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 ~~July 3, 2021~~January 1, 2022


☐			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

Plantronics, Inc.

(Exact name of registrant as specified in its charter)


Delaware			77-0207692
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

345 Encinal Street

Santa Cruz, California 95060

(Address of principal executive offices)

(Zip Code)

(831) 420-3002

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the ~~Act~~Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	POLY	New York Stock Exchange

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.


Large accelerated filer	☒	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 o~~July 26, 2021~~,f February 3, 2022, ~~42,321,794~~42,778,870 shares of the registrant's common stock were outstanding.

PLANTRONICS, INC.

FORM 10-Q

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated F ~~inancial~~Financial Statements (Unaudited)	43
	Condensed Consolidated Balance Sheets as of ~~July 3, 2021~~January 1, 2022 and April 3, ~~2021~~20 21	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended January 1, 2022 and December 26, 2020	4
	Condensed Consolidated Statements of ~~Operations~~Comprehensive (Loss)Income for the Three and Nine Months Ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020	5
	Condensed Consolidated Statements of ~~ComprehensiveLoss~~Cash Flows for the ~~Three~~Nine Months Ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020	6
	Condensed Consolidated Statements of ~~Cash Flows~~Stockholders' Equity (Deficit) for the Three and Nine Months Ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020	7
	~~Condensed Consolidated Statements of Stockholders'~~ ~~Deficit~~ ~~for the Three Months Ended July 3, 2021 and June 27, 2020~~	98
	Notes to the Condensed Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2830
	Overview	2931
	Results of Operations	3133
	Financial Condition	3638
	Off Balance Sheet Arrangements and Contractual Obligations	3840
	Critical Accounting Estimates	3841
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3942
Item 4.	Controls and Procedures	4144

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	4144
Item 1A.	Risk Factors	4144
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4245
Item 6.	Exhibits	4346

Signatures		4447

Plantronics, Poly, the Propeller design, the Poly logo, and Polycom are trademarks of Plantronics, Inc.

All other trademarks are the property of their respective owners.

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PLANTRONICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)

July 3, 2021 April 3,
2021
ASSETS
Current assets
Cash and cash equivalents $ 196,761 $ 202,560
Restricted cash 0 493,908
Short-term investments 15,953 14,559
Accounts receivable, net 271,592 267,464
Inventory, net 187,476 194,405
Other current assets 61,974 65,214
Total current assets 733,756 1,238,110
Non-current assets
Property, plant, and equipment, net 131,294 140,875
Purchased intangibles, net 311,180 341,614
Goodwill 796,216 796,216
Deferred tax assets 101,841 95,800
Other non-current assets 60,774 51,654
Total assets $ 2,135,061 $ 2,664,269
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 163,926 $ 151,244
Accrued liabilities 361,940 394,084
Current portion of long-term debt 0 478,807
Total current liabilities 525,866 1,024,135
Non-current liabilities
Long-term debt, net 1,497,119 1,496,064
Long-term income taxes payable 85,858 86,227
Other non-current liabilities 138,772 138,609
Total liabilities 2,247,615 2,745,035
Commitments and contingencies (Note 7) 0 0
Stockholders' deficit
Common stock 921 912
Additional paid-in capital 1,566,688 1,556,272
Accumulated other comprehensive income (loss) 1,602 (3,221)
Accumulated deficit (802,044) (765,233)
Total stockholders' equity before treasury stock 767,167 788,730
Less: Treasury stock, at cost (879,721) (869,496)
Total stockholders' deficit (112,554) (80,766)
Total liabilities and stockholders' deficit $ 2,135,061 $ 2,664,269


	January 1, 2022		April 3, 2021
ASSETS
Current assets
Cash and cash equivalents	$	182,700	$	202,560
Restricted cash	—		493,908
Short-term investments	17,017		14,559
Accounts receivable, net	275,913		267,464
Inventory, net	216,750		194,405
Other current assets	61,484		65,214
Total current assets	753,864		1,238,110
Non-current assets

Property, plant, and equipment, net	126,973		140,875
Purchased intangibles, net	255,564		341,614
Goodwill	796,216		796,216
Deferred tax assets	211,543		95,800
Other non-current assets	70,332		51,654
Total assets	$	2,214,492	$	2,664,269

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	160,529	$	151,244
Accrued liabilities	328,551		394,084
Current portion of long-term debt	—		478,807
Total current liabilities	489,080		1,024,135
Non-current liabilities
Long-term debt, net	1,499,228		1,496,064

Long-term income taxes payable	76,095		86,227

Other non-current liabilities	139,469		138,609
Total liabilities	2,203,872		2,745,035
Commitments and contingencies (Note 6)	0		0
Stockholders' equity (deficit)
Common stock	926		912
Additional paid-in capital	1,596,313		1,556,272
Accumulated other comprehensive income (loss)	11,454		(3,221)
Accumulated deficit	(716,423)		(765,233)
Total stockholders' equity before treasury stock	892,270		788,730
Less: Treasury stock, at cost	(881,650)		(869,496)
Total stockholders' equity (deficit)	10,620		(80,766)
Total liabilities and stockholders' equity (deficit)	$	2,214,492	$	2,664,269

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PLANTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Net revenues
Net product revenues	$	354,022	$	420,711	$	1,086,607	$	1,059,846
Net service revenues	55,544		63,974		173,155		191,529
Total net revenues	409,566		484,685		1,259,762		1,251,375
Cost of revenues
Cost of product revenues	226,994		236,842		682,360		622,718
Cost of service revenues	18,386		21,186		58,334		64,921
Total cost of revenues	245,380		258,028		740,694		687,639

Gross profit	164,186		226,657		519,068		563,736

Operating expenses
Research, development, and engineering	46,216		54,150		136,090		156,327
Selling, general, and administrative	121,387		129,641		364,417		361,892
Loss, net from litigation settlements	—		—		—		17,561
Restructuring and other related charges	2,398		13,977		33,977		49,477
Total operating expenses	170,001		197,768		534,484		585,257

Operating (loss) income	(5,815)		28,889		(15,416)		(21,521)

Interest expense	15,948		18,417		53,871		58,182
Other non-operating income, net	(995)		(2,596)		(1,664)		(4,188)
(Loss) income before income taxes	(20,768)		13,068		(67,623)		(75,515)

Income tax benefit	(9,604)		(7,045)		(116,433)		(7,208)
Net (loss) income	$	(11,164)	$	20,113	$	48,810	$	(68,307)

Per share data
Basic (loss) earnings per common share	$	(0.26)	$	0.49	$	1.15	$	(1.67)
Diluted (loss) earnings per common share	$	(0.26)	$	0.48	$	1.11	$	(1.67)
Basic shares used in computing (loss) earnings per common share	42,745		41,252		42,450		40,894
Diluted shares used in computing (loss) earnings per common share	42,745		42,184		43,811		40,894

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PLANTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~COMPREHENSIVE (LOSS) INCOME

(in ~~thousands, except per share data)~~thousands)

(Unaudited)

Three Months Ended
July 3, 2021 June 27, 2020
Net revenues
Net product revenues $ 371,203 $ 291,458
Net service revenues 59,969 64,262
Total net revenues 431,172 355,720
Cost of revenues
Cost of product revenues 235,196 176,615
Cost of service revenues 20,787 22,773
Total cost of revenues 255,983 199,388
Gross profit 175,189 156,332
Operating expenses
Research, development, and engineering 45,466 50,029
Selling, general, and administrative 120,734 116,644
Loss, net from litigation settlements 0 17,561
Restructuring and other related charges 28,972 29,330
Total operating expenses 195,172 213,564
Operating loss (19,983) (57,232)
Interest expense 21,782 21,184
Other non-operating income, net (692) (224)
Loss before income taxes (41,073) (78,192)
Income tax benefit (4,262) (3,177)
Net loss $ (36,811) $ (75,015)
Per share data
Basic and diluted loss per common share $ (0.88) $ (1.85)
Basic and diluted shares used in computing loss per common share 42,061 40,460


	Three Months Ended				Nine Months Ended
	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Net (loss) income	$	(11,164)	$	20,113	$	48,810	$	(68,307)

Other comprehensive income, before tax
Unrealized gains on cash flow hedges
Unrealized cash flow hedge gains (losses)	7,846		(3,754)		8,520		(8,339)
Net (gains) losses reclassified into net revenues	(1,804)		1,054		(671)		1,797
Net gains reclassified into cost of revenues	(10)		—		(489)		—
Net losses reclassified into interest expense	2,100		3,039		7,582		10,290
Net unrealized gains on cash flow hedges	8,132		339		14,942		3,748



Income tax benefit (expense) in other comprehensive income	38		599		(267)		1,122
Other comprehensive income	8,170		938		14,675		4,870

Comprehensive (loss) income	$	(2,994)	$	21,051	$	63,485	$	(63,437)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table ~~of Contents~~

~~PLANTRONICS, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS~~

~~(in thousands)~~

~~(Unaudited)~~

Three Months Ended
July 3, 2021 June 27, 2020
Net loss $ (36,811) $ (75,015)
Other comprehensive income, before tax
Unrealized gains on cash flow hedges
Unrealized cash flow hedge gains (losses) 440 (1,579)
Net losses (gains) reclassified into net revenues 1,772 (909)
Net gains reclassified into cost of revenues (236) 0
Net losses reclassified into interest expense 3,089 3,723
Net unrealized gains on cash flow hedges 5,065 1,235
Income tax (expense) benefit in other comprehensive income (243) 264
Other comprehensive income 4,822 1,499
Comprehensive loss $ (31,989) $ (73,516)

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~Table~~ of Contents

PLANTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Three Months Ended
July 3, 2021 June 27, 2020
Cash flows from operating activities
Net loss $ (36,811) $ (75,015)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization 39,833 43,400
Amortization of debt issuance costs 2,937 1,340
Stock-based compensation 10,416 9,355
Deferred income taxes (5,943) (7,169)
Provision for excess and obsolete inventories 5,310 6,082
Restructuring and other related charges 28,972 29,330
Cash payments for restructuring charges (12,230) (13,085)
Other operating activities (2,998) (1,851)
Changes in assets and liabilities
Accounts receivable, net (3,758) 37,914
Inventory, net 6,326 (16,008)
Current and other assets 365 3,483
Accounts payable 12,515 12,321
Accrued liabilities (40,631) 11,236
Income taxes (3,454) 389
Net cash provided by operating activities 849 41,722
Cash flows from investing activities
Purchases of short-term investments (404) (108)
Capital expenditures (6,052) (5,437)
Proceeds from sale of property and equipment 0 1,900
Other investing activities (4,000) 0
Cash used in investing activities (10,456) (3,645)
Cash flows from financing activities
Employees' tax withheld and paid for restricted stock and restricted stock units (10,225) (2,739)
Proceeds from issuances under stock-based compensation plans 9 5
Proceeds from revolving line of credit 0 50,000
Repayments of revolving line of credit 0 (50,000)
Repayments of long-term debt (480,689) 0
Net cash used in financing activities (490,905) (2,734)
Effect of exchange rate changes on cash and cash equivalents and restricted cash 805 544
Net (decrease) increase in cash and cash equivalents and restricted cash (499,707) 35,887
Cash and cash equivalents and restricted cash at beginning of period 696,468 213,879
Cash and cash equivalents and restricted cash at end of period $ 196,761 $ 249,766

~~The accompanying notes are an integral part of these condensed consolidated financial statements.~~


	Nine Months Ended
	January 1, 2022		December 26, 2020
Cash flows from operating activities
Net income (loss)	$	48,810	$	(68,307)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities
Depreciation and amortization	112,796		124,881
Amortization of debt issuance costs	5,046		3,962
Stock-based compensation	34,214		31,104
Deferred income taxes	(115,660)		(15,373)
Provision for excess and obsolete inventories	8,160		12,767
Restructuring and other related charges	33,977		49,477
Cash payments for restructuring charges	(27,515)		(28,794)
Other operating activities	(1,526)		(6,000)
Changes in assets and liabilities
Accounts receivable, net	(8,569)		(71,439)
Inventory, net	(24,699)		(39,941)
Current and other assets	(9,129)		(15,246)
Accounts payable	9,170		62,454
Accrued liabilities	(45,502)		47,529
Income taxes	(19,625)		(15,925)
Net cash (used in) provided by operating activities	(52)		71,149

Cash flows from investing activities
Proceeds from sales of short-term investments	264		667

Purchases of short-term investments	(760)		(394)

Capital expenditures	(20,682)		(16,753)
Proceeds from sale of property, plant, and equipment	—		1,900
Other investing activities	(4,000)		—
Net cash used in investing activities	(25,178)		(14,580)

Cash flows from financing activities

Employees' tax withheld and paid for restricted stock and restricted stock units	(12,154)		(3,193)
Proceeds from issuances under stock-based compensation plans	5,841		5,731
Proceeds from revolving line of credit	—		50,000
Repayments of revolving line of credit	—		(50,000)


Repayments of long-term debt	(480,689)		(46,980)

Net cash used in financing activities	(487,002)		(44,442)

Effect of exchange rate changes on cash and cash equivalents and restricted cash	(1,536)		4,059
Net (decrease) increase in cash and cash equivalents and restricted cash	(513,768)		16,186

Cash and cash equivalents and restricted cash at beginning of period	696,468		213,879
Cash and cash equivalents and restricted cash at end of period	$	182,700	$	230,065

Table of Contents

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:


(in thousands)	(in thousands)	July 3, 2021		April 3, 2021		(in thousands)	January 1, 2022		April 3, 2021
Cash and cash equivalents	Cash and cash equivalents	$	196,761	$	202,560	Cash and cash equivalents	$	182,700	$	202,560
Restricted cash	Restricted cash	0		493,908		Restricted cash	—		493,908
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows		$	196,761	$	696,468
Total cash and cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows						Total cash and cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	182,700	$	696,468

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PLANTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' ~~DEFICIT~~EQUITY (DEFICIT)

(in thousands)

(Unaudited)

Three Months Ended July 3, 2021
Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Treasury Stock Total Stockholders' Deficit
Shares Amount
Balances at April 3, 2021 41,751 $ 912 $ 1,556,272 $ (3,221) $ (765,233) $ (869,496) $ (80,766)
Net loss — — — — (36,811) — (36,811)
Net unrealized gains on cash flow hedges, net of tax — — — 4,823 — — 4,823
Proceeds from issuances under stock-based compensation plans 569 9 — — — — 9
Stock-based compensation — — 10,416 — — — 10,416
Employees' tax withheld and paid for restricted stock and restricted stock units 0 — — — — (10,225) (10,225)
Balances at July 3, 2021 42,320 $ 921 $ 1,566,688 $ 1,602 $ (802,044) $ (879,721) $ (112,554)


	Three Months Ended January 1, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Treasury Stock		Total Stockholders' (Deficit) Equity
	Shares	Amount
Balances at October 2, 2021	42,721	$	926	$	1,584,088	$	3,284	$	(705,259)	$	(880,806)	$	2,233
Net loss	—	—		—		—		(11,164)		—		(11,164)

Net unrealized gains on cash flow hedges, net of tax	—	—		—		8,170		—		—		8,170

Proceeds from issuances under stock-based compensation plans	43	—		—		—		—		—		—



Stock-based compensation	—	—		12,225		—		—		—		12,225


Employees' tax withheld and paid for restricted stock and restricted stock units	—	—		—		—		—		(844)		(844)




Balances at January 1, 2022	42,764	$	926	$	1,596,313	$	11,454	$	(716,423)	$	(881,650)	$	10,620


		Three Months Ended June 27, 2020																				Three Months Ended December 26, 2020
		Common Stock			Additional Paid-In Capital				Accumulated Other Comprehensive Loss		Accumulated Deficit			Treasury Stock				Total Stockholders' Deficit				Common Stock					Additional Paid-In Capital				Accumulated Other Comprehensive Loss				Accumulated Deficit				Treasury Stock				Total Stockholders' Deficit
		Shares	Amount										Shares								Amount
Balances at March 28, 2020		40,406	$	896			$	1,501,340			$	(13,582)				$	(707,904)			$	(863,566)		$	(82,816)
Net loss		—	—		—				—		(75,015)			—				(75,015)
Balances at September 26, 2020																					Balances at September 26, 2020	41,246			$	907			$	1,526,677			$	(9,650)			$	(796,324)			$	(866,615)			$	(145,005)
Net income																					Net income	—			—		—				—				20,113				—				20,113

Net unrealized gains on cash flow hedges, net of tax	Net unrealized gains on cash flow hedges, net of tax	—	—		—				1,499		—			—				1,499			Net unrealized gains on cash flow hedges, net of tax	—			—		—				938				—				—				938

Proceeds from issuances under stock-based compensation plans	Proceeds from issuances under stock-based compensation plans	519	5		—				—		—			—				5			Proceeds from issuances under stock-based compensation plans	19			—		—				—				—				—				—
Repurchase of restricted common stock		(10)	—		—				—		—			—				—

Stock-based compensation	Stock-based compensation	—	—		9,355				—		—			—				9,355			Stock-based compensation	—			—		11,486				—				—				—				11,486

Employees' tax withheld and paid for restricted stock and restricted stock units	Employees' tax withheld and paid for restricted stock and restricted stock units	(233)	—		—				—		—			(2,739)				(2,739)			Employees' tax withheld and paid for restricted stock and restricted stock units	(6)			—		—				—				—				(144)				(144)

Balances at June 27, 2020		40,682	$	901	$	1,510,695			$	(12,083)	$	(782,919)		$	(866,305)			$	(149,711)
Other equity changes																					Other equity changes	—			—		(3)				(409)				3				—				(409)
Balances at December 26, 2020																					Balances at December 26, 2020	41,259			$	907	$	1,538,160			$	(9,121)			$	(776,208)			$	(866,759)			$	(113,021)


	Nine Months Ended January 1, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Treasury Stock		Total Stockholders' (Deficit) Equity
	Shares	Amount
Balances at April 3, 2021	41,751	$	912	$	1,556,272	$	(3,221)	$	(765,233)	$	(869,496)	$	(80,766)
Net income	—	—		—		—		48,810		—		48,810

Net unrealized gains on cash flow hedges, net of tax	—	—		—		14,675		—		—		14,675

Proceeds from issuances under stock-based compensation plans	785	11		—		—		—		—		11



Stock-based compensation	—	—		34,214		—		—		—		34,214


Employees' tax withheld and paid for restricted stock and restricted stock units	—	—		—		—		—		(12,154)		(12,154)

Proceeds from Employee Stock Purchase Program	228	3		5,827		—		—		—		5,830


Balances at January 1, 2022	42,764	$	926	$	1,596,313	$	11,454	$	(716,423)	$	(881,650)	$	10,620

Table of Contents


	Nine Months Ended December 26, 2020
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Treasury Stock		Total Stockholders' Deficit
	Shares	Amount
Balances at March 28, 2020	40,406	$	896	$	1,501,340	$	(13,582)	$	(707,904)	$	(863,566)	$	(82,816)
Net loss	—	—		—		—		(68,307)		—		(68,307)

Net unrealized gains on cash flow hedges, net of tax	—	—		—		4,870		—		—		4,870

Proceeds from issuances under stock-based compensation plans	667	6		—		—		—		—		6
Repurchase of restricted common stock	(10)	—		—		—		—		—		—


Stock-based compensation	—	—		31,104		—		—		—		31,104


Employees' tax withheld and paid for restricted stock and restricted stock units	(261)	—		—		—		—		(3,193)		(3,193)

Proceeds from Employee Stock Purchase Program	457	5		5,719		—		—		—		5,724

Other equity changes	—	—		(3)		(409)		3		—		(409)
Balances at December 26, 2020	41,259	$	907	$	1,538,160	$	(9,121)	$	(776,208)	$	(866,759)	$	(113,021)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

PLANTRONICS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BACKGROUND AND BASIS OF PRESENTATION

Plantronics, Inc. (“Poly,” the “Company”) is a leading global communications company that designs, manufactures, and markets integrated communications and collaboration solutions that span headsets, open Session Initiation Protocol ("SIP") and native ecosystem desktop phones, conference room phones, video conferencing solutions and peripherals, including cameras, speakers, and microphones, cloud management and analytics software solutions, and services. The Company has two operating and reportable segments, Products and Services, and offers its products under the

, Plantronics and Polycom brands.

Founded in 1961, the Company is incorporated in the state of Delaware under the name Plantronics, Inc. and in March 2019, the Company changed the name under which it markets itself to Poly. The Company is listed on the New York Stock Exchange ("NYSE") under the ticker symbol "POLY."

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on a basis materially consistent with, and should be reviewed in conjunction with, the Company's audited consolidated financial statements as of and for the year ended April 3, 2021 and notes thereto included in the Company's Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission ("SEC") on May 18, 2021 and include all adjustments necessary to fairly state the information set forth herein. Certain information and footnote disclosures normally included in financial statements prepared pursuant to the rules and regulations of the SEC applicable to interim financial information and in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements contain all adjustments necessary for a fair presentation of the Company’s consolidated financial position and the consolidated results of operations and cash flows as of the dates and for the periods presented and are normal and recurring in ~~nature~~nature. The Company's reporting currency is United States Dollars ("USD.") The interim period results are subject to variation and are not necessarily indicative of the results of operations to be expected for the full fiscal year. The financial statements include the accounts of the Company and its ~~wholly owned subsidiaries.~~subsidiaries, all of which are wholly-owned. All intercompany balances and transactions have been eliminated.

The Company’s fiscal year ends on the Saturday closest to the last day of March. The Company’s current fiscal year ends on April 2, 2022 and consists of 52 weeks. The Company's prior fiscal year ended on April 3, 2021 and consisted of 53 weeks. The three and nine months ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020 ~~both~~each contain 13 ~~weeks.~~and 39 weeks, respectively.

Risks and uncertainties

The Company is subject to a greater degree of uncertainty than normal in making the judgments and estimates needed to apply its significant accounting policies due to the ongoing COVID-19 ~~pandemic.~~pandemic and supply chain disruptions. The Company has assessed accounting estimates and other matters, including those using prospective financial information, using information that is reasonably available as of the issuance date of the condensed consolidated financial statements. The accounting estimates and other matters the Company has assessed included, but were not limited to, impairment of goodwill and other long-lived assets, provisions for doubtful accounts, valuation allowances for deferred tax assets, inventory and related reserves, and revenue recognition and related reserves. The Company may make changes to these estimates and judgments, which could result in material impacts to the condensed consolidated financial statements in future periods. The extent and duration of the impact of the COVID-19 pandemic and the shortage of adequate component supply on the Company's business is highly uncertain and difficult to predict. The Company relies on contract manufacturers and sourcing of materials from the Asia Pacific region, as well as its owned manufacturing facility in Mexico. The Company has experienced disruptions in both its own supply chain as well as those of its contract manufacturers and suppliers both as a result of COVID-19 ~~and,~~ as ~~this virus has impacted various regions differently,~~well as the ~~Company may in the future experience further business operation disruptions.~~global shortage of key components. Such disruptions have had, and may continue to have, a material impact on the Company's ability to source critical component parts, complete production of its products, fulfill customer orders, and adversely affect the ability to meet customer demands as companies utilize work-from-home and hybrid work models. Additionally, if a significant number of the Company's workforce employed in any of these manufacturing facilities or in the Company's offices were to contract the virus, the Company may experience delays or the inability to develop, produce, and deliver the Company's products on a timely basis. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic and the supply chain disruptions, and it is possible that it could cause a local and/or global economic recession.

Table of Contents

The severity of the impact of the COVID-19 pandemic and supply chain disruptions on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of ~~the pandemic~~these factors and the extent and severity of the impact on its customers and suppliers, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, including potential write-offs due to financial weakness and/or bankruptcy of its customers, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by its customers and suppliers.

As of the issuance date of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic and supply chain disruptions may materially impact the Company's financial condition, liquidity, or results of operations is uncertain.

Reclassifications

Certain prior year amounts have been reclassified for consistency with current year presentation. Each of the reclassifications was immaterial and had no effect on the Company's results of operations or cash flows.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements issued by the Financial Accounting Standards Board ("FASB") did not and are not expected to have a material impact on the Company's financial position, results of operations, or cash flows.

3. ~~CASH AND CASH EQUIVALENTS, RESTRICTED CASH, AND SHORT-TERM INVESTMENTS~~

The following tables summarize the Company’s cash and cash equivalents, restricted cash, and short-term investments amortized cost, gross unrealized gains, gross unrealized losses, and fair value on a recurring basis by significant investment category recorded as of July 3, 2021 and April 3, 2021 (in thousands):

July 3, 2021 Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value Cash & Cash Equivalents Short-term investments
Cash $ 171,751 $ — $ — $ 171,751 $ 171,751 $ —
Level 1:
Mutual funds 13,553 2,401 (1) 15,953 0 15,953
Money market funds 25,010 0 0 25,010 25,010 —
Total cash, cash equivalents
and short-term investments measured at fair value $ 210,314 $ 2,401 $ (1) $ 212,714 $ 196,761 $ 15,953

April 3, 2021 Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value Cash & Cash Equivalents Restricted Cash Short-Term Investments
Cash $ 177,551 $ — $ — $ 177,551 $ 177,551 $ — $ —
Restricted cash(1)
493,908 493,908 493,908
Level 1:
Mutual funds 12,622 1,945 (8) 14,559 0 14,559
Money market funds 25,009 0 0 25,009 25,009
Total cash, cash equivalents, restricted cash and short-term investments measured at fair value $ 709,090 $ 1,945 $ (8) $ 711,027 $ 202,560 $ 493,908 $ 14,559

~~(1)~~ ~~Restricted cash represents the cash held in trust and restricted for use to redeem the 5.50% Senior Notes. Refer to Note 8, Debt.~~

~~Table~~ ~~of Contents~~

As of July 3, 2021 and April 3, 2021, the Company's short-term investments consisted of assets related to its deferred compensation plans and are classified as trading securities. The assets are reported at fair value, with unrealized gains and losses included in current period earnings. For more information regarding the Company's deferred compensation plan, see Note 4, ~~Deferred Compensation~~. The Company did 0t incur any material realized or unrealized gains or losses in the three months ended July 3, 2021 or June 27, 2020. There were no transfers between fair value measurement levels during the three months ended July 3, 2021 or June 27, 2020.

4. DEFERRED COMPENSATION

As of ~~July 3, 2021,~~January 1, 2022, the Company held investments in mutual funds with a fair value totaling ~~$16.0~~$17.0 million, ~~all of which related to~~whose holdings are publicly traded debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans. The total related deferred compensation liability was ~~$16.0~~$17.0 million ~~at July 3, 2021.~~ as of January 1, 2022. As of April 3, 2021, the Company held investments in mutual funds with a fair value totaling $14.6 million, all of which related to debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans. The total related deferred compensation liability atas of April 3, 2021 was $14.6 million.

The investments are ~~classified as trading securities and are~~ recorded at fair value in short-term investments in the condensed consolidated balance sheets. The liability is recorded in accrued liabilities and other non-current liabilities in the condensed consolidated balance sheets.

5.4. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS

Accounts receivable, ~~net:~~net


(in thousands)	(in thousands)	July 3, 2021		April 3, 2021		(in thousands)	January 1, 2022		April 3, 2021
Accounts receivable	Accounts receivable	$	360,004	$	352,108	Accounts receivable	$	358,877	$	352,108

Provisions for promotions, rebates, and other	Provisions for promotions, rebates, and other	(86,586)		(82,315)		Provisions for promotions, rebates, and other	(82,155)		(82,315)
Provisions for doubtful accounts and sales allowances	Provisions for doubtful accounts and sales allowances	(1,826)		(2,329)		Provisions for doubtful accounts and sales allowances	(809)		(2,329)
Accounts receivable, net	Accounts receivable, net	$	271,592	$	267,464	Accounts receivable, net	$	275,913	$	267,464

The Company maintains a provision for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company regularly performs credit evaluations of its customers’ financial conditions and considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic or country-specific risks, and economic conditions that may affect a ~~customer’s~~customer's ability to pay.

Inventory, ~~net:~~net

(in thousands) July 3, 2021 April 3, 2021
Raw materials $ 83,420 $ 87,050
Work in process 4,927 9,511
Finished goods 99,129 97,844
Inventory, net $ 187,476 $ 194,405

~~Accrued Liabilities:~~

(in thousands) July 3, 2021 April 3, 2021
Short-term deferred revenue $ 136,433 $ 141,375
Employee compensation and benefits 61,095 84,318
Operating lease liabilities, current 20,293 21,701
Provision for returns 19,011 25,133
Accrued other 125,108 121,557
Accrued liabilities $ 361,940 $ 394,084


(in thousands)	January 1, 2022		April 3, 2021
Raw materials	$	85,820	$	87,050
Work in process	3,277		9,511
Finished goods	127,653		97,844
Inventory, net	$	216,750	$	194,405

1211

Table of Contents

Accrued Liabilities


(in thousands)	January 1, 2022		April 3, 2021
Short-term deferred revenue	$	132,498	$	141,375
Employee compensation and benefits	65,757		84,318
Operating lease liabilities, current	16,504		21,701
Warranty obligation	16,044		14,774
Provision for returns	14,133		25,133







Accrued other	83,615		106,783
Accrued liabilities	$	328,551	$	394,084

The Company's warranty obligation is recorded in accrued liabilities and other non-current liabilities in the condensed consolidated balance sheets. Changes in the warranty obligation during the ~~three~~nine months ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020 were as follows:


		Three Months Ended					Nine Months Ended
(in thousands)	(in thousands)	July 3, 2021		June 27, 2020		(in thousands)	January 1, 2022		December 26, 2020
Warranty obligation at beginning of period	Warranty obligation at beginning of period	$	17,384	$	15,261	Warranty obligation at beginning of period	$	17,384	$	15,261

Warranty provision related to products shipped	Warranty provision related to products shipped	4,157		9,428		Warranty provision related to products shipped	13,179		17,092
Deductions for warranty claims processed	Deductions for warranty claims processed	(6,800)		(4,269)		Deductions for warranty claims processed	(19,424)		(12,736)
Adjustments related to preexisting warranties	Adjustments related to preexisting warranties	3,603		(533)		Adjustments related to preexisting warranties	8,307		(4,097)
Warranty obligation at end of period	Warranty obligation at end of period	$	18,344	$	19,887	Warranty obligation at end of period	$	19,446	$	15,520

6.5. PURCHASED INTANGIBLE ASSETS

As of ~~July 3, 2021~~January 1, 2022 and April 3, 2021, the carrying value of purchased ~~intangibles,~~intangible assets, excluding fully amortized assets and goodwill, is as follows:


		July 3, 2021							April 3, 2021							January 1, 2022							April 3, 2021
(in thousands)	(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing Assets	Amortizing Assets														Amortizing Assets
Existing technology	Existing technology	$	427,123	$	(293,310)	$	133,813	2.1 years	$	427,123	$	(277,071)	$	150,052	Existing technology	$	427,123	$	(325,787)	$	101,336	1.6 years	$	427,123	$	(277,071)	$	150,052
Customer relationships	Customer relationships	240,024		(139,724)		100,300		3.0 years	240,024		(128,740)		111,284		Customer relationships	240,024		(156,441)		83,583		2.5 years	240,024		(128,740)		111,284
Trade name/Trademarks	Trade name/Trademarks	115,600		(38,533)		77,067		6.0 years	115,600		(35,322)		80,278		Trade name/Trademarks	115,600		(44,955)		70,645		5.5 years	115,600		(35,322)		80,278
Total intangible assets	Total intangible assets	$	782,747	$	(471,567)	$	311,180	3.3 years	$	782,747	$	(441,133)	$	341,614	Total intangible assets	$	782,747	$	(527,183)	$	255,564	3.0 years	$	782,747	$	(441,133)	$	341,614

During the three and nine months ended ~~July 3, 2021~~January 1, 2022, the Company recognized amortization expense of $27.8 million and ~~June 27,~~$86.0 million, respectively. During the three and nine months ended December 26, 2020, the Company recognized amortization expense of ~~$30.4~~$30.7 million and ~~$32.4~~ $94.5 million, respectively.

Table of Contents

Expected amortization expense attributable to purchased ~~intangibles~~intangible assets for each of the next five years and thereafter as of ~~July 3, 2021~~January 1, 2022 is as follows:


(in thousands)	(in thousands)	Amount		(in thousands)	Amount
2022 (remaining nine months)		$	83,424
2022 (remaining three months)				2022 (remaining three months)	27,808
2023	2023	111,232		2023	111,232
2024	2024	65,936		2024	65,936
2025	2025	21,688		2025	21,688
2026	2026	12,844		2026	12,844
Thereafter	Thereafter	16,056		Thereafter	16,056
		$	311,180
Total				Total	$	255,564

~~Table~~ ~~of Contents~~

7.6. COMMITMENTS AND CONTINGENCIES

Future Minimum Lease Payments

Future minimum lease payments under non-cancelable operating leases as of ~~July 3, 2021~~January 1, 2022 were as follows:


(in thousands)	(in thousands)	Operating Leases(1)		(in thousands)	Operating Leases(1)
2022 (remaining nine months)		$	17,939
2022 (remaining three months)				2022 (remaining three months)	$	6,443
2023	2023	10,464		2023	14,875
2024	2024	8,719		2024	13,419
2025	2025	6,791		2025	9,669
2026	2026	5,627		2026	8,100
Thereafter	Thereafter	16,086		Thereafter	17,244
Total lease payments	Total lease payments	$	65,626	Total lease payments	69,750
Less: Imputed interest(2)	Less: Imputed interest(2)	(7,955)		Less: Imputed interest(2)	(7,958)
Present value of lease liabilities	Present value of lease liabilities	$	57,671	Present value of lease liabilities	$	61,792

(1) The weighted average remaining lease term was 4.8 years as of ~~July 3, 2021.~~January 1, 2022.

(2) The weighted average discount rate was ~~4.7%~~4.6% as of ~~July 3, 2021.~~January 1, 2022.

Unconditional Purchase Obligations

We use several contract manufacturers to manufacture raw materials, components, and subassemblies for our products through our supply and demand information that can cover periods up to 78 weeks. The ~~Company purchases materials~~contract manufacturers use this information to acquire components and ~~services~~build products. We also obtain individual components for our products from a wide variety of individual suppliers ~~and manufacturers. During the normal course~~using a combination of ~~business and to manage manufacturing operations, the Company may enter into firm, non-cancelable, and unconditional~~purchase orders, supplier contracts, including annual minimum purchase obligations, ~~for inventory, including electronic components, such as semiconductor chips, in addition to service, capital expenditure,~~ and ~~general and administrative activities, for which amounts are not recorded~~open orders based on ~~the condensed consolidated balance sheets.~~projected demand information. As of ~~July 3, 2021, the Company~~January 1, 2022, we had outstanding off-balance sheet third-party manufacturing, component purchase, and other general and administrative commitments of $615.5 million, including off-balance sheet consigned inventories of $~~599.5~~65.3 million. 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 condensed consolidated balance sheets 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. We expect to consume unconditional purchase obligations in the normal course of business, net of an immaterial purchase commitments reserve. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs in partnering with our suppliers given the current environment.

Table of Contents

Other Guarantees and Obligations

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, purchasers of assets or subsidiaries and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company's breach of agreements or representations and warranties made by the Company, services to be provided by the Company, intellectual property infringement claims made by third parties or, with respect to the sale of assets of a subsidiary, matters related to the Company's conduct of business and tax matters prior to the sale. From time to time, the Company indemnifies customers against combinations of loss, expense, or liability arising from various triggering events relating to the sale and use of its products and services.

In addition, the Company also provides indemnification to customers against claims related to undiscovered liabilities, additional product liability, or environmental obligations. The Company has also entered into indemnification agreements with its directors, officers, and certain other personnel that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers of the Company or certain of its affiliated entities. The Company maintains director and officer liability insurance, which may cover certain liabilities arising from its obligation to indemnify its directors, officers, and certain other personnel in certain circumstances. It is not possible to determine the aggregate maximum potential loss under these agreements due to the limited history of prior claims and the unique facts and circumstances involved in each particular claim. Such indemnification obligations might not be subject to maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations under these agreements and it has not accrued any liabilities related to such indemnification obligations in the condensed consolidated financial statements.

~~Table~~ ~~of Contents~~

Claims and Litigation

On January 23, 2018, FullView, Inc. filed a complaint in the United States District Court of the Northern District of California against Polycom, Inc. alleging infringement of two patents and thereafter filed a similar complaint in connection with the same patents in Canada. Polycom thereafter filed an inter partes reexamination ("IPR") of one of the patents, which was then appealed to Federal Circuit ~~Court and denied.~~Court. Litigation in both matters in the United States and Canada, respectively, were stayed pending the results of that appeal. Polycom also filed an IPR of the second patent and the U.S. Patent Trial and Appeal Board (“PTAB”) denied institution of the IPR petition. FullView ~~had~~ also initiated arbitration proceedings under a terminated license agreement with Polycom alleging that Polycom had failed to pay certain royalties due under that agreement. The arbitration panel awarded an immaterial amount to FullView. FullView filed a First and Second Amended Complaint and Polycom filed a motion to dismiss. The Court granted Polycom's partial motion to dismiss without prejudice and invalidated one of the patents in suit. Litigation on the remaining patent is ongoing.

On June 21, 2018, directPacket Research Inc. filed a complaint alleging patent infringement by Polycom, Inc. in the United States District Court for the Eastern District of Virginia, Norfolk Division. The Court granted Polycom’s Motion to Transfer Venue to the Northern District of California. Polycom filed petitions for ~~Inter Partes Review~~IPR of the asserted patents which were granted by the PTAB. The District Court matter was stayed pending resolution of the IPRs. ~~Oral~~After oral argument ~~was heard~~held in October 2020, on ~~the IPRs on October 20, 2020. On~~ January 11, 2021, the PTAB issued final written decisions invalidating two of the asserted patents. The remaining claims of the third patent were unasserted against the Company. On February 12, 2021, directPacket filed a notice of appeal to the United States Court of Appeals for the Federal Circuit with respect to the PTAB’s final written decision regarding the ’588 patent. On March 15, 2021, Polycom filed a notice of appeal to the United States Court of Appeals for the Federal Circuit with respect to the PTAB’s final written decision regarding the ’978 patent. ~~Both parties have filed their respective appellate briefs~~On December 13, 2021, the Court issued an affirmance of the decision regarding the invalidity of all asserted claims of the ‘978 patent. On January 27, 2022, the Court vacated the PTAB’s finding that certain claims were invalid as obvious and ~~litigation~~remanded the case for further proceedings at the PTAB. Litigation is ongoing.

On November 15, 2019, Felice Bassuk, individually and on behalf of others similarly situated, filed a complaint against the Company, its former CEO, Joseph Burton, its CFO, Charles Boynton, and its former CFO, Pamela Strayer, alleging various securities law violations. The Company disputes the allegations. The Court appointed lead plaintiff and lead counsel and renamed the action “In re Plantronics, Inc. Securities Litigation” on February 13, 2020. Plaintiffs filed the amended complaint on June 5, 2020 and the ~~Company’s~~Company filed a Motion to Dismiss the Amended Complaint on August 7, 2020. Plaintiffs filed their opposition on October 2, 2020 and the Company replied on November 16, 2020. The hearing scheduled for January 13, 2021 was vacated and on March 29, 2021, the Court issued its order granting the Company’s motion to dismiss, but allowing the Plaintiffs leave to amend their complaint. On April 13, 2021, pursuant to the parties’ mutual agreement, the Court issued its order granting a stipulation and scheduling order which provides the plaintiffs until June 15, 2021 (subsequently extended to June 22, 2021) to consider whether or not to file a second amended complaint, and if filed, allowing defendants until August 16, 2021 to file a motion to dismiss, with plaintiffs’ opposition to such motion due on or before September 30, 2021, and with

Table of Contents

defendants’ reply to be filed on or before November 1, 2021. The Plaintiff filed anits second amended complaint on June 22, 2021 and the Company ~~expects to file~~filed its Motion to Dismiss byon September 7, 2021. The court is expected to rule based on the ~~applicable deadline.~~briefs without a hearing and the parties are awaiting the court's ruling.

On December 17, 2019, Cisco Systems, Inc. filed a First Amended Complaint for Trade Secret Misappropriation against Plantronics, Inc. and certain individuals which amends a previously filed complaint against certain other individuals. The Company disputes the allegations. The Company filed a Motion to Dismiss and the Court granted the ~~such~~ Motion with leave to amend as to defendants He, Chung and Williams, granted the Motion to Compel Arbitration for defendant Williams and granted in part and denied in part the Motion to Dismiss by defendants Puorro and the Company. Cisco filed an Amended Complaint and the defendants moved to dismiss or strike portions of the Amended Complaint. The Court granted in part and denied in part the Motion to Dismiss. On September 10, 2020, the Company filed a Motion for Protective Order and a Motion to Strike and Challenge the Sufficiency of Cisco’s Trade Secret Disclosure. On December 21, 2020, the Court granted in part and denied in part such Motions. On December 30, 2020, Cisco filed a motion for leave to file a Motion for Reconsideration. On January 11, 2021 the Company filed its opposition. The Court issued its Case Management and Pretrial order setting a settlement conference which occurred on April 1, 2021. During such mediation conference, the parties ~~agreed to stay the District Court case for 30 days to pursue settlement of pending claims. This 30 day period has run, and the parties~~ were unable to reach settlement. The ~~litigation~~Texas arbitration proceeding between Mr. Williams and Cisco was settled pursuant to an agreement by the parties, and Mr. Williams was dismissed with prejudice from both that proceeding and from the district court action. On August 13, 2021, Mr. He settled with Cisco pursuant to which he will be permanently enjoined and forever prohibited from receiving, using, and/or distributing Cisco Confidential Business Information except in limited circumstances. Discovery is ~~ongoing and discovery continues.~~

~~Table~~ ~~of Contents~~

ongoing.

On July 22, 2020, Koss Corporation filed a complaint alleging patent infringement by the Company and Polycom, Inc. in the United States District Court for the Western District of Texas, Waco Division. The Company answered the Complaint on October 1, 2020 disputing the claims. On December 18, 2020, the Company filed a Motion to Transfer Venue to the Northern District of ~~California, which remains pending.~~California. On January 29, 2021, the plaintiff amended its infringement contentions to add new accused products. On February 12, 2021, the plaintiff filed its opposition to the Motion to Transfer. ~~Claim construction exchanges have begun, and a claim construction hearing was scheduled for April 22, 2021. Trial is scheduled for April 18, 2022.~~ On May 20, 2021, the judge granted the Company’s Motion to Transfer Venue to the Northern District of California. ~~Discovery continues.~~On November 1, 2021, the Company filed a Motion to Dismiss the suit with the District Court on the grounds of non-patentable subject matter. The Court will rule based on the briefs without a hearing and the parties are awaiting the Court's ruling.

In addition to the specific matters discussed above, the Company is involved in various legal proceedings and investigations arising in the normal course of conducting business. Where applicable, in relation to the matters described above, the Company has accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to the Company's financial condition, results of operations, or cash flows. The Company is not able to estimate an amount or range of any reasonably possible loss, including in excess of any amount accrued, because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the variable treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings.

However, based upon the Company's historical experience, the resolution of these proceedings is not expected to have a material effect on the Company's financial condition, results of operations or cash flows. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings.

8.7. DEBT

The carrying value ~~and estimated fair value measured on a recurring basis~~ of the Company's outstanding debt as of ~~July 3, 2021~~January 1, 2022 and April 3, 2021 was as follows:


		July 3, 2021				April 3, 2021
(in thousands)	(in thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value		(in thousands)	January 1, 2022		April 3, 2021
4.75% Senior Notes	4.75% Senior Notes	$	496,475	$	494,173	$	492,580	$	493,985	4.75% Senior Notes	$	494,549	$	493,985
5.50% Senior Notes	5.50% Senior Notes	0		0		482,669		478,807		5.50% Senior Notes	—		478,807
Term loan facility	Term loan facility	999,659		1,002,946		1,004,743		1,002,079		Term loan facility	1,004,679		1,002,079

As of ~~July 3, 2021~~January 1, 2022 and April 3, 2021, the net unamortized discount, premium, and debt issuance costs on the Company's outstanding debt were ~~$19.7~~ $17.6 million and $22.6 million, respectively.

4.75% Senior Notes

Table of Contents

September 1 of each year, commencing on September 1, 2021. The Company received proceeds of $493.9 million from issuance of the 4.75% Senior Notes, net of issuance costs of $6.1 million, which are presented in the condensed consolidated balance sheets as a reduction to the outstanding amount payable and are being amortized to interest expense using the straight-line method, which approximates the effective interest method for this debt, over the term of the 4.75% Senior Notes. A portion of the proceeds was used to repay the outstanding principal of the 5.50% Senior Notes on May 17, 2021.

~~The fair value of the 4.75% Senior Notes was determined based on inputs that were observable in the market, including the trading price of the 4.75% Senior Notes, when available (Level 2).~~

~~Table~~ ~~of Contents~~

The Company may redeem all or part of the 4.75% Senior Notes, upon not less than a 15-day or more than a 60-day notice, however, the applicable redemption price will be determined as follows:

Redemption Period Requiring Payment of:

Redemption Up To 40% Using Cash Proceeds From An Equity Offering (3)

Make-Whole (1)

Premium (2)

Date

Specific Price

4.75% Senior Notes

Prior to March 1, 2024

On or after March 1, 2024

Prior to March 1, 2024

104.75%

(1) If the Company redeems the notes prior to the applicable date, the price is principal plus a make-whole premium, which means, the greater of (i) 1.0% of the principal or (ii) the excess of the present value of the redemption price at March 1, 2024 plus interest through March 1, 2024 over the principal amount.

(2) If the Company redeems the notes on or after the applicable date, the price is principal plus a premium which declines over time, as specified in the applicable indenture, together with accrued and unpaid interest.

(3) If the Company redeems the notes prior to the applicable date with net cash proceeds of one or more equity offerings, the price is equal to the amount specified above, together with accrued and unpaid interest, subject to a maximum redemption of 40% of the aggregate principal amount of the respective note being redeemed and at least 50% of the aggregate principal amount remains outstanding immediately after any such redemption (unless the notes are redeemed or repurchased substantially concurrently).

In addition, upon the occurrence of certain change of control triggering events, the Company may be required to repurchase the 4.75% Senior Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 4.75% Senior Notes contain restrictive covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to incur or guarantee additional indebtedness, make certain investments and other restricted payments, transfer and sell assets, create liens, enter into transactions with affiliates, and engage in mergers, consolidations, or sales of assets.

5.50% Senior Notes

In May 2015, the Company issued $500.0 million aggregate principal amount of 5.50% Senior Notes. The 5.50% Senior Notes mature on May 31, 2023, and bear interest at a rate of 5.50% per annum, payable semi-annually on May 15 and November 15 of each year, commencing on November 15, 2015. The Company received net proceeds of $488.4 million from issuance of the 5.50% Senior Notes, net of issuance costs of $11.6 million, which are being amortized to interest expense over the term of the 5.50% Senior Notes using the straight-line method, which approximates the effective interest method for this debt. A portion of the proceeds was used to repay all then-outstanding amounts under the Company's revolving line of credit agreement with Wells Fargo Bank and the remaining proceeds were used primarily for share repurchases.

~~The fair value of the 5.50% Senior Notes was determined based on inputs that were observable in the market, including the trading price of the 5.50% Senior Notes when available (Level 2).~~

On May 17, 2021, the Company used a portion of the proceeds from the 4.75% Senior Notes to redeem the outstanding principal and accrued interest of the 5.50% Senior Notes of $493.9 million.

Term Loan Facility

In connection with the acquisition of Polycom completed on July 2, 2018, the Company entered into a Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (the “Credit ~~Agreement”~~Agreement.”). The Credit Agreement replaced the Company’s prior revolving credit facility in its entirety. The Credit Agreement provides for (i) a revolving credit facility with an initial maximum aggregate amount of availability of $100 million that matures in July 2023 and (ii) a $1.275 billion term loan facility priced at LIBOR plus 2.50% due in quarterly principal installments commencing on the last business day of March, June, September and December beginning with the first full fiscal quarter ending after the closing date under the Credit Agreement for the aggregate principal amount funded on the closing date under the Credit Agreement multiplied by 0.25% (subject to prepayments outlined in the Credit Agreement) and all remaining outstanding principal due at maturity in July 2025. The Company has paid the full amount of term debt principal due prior to maturity. The Company borrowed the full amount available under the term loan facility of $1.245 billion, net of approximately $30 million of discounts and issuance costs which are being amortized to interest expense over the term of the Credit Agreement using the straight-line method, which approximates the effective interest method for this debt. The proceeds from the initial borrowing under the Credit Agreement were used to finance the acquisition of Polycom, to refinance certain debt of Polycom, and to pay related

Table of Contents

fees, commissions and transaction costs. The Company has additional borrowing capacity under the Credit Agreement through the revolving credit facility, which could be used to provide ongoing working capital and capital for other general corporate

~~Table~~ ~~of Contents~~

purposes of the Company and its subsidiaries. The Company’s obligations under the Credit Agreement are currently guaranteed by Polycom and will from time to time be guaranteed by, subject to certain exceptions, any domestic subsidiaries that may become material in the future. Subject to certain exceptions, the Credit Agreement is secured by first-priority perfected lien on, and security interests in, substantially all of the personal property of the Company and each subsidiary guarantor and will from time to time also be secured by certain material real property that the Company or any subsidiary guarantor may acquire. Borrowings under the Credit Agreement bear interest due on a quarterly basis at a variable rate equal to (i) LIBOR plus a specified margin, or (ii) the base rate (which is the highest of (a) the prime rate publicly announced from time to time by Wells Fargo Bank, National Association, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin. The Company must also pay (i) an unused commitment fee ranging from 0.200% to 0.300% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement, and (ii) a per annum fee equal to (a) for each performance standby letter of credit outstanding under the Credit Agreement with respect to non-financial contractual obligations, 50% of the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn under such letter of credit, and (b) for each other letter of credit outstanding under the Credit Agreement, the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn under such letter of credit.

On ~~February 20, 2020,~~December 29, 2021, the Company entered into an Amendment No. 23 to Credit Agreement ~~(the “Amendment”~~(“Amendment No. 3”) by and among the Company, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as administrative agent. ~~The~~ Amendment No. 3 amended the Credit Agreement, as previously amended, to (i) increase the maximum Secured Net Leverage Ratio ~~(as~~(as defined in the Credit Agreement) permitted ~~under the Credit Agreement~~ to 3.75 to 1.00 as of the end of any fiscal quarter ending during the period beginning on January 2, 2022 through December ~~26, 2020~~31, 2022 and to 3.00 to 1.00 as of the end of any fiscal quarter ending thereafter, ~~and (ii) decrease~~except that the ~~minimum Interest Coverage~~maximum Secured Net Leverage Ratio shall be deemed to be 3.00 to 1.00 at all times for purposes of determining pro forma compliance with each Specified Pro Forma Financial Covenant Test (as defined in the Credit Agreement) ~~required under the Credit Agreement to 2.25 to 1.00 through December 26, 2020 and 2.75 to 1.00 thereafter.~~.

Additionally, ~~the~~ Amendment No. 3 modified the calculation of the Secured Net Leverage Ratio ~~and the Interest Coverage Ratio~~ solely for purposes of determining compliance with ~~Sections~~Section 7.11(a) ~~and 7.11(b)~~ of the Credit Agreement to (i) calculate the Secured Net Leverage Ratio net of the aggregate amount of unrestricted Cash and Cash Equivalents (as defined in the Credit Agreement) on the condensed consolidated balance sheets of the Company and its Restricted Subsidiaries (as defined in the Credit Agreement) as of the date of calculation up to an amount equal to $150,000,000 and (ii) solely for ~~purposes of~~ any fiscal quarter ending ~~from December 29, 2019~~between January 2, 2022 through December ~~26, 2020, increase~~31, 2022 by amending the ~~cap on Expected Cost Savings (as defined in the Credit Agreement) in determining~~definition of Consolidated EBITDA ~~(as defined in~~to (a) limit the ~~Credit Agreement)~~aggregate amount added back pursuant to clause (vii) thereof (relating to certain acquisition expenses) to the greater of ~~(A) 20%~~$30,000,000 and 10% of Consolidated EBITDA for such Measurement Period (as defined in the Credit Agreement) (calculated before giving effect to any such ~~Expected Cost Savings~~expenses to be added back pursuant to such clause ~~(a)(ix)~~(vii) for such Measurement Period), (b) limit the aggregate amount added back pursuant to clause (vii) thereof in respect of integration expenses related to the ~~definition~~Polycom Acquisition (as defined in the Credit Agreement) to $30,000,000, and (c) limit the aggregate amount added back pursuant to clause (viii) thereof (relating to certain non-recurring or unusual items reducing consolidated net income) to the greater of $30,000,000 and 10% of Consolidated ~~EBITDA) and (B)(x)~~EBITDA for ~~the period from December 29, 2019 through March 28, 2020, $121,000,000, (y)~~such Measurement Period (calculated before giving effect to any such items to be added back pursuant to such clause (viii) for ~~the period from March 29, 2020 through June 27, 2020, $107,000,000 and (z) for the period from June 28, 2020 through December 26, 2020, $88,000,000.~~such Measurement Period).

The financial covenants under the Credit Agreement, ~~described above~~as amended, are for the benefit of the revolving credit lenders only and do not apply to any other debt of the Company. The Credit Agreement also contains various other restrictions and covenants, some of which have become more stringent over time, including restrictions on our, and certain of our subsidiaries, ability to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions, make investments, and pay dividends and other distributions. The Company has the unilateral ability to terminate the revolving line of credit such that the financial covenants described above are no longer applicable. The Credit Agreement also contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable; provided, however, that the occurrence of an event of default as a result of a breach of a financial covenant under the Credit Agreement does not constitute a default or event of default with respect to any term facility under the Credit Agreement unless and until the required revolving lenders shall have terminated their revolving commitments and declared all amounts outstanding under the revolving credit facility to be due and payable. In addition, if the Company, any subsidiary guarantor or, with certain exceptions, any other subsidiary becomes the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Credit Agreement will automatically become immediately due and payable. Loans outstanding under the Credit Agreement will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) while a payment or bankruptcy event of default exists or (ii) upon the lenders’ request, during the continuance of any other event of default. As of ~~July 3, 2021~~,January 1, 2022, the Company was in compliance with all financial covenants.

1817

Table of Contents

The Company may prepay the loans and terminate the commitments under the Credit Agreement at any time without penalty. Additionally, the Company is subject to mandatory debt repayments five business days after the filing of its consolidated financial statements for any annual period in which the Company generates Excess Cash (as defined in the Credit Agreement). In accordance with the terms of the Credit Agreement, the Company did not generate Excess Cash during ~~Fiscal Year~~the fiscal year ended April 3, 2021 and therefore is not required to make any debt repayments in ~~Fiscal Year~~the fiscal year ended April 2, 2022. During the three and nine months ended ~~July 3, 2021,~~January 1, 2022, the Company ~~did~~did not prepay any aggregate principal amount of the term loan facility. As of ~~July 3, 2021,~~January 1, 2022, the Company had 5 letters of credit outstanding under the revolving credit facility for a total of ~~$1.4~~$2.9 million.~~The fair value of the term loan facility was determined based on inputs that were observable in the market (Level 2).~~

9.8. RESTRUCTURING AND OTHER RELATED CHARGES

Summary of Restructuring Plans

Fiscal Year 2022 ~~restructuring plan~~Restructuring Plan

During the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, the Company committed to actions to reduce expenses to enable strategic investments in revenue growth. The costs incurred to date under this plan include severance benefits related to headcount reductions in the Company's global workforce and facility related charges due to the closure or consolidation of offices.

Fiscal Year 2021 ~~restructuring plan~~Restructuring Plan

During Fiscal Year 2021, the Company committed to additional actions to reduce expenses and align its overall cost structure to better ~~align~~ with projected revenue levels, as well as reorganize its executive management to align to its new Chief Executive Officer's management structure. The costs incurred to date under this plan include severance benefits related to headcount reductions in the Company's global workforce and facility related charges due to the closure or consolidation of leased offices.

Legacy ~~restructuring plans~~Restructuring Plans

In connection with the Polycom acquisition, in Fiscal Years 2019 and 2020 the Company initiated actions to rationalize post-acquisition operations and realign its cost structure. These actions included streamlining the global workforce, closure or consolidation of leased offices and distribution centers, consumer product portfolio optimization efforts, and legal entity rationalization.

The following table summarizes the restructuring and other related charges recognized in the Company's condensed consolidated statements of operations:


		Three Months Ended				Three Months Ended				Nine Months Ended
(in thousands)	(in thousands)	July 3, 2021		June 27, 2020			(in thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Severance	Severance	$	19,301	$	22,311		Severance	$	191	$	3,969	$	19,592	$	27,161
Facility	Facility	(472)		1,798			Facility	—		1,658		(503)		3,300
Other (1)	Other (1)	4,103		1,441			Other (1)	374		1,107		5,285		3,416
Total cash charges	Total cash charges	22,932		25,550			Total cash charges	565		6,734		24,374		33,877
Non-cash charges (2)	Non-cash charges (2)	6,040		3,780			Non-cash charges (2)	1,833		7,243		9,603		15,600
Total restructuring and other related charges	Total restructuring and other related charges	$	28,972	$	29,330		Total restructuring and other related charges	$	2,398	$	13,977	$	33,977	$	49,477

(1) Other costs primarily represent associated legal and advisory services.

(2) Non-cash charges primarily represent accelerated depreciation due to the closure or consolidation of facilities.

1918

Table of Contents

The Company's restructuring liabilities as of ~~July 3, 2021 is~~January 1, 2022 are as follows:


(in thousands)	(in thousands)	As of April 3, 2021		Accruals (1)		Cash Payments		As of July 3, 2021		(in thousands)	As of April 3, 2021		Accruals (1)		Cash Payments		As of January 1, 2022
FY 2022 Plan
Fiscal Year 2022 Plan										Fiscal Year 2022 Plan
Severance	Severance	$	0	$	20,110	$	(4,875)	$	15,235	Severance	$	—	$	20,281	$	(15,577)	$	4,704
Facility	Facility	0		0		0		0		Facility	—		—		—		—
Other	Other	0		4,103		(3,959)		144		Other	—		5,313		(5,228)		85
Total FY 2022 Plan		$	0	$	24,213	$	(8,834)	$	15,379
Total Fiscal Year 2022 Plan										Total Fiscal Year 2022 Plan	$	—	$	25,594	$	(20,805)	$	4,789

FY 2021 Plans
Fiscal Year 2021 Plans										Fiscal Year 2021 Plans
Severance	Severance	$	6,039	$	(801)	$	(2,449)	$	2,789	Severance	$	6,039	$	(720)	$	(3,475)	$	1,844
Facility	Facility	913		50		(134)		829		Facility	913		83		(465)		531
Other	Other	186		0		(150)		36		Other	186		(28)		(158)		—
Total FY 2021 Plans		$	7,138	$	(751)	$	(2,733)	$	3,654
Total Fiscal Year 2021 Plans										Total Fiscal Year 2021 Plans	$	7,138	$	(665)	$	(4,098)	$	2,375

Legacy Plans	Legacy Plans									Legacy Plans
Severance	Severance	$	1,222	$	(8)	$	(217)	$	997	Severance	$	1,222	$	31	$	(813)	$	440
Facility	Facility	3,281		(522)		(446)		2,313		Facility	3,281		(586)		(1,799)		896
Other	Other	0		0		0		0		Other	—		—		—		—
Total Legacy Plans	Total Legacy Plans	$	4,503	$	(530)	$	(663)	$	3,310	Total Legacy Plans	$	4,503	$	(555)	$	(2,612)	$	1,336

Total										Total
Severance	Severance	$	7,261	$	19,301	$	(7,541)	$	19,021	Severance	$	7,261	$	19,592	$	(19,865)	$	6,988
Facility	Facility	4,194		(472)		(580)		3,142		Facility	4,194		(503)		(2,264)		1,427
Other	Other	186		4,103		(4,109)		180		Other	186		5,285		(5,386)		85
Grand Total	Grand Total	$	11,641	$	22,932	$	(12,230)	$	22,343	Grand Total	$	11,641	$	24,374	$	(27,515)	$	8,500

(1) Excludes non-cash charges of ~~$6.0~~$9.6 million recorded in restructuring and other related charges onin the ~~Company's~~ condensed consolidated statements of operations for the ~~three~~nine months ended ~~July 3, 2021.~~

January 1, 2022.

~~10.~~9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of accumulated other comprehensive income (loss), net of tax, ~~were~~are as follows:


(in thousands)	(in thousands)	July 3, 2021		April 3, 2021		(in thousands)	January 1, 2022		April 3, 2021
Accumulated unrealized loss on cash flow hedges		$	(3,013)	$	(7,836)
Accumulated unrealized gain (loss) on cash flow hedges						Accumulated unrealized gain (loss) on cash flow hedges	$	6,839	$	(7,836)
Accumulated foreign currency translation adjustments	Accumulated foreign currency translation adjustments	4,615		4,615		Accumulated foreign currency translation adjustments	4,615		4,615

Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	$	1,602	$	(3,221)	Accumulated other comprehensive income (loss)	$	11,454	$	(3,221)

~~11.~~10. DERIVATIVES

Foreign Currency Derivatives

The Company's foreign currency derivatives consist primarily of foreign currency forward and option contracts. The Company does not purchase derivative financial instruments for speculative trading purposes. The derivatives expose the Company to credit risk to the extent the counterparties may be unable to meet the terms of the derivative instrument. The Company's maximum exposure to loss as a result of credit risk was equal to the carrying value of the Company's derivative assets as of ~~July 3, 2021~~January 1, 2022 and April 3, 2021. The Company seeks to mitigate such risk by limiting its counterparties to large financial institutions. In addition, the Company monitors the potential risk of loss with any one counterparty resulting from this type of credit risk on an ongoing basis.

2019

Table of Contents

The Company enters into master netting arrangements with counterparties to mitigate credit risk in derivative transactions, when possible. A master netting arrangement may allow each counterparty to net settle amounts owed between the Company and the counterparty as a result of multiple, separate derivative transactions. As of ~~July 3, 2021,~~January 1, 2022, the Company had International Swaps and Derivatives Association ("ISDA") agreements with 5 applicable banks and financial institutions which contained netting provisions. The Company has elected to present the fair value of derivative assets and liabilities within the Company's condensed consolidated balance sheets on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. Derivatives not subject to master netting agreements are not eligible for net presentation. As of ~~July 3, 2021~~January 1, 2022 and April 3, 2021, no cash collateral had been received or pledged related to these derivative instruments.

Offsetting of Financial Assets/Liabilities under Master Netting Agreements with Derivative Counterparties

As of January 1, 2022


	Gross Amount of Derivative Assets Presented in the Condensed Consolidated Balance Sheets		Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet that are Subject to Master Netting Agreements
(in thousands)			Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets
Derivatives subject to master netting agreements	$	10,572	$	(4,915)	$	—	$	5,657
Derivatives not subject to master netting agreements	—						—
Total	$	10,572					$	5,657


	Gross Amount of Derivative Liabilities Presented in the Condensed Consolidated Balance Sheets		Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet that are Subject to Master Netting Agreements
(in thousands)			Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Received		Net Amount of Derivative Liabilities
Derivatives subject to master netting agreements	$	(4,915)	$	4,915	$	—	$	—
Derivatives not subject to master netting agreements	—						—
Total	$	(4,915)					$	—

~~The Company's derivative instruments are measured using Level 2 fair value inputs.~~ As of April 3, 2021


	Gross Amount of Derivative Assets Presented in the Condensed Consolidated Balance Sheets		Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet that are Subject to Master Netting Agreements
(in thousands)			Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets
Derivatives subject to master netting agreements	$	5,106	$	(5,106)	$	—	$	—
Derivatives not subject to master netting agreements	—						—
Total	$	5,106					$	—

Table of Contents


	Gross Amount of Derivative Liabilities Presented in the Condensed Consolidated Balance Sheets		Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet that are Subject to Master Netting Agreements
(in thousands)			Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Received		Net Amount of Derivative Liabilities
Derivatives subject to master netting agreements	$	(11,700)	$	5,106	$	—	$	(6,594)
Derivatives not subject to master netting agreements	—						—
Total	$	(11,700)					$	(6,594)

The gross fair value of the Company's outstanding derivative contracts ~~measured on a recurring basis~~ at ~~the end of each period~~January 1, 2022 and April 3, 2021 was as follows:


(in thousands)	(in thousands)	July 3, 2021		April 3, 2021		(in thousands)	January 1, 2022		April 3, 2021
Derivative assets(1)	Derivative assets(1)					Derivative assets(1)
Non-designated hedges	Non-designated hedges	$	1,218	$	2,864	Non-designated hedges	$	317	$	2,864
Cash flow hedges	Cash flow hedges	1,917		2,242		Cash flow hedges	2,803		2,242
Interest rate swap		2,549		0
Interest rate swaps						Interest rate swaps	7,452		—
Total derivative assets	Total derivative assets	$	5,684	$	5,106	Total derivative assets	$	10,572	$	5,106

Derivative liabilities(2)	Derivative liabilities(2)					Derivative liabilities(2)
Non-designated hedges	Non-designated hedges	$	19	$	18	Non-designated hedges	$	1,134	$	18
Cash flow hedges	Cash flow hedges	891		1,819		Cash flow hedges	477		1,819
Interest rate swap		8,294		9,863
Interest rate swaps						Interest rate swaps	3,304		9,863
Accrued interest	Accrued interest	102		102		Accrued interest	22		102
Total derivative liabilities	Total derivative liabilities	$	9,306	$	11,802	Total derivative liabilities	$	4,937	$	11,802

(1) Short-term derivative assets are recorded in other current assets and long-term derivative assets are recorded in other non-current assets on the condensed consolidated balance sheets. As of ~~July~~January 1, 2022, the portion of derivative assets classified as long-term was $6.9 million. As of April 3, 2021, the portion of derivative assets classified as long-term was ~~$2.7~~ $0.1 million.

(2) Short-term derivative liabilities are recorded in accrued liabilities and long-term derivative liabilities are recorded in other non-current liabilities on the condensed consolidated balance sheets. As of ~~July~~January 1, 2022, the portion of derivative liabilities classified as long-term was $0.1 million. As of April 3, 2021, the portion of derivative liabilities classified as long-term was ~~$0.6~~ $2.0 million.

Non-Designated Hedges

As of ~~July 3, 2021,~~January 1, 2022, the Company had foreign currency forward contracts denominated in Euro ("EUR") and Great Britain Pound Sterling ("~~GBP"~~GBP."). The Company does not elect to obtain hedge accounting for these forward contracts. These forward contracts hedge against a portion of the Company’s foreign currency-denominated cash balances, accounts receivables, and accounts payables. The following table summarizes the notional value of the Company’s outstanding foreign exchange currency contracts and approximate USD equivalent at ~~July 3, 2021:~~January 1, 2022:

(in thousands)

Local Currency

USD Equivalent

Position

Maturity

(in thousands)

Local Currency

USD Equivalent

Position

Maturity

EUR

€

36,000

42,674

Sell EUR

1 month

EUR

€

25,000

28,335

Sell EUR

1 month

GBP

9,500

13,100

Sell GBP

1 month

GBP

10,400

14,040

Sell GBP

1 month

Effect of Non-Designated Derivative Contracts on the Condensed Consolidated Statements of Operations

The effect of non-designated derivative contracts on results of operations recognized in other non-operating income, net in the condensed consolidated statements of operations was as follows:


		Three Months Ended				Three Months Ended	Nine Months Ended
(in thousands)	(in thousands)	July 3, 2021		June 27, 2020				(in thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Loss on foreign exchange contracts		$	(486)	$	(918)
Gain (loss) on foreign exchange contracts								Gain (loss) on foreign exchange contracts	$	651	$	(4,440)	$	1,841	$	(7,173)

Table of Contents

Cash Flow Hedges

Costless Collars

The Company hedges a portion of the forecasted EUR and GBP denominated revenues with costless collars. On a monthly basis, the Company enters into option contracts with a six to twelve-month term. Collar contracts are scheduled to mature at the beginning of each fiscal quarter, at which time the instruments convert to ~~forward~~forward contracts. The Company also enters into cash flow forwards ~~wit~~hwith a ~~three-mon~~ththree-month term. Once the hedged revenues are recognized, the forward contracts become non-designated hedges to protect the resulting foreign monetary asset position for the Company.

The notional value of the Company's outstanding EUR and GBP option and forward contracts at the end of each period was as follows:

~~July 3, 2021~~January 1, 2022

April 3, 2021

(in millions)

EUR

GBP

EUR

GBP

Option contracts

€~~100.3~~77.4

£~~20.9~~15.7

€91.4

£18.1

Forward contracts

€~~84.2~~75.0

£~~16.1~~14.0

€76.0

£15.6

The Company will reclassify all related amounts in accumulated other comprehensive income into earnings within the next twelve months.

Cross-currency Swaps

The Company hedges a portion of the forecasted Mexican Peso (“MXN”) denominated expenditures with a cross-currency swap. As of ~~July 3, 2021,~~January 1, 2022, and April 3, 2021, the Company had foreign currency swap contracts of approximately MXN 415.9 million ~~369.9 million~~ and MXN 564.3 million, respectively.

The following table summarizes the notional value of the Company's outstanding MXN currency swaps and approximate USD Equivalent at ~~July 3, 2021:~~January 1, 2022:

(in thousands)

Local Currency

USD Equivalent

Position

Maturity

(in thousands)

Local Currency

USD Equivalent

Position

Maturity

MXN

369,888

17,813

Buy MXN

Monthly over a twelve month period

MXN

415,938

19,860

Buy MXN

Monthly over a nine month period

The Company will reclassify all related amounts in accumulated other comprehensive income into earnings within the next twelve months.

Interest Rate ~~Swap~~Swaps

On June 15, 2021, the Company entered into a three-year amortizing interest rate swap agreement with Bank of America, N.A. The swap has an initial notional amount of $680 million and matures on July 31, 2024. The swap involves the receipt of floating-rate interest payments for fixed interest rate payments at a rate of 0.39% over the life of the agreement. Additionally, on July 30, 2018, the Company entered into a four-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. The swap involves the receipt of floating-rate interest payments for fixed interest rate payments at a rate of 2.78% over the life of the agreement.

The Company has designated the interest rate swaps as cash flow hedges. The purpose of the interest rate swaps is to hedge against changes in cash flows (interest payments) attributable to fluctuations in the Company's variable rate debt. The swaps are valued based on prevailing LIBOR rate curves on the date of measurement. The Company also evaluates counterparty credit risk when it calculates the fair value of the interest rate swaps. Changes in the fair value of the interest rate swaps are recorded to other comprehensive income and are reclassified to interest expense over the life of the underlying debt as interest is accrued. During the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, the Company reclassified into interest expense ~~$3.1~~$7.6 million and had a ~~$5.7~~$4.1 million unrealized ~~loss~~gain on its interest rate ~~swap~~swaps derivatives de~~signated~~designated as cash flow hedges.

The Company will reclassify approximately ~~$8.0~~$2.7 million in accumulated other comprehensive income into earnings within the next twelve months.

Table of Contents

Effect of Designated Derivative Contracts on Accumulated Other Comprehensive Income (Loss) and Condensed Consolidated Statements of Operations

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and nine months ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020:

Three Months Ended
(in thousands) July 3, 2021 June 27, 2020
Loss included in accumulated other comprehensive income (loss), as of beginning of period $ (10,062) $ (20,156)
Gain (loss) recognized in other comprehensive income (loss) 440 (1,579)
Amount of (gain)/loss reclassified from accumulated other comprehensive income (loss) into net revenues 1,772 (909)
Amount of loss reclassified from accumulated other comprehensive income (loss) into cost of revenues (236) 0
Amount of gain reclassified from accumulated other comprehensive income (loss) into interest expense 3,089 3,723
Total amount of gain reclassified from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations 4,625 2,814
Loss included in accumulated other comprehensive income (loss), as of end of period $ (4,997) $ (18,921)


	Three Months Ended				Nine Months Ended
(in thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Loss included in accumulated other comprehensive income (loss), as of beginning of period	$	(3,252)	$	(16,747)	$	(10,062)	$	(20,156)

Gain (loss) recognized in other comprehensive income (loss)	7,846		(3,754)		8,520		(8,339)

Amount of (gain) loss reclassified from accumulated other comprehensive income (loss) into net revenues	(1,804)		1,054		(671)		1,797
Amount of gain reclassified from accumulated other comprehensive income (loss) into cost of revenues	(10)		—		(489)		—
Amount of loss reclassified from accumulated other comprehensive income (loss) into interest expense	2,100		3,039		7,582		10,290
Total amount of loss reclassified from accumulated other comprehensive income to the condensed consolidated statements of operations	286		4,093		6,422		12,087



Gain (loss) included in accumulated other comprehensive income (loss), as of end of period	$	4,880	$	(16,408)	$	4,880	$	(16,408)

Table of Contents

11. FAIR VALUE MEASUREMENTS

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. In determining fair value, we use various valuation approaches. The hierarchy of those valuation approaches is in three levels based on the reliability of inputs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following is a summary of the hierarchy levels:

•Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.

•Level 2: Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly.

•Level 3: Inputs are unobservable for the asset or liability.


	Carrying Value at January 1, 2022		Fair Value at January 1, 2022 Using Inputs Considered as:
(in thousands)			Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	182,700	$	182,700	$	—	$	—
Short-term investments	17,017		17,017		—		—
Derivative instruments	10,572		—		10,572		—

Liabilities:
Derivative instruments	$	4,937	$	—	$	4,937	$	—
Long-term debt	1,499,228		—		1,474,436		—


	Carrying Value at April 3, 2021		Fair Value at April 3, 2021 Using Inputs Considered as:
(in thousands)			Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	202,560	$	202,560	$	—	$	—
Restricted cash	493,908		493,908		—		—
Short-term investments	14,559		14,559		—		—
Derivative instruments	5,106		—		5,106		—

Liabilities:
Derivative instruments	$	11,802	$	—	$	11,802	$	—
Current portion of long-term debt	478,807		—		482,669		—
Long-term debt	1,496,064		—		1,497,323		—

Valuation Techniques

•Cash and cash equivalents, short-term investments, and restricted cash are classified within Level 1 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets. The types of financial instruments the Company classifies within Level 1 include bank deposits, money market securities, and publicly traded mutual funds. Restricted cash represents the cash held in trust and restricted for use to redeem the 5.50% Senior Notes. Refer to Note 7, Debt.

•The Company estimates the fair value of derivatives using pricing models that use observable market inputs. The significant Level 2 inputs used in the valuation of derivatives include spot rates and forward rates. These inputs were obtained from pricing services, broker quotes, and other sources.

•The fair value of long-term debt was determined based on inputs that were observable in the market, including the trading price, when available.

Table of Contents

The Company did not incur any material realized or unrealized gains or losses in the three and nine months ended January 1, 2022 or December 26, 2020.

There were no transfers between fair value hierarchy levels during the three and nine months ended January 1, 2022 or December 26, 2020.

12. INCOME TAXES

The Company and its subsidiaries are subject to taxation in the U.S. and in various foreign and state jurisdictions. The Company's income tax benefit is determined using an ~~estimate of its~~estimated annual effective tax rate, ~~and~~ adjusted for discrete items ~~that are taken into account in~~arising during the ~~relevant~~ period. The effective tax rates for the three and nine months ended ~~July 3, 2021~~January 1, 2022 were 46.2% and ~~June 27,~~172.2%, respectively. The effective tax rates for the three and nine months ended December 26, 2020 were ~~10.4%~~(53.9)% and ~~4.1%~~9.6%, respectively.

Income tax benefit for the three and nine months ended January 1, 2022 was ~~$(4.3)~~$(9.6) million and ~~$(3.2)~~$(116.4) million, respectively. Income tax benefit for the three and nine months ended December 26, 2020 was $(7.0) million and $(7.2) million, respectively. During the three months ended ~~July 3,~~October 2, 2021, the Company transferred certain non-Americas intellectual property (“IP”) rights between our wholly-owned subsidiaries ("IP transfer") to align with our evolving business operations, resulting in the derecognition of a deferred tax asset of $91.1 million and ~~June 27, 2020, respectively.~~the recognition of a new deferred tax asset of $204.3 million, which represents the book and tax basis difference in the IP and was based on the fair value of the IP, in the respective subsidiaries. This results in a net discrete deferred tax benefit of $113.2 million. The ~~provision for income taxes for~~impact of the ~~three~~IP transfer to net cash flows on the condensed consolidated statements of cash flows during the nine months ended ~~July 3, 2021 consisted primarily of federal, state,~~January 1, 2022 was not material.

The difference between the effective tax rate and ~~foreign income taxes. For the three months ended July 3, 2021 and June 27, 2020, the income tax benefit differed from~~ the U.S. federal statutory rate primarily ~~due~~relates to the changes in uncertain tax positions, U.S. and foreign income mix, and the valuation allowance on the U.S. federal and state deferred tax ~~assets.~~assets (DTAs) that continues to be maintained as of January 1, 2022.

~~As of July 3, 2021, the Company continued to maintain a full valuation allowance against its U.S. federal and state deferred tax assets ("DTAs.")~~ A significant portion of the Company's DTAs relate to ~~internal intangible property restructuring~~the IP transfer between wholly-owned subsidiaries. At this time, based on evidence currently available, the Company considers it more likely than not that it will have sufficient taxable income in the future that will allow the Company to realize the DTAs; however, failure to generate sufficient future taxable income could result in some or all DTAs not being utilized in the future. If the Company is unable to generate sufficient future taxable income, a substantial valuation allowance to reduce the Company's DTAs may be required.

The Company is subject to the examination of its income tax returns by the Internal Revenue Service and other tax authorities.Significant judgment is required in evaluating our uncertain tax positions and determining the Company's provision for income taxes. During the three months ended ~~July 3, 2021, there were no material changes to~~January 1, 2022, the ~~total~~ amount of gross unrecognized tax benefits decreased by $3.6 million. As of January 1, 2022, the Company has $17.9 million of unrecognized tax ~~benefits. Within~~benefits, all of which could result in a reduction of the ~~next twelve months, we believe that the resolution of certain U.S. and foreign~~Company’s effective tax ~~examinations and negotiations is reasonably possible and that a change~~rate if recognized.The reduction in ~~estimate, reducing~~gross unrecognized tax benefits ~~may occur. It~~ is ~~not possible~~primarily attributable to ~~provide a range~~the lapse of ~~the potential change until the tax examinations and negotiations progress further or the related statutes~~applicable statute of ~~limitations expire.~~limitations.

2325

Table of Contents

13. COMPUTATION OF ~~LOSS~~(LOSS) EARNINGS PER COMMON SHARE

Basic ~~loss~~(loss) earnings per share is calculated by dividing net ~~loss~~(loss) income by the weighted-average number of common shares outstanding during the period. Diluted ~~loss~~(loss) earnings per share assumes the issuance of additional shares of common stock by the Company upon exercise of all outstanding stock options and vesting of restricted stock, if the effect is dilutive, in accordance with the treasury stock method. The potentially dilutive effect of outstanding stock options and restricted stock has been excluded from the computation of diluted loss per share in ~~all~~ periods ~~presented,~~where the Company had a net loss, as their effect is anti-dilutive.

The following table sets forth the computation of basic and diluted ~~loss~~(loss) earnings per common share for the three and nine months ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020:

Three Months Ended
(in thousands, except per share data) July 3, 2021 June 27, 2020
Numerator:
Net loss $ (36,811) $ (75,015)
Denominator:
Weighted-average common shares outstanding 42,061 40,460
Basic and diluted loss per common share $ (0.88) $ (1.85)
Potentially dilutive securities excluded from diluted loss per common share because their effect is anti-dilutive 405 1,546


	Three Months Ended				Nine Months Ended
(in thousands, except per share data)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Numerator:
Net (loss) income	$	(11,164)	$	20,113	$	48,810	$	(68,307)

Denominator:
Weighted-average basic shares outstanding	42,745		41,252		42,450		40,894
Weighted-average diluted shares outstanding	42,745		42,184		43,811		40,894

Basic (loss) earnings per common share	$	(0.26)	$	0.49	$	1.15	$	(1.67)
Diluted (loss) earnings per common share	$	(0.26)	$	0.48	$	1.11	$	(1.67)

Potentially dilutive securities excluded from diluted (loss) earnings per common share because their effect is anti-dilutive	383		988		210		1,248

14. REVENUE AND MAJOR CUSTOMERS

The Company designs, builds, and markets collaboration solutions which combine legendary audio expertise and powerful video and conferencing capabilities to create endpoints that power meaningful human connections and provide solutions that make life easier when they work together and with our ~~partner's~~partners' services.

The Company’s major product categories are Headsets, Video, Voice, and Services. Headsets include wired and wireless communication headsets; Voice includes open SIP and native ecosystem desktop phones as well as conference room phones; Video includes video conferencing solutions and peripherals, such as cameras, speakers, and microphones. The broad portfolio of Services include video interoperability, hardware and support for our solutions and hardware devices, as well as professional, hosted, and managed services that are grounded in our deep expertise aimed at helping customers achieve their goals for collaboration. The Company's cloud management and analytics software enables IT administrators to configure and update firmware, monitor device usage, troubleshoot, and gain a deep understanding of user behavior. All of the Company's solutions are designed to integrate seamlessly with the platform and services of our customers choice in a wide range of Unified Communications & Collaboration ("UC&C"), Unified Communication as a Service ("UCaaS"), and Video as a Service ("VaaS") environments. The Company's RealPresence collaboration solutions range from infrastructure to endpoints and allow people to connect and collaborate globally, naturally, and seamlessly.

Product revenue is largely comprised of sales of hardware devices, peripherals, and platform software licenses used in communication and collaboration in offices and contact centers, with mobile devices, cordless phones, and computers. Services revenue primarily includes support on hardware devices, professional, hosted and managed services, and solutions to the Company's customers.

Table of Contents

The following table disaggregates revenues by major product category for the three and nine months ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020:

~~Table~~ ~~of Contents~~


		Three Months Ended				Three Months Ended				Nine Months Ended
(in thousands)	(in thousands)	July 3, 2021		June 27, 2020			(in thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Net revenues	Net revenues						Net revenues
Headsets	Headsets	172,194		174,750			Headsets	$	195,479	$	240,908	$	553,452	$	618,498
Voice	Voice	61,298		45,821			Voice	53,156		67,076		174,159		156,682
Video	Video	137,711		70,887			Video	105,387		112,727		358,996		284,666
Services	Services	59,969		64,262			Services	55,544		63,974		173,155		191,529
Total net revenues	Total net revenues	$	431,172	$	355,720		Total net revenues	$	409,566	$	484,685	$	1,259,762	$	1,251,375

For reporting purposes, revenue is attributed to each geographic region based on the location of the customer. Other than the U.S., no country accounted for 10% or more of the Company's total net revenues for the three and nine months ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020.

The following table presents total net revenues by geography:


		Three Months Ended				Three Months Ended	Nine Months Ended
(in thousands)	(in thousands)	July 3, 2021		June 27, 2020				(in thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Net product revenues	Net product revenues							Net product revenues
U.S.	U.S.	$	175,970	$	144,289			U.S.	$	160,731	$	169,812	$	522,770	$	473,633

Europe, Middle East, and Africa	Europe, Middle East, and Africa	111,460		77,618				Europe, Middle East, and Africa	119,067		164,896		327,868		357,389
Asia Pacific	Asia Pacific	58,270		45,431				Asia Pacific	46,273		57,481		161,836		155,460
Americas, excluding U.S.	Americas, excluding U.S.	25,503		24,120				Americas, excluding U.S.	27,951		28,522		74,133		73,364
Total international net product revenues	Total international net product revenues	195,233		147,169				Total international net product revenues	193,291		250,899		563,837		586,213

Total net product revenues	Total net product revenues	$	371,203	$	291,458			Total net product revenues	$	354,022	$	420,711	$	1,086,607	$	1,059,846

Net service revenues	Net service revenues							Net service revenues
U.S.	U.S.	$	22,758	$	23,992			U.S.	$	21,498	$	23,601	$	66,347	$	71,839

Europe, Middle East, and Africa	Europe, Middle East, and Africa	14,661		16,488				Europe, Middle East, and Africa	14,117		16,533		43,199		48,545
Asia Pacific	Asia Pacific	18,488		18,833				Asia Pacific	16,140		19,342		51,643		57,196
Americas, excluding U.S.	Americas, excluding U.S.	4,062		4,949				Americas, excluding U.S.	3,789		4,498		11,966		13,949
Total international net service revenues	Total international net service revenues	37,211		40,270				Total international net service revenues	34,046		40,373		106,808		119,690

Total net service revenues	Total net service revenues	$	59,969	$	64,262			Total net service revenues	$	55,544	$	63,974	$	173,155	$	191,529

Total net revenues	Total net revenues	$	431,172	$	355,720			Total net revenues	$	409,566	$	484,685	$	1,259,762	$	1,251,375

Deferred revenue is primarily comprised of non-cancelable maintenance support performance obligations on hardware devices which are typically billed in advance and recognized ratably over the contract term as the services are delivered. As of ~~July 3, 2021, the Company's deferred revenue balance was $207.6 million. As of~~January 1, 2022 and April 3, 2021, the Company's deferred revenue balance was $199.2 million and $213.8 ~~million.~~million, respectively. During the three months ended ~~July 3, 2021,~~January 1, 2022, the Company recognized ~~$47.6~~$46.2 million in total net revenues that were recorded in deferred revenue at the beginning of the period.

Table of Contents

The table below represents aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of ~~July 3, 2021:~~January 1, 2022:


		July 3, 2021
(in millions)		Current		Noncurrent		Total
(in thousands)								(in thousands)	Current		Non-Current		Total
Unsatisfied (or partially unsatisfied) performance obligations	Unsatisfied (or partially unsatisfied) performance obligations	$	136.4	$	71.2	$	207.6	Unsatisfied (or partially unsatisfied) performance obligations	$	132,498	$	66,695	$	199,193

Sales, value add, and other taxes collected concurrently with revenue producing activities are excluded from revenue.

~~Table~~ ~~of Contents~~

The Company's indirect channel model includes both a two-tiered distribution structure, where the Company sells to distributors that subsequently sell to resellers, and a one-tiered structure where the Company sells directly to resellers. For these arrangements, transfer of control begins at the time access to the Company's services is made available to the end customer and entitlements have been contractually established, provided all other criteria for revenue recognition are met.

Commercial distributors and retailers represent the Company's largest sources of net revenues. Sales through its distribution and retail channels are made primarily under agreements allowing for rights of return and include various sales incentive programs, such as back end rebates, discounts, marketing development funds, price protection, and other sales incentives. The Company has an established sales history for these arrangements and the Company records the estimated reserves at the inception of the contract as a reflection of the reduced transaction price. Customer sales returns are estimated based on historical data, relevant current data, and the monitoring of inventory build-up in the distribution channel. Revenue reserves represent a reasonable estimation made by management and are subject to significant judgment. Estimated reserves may differ from actual returns or incentives provided due to unforeseen customer return or claim patterns or changes in circumstances. For certain customer contracts which have historically demonstrated variability, the Company has considered the likelihood of being under-reserved and has considered a constraint accordingly. Provisions for sales returns are presented within accrued liabilities in the ~~Company's~~ condensed consolidated balance sheets. Provisions for promotions, rebates, and other sales incentives are presented as a reduction of accounts receivable unless there is no identifiable right to offset, in which case they are presented within accrued liabilities on ~~its~~the condensed consolidated balance sheets. See Note 5,4, Details of Certain Balance Sheet Accounts ~~for additional details.~~.

For certain arrangements, the Company pays commissions, bonuses and taxes associated with obtaining the contracts. The Company capitalizes such costs if they are deemed to be incremental and recoverable. The Company has elected to use the practical expedient to record the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. Determining the amortization period of costs related to obtaining a contract involves judgment. Capitalized commissions and related expenses on hardware sales and services recognized at a point in time generally have an amortization period of less than one year. Maintenance-related performance obligations generally have an amortization period greater than one year when considering renewals. Capitalized commissions are amortized to selling, general, and administrative expense on a straight-line basis. The capitalized amount of incremental and recoverable costs of obtaining contracts ~~with a~~and related amortization ~~period greater than one year are~~ was not material as of and for the three and nine months ended ~~July 3, 2021.~~January 1, 2022.

15. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

The Company's Chief Executive Officer is identified as its Chief Operating Decision Maker ("~~CODM"~~CODM."). The CODM has organized the Company, manages resource allocations, and measures performance among its 2 operating segments: Products and Services.

The Products reportable segment includes the ~~Company's~~ Headsets, Voice and Video product lines. The Services reportable segment includes maintenance support on hardware devices as well as professional, managed and cloud services and solutions.

In managing the 2 operating segments the CODM uses information about their revenue and gross margin after adjustments to exclude certain non-cash transactions and activities that are not reflective of the Company's ongoing or core operations as further described below. The CODM does not review asset information by segment.

Purchase accounting amortization: Represents the amortization of purchased intangible assets recorded in connection with the acquisition of Polycom.

Deferred revenue purchase accounting: Represents the impact of fair value purchase accounting adjustments related to deferred revenue recorded in connection with the Acquisition of Polycom. The Company's deferred revenue primarily relates to service revenue associated with non-cancelable maintenance support on hardware devices which are typically billed in advance and recognized ratably over the contract term as those services are delivered. This adjustment represents

Table of Contents

the amount of additional revenue that would have been recognized during the period absent the write-down to fair value required under purchase accounting guidelines.

Stock compensation expense: Represents the non-cash expense associated with the Company's ~~issuance~~grant of ~~common stock and~~ stock-based awards to employees and non-employee directors.

~~Table~~ ~~of Contents~~

The following table presents ~~segments~~segment results for revenue and gross margin, as reviewed by the CODM, and ~~their~~the related reconciliation to the Company's condensed consolidated GAAP results:


		Three Months Ended				Three Months Ended		Nine Months Ended
(in thousands)	(in thousands)	July 3, 2021		June 27, 2020			(in thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Segment revenues, as reviewed by CODM	Segment revenues, as reviewed by CODM						Segment revenues, as reviewed by CODM
Products	Products	$	371,379	$	291,786		Products	$	354,149	$	420,976	$	1,087,058	$	1,060,733
Services	Services	61,053		69,016			Services	56,324		66,998		175,925		203,250
Total segment revenues, as reviewed by CODM	Total segment revenues, as reviewed by CODM	$	432,432	$	360,802		Total segment revenues, as reviewed by CODM	$	410,473	$	487,974	$	1,262,983	$	1,263,983

Segment gross profit, as reviewed by CODM	Segment gross profit, as reviewed by CODM						Segment gross profit, as reviewed by CODM
Products	Products	$	153,548	$	134,242		Products	$	144,630	$	201,392	$	456,937	$	492,262
Services	Services	40,266		46,243			Services	37,939		45,812		117,591		138,329
Total segment gross profit, as reviewed by CODM	Total segment gross profit, as reviewed by CODM	$	193,814	$	180,485		Total segment gross profit, as reviewed by CODM	$	182,569	$	247,204	$	574,528	$	630,591


		Three Months Ended				Three Months Ended				Nine Months Ended
(in thousands)	(in thousands)	July 3, 2021		June 27, 2020			(in thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Total segment revenues, as reviewed by CODM	Total segment revenues, as reviewed by CODM	$	432,432	$	360,802		Total segment revenues, as reviewed by CODM	$	410,473	$	487,974	$	1,262,983	$	1,263,983
Deferred revenue purchase accounting	Deferred revenue purchase accounting	(1,260)		(5,082)			Deferred revenue purchase accounting	(907)		(3,289)		(3,221)		(12,608)
GAAP net revenues	GAAP net revenues	$	431,172	$	355,720		GAAP net revenues	$	409,566	$	484,685	$	1,259,762	$	1,251,375

Total segment gross profit, as reviewed by CODM (1)	Total segment gross profit, as reviewed by CODM (1)	$	193,814	$	180,485		Total segment gross profit, as reviewed by CODM (1)	$	182,569	$	247,204	$	574,528	$	630,591
Purchase accounting amortization	Purchase accounting amortization	(16,238)		(18,238)			Purchase accounting amortization	(16,238)		(16,459)		(48,714)		(51,873)
Deferred revenue purchase accounting	Deferred revenue purchase accounting	(1,260)		(5,082)			Deferred revenue purchase accounting	(907)		(3,289)		(3,221)		(12,608)
Stock-based compensation	Stock-based compensation	(1,127)		(833)			Stock-based compensation	(1,238)		(799)		(3,525)		(2,374)
GAAP gross profit	GAAP gross profit	$	175,189	$	156,332		GAAP gross profit	$	164,186	$	226,657	$	519,068	$	563,736

(1) Includes depreciation ~~expen~~seexpense of ~~$3.6~~$3.4 million and ~~$3.3~~$3.7 million for the three months ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020, respectively. Includes depreciation expense of $11 million and $10.7 million for the nine months ended January 1, 2022 and December 26, 2020, respectively.

2729

Table of Contents

ITEM 2. 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, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to our intentions, beliefs, projections, outlook, analyses or current expectations that are subject to many risks and uncertainties. Such forward-looking statements and the associated risks and uncertainties 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 that the virus has caused, and will continue to cause, a shift to a hybrid work environment and that the elevated demand we have experienced in certain product lines, including our ~~Enterprise Headsets~~Video and ~~Video~~Voice devices, will continue over the long ~~term, (b)~~term; (ii) risks related to global supply chain disruptions, including continued uncertainty and potential impact on future quarters relating to a shortage of adequate component supply, including integrated circuits and manufacturing capacity, long lead times for raw materials and components, increased costs to us and increased pass-through costs to our customers, increased purchase commitments and a delay in our ability to fulfill orders, which has had, and may continue to have, an adverse impact on our business and operating results and which could continue to negatively affect our profitability and/or market share; (iii) expectations related to our ability to manage profitability and maintain margins in light of supply chain challenges, including our efforts to implement productivity improvements in our Tijuana manufacturing facility, while making investments for long-term growth, including investments in strategic alliances and/or acquisitions, in light of the supply chain challenges; (iv) our expectations regarding growth objectives related to our strategic initiatives designed to expand our product and service offerings, including our expectations related to increased demand for our solutions to facilitate hybrid working in and out of offices for our enterprise customers, as well as our expectations related to building strategic alliances and key partnerships with providers of collaboration tools and platforms to drive revenue growth and market share, including expectations related to our expansion of our presence in China; (v) our belief that we will continue to experience increased customer and partner demand in collaboration endpoints, and that we will be able to design new product offerings to meet ~~the change~~changes in demand due to a global hybrid work environment, (c) our 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; and (d) 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 shutdowns; (ii) our expectations related to global supply chain disruptions, including our belief that shortages of key components, including semiconductor chips, have impacted companies worldwide both within and outside of our industry, and that we will continue to experience a shortage of adequate component supply, including integrated circuits and manufacturing capacity, long lead times for raw materials and components, increased costs, increased purchase commitments and a delay in our ability to fulfill orders, which has had, and may continue to have, an adverse impact on our business and operating results; (iii)environment; (vi) expectations related to our ability to fulfill the backlog generated by supply constraints and to timely supply the number of products to fulfill current and future customer demand in a timely manner to satisfy perishable demand; ~~(iv)~~(vii) risks associated with our dependence on manufacturing operations conducted in our own facility in Tijuana, Mexico and through contract manufacturers, original design manufacturers, and suppliers to manufacture our products, to timely obtain sufficient quantities of materials ~~as well as~~and/or finished products of acceptable quality, at acceptable prices, and in the quantities necessary for us to meet critical schedules for the delivery of our own products and services and fulfill our anticipated customer demand; ~~(v)~~(viii) risks associated with our ability to secure critical components from sole source suppliers or identify alternative suppliers and/or buy component parts on the open market or completed goods in quantities sufficient to meet our requirements on a timely basis, affecting our ability to deliver products and services to our customers; (vi) our belief that consolidations of suppliers has occurred, and may continue to occur, which may negatively impact our ability to access certain parts and may result in higher prices which will impact our gross margins; (vii)(ix) risks related to increased cost of goods sold, including increased freight and other costs associated with expediting shipment and delivery of high-demand products to key markets in order to meet customer demand; ~~(viii) continued uncertainty and potential impact~~(x) risks associated with passing on ~~future quarters if sourcing constraints continue and/or~~increased costs through price ~~volatility occurs, which could continue~~increases to ~~negatively affect our profitability and/or market share; (ix)~~customers; (xi) 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; (x) 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, and restricted customer engagement; (xi) expectations related to our ability to supply products in a timely manner to satisfy perishable demand; (xii) 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; (xiii) 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; ~~(xiv) 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; (xv)~~(xiii) expectations related to our Services reportable segment revenues, particularly as we introduce ~~new generation,~~next-generation, less complex, product solutions, or as companies shift from on premises to work from home options for their workforce, which have resulted and may continue to result in decreased demand for our professional, installation and/or managed service offerings; (xvii) 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; (xviii) 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; (xix) 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; (xx)(xiv) expectations related to our efforts to drive sales and sustainable profitable revenue growth, to improve our profitability and cash flow, and accelerate debt reduction and de-levering; ~~(xxi) our expectations regarding growth objectives related to our strategic initiatives designed to expand our~~

~~Table~~ ~~of Contents~~

product and service offerings, including our expectations related to building strategic alliances and key partnerships with providers of collaboration tools and platforms to drive revenue growth and market share, our expectations for new products launches, the timing of their releases and their expected impact on future growth and on our existing products, and our belief that 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; (xxii)(xv) risks associated with forecasting sales and procurement demands, which are inherently difficult, particularly with continuing uncertainty in regional and global economic conditions; ~~(xxv)~~(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; ~~(xxvi)~~(xvii) expectations relating to our earnings guidance, particularly as economic uncertainty, including, without limitation, uncertainty related to the continued impact of COVID-19, the current constraints in our ability to source key components for our products, continued uncertainty in the macro-economic climate and other external factors, puts further pressure on management judgments used to develop forward-looking financial guidance and other prospective financial information; ~~(xxvii)~~(xviii) expectations related to GAAP and non-GAAP financial results for the ~~second quarter and~~ full Fiscal Year 2022, including net revenues, adjusted ~~EBITDA,~~earnings before interest, tax, depreciation, and amortization (EBITDA), tax rates, intangibles amortization, diluted weighted average shares outstanding and diluted EPS; (xxviii) 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; (xxix) uncertainties attributable to currency fluctuations, including fluctuations in foreign exchange rates and/or new or greater tariffs on our products; (xxx) our belief that the increased adoption of certain technologies and our open architecture approach has and will continue to increase demand for our solutions; (xxxi) expectations related to the micro and macro-economic conditions in our domestic and international markets and their impact on our future business; (xxxii)earnings per share (EPS); (xix) our forecast and estimates with respect to tax matters, including expectations with respect to ~~utilizing~~the valuation of our intellectual property or expectations regarding utilization of our deferred tax assets; and ~~(xxxiii)~~(xx) our expectations regarding pending and potential future litigation, in addition to other matters discussed in this ~~Annual~~Quarterly Report on Form ~~10-K~~10-Q that are not purely historical data. Such forward-looking

Table of Contents

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"~~Factors" of our Annual Report on Form 10-K for the fiscal year ended April 3, 2021, filed with the Securities and Exchange Commission ("SEC") on May 18, 2021; 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”) is a leading global communications technology company that designs, manufactures, and markets integrated communications and collaboration solutions for professionals. We offer premium audio and video products designed to work in an era where work is no longer a place and enterprise work forces are increasingly distributed. Our products and services are designed and engineered to connect people with high fidelity and incredible clarity. They are professional-grade, easy to use, and work seamlessly with major ~~video-~~video and audio-conferencing platforms.

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; Video includes conferencing solutions and peripherals, such as cameras, speakers, and microphones. All of our solutions are designed to integrate seamlessly with the platform and services of our customers’ choice in a wide range of Unified Communications & Collaboration (“UC&C”), Unified Communication as a Service (“UCaaS”), and Video as a Service (“VaaS”) environments.

Additionally, our cloud management and analytics software enables Information Technology ~~("IT")~~ administrators to configure and update firmware, monitor device usage, troubleshoot, and gain a deep understanding of user behavior. We offer a broad portfolio of services including video interoperability, support for our solutions and hardware devices, as well as professional, hosted, and managed services that are grounded in our deep expertise aimed at helping our customers achieve their goals for collaboration.

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.

~~Table~~ ~~of Contents~~

Our fiscal year ends on the Saturday closest to the last day of March. The year ended April 2, 2022 ("Fiscal Year 2022") has 52 weeks, while the year ended April 3, 2021 ("Fiscal Year 2021") had 53 weeks. The three months ended ~~July 3, 2021~~January 1, 2022 ("~~first~~third quarter Fiscal Year 2022") and ~~June 27,~~December 26, 2020 ("~~first~~third quarter Fiscal Year 2021") each had 13 weeks. The nine months ended January 1, 2022 and December 26, 2020 each had 39 weeks.

Impact of the Current Environment, Supply Chain Disruptions, and COVID-19 on Our Business

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 led to a massive increase in remote work. As a result, during Fiscal Year 2021 we experienced 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 remote work environments, remote learning, and telemedicine opportunities led to increased sales and operating income. During the fourth quarter of Fiscal Year 2021 and continuing in the first quarter of Fiscal Year 2022, we experienced elevated demand for certain Video and Voice devices as companies began to shift from work-from-home arrangements to hybrid work models.

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 suffer other adverse effects on our gross margins to meet 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 we expect supply chain constraints to limit our ability to meet demand in the short-term.

We have experienced and continue to monitor limited supply and longer lead times for certain key components, such as semiconductor chips, necessary to complete production and meet customer demand, including fulfillment of our backlog. ~~In particular, we are experiencing long lead times for global semiconductor chips and other key components.~~ We do not manufacture these component parts and currently purchase certain parts, including semiconductor chips and sub-assemblies that require semiconductor chips, from single or limited sources. Additionally, constrained supply has resulted in ~~increased prices~~price inflation for certain components, including semiconductor chips, on the spot market, increased transportation costs, inefficiencies at our owned manufacturing facility in Tijuana, Mexico, and inability to fulfill backlog for certain products timely. We continue to monitor our supply chain and are taking action against limited supply and increasing lead times, including increased spot market purchases, outreach to critical suppliers, and entering into contractual obligations that provide for increased costs, and multi-year commitments, to secure supply. Additionally, to the extent we pass through increased costs to our customers, this may result in reduced demand. These factors, among others, are affecting and are expected to continue to affect total net revenue and gross margin rates. ~~We are unable to estimate the extent and the period over which these conditions will exist.~~

In ~~responding~~addition, COVID-19 has continued to ~~this pandemic, employee safety~~spread globally and continues to beadd 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.

Table of Contents

The COVID-19 pandemic led to a ~~critical concern~~massive increase in remote work. As a result, during Fiscal Year 2021 we experienced elevated demand for ~~Poly~~certain enterprise Headsets and Video devices and a decline in demand for our Voice products and associated Services, as companies shifted from in-office to work-from-home arrangements for many of their office workers. Beginning in the fourth quarter of Fiscal Year 2021 and continuing through the third quarter of Fiscal Year 2022, we ~~have taken measures~~experienced elevated demand for certain Video and Voice devices as companies began to ~~protect our employees globally by adherence~~shift from work-from-home arrangements to ~~public safety~~hybrid work models.

However, the impact of COVID-19 is fluid and ~~shelter in place directives, physical distancing protocols within offices~~uncertain, and ~~manufacturing facilities, providing personal protective equipment, including face masks~~it has caused, and ~~hand sanitizers, conducting routine sanitation of facilities, requiring health monitoring before entry into Poly facilities and restricting the number of visitors~~may continue to ~~our sites. The safety protocols implemented globally meet or exceed current regulations, however~~cause, various negative effects as we continue to ~~monitor employees’ safety~~experience constraints in our supply chain, specifically the sourcing of certain components and ~~evolving regulatory requirements. Although~~raw materials, and increased logistics costs to meet customer demand, which, in turn, adversely impacts our ~~manufacturing facility remains open and certain office employees may utilize~~gross margins. As a result, the impact of COVID-19 to date has had mixed effects on our ~~offices when necessary, the majority~~results of all non-factory employees continue to work from home, using headsets and other Poly-issued equipment. We provided COVID-19 vaccines to our employees and their immediate families, as well as other workers, at our manufacturing facility on a voluntary basis free of charge.operations.

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, and variants 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 or when 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 on Poly are highly uncertain and we will continue to assess the impact from such events on our condensed consolidated financial statements.

~~Table~~In responding to this pandemic, employee safety continues to be a critical concern for Poly 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 ~~Contents~~

facilities, requiring health monitoring before entry into Poly 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 Poly-issued equipment. We provided COVID-19 vaccines to our employees and their immediate families, as well as other workers, at our manufacturing facility on a voluntary basis free of charge.

~~First~~Third Quarter Fiscal Year 2022 Highlights

Total net revenues for the ~~first~~third quarter of Fiscal Year 2022 were ~~$431.2~~$409.6 million, ~~an increase~~a decrease of ~~$75.5~~$75.1 million or ~~21.2%~~(15.5)%, compared to the ~~first~~third quarter of Fiscal Year 2021, primarily driven by ~~increased~~decreased sales in our ~~Video~~Headset, Voice, Services and ~~Voice~~Video product categories.

~~Product~~Products gross margin rate for the ~~first~~third quarter of Fiscal Year 2022 decreased from ~~39.4%~~43.7% in the ~~first~~third quarter of Fiscal Year 2021 to ~~36.6%~~35.9%, primarily driven by increased component ~~transportation, and manufacturing~~ costs, ~~as well as~~ unfavorable product ~~mix.~~

We ~~redeemed the outstanding principal~~mix, and ~~accrued interest on the 5.50% Senior Notes of $493.9 million during~~ ~~the first quarter of Fiscal Year~~ ~~2022~~. On June 15, 2021, we entered into a three-year amortizing interest rate swap agreement as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates on our $1.275 billion term loan facility.increased transportation costs.

During the ~~first~~third quarter of Fiscal Year 2022, we announced the ~~Voyager Focus 2 headset,~~partnership with Appspace, a ~~next generation USB~~leading provider of workspace experience software, to deliver dynamic digital signage on Poly video OS devices to enhance the Return to Office experience for employees and ~~Bluetooth headset, designed~~visitors. The digital signage was available on Poly Studio X Series (including Poly Studio X30, X50, X70) and G7500 video conference devices with an Appspace subscription. We also announced the updated Poly Room Solutions for Microsoft Teams Rooms on Windows. The new lineup of Poly Studio Kits offers premium audio and video for focus, small, medium, and large rooms, and feature Poly's ~~next generation Acoustic Fence Technology and Advanced Digital Hybrid Active Noise Cancellation. This product was~~Director AI technology. These products were available during the ~~first~~third quarter of Fiscal Year 2022 and did not have a material impact on total net revenues.

Table of Contents

RESULTS OF OPERATIONS

The Company’s reportable segments are Products and Services. Our Products reportable segment includes the Headsets, Voice, and Video product lines. Our Services reportable segment includes maintenance support on hardware devices, as well as professional, managed, and cloud services and solutions.

Total Net Revenues

The following table sets forth total net revenues by reportable segment for the ~~first quarter of Fiscal Years~~three and nine months ended January 1, 2022 and ~~2021:~~December 26, 2020:


		Three Months Ended									Three Months Ended								Nine Months Ended
(in thousands, except percentages)	(in thousands, except percentages)	July 3, 2021		June 27, 2020		Change				(in thousands, except percentages)	January 1, 2022		December 26, 2020		Change				January 1, 2022		December 26, 2020		Change
Products	Products	$	371,203	$	291,458	$	79,745	27.4	%			Products	$	354,022	$	420,711	$	(66,689)	(15.9)	%	$	1,086,607	$	1,059,846	$	26,761	2.5	%
Services	Services	59,969		64,262		(4,293)		(6.7)	%			Services	55,544		63,974		(8,430)		(13.2)	%	173,155		191,529		(18,374)		(9.6)	%
Total net revenues	Total net revenues	$	431,172	$	355,720	$	75,452	21.2	%			Total net revenues	$	409,566	$	484,685	$	(75,119)	(15.5)	%	$	1,259,762	$	1,251,375	$	8,387	0.7	%

Products

Total product net revenues decreased in the third quarter of Fiscal Year 2022 compared to the third quarter of Fiscal Year 2021, primarily due to the following:

•Headset, Voice, and Video product categories net revenues decreased primarily due to constrained supply of certain components, such as semiconductor chips.

Total product net revenues increased in the ~~first quarter of Fiscal Year~~nine months ended January 1, 2022 compared to the ~~first quarter of Fiscal Year 2021,~~nine months ended December 26, 2020, primarily due to the following:

•Video product category net revenues increased, driven by the shift to hybrid work arrangements and the need for office workers to be able to effectively communicate and collaborate regardless of ~~location, as well as remote learning, telemedicine, and the continued ramp of our new video portfolio.~~location.

•Voice product category net revenues also increased as companies returned or made plans to return to the office.

•Headsets product category net revenues decreased primarily due to constrained supply of certain components, such as semiconductor chips.

Services

Total services net ~~revenues~~revenues decreased in the ~~first~~third quarter of Fiscal Year 2022 compared to the ~~first~~third quarter of Fiscal Year 2021 and in the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020, primarily 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.

3133

Table of Contents

Geographic Region

The following table sets forth total net revenues by geographic region for the ~~first quarter of Fiscal Years~~three and nine months ended January 1, 2022 and ~~2021:~~December 26, 2020:


		Three Months Ended									Three Months Ended								Nine Months Ended
(in thousands, except percentages)	(in thousands, except percentages)	July 3, 2021		June 27, 2020		Change				(in thousands, except percentages)	January 1, 2022		December 26, 2020		Change				January 1, 2022		December 26, 2020		Change
United States	United States	$	198,728	$	168,281	$	30,447	18.1	%			United States	$	182,229	$	193,413	$	(11,184)	(5.8)	%	$	589,117	$	545,472	$	43,645	8.0	%

International net revenues:	International net revenues:											International net revenues:
Europe, Middle East, and Africa	Europe, Middle East, and Africa	126,121		94,106		32,015		34.0	%			Europe, Middle East, and Africa	133,184		181,429		(48,245)		(26.6)	%	371,067		405,933		(34,866)		(8.6)	%
Asia Pacific	Asia Pacific	76,758		64,264		12,494		19.4	%			Asia Pacific	62,413		76,823		(14,410)		(18.8)	%	213,479		212,657		822		0.4	%
Americas, excluding United States	Americas, excluding United States	29,565		29,069		496		1.7	%			Americas, excluding United States	31,740		33,020		(1,280)		(3.9)	%	86,099		87,313		(1,214)		(1.4)	%
Total international net revenues	Total international net revenues	232,444		187,439		45,005		24.0	%			Total international net revenues	227,337		291,272		(63,935)		(22.0)	%	670,645		705,903		(35,258)		(5.0)	%

Total net revenues	Total net revenues	$	431,172	$	355,720	$	75,452	21.2	%			Total net revenues	$	409,566	$	484,685	$	(75,119)	(15.5)	%	$	1,259,762	$	1,251,375	$	8,387	0.7	%

United States (U.S.)

U.S. total net revenues ~~increased~~decreased in the ~~first~~third quarter of Fiscal Year 2022 compared to the ~~first~~third quarter of Fiscal Year 2021, primarily due to decreased net sales in the Voice product category. U.S. Video, Headsets and Services total net revenues were materially unchanged in the third quarter of Fiscal Year 2022 compared to the third quarter of Fiscal Year 2021.

U.S. total net revenues increased in the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020, primarily due to increased net sales in the Video and Voice product categories, partially offset by decreased net sales in ~~Headsets.~~the Services category. U.S. ~~Services~~Headsets total net revenues were materially unchanged ~~during~~during the ~~first quarter of Fiscal Year~~nine months ended January 1, 2022 compared to the ~~first quarter of Fiscal Year 2021.~~nine months ended December 26, 2020.

International

International t~~otal~~total net revenues ~~increased~~decreased in the ~~first~~third quarter of Fiscal Year 2022 compared to the ~~first~~third quarter of Fiscal Year 2021, primarily due to decreased net sales in the Headsets, Video, Services, and Voice product categories.

International total net revenues decreased in the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020, primarily due to decreased net sales in the Headsets and Services product categories, partially offset increased net sales in the Video ~~Headset, and~~product category. International Voice ~~product categories, partially offset by decreased~~total net ~~sales in Services.~~revenues were materially unchanged during the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020.

During the ~~first~~third quarter of Fiscal Year 2022, changes in foreign exchange rates favorably impacted total net revenues by ~~$9.6~~$1.6 million, net of the effects of hedging, compared to a ~~$2.5~~$8.4 million ~~unfavorable~~favorable impact on revenue in the ~~first~~third quarter of fiscal year 2021.

During the nine months ended January 1, 2022, changes in foreign exchange rates favorably impacted total net revenues by $16.6 million, net of the effects of hedging, compared to a $5.8 million favorable impact on revenue in the prior year period.

3234

Table of Contents

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
(in thousands, except percentages)													(in thousands, except percentages)	Three Months Ended												Nine Months Ended
	(in thousands, except percentages)	July 3, 2021			June 27, 2020			Change				(in thousands, except percentages)		January 1, 2022			December 26, 2020	Change						January 1, 2022			December 26, 2020		Change
Products:	Products:														Products:
Net revenues	Net revenues	$	371,203		$	291,458		$	79,745	27.4	%					Net revenues		$	354,022		$	420,711		$	(66,689)		(15.9)	%	$	1,086,607		$	1,059,846		$	26,761	2.5	%
Cost of revenues	Cost of revenues	235,196			176,615			58,581		33.2	%					Cost of revenues		226,994			236,842			(9,848)			(4.2)	%	682,360			622,718			59,642		9.6	%
Gross profit	Gross profit	$	136,007		$	114,843		$	21,164	18.4	%					Gross profit		$	127,028		$	183,869		$	(56,841)		(30.9)	%	$	404,247		$	437,128		$	(32,881)	(7.5)	%
Gross profit %	Gross profit %	36.6		%	39.4		%									Gross profit %		35.9		%	43.7		%						37.2		%	41.2		%
Services:	Services:															Services:
Net revenues	Net revenues	$	59,969		$	64,262		$	(4,293)	(6.7)	%					Net revenues		$	55,544		$	63,974		$	(8,430)		(13.2)	%	$	173,155		$	191,529		$	(18,374)	(9.6)	%
Cost of revenues	Cost of revenues	20,787			22,773			(1,986)		(8.7)	%					Cost of revenues		18,386			21,186			(2,800)			(13.2)	%	58,334			64,921			(6,587)		(10.1)	%
Gross profit	Gross profit	$	39,182		$	41,489		$	(2,307)	(5.6)	%					Gross profit		$	37,158		$	42,788		$	(5,630)		(13.2)	%	$	114,821		$	126,608		$	(11,787)	(9.3)	%
Gross profit %	Gross profit %	65.3		%	64.6		%									Gross profit %		66.9		%	66.9		%						66.3		%	66.1		%
Total:	Total:															Total:
Net revenues	Net revenues	$	431,172		$	355,720		$	75,452	21.2	%					Net revenues		$	409,566		$	484,685		$	(75,119)		(15.5)	%	$	1,259,762		$	1,251,375		$	8,387	0.7	%
Cost of revenues	Cost of revenues	255,983			199,388			56,595		28.4	%					Cost of revenues		245,380			258,028			(12,648)			(4.9)	%	740,694			687,639			53,055		7.7	%
Gross profit	Gross profit	$	175,189		$	156,332		$	18,857	12.1	%					Gross profit		$	164,186		$	226,657		$	(62,471)		(27.6)	%	$	519,068		$	563,736		$	(44,668)	(7.9)	%
Gross profit %	Gross profit %	40.6		%	43.9		%									Gross profit %		40.1		%	46.8		%						41.2		%	45.0		%

Products

Gross profit as a percentage of total product net ~~revenues~~revenues decreased in the ~~first~~third quarter of Fiscal Year 2022 as compared to the ~~first~~third quarter of Fiscal Year 2021 and in the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020, primarily ~~driven by~~due to increased component ~~transportation, and manufacturing~~ costs, ~~as well as~~ unfavorable product ~~mix.~~mix, and increased transportation costs. The increase in component costs was primarily driven by increased spot market purchases of certain key components, such as semiconductor chips, due to global supply shortages. Transportation costs increased as a result of high global demand and limited capacity of air freight carriers and increased air freight usage to mitigate longer component lead times to meet our commitments to customers. Additionally, the supply shortages and increased lead times resulted in inefficiencies at our manufacturing facility. These declines were partially offset by the non-recurrence of a one-time provision for inventory excess and obsolescence recorded during the first quarter of Fiscal Year 2021.

Services

~~Compared to the first quarter of Fiscal Year 2021, gross~~Gross profit as a percentage of total services net revenues ~~increased in~~was materially unchanged during the ~~first~~third quarter of Fiscal Year 2022 ~~primarily due~~compared to the ~~decrease~~third quarter of Fiscal Year 2021 and in the ~~acquisition-related deferred revenue fair value adjustment.~~

nine months ended January 1, 2022 compared to the nine months ended December 26, 2020.

3335

Table of Contents

Operating Expenses

Operating expenses for the ~~first quarter of Fiscal Years~~three and nine months ended January 1, 2022 and ~~2021~~December 26, 2020 were as follows:


		Three Months Ended										Three Months Ended								Nine Months Ended
(in thousands, except percentages)	(in thousands, except percentages)	July 3, 2021			June 27, 2020			Change									(in thousands, except percentages)		January 1, 2022			December 26, 2020				Change						January 1, 2022			December 26, 2020			Change
Research, development, and engineering	Research, development, and engineering	$	45,466		$	50,029		$	(4,563)	(9.1)	%													Research, development, and engineering			$	46,216		$	54,150		$	(7,934)			(14.7)	%	$	136,090		$	156,327		$	(20,237)	(12.9)	%
% of total net revenues	% of total net revenues	10.5		%	14.1		%																	% of total net revenues			11.3		%	11.2		%							10.8		%	12.5		%
Selling, general and administrative	Selling, general and administrative	120,734			116,644			4,090		3.5	%													Selling, general and administrative			121,387			129,641			(8,254)				(6.4)	%	364,417			361,892			2,525		0.7	%
% of total net revenues	% of total net revenues	28.0		%	32.8		%																	% of total net revenues			29.6		%	26.7		%							28.9		%	28.9		%
Loss, net from litigation settlements	Loss, net from litigation settlements	—			17,561			(17,561)		100.0	%													Loss, net from litigation settlements			—			—			—				—	%	—			17,561			(17,561)		100.0	%
% of total net revenues	% of total net revenues	—		%	4.9		%																	% of total net revenues			—		%	—		%							—		%	1.4		%
Restructuring and other related charges	Restructuring and other related charges	28,972			29,330			(358)		(1.2)	%													Restructuring and other related charges			2,398			13,977			(11,579)				(82.8)	%	33,977			49,477			(15,500)		(31.3)	%
% of total net revenues	% of total net revenues	6.7		%	8.2		%																	% of total net revenues			0.6		%	2.9		%							2.7		%	4.0		%
Total Operating Expenses		$	195,172		$	213,564		$	(18,392)	(8.6)	%
Total operating expenses												Total operating expenses	$	170,001	$	197,768		$	(27,767)		(14.0)		%	$	534,484			$	585,257		$	(50,773)		(8.7)		%
% of total net revenues	% of total net revenues	45.3		%	60.0		%																	% of total net revenues			41.5		%	40.8		%							42.4		%	46.8		%

Research, Development, and Engineering

Research, development, and engineering costs are expensed as incurred and consist primarily of compensation costs, outside services, expensed materials, and overhead expenses.

Research, development, and engineering ex~~penses~~expenses decreased during the ~~first~~third quarter of Fiscal Year 2022 compared to the ~~first~~third quarter of Fiscal Year 2021 and in the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020, primarily due to lower compensation expense due to reduction in headcount, cost control efforts, and lower incentive compensation ~~and decreased travel expenses due to COVID-19 restrictions.~~.

Selling, General, and Administrative

Selling, general, and administrative costs are expensed as incurred and consist primarily of compensation costs, marketing costs, travel expenses, professional service fees, and overhead expenses.

Selling, general and administrative expenses ~~increased during~~ decreased during the ~~first~~third quarter of Fiscal Year 2022 compared to the ~~first~~third quarter of Fiscal Year 2021, primarily due to lower incentive compensation, partially offset by increased marketing and travel expense. Selling, general and administrative expenses increased during the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020, primarily due to higher sales commissions, ~~due to increased sales~~marketing, and ~~higher advertising and promotional activity. The increases were~~travel expense, partially offset by lower ~~compensation expense due to reduced headcount, decreased travel expenses due to COVID-19 restrictions, and other cost control efforts.~~facilities expenses.

Loss, net from Litigation Settlements

Loss, net from litigation settlements decreased during the ~~first quarter of Fiscal Year~~nine months ended January 1, 2022 compared to the ~~first quarter of Fiscal Year 2021~~nine months ended December 26, 2020, due to the recording of one-time litigation charges for settlements during the prior period.

Restructuring and Other Related Charges

Restructuring and other related charges ~~was materially unchanged~~decreased during the ~~first~~third quarter of Fiscal Year 2022 compared to the ~~first~~third quarter of Fiscal Year ~~2021.~~2021 and in the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020. During the ~~first quarter of Fiscal Years~~three and nine months ended January 1, 2022 and ~~2021~~December 26, 2020 we recorded restructuring and other related charges to reduce expenses and optimize our cost structure. These actions consisted of headcount reductions and office closures.

3436

Table of Contents

Interest Expense

Interest expense for the ~~first quarter of Fiscal Years~~three and nine months ended January 1, 2022 and ~~2021~~December 26, 2020 was as follows:


		Three Months Ended											Three Months Ended										Nine Months Ended
(in thousands, except percentages)	(in thousands, except percentages)	July 3, 2021			June 27, 2020			Change				(in thousands, except percentages)	January 1, 2022		December 26, 2020			Change					January 1, 2022		December 26, 2020			Change
Interest expense	Interest expense	$	21,782		$	21,184		$	598	(2.8)	%			Interest expense	$	15,948		$	18,417		$	(2,469)	13.4	%	$	53,871		$	58,182		$	(4,311)	7.4	%
% of total net revenues	% of total net revenues	5.1		%	6.0		%							% of total net revenues	3.9		%	3.8		%					4.3		%	4.6		%

Interest expense ~~increased~~ decreased during the ~~first~~third quarter of Fiscal Year 2022 compared to the ~~first~~third quarter of Fiscal Year 2021 and in the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020, primarily due to lower interest expense related to the 2023 Senior Notes and lower outstanding principal balance on the term loan facility, partially offset by the amortization of the remaining debt issuance costs related to the 2023 Senior Notes, which were redeemed during the first quarter of Fiscal Year 2022, and interest expense related to the 2029 Senior Notes, which were issued in the fourth quarter of Fiscal Year ~~2021, partially offset by lower interest expense related to the 2023 Senior Notes and lower outstanding principal balance on the term loan facility.~~2021.

Other Non-Operating Income, Net

Other non-operating income, net for the ~~first quarter of Fiscal Years~~three and nine months ended January 1, 2022 and ~~2021~~December 26, 2020 was as follows:


		Three Months Ended											Three Months Ended										Nine Months Ended
(in thousands, except percentages)	(in thousands, except percentages)	July 3, 2021			June 27, 2020			Change				(in thousands, except percentages)	January 1, 2022		December 26, 2020			Change					January 1, 2022		December 26, 2020			Change
Other non-operating income, net	Other non-operating income, net	$	(692)		$	(224)		$	(468)	208.9	%			Other non-operating income, net	$	(995)		$	(2,596)		$	1,601	(61.7)	%	$	(1,664)		$	(4,188)		$	2,524	(60.3)	%
% of total net revenues	% of total net revenues	(0.2)		%	(0.1)		%							% of total net revenues	(0.2)		%	(0.5)		%					(0.1)		%	(0.3)		%

Other non-operating income, net ~~increased~~decreased during the ~~first~~third quarter of Fiscal Year 2022 compared to the ~~first~~third quarter of Fiscal Year 2021, primarily due to ~~lower losses on non-designated~~immaterial net foreign currency ~~forward derivatives.~~losses compared to immaterial net foreign currency gains in the prior period. Other non-operating income, net decreased in the nine months ended January 1, 2022 compared to the nine months ended December 26, 2020, primarily due to lower immaterial unrealized gains on the deferred compensation plan investments and immaterial net foreign currency losses during the current period compared to immaterial net foreign currency gains in the prior period.

Income Tax Benefit


		Three Months Ended											Three Months Ended										Nine Months Ended
(in thousands except percentages)	(in thousands except percentages)	July 3, 2021			June 27, 2020			Change				(in thousands except percentages)	January 1, 2022		December 26, 2020			Change					January 1, 2022		December 26, 2020			Change
Income (loss) before income taxes		$	(41,073)		$	(78,192)		$	37,119	47.5	%
(Loss) income before income taxes														(Loss) income before income taxes	$	(20,768)		$	13,068		$	(33,836)	258.9	%	$	(67,623)		$	(75,515)		$	7,892	10.5	%
Income tax benefit	Income tax benefit	(4,262)			(3,177)			(1,085)		(34.2)	%			Income tax benefit	(9,604)			(7,045)			(2,559)		(36.3)	%	(116,433)			(7,208)			(109,225)		(1,515.3)	%
Net income (loss)		$	(36,811)		$	(75,015)		$	38,204	50.9	%
Net (loss) income														Net (loss) income	$	(11,164)		$	20,113		$	(31,277)	155.5	%	$	48,810		$	(68,307)		$	117,117	171.5	%
Effective tax rate	Effective tax rate	10.4		%	4.1		%							Effective tax rate	46.2		%	(53.9)		%					172.2		%	9.6		%

The Company and its subsidiaries are subject to taxation in the U.S. and in various foreign and state jurisdictions. The Company's income tax benefit is determined using an ~~estimate of its~~estimated annual effective tax rate, ~~and~~ adjusted for discrete items ~~that are taken into account in~~arising during the ~~relevant~~ period. The effective tax rates for the ~~first quarter of Fiscal Years~~three and nine months ended January 1, 2022 were 46.2% and ~~2021~~172.2%, respectively. The effective tax rates for the three and nine months ended December 26, 2020 were ~~10.4%~~(53.9)% and ~~4.1%~~9.6%, respectively.

Table of Contents

Income tax benefit for the three and nine months ended January 1, 2022 was ~~$(4.3)~~$(9.6) million and ~~$(3.2)~~$(116.4) million, respectively. Income tax benefit for the ~~first quarter of Fiscal Years 2022~~three and ~~2021,~~nine months ended December 26, 2020 was $(7.0) million and $(7.2) million, respectively. ~~The provision for income taxes for~~During the three months ended ~~July 3,~~October 2, 2021, ~~consisted primarily~~the Company transferred certain non-Americas intellectual property (“IP”) rights between our wholly-owned subsidiaries ("IP transfer") to align with our evolving business operations, resulting in the derecognition of ~~federal, state,~~a deferred tax asset of $91.1 million and ~~foreign income taxes. For~~ the ~~first quarter~~recognition of ~~Fiscal Year 2022,~~a new deferred tax asset of $204.3 million, which represents the ~~income~~book and tax basis difference in the IP and was based on the fair value of the IP, in the respective subsidiaries. This results in a net discrete deferred tax benefit ~~differed from~~of $113.2 million. The impact of the IP transfer to net cash flows on the condensed consolidated statements of cash flows during the nine months ended January 1, 2022 was not material.

The difference between the effective tax rate and the U.S. federal statutory rate primarily ~~due~~relates to the changes in uncertain tax positions, U.S. and foreign income mix, and the valuation allowance on the U.S. federal and state deferred tax assets (DTAs) that continues to be maintained as of ~~July 3, 2021.~~January 1, 2022.

A significant portion of the Company's ~~deferred tax assets ("DTAs")~~DTAs relate to ~~internal intangible property restructuring~~the IP transfer between wholly-owned ~~subsidiaries.~~subsidiaries completed during the three months ended October 2, 2021. At this time, based on evidence currently available, the Company considers it more likely than not that it will have sufficient taxable income in the future that will allow the Company to realize the DTAs; however, failure to generate sufficient future taxable income could result in some or all DTAs not being utilized in the future. If the Company is unable to generate sufficient future taxable income, a substantial valuation allowance to reduce the Company's DTAs may be required.

~~Table~~ ~~of Contents~~

FINANCIAL CONDITION

Liquidity and Capital Resources

The following tables present selected financial information and statistics as of ~~July 3, 2021~~January 1, 2022 and April 3, 2021 and for the ~~first quarter of Fiscal Years~~nine months ended January 1, 2022 and ~~2021~~December 26, 2020 (in thousands):

July 3, 2021 April 3, 2021
Cash, cash equivalents, and short-term investments $ 212,714 $ 217,119
Property, plant, and equipment, net 131,294 140,875
Current portion of long-term debt — 478,807
Long-term debt, net 1,497,119 1,496,064
Working capital 207,890 213,975

Three Months Ended
July 3, 2021 June 27, 2020
Cash provided by operating activities $ 849 $ 41,722
Cash used in investing activities (10,456) (3,645)
Cash used in financing activities (490,905) (2,734)


	January 1, 2022		April 3, 2021
Cash and cash equivalents and short-term investments	$	199,717	$	217,119
Property, plant, and equipment, net	126,973		140,875
Current portion of long-term debt	—		478,807
Long-term debt, net	1,499,228		1,496,064
Working capital	264,784		213,975


	Nine Months Ended
	January 1, 2022		December 26, 2020
Cash (used in) provided by operating activities	$	(52)	$	71,149
Cash used in investing activities	(25,178)		(14,580)
Cash used in financing activities	(487,002)		(44,442)

Our cash and cash equivalents as of ~~July 3, 2021~~January 1, 2022 consisted of bank deposits and money market funds with third-party financial institutions. As of ~~July 3, 2021,~~January 1, 2022, of our ~~$212.7~~$199.7 million of cash and cash equivalents and short-term investments, ~~$105.5~~$104.7 million was held domestically while ~~$107.2~~$95.0 million was held by foreign subsidiaries, and approximately ~~70%~~71% was based in USD-denominated instruments. As of ~~July 3, 2021,~~January 1, 2022, our short-term investments were composed of mutual funds. An additional source of liquidity is ~~$98.6~~$97.1 million ofof availability from our revolving credit facility, net of outstanding letters of credit.

Table of Contents

Historically, we use cash provided by operating activities as our primary source of liquidity. We expect that cash provided by operating activities will fluctuate in future periods, including the current quarter as a result of a number of factors, including fluctuations in our revenues, the timing of compensation-related payments, such as our annual bonus/variable compensation plan, interest payments on our long-term debt, product shipments, accounts receivable collections, inventory and supply chain management, and the timing and amount of tax and other payments.

During the ~~first quarter of Fiscal Year~~nine months ended January 1, 2022, cash ~~provided by~~used in operating activities of ~~$0.8 million~~$(52) thousand was a result of ~~non-cash adjustments to~~$(98.4) million of cash used in net ~~loss of $66.3 million,~~working capital, partially offset by ~~$(36.8)~~$48.8 million of net ~~loss~~income and ~~a decrease~~$49.5 million in ~~the~~ net ~~change in operating assets and liabilities of $(28.7) million.~~non-cash charges. Cash used in investing activities of ~~($10.4)~~$(25.2) million consisted primarily of capital expenditures of ~~($6.1)~~$(20.7) million and other investing activities of ~~($4.0)~~$(4.0) million. Cash used in financing activities of $(487.0) million consisted primarily of ~~($480.7)~~$(480.7) million of repayments of long-term debt and ~~$($10.2)~~$(12.2) million of employees' tax withheld and paid for restricted stock and restricted stock ~~units.~~units, partially offset by $5.8 million of proceeds from stock compensation plans.

Capital Expenditures

We anticipate our capital expenditures in Fiscal Year 2022 will be approximately ~~$35~~$25 million to ~~$45~~$35 million, relating primarily to ~~costs associated~~investments in our manufacturing capabilities, including tooling for new products, new information technology investments, and facilities upgrades. We will continue to evaluate new business opportunities and new markets. As a result, our future growth within the existing business or new opportunities and markets may dictate the need for additional facilities and capital expenditures to support that growth.

Debt

In July 2018, in connection with the Polycom acquisition, the Company entered into a 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 first ~~quarter~~nine months of Fiscal Year 2022, we did not repurchase any of our outstanding principal. As of ~~July 3, 2021,~~January 1, 2022, we had $1.0 billion of principal outstanding.

~~Table~~ ~~of Contents~~

On ~~February 20, 2020,~~December 29, 2021, the Company entered into an Amendment to the Credit Agreement 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 ~~July 3, 2021,~~January 1, 2022, the Company hashas five outstanding letters of credit on the revolving credit facility for a total of ~~$1.4~~$2.9 million and had ~~$98.6~~$97.1 million available under the revolving ~~line of credit.~~credit facility. As of ~~July 3, 2021,~~January 1, 2022, the Company was in compliance with the financial covenants.

On July 30, 2018, the Company 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. On June 15, 2021, the Company entered into a three-year amortizing interest rate swap agreement with Bank of America, N.A. The swap has an initial notional amount of $680 million and matures on July 31, 2024. During the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, the Company reclassified into interest expense ~~$3.1~~$7.6 million and recorded a ~~$5.7~~$4.1 million unrealized ~~loss~~ gain on its interest rate ~~swap derivative~~swaps derivatives designated as a cash flow hedge.

On March 4, 2021, the Company issued $500.0 million aggregate principal amount of 4.75% Senior Notes. The 4.75% Senior Notes mature on March 1, 2029 and bear interest at a rate of 4.75% per annum, payable semi-annually on March 1 and September 1 of each year, commencing on September 1, 2021. A portion of the proceeds from the 4.75% Senior Notes was used to redeem the outstanding principal and accrued interest on the 5.50% Senior Notes of $493.9 million. As of ~~July 3, 2021,~~ ~~$500~~January 1, 2022, $500 million of principal was outstanding.

During the first quarter of Fiscal Year 2022, we redeemed the outstanding principal and accrued interest on the 5.50% Senior Notes ofof $493.9 million.

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. In addition, our liquidity, capital resources, and results of operations in any period could be affected by repurchases of our common stock, the payment in the future of cash dividends if the Board determines to reinstate the dividend program, the exercise of outstanding stock options, restricted stock grants under stock plans, and the issuance of common stock under the ESPP. The acquisition of Polycom affected our liquidity and leverage ratios and we are working to reduce our debt leverage

Table of Contents

ratios by prioritizing the repayment of the debt obtained to finance such acquisition. We receive cash from the exercise of outstanding stock options under our stock plan and the issuance of shares under our ~~ESPP.~~Employee Stock Purchase Plan. However, the resulting increase in the number of outstanding shares from these equity grants and issuances could affect our earnings per share. We cannot predict the timing or amount of proceeds from the sale or exercise of these securities or whether they will be exercised, forfeited, canceled, or will expire.

Further information regarding the Company’s debt issuances and related hedging activity can be found in Note 87, Debt, and Note ~~11,~~10, Derivatives, of the accompanying notes to the condensed consolidated financial statements within “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q.

Common Stock Repurchases

From time to time, our Board authorizes programs under which we may repurchase shares of our common stock in the open market or through privately negotiated transactions, including accelerated stock repurchase agreements. On November 28, 2018, the Board approved a 11.0 million share repurchase program expanding our capacity to repurchase shares to approximately 1.7 million shares. During the ~~first quarter of Fiscal Year~~nine months ended January 1, 2022, we did not repurchase any shares of our common stock. As of ~~July 3, 2021,~~January 1, 2022, there remained 1,369,014 shares authorized for repurchase under the existing stock repurchase program.

We believe that our current cash and cash equivalents, short-term investments, cash ~~provided by~~flow from 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 April 3, 2021, filed with the SEC onon May 18, 2021, and other periodic filings with the SEC, any of which could affect our estimates for future financial needs and sources of working capital.

~~Table~~ ~~of Contents~~

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~~Unconditional Purchase Obligations

We use several contract manufacturers to manufacture raw materials, components, and subassemblies for our products through our supply and demand information that can cover periods up to 78 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 January 1, 2022, we had outstanding off-balance sheet third-party manufacturing, component purchase, and other general and administrative commitments of $615.5 million, including off-balance sheet consigned inventories of $65.3 million. 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 condensed consolidated balance sheets 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 July 3, 2021 and April 3, 2021, we had off-balance sheet consigned inventories of $53.6 million~~ ~~and $57.3 million, respectively.~~

~~Unconditional Purchase Obligations~~

We use several contract manufacturers to manufacture raw materials, components, and subassemblies for our products through our supply and demand information that typically covers periods up to 52 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 July 3, 2021, we had outstanding off-balance sheet third-party manufacturing, component purchase, and other general and administrative commitme~~nts of $599.5 million, including the off-balance sheet consigned inventories of $53.6 million.~~ We expect to consume unconditional purchase obligations in the normal course of business, net of an immaterial purchase commitments reserve. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs in partnering with our suppliers given the current environment.

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 April 3, 2021.

Table of Contents

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 April 3, 2021. There have been no material changes to our critical accounting estimates during ~~the first quarter of~~ Fiscal Year 2022.

Recent Accounting Pronouncements

3841

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The discussion of our exposure to market risk related to changes in interest rates and foreign currency exchange rates contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors, including those discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 3, 2021, which could materially affect our business, financial position, or future results of operations.

INTEREST RATE RISK

Our exposure to market risk for changes in interest rates relates primarily to our floating-rate interest payments under our $1.275 billion term loan facility. Borrowings under the Credit Agreement bear interest at a variable rate equal to (i) LIBOR plus a specified margin, or (ii) the base rate (which is the highest of (a) the prime rate publicly announced from time to time by Wells Fargo Bank, National Association, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR plus a specified margin.

On July 30, 2018, we entered into a four-year amortizing interest rate swap agreement, and on June 15, 2021, we entered into a three-year amortizing interest rate swap agreement, both with Bank of America, N.A., as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates on the $1.275 billion term loan facility. As a matter of policy, we only enter into transactions that we believe will be highly effective at offsetting the underlying risk and we do not use derivatives for trading or speculative purposes. Our objective is to mitigate the impact of interest expense fluctuations on our profitability related to interest rate changes by minimizing movements in future debt payments with ~~this~~these interest rate ~~swap.~~swaps.

The first swap has an initial notional amount of $831 million and ~~mature~~matures on July 31, 2022. The second swap has an initial notional amount of $680 million and matures on July 31, 2024. The swaps involve the receipt of floating-rate interest payments for fixed interest rate payments over the life of the agreement. We have designated these interest rate swaps as cash flow hedges. Changes in the fair value of the derivatives are recorded to other comprehensive income on the condensed consolidated statements of comprehensive ~~loss~~(loss) income and are reclassified to interest expense over the life of the agreements. For additional details, refer to Note ~~11,~~10, Derivatives, of the accompanying notes to the condensed consolidated financial statements within “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q. During the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, we made payments of ~~approximately $3.1~~approximately $7.7 million on our interest rate swaps and recognized $~~3.1~~7.6 million within interest expense on the condensed consolidated statement of operations. As of ~~July 3, 2021,~~January 1, 2022, we had ~~$0.1 million o~~fan immaterial amount of interest accrued within accrued liabilities on the condensed consolidated balance sheet. A hypothetical 10% increase or decrease on market interest rates could result in a corresponding immaterial increase or decrease in annual interest expense ~~of approximately~~ ~~$0.1 million~~.due to the two interest rate swaps.

Interest rates were ~~were~~ lower in the three and nine months ended ~~July 3, 2021~~January 1, 2022 compared to the same period in the prior year. InInterest income was not material in the three and nine months ended ~~July 3, 2021~~January 1, 2022 and ~~June 27, 2020 we generated interest income of $0.2 million and $0.0 million, respectively.~~December 26, 2020.

FOREIGN CURRENCY EXCHANGE RATE RISK

We are a net receiver of currencies other than the United States Dollar ("USD.") Accordingly, changes in exchange rates, and in particular a strengthening of the USD, could negatively affect our total net revenues and gross margins, as expressed in USD. There is a risk that we will have to adjust local currency product pricing due to competitive pressures if there is significant volatility in foreign currency exchange rates.

The primary currency fluctuations to which we are exposed are the Euro ("EUR"), Great Britain Pound Sterling ("GBP"), and Mexican Peso ("~~MXN"~~MXN."). We use a hedging strategy to diminish, and make more predictable, the effect of currency fluctuations. All of our hedging activities are entered into with large financial institutions, which we periodically evaluate for credit risks. We hedge our balance sheet exposure by hedging EUR and GBP denominated cash, accounts receivable, and accounts payable balances, and our economic exposure by hedging a portion of anticipated EUR and GBP denominated sales and our MXN denominated expenditures. We can provide no assurance that our strategy will be successful in the future and that exchange rate fluctuations will not materially adversely affect our business. We do not hold or issue derivative financial instruments for speculative trading purposes. While our existing hedges cover a certain amount of exposure for the upcoming fiscal year, long-term strengthening of the USD relative to the currencies of other countries in which we sell may have a material adverse impact on our financial results. In addition, our results may be adversely impacted by future changes in foreign currency exchange rates relative to original hedging contracts.

3942

Table of Contents

The impact of changes in foreign currency rates recognized in other non-operating income, net was immaterial in both the ~~first quarter of Fiscal Year~~three and nine months ended January 1, 2022. Although we hedge a portion of our foreign currency exchange exposure, the weakening of certain foreign currencies, particularly the EUR and GBP in comparison to the USD, could result in material foreign exchange losses in future periods.

~~Non-designated~~Non-Designated Hedges

We hedge our EUR and GBP denominated cash, accounts receivable, and accounts payable balances by entering into foreign exchange forward contracts. The table below presents the impact on the foreign exchange gain (loss) of a hypothetical 10% appreciation and a 10% depreciation of the USD against the forward currency contracts as of ~~July 3, 2021~~January 1, 2022 (in millions):


Currency - forward contracts	Currency - forward contracts	Position	USD Notional Value of Net Foreign Exchange Contracts		Foreign Exchange Gain From 10% Appreciation of USD		Foreign Exchange (Loss) From 10% Depreciation of USD		Currency - forward contracts	Position	USD Notional Value of Net Foreign Exchange Contracts		Foreign Exchange Gain From 10% Appreciation of USD		Foreign Exchange (Loss) From 10% Depreciation of USD
EUR	EUR	Sell EUR	$	42.7	$	4.3	$	(4.3)	EUR	Sell EUR	$	28.3	$	2.8	$	(2.8)
GBP	GBP	Sell GBP	13.1		1.3		(1.3)		GBP	Sell GBP	14.0		1.4		(1.4)

Cash Flow Hedges

In the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, approximately ~~54%~~53% of our total net revenues were derived from sales outside of the U.S. and were denominated primarily in EUR and GBP.

As of ~~July 3, 2021,~~January 1, 2022, we had foreign currency put and call option contracts with notional amounts of approximately ~~€100.3~~€77.4 million and ~~£20.9~~£15.7 million denominated in EUR and GBP, respectively. Collectively, our option contracts hedge against a portion of our forecasted foreign currency denominated sales. If the USD is subjected to either a 10% appreciation or 10% depreciation versus these net exposed currency positions, we could realize a gain of $8.7 million ~~$10.5 million~~ or incur a loss of ~~$7.9~~$5.0 million, respectively.

The table below presents the impact on the Black-Scholes valuation of our currency option contracts of a hypothetical 10% appreciation and a 10% depreciation of the USD against the indicated option contract type for cash flow hedges as of ~~July 3, 2021~~January 1, 2022 (in millions):


Derivative	Derivative	USD Notional Value of Net Foreign Exchange Contracts		Foreign Exchange Gain From 10% Appreciation of USD		Foreign Exchange (Loss) From 10% Depreciation of USD		Derivative	USD Notional Value of Net Foreign Exchange Contracts		Foreign Exchange Gain From 10% Appreciation of USD		Foreign Exchange (Loss) From 10% Depreciation of USD
Call options	Call options	$	155.5	$	0.4	$	(7.4)	Call options	$	116.3	$	0.3	$	(4.7)
Put options	Put options	143.8		9.6		(0.9)		Put options	107.5		7.6		(1.1)
Forwards	Forwards	122.1		12.1		(12.1)		Forwards	105.9		(4.9)		(10.4)

Collectively, our swap contracts hedge against a portion of our forecasted MXN denominated expenditures. As of ~~July 3, 2021,~~January 1, 2022, we had cross-currency swap contracts with notional amounts of approximately MXN 415.9 million ~~369.9 million.~~.

The table below presents the impact on the valuation of our cross-currency swap contracts of a hypothetical 10% appreciation and a 10% depreciation of the USD as of ~~July 3, 2021~~January 1, 2022 (in millions):


Derivative	Derivative	USD Notional Value of Cross-Currency Swap Contracts		Foreign Exchange (Loss) From 10% Appreciation of USD		Foreign Exchange Gain From 10% Depreciation of USD		Derivative	USD Notional Value of Cross-Currency Swap Contracts		Foreign Exchange (Loss) From 10% Appreciation of USD		Foreign Exchange Gain From 10% Depreciation of USD
Position: Buy MXN	Position: Buy MXN	$	17.8	$	(1.8)	$	1.8	Position: Buy MXN	$	19.9	$	(1.9)	$	1.9

Except as described above, there have been no material changes in our market risk as described in our Annual Report on Form 10-K for the fiscal year ended April 3, 2021.

4043

Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

(a)Evaluation of disclosure controls and procedures

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)Changes in internal control over financial reporting

There have been no changes in the Company’s internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are presently engaged in various legal actions arising in the normal course of business. We believe that it is unlikely that any of these actions will have a material adverse impact on our operating results; however, because of the inherent uncertainties of litigation, the outcome of any of these actions could be unfavorable and could have a material adverse effect on our financial condition, results of operations or cash flows. For additional information about our material legal proceedings, please see Note 76, Commitments and Contingencies, of the accompanying notes to the condensed consolidated financial statements within “Part I. Item 1. Financial Statements” of this Quarterly Report on Form ~~10-Q..~~10-Q.

ITEM 1A. RISK FACTORS

You should carefully consider the risk factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 3, 2021, ~~("Form 10-K"),~~ each of which could materially affect our business, financial position, or future results of operations.

The risks described within this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K for the fiscal year ended April 3, 2021 are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial position, or future results of operations.

4144

Table of Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the ~~first quarter of Fiscal Year~~three months ended January 1, 2022, we did not repurchase any shares of our common stock. As of ~~July 3, 2021,~~January 1, 2022, there remained 1,369,014 shares authorized for repurchase under the existing stock repurchase program. The following table presents information with respect to shares that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock grants under our stock ~~plans:~~plans during the three months ended January 1, 2022:

Total Number of Shares Purchased (4)

Average Price Paid per Share (2)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (3)
April 4, 2021 to May 1, 2021 — N/A — 1,369,014
May 2, 2021 to May 29, 2021 308,359 N/A — 1,369,014
May 30, 2021 to July 3, 2021 8,219 N/A — 1,369,014


	Total Number of Shares Purchased (4)	Average Price Paid per Share (2)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (3)
October 3, 2021 to October 30, 2021	15,679	N/A	—	1,369,014
October 31, 2021 to November 27, 2021	9,463	N/A	—	1,369,014
November 28, 2021 to January 1, 2022	5,665	N/A	—	1,369,014


(1)			On November 28, 2018, our Board of Directors approved a 11.0 million shares repurchase program expanding our capacity to repurchase shares to approximately 1.7 million shares. We may repurchase shares from time to time in open market transactions or through privately negotiated transactions. There is no expiration date associated with the repurchase activity.
(2)			"Average Price Paid per Share" reflects open market repurchases of common stock only.
(3)			These shares reflect the available shares authorized for repurchase under the expanded repurchase program approved by the Board on November 28, 2018.
(4)			Represents only shares that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock grants under our stock plans.

4245

Table of Contents

ITEM 6. EXHIBITS

We have filed the following documents as Exhibits to this Quarterly Report on Form 10-Q:

EXHIBITS INDEX

~~Exhibit Number~~

~~Incorporation by Reference~~

~~Filed Herewith~~

~~Exhibit Description~~

~~Form~~

~~File No.~~

~~Exhibit~~

~~Filing Date~~

10.1**

~~Offer letter dated as of June 14, 2021 between Registrant and Warren Schlichting~~

10.2*

~~Executive Severance Agreement and Change of Control Severance Agreement dated as of June 14, 2021 between Registrant and Warren Schlichting~~

~~31.1~~

~~Certification of the President and CEO Pursuant to Rule 13a-14(a)/15d-14(a).~~

~~31.2~~

~~Certification of Executive Vice President and CFO Pursuant to Rule 13a-14(a)/15d-14(a).~~

~~32.1~~

~~Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.~~

~~101.INS~~

~~XBRL Instance Document - the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document~~

~~101.SCH~~

~~Inline XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~

~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.LAB~~

~~Inline XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~

~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~

~~101.DEF~~

~~Inline XBRL Taxonomy Definition Linkbase Document~~

~~104~~

~~Cover Page Interactive Data File, (formatted as Inline XBRL and contained in Exhibit 101)~~

~~Indicates a management contract or compensatory plan, contract or arrangement in which any Director or any Executive Officer participates.~~

~~Confidential treatment has been granted with respect to certain portions of this Exhibit.~~

Exhibit Number

Incorporation by Reference

Filed Herewith

Exhibit Description

Form

File No.

Exhibit

Filing Date

10.1

Amendment No. 3 to Credit Agreement, dated as of December 29, 2021, by and among Plantronics, Inc., the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent

8-K

001-12696

10.1

12/29/2021

10.2*

Plantronics, Inc. 2002 Employee Stock Purchase Plan, as amended and restated

31.1

Certification of the President and CEO Pursuant to Rule 13a-14(a)/15d-14(a)

31.2

Certification of Executive Vice President and CFO Pursuant to Rule 13a-14(a)/15d-14(a)

32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

101.INS

XBRL Instance Document - the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

Inline XBRL Taxonomy Definition Linkbase Document

104

Cover Page Interactive Data File, (formatted as Inline XBRL and contained in Exhibit 101)

Indicates a management contract or compensatory plan, contract or arrangement in which any Director or any Executive Officer participates.

4346

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		PLANTRONICS, INC.

Date:	~~July 30, 2021~~February 8, 2022	By:	/s/ Charles D. Boynton
		Name:	Charles D. Boynton
		Title:	Executive Vice President and Chief Financial Officer (on behalf of the Registrant and as principal financial officer and principal accounting officer)

4447


	Three Months Ended July 3, 2021
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Treasury Stock		Total Stockholders' Deficit
	Shares	Amount
Balances at April 3, 2021	41,751	$	912	$	1,556,272	$	(3,221)	$	(765,233)	$	(869,496)	$	(80,766)
Net loss	—	—		—		—		(36,811)		—		(36,811)

Net unrealized gains on cash flow hedges, net of tax	—	—		—		4,823		—		—		4,823

Proceeds from issuances under stock-based compensation plans	569	9		—		—		—		—		9



Stock-based compensation	—	—		10,416		—		—		—		10,416


Employees' tax withheld and paid for restricted stock and restricted stock units	0	—		—		—		—		(10,225)		(10,225)




Balances at July 3, 2021	42,320	$	921	$	1,566,688	$	1,602	$	(802,044)	$	(879,721)	$	(112,554)


July 3, 2021	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash & Cash Equivalents		Short-term investments
Cash	$	171,751	$	—	$	—	$	171,751	$	171,751	$	—
Level 1:
Mutual funds	13,553		2,401		(1)		15,953		0		15,953

Money market funds	25,010		0		0		25,010		25,010		—









Total cash, cash equivalents and short-term investments measured at fair value	$	210,314	$	2,401	$	(1)	$	212,714	$	196,761	$	15,953


	July 3, 2021		April 3, 2021
Cash, cash equivalents, and short-term investments	$	212,714	$	217,119
Property, plant, and equipment, net	131,294		140,875
Current portion of long-term debt	—		478,807
Long-term debt, net	1,497,119		1,496,064
Working capital	207,890		213,975