Polycom (PLCM) 8-K Polycom Reports Second Quarter 2011 Earnings

Exhibit 99.1

Investor Contact:	Laura Graves
	Polycom, Inc.
	925.924.5630
	laura.graves@polycom.com
Press Contact:	Shawn Dainas
	Polycom, Inc.
	925.924.5676
	shawn.dainas@polycom.com

Polycom Reports Second Quarter 2011 Earnings

Q2 Revenue Growth of 24 Percent Year-over-Year to a Record $366 Million

PLEASANTON, Calif. – July 21, 2011 –Polycom, Inc. (Nasdaq: PLCM), a global leader in unified communications (UC), today reported its earnings for the second quarter ended June 30, 2011.

Second quarter 2011 consolidated net revenues were a record $366 million, compared to $295 million for the second quarter of 2010. GAAP net income for the second quarter of 2011 was $29 million, or 16 cents per diluted share, compared to $13 million, or 7 cents per diluted share, for the same period last year. Non-GAAP net income for the second quarter of 2011 was $48 million, or 26 cents per diluted share, compared to non-GAAP net income of $30 million, or 17 cents per diluted share, for the second quarter of 2010.

For the six months ended June 30, 2011, net revenues were $710 million, compared to $571 million for the first six months of 2010. GAAP net income for the six months ended June 30, 2011 was $63 million, or 34 cents per diluted share, compared to GAAP net income of $18 million, or 10 cents per diluted share, for the same period last year. Non-GAAP net income for the period was $91 million, or 50 cents per diluted share, compared to $55 million, or 32 cents per diluted share, for the first six months of 2010.

Note that the share and per share data for all periods presented in this release have been adjusted to reflect a two-for-one stock split that was effective July 1, 2011.

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

On a geographic basis, consolidated net revenues for the second quarter of 2011 were comprised of:

• 52 percent Americas, or $189.2 million;

• 24 percent Europe, Middle East, and Africa, or $89.3 million; and

• 24 percent Asia Pacific, or $87.1 million.

On a geographic basis, consolidated net revenues for the second quarter of 2010 were comprised of:

• 53 percent Americas, or $155.8 million;

• 25 percent Europe, Middle East, and Africa, or $74.3 million; and

• 22 percent Asia Pacific, or $64.5 million.

“Q2 was a hallmark quarter for Polycom, both in terms of strategic achievement and financial accomplishments,” said Andrew Miller, Polycom president and CEO. “We made significant progress with our key partners through the Polycom Open Collaboration Network^TM, experienced significant acceleration in the adoption of our UC Intelligent Core™ network infrastructure solutions, and again benefitted from broad-based demand for our suite of solutions across all major geographies.”

“Specifically, during the second quarter, we announced the acquisition of HP’s Visual Collaboration business which is expected to close later this month, and the execution of a strategic agreement that makes Polycom an exclusive partner to HP for our wide array of telepresence and video solutions. We also expanded our strategic partnership with Microsoft through our upcoming launch of the Polycom CX7000 unified collaboration system that natively integrates with Microsoft’s leading Lync platform. Built on this and our numerous other strategic successes with Microsoft, we were thrilled to be named the 2011 Microsoft Unified Communications Innovation Partner of the Year. As a further testament to our role as UC ecosystem partner of choice, we also announced the launch of the industry’s first open video exchange cloud with AT&T, BT Conferencing, Telefonica, Verizon, and other global leading service providers, enabling B2B and B2C video communications and the network effect of video adoption worldwide.”

“In Q2, we continued to experience strong demand in emerging markets such as China, India, Russia, and Brazil and also began to see momentum in select verticals such as the US Federal market, yielding record revenues in each major geography and product category. In fact, in order to fully optimize our opportunity, I have added Tracey Newell to the executive team as Polycom’s new executive vice president of Global Sales. Each of the theatre presidents and global sales operations will report to her in this newly created role. Tracey is the ideal fit for this position and an excellent addition to the team with her proven go-to-market track record in both Cloud and customer premise-based sales at Juniper Networks and Cisco Systems.”

“In summary, we continue to leverage our unparalleled position in the UC industry as the only independent provider of scale. Through our Cloud, Mobility, and Ecosystem advances and market gains, we believe Polycom is poised to capture the momentum of the video communications market. With these exciting market dynamics and Polycom’s industry-leading capabilities, we expect to continue to deliver strong revenue growth and continued operating margin expansion,” concluded Miller.

“Polycom generated strong sequential and year-over-year growth in revenues, gross margins, and operating margins in the second quarter,” said Michael Kourey, Polycom’s executive vice president, finance and administration, and CFO. “Coupled with effective working capital management, we delivered a record quarterly operating cash flow of $85 million. As a result of these excellent operating results, Polycom exited Q2 with $609 million in cash and investments and no debt.”

About Polycom

Polycom, Inc. (Nasdaq: PLCM) is a global leader in unified communications solutions with industry-leadingtelepresence,video,voice andinfrastructure solutions built on open standards. Polycom powers smarter conversations, transforming lives and businesses worldwide. Please visitwww.polycom.com for more information or connect with Polycom onTwitter,Facebook, andLinkedIn.

This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 regarding future events, future demand for our products, and the future performance of the Company, including statements regarding the closing of Polycom’s acquisition of HP’s Visual Collaboration business, our future offering of the Polycom CX7000 unified collaboration system, Polycom as being poised to capture the momentum of the video communications market and the future delivery of strong revenue growth and expanding operating margins by Polycom. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the fact that the Company’s continuing strategic investment plan may not yield the intended results or may take longer than originally anticipated to

achieve such results; the impact of competition on our product sales and for our customers and partners; the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources than we do; potential fluctuations in results and future growth rates; risks associated with general economic conditions and external market factors; the market acceptance of Polycom’s products and changing market demands, including demands for differing technologies or product and services offerings; our ability to successfully integrate our acquisitions into our business; possible delays in the development, availability and shipment of new products; increasing costs and differing uses of capital; changes in key personnel that may cause disruption to the business; any disruptive impact to the Company that may result from the new executive hires; the impact of restructuring actions; and the impact of global conflicts that may adversely impact our business. Many of these risks and uncertainties are discussed in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.

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

Earnings Call Details

As has been noted on the Company’s web site since July 7, 2011, Polycom will hold a conference call today, July 21, 2011, at 5 p.m. EDT/2 p.m. PDT to discuss its second quarter earnings. Andrew Miller, president and CEO, and Michael Kourey, chief financial officer, will host the conference call. You may participate by viewing the webcast atwww.polycom.com/investors or, for callers in the US and Canada, by calling 800.913.1647; and for callers outside of the US and Canada, by calling 212.231.2900. The pass code for the call is “Polycom.” A replay of the call will also be available atwww.polycom.com or, for callers in the US and Canada, at 800.633.8284; and for callers outside of the US and Canada, at 402.977.9140. The access number for the replay is 21529290. A replay of the call will be available onwww.polycom.com for approximately 12 months.

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

© 2011 Polycom, Inc. All rights reserved. POLYCOM^®, the Polycom “Triangles” logo and the names and marks associated with Polycom’s products are trademarks and/or service marks of Polycom, Inc. and are registered and/or common law marks in the United States and various other countries. All other trademarks are property of their respective owners.

POLYCOM, INC.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended									Six Months Ended
	June 30, 2011									June 30, 2011
	GAAP			Excluded			Non-GAAP			GAAP			Excluded			Non-GAAP
Revenues:
Product revenues	$	301,458		$	—		$	301,458		$	586,927		$	—		$	586,927
Service revenues		64,151			—			64,151			122,847			—			122,847
Total revenues		365,609			—			365,609			709,774			—			709,774
Cost of revenues:
Cost of product revenues		119,664			3,514	(a)		116,150			231,651			7,553	(a)		224,098
Cost of service revenues		24,952			1,044	(b)		23,908			51,376			1,626	(b)		49,750
Total cost of revenues		144,616			4,558			140,058			283,027			9,179			273,848
Gross profit		220,993			(4,558	)		225,551			426,747			(9,179	)		435,926
Operating expenses:
Sales and marketing		106,988			6,401	(b)		100,587			207,609			11,225	(b)		196,384
Research and development		49,296			3,715	(b)		45,581			93,527			6,115	(b)		87,412
General and administrative		21,217			4,240	(c)		16,977			39,646			7,215	(c)		32,431
Amortization of purchased intangibles		1,702			1,702			—			3,084			3,084			—
Restructuring costs		897			897			—			3,475			3,475			—
Acquisition-related costs		1,997			1,997			—			4,346			4,346			—
Total operating expenses		182,097			18,952			163,145			351,687			35,460			316,227
Operating income		38,896			(23,510	)		62,406			75,060			(44,639	)		119,699
Other income (expense), net		(728	)		—			(728	)		(2,007	)		(500	) (d)		(1,507	)
Income before provision for income taxes		38,168			(23,510	)		61,678			73,053			(45,139	)		118,192
Provision for income taxes		9,625			(4,402	) (e)		14,027			10,532			(16,776	) (e)		27,308
Net income	$	28,543		$	(19,108	)	$	47,651		$	62,521		$	(28,363	)	$	90,884
Basic net income per share	$	0.16		$	(0.11	)	$	0.27		$	0.36		$	(0.16	)	$	0.52
Diluted net income per share	$	0.16		$	(0.10	)	$	0.26		$	0.34		$	(0.16	)	$	0.50
Weighted average shares outstanding for basic net income per share		176,670						176,670			175,863						175,863
Weighted average shares outstanding for diluted net income per share		182,329						182,329			181,464						181,464

(a) For the three months ended June 30, 2011, the excluded amount includes $2,789 related to the amortization of purchased intangibles for core and existing technologies, $608 for stock-based compensation expense recorded during the period and $117 related to the effect of stock-based compensation on warranty expense rates. For the six months ended June 30, 2011, the excluded amount includes $6,075 related to the amortization of purchased intangibles for core and existing technologies, $1,250 for stock-based compensation expense recorded during the period and $228 related to the effect of stock-based compensation on warranty expense rates.

(b) Excluded amount represents stock-based compensation expense recorded during the period.

(c) For the three months ended June 30, 2011, the excluded amount includes $4,116 for stock-based compensation expense recorded during the period and $124 for the legal costs related to the indemnification of a former officer of the Company. For the six months ended June 30, 2011, the excluded amount includes $5,923 for stock-based compensation expense recorded during the period and $1,292 for the legal costs related to the indemnification of a former officer of the Company.

(d) Excluded amount represents the impairment of an investment in a private company.

(e) For the three months ended June 30, 2011 the excluded amount represents the tax impact on expenses which are excluded in items (a)-(c) above. For the six months ended June 30, 2011, the excluded amount represents the tax impact on expenses which are excluded in items (a) - (d) above, as well as a $7,487 benefit related to the resolution of a multi-year tax audit.

POLYCOM, INC.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended								Six Months Ended
	June 30, 2010								June 30, 2010
	GAAP		Excluded			Non-GAAP			GAAP			Excluded			Non-GAAP
Revenues:
Product revenues	$	244,795	$	—		$	244,795		$	472,852		$	—		$	472,852
Service revenues		49,840		—			49,840			97,937			—			97,937
Total revenues		294,635		—			294,635			570,789			—			570,789
Cost of revenues:
Cost of product revenues		99,001		4,011	(a)		94,990			191,550			8,265	(a)		183,285
Cost of service revenues		24,733		960	(b)		23,773			49,019			2,139	(b)		46,880
Total cost of revenues		123,734		4,971			118,763			240,569			10,404			230,165
Gross profit		170,901		(4,971	)		175,872			330,220			(10,404	)		340,624
Operating expenses:
Sales and marketing		94,361		7,273	(b)		87,088			185,277			13,564	(b)		171,713
Research and development		36,240		2,367	(b)		33,873			70,145			5,449	(b)		64,696
General and administrative		20,205		6,194	(c)		14,011			36,187			8,691	(c)		27,496
Amortization of purchased intangibles		1,421		1,421			—			2,861			2,861			—
Restructuring costs		1,524		1,524			—			3,273			3,273			—
Litigation reserves and payments		1,235		1,235			—			1,235			1,235			—
Total operating expenses		154,986		20,014			134,972			298,978			35,073			263,905
Operating income		15,915		(24,985	)		40,900			31,242			(45,477	)		76,719
Other income (expense), net		357		957	(d)		(600	)		(8,224	)		(5,573	) (d)		(2,651	)
Income before provision for income taxes		16,272		(24,028	)		40,300			23,018			(51,050	)		74,068
Provision for income taxes		3,668		(6,496	)		10,164			5,003			(13,599	)		18,602
Net income	$	12,604	$	(17,532	)	$	30,136		$	18,015		$	(37,451	)	$	55,466
Basic net income per share	$	0.07	$	(0.11	)	$	0.18		$	0.11		$	(0.22	)	$	0.33
Diluted net income per share	$	0.07	$	(0.10	)	$	0.17		$	0.10		$	(0.22	)	$	0.32
Weighted average shares outstanding for basic net income per share		170,316					170,316			169,822						169,822
Weighted average shares outstanding for diluted net income per share		176,488					176,488			175,608						175,608

(a) For the three months ended June 30, 2010, the excluded amount includes $3,312 related to the amortization of purchased intangibles for core and existing technologies, $587 for stock-based compensation expense recorded during the period and $112 related to the effect of stock-based compensation on warranty expense rates. For the six months ended June 30, 2010, the excluded amount includes $6,675 related to the amortization of purchased intangibles for core and existing technologies, $1,357 for stock-based compensation expense recorded during the period and $233 related to the effect of stock-based compensation on warranty expense rates.

(b) Excluded amount represents stock-based compensation expense recorded during the period.

(c) For the three months ended June 30, 2010, the excluded amount includes $2,607 for stock-based compensation expense recorded during the period and $3,587 for severance, legal and other costs associated with the CEO transition in May 2010. For the six months ended June 30, 2010, the excluded amount includes $5,104 for stock-based compensation expense recorded during the period and $3,587 for severance, legal and other costs associated with the CEO transition in May 2010.

(d) For the three months ended June 30, 2010, the excluded amount represents the net gain realized during the period on preferred equity securities for which we previously recognized a loss as the securities were deemed to be other than temporarily impaired. For the six months ended June 30, 2010, the excluded amount represents the loss recognized during the period on preferred securities considered to be other than temporarily impaired, net of any subsequent realized gains.

POLYCOM, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	June 30, 2011		December 31, 2010
ASSETS
Current assets
Cash and cash equivalents	$	363,559	$	324,188
Short-term investments		197,239		170,154
Trade receivables, net		186,897		154,507
Inventories		104,209	��	113,994
Deferred taxes		39,412		32,357
Prepaid expenses and other current assets		44,669		41,884
Total current assets		935,985		837,084
Property and equipment, net		117,504		110,321
Long-term investments		48,168		41,316
Goodwill and purchased intangibles		567,299		519,685
Deferred taxes		16,613		18,388
Other assets		19,344		20,611
Total assets	$	1,704,913	$	1,547,405
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	95,630	$	90,890
Accrued payroll and related liabilities		43,494		35,222
Deferred revenue		121,913		104,919
Other accrued liabilities		60,863		54,651
Total current liabilities		321,900		285,682
Non-current liabilities
Deferred revenue		65,400		55,292
Taxes payable		14,537		16,690
Deferred taxes		864		2,057
Other non-current liabilities		13,066		12,714
Total liabilities		415,767		372,435
Stockholders’ equity		1,289,146		1,174,970
Total liabilities and stockholders’ equity	$	1,704,913	$	1,547,405

POLYCOM, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended					Six Months Ended
	June 30, 2011			June 30, 2010		June 30, 2011			June 30, 2010
Revenues:
Product revenues	$	301,458		$	244,795	$	586,927		$	472,852
Service revenues		64,151			49,840		122,847			97,937
Total revenues		365,609			294,635		709,774			570,789
Cost of revenues:
Cost of product revenues		119,664			99,001		231,651			191,550
Cost of service revenues		24,952			24,733		51,376			49,019
Total cost of revenues		144,616			123,734		283,027			240,569
Gross profit		220,993			170,901		426,747			330,220
Operating expenses:
Sales and marketing		106,988			94,361		207,609			185,277
Research and development		49,296			36,240		93,527			70,145
General and administrative		21,217			20,205		39,646			36,187
Amortization of purchased intangibles		1,702			1,421		3,084			2,861
Restructuring costs		897			1,524		3,475			3,273
Acquistion-related expenses		1,997			—		4,346			—
Litigation reserves and payments		—			1,235		—			1,235
Total operating expenses		182,097			154,986		351,687			298,978
Operating income		38,896			15,915		75,060			31,242
Other income (expense), net		(728	)		357		(2,007	)		(8,224	)
Income before provision for income taxes		38,168			16,272		73,053			23,018
Provision for income taxes		9,625			3,668		10,532			5,003
Net income	$	28,543		$	12,604	$	62,521		$	18,015
Basic net income per share	$	0.16		$	0.07	$	0.36		$	0.11
Diluted net income per share	$	0.16		$	0.07	$	0.34		$	0.10
Weighted average shares outstanding for basic net income per share		176,670			170,316		175,863			169,822
Weighted average shares outstanding for diluted net income per share		182,329			176,488		181,464			175,608

POLYCOM, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended
	June 30, 2011			June 30, 2010
Cash flows from operating activities:
Net income	$	62,521		$	18,015
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		25,202			18,975
Amortization of purchased intangibles		9,159			9,536
Provision for excess and obsolete inventories		5,299			1,551
Non-cash stock based compensation		26,139			27,612
Impairment of private company investments		500			—
Excess tax benefits from stock-based compensation		(11,977	)		(5,931	)
Write down of investments other than temporarily impaired		—			6,530
Loss on disposals of property and equipment		699			141
Changes in assets and liabilities, net of the effect of acquisitions:
Trade receivables		(30,254	)		(1,005	)
Inventories		4,624			(16,648	)
Deferred taxes		(6,635	)		(3,664	)
Prepaid expenses and other assets		(4,920	)		(20,230	)
Accounts payable		4,533			6,787
Taxes payable		9,531			2,945
Other accrued liabilities		36,476			16,266
Net cash provided by operating activities		130,897			60,880
Cash flows from investing activities:
Purchases of property and equipment		(32,029	)		(33,596	)
Purchases of investments		(228,251	)		(231,113	)
Proceeds from sale of investments		26,722			83,636
Proceeds from maturities of investments		167,646			49,725
Net cash paid in purchase acquisitions		(50,041	)		—
Net cash used in investing activities		(115,953	)		(131,348	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee option and stock purchase plans		29,891			29,325
Repurchase of common stock		(17,441	)		(46,997	)
Excess tax benefits from stock-based compensation		11,977			5,931
Net cash provided by (used in) financing activities		24,427			(11,741	)
Net increase (decrease) in cash and cash equivalents		39,371			(82,209	)
Cash and cash equivalents, beginning of period		324,188			331,098
Cash and cash equivalents, end of period	$	363,559		$	248,889