SAN JOSE, Calif.--(BUSINESS WIRE)--Polycom, Inc. (Nasdaq:PLCM), the global leader in open standards-based unified communications (UC), today reported financial results for the second quarter ended June 30, 2012. Total combined revenues were $379 million, including revenues from the company’s Enterprise Wireless Solutions (EWS) business of $21 million. Polycom has announced plans to divest the EWS business in order to focus its product and technology portfolio on core unified communications and video collaboration solutions.
Second quarter 2012 consolidated net revenues from continuing operations were $359 million, up 5 percent year-over-year as compared to $341 million for the second quarter of 2011. Non-GAAP net income for the second quarter of 2012 was $39 million, or 22 cents per diluted share, compared to non-GAAP net income of $43 million, or 24 cents per diluted share, for the second quarter of 2011. GAAP net income for the second quarter of 2012 was $7 million, or 4 cents per diluted share, compared to $29 million, or 16 cents per diluted share, for the same period last year. The share and per share data for all periods presented in this release have been adjusted to reflect the two-for-one stock split that was effective July 1, 2011 and the classification of Polycom’s EWS business as discontinued operations.
“Demand for our best in class UC solutions was solid in Q2, which allowed us to exceed both revenue and earnings expectations,” stated Andrew M. Miller, Polycom President and Chief Executive Officer. “In the second half of this year, we will be launching a series of products that we believe will be game-changing and will allow us to expand our addressable market and extend our advantages versus the competition. Most recently, we launched the new Polycom® RealPresence® Resource Manager offering that further differentiates our Polycom® RealPresence® Platform with support for large scale video deployments of up to 10,000 endpoints, including mobile devices, multi-tenancy for service providers to deliver Video-as-a-Service cost-effectively, and a new suite of rich, open APIs that extends the value and ecosystem around our RealPresence Platform.”
“Our overall performance was better than expected, although we are closely monitoring demand in Europe,” continued Eric Brown, Polycom Chief Operating Officer and Chief Financial Officer. “Our primary focus for the balance of the year will be allocating resources to support our key upcoming new product launches.”
When reviewing these results, it is important to note that due to the previously announced divestiture of the EWS business, results attributable to the EWS business are therefore considered discontinued operations for all periods presented. Accordingly, EWS revenue and related expenses are shown, net of taxes, as discontinued operations in the statement of operations and excluded from non-GAAP results. Prior periods have been restated to conform to the current period presentation.
Results for the second quarter ended June 30, 2012, before consideration of EWS as discontinued operations, were as follows:
|
Revenues
(millions) |
Non-GAAP |
|||||
| Continuing operations | $ | 358.5 | $ | 0.22 | ||
| EWS reported as discontinued operations | $ | 20.8 | $ | 0.02 | ||
| Total revenues | $ | 379.3 | $ | 0.24 | ||
The reconciliation between GAAP net income and non-GAAP net income is provided in the tables at the end of this release.
On a geographic basis, consolidated net revenues from continuing operations for the second quarter of 2012 were comprised of:
- 50 percent Americas, or $177.7 million, an increase of 3 percent year-over-year;
- 22 percent Europe, Middle East, and Africa (EMEA), or $80.4 million, a decrease of 2 percent year-over-year; and
- 28 percent Asia Pacific, or $100.4 million, an increase of 16 percent year-over-year.
By product line, inclusive of its service component, consolidated net revenues from continuing operations for the second quarter of 2012 were comprised of:
- UC Group Systems of $251.7 million, an increase of 7 percent year-over-year;
- UC Personal Devices of $42.9 million, a decrease of 3 percent year-over-year; and
- UC Platform of $63.9 million, an increase of 6 percent year-over-year.
In Q2 2012, Polycom generated a total of $41 million in operating cash flow and completed share repurchases of $20 million. Operating cash flow on a trailing 12 month basis was $242 million.
Q2 2012 Business Highlights
- Announced a definitive agreement to divest the EWS business to an affiliate of Sun Capital Partners, Inc. The sale is expected to close within the third quarter of 2012.
- Announced updates to Polycom® RealPresence® Video Content Management solutions that deliver live video streaming and video recordings on-demand through a Web portal to Android and Apple devices.
- Introduced new corporate brand identity to underscore Polycom’s continuing transformation to a software-led company.
- Announced BT Conferencing is using the Polycom® RealPresence® Platform to power its Video-as-a-Service (VaaS) offering for Polycom deployments.
- Entered into a U.S. and Canadian distribution agreement with Avnet Technology Solutions, under which they will resell Polycom® RealPresence® video and voice solutions.
Earnings Call Details
Polycom will hold a conference call today, July 24, 2012, at 5:00 p.m. ET/2:00 p.m. PT to discuss its second quarter financial results. Andrew M. Miller, President and 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 800.707.8704 and for callers outside of the U.S. and Canada, by calling 303.223.4360. 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 800.633.8284 and, for callers outside of the U.S. and Canada, at 402.977.9140. The access number for the replay is 21598593. 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 events, future demand for our products, and the future performance of the Company, including statements regarding the expected expansion of our addressable market and competitive advantages through game-changing new product launches, the expected areas of focus and anticipated results of realigning our expense profile, the expected close date of the divestiture of our EWS business, and our transformation to a software-led company. 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; 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 and divest our EWS business; possible delays in the development, availability and shipment of new products; increasing costs and differing uses of capital; changes in key personnel that may cause disruption to the business; any disruptive impact to us that may result from new senior-level hires; continuing disruption to the business due to the realignment of the North America sales organization; our inability to achieve the expected results from adjustments being made to our expense profile; 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 March 31, 2012, 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 (UC) solutions for telepresence, video, and voice, powered by the Polycom® RealPresence®Platform. The RealPresence Platform interoperates with the broadest range of business, mobile and social applications and devices. More than 400,000 organizations trust Polycom solutions to collaborate and meet face to face from any location for more productive and effective engagement with colleagues, partners, customers, specialists, and prospects. Polycom, together with its broad partner ecosystem, provides customers with the best total cost of ownership, interoperability, scalability, and security for video collaboration, whether on-premises, hosted or cloud delivered. Visit www.polycom.com or connect with Polycom on Twitter, Facebook, and LinkedIn.
© 2012 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 | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| Revenues: | ||||||||||||||||||
| Product revenues | $ | 272,279 | $ | 282,332 | $ | 533,555 | $ | 549,718 | ||||||||||
| Service revenues | 86,221 | 58,236 | 170,656 | 110,975 | ||||||||||||||
| Total revenues | 358,500 | 340,568 | 704,211 | 660,693 | ||||||||||||||
| Cost of revenues: | ||||||||||||||||||
| Cost of product revenues | 109,498 | 108,112 | 214,628 | 206,495 | ||||||||||||||
| Cost of service revenues | 35,080 | 21,479 | 69,324 | 44,435 | ||||||||||||||
| Total cost of revenues | 144,578 | 129,591 | 283,952 | 250,930 | ||||||||||||||
| Gross profit | 213,922 | 210,977 | 420,259 | 409,763 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Sales and marketing | 118,021 | 105,281 | 230,188 | 204,102 | ||||||||||||||
| Research and development | 49,726 | 46,609 | 99,428 | 87,896 | ||||||||||||||
| General and administrative | 23,682 | 20,874 | 44,999 | 38,992 | ||||||||||||||
| Amortization of purchased intangibles | 2,479 | 622 | 4,806 | 936 | ||||||||||||||
| Restructuring costs | 12,735 | 897 | 15,658 | 3,475 | ||||||||||||||
| Acquisition-related expenses | 3,545 | 1,997 | 5,459 | 4,346 | ||||||||||||||
| Total operating expenses | 210,188 | 176,280 | 400,538 | 339,747 | ||||||||||||||
| Operating income | 3,734 | 34,697 | 19,721 | 70,016 | ||||||||||||||
| Other expense, net | (993 | ) | (728 | ) | (2,780 | ) | (2,007 | ) | ||||||||||
| Income from continuing operations before provision for income taxes | 2,741 | 33,969 | 16,941 | 68,009 | ||||||||||||||
| Provision for income taxes | 509 | 7,805 | 2,359 | 7,408 | ||||||||||||||
| Income from continuing operations | 2,232 | 26,164 | 14,582 | 60,601 | ||||||||||||||
| Income from discontinued operations, net of taxes | 4,313 | 2,379 | 7,065 | 1,920 | ||||||||||||||
| Net income | $ | 6,545 | $ | 28,543 | $ | 21,647 | $ | 62,521 | ||||||||||
| Basic net income per share: | ||||||||||||||||||
| Income per share from continuing operations | $ | 0.01 | $ | 0.15 | $ | 0.08 | $ | 0.34 | ||||||||||
| Income per share from discontinued operations, net of taxes | $ | 0.02 | $ | 0.01 | $ | 0.04 | $ | 0.01 | ||||||||||
| Basic net income per share | $ | 0.04 | $ | 0.16 | $ | 0.12 | $ | 0.36 | ||||||||||
| Diluted net income per share: | ||||||||||||||||||
| Income per share from continuing operations | $ | 0.01 | $ | 0.14 | $ | 0.08 | $ | 0.33 | ||||||||||
| Income per share from discontinued operations, net of taxes | $ | 0.02 | $ | 0.01 | $ | 0.04 | $ | 0.01 | ||||||||||
| Diluted net income per share: | $ | 0.04 | $ | 0.16 | $ | 0.12 | $ | 0.34 | ||||||||||
| Number of shares used in computation of net income per share: | ||||||||||||||||||
| Basic | 177,720 | 176,670 | 177,574 | 175,863 | ||||||||||||||
| Fully diluted | 179,047 | 182,329 | 179,768 | 181,464 | ||||||||||||||
|
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. |
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| POLYCOM, INC. | ||||||||||||||||||
| Reconciliation of GAAP to Non-GAAP Net Income | ||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| GAAP net income | $ | 6,545 | $ | 28,543 | $ | 21,647 | $ | 62,521 | ||||||||||
| Income from discontinued operations, net of income taxes | (4,313 | ) | (2,379 | ) | (7,065 | ) | (1,920 | ) | ||||||||||
| Amortization of purchased intangibles | 4,388 | 2,215 | 8,625 | 3,179 | ||||||||||||||
| Restructuring costs | 12,735 | 897 | 15,658 | 3,475 | ||||||||||||||
| Acquisition-related expenses | 3,545 | 1,997 | 5,459 | 4,346 | ||||||||||||||
| Stock-based compensation expense | 22,494 | 15,624 | 40,246 | 25,621 | ||||||||||||||
| Effect of stock-based compensation on warranty rates | 183 | 117 | 371 | 228 | ||||||||||||||
| Severance costs associated with CFO retirement | - | - | 929 | - | ||||||||||||||
| Legal costs associated with the indemnification of a former officer | - | 124 | 115 | 1,292 | ||||||||||||||
| Impairment of an investment in a private company | - | - | - | 500 | ||||||||||||||
| Benefit related to the resolution of a multi-year tax audit | - | - | - | (7,486 | ) | |||||||||||||
| Income tax effect of non-GAAP exclusions | (6,929 | ) | (3,708 | ) | (12,097 | ) | (7,389 | ) | ||||||||||
| Non-GAAP net income | $ | 38,648 | $ | 43,430 | $ | 73,888 | $ | 84,367 | ||||||||||
| GAAP earnings per share | ||||||||||||||||||
| Basic | $ | 0.04 | $ | 0.16 | $ | 0.12 | $ | 0.36 | ||||||||||
| Fully diluted | $ | 0.04 | $ | 0.16 | $ | 0.12 | $ | 0.34 | ||||||||||
| Non-GAAP earnings per share | ||||||||||||||||||
| Basic | $ | 0.22 | $ | 0.25 | $ | 0.42 | $ | 0.48 | ||||||||||
| Fully diluted | $ | 0.22 | $ | 0.24 | $ | 0.41 | $ | 0.46 | ||||||||||
| Number of shares used in computation of GAAP and non-GAAP earnings per share: | ||||||||||||||||||
| Basic | 177,720 | 176,670 | 177,574 | 175,863 | ||||||||||||||
| Fully diluted | 179,047 | 182,329 | 179,768 | 181,464 | ||||||||||||||
| POLYCOM, INC. | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| June 30, | December 31, | |||||
| 2012 | 2011 | |||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 394,651 | $ | 375,241 | ||
| Short-term investments | 177,422 | 159,426 | ||||
| Trade receivables, net | 211,871 | 210,804 | ||||
| Inventories | 99,886 | 93,284 | ||||
| Deferred taxes | 43,869 | 37,282 | ||||
| Prepaid expenses and other current assets | 53,166 | 51,241 | ||||
| Assets held for sale, current | 62,586 | 67,130 | ||||
| Total current assets | 1,043,451 | 994,408 | ||||
| Property and equipment, net | 140,809 | 126,884 | ||||
| Long-term investments | 42,853 | 56,772 | ||||
| Goodwill and purchased intangibles | 616,975 | 623,121 | ||||
| Deferred taxes | 25,678 | 23,356 | ||||
| Other assets | 19,500 | 20,264 | ||||
| Total assets | $ | 1,889,266 | $ | 1,844,805 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current liabilities | ||||||
| Accounts payable | $ | 94,917 | $ | 110,719 | ||
| Accrued payroll and related liabilities | 29,394 | 38,546 | ||||
| Deferred revenue | 150,264 | 138,486 | ||||
| Other accrued liabilities | 58,510 | 59,288 | ||||
| Liabilities held for sale, current | 13,981 | 14,119 | ||||
| Total current liabilities | 347,066 | 361,158 | ||||
| Non-current liabilities | ||||||
| Deferred revenue | 88,589 | 82,898 | ||||
| Taxes payable | 16,718 | 16,813 | ||||
| Deferred taxes | 538 | 558 | ||||
| Other non-current liabilities | 18,070 | 13,262 | ||||
| Total liabilities | 470,981 | 474,689 | ||||
| Stockholders' equity | 1,418,285 | 1,370,116 | ||||
| Total liabilities and stockholders' equity | $ | 1,889,266 | $ | 1,844,805 | ||
| POLYCOM, INC. | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| 2012 | 2011 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 21,647 | $ | 62,521 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 29,530 | 25,202 | ||||||
| Amortization of purchased intangibles | 11,439 | 9,159 | ||||||
| Provision for excess and obsolete inventories | 4,828 | 5,299 | ||||||
| Provision for doubtful accounts | 550 | - | ||||||
| Stock-based compensation expense | 41,024 | 26,139 | ||||||
| Impairment of private company investments | - | 500 | ||||||
| Excess tax benefits from stock-based compensation | (5,634 | ) | (11,977 | ) | ||||
| Loss on disposals of property and equipment | 3,231 | 699 | ||||||
|
Changes in assets and liabilities, net of the effect of acquisitions: |
||||||||
| Trade receivables | (1,224 | ) | (30,254 | ) | ||||
| Inventories | (10,497 | ) | 4,624 | |||||
| Deferred taxes | (9,635 | ) | (6,635 | ) | ||||
| Prepaid expenses and other assets | (3,636 | ) | (4,920 | ) | ||||
| Accounts payable | (22,822 | ) | 4,533 | |||||
| Taxes payable | 3,987 | 9,531 | ||||||
| Other accrued liabilities | 10,657 | 36,476 | ||||||
| Net cash provided by operating activities | 73,445 | 130,897 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (35,513 | ) | (32,029 | ) | ||||
| Purchases of investments | (142,565 | ) | (228,251 | ) | ||||
| Proceeds from sale of investments | 14,790 | 26,722 | ||||||
| Proceeds from maturities of investments | 123,873 | 167,646 | ||||||
| Net cash paid in purchase acquisitions | (4,583 | ) | (50,041 | ) | ||||
| Net cash used in investing activities | (43,998 | ) | (115,953 | ) | ||||
| Cash flows from financing activities: | ||||||||
|
Proceeds from issuance of common stock under employee option and stock purchase plans |
15,147 | 29,891 | ||||||
| Repurchase of common stock | (30,818 | ) | (17,441 | ) | ||||
| Excess tax benefits from stock-based compensation | 5,634 | 11,977 | ||||||
| Net cash (used in) provided by financing activities | (10,037 | ) | 24,427 | |||||
| Net increase in cash and cash equivalents | 19,410 | 39,371 | ||||||
| Cash and cash equivalents, beginning of period | 375,441 | 324,188 | ||||||
| Cash and cash equivalents, end of period | $ | 394,851 | $ | 363,559 | ||||
| These Condensed Consolidated Statements of Cash Flows include combined cash flows of continuing and discontinued operations. | ||||||||
| POLYCOM, INC. | ||||||||||||||||||
| Reconciliations of GAAP Measures to Non-GAAP Measures | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| GAAP cost of revenues used in inventory turns | $ | 144,578 | $ | 129,591 | $ | 283,952 | $ | 250,930 | ||||||||||
| Stock-based compensation expense | (2,486 | ) | (1,545 | ) | (4,783 | ) | (2,668 | ) | ||||||||||
| Effect of stock-based compensation on warranty rates | (183 | ) | (117 | ) | (371 | ) | (228 | ) | ||||||||||
| Amortization of purchased intangibles | (1,909 | ) | (1,593 | ) | (3,819 | ) | (2,243 | ) | ||||||||||
| Non-GAAP cost of revenues used in inventory turns | $ | 140,000 | $ | 126,336 | $ | 274,979 | $ | 245,791 | ||||||||||
| GAAP gross profit | $ | 213,922 | $ | 210,977 | $ | 420,259 | $ | 409,763 | ||||||||||
| Stock-based compensation expense | 2,486 | 1,545 | 4,783 | 2,668 | ||||||||||||||
| Effect of stock-based compensation on warranty rates | 183 | 117 | 371 | 228 | ||||||||||||||
| Amortization of purchased intangibles | 1,909 | 1,593 | 3,819 | 2,243 | ||||||||||||||
| Non-GAAP gross profit | $ | 218,500 | $ | 214,232 | $ | 429,232 | $ | 414,902 | ||||||||||
| Non-GAAP gross margin | 60.9 | % | 62.9 | % | 61.0 | % | 62.8 | % | ||||||||||
| GAAP sales and marketing expense | $ | 118,021 | $ | 105,281 | $ | 230,188 | $ | 204,102 | ||||||||||
| Stock-based compensation expense | (9,659 | ) | (6,362 | ) | (17,303 | ) | (11,113 | ) | ||||||||||
| Non-GAAP sales and marketing expense | $ | 108,362 | $ | 98,919 | $ | 212,885 | $ | 192,989 | ||||||||||
| Non-GAAP sales and marketing expense as percent of revenues | 30.2 | % | 29.0 | % | 30.2 | % | 29.2 | % | ||||||||||
| GAAP research and development expense | $ | 49,726 | $ | 46,609 | $ | 99,428 | $ | 87,896 | ||||||||||
| Stock-based compensation expense | (4,852 | ) | (3,612 | ) | (9,399 | ) | (5,928 | ) | ||||||||||
| Non-GAAP research and development expense | $ | 44,874 | $ | 42,997 | $ | 90,029 | $ | 81,968 | ||||||||||
| Non-GAAP research and development expense as percent of revenues | 12.5 | % | 12.6 | % | 12.8 | % | 12.4 | % | ||||||||||
| GAAP general and administrative expense | $ | 23,682 | $ | 20,874 | $ | 44,999 | $ | 38,992 | ||||||||||
| Stock-based compensation expense | (5,497 | ) | (4,105 | ) | (8,761 | ) | (5,912 | ) | ||||||||||
| Severance costs associated with CFO retirement | - | - | (929 | ) | - | |||||||||||||
| Legal costs associated with the indemnification of a former officer | - | (124 | ) | (115 | ) | (1,292 | ) | |||||||||||
| Non-GAAP general and administrative expense | $ | 18,185 | $ | 16,645 | $ | 35,194 | $ | 31,788 | ||||||||||
| Non-GAAP general and administrative expense as percent of revenues | 5.1 | % | 4.9 | % | 5.0 | % | 4.8 | % | ||||||||||
| GAAP total operating expenses | $ | 210,188 | $ | 176,280 | $ | 400,538 | $ | 339,747 | ||||||||||
| Stock-based compensation expense | (20,008 | ) | (14,079 | ) | (35,463 | ) | (22,953 | ) | ||||||||||
| Amortization of purchased intangibles | (2,479 | ) | (622 | ) | (4,806 | ) | (936 | ) | ||||||||||
| Restructuring costs | (12,735 | ) | (897 | ) | (15,658 | ) | (3,475 | ) | ||||||||||
| Acquisition-related expenses | (3,545 | ) | (1,997 | ) | (5,459 | ) | (4,346 | ) | ||||||||||
| Severance costs associated with CFO retirement | - | - | (929 | ) | - | |||||||||||||
| Legal costs associated with the indemnification of a former officer | - | (124 | ) | (115 | ) | (1,292 | ) | |||||||||||
| Non-GAAP total operating expenses | $ | 171,421 | $ | 158,561 | $ | 338,108 | $ | 306,745 | ||||||||||
| Non-GAAP total operating expenses as percent of revenues | 47.8 | % | 46.6 | % | 48.0 | % | 46.4 | % | ||||||||||
| GAAP operating income | $ | 3,734 | $ | 34,697 | $ | 19,721 | $ | 70,016 | ||||||||||
| Stock-based compensation expense | 22,494 | 15,624 | 40,246 | 25,621 | ||||||||||||||
| Effect of stock-based compensation on warranty rates | 183 | 117 | 371 | 228 | ||||||||||||||
| Amortization of purchased intangibles | 4,388 | 2,215 | 8,625 | 3,179 | ||||||||||||||
| Restructuring costs | 12,735 | 897 | 15,658 | 3,475 | ||||||||||||||
| Acquisition-related expenses | 3,545 | 1,997 | 5,459 | 4,346 | ||||||||||||||
| Severance costs associated with CFO retirement | - | - | 929 | - | ||||||||||||||
| Legal costs associated with the indemnification of a former officer | - | 124 | 115 | 1,292 | ||||||||||||||
| Non-GAAP operating income | $ | 47,079 | $ | 55,671 | $ | 91,124 | $ | 108,157 | ||||||||||
| Non-GAAP operating margin | 13.1 | % | 16.3 | % | 12.9 | % | 16.4 | % | ||||||||||
| POLYCOM, INC. | ||||||||||||||
| Summary of Stock-Based Compensation Expense | ||||||||||||||
| (In thousands) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||
| Cost of sales - product | $ | 793 | $ | 539 | $ | 1,751 | $ | 1,124 | ||||||
| Cost of sales - service | 1,693 | 1,006 | 3,032 | 1,544 | ||||||||||
| Stock-based compensation expense in cost of sales | 2,486 | 1,545 | 4,783 | 2,668 | ||||||||||
| Sales and marketing | 9,659 | 6,362 | 17,303 | 11,113 | ||||||||||
| Research and development | 4,852 | 3,612 | 9,399 | 5,928 | ||||||||||
| General and administrative | 5,497 | 4,105 | 8,761 | 5,912 | ||||||||||
| Stock-based compensation expense in operating expenses | 20,008 | 14,079 | 35,463 | 22,953 | ||||||||||
| Total stock-based compensation expense | $ | 22,494 | $ | 15,624 | $ | 40,246 | $ | 25,621 | ||||||