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SANTA CRUZ, Calif. - Media OutReach- July 4, 2018 - Plantronics (NYSE: PLT) announced today that it has completedits acquisition of Polycom. The acquisition of Polycom will accelerate andexpand Plantronics' vision and enable it to deliver the broadest portfolio ofend points in the Unified Communications and Collaboration (UCC) ecosystem.
"We are pleased that Plantronics andPolycom are moving ahead as one company focused on putting people at the centerof every collaboration experience," stated Joe Burton,Plantronics' President and Chief Executive Officer. "Plantronics now offersan unparalleled portfolio of integrated, intelligent solutions that spansheadsets, software, desk phones, audio and video conferencing, and cloud services.This combined offering empowers people with the tools and flexibility they needto create the best experience when connecting to what is most important tothem."
UCC and team collaboration technology are unlocking human potential atwork and at home. With this acquisition, Plantronics is focused on voice, video,content, and cloud solutions for every place that technology touches people asthey work, share, collaborate, and play. As trends in enterprise communicationsmove toward open work spaces and flexible work arrangements, the ecosystem ofplatforms and devices continues to expand. With the addition of Polycom'sleading portfolio, Plantronics can offer a premium experience regardless of theUCC solutions selected by the customer.
"The combinationof Plantronics and Polycom comes at a critical time when customers aresearching for high-quality audio and video solutions that are easy to buy, easyto use, and easy to manage," said Ira M. Weinstein, Founder, Recon Research."The company's offerings work with on-premises, cloud (service provider) andhybrid platforms, giving customers the flexibility to choose their deploymentmethod and cloud migration timing. In addition, its global channel andtechnology partner ecosystem fosters both innovation and global reach. We'reexpecting great things in the future from the new and expanded Plantronics."
Plantronics expects the acquisition to be immediately accretive toNon-GAAP earnings per share and believes it can achieve annual run-rate costsynergies of $75 million within 12 months. Non-GAAP earnings per share may excludecharges related to stock-based compensation, purchase accounting adjustments,acquisition and integration costs, restructuring and other related charges,litigation settlements, as well as the tax impact of these items and any discretetax adjustments.
Under terms of the acquisition agreement, Plantronics acquired Polycom ata $2.0 billion enterprise value with the total consideration consisting of approximately$1.638 billion in cash and 6.352 million Plantronics shares, resulting inTriangle Private Holdings II, LLC, which was Polycom's sole shareholder, owningapproximately 16.0% of Plantronics following the acquisition. Under the termsof the transaction, Frank Baker, Co-Founder and Managing Partner, Siris CapitalGroup (an affiliate of Triangle Private Holdings II, LLC), and Daniel Moloney,Executive Partner, Siris Capital Group, were appointed to Plantronics Board ofDirectors and have been nominated for election by Plantronics' stockholders atthe 2018 Annual Meeting of Stockholders.
Inconjunction with the closing of the acquisition, Plantronics today completedthe financing of the transaction through a $1.275 billion term loan priced at LIBORplus 250 bps, maturing in July 2025 ("Term Loan"). Proceeds of the Term Loan,along with cash on hand, were used to finance the acquisition as well as pay relatedfees and expenses. Additionally, Plantronics concurrently replaced its existing$100 million credit facility with Wells Fargo Bank, N.A. ("Wells Fargo"), witha new $100 million credit facility. Wells Fargo led the new Term Loan facility,as well as the replacement of the existing credit facility and will act asadministrative agent for both the Term Loan and new credit facility. Foley & Lardner LLP acted as outside legal counsel for Plantronics.Further details regarding the terms of the TermLoan and new credit facility are outlined in Plantronics' Current Report onForm 8-K to be filed today with the Securities and Exchange Commission.
Q1 Fiscal Year 2019 Earnings Release Date
Plantronics will release financial results for itsfiscal Q1 2019 on August 7, 2018. Given that the acquisition closed after thequarter ended, Plantronics will issue financial results on a standalone basis forthe quarter, but intends to issue guidance for the September quarter on acombined basis.
Forward Looking Statements
This press release, together with other statements and informationpublicly disseminated by Plantronics, contains forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933, as amended,and Section 21E of the Securities Exchange Act of 1934, as amended , includingstatements relating to: (i) potential accretion from the transaction; (ii)expected synergies; (iii) benefits to our business, partners and users that weexpect from the acquisition; (iv) expectations regarding timing; and (v)expectations and targets regarding cash flow and debt repayments, in additionto other matters discussed in this press release that are not purely historicaldata. We do not assume any obligation to update or revise any suchforward-looking statements, whether as the result of new developments orotherwise.
Forward-looking statements involve risks and uncertainties thatmay cause actual results to differ materially from those contemplated by suchstatements. Among the factors that could cause actual results to differmaterially from those contemplated are:
| * | the ability to: (i) realize expected synergies or operating efficiencies within the expected time-frames or not at all and (ii) integrate Polycom's business in a timely and cost-efficient manner without adversely impacting operations, including new product launches; |
| * | the effect of the acquisition on (i) relationships with the combined company's historical customers, suppliers and strategic partners and their operating results and businesses generally (including the diversion of management time on integration-related issues), (ii) competition and competitive strategies, including each party's historical competitors, and (iii) the combined company's ability to retain and hire key personnel; |
| * | the possibility that pending and unforeseen Polycom legal and regulatory enforcement may adversely impact the results of the combined company in amounts exceeding or otherwise not within the scope of Plantronics indemnification rights under the acquisition agreement; |
| * | the risks associated with the increased leverage undertaken by the company as a result of the acquisition; |
| * | the potential negative effects of the acquisition on the market price of the company's common stock, particularly in light of the issuance of stock in the transaction; |
| * | risks relating to our financial reporting including those resulting from the adoption of new accounting pronouncements and associated system implementation in the context of the acquisition, our ability to forecast financial results of the combined company and the risk that reporting system integration could impact our ability to make timely and accurate SEC filings; |
| * | the potential impact of the acquisition on our future tax rate and payments based on the consolidation of the global group and our ability to quickly integrate foreign operations; |
| * | the challenges of integrating the supply chains of the two companies; |
| * | the potential that our due diligence did not uncover risks and potential liabilities associated with Polycom; |
| * | our ability to realize and achieve positive financial results projected to arise in the Enterprise market from UCC adoption could be adversely affected by a variety of factors including the following: (i) as UCC become more widely adopted, the risk that competitors will offer solutions that will effectively commoditize our product and service offerings which, in turn, will reduce the sales prices for our products and services; (ii) our plans are dependent upon adoption of our UCC solutions by major platform providers and strategic partners such as Microsoft Corporation, Cisco Systems, Inc., Avaya, Inc., Alcatel-Lucent, and Huawei, and our influence over such providers with respect to the functionality of their platforms or their product offerings, their rate of deployment, and their willingness to integrate their platforms and product offerings with our solutions is limited; (iii) delays or limitations on our ability to timely introduce solutions that are cost effective, feature-rich, stable, and attractive to our customers within forecasted development budgets; (iv) our successful implementation and execution of new and different processes involving the design, development, and manufacturing of complex electronic systems composed of hardware, firmware, and software that works seamlessly and continuously in a wide variety of environments and with multiple devices; (v) failure of UCC solutions generally, or our solutions in particular, to be adopted with the breadth and speed we anticipate; (vi) our sales model and expertise must successfully evolve to support complex integration of hardware and software with UCC infrastructure consistent with changing customer purchasing expectations; (vii) as UCC becomes more widely adopted we anticipate that competition for market share will increase, particularly given that some competitors may have superior technical and economic resources; (viii) sales cycles for more complex UCC deployments are longer as compared to our traditional Enterprise products; (ix) our inability to timely and cost-effectively adapt to changing business requirements may impact our profitability in this market and our overall margins; and (x) our failure to expand our technical support capabilities to support the complex and proprietary platforms in which our UCC products are and will be integrated; |
| * | volatility in prices from our suppliers, including our manufacturers located in China, which have in the past and could in the future negatively affect our profitability and/or market share; |
| * | fluctuations in foreign exchange rates; |
| * | the bankruptcy or financial weakness of distributors or key customers, or the bankruptcy of or reduction in capacity of our key suppliers; |
| * | seasonality in one or more of our product categories; |
* | general global macroeconomic and geo-political conditions, including but not limited to, fluctuations in the stock markets generally; and |
| * | slowdowns or downturns in economic conditions generally and in the market for consumer electronics, including voice, video and content solutions. |
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For more informationconcerning these and other possible risks, please refer to our Annual Report onForm 10-K filed with the Securities and Exchange Commission on May 9,2018 and other filings with the Securities and Exchange Commission, aswell as recent press releases. The Securities and Exchange Commission filingscan be accessed over the Internet at https://www.sec.gov/edgar/searchedgar/companysearch.html.
About Plantronics
Plantronics is an audio pioneer and a leader in the communicationsindustry. Plantronics technology creates rich, natural,people-first audio and collaboration experiences so good ideas can be sharedand heard--wherever, whenever and however they happen. The company's portfolioof integrated communications and collaboration solutions spans headsets,software, desk phones, audio and video conferencing, analytics and services. Our solutions areused worldwide by consumers and businesses alike and are the leading choice forevery kind of workspace. Formore information visit plantronics.com.
Plantronics is a registered trademark of Plantronics.The Bluetooth name and the Bluetooth trademarks are owned by Bluetooth SIG,Inc. and are used by Plantronics under license. All other trademarks are theproperty of their respective owners.
