisitions

     (7,974     (4,583
  

 

 

   

 

 

 

Net cash used in investing activities

     (42,720     (52,983
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of common stock under employee option and stock purchase plans

     23,326        24,362   

Proceeds from debt, net of debt issue costs

     247,582        —     

Repurchase of common stock

     (110,816     (62,073

Excess tax benefits from stock-based compensation

     780        9,587   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     160,872        (28,124
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     235,621        40,317   

Cash and cash equivalents, beginning of period

     477,073        375,441   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 712,694      $ 415,758   
  

 

 

   

 

 

 


POLYCOM, INC.

Selected Summary Data

(In millions except per share amounts and headcount)

(Unaudited)

 

     September 30,
2013
    June 30,
2013
    September 30,
2012
 

Balance Sheet Highlights

      

Cash and investments

   $ 954      $ 694      $ 629   

Number of shares outstanding

     170        170        175   

Cash and investments per share

   $ 5.60      $ 4.08      $ 3.59   

Debt

   $ 250.00      $ —        $ —     

Operating cash flow - quarterly

   $ 36      $ 32      $ 48   

Operating cash flow - trailing 12 months

   $ 183      $ 195      $ 243   

DSO (Days Sales Outstanding)

     47        54        51   

Inventory turns - GAAP

     5.3        5.7        5.4   

Inventory turns - non-GAAP

     5.1        5.6        5.2   

Deferred revenues

   $ 260      $ 259      $ 249   

Share repurchases:

      

Quarter-to-date share repurchases - shares

     1.7        4.7        2.9   

Quarter-to-date share repurchases - dollars

   $ 18      $ 50      $ 30   

Year-to-date share repurchases - shares

     9.8        8.1        4.7   

Year-to-date share repurchases - dollars

   $ 102      $ 84      $ 50   

Remaining authorization for share repurchases (1)

   $ 400      $ 89      $ 28   

Ending headcount

     3,789        3,844        3,733   
     For the three months ended  
     September 30,
2013
    June 30,
2013
    September 30,
2012
 

Income Statement Highlights

      

GAAP:

      

Revenues

   $ 336      $ 345      $ 335   

Gross margin

     58.0     58.4     58.5

Operating expenses

   $ 217      $ 196      $ 214   

Operating margin

     -6.6     1.8     -5.3

Diluted EPS

   $ (0.14   $ 0.03      $ (0.08

Non-GAAP:

      

Revenues

   $ 336      $ 345      $ 335   

Gross margin

     59.0     59.5     60.0

Operating expenses

   $ 173      $ 173      $ 177   

Operating margin

     7.7     9.5     7.2

Diluted EPS

   $ 0.11      $ 0.15      $ 0.10   

 

(1) Polycom is not obligated to purchase any specific number of shares under its Share Repurchase Program and the program may be modified, suspended or discontinued at any time. On September 11, 2013, Polycom’s Board of Directors authorized the repurchase of $400 million though a $250 million modified Dutch Auction self-tender offer and subsequent open market purchases of privately negotiated transactions. The program is expected to be funded by $150 million in cash and a $250 million term loan.


POLYCOM, INC.

Reconciliations of GAAP Measures to Non-GAAP Measures

(In thousands)

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2013
    September 30,
2012
    September 30,
2013
    September 30,
2012
 

GAAP cost of revenues used in inventory turns

   $ 141,417      $ 139,034      $ 424,708      $ 422,986   

Stock-based compensation expense

     (2,165     (2,889     (6,852     (7,672

Effect of stock-based compensation on warranty rates

     (120     (169     (421     (541

Amortization of purchased intangibles

     (1,248     (1,909     (3,744     (5,726
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP cost of revenues used in inventory turns

   $ 137,884      $ 134,067      $ 413,691      $ 409,047   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP gross profit

   $ 195,044      $ 196,358      $ 595,739      $ 616,616   

Stock-based compensation expense

     2,165        2,889        6,852        7,672   

Effect of stock-based compensation on warranty rates

     120        169        421        541   

Amortization of purchased intangibles

     1,248        1,909        3,744        5,726   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 198,577      $ 201,325      $ 606,756      $ 630,555   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     59.0     60.0     59.5     60.7

GAAP sales and marketing expense

   $ 107,292      $ 117,853      $ 325,663      $ 348,041   

Stock-based compensation expense

     (5,889     (9,765     (19,742     (27,069
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP sales and marketing expense

   $ 101,403      $ 108,088      $ 305,921      $ 320,972   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP sales and marketing expense as percent of revenues

     30.1     32.2     30.0     30.9

GAAP research and development expense

   $ 54,220      $ 53,997      $ 164,782      $ 153,425   

Stock-based compensation expense

     (3,669     (5,409     (12,578     (14,808
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP research and development expense

   $ 50,551      $ 48,588      $ 152,204      $ 138,617   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP research and development expense as percent of revenues

     15.0     14.5     14.9     13.3

GAAP general and administrative expense

   $ 28,468      $ 27,376      $ 76,461      $ 72,375   

Stock-based compensation expense

     (5,479     (6,760     (14,128     (15,522

Severance costs associated with CFO retirement

     —          —          —          (929

Legal costs associated with the indemnification of a former officer

     —          (121     —          (236

Costs associated with CEO separation and related SEC investigation

     (2,107     —          (2,107     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP general and administrative expense

   $ 20,882      $ 20,495      $ 60,226      $ 55,688   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP general and administrative expense as percent of revenues

     6.2     6.1     5.9     5.4

GAAP total operating expenses

   $ 217,393      $ 214,243      $ 612,491      $ 614,781   

Stock-based compensation expense

     (15,037     (21,934     (46,448     (57,399

Amortization of purchased intangibles

     (2,487     (2,512     (7,535     (7,318

Restructuring costs

     (24,887     (6,171     (34,639     (21,829

Acquisition-related expenses

     (39     (6,334     (3,411     (11,793

Severance costs associated with CFO retirement

     —          —          —          (929

Legal costs associated with the indemnification of a former officer

     —          (121     —          (236

Costs associated with CEO separation and related SEC investigation

     (2,107     —          (2,107     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP total operating expenses

   $ 172,836      $ 177,171      $ 518,351      $ 515,277   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP total operating expenses as percent of revenues

     51.4     52.8     50.8     49.6

GAAP operating income (loss)

   $ (22,349   $ (17,885   $ (16,752   $ 1,835   

Stock-based compensation expense

     17,202        24,823        53,300        65,071   

Effect of stock-based compensation on warranty rates

     120        169        421        541   

Amortization of purchased intangibles

     3,735        4,421        11,279        13,044   

Restructuring costs

     24,887        6,171        34,639        21,829   

Acquisition-related expenses

     39        6,334        3,411        11,793   

Severance costs associated with CFO retirement

     —          —          —          929   

Legal costs associated with the indemnification of a former officer

     —          121        —          236   

Costs associated with CEO separation and related SEC investigation

     2,107        —          2,107        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 25,741      $ 24,154      $ 88,405      $ 115,278   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating margin

     7.7     7.2     8.7     11.1


POLYCOM, INC.

Summary of Stock-Based Compensation Expense

(In thousands)

(Unaudited)

 

     Three Months Ended      Nine Months Ended  
     September 30,
2013
     September 30,
2012
     September 30,
2013
     September 30,
2012
 

Cost of sales - product

   $ 686       $ 969       $ 2,252       $ 2,720   

Cost of sales - service

     1,479         1,920         4,600         4,952   
  

 

 

    

 

 

    

 

 

    

 

 

 

Stock-based compensation expense in cost of sales

     2,165         2,889         6,852         7,672   
  

 

 

    

 

 

    

 

 

    

 

 

 

Sales and marketing

     5,889         9,765         19,742         27,069   

Research and development

     3,669         5,409         12,578         14,808   

General and administrative

     5,479         6,760         14,128         15,522   
  

 

 

    

 

 

    

 

 

    

 

 

 

Stock-based compensation expense in operating expenses

     15,037         21,934         46,448         57,399   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total stock-based compensation expense

   $ 17,202       $ 24,823       $ 53,300       $ 65,071