Polycom Reports First Quarter Results

Revenues Grow 27% to $96.2 Million for Q1 2001;

Pro Forma EPS Grows 38% to 18 Cents per Share in Q1



Apr 25, 2001, 01:00 ET from Polycom, Inc.

    MILPITAS, Calif., April 25 /PRNewswire/ --
 Polycom(R), Inc. (Nasdaq:   PLCM), a worldwide leader in broadband communication
 solutions, today reported its operating results for the first quarter ending
 March 31, 2001.
     First quarter consolidated net revenues grew to $96.2 million, an increase
 of 27%, compared to $75.6 million recorded for the first quarter of 2000.
 Pro forma net income in the first quarter of 2001, which excludes the effects
 of acquisition-related costs, was $15.5 million, or 18 cents per diluted
 share, representing a 38% growth in pro forma EPS.  This compares to a pro
 forma net income of $10.6 million, or 13 cents per diluted share, for the
 first quarter of 2000.  These figures include the results of Accord Networks,
 acquired February 28, 2001, and accounted for as a pooling of interests.
 Prior periods have been restated for the Accord acquisition.
     Net revenues for the first quarter of 2001 were comprised of 19% network
 systems, or $18.7 million; 9% network access, or $8.9 million; 50% video
 communications, or $47.6 million; and 22% voice communications, or
 $21.0 million.  This compares to the first quarter of 2000, in which revenues
 were comprised of 11% network systems, or $8.3 million; 3% network access, or
 $2.6 million; 55% video communications, or $41.2 million; and 31% voice
 communications, or $23.5 million.
     Including the effect of the pro forma items, net income for the first
 quarter of fiscal 2001 was $6.4 million, or 8 cents per diluted share,
 compared with $11.8 million, or 15 cents per diluted share, for the same
 period last year.
     "Polycom continued to fortify its position during the first few months of
 2001," stated Robert Hagerty, president and CEO.  "We closed the acquisition
 of Accord Networks, the leader in video and voice network infrastructure, and
 on April 2nd we closed the acquisition of Circa Communications, a leading
 developer of voice over internet protocol (VoIP) products.  With these
 strategic additions to Polycom's offerings, we are best positioned to fulfill
 the demand for end-to-end voice and video solutions over IP and
 circuit-switched networks."
     Hagerty continued, "During the quarter, we experienced multiple
 validations that our products are being procured to increase productivity and
 lower operating costs in this volatile economic climate.  In fact, in the
 first quarter, we announced that IBM, Towers Perrin, Adobe Systems,
 Focusvision, Otis Elevator, and Qwest all determined that an aggressive
 deployment of Polycom product would optimize their internal and external
 communications.  On the product front, we announced a new PC live sharing
 device for our video communications product line, G.SHDSL and BRI NetEngine
 network access products, and a SoundStation Premier for Avaya's leading
 Definity business communications server.  Finally, adding to our channel and
 strategic partner network, we signed agreements with Stryker Communications
 for our ViewStation products in the telemedicine space and Sylantro Systems
 for Polycom's upcoming line of VoIP telephony products."
     "With the completion of the Accord acquisition, Polycom experienced a
 significant sequential increase in gross margin to 57.5% in the first quarter,
 yielding a significant operating profit for the period," said Michael Kourey,
 senior vice president, finance and administration, and CFO.  "Not only did we
 grow revenues 27% and pro forma EPS by 38%, Polycom generated $9 million of
 positive operating cash flow in the first quarter of 2001, the company's 12th
 consecutive quarter of positive cash flow.  Including the $46.7 million of
 cash and investments assumed through the closing of the Accord acquisition in
 February, Polycom has a cash and investment balance of $316.2 million."
 
     About Polycom
     Polycom, Inc. develops, manufactures and markets a full range of
 high-quality, easy-to-use and affordable voice and video communication
 products and network infrastructure and access solutions.  Polycom's
 integrated communication solutions enable business users to immediately
 realize the benefits of video, voice and data over rapidly growing converged
 networks.
     Except for the historical information contained herein, matters discussed
 in this release include forward looking statements that involve risks and
 uncertainties, including potential fluctuations in results and future growth
 rates; the market acceptance of ViewStation(TM), NetEngine(TM), ViaVideo(TM),
 SoundPoint(R)Pro, and other new products; the impact of competitive products
 and pricing; risks associated with the current general economic conditions and
 telecom spending; technological change; risks associated with international
 operations; dependence on research and development; existing and new
 competition; risks associated with the Accord Networks acquisition, such as
 the risk of loss of Accord Networks' distribution channels that sell products
 competitive to Polycom, potential difficulties in the assimilation of the
 other distribution channels and other operations of Accord, the risk of loss
 of key Accord personnel, risk of entering new markets associated with Accord
 Networks' partners, including significant current and expected additional
 competition and the need to continue to expand product distribution,
 particularly in the IP channels and internationally; the risks associated with
 the Circa Communications Ltd. acquisition, such as potential difficulties in
 the assimilation of distribution channels, operations, strategies,
 technologies and products of the acquired company, the risk of loss of key
 Circa personnel, risk of entering new markets associated with Circa's
 partners, including significant current and expected additional competition
 and the need to continue to expand product distribution, particularly in the
 data channels and internationally.  Further risks are detailed from time to
 time in Polycom's SEC reports, including the Form 10-K for the year 2000, and
 subsequent Form 10-Q filings.
     As has been noted on the Company's web site since April 20, 2001, Polycom
 will hold a conference call today at 5:00 p.m. EDT/2:00 p.m. PDT to discuss
 its first quarter earnings.  Robert Hagerty, Chairman, President and CEO, and
 Michael Kourey, Chief Financial Officer will host the conference.  You may
 participate by viewing the webcast at www.polycom.com or, for callers in the
 U.S. and Canada, call 888-489-9487; and for callers outside of the U.S. and
 Canada, call 212-231-6038.  A replay of the call will also be available
 through May 2 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 858-812-6440.
      NOTE:  Polycom, the Polycom logo design, Accord and SoundPoint Pro are
 registered trademarks and ViewStation, NetEngine, ViaVideo are trademarks of
 Polycom, Inc. in the U.S. and various countries.
 
 
                                 POLYCOM, INC.
                  Pro Forma Consolidated Statements of Income
       Excluding Acquisition-Related Costs and Litigation Reserve Release
                     (in thousands, except per share data)
                                  (Unaudited)
 
                                                        Three Months Ended
                                                     March 31,      March 31,
                                                       2001           2000
 
     Net revenues                                     $96,217        $75,554
     Cost of net revenues                              40,904         32,496
      Gross profit                                     55,313         43,058
 
     Operating expenses:
      Sales and marketing                              18,613         14,627
      Research and development                         14,190          8,966
      General and administrative                        4,755          4,575
       Total operating expenses                        37,558         28,168
 
     Operating income                                  17,755         14,890
 
     Interest income, net                               3,982            773
     Other income                                          65             71
 
     Income before provision for income taxes          21,802         15,734
     Provision for income taxes                         6,323          5,120
     Net income                                       $15,479        $10,614
 
 
 
     Basic net income per share                         $0.19          $0.15
 
     Dilutive net income per share                      $0.18          $0.13
 
 
     Weighted average shares outstanding
      for basic EPS                                    82,425         69,487
     Weighted average shares outstanding
      for dilutive EPS                                 85,757         80,966
 
 
 
     The above pro forma amounts have been adjusted to exclude the following
     items:
 
                                                        Three Months Ended
                                                      March 31,     March 31,
                                                        2001          2000
 
     Acquisition-related costs                         $9,682            $--
     Litigation reserve release                            --        (1,843)
     Combined income tax effect of pro forma
      adjustments                                       (648)            608
     Net effect of pro forma adjustments               $9,034       $(1,235)
 
 
                                 POLYCOM, INC.
                       Consolidated Statements of Income
                     (in thousands, except per share data)
                                  (Unaudited)
 
 
 
                                                        Three Months Ended
                                                     March 31,      March 31,
                                                       2001           2000
 
     Net revenues                                     $96,217        $75,554
     Cost of net revenues                              40,904         32,496
      Gross profit                                     55,313         43,058
 
     Operating expenses:
      Sales and marketing                              18,613         14,627
      Research and development                         14,190          8,966
      General and administrative                        4,755          4,575
      Acquisition-related costs                         9,682            ---
      Litigation reserve release                          ---        (1,843)
       Total operating expenses                        47,240         26,325
 
     Operating income                                   8,073         16,733
 
     Interest income, net                               3,982            773
     Other income                                          65             71
 
     Income before provision for income taxes          12,120         17,577
     Provision for income taxes                         5,675          5,728
     Net income                                        $6,445        $11,849
 
 
 
     Basic net income per share                         $0.08          $0.17
 
     Dilutive net income per share                      $0.08          $0.15
 
 
     Weighted average shares outstanding for basic EPS 82,425         69,487
     Weighted average shares outstanding for dilutive EPS85,757       80,966
 
 
                                 POLYCOM, INC.
                     Condensed Consolidated Balance Sheets
                                 (in thousands)
 
 
                                                     March 31,      Dec. 31,
                                                       2001           2000
                                                    (Unaudited)
     ASSETS
     Current assets
      Cash and cash equivalents                      $153,854       $189,399
      Short-term investments                           84,241         52,399
      Trade receivables, net                           68,857         75,653
      Inventories                                      54,879         49,971
      Deferred taxes                                   24,864         26,623
      Non-trade receivables                            10,986          8,065
      Prepaid expenses and other current assets         3,874          3,218
       Total current assets                           401,555        405,328
 
     Fixed assets, net                                 21,447         22,046
     Long-term investments                             67,924         53,543
     Other investments                                 10,146         10,146
     Licenses                                           7,234          7,778
     Noncurrent deferred taxes                          2,811          2,811
     Deposits and other assets                          2,951          2,056
       Total assets                                  $514,068       $503,708
 
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities
      Accounts payable                                $29,909        $33,614
      Taxes payable                                    18,354         16,188
      Other current liabilities                        28,904         29,557
       Total current liabilities                       77,167         79,359
 
     Long-term liabilities                              1,824          1,566
       Total liabilities                               78,991         80,925
 
     Stockholders' equity                             435,077        422,783
 
       Total liabilities and stockholders' equity    $514,068       $503,708
 
                      MAKE YOUR OPINION COUNT - Click Here
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SOURCE Polycom, Inc.
    MILPITAS, Calif., April 25 /PRNewswire/ --
 Polycom(R), Inc. (Nasdaq:   PLCM), a worldwide leader in broadband communication
 solutions, today reported its operating results for the first quarter ending
 March 31, 2001.
     First quarter consolidated net revenues grew to $96.2 million, an increase
 of 27%, compared to $75.6 million recorded for the first quarter of 2000.
 Pro forma net income in the first quarter of 2001, which excludes the effects
 of acquisition-related costs, was $15.5 million, or 18 cents per diluted
 share, representing a 38% growth in pro forma EPS.  This compares to a pro
 forma net income of $10.6 million, or 13 cents per diluted share, for the
 first quarter of 2000.  These figures include the results of Accord Networks,
 acquired February 28, 2001, and accounted for as a pooling of interests.
 Prior periods have been restated for the Accord acquisition.
     Net revenues for the first quarter of 2001 were comprised of 19% network
 systems, or $18.7 million; 9% network access, or $8.9 million; 50% video
 communications, or $47.6 million; and 22% voice communications, or
 $21.0 million.  This compares to the first quarter of 2000, in which revenues
 were comprised of 11% network systems, or $8.3 million; 3% network access, or
 $2.6 million; 55% video communications, or $41.2 million; and 31% voice
 communications, or $23.5 million.
     Including the effect of the pro forma items, net income for the first
 quarter of fiscal 2001 was $6.4 million, or 8 cents per diluted share,
 compared with $11.8 million, or 15 cents per diluted share, for the same
 period last year.
     "Polycom continued to fortify its position during the first few months of
 2001," stated Robert Hagerty, president and CEO.  "We closed the acquisition
 of Accord Networks, the leader in video and voice network infrastructure, and
 on April 2nd we closed the acquisition of Circa Communications, a leading
 developer of voice over internet protocol (VoIP) products.  With these
 strategic additions to Polycom's offerings, we are best positioned to fulfill
 the demand for end-to-end voice and video solutions over IP and
 circuit-switched networks."
     Hagerty continued, "During the quarter, we experienced multiple
 validations that our products are being procured to increase productivity and
 lower operating costs in this volatile economic climate.  In fact, in the
 first quarter, we announced that IBM, Towers Perrin, Adobe Systems,
 Focusvision, Otis Elevator, and Qwest all determined that an aggressive
 deployment of Polycom product would optimize their internal and external
 communications.  On the product front, we announced a new PC live sharing
 device for our video communications product line, G.SHDSL and BRI NetEngine
 network access products, and a SoundStation Premier for Avaya's leading
 Definity business communications server.  Finally, adding to our channel and
 strategic partner network, we signed agreements with Stryker Communications
 for our ViewStation products in the telemedicine space and Sylantro Systems
 for Polycom's upcoming line of VoIP telephony products."
     "With the completion of the Accord acquisition, Polycom experienced a
 significant sequential increase in gross margin to 57.5% in the first quarter,
 yielding a significant operating profit for the period," said Michael Kourey,
 senior vice president, finance and administration, and CFO.  "Not only did we
 grow revenues 27% and pro forma EPS by 38%, Polycom generated $9 million of
 positive operating cash flow in the first quarter of 2001, the company's 12th
 consecutive quarter of positive cash flow.  Including the $46.7 million of
 cash and investments assumed through the closing of the Accord acquisition in
 February, Polycom has a cash and investment balance of $316.2 million."
 
     About Polycom
     Polycom, Inc. develops, manufactures and markets a full range of
 high-quality, easy-to-use and affordable voice and video communication
 products and network infrastructure and access solutions.  Polycom's
 integrated communication solutions enable business users to immediately
 realize the benefits of video, voice and data over rapidly growing converged
 networks.
     Except for the historical information contained herein, matters discussed
 in this release include forward looking statements that involve risks and
 uncertainties, including potential fluctuations in results and future growth
 rates; the market acceptance of ViewStation(TM), NetEngine(TM), ViaVideo(TM),
 SoundPoint(R)Pro, and other new products; the impact of competitive products
 and pricing; risks associated with the current general economic conditions and
 telecom spending; technological change; risks associated with international
 operations; dependence on research and development; existing and new
 competition; risks associated with the Accord Networks acquisition, such as
 the risk of loss of Accord Networks' distribution channels that sell products
 competitive to Polycom, potential difficulties in the assimilation of the
 other distribution channels and other operations of Accord, the risk of loss
 of key Accord personnel, risk of entering new markets associated with Accord
 Networks' partners, including significant current and expected additional
 competition and the need to continue to expand product distribution,
 particularly in the IP channels and internationally; the risks associated with
 the Circa Communications Ltd. acquisition, such as potential difficulties in
 the assimilation of distribution channels, operations, strategies,
 technologies and products of the acquired company, the risk of loss of key
 Circa personnel, risk of entering new markets associated with Circa's
 partners, including significant current and expected additional competition
 and the need to continue to expand product distribution, particularly in the
 data channels and internationally.  Further risks are detailed from time to
 time in Polycom's SEC reports, including the Form 10-K for the year 2000, and
 subsequent Form 10-Q filings.
     As has been noted on the Company's web site since April 20, 2001, Polycom
 will hold a conference call today at 5:00 p.m. EDT/2:00 p.m. PDT to discuss
 its first quarter earnings.  Robert Hagerty, Chairman, President and CEO, and
 Michael Kourey, Chief Financial Officer will host the conference.  You may
 participate by viewing the webcast at www.polycom.com or, for callers in the
 U.S. and Canada, call 888-489-9487; and for callers outside of the U.S. and
 Canada, call 212-231-6038.  A replay of the call will also be available
 through May 2 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 858-812-6440.
      NOTE:  Polycom, the Polycom logo design, Accord and SoundPoint Pro are
 registered trademarks and ViewStation, NetEngine, ViaVideo are trademarks of
 Polycom, Inc. in the U.S. and various countries.
 
 
                                 POLYCOM, INC.
                  Pro Forma Consolidated Statements of Income
       Excluding Acquisition-Related Costs and Litigation Reserve Release
                     (in thousands, except per share data)
                                  (Unaudited)
 
                                                        Three Months Ended
                                                     March 31,      March 31,
                                                       2001           2000
 
     Net revenues                                     $96,217        $75,554
     Cost of net revenues                              40,904         32,496
      Gross profit                                     55,313         43,058
 
     Operating expenses:
      Sales and marketing                              18,613         14,627
      Research and development                         14,190          8,966
      General and administrative                        4,755          4,575
       Total operating expenses                        37,558         28,168
 
     Operating income                                  17,755         14,890
 
     Interest income, net                               3,982            773
     Other income                                          65             71
 
     Income before provision for income taxes          21,802         15,734
     Provision for income taxes                         6,323          5,120
     Net income                                       $15,479        $10,614
 
 
 
     Basic net income per share                         $0.19          $0.15
 
     Dilutive net income per share                      $0.18          $0.13
 
 
     Weighted average shares outstanding
      for basic EPS                                    82,425         69,487
     Weighted average shares outstanding
      for dilutive EPS                                 85,757         80,966
 
 
 
     The above pro forma amounts have been adjusted to exclude the following
     items:
 
                                                        Three Months Ended
                                                      March 31,     March 31,
                                                        2001          2000
 
     Acquisition-related costs                         $9,682            $--
     Litigation reserve release                            --        (1,843)
     Combined income tax effect of pro forma
      adjustments                                       (648)            608
     Net effect of pro forma adjustments               $9,034       $(1,235)
 
 
                                 POLYCOM, INC.
                       Consolidated Statements of Income
                     (in thousands, except per share data)
                                  (Unaudited)
 
 
 
                                                        Three Months Ended
                                                     March 31,      March 31,
                                                       2001           2000
 
     Net revenues                                     $96,217        $75,554
     Cost of net revenues                              40,904         32,496
      Gross profit                                     55,313         43,058
 
     Operating expenses:
      Sales and marketing                              18,613         14,627
      Research and development                         14,190          8,966
      General and administrative                        4,755          4,575
      Acquisition-related costs                         9,682            ---
      Litigation reserve release                          ---        (1,843)
       Total operating expenses                        47,240         26,325
 
     Operating income                                   8,073         16,733
 
     Interest income, net                               3,982            773
     Other income                                          65             71
 
     Income before provision for income taxes          12,120         17,577
     Provision for income taxes                         5,675          5,728
     Net income                                        $6,445        $11,849
 
 
 
     Basic net income per share                         $0.08          $0.17
 
     Dilutive net income per share                      $0.08          $0.15
 
 
     Weighted average shares outstanding for basic EPS 82,425         69,487
     Weighted average shares outstanding for dilutive EPS85,757       80,966
 
 
                                 POLYCOM, INC.
                     Condensed Consolidated Balance Sheets
                                 (in thousands)
 
 
                                                     March 31,      Dec. 31,
                                                       2001           2000
                                                    (Unaudited)
     ASSETS
     Current assets
      Cash and cash equivalents                      $153,854       $189,399
      Short-term investments                           84,241         52,399
      Trade receivables, net                           68,857         75,653
      Inventories                                      54,879         49,971
      Deferred taxes                                   24,864         26,623
      Non-trade receivables                            10,986          8,065
      Prepaid expenses and other current assets         3,874          3,218
       Total current assets                           401,555        405,328
 
     Fixed assets, net                                 21,447         22,046
     Long-term investments                             67,924         53,543
     Other investments                                 10,146         10,146
     Licenses                                           7,234          7,778
     Noncurrent deferred taxes                          2,811          2,811
     Deposits and other assets                          2,951          2,056
       Total assets                                  $514,068       $503,708
 
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities
      Accounts payable                                $29,909        $33,614
      Taxes payable                                    18,354         16,188
      Other current liabilities                        28,904         29,557
       Total current liabilities                       77,167         79,359
 
     Long-term liabilities                              1,824          1,566
       Total liabilities                               78,991         80,925
 
     Stockholders' equity                             435,077        422,783
 
       Total liabilities and stockholders' equity    $514,068       $503,708
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X83816311
 
 SOURCE  Polycom, Inc.