Delaware
|
1-12696
|
77-0207692
|
(State or Other Jurisdiction of Incorporation)
|
(Commission file number)
|
(I.R.S. Employer Identification No.)
|
Not Applicable
|
(Former name or former address, if changed since last report)
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value
|
PLT
|
New York Stock Exchange
|
Date: May 17, 2019
|
PLANTRONICS, INC.
|
|
|
By:
Name:
|
/s/ Charles D. Boynton
Charles D. Boynton
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
Page
|
|
|
Condensed Consolidated Balance Sheets
|
3
|
Condensed Consolidated Statements of Operations
|
4
|
Condensed Consolidated Statements of Comprehensive (Loss) Income
|
5
|
Condensed Consolidated Statements of Cash Flows
|
6
|
Notes to Condensed Consolidated Financial Statements
|
7
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
80,139
|
|
|
$
|
86,005
|
|
Trade receivables, net
|
|
122,101
|
|
|
134,622
|
|
||
Inventories
|
|
82,556
|
|
|
71,293
|
|
||
Prepaid expenses and other current assets
|
|
30,789
|
|
|
29,683
|
|
||
Total current assets
|
|
$
|
315,585
|
|
|
$
|
321,603
|
|
Property and equipment, net
|
|
54,993
|
|
|
61,705
|
|
||
Goodwill
|
|
478,652
|
|
|
502,809
|
|
||
Purchased intangibles, net
|
|
8,486
|
|
|
918
|
|
||
Deferred taxes
|
|
60,109
|
|
|
64,878
|
|
||
Other assets
|
|
17,026
|
|
|
18,481
|
|
||
Total assets
|
|
$
|
934,851
|
|
|
$
|
970,394
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
79,640
|
|
|
$
|
68,042
|
|
Accrued payroll and related liabilities
|
|
38,213
|
|
|
54,478
|
|
||
Income taxes payable
|
|
2,998
|
|
|
4,929
|
|
||
Deferred revenue
|
|
178,145
|
|
|
172,538
|
|
||
Current portion of long-term debt
|
|
65,749
|
|
|
11,736
|
|
||
Other accrued liabilities
|
|
107,754
|
|
|
69,073
|
|
||
Total current liabilities
|
|
$
|
472,499
|
|
|
$
|
380,796
|
|
Long-term deferred revenue
|
|
82,272
|
|
|
82,800
|
|
||
Income taxes payable
|
|
9,064
|
|
|
9,072
|
|
||
Long-term debt
|
|
657,661
|
|
|
694,854
|
|
||
Other non-current liabilities
|
|
16,263
|
|
|
75,438
|
|
||
Total liabilities
|
|
$
|
1,237,759
|
|
|
$
|
1,242,960
|
|
Commitments and contingencies (Note 11)
|
|
|
|
|
||||
Stockholders' deficit
|
|
|
|
|
||||
Common stock, $0.001 par value; authorized: 101,000 shares; issued and outstanding: 100,100 shares at June 30, 2018 and December 31, 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
Additional paid-in capital
|
|
138,394
|
|
|
138,394
|
|
||
Accumulated deficit
|
|
(438,587
|
)
|
|
(409,089
|
)
|
||
Accumulated other comprehensive income (loss)
|
|
(2,715
|
)
|
|
(1,871
|
)
|
||
Total stockholders' deficit
|
|
$
|
(302,908
|
)
|
|
$
|
(272,566
|
)
|
Total liabilities and stockholders' deficit
|
|
$
|
934,851
|
|
|
$
|
970,394
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Revenues
|
|
|
|
|
||||
Product revenues
|
|
$
|
390,593
|
|
|
$
|
389,403
|
|
Service revenues
|
|
159,745
|
|
|
160,011
|
|
||
Total revenues
|
|
550,338
|
|
|
549,414
|
|
||
Cost of revenues
|
|
|
|
|
||||
Cost of product revenues
|
|
178,034
|
|
|
180,726
|
|
||
Cost of service revenues
|
|
57,135
|
|
|
58,114
|
|
||
Total cost of revenues
|
|
235,169
|
|
|
238,840
|
|
||
Gross profit
|
|
315,169
|
|
|
310,574
|
|
||
Operating expenses
|
|
|
|
|
||||
Sales and marketing
|
|
134,889
|
|
|
133,145
|
|
||
Research and development
|
|
73,107
|
|
|
67,539
|
|
||
General and administrative
|
|
33,851
|
|
|
34,340
|
|
||
Amortization of goodwill
|
|
28,216
|
|
|
28,010
|
|
||
(Gain) loss, net from litigation and other settlements
|
|
42,636
|
|
|
363
|
|
||
Amortization of purchased intangibles
|
|
567
|
|
|
4,006
|
|
||
Restructuring costs
|
|
1,693
|
|
|
5,211
|
|
||
Transaction-related costs
|
|
11,505
|
|
|
2,816
|
|
||
Total operating expenses
|
|
326,464
|
|
|
275,430
|
|
||
Operating income (loss)
|
|
(11,295
|
)
|
|
35,144
|
|
||
Interest and other income (expense), net
|
|
|
|
|
||||
Interest expense
|
|
(43,084
|
)
|
|
(39,555
|
)
|
||
Other income (expense), net
|
|
12,690
|
|
|
(33,802
|
)
|
||
Interest and other income (expense), net
|
|
(30,394
|
)
|
|
(73,357
|
)
|
||
Loss before provision for income taxes
|
|
(41,689
|
)
|
|
(38,213
|
)
|
||
Provision for income taxes
|
|
(12,192
|
)
|
|
5,149
|
|
||
Net loss
|
|
$
|
(29,497
|
)
|
|
$
|
(43,362
|
)
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Net loss
|
|
$
|
(29,497
|
)
|
|
$
|
(43,362
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Foreign currency translation adjustments
|
|
(844
|
)
|
|
1,550
|
|
||
Gains/losses on hedging securities:
|
|
|
|
|
||||
Net losses reclassified into earnings for revenue hedges
|
|
—
|
|
|
151
|
|
||
Net losses reclassified into earnings for expense hedges
|
|
—
|
|
|
288
|
|
||
Net gains (losses) on hedging securities
|
|
—
|
|
|
439
|
|
||
Other comprehensive income
|
|
(844
|
)
|
|
1,989
|
|
||
Comprehensive loss
|
|
$
|
(30,341
|
)
|
|
$
|
(41,373
|
)
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
||||
Net loss
|
|
$
|
(29,497
|
)
|
|
$
|
(43,362
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
16,512
|
|
|
19,649
|
|
||
Amortization of goodwill
|
|
28,216
|
|
|
28,010
|
|
||
Amortization of purchased intangibles
|
|
567
|
|
|
4,006
|
|
||
Amortization of capitalized software development costs for products to be sold
|
|
1,921
|
|
|
2,273
|
|
||
Amortization of debt issuance costs
|
|
6,700
|
|
|
6,478
|
|
||
Write-down of excess and obsolete inventories
|
|
5,936
|
|
|
6,919
|
|
||
(Gain) Loss on disposal of property and equipment
|
|
409
|
|
|
1,062
|
|
||
Unrealized loss on mark-to-market of derivative
|
|
9,924
|
|
|
—
|
|
||
Realized loss on cash flow hedges
|
|
5,865
|
|
|
36,860
|
|
||
Changes in assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
||||
Trade receivables
|
|
12,612
|
|
|
(930
|
)
|
||
Inventories
|
|
(15,050
|
)
|
|
(1,920
|
)
|
||
Deferred taxes
|
|
2,551
|
|
|
(13,255
|
)
|
||
Prepaid expenses and other assets
|
|
(584
|
)
|
|
(625
|
)
|
||
Accounts payable
|
|
9,905
|
|
|
(19,693
|
)
|
||
Taxes payable
|
|
(2,517
|
)
|
|
10,955
|
|
||
Other accrued liabilities and deferred revenue
|
|
(30,899
|
)
|
|
(6,945
|
)
|
||
Net cash provided by operating activities
|
|
22,571
|
|
|
29,482
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(8,338
|
)
|
|
(8,920
|
)
|
||
Capitalized software development costs for products to be sold
|
|
(1,708
|
)
|
|
(1,606
|
)
|
||
Net cash used in investing activities
|
|
(10,046
|
)
|
|
(10,526
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
||||
Proceeds from debt, net of debt issuance costs
|
|
44,200
|
|
|
—
|
|
||
Payments on debt
|
|
(34,432
|
)
|
|
—
|
|
||
Issuance costs related to loans
|
|
—
|
|
|
(7,847
|
)
|
||
Premium on call option
|
|
(5,865
|
)
|
|
—
|
|
||
Repayment of cross currencies swap
|
|
(44,114
|
)
|
|
—
|
|
||
Proceeds from prepaid acquisition consideration
|
|
33,550
|
|
|
—
|
|
||
Payment of the accrued consideration to dissenting shareholders
|
|
(11,791
|
)
|
|
(60,375
|
)
|
||
Net cash used in financing activities
|
|
(18,452
|
)
|
|
(68,222
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
61
|
|
|
(362
|
)
|
||
Net decrease in cash and cash equivalents
|
|
(5,866
|
)
|
|
(49,628
|
)
|
||
Cash and cash equivalents, beginning of period
|
|
86,005
|
|
|
100,075
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
80,139
|
|
|
$
|
50,447
|
|
|
|
|
|
|
||||
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
30,854
|
|
|
$
|
35,266
|
|
Cash paid for income taxes
|
|
$
|
3,561
|
|
|
$
|
2,833
|
|
Consideration:
|
|
June 30, 2018
|
||
Total Consideration
|
|
$
|
15,105
|
|
|
|
|
||
Fair value of assets acquired and liabilities assumed:
|
|
|
||
Cash
|
|
$
|
3,814
|
|
Other current and non-current assets
|
|
2,475
|
|
|
Goodwill
|
|
4,111
|
|
|
Purchased intangibles
(a)
|
|
8,134
|
|
|
Accounts payable
|
|
(552
|
)
|
|
Short-term taxes payable
|
|
(589
|
)
|
|
Other current and non-current liabilities
|
|
(144
|
)
|
|
Long-term deferred tax liability
|
|
(2,144
|
)
|
|
Total fair value of assets acquired and liabilities assumed
|
|
$
|
15,105
|
|
(a)
|
Purchased intangible assets consist of developed technology ($7.2 million), trade name ($0.5 million) and customer and partner relationships ($0.5 million) and are expected to be amortized over their estimated useful lives of 5 to 10 years. See Note 5 - Goodwill, Purchased Intangibles, and Software Development Costs for further details.
|
Balance at December 31, 2017
|
$
|
502,809
|
|
Additions
|
4,175
|
|
|
Goodwill amortization
|
(28,216
|
)
|
|
Foreign currency translation
|
(116
|
)
|
|
Balance at June 30, 2018
|
$
|
478,652
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
Gross
Value
|
|
Accumulated
Amortization
& Impairment
|
|
Net Value
|
|
Gross
Value
|
|
Accumulated
Amortization
& Impairment
|
|
Net Value
|
||||||||||||
Developed technology
|
|
$
|
7,230
|
|
|
$
|
(507
|
)
|
|
$
|
6,723
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Trade name
|
|
502
|
|
|
(36
|
)
|
|
466
|
|
|
|
|
|
|
|
|||||||||
Customer and partner relationships
|
|
79,928
|
|
|
(79,549
|
)
|
|
379
|
|
|
79,525
|
|
|
(79,525
|
)
|
|
—
|
|
||||||
Finite-lived intangible assets
|
|
87,660
|
|
|
(80,092
|
)
|
|
7,568
|
|
|
79,525
|
|
|
(79,525
|
)
|
|
—
|
|
||||||
Indefinite-lived trade name
|
|
918
|
|
|
—
|
|
|
918
|
|
|
918
|
|
|
—
|
|
|
918
|
|
||||||
Total acquired intangible assets
|
|
$
|
88,578
|
|
|
$
|
(80,092
|
)
|
|
$
|
8,486
|
|
|
$
|
80,443
|
|
|
$
|
(79,525
|
)
|
|
$
|
918
|
|
Capitalized software development costs for products to be sold
|
|
$
|
20,557
|
|
|
$
|
(15,769
|
)
|
|
$
|
4,788
|
|
|
$
|
18,849
|
|
|
$
|
(13,849
|
)
|
|
$
|
5,000
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Gross trade receivables
|
|
$
|
178,029
|
|
|
$
|
196,332
|
|
Returns and other reserves
|
|
(52,618
|
)
|
|
(59,818
|
)
|
||
Allowance for doubtful accounts
|
|
(3,310
|
)
|
|
(1,892
|
)
|
||
Total
|
|
$
|
122,101
|
|
|
$
|
134,622
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Raw materials
|
|
$
|
820
|
|
|
$
|
1,421
|
|
Work in process
|
|
15
|
|
|
7
|
|
||
Finished goods
|
|
81,721
|
|
|
69,865
|
|
||
Total
|
|
$
|
82,556
|
|
|
$
|
71,293
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Non-trade receivables
|
|
$
|
5,290
|
|
|
$
|
6,586
|
|
Prepaid expenses
|
|
22,698
|
|
|
20,835
|
|
||
Other current assets
|
|
2,801
|
|
|
2,262
|
|
||
Total
|
|
$
|
30,789
|
|
|
$
|
29,683
|
|
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
Estimated useful Life
|
|
2018
|
|
2017
|
||||
Computer equipment and software
|
|
3 to 5 years
|
|
$
|
263,995
|
|
|
$
|
270,337
|
|
Equipment, furniture and fixtures
|
|
1 to 7 years
|
|
102,789
|
|
|
105,818
|
|
||
Tooling equipment
|
|
3 years
|
|
14,737
|
|
|
13,124
|
|
||
Leasehold improvements
|
|
3 to 13 years
|
|
50,709
|
|
|
52,911
|
|
||
Total gross property and equipment
|
|
|
|
432,230
|
|
|
442,190
|
|
||
Less: Accumulated depreciation and amortization
|
|
|
|
(377,237
|
)
|
|
(380,485
|
)
|
||
Total
|
|
|
|
$
|
54,993
|
|
|
$
|
61,705
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Short-term:
|
|
|
|
|
||||
Service
|
|
$
|
168,299
|
|
|
$
|
163,036
|
|
License
|
|
9,846
|
|
|
9,502
|
|
||
Total
|
|
$
|
178,145
|
|
|
$
|
172,538
|
|
Long-term:
|
|
|
|
|
||||
Service
|
|
74,570
|
|
|
75,645
|
|
||
License
|
|
7,702
|
|
|
7,155
|
|
||
Total
|
|
$
|
82,272
|
|
|
$
|
82,800
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Accrued expenses
|
|
$
|
13,728
|
|
|
$
|
27,848
|
|
Accrued co-op expenses
|
|
1,638
|
|
|
1,798
|
|
||
Restructuring reserves
|
|
3,174
|
|
|
6,409
|
|
||
Warranty obligations
|
|
9,119
|
|
|
8,808
|
|
||
Proceeds from prepaid acquisition consideration
|
|
33,550
|
|
|
|
|||
Litigation and other settlements
|
|
42,636
|
|
|
|
|||
Other accrued liabilities
|
|
3,909
|
|
|
24,210
|
|
||
Total
|
|
$
|
107,754
|
|
|
$
|
69,073
|
|
|
|
Six Ended June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Balance at beginning of period
|
|
$
|
8,808
|
|
|
$
|
8,183
|
|
Accruals for warranties issued during the period
|
|
6,429
|
|
|
5,879
|
|
||
Charges against warranty reserve during the period
|
|
(6,118
|
)
|
|
(5,919
|
)
|
||
Balance at end of period
|
|
$
|
9,119
|
|
|
$
|
8,143
|
|
|
|
Severance/Other
|
|
Facilities
|
|
Other
|
|
Total
|
||||||||
Balance at December 31, 2017
|
|
$
|
1,048
|
|
|
$
|
12,448
|
|
|
$
|
—
|
|
|
$
|
13,496
|
|
Additions to the reserve, net
|
|
2,238
|
|
|
(819
|
)
|
|
—
|
|
|
1,419
|
|
||||
Interest accretion
|
|
—
|
|
|
274
|
|
|
—
|
|
|
274
|
|
||||
Non-cash adjustments
|
|
—
|
|
|
(389
|
)
|
|
—
|
|
|
(389
|
)
|
||||
Cash payments
|
|
(2,365
|
)
|
|
(2,940
|
)
|
|
—
|
|
|
(5,305
|
)
|
||||
Balance at June 30, 2018
|
|
$
|
921
|
|
|
$
|
8,574
|
|
|
$
|
—
|
|
|
$
|
9,495
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Current portion of long-term debt
|
|
$
|
77,013
|
|
|
$
|
23,438
|
|
Less: Unamortized issuance costs associated with current portion of long-term debt
|
|
(11,420
|
)
|
|
(11,702
|
)
|
||
Total current portion of long-term debt
|
|
$
|
65,593
|
|
|
$
|
11,736
|
|
|
|
|
|
June 30,
|
|
December 31,
|
||||
|
|
Maturities
|
|
2018
|
|
2017
|
||||
1st Lien Term Loan of $750 million
|
|
2023
|
|
600,388
|
|
|
590,563
|
|
||
2nd Lien Term Loan of $175 million
|
|
2024
|
|
175,000
|
|
|
175,000
|
|
||
Computer equipment leases
|
|
2021
|
|
311
|
|
|
|
|||
Total gross long-term debt
|
|
|
|
$
|
775,699
|
|
|
$
|
765,563
|
|
|
|
|
|
|
|
|
||||
Less Unamortized discount and issuance costs attributable to long-term debt
|
(52,445
|
)
|
|
(58,973
|
)
|
|||||
|
|
|
|
|
|
|
||||
Less Current portion of long-term debt, net
|
|
|
|
(65,593
|
)
|
|
(11,736
|
)
|
||
Total long-term debt
|
|
|
|
$
|
657,661
|
|
|
$
|
694,854
|
|
|
|
Six months ending June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Contractual interest expense
|
|
$
|
36,384
|
|
|
$
|
33,077
|
|
Amortization of debt issuance costs
|
|
6,700
|
|
|
6,478
|
|
||
Total
|
|
$
|
43,084
|
|
|
$
|
39,555
|
|
Year Ending December 31,
|
|
Amount
|
||
2018
|
|
$
|
14,063
|
|
2019
|
|
37,500
|
|
|
2020
|
|
42,188
|
|
|
2021
|
|
100,450
|
|
|
2022
|
|
56,250
|
|
|
Thereafter
|
|
524,937
|
|
|
Total
|
|
$
|
775,388
|
|
Derivatives Not Designated As Hedging Instruments
|
|
Location of Gain/(Loss) Recognized in Income from Derivatives
|
|
Amount of Gain/(Loss) Recognized in Income from Derivatives
|
||
|
|
|
|
Six Months Ended June 30, 2018
|
||
Foreign Exchange Contracts
|
|
Interest and other income (expense), net
|
$
|
(46,156
|
)
|
|
|
|
|
|
|
||
|
|
|
|
Six Months Ended June 31, 2017
|
||
Foreign Exchange Contracts
|
|
Interest and other income (expense), net
|
$
|
(35,676
|
)
|
|
|
Gain or (Loss) Recognized in OCI-Effective Portion
|
|
Location of Gain or (Loss) Reclassified from OCI into Income-Effective Portion
|
|
Gain or (Loss) Reclassified from OCI into Income -Effective Portion
|
|
Location of Gain or (Loss) Recognized Ineffective Portion and Amount Excluded from Effectiveness Testing
|
|
Gain or (Loss) Recognized Ineffective Portion and Amount Excluded from Effectiveness Testing (a)
|
||||||
|
|
Six Months Ended June 30, 2017
|
||||||||||||||
Foreign exchange contracts
|
|
$
|
—
|
|
|
Product revenues
|
|
$
|
(151
|
)
|
|
Interest and other income (expense), net
|
|
$
|
—
|
|
|
|
|
|
Cost of revenues
|
|
(71
|
)
|
|
|
|
|
|||||
|
|
|
|
Sales and marketing
|
|
(163
|
)
|
|
|
|
|
|||||
|
|
|
|
Research and development
|
|
(13
|
)
|
|
|
|
|
|||||
|
|
|
|
General and administrative
|
|
(41
|
)
|
|
|
|
|
|||||
|
|
$
|
—
|
|
|
|
|
$
|
(439
|
)
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the
|
||||||||||||||||
Condensed Consolidated Balance Sheets
|
||||||||||||||||||||||||
|
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Pledged
|
|
Net Amount
|
||||||||||||
As of December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
|
$
|
18,658
|
|
|
$
|
—
|
|
|
$
|
18,658
|
|
|
$
|
(18,658
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Foreign Currency Translation
|
||
Balance as of December 31, 2017
|
|
$
|
(1,871
|
)
|
Other comprehensive income (loss)
|
|
(844
|
)
|
|
Balance as of June 30, 2018
|
|
$
|
(2,715
|
)
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Income tax expense/(benefit)
|
|
$
|
(12,192
|
)
|
|
$
|
5,149
|
|
Effective tax rate
|
|
29.2
|
%
|
|
13.5
|
%
|
|
|
Plantronics
|
|
Polycom
|
|
|
|
|
|
|
||||||||
|
|
Historical
|
|
Historical
|
|
|
|
|
|
|
||||||||
|
|
3/31/2019
|
|
6/30/2018
|
|
Pro Forma
|
|
|
|
Plantronics
|
||||||||
|
|
[1]
|
|
[2]
|
|
Adjustments
|
|
Notes
|
|
Pro Forma
|
||||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net product revenues
|
|
$
|
1,510,770
|
|
|
$
|
198,281
|
|
|
$
|
691
|
|
|
(a)
|
|
$
|
1,708,344
|
|
|
|
|
|
|
|
(1,398
|
)
|
|
(b)
|
|
|
|
||||||
Net service revenues
|
|
163,765
|
|
|
80,829
|
|
|
(12,152
|
)
|
|
(b)
|
|
232,442
|
|
||||
Total net revenues
|
|
1,674,535
|
|
|
279,110
|
|
|
(12,859
|
)
|
|
|
|
1,940,786
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||
Cost of product revenues
|
|
902,625
|
|
|
93,745
|
|
|
27,568
|
|
|
(c)
|
|
1,023,938
|
|
||||
Cost of service revenues
|
|
77,771
|
|
|
28,765
|
|
|
|
|
|
|
106,536
|
|
|||||
Total cost of revenues
|
|
980,396
|
|
|
122,510
|
|
|
27,568
|
|
|
|
|
1,130,474
|
|
||||
Gross profit
|
|
694,139
|
|
|
156,600
|
|
|
(40,427
|
)
|
|
|
|
810,312
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research, development, and engineering
|
|
201,886
|
|
|
36,747
|
|
|
—
|
|
|
|
|
238,633
|
|
||||
Selling, general, and administrative
|
|
567,879
|
|
|
106,080
|
|
|
(19,215
|
)
|
|
(d)
|
|
655,321
|
|
||||
|
|
|
|
|
|
(14,190
|
)
|
|
(e)
|
|
|
|||||||
|
|
|
|
|
|
691
|
|
|
(f)
|
|
|
|||||||
|
|
|
|
|
|
15,099
|
|
|
(c)
|
|
|
|||||||
|
|
|
|
|
|
(1,023
|
)
|
|
(a)
|
|
|
|||||||
(Gain) loss, net from litigation and other settlements
|
|
975
|
|
|
42,636
|
|
|
—
|
|
|
|
|
43,611
|
|
||||
Restructuring and other related charges (credits)
|
|
32,694
|
|
|
1,527
|
|
|
—
|
|
|
|
|
34,221
|
|
||||
Total operating expenses
|
|
803,434
|
|
|
186,990
|
|
|
(18,638
|
)
|
|
|
|
971,786
|
|
||||
Operating income
|
|
(109,295
|
)
|
|
(30,390
|
)
|
|
(21,789
|
)
|
|
|
|
(161,474
|
)
|
||||
Interest expense
|
|
(83,000
|
)
|
|
(24,340
|
)
|
|
6,933
|
|
|
(g)
|
|
(100,407
|
)
|
||||
Other non-operating income and (expense), net
|
|
6,603
|
|
|
23,196
|
|
|
(22,143
|
)
|
|
(h)
|
|
7,656
|
|
||||
Income (loss) before income taxes
|
|
(185,692
|
)
|
|
(31,534
|
)
|
|
(36,999
|
)
|
|
|
|
(254,225
|
)
|
||||
Income tax expense (benefit)
|
|
(50,131
|
)
|
|
(8,092
|
)
|
|
(8,130
|
)
|
|
(i)
|
|
(66,127
|
)
|
||||
|
|
|
|
|
|
226
|
|
|
(a)
|
|
|
|||||||
Net loss
|
|
$
|
(135,561
|
)
|
|
$
|
(23,442
|
)
|
|
$
|
(28,869
|
)
|
|
|
|
$
|
(188,098
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss per common unit:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(3.61
|
)
|
|
|
|
|
|
|
|
$
|
(4.81
|
)
|
||||
Diluted
|
|
$
|
(3.61
|
)
|
|
|
|
|
|
|
|
$
|
(4.81
|
)
|
||||
Weighted average common units outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
37,569
|
|
|
|
|
1,520
|
|
|
(j)
|
|
39,089
|
|
|||||
Diluted
|
|
37,569
|
|
|
|
|
1,520
|
|
|
(j)
|
|
39,089
|
|
(in thousands)
|
|
July 2, 2018
|
||
ASSETS
|
|
|
||
Cash and cash equivalents
|
|
$
|
80,139
|
|
Trade receivables, net
|
|
165,449
|
|
|
Inventories
|
|
109,074
|
|
|
Prepaid expenses and other current assets
|
|
68,451
|
|
|
Property and equipment, net
|
|
79,497
|
|
|
Intangible assets
|
|
985,400
|
|
|
Other assets
|
|
27,237
|
|
|
Total assets acquired
|
|
$
|
1,515,247
|
|
|
|
|
||
LIABILITIES
|
|
|
||
Accounts payable
|
|
$
|
80,653
|
|
Accrued payroll and related liabilities
|
|
44,538
|
|
|
Accrued expenses
|
|
144,051
|
|
|
Income tax payable
|
|
27,044
|
|
|
Deferred revenue
|
|
115,061
|
|
|
Deferred income taxes
|
|
98,342
|
|
|
Other liabilities
|
|
51,796
|
|
|
Total liabilities assumed
|
|
$
|
561,485
|
|
|
|
|
||
Total identifiable net assets acquired
|
|
953,762
|
|
|
Goodwill
|
|
1,262,883
|
|
|
Total Purchase Price
|
|
$
|
2,216,645
|
|
(a)
|
Reflects adjustment to Polycom’s revenue and selling, general and administrative costs based on management’s evaluation of Polycom’s sales arrangements under ASC 606,
Revenue from Contracts with Customer
(“ASC 606”), which Plantronics adopted on April 1, 2018. As Polycom was a privately held company and had not adopted ASC 606 at the time of the Acquisition, Polycom’s historical results of operations have been adjusted to conform to the timing and method of adoption of ASC 606 used by Plantronics.
|
(b)
|
Reflects the reduction in revenue for the three months ended June 30, 2018 based on the fair value estimates of the acquired deferred revenue. This amount was determined to have a continuing impact.
|
(c)
|
Reflects the amortization expense adjustments based on the fair value estimates of the acquired intangibles.
|
|
Fair Value
|
|
Average Remaining Useful Life (years)
|
|
Pro Forma Amortization Expense
|
|
Amortization Expense Recorded (7/2/18 to 3/31/19)
|
|
Pro Forma Amortization Expense Adjustment
|
||||||||
Existing Technology
|
$
|
566,708
|
|
|
5.1
|
|
$
|
110,270
|
|
|
$
|
82,702
|
|
|
$
|
27,568
|
|
In-process Technology
|
29,892
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Customer Relationships
|
245,100
|
|
|
5.1
|
|
48,267
|
|
|
36,200
|
|
|
12,067
|
|
||||
Backlog
|
28,100
|
|
|
1.0
|
|
28,100
|
|
|
28,100
|
|
|
—
|
|
||||
Trade Name / Trademarks
|
115,600
|
|
|
9.0
|
|
12,844
|
|
|
9,633
|
|
|
3,211
|
|
||||
Total
|
$
|
985,400
|
|
|
|
|
$
|
199,481
|
|
|
$
|
156,635
|
|
|
$
|
42,846
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Less: Polycom's historical intangible assets and amortization expense
|
|
|
$
|
180
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Increase to pro forma intangibles and amortization expense
|
|
|
$
|
42,666
|
|
(d)
|
Reflects the elimination of Plantronics’ and Polycom’s transaction-related expenses that are included within each company’s historical general and administrative expense.
|
(e)
|
Reflects the elimination of Polycom’s historical amortization of goodwill to align with a public company’s accounting policy for goodwill. As a private company prior to the acquisition, Polycom had elected to amortize goodwill as part of its accounting policy.
|
(f)
|
Reflects the depreciation expense adjustments based on the fair value estimates of the acquired property, plant, and equipment.
|
|
|
|
Fair Value
|
|
Average Remaining Useful Life (years)
|
|
Pro Forma Depreciation Expense
|
||||
Computer equipment and software
|
|
|
$
|
28,520
|
|
|
2.3
|
|
$
|
12,320
|
|
Equipment, furniture and fixtures
|
|
|
22,119
|
|
|
3.9
|
|
5,721
|
|
||
Tooling equipment
|
|
|
5,602
|
|
|
4.0
|
|
1,401
|
|
||
Leasehold improvements
|
|
|
19,492
|
|
|
4.0
|
|
4,873
|
|
||
Total
|
|
|
$
|
75,733
|
|
|
|
|
$
|
24,315
|
|
|
|
|
|
|
|
|
|
||||
Less: Depreciation expense recorded by Plantronics on acquired Polycom's assets for 7/2/18 to 3/31/19
|
19,303
|
|
|||||||||
|
|
|
|
|
|
|
|
||||
Less: Polycom's historical depreciation expense
|
4,321
|
|
|||||||||
|
|
|
|
|
|
|
|
||||
Increase to pro forma depreciation expense
|
$
|
691
|
|
(g)
|
Reflects adjustment to interest expense for the year ended March 31, 2019, based upon: (i) interest expense on the Credit Facility (the credit agreement entered into by the Company in connection with the Acquisition on July 2, 2018), (ii) amortization of deferred financing costs of $30.3 million based on an estimated amortization period of 84 months, , and (iii) the elimination of Polycom’s historical interest expense for the quarter ended June 30, 2018 as Polycom’s pre-existing debt was settled in connection with the acquisition.
|
(
in thousands
)
|
|
Year Ended March 31, 2019
|
||
Interest on term loan facility borrowing
|
|
$
|
61,686
|
|
Amortization of deferred financing costs and discounts from the Credit Facility
|
|
3,691
|
|
|
Total interest expense
|
|
65,377
|
|
|
Less:
|
|
|
||
Interest expense recorded for the Credit Facility for 7/2/18 to 3/31/19
|
|
47,970
|
|
|
Historical Polycom interest expense for 4/1/18 to 7/1/18
|
|
24,340
|
|
|
Net pro forma adjustment to interest expense
|
|
$
|
6,933
|
|
(h)
|
Reflects the elimination of Polycom’s historical gain recognized on its cross-currency swap, settled in connection with the Acquisition.
|
(i)
|
Reflects the income tax expense/benefit of the pro forma adjustments based on management’s estimate of the blended applicable statutory tax rate of 21% for the jurisdictions associated with the respective pro forma adjustments. Because the tax rates used for the unaudited pro forma condensed combined statement of operations are an estimate, the blended rate will likely vary from the statutory tax rate in periods subsequent to the Acquisition.
|
(j)
|
The impact to basic and diluted weighted-average shares outstanding resulting from the 6.4 million Plantronics common shares issued as part of the acquisition purchase price. For the year ended March 31, 2019, the historical Plantronics weighted -average shares outstanding reflected the 6.4 million shares as outstanding for nine months; therefore, the pro forma adjustment increased the shares outstanding by 1.5 million.
|