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Polycom Announces Total Revenues of $379 Million for Second Quarter 2012; Revenues Grew 4 Percent Year-over-Year

July 25, 2012 | William Zimmerman

UC Group Systems Revenues Grew 7 Percent Year-Over-Year;UC Platform Revenues Grew 6 Percent Year-Over-Year

SAN JOSE, Calif., Jul 24, 2012 (BUSINESS WIRE) -- Polycom, Inc., the global leader in open standards-based unified communications (UC), today reported financial results for the second quarter ended June 30, 2012. Total combined revenues were $379 million, including revenues from the company's Enterprise Wireless Solutions (EWS) business of $21 million. Polycom has announced plans to divest the EWS business in order to focus its product and technology portfolio on core unified communications and video collaboration solutions.

Second quarter 2012 consolidated net revenues from continuing operations were $359 million, up 5 percent year-over-year as compared to $341 million for the second quarter of 2011. Non-GAAP net income for the second quarter of 2012 was $39 million, or 22 cents per diluted share, compared to non-GAAP net income of $43 million, or 24 cents per diluted share, for the second quarter of 2011. GAAP net income for the second quarter of 2012 was $7 million, or 4 cents per diluted share, compared to $29 million, or 16 cents per diluted share, for the same period last year. The share and per share data for all periods presented in this release have been adjusted to reflect the two-for-one stock split that was effective July 1, 2011 and the classification of Polycom's EWS business as discontinued operations.

"Demand for our best in class UC solutions was solid in Q2, which allowed us to exceed both revenue and earnings expectations," stated Andrew M. Miller, Polycom President and Chief Executive Officer. "In the second half of this year, we will be launching a series of products that we believe will be game-changing and will allow us to expand our addressable market and extend our advantages versus the competition. Most recently, we launched the new Polycom(R) RealPresence(R) Resource Manager offering that further differentiates our Polycom(R) RealPresence(R) Platform with support for large scale video deployments of up to 10,000 endpoints, including mobile devices, multi-tenancy for service providers to deliver Video-as-a-Service cost-effectively, and a new suite of rich, open APIs that extends the value and ecosystem around our RealPresence Platform."

"Our overall performance was better than expected, although we are closely monitoring demand in Europe," continued Eric Brown, Polycom Chief Operating Officer and Chief Financial Officer. "Our primary focus for the balance of the year will be allocating resources to support our key upcoming new product launches."

When reviewing these results, it is important to note that due to the previously announced divestiture of the EWS business, results attributable to the EWS business are therefore considered discontinued operations for all periods presented. Accordingly, EWS revenue and related expenses are shown, net of taxes, as discontinued operations in the statement of operations and excluded from non-GAAP results. Prior periods have been restated to conform to the current period presentation.

Results for the second quarter ended June 30, 2012, before consideration of EWS as discontinued operations, were as follows:

Revenues (millions)
Non-Gaap Earnings per Diluted Share
Continuing Operations
EWS Reporting as discontinued operations

Total Revenues

The reconciliation between GAAP net income and non-GAAP net income is provided in the tables at the end of this release.

On a geographic basis, consolidated net revenues from continuing operations for the second quarter of 2012 were comprised of:

-- 50 percent Americas, or $177.7 million, an increase of 3 percent year-over-year;

-- 22 percent Europe, Middle East, and Africa (EMEA), or $80.4 million, a decrease of 2 percent year-over-year; and

-- 28 percent Asia Pacific, or $100.4 million, an increase of 16 percent year-over-year.

By product line, inclusive of its service component, consolidated net revenues from continuing operations for the second quarter of 2012 were comprised of:

-- UC Group Systems of $251.7 million, an increase of 7 percent year-over-year;

-- UC Personal Devices of $42.9 million, a decrease of 3 percent year-over-year; and

-- UC Platform of $63.9 million, an increase of 6 percent year-over-year.

In Q2 2012, Polycom generated a total of $41 million in operating cash flow and completed share repurchases of $20 million. Operating cash flow on a trailing 12 month basis was $242 million.

Q2 2012 Business Highlights

-- Announced a definitive agreement to divest the EWS business to an affiliate of Sun Capital Partners, Inc. The sale is expected to close within the third quarter of 2012.

-- Announced updates to Polycom(R) RealPresence(R) Video Content Management solutions that deliver live video streaming and video recordings on-demand through a Web portal to Android and Apple devices.

-- Introduced new corporate brand identity to underscore Polycom's continuing transformation to a software-led company.

-- Announced BT Conferencing is using the Polycom(R) RealPresence(R) Platform to power its Video-as-a-Service (VaaS) offering for Polycom deployments.

-- Entered into a U.S. and Canadian distribution agreement with Avnet Technology Solutions, under which they will resell Polycom(R) RealPresence(R) video and voice solutions.

Earnings Call Details

Polycom will hold a conference call today, July 24, 2012, at 5:00 p.m. ET/2:00 p.m. PT to discuss its second quarter financial results. Andrew M. Miller, President and CEO, and Eric Brown, Chief Operating Officer and Chief Financial Officer, will host the call. You may participate by viewing the webcast at or, for callers in the U.S. and Canada, you may participate by calling 800.707.8704 and for callers outside of the U.S. and Canada, by calling 303.223.4360. The pass code for the call is "Polycom." A replay of the call will also be available at or, for callers in the U.S. and Canada, at 800.633.8284 and, for callers outside of the U.S. and Canada, at 402.977.9140. The access number for the replay is 21598593. A replay of the call will be available on for at least three months.

Forward Looking Statements and Risk Factors

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 regarding future events, future demand for our products, and the future performance of the Company, including statements regarding the expected expansion of our addressable market and competitive advantages through game-changing new product launches, the expected areas of focus and anticipated results of realigning our expense profile, the expected close date of the divestiture of our EWS business, and our transformation to a software-led company. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact of competition on our product sales and for our customers and partners; the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources than we do; potential fluctuations in results and future growth rates; risks associated with global economic conditions and external market factors; the market acceptance of our products and changing market demands, including demands for differing technologies or product and services offerings; our ability to successfully integrate our acquisitions into our business and divest our EWS business; possible delays in the development, availability and shipment of new products; increasing costs and differing uses of capital; changes in key personnel that may cause disruption to the business; any disruptive impact to us that may result from new senior-level hires; continuing disruption to the business due to the realignment of the North America sales organization; our inability to achieve the expected results from adjustments being made to our expense profile; the impact of restructuring actions; and the impact of global conflicts that may adversely impact our business. Many of these risks and uncertainties are discussed in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.

Polycom reserves the right to modify future product plans at any time. Products and/or related specifications referenced in this press release are not guaranteed and will be delivered on a when and if available basis.

GAAP to non-GAAP Reconciliation

To supplement our consolidated financial statements presented on a GAAP basis, Polycom uses non-GAAP measures of operating results, net income and income per share, which are adjusted to exclude certain costs, expenses, gains, and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Polycom's underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before gains, losses, or other charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or diluted net income per share prepared in accordance with generally accepted accounting principles in the United States.

About Polycom

Polycom is the global leader in open standards-based unified communications (UC) solutions for telepresence, video, and voice, powered by the Polycom(R) RealPresence(R)Platform. The RealPresence Platform interoperates with the broadest range of business, mobile and social applications and devices. More than 400,000 organizations trust Polycom solutions to collaborate and meet face to face from any location for more productive and effective engagement with colleagues, partners, customers, specialists, and prospects. Polycom, together with its broad partner ecosystem, provides customers with the best total cost of ownership, interoperability, scalability, and security for video collaboration, whether on-premises, hosted or cloud delivered. Visit or connect with Polycom on Twitter, Facebook, and LinkedIn.

(C) 2012 Polycom, Inc. All rights reserved. POLYCOM(R), the Polycom logo, and the names and marks associated with Polycom's products are trademarks and/or service marks of Polycom, Inc. and are registered and/or common law marks in the United States and various other countries. All other trademarks are property of their respective owners.

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