Plantronics Earnings 2020-12-26
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended December 26, 2020
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ________to _________
Commission File Number: 001-12696
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices)
(Zip Code)
(831 ) 426-5858
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of February 1, 2021, 41,262,484 shares of the registrant's common stock were outstanding.
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Plantronics, Inc.
FORM 10-Q
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | Page No. | ||||
| PART II. OTHER INFORMATION | |||||
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Plantronics®, Poly®, Simply Smarter Communications® , and the propeller design are trademarks or registered trademarks of Plantronics, Inc. All other trademarks are the property of their respective owners.
DECT™ is a trademark of ETSI registered for the benefit of its members in France and other jurisdictions.
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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Part I -- FINANCIAL INFORMATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
CERTAIN FORWARD-LOOKING INFORMATION:
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may generally be identified by the use of such words as "expect," "anticipate," "believe," "estimate," "intend," "predict," "project," or "will," or variations of such words and similar expressions are based on current expectations and entail various risks and uncertainties. Specific forward-looking statements and the associated risks and uncertainties contained within this Form 10-Q include, but are not limited to: (i) our beliefs with respect to the length and severity of the COVID-19 (coronavirus) outbreak, and its impact across our businesses, our operations and global supply chain, including (a) our expectations the virus has caused and will continue to cause an increase in customer and partner demand for our product lines, including increased demand in collaboration endpoints, and our ability to design new product offerings to meet the change in demand due to a global hybrid work environment, (b) risks related to increased freight and other costs associated with expediting shipment and delivery of high-demand products to key markets in order to meet customer demand, (c) our inability to source component parts from key suppliers in sufficient quantities necessary to meet the high demand for certain product lines, including our Enterprise Headsets and continued uncertainty and potential impact on future quarters if sourcing constraints continue and/or price volatility occurs, which could continue to negatively affect our profitability and/or market share, (d) expectations related to our voice product lines, as well as our services attachment rate for such products, which have been, and may continue to be, negatively impacted as companies have delayed returning their workforces to offices in many countries due to the continued impact of COVID-19, (e) expectations related to our ability to fulfill the backlog generated by supply constraints, to timely supply the number of products to fulfill current and future customer demand, including expectations that our manufacturing facility in Tijuana, Mexico will continue production at the capacity necessary to meet such demand, (f) the impact of the virus on our distribution partners, resellers, end-user customers and our production facilities, including our ability to obtain alternative sources of supply if our production facility or other suppliers are impacted by future shut-downs, (g) the impact if global or regional economic conditions deteriorate further, on our customers and/or partners, including increased demand for pricing accommodations, delayed payments, delayed deployment plans, insolvency or other issues which may increase credit losses, (h) risks related to restrictions or delays in global return to worksites as a result of COVID-19, which continues to impact our employees and our customers worldwide, which has negatively impacted our voice product lines for the quarter, and restricted customer engagement; and (i) the complexity of the forecast analysis and the design and operation of internal controls; and (ii) our belief that we can manufacture or supply products in a timely manner to satisfy perishable demand; (iii) expectations related to our customers’ purchasing decisions and our ability to pivot quickly enough and/or match product production to demand, particularly 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; (iv) risks associated with significant and/or abrupt changes in product demand which increases the complexity of management’s evaluation of potential excess or obsolete inventory; (v) risks associated with the bankruptcy or financial weakness of distributors or key customers, or the bankruptcy of or reduction in capacity of our key suppliers; (vi) risks associated with the potential interruption in the supply of sole-sourced critical components, our ability to move to a dual-source model, and the continuity of component supply at costs consistent with our plans, which has negatively impacted us in the quarter, and may continue to impact, our ability to timely supply product to meet our customer demand; (vii) expectations related to our services segment revenues, particularly as we introduce new generation, less complex, product solutions, or as companies shift from on premises to work from home options for their workforce, which may result in decreased demand for our professional, installation and/or managed service offerings; (viii) expectations that our current cash on hand, additional cash generated from operations, together with sources of cash through our credit facility, either alone or in combination with our election to suspend our dividend payments, will meet our liquidity needs during and following the unknown duration and impact of the COVID-19 pandemic; (ix) expectations relating to our ability to generate sufficient cash flow from operations to meet our debt covenants, and timely repay all principal and interest amounts drawn under our credit facility as they become due; (x) risks associated with our channel partners’ sales reporting, product inventories and product sell through since we sell a significant amount of products to channel partners who maintain their own inventory of our products; (xi) our efforts to execute to drive sales and sustainable profitable revenue growth, to improve our profitability and cash flow, and accelerate debt reduction and de-levering; (xii) our expectations for new products launches, the timing of their releases and their expected impact on future growth and on our existing products; (xiii) our belief that our Partner Program and/or our product management and personal device services, including Poly Lens and/or Poly+, will drive growth and profitability for both us and our partners through the sale of our product, services and solutions; (xiv) risks associated with forecasting sales and procurement demands, which are inherently difficult, particularly with continuing uncertainty in regional and global economic conditions; (xv) uncertainties attributable to currency fluctuations, including fluctuations in foreign exchange rates and/or new or greater tariffs
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on our products; (xvi) our expectations regarding our ability to control costs, streamline operations and successfully implement our various cost-reduction activities and realize anticipated cost savings under such cost-reduction initiatives; (xvii) expectations relating to our quarterly and annual earnings guidance, particularly as economic uncertainty, including, without limitation, uncertainty related to the continued impact of COVID-19, the macro-economic and political climate and other external factors, puts further pressure on management judgments used to develop forward looking financial guidance and other prospective financial information; (xviii) expectations related to GAAP and non-GAAP financial results for the fourth quarter and full Fiscal Year 2021, including net revenues, adjusted EBITDA, tax rates, intangibles amortization, diluted weighted average shares outstanding and diluted EPS; (xix) our expectations of the impact of the acquisition of Polycom as it relates to our strategic vision and additional market and strategic partnership opportunities for our combined hardware, software and services offerings; (xx) our beliefs regarding the UC&C market, market dynamics and opportunities, and customer and partner behavior as well as our position in the market, including risks associated with the potential failure of our UC&C solutions to be adopted with the breadth and speed we anticipate; (xxi) our belief that the increased adoption of certain technologies and our open architecture approach has and will continue to increase demand for our solutions; (xxii) expectations related to the micro and macro-economic conditions in our domestic and international markets and their impact on our future business; (xxiii) our forecast and estimates with respect to tax matters, including expectations with respect to utilizing our deferred tax assets; (xxiv) our expectations related to building strategic alliances and key partnerships with providers of collaboration tools and platforms to drive revenue growth and market share; and (xxv) our expectations regarding pending and potential future litigation, in addition to other matters discussed in this Quarterly Report on Form 10-Q that are not purely historical data. Such forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. Factors that could cause actual results and events to differ materially from such forward-looking statements are included, but not limited to, those discussed in this Quarterly Report on Form 10-Q; in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended March 28, 2020, filed with the Securities and Exchange Commission ("SEC") on June 8, 2020; and other documents we have filed with the SEC. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
OVERVIEW
Plantronics, Inc. (“Poly,” “Company,” “we,” “our,” or “us”) builds premium audio and video products that are engineered to connect people with incredible clarity, are easy to use, and work seamlessly with any conferencing platform. Poly combines legendary audio expertise and powerful video and conferencing capabilities to create professional tools that help our customers look and sound their best, wherever they are, however they want to connect, and whatever platform they use. Our headsets, video and audio conferencing, desk phones, analytics software and services are used worldwide and are a leading choice for "work from anywhere" environments.
Our major product categories are Headsets, Video, Voice, and Services. Headsets include wired and wireless communication headsets; Voice includes open Session Initiation Protocol (“SIP”) and native ecosystem desktop phones as well as conference room phones; and Video includes video conferencing solutions and peripherals, such as cameras, speakers, and microphones. Poly provides a complete portfolio of products and usage scenarios that are themselves supported by a comprehensive Service organization to meet the needs of the most demanding and largest enterprise customers. Our broad portfolio of Services include video interoperability, hardware and software support for our devices, as well as professional, hosted, and managed services that are grounded in our deep expertise aimed at giving our customers the confidence, flexibility and edge needed to command the conversation.
Our products are designed to work seamlessly with all the best video and audio conferencing services for what's known in the industry as Unified Communications & Collaboration ("UC&C"), Unified Communication as a Service ("UCaaS"), Video as a Service ("VaaS"), and/or Device as a Service ("DaaS") environments. Our cloud management and analytics software gives IT the tools needed to manage devices with remote troubleshooting, updates, and inventory control and interactive mapping for faster return on investment ("ROI").
We sell our products through a well-developed global network of distributors and channel partners, including value-added resellers, integrators, direct marketing resellers, and service providers as well as through both traditional and online retailers, office supply distributors, and e-commerce channels. We have well-established distribution channels in the Americas, Europe, Middle East, Africa, and Asia Pacific where use of our products is widespread.
Impact of COVID-19 on Our Business
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The novel strain of COVID-19 has continued to spread globally and continues to add uncertainty and influence global economic activity, the global supply chain and financial markets. The impact of the pandemic on our operations has varied by local conditions, government mandates and business limitations, including travel bans, remote work and other restrictions.
Shelter-in-place mandates have led to a massive increase in remote work. As a result, we continued to experience elevated demand for certain Enterprise Headsets and Video devices and a decline in demand for our Voice products and associated services, as companies continued to shift from in-office to work-from-home arrangements for many of their office workers. The acceleration in customer and partner demand for these products to support hybrid work environments, remote learning, and telemedicine opportunities, have led to increased sales and operating income.
However, the impact of COVID-19 is fluid and uncertain, and it has caused, and may continue to cause, various negative effects as we continue to experience periodic constraints in our supply chain, specifically the sourcing of certain components and raw materials, and increased logistics costs and other adverse effects on our gross margins to meet the high customer demand for specific Headsets and Video products. As a result, the impact of COVID-19 to date has had mixed effects on our results of operations, and may continue to have such effects.
In responding to this pandemic, employee safety continues to be a critical concern to the Company and we have taken measures to protect our employees globally by adherence to public safety and shelter in place directives, physical distancing protocols within offices and manufacturing facilities, providing personal protective equipment, including face masks and hand sanitizers, conducting routine sanitation of facilities, requiring health monitoring before entry into Company facilities and restricting the number of visitors to our sites. The safety protocols implemented globally meet or exceed current regulations, however we continue to monitor employees’ safety and evolving regulatory requirements. Although our manufacturing facility remains open and certain office employees may utilize our offices when necessary, the majority of all non-factory employees continue to work from home, using headsets and other Company-issued equipment.
The full extent and duration of the impact of the COVID-19 pandemic on our business continues to be uncertain and difficult to predict and will depend on many factors outside of our control, including the extent and duration of the pandemic, mutations of the virus, the development and availability of effective treatments, including the availability of vaccines for our global workforce, mandates of protective public safety measures, and the impact of the pandemic on the global economy, global supply chains, and demand for our products. It is not possible at this time to foresee whether the outbreak of COVID-19 or other events beyond our control will be effectively contained, nor can we estimate the entirety of the impact that COVID-19 or such other pandemics or natural or man-made disaster will have on the global economy, our business, customers, suppliers or other business partners. As such, impacts from such events to the Company are highly uncertain and the Company will continue to assess the impact from such events on our financial statements.
Third Quarter Fiscal Year 2021 Highlights
Total net revenues for the third quarter of Fiscal Year 2021 were $484.7 million, an increase of $100.2 million or 26.1%, compared to the same quarter in Fiscal Year 2020, primarily driven by increased net sales in our Enterprise Headset and Video revenues partially offset by decreases in Consumer Headset and Voice revenues. Refer to further discussion on total net revenues in the Results of Operations below.
For the quarter ended December 26, 2020, our backlog increased from the previous quarter as channel-buying patterns anticipate high demand and product shortages. We also saw an increase in channel inventory in certain key markets consistent with the demand increases. Although backlog has increased, lead-times and product availability continue to improve.
Product gross margins for the third quarter of Fiscal Year 2021 increased from 30.4% to 43.7%, primarily driven by a decrease in intangible asset amortization expense and the non-recurrence of Consumer inventory-related reserves taken in last year's comparative fiscal quarter, partially offset by COVID-19 related incremental manufacturing and logistics costs and Video product transitions.
During the third quarter of Fiscal Year 2021, we announced our new Poly Sync Family, a new line of smart, USB and Bluetooth speakerphones, designed to enable today’s need to work from anywhere. These new products were available beginning early in calendar year 2021 and did not have a material impact on current quarter revenues.
We repurchased $12.0 million of the outstanding principal of our 5.50% senior notes due 2023 during the third quarter of Fiscal Year 2021 resulting in an immaterial gain on the extinguishment of debt.
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RESULTS OF OPERATIONS
We group our operations into two reportable segments: Products and Services. Our Products segment consists of Headsets, Voice, and Video product categories and our Services segment consists of support, professional, managed, and cloud services and solutions.
NET REVENUES
The following table sets forth net revenues by reportable segment for the three and nine months ended December 26, 2020 and December 28, 2019:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | December 26, 2020 | December 28, 2019 | Change | December 26, 2020 | December 28, 2019 | Change | ||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Products | $ | 420,711 | $ | 316,633 | $ | 104,078 | 32.9 | % | $ | 1,059,846 | $ | 1,094,515 | $ | (34,669) | (3.2) | % | ||||||||||||||||||||||||||||||||||
| Services | 63,974 | 67,838 | (3,864) | (5.7) | % | 191,529 | 199,432 | (7,903) | (4.0) | % | ||||||||||||||||||||||||||||||||||||||||
| Total net revenues | $ | 484,685 | $ | 384,471 | $ | 100,214 | 26.1 | % | $ | 1,251,375 | $ | 1,293,947 | $ | (42,572) | (3.3) | % | ||||||||||||||||||||||||||||||||||
Products
Net products revenues increased in the three months ended December 26, 2020 compared to the prior year period, primarily due to the following:
•Enterprise Headset and Video net revenues were driven by the COVID-19 shift toward "work from anywhere" and the need for office workers to be able to effectively communicate and collaborate regardless of location. Although we continue to experience periodic supply constraints on certain headsets and new video products, we were able to more than double unit shipments in each category year over year. Video demand was also driven by remote learning, telemedicine, and the continued ramp of our new video portfolio.
•Partially offsetting these increases were declines in our Voice product revenues as a result of the COVID-19 shift in demand toward "work from home" products, as well as declines in the our Consumer Headsets portfolio primarily due to our decision to discontinue certain low-margin mono and stereo products and the sale of our gaming headset assets in the fiscal fourth quarter of FY20.
Net products revenues decreased in the nine months ended December 26, 2020 compared to the prior year period, primarily due to the following:
•Voice product revenues declined as a result of the COVID-19 shift in demand toward "work from anywhere" products.
•Consumer Headsets declined significantly year over year primarily due to our decision to discontinue certain low-margin mono and stereo products and the sale of our gaming headset assets in the fiscal fourth quarter of FY20.
•Partially offsetting the declines in Voice and Consumer, we saw growth in Enterprise Headset and Video net revenues driven by the COVID-19 shift toward "work from home" and the need for office workers to be able to effectively communicate and collaborate regardless of location. Although we continue to experience periodic supply constraints on certain headsets and new video products, we were able to ship a record number of headsets and video units during the period. Video demand was also driven by remote learning, telemedicine, and the continued ramp of our new video portfolio.
Services
Net services revenues decreased slightly in the three and nine months ended December 26, 2020 due to the Video product mix shift from legacy Platform and Telepresence to recently launched Studio video bars, which are less complex, easier to install and operate, and carry optional service contracts. The decrease was partially offset by the impact of the deferred revenue fair value adjustment resulting from the Polycom Acquisition (the "Acquisition").
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The following table sets forth net revenues by geographic region for the three and nine months ended December 26, 2020 and December 28, 2019:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | December 26, 2020 | December 28, 2019 | Change | December 26, 2020 | December 28, 2019 | Change | ||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | $ | 193,413 | $ | 175,856 | $ | 17,557 | 10.0 | % | $ | 545,472 | $ | 613,810 | $ | (68,338) | (11.1) | % | ||||||||||||||||||||||||||||||||||
| Europe and Africa | 181,429 | 105,931 | 75,498 | 71.3 | % | 405,933 | 351,883 | 54,050 | 15.4 | % | ||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | 76,823 | 73,630 | 3,193 | 4.3 | % | 212,657 | 235,931 | (23,274) | (9.9) | % | ||||||||||||||||||||||||||||||||||||||||
| Americas, excluding U.S. | 33,020 | 29,054 | 3,966 | 13.7 | % | 87,313 | 92,323 | (5,010) | (5.4) | % | ||||||||||||||||||||||||||||||||||||||||
| Total international net revenues | 291,272 | 208,615 | 82,657 | 39.6 | % | 705,903 | 680,137 | 25,766 | 3.8 | % | ||||||||||||||||||||||||||||||||||||||||
| Total net revenues | $ | 484,685 | $ | 384,471 | $ | 100,214 | 26.1 | % | $ | 1,251,375 | $ | 1,293,947 | $ | (42,572) | (3.3) | % | ||||||||||||||||||||||||||||||||||
United States (U.S.)
Compared to the same prior year period, U.S. net revenues for the three months ended December 26, 2020 increased primarily due to increased net sales in our Enterprise Headset and Video revenues partially offset by decreases in Consumer Headset and Voice revenues.
Compared to the same prior year period, U.S. net revenues for the nine months ended December 26, 2020 decreased primarily due to declines in our Voice product revenues, which was a result of COVID-19 shift in demand toward "work from home" products. Our Consumer Headset product revenues declined driven by our decision to eliminate lower margin consumer products from our portfolio, including the Fiscal Year 2020 sale of gaming headset assets. These declines were partially offset by growth in our Video product revenues as new products ramp and an increase in sales of our Enterprise Headset products.
International
International net revenues, notably in Europe and Africa, for the three and nine months ended December 26, 2020 increased from the same prior year period primarily due to an increase in our Enterprise Headset and Video product revenues due to a shift to "work from anywhere", telemedicine, and remote learning. These increases were partially offset by a decline in Consumer Headset and Voice product revenues.
During the three months ended December 26, 2020, changes in foreign exchange rates favorably impacted net revenues by $8.4 million, net of the effects of hedging, compared to a $3.6 million unfavorable impact on revenue in the prior year period.
During the nine months ended December 26, 2020, changes in foreign exchange rates favorably impacted net revenues by $5.8 million, net of the effects of hedging, compared to a $11.2 million unfavorable impact on revenue in the prior year period.
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COST OF REVENUES AND GROSS PROFIT
Cost of revenues consists primarily of direct and contract manufacturing costs, amortization of acquired technology, freight, warranty, charges for excess and obsolete inventory, depreciation, duties, royalties, and overhead expenses.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | December 26, 2020 | December 28, 2019 | Change | December 26, 2020 | December 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
| Products: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | $ | 420,711 | $ | 316,633 | $ | 104,078 | 32.9 | % | $ | 1,059,846 | $ | 1,094,515 | $ | (34,669) | (3.2) | % | |||||||||||||||||||||||||||||||||||||
| Cost of revenues | 236,842 | 220,469 | 16,373 | 7.4 | % | 622,718 | 658,408 | (35,690) | (5.4) | % | |||||||||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 183,869 | $ | 96,164 | $ | 87,705 | 91.2 | % | $ | 437,128 | $ | 436,107 | $ | 1,021 | 0.2 | % | |||||||||||||||||||||||||||||||||||||
| Gross profit % | 43.7 | % | 30.4 | % | 41.2 | % | 39.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Services: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | $ | 63,974 | $ | 67,838 | $ | (3,864) | (5.7) | % | $ | 191,529 | $ | 199,432 | $ | (7,903) | (4.0) | % | |||||||||||||||||||||||||||||||||||||
| Cost of revenues | 21,186 | 20,156 | 1,030 | 5.1 | % | 64,921 | 72,976 | (8,055) | (11.0) | % | |||||||||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 42,788 | $ | 47,682 | $ | (4,894) | (10.3) | % | $ | 126,608 | $ | 126,456 | $ | 152 | 0.1 | % | |||||||||||||||||||||||||||||||||||||
| Gross profit % | 66.9 | % | 70.3 | % | 66.1 | % | 63.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Total: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | $ | 484,685 | $ | 384,471 | $ | 100,214 | 26.1 | % | $ | 1,251,375 | $ | 1,293,947 | $ | (42,572) | (3.3) | % | |||||||||||||||||||||||||||||||||||||
| Cost of revenues | 258,028 | 240,625 | 17,403 | 7.2 | % | 687,639 | 731,384 | (43,745) | (6.0) | % | |||||||||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 226,657 | $ | 143,846 | $ | 82,811 | 57.6 | % | $ | 563,736 | $ | 562,563 | $ | 1,173 | 0.2 | % | |||||||||||||||||||||||||||||||||||||
| Gross profit % | 46.8 | % | 37.4 | % | 45.0 | % | 43.5 | % | |||||||||||||||||||||||||||||||||||||||||||||
Products
Compared to the prior year period, gross profit as a percentage of net revenues increased in the three and nine months ended December 26, 2020, primarily due to a decrease in intangible asset amortization expense resulting from the long-lived asset impairment of existing technology related to our Voice products in the fourth quarter of Fiscal Year 2020, the non-recurrence of inventory-related reserves taken during the third quarter of Fiscal Year 2020 in connection with the optimization of our Consumer product portfolio, and a favorable product mix. Partially offsetting these favorable items was COVID-19 related incremental manufacturing and logistics costs and Video product transitions.
Given the significant variances in gross profit percentages between our higher and lower margin products, gross profit percentages may be impacted by variations in product mix and other factors, including production levels, pricing and promotions, distribution channels, and return rates.
Services
Compared to the prior year period, the gross profit as a percentage of net revenues decreased in the three months ended December 26, 2020, primarily due to fixed cost items spread over lower net revenues partially offset by the decrease in the Acquisition-related deferred revenue fair value adjustment.
Compared to the prior year period, the gross profit as a percentage of net revenues increased in the nine months ended December 26, 2020, primarily due to the decrease in the Acquisition-related deferred revenue fair value adjustment and a lower fixed cost base.
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OPERATING EXPENSES
Operating expenses for the three and nine months ended December 26, 2020 and December 28, 2019 were as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | December 26, 2020 | December 28, 2019 | Change | December 26, 2020 | December 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
| Research, development, and engineering | $ | 54,150 | $ | 53,769 | $ | 381 | 0.7 | % | $ | 156,327 | $ | 170,708 | $ | (14,381) | (8.4) | % | |||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 129,641 | 144,978 | (15,337) | (10.6) | % | 361,892 | 457,004 | (95,112) | (20.8) | % | |||||||||||||||||||||||||||||||||||||||||||
| (Gain) loss, net from litigation settlements | — | — | — | — | % | 17,561 | (1,162) | 18,723 | 1,611.3 | % | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other related charges | 13,977 | 21,724 | (7,747) | (35.7) | % | 49,477 | 47,096 | 2,381 | 5.1 | % | |||||||||||||||||||||||||||||||||||||||||||
| Total Operating Expenses | $ | 197,768 | $ | 220,471 | $ | (22,703) | (10.3) | % | $ | 585,257 | $ | 673,646 | $ | (88,389) | (13.1) | % | |||||||||||||||||||||||||||||||||||||
| % of net revenues | 40.8 | % | 57.3 | % | 46.8 | % | 52.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Research, development, and engineering expenses decreased during the nine months ended December 26, 2020 when compared to the prior year period primarily due to lower compensation expense driven by reduction in headcount, cost control efforts, and decreased expenses due to COVID-19 restrictions.
Selling, general and administrative expenses decreased during the three months ended December 26, 2020 when compared to the prior year period primarily due to lower compensation expense driven by reduced headcount, cost control efforts, and decreased travel expenses due to COVID-19 restrictions. The decreases were partially offset by higher incentive compensation when compared to the prior year period. Selling, general and administrative expenses decreased during the nine months ended December 26, 2020 when compared to the prior year period primarily due to integration related expenses that did not occur in the current period, lower compensation expense, driven by reduced headcount and lower sales commissions, decreased expenses due to COVID-19 restrictions, and other cost control efforts. The decreases were partially offset by higher incentive compensation when compared to the prior year period.
During the nine months ended December 26, 2020 we recorded litigation charges for settlements that occurred during the period. See Note 7, Commitments and Contingencies, of the accompanying notes to condensed consolidated financial statements for further information regarding on-going litigation.
Compared to the prior year period, restructuring and other related charges decreased in the three months ended December 26, 2020 primarily related to severance due to headcount related actions initiated in the prior year period. Compared to the prior year period, restructuring and other related charges increased in the nine months ended December 26, 2020, primarily due to new restructuring actions initiated during the period to reduce expenses and optimize our cost structure and align with projected revenue levels. These actions consisted of headcount reductions and office closures. For more information regarding restructuring activities, see Note 9, Restructuring and Other Related Charges, of the accompanying notes to condensed consolidated financial statements.
INTEREST EXPENSE
Interest expense for the three and nine months ended December 26, 2020 and December 28, 2019 was as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | December 26, 2020 | December 28, 2019 | Change | December 26, 2020 | December 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | $ | (18,417) | $ | (22,533) | $ | 4,116 | 18.3 | % | $ | (58,182) | $ | (70,262) | $ | 12,080 | 17.2 | % | |||||||||||||||||||||||||||||||||||||
| % of net revenues | (3.8) | % | (5.9) | % | (4.6) | % | (5.4) | % | |||||||||||||||||||||||||||||||||||||||||||||
Interest expense decreased for the three and nine months ended December 26, 2020 primarily due to a lower outstanding balance on the term loan facility, the gains recognized on the repurchase of outstanding debt, and lower interest rates. See Note 8, Debt, of the accompanying notes to condensed consolidated financial statements.
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OTHER NON-OPERATING INCOME, NET
Other non-operating income, net for the three and nine months ended December 26, 2020 and December 28, 2019 was as follows:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | December 26, 2020 | December 28, 2019 | Change | December 26, 2020 | December 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
| Other non-operating income, net | $ | 2,596 | $ | 967 | $ | 1,629 | 168.5 | % | $ | 4,188 | $ | 675 | $ | 3,513 | 520.4 | % | |||||||||||||||||||||||||||||||||||||
| % of net revenues | 0.5 | % | 0.3 | % | 0.3 | % | 0.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Other non-operating income, net for the three and nine months ended December 26, 2020 increased primarily due to immaterial net foreign currency gains and immaterial unrealized gains on the deferred compensation portfolio during the current period compared to immaterial unrealized gains on the deferred compensation portfolio and immaterial net foreign currency gains in the prior period.
INCOME TAX BENEFIT
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands except percentages) | December 26, 2020 | December 28, 2019 | Change | December 26, 2020 | December 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | $ | 13,068 | $ | (98,191) | $ | 111,259 | 113.3 | % | $ | (75,515) | $ | (180,670) | $ | 105,155 | 58.2 | % | |||||||||||||||||||||||||||||||||||||
| Income tax benefit | (7,045) | (19,708) | 12,663 | 64.3 | % | (7,208) | (31,406) | 24,198 | 77.0 | % | |||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 20,113 | $ | (78,483) | $ | 98,596 | 125.6 | % | $ | (68,307) | $ | (149,264) | $ | 80,957 | 54.2 | % | |||||||||||||||||||||||||||||||||||||
| Effective tax rate | (53.9) | % | 20.1 | % | 9.6 | % | 17.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
The Company and its subsidiaries are subject to taxation in the U.S. and in various foreign and state jurisdictions. Our income tax expense or benefit is determined using an estimate of our annual effective tax rate and adjusted for discrete items that are taken into account in the relevant period. The effective tax rates for the three months ended December 26, 2020 and December 28, 2019 were (53.9)% and 20.1%, respectively. The effective tax rates for the nine months ended December 26, 2020 and December 28, 2019 were 9.6% and 17.4%, respectively.
The change in our effective tax rate for the three and nine months ended December 26, 2020 relative to the prior year is primarily due to recently enacted statutory tax rate increase in Netherlands, resulting in a benefit from a revaluation of net deferred tax assets from internal intangible property restructuring between our wholly-owned subsidiaries.
Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the two-year period ended March 28, 2020 and Fiscal Year 2021 forecasted results in the U.S. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 26, 2020, a valuation allowance against U.S. federal and state deferred tax assets continues to be maintained for the three months ended December 26, 2020.
As of December 26, 2020, we had approximately $97.3 million in non-US net deferred tax assets ("DTAs") after valuation allowance. A significant portion of our DTAs relate to internal intangible property restructuring between wholly-owned subsidiaries. At this time, based on evidence currently available, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize our DTAs; however, failure to generate sufficient future taxable income could result in some or all DTAs not being utilized in the future. If we are unable to generate sufficient future taxable income, a substantial valuation allowance to reduce our DTAs may be required.
11
FINANCIAL CONDITION
Liquidity and Capital Resources
The following tables present selected financial information and statistics as of December 26, 2020 and March 28, 2020 and for the first nine months of Fiscal Years 2021 and 2020 (in thousands):
| December 26, 2020 | March 28, 2020 | |||||||||||||
| Cash, cash equivalents, and short-term investments | $ | 245,345 | $ | 225,720 | ||||||||||
| Property, plant and equipment, net | $ | 143,489 | $ | 165,858 | ||||||||||
| Long-term debt, net of issuance costs | $ | 1,576,998 | $ | 1,621,694 | ||||||||||
| Working capital | $ | 247,045 | $ | 209,203 | ||||||||||
| Nine Months Ended | ||||||||||||||
| December 26, 2020 | December 28, 2019 | |||||||||||||
| Cash provided by operating activities | $ | 71,149 | $ | 16,355 | ||||||||||
| Cash used for investing activities | $ | (14,580) | $ | (15,637) | ||||||||||
| Cash used for financing activities | $ | (44,442) | $ | (45,962) | ||||||||||
Our cash and cash equivalents as of December 26, 2020 consisted of bank deposits with third party financial institutions. We monitor bank balances in our operating accounts and adjust the balances as appropriate. Cash balances are held throughout the world, including substantial amounts held outside of the U.S. As of December 26, 2020, of our $245.3 million of cash, cash equivalents, and short-term investments, $141.2 million was held domestically while $104.1 million was held by foreign subsidiaries, and approximately 71% was based in USD-denominated instruments. Our remaining investments were composed of Mutual Funds.
During the nine months ended December 26, 2020, cash generated by operating activities of $71.1 million was a result of $68.3 million of net loss, non-cash adjustments to net loss of $172.0 million and a decrease in the net change in operating assets and liabilities of $32.6 million. Cash used in investing activities of $(14.6) million during the nine months ended December 26, 2020 consisted primarily of cash used to acquire property, plant and equipment of $(16.8) million and partially offset by proceeds from assets held for sales of $1.9 million. Cash used in financing activities of $(44.4) million during the nine months ended December 26, 2020 consisted primarily of $47.0 million repayment of long-term debt and $3.2 million for taxes paid on behalf of employees related to net share settlements of vested employee equity awards. The uses of cash were partially offset by $5.7 million of proceeds from issuance of common stock from our Employee Stock Purchase Plan ("ESPP").
During the nine months ended December 28, 2019, cash generated by operating activities of $16.4 million was a result of $(149.3) million of net loss, non-cash adjustments to net loss of $195.2 million and a decrease in the net change in operating assets and liabilities of $(29.6) million. Cash used in investing activities of $(15.6) million during the nine months ended December 28, 2019 consisted primarily of cash used to acquire property, plant and equipment of $(17.0) million partially offset by proceeds from the sale of real property of $2.1 million. Cash used in financing activities of $(46.0) million during the nine months ended December 28, 2019 consisted primarily of early repayment of long-term debt of $(25.0) million, payment of the quarterly dividend on our common stock of $(17.9) million, and taxes paid on behalf of employees related to net share settlements of vested employee equity awards of $(9.7) million. The uses of cash were partially offset by proceeds from issuance of common stock from our Employee Stock Purchase Plan ("ESPP") of $6.6 million.
Debt
In July 2018, in connection with the Acquisition, we entered into a Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto and borrowed the full amount available under the term loan facility of $1.245 billion, net of approximately $30 million of discounts and issuance costs. During the third quarter of Fiscal Year 2021, we did not repurchase any of our outstanding principal. As of December 26, 2020, we had $1.1 billion of the term loan outstanding.
On February 20, 2020, we entered into an Amendment No. 2 to the Credit Agreement (the “Amendment”) in order to relax certain financial covenants on the revolving line of credit. The financial covenants under the Credit Agreement are for the benefit of the revolving credit lenders only and do not apply to any other debt of the Company. As of December 26, 2020, the
12
Company has five outstanding letters of credit on the revolving credit facility for a total of $1.4 million and had $98.6 million available under the revolving line of credit. As of December 26, 2020, the Company was in compliance with the financial covenants.
On July 30, 2018, we entered into a 4-year amortizing interest rate swap agreement with Bank of America, N.A. The swap has an initial notional amount of $831 million and matures on July 31, 2022. During the nine months ended December 26, 2020, the Company reclassified into interest expense $10.3 million and recorded a $13.1 million unrealized loss on its interest rate swap derivative designated as a cash flow hedge.
During Fiscal Year 2016, we obtained $488.4 million from debt financing, net of issuance costs. The debt matures on May 31, 2023 and bears interest at an annual rate of 5.50%. During the third quarter of Fiscal Year 2021 we repurchased $12.0 million of our outstanding principal and recorded an immaterial gain on the extinguishment of debt. As of December 26, 2020, we had $477.3 million of debt outstanding.
We may at any time and from time to time, depending on market conditions and prices, continue to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Further information regarding the Company’s debt issuances and related hedging activity can be found in Note 8, Debt and Note 13, Derivatives, of the accompanying notes to condensed consolidated financial statements.
Capital Return Program
On November 28, 2018, the Board approved a 1 million share repurchase program expanding our capacity to repurchase shares to approximately 1.7 million shares. During the first three quarters of Fiscal Year 2021, we did not repurchase any shares of our common stock. As of December 26, 2020, there remained 1,369,014 shares authorized for repurchase under the existing stock repurchase program. See Note 11, Common Stock Repurchases, of the accompanying notes to condensed consolidated financial statements.
We believe that our current cash and cash equivalents, short-term investments, cash provided by operations, and availability of additional funds under the Credit Agreement, as amended from time to time, will be sufficient to fund our operations for one year from the date of issuance of these financial statements. However, any projections of future financial needs and sources of working capital are subject to uncertainty on our financial results. Readers are cautioned to review the risks, uncertainties, and assumptions set forth in this Quarterly Report on Form 10-Q, including the section entitled "Certain Forward-Looking Information" and the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended March 28, 2020, filed with the SEC on June 8, 2020, and other periodic filings with the SEC, any of which could affect our estimates for future financial needs and sources of working capital.
OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides us with financing and liquidity support, market risk, or credit risk support.
Consigned Inventory
A substantial portion of the raw materials, components, and subassemblies used in our products are provided by our suppliers on a consignment basis. These consigned inventories are not recorded on our consolidated balance sheet until we take title to the raw materials, components, and subassemblies, which occurs when they are consumed in the production process. Prior to consumption in the production process, our suppliers bear the risk of loss and retain title to the consigned inventory. The agreements allow us to return parts in excess of maximum order quantities to the suppliers at the supplier’s expense. Returns for other reasons are negotiated with the suppliers on a case-by-case basis and to date have been immaterial. If our suppliers were to discontinue financing consigned inventory, it would require us to make cash outlays and we could incur expenses which, if material, could negatively affect our business and financial results. As of December 26, 2020, and March 28, 2020, we had off-balance sheet consigned inventories of $45.3 million and $21.7 million, respectively.
13
Unconditional Purchase Obligations
We use several contract manufacturers to manufacture raw materials, components, and subassemblies for our products through our supply of demand information that typically covers periods up to 13 weeks. The contract manufacturers use this information to acquire components and build products. We also obtain individual components for our products from a wide variety of individual suppliers using a combination of purchase orders, supplier contracts, including annual minimum purchase obligations, and open orders based on projected demand information. As of December 26, 2020, we had outstanding off-balance sheet third-party manufacturing, component purchase, and other general and administrative commitments of $501.1 million, including the off-balance sheet consigned inventories of $45.3 million.
Except as described above, there have been no material changes in our contractual obligations as described in our Annual Report on Form 10-K for the fiscal year ended March 28, 2020.
CRITICAL ACCOUNTING ESTIMATES
For a complete description of what we believe to be the critical accounting estimates used in the preparation of our condensed consolidated financial statements, refer to our Annual Report on Form 10-K for the fiscal year ended March 28, 2020, filed with the SEC on June 8, 2020. There have been no material changes to our critical accounting estimates during the nine months ended December 26, 2020.
Recent Accounting Pronouncements
For more information regarding the Recent Accounting Pronouncements that may impact us, see Note 2, Recent Accounting Pronouncements, of the accompanying notes to the condensed consolidated financial statements.
14
Financial Statements (Unaudited)
PLANTRONICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
| December 26, 2020 | March 28, 2020 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Accounts receivable, net | |||||||||||
| Inventory, net | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant, and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Purchased intangibles, net | |||||||||||
| Deferred tax assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long term debt, net of issuance costs | |||||||||||
| Long-term income taxes payable | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 7) | |||||||||||
| Stockholders' deficit: | |||||||||||
| Common stock | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders' equity before treasury stock | |||||||||||
| Less: Treasury stock, at cost | ( | ( | |||||||||
| Total stockholders' deficit | ( | ( | |||||||||
| Total liabilities and stockholders' deficit | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
15
PLANTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| December 26, 2020 | December 28, 2019 | December 26, 2020 | December 28, 2019 | ||||||||||||||||||||
| Net revenues | |||||||||||||||||||||||
| Net product revenues | $ | $ | $ | $ | |||||||||||||||||||
| Net service revenues | |||||||||||||||||||||||
| Total net revenues | |||||||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||
| Cost of product revenues | |||||||||||||||||||||||
| Cost of service revenues | |||||||||||||||||||||||
| Total cost of revenues | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research, development, and engineering | |||||||||||||||||||||||
| Selling, general, and administrative | |||||||||||||||||||||||
| (Gain) loss, net from litigation settlements | ( | ||||||||||||||||||||||
| Restructuring and other related charges | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Operating income (loss) | ( | ( | ( | ||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other non-operating income, net | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ( | ( | ||||||||||||||||||||
| Income tax benefit | ( | ( | ( | ( | |||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||
| Basic | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Diluted | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Shares used in computing earnings (loss) per common share: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
16
PLANTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| December 26, 2020 | December 28, 2019 | December 26, 2020 | December 28, 2019 | ||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ||||||||||||||||||||||
| Unrealized gains (losses) on cash flow hedges: | |||||||||||||||||||||||
| Unrealized cash flow hedge gains (losses) arising during the period | ( | ( | ( | ( | |||||||||||||||||||
| Net (gains) losses reclassified into income for revenue hedges | ( | ( | |||||||||||||||||||||
| Net (gains) losses reclassified into income for cost of revenue hedges | ( | ( | |||||||||||||||||||||
| Net (gains) losses reclassified into income for interest rate swaps | |||||||||||||||||||||||
| Net unrealized gains (losses) on cash flow hedges | ( | ( | |||||||||||||||||||||
| Aggregate income tax benefit (expense) of the above items | |||||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Comprehensive income (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
17
PLANTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Nine Months Ended | |||||||||||
| December 26, 2020 | December 28, 2019 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of debt issuance costs | |||||||||||
| Stock-based compensation | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Provision for excess and obsolete inventories | |||||||||||
| Restructuring and other related charges | |||||||||||
| Cash payments for restructuring charges | ( | ( | |||||||||
| Other operating activities | ( | ||||||||||
| Changes in assets and liabilities, net of acquisition: | |||||||||||
| Accounts receivable, net | ( | ||||||||||
| Inventory, net | ( | ( | |||||||||
| Current and other assets | ( | ||||||||||
| Accounts payable | ( | ||||||||||
| Accrued liabilities | ( | ||||||||||
| Income taxes | ( | ||||||||||
| Cash provided by operating activities | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Proceeds from sales of investments | |||||||||||
| Purchase of investments | ( | ( | |||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from sale of property and equipment | |||||||||||
| Cash used for investing activities | ( | ( | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Employees' tax withheld and paid for restricted stock and restricted stock units | ( | ( | |||||||||
| Proceeds from issuances under stock-based compensation plans | |||||||||||
| Proceeds from revolving line of credit | |||||||||||
| Repayments of revolving line of credit | ( | ||||||||||
| Payment of cash dividends | ( | ||||||||||
| Repayments of long-term debt | ( | ( | |||||||||
| Cash used for financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURES | |||||||||||
| Cash paid for income taxes | $ | $ | |||||||||
| Cash paid for interest | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
18
PLANTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) / EQUITY
(in thousands)
(Unaudited)
| Three Months Ended December 26, 2020 | |||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated Other Comprehensive | Accumulated | Treasury | Total Stockholders' | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Stock | Deficit | |||||||||||||||||||||||||||||||||||
| Balances at September 26, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
| Net Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) on cash flow hedges, net of tax | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Proceeds from issuances under stock-based compensation plans | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | |||||||||||||||||||||||||||||||||||||||