Polycom (PLCM) 8-K Polycom Announces Revenues of $336 Million for Third Quarter 2013

Exhibit 99.1

Investor Contact:	Laura Graves
	Polycom, Inc.
	1.408.586.4271 laura.graves@polycom.com
Press Contact:	Shawn Dainas
	Polycom, Inc.
	1.408.586.3768 shawn.dainas@polycom.com

Polycom Announces Revenues of $336 Million for Third Quarter 2013

•    Americas revenues grow 4 percent year-over-year

•    UC Personal Devices revenues grow 24 percent year-over-year

•    $400 million return of capital program initiated

SAN JOSE, Calif. – October 23, 2013 –Polycom, Inc. (Nasdaq: PLCM), the global leader in open, standards-based unified communication and collaboration (UC&C), today reported financial results for the third quarter ended September 30, 2013. Polycom reported third quarter 2013 net revenues of $336 million, non-GAAP net income of $19 million and non-GAAP earnings per diluted share of 11 cents. GAAP net income for the third quarter was a loss of $24 million, or 14 cents per share. A reconciliation of GAAP to non-GAAP results is provided in the tables at the end of this press release.

“Polycom’s financial performance in Q3 was on target with our expectations, driven by our U.S. Enterprise and voice related businesses, partially offset by a more challenging quarter in Asia Pacific,” stated Kevin Parker, Polycom’s Chairman and interim Chief Executive Officer. “We continue to prioritize those areas of the business that maximize growth, while also pursuing opportunities to reduce expenses and drive expanded profitability.”

“Our third quarter results demonstrate the diversity of our revenue base, including growth from voice and services,” continued Eric Brown, Polycom Chief Operating Officer and Chief Financial Officer. “We announced a new $400 million return of capital program, including a Term Loan A financing and a tender offer for our shares, and closed the quarter with trailing 12 month operating cash flow of $183 million.”

On a comparative basis, consolidated financial results were:

($ in millions, except per share data)	Q3 2013			Q2 2013		Q3 2012
Revenues	$	336.5		$	345.2	$	335.4
Non-GAAP Net Income	$	19.3		$	25.9	$	17.2
Non-GAAP EPS	$	0.11		$	0.15	$	0.10
GAAP Net Income (Loss)	$	(24.0	)	$	5.3	$	(14.8	)
GAAP EPS	$	(0.14	)	$	0.03	$	(0.08	)

On a geographic basis, consolidated net revenues were comprised of:

($ in millions)	Q3 2013			Q2 2013			Q3 2012			Sequential Change			Year-Over- Year Change
Americas	$	177.3		$	175.6		$	171.0			1	%		4	%
% of revenues		53	%		51	%		51	%
Europe, Middle East & Africa (EMEA)		80.0			79.7			78.6			0	%		2	%
% of revenues		24	%		23	%		23	%
Asia Pacific		79.2			89.9			85.9			-12	%		-8	%
% of revenues		23	%		26	%		26	%
Totals *	$	336.5		$	345.2		$	335.4			-3	%		0	%

* may not foot due to rounding

By product line, inclusive of its service component, consolidated net revenues were comprised of:

($ in millions)	Q3 2013			Q2 2013			Q3 2012			Sequential Change			Year-Over- Year Change
UC Group Systems	$	221.4		$	233.0		$	225.8			-5	%		-2	%
% of revenues		66	%		67	%		67	%
UC Personal Devices		56.9			50.8			45.7			12	%		24	%
% of revenues		17	%		15	%		14	%
UC Platform		58.2			61.4			63.9			-5	%		-9	%
% of revenues		17	%		18	%		19	%
Totals *	$	336.5		$	345.2		$	335.4			-3	%		0	%

* may not foot due to rounding

In Q3 2013, Polycom generated a total of $36 million in operating cash flow. Operating cash flow on a trailing 12 month basis was $183 million. Cash and investments at the end of Q3 2013 totaled $954 million following the close of the $250 million Term Loan A facility. Deferred revenue was $260 million. Polycom repurchased $18 million of common stock in Q3 2013. As of September 30, 2013, Polycom has $400 million remaining in share repurchase authorization, inclusive of the $250 million Tender Offer launched on September 13, 2013, which will expire on October 30, 2013, unless extended.

Earnings Call Details

Polycom will hold a conference call today, October 23, 2013, at 4:30 p.m. EST/1:30 p.m. PST to discuss its third quarter 2013 financial results. Kevin Parker, Chairman and interim CEO, and Eric Brown, Chief Operating Officer and Chief Financial Officer, will host the call. You may participate by viewing the webcast atwww.polycom.com/investors or, for callers in the U.S. and Canada, you may participate by calling 1.800.741.5804 and for callers outside of the U.S. and Canada, by calling 1.212.231.2912. 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 U.S. and Canada, at 1.800.633.8284 and, for callers outside of the U.S. and Canada, at 1.402.977.9140. The access number for the replay is 21675843. A replay of the call will be available onwww.polycom.com for at least three months.

Forward Looking Statements and Risk Factors

This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 regarding future growth, expense reduction and expanded profitability. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact of competition on our product sales and for our customers and partners and any resulting loss of business; the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources

than we do; potential fluctuations in results and future growth rates; risks associated with global economic conditions and external market factors; the market acceptance of our products and changing market demands, including demands for differing technologies or product and services offerings; our ability to successfully integrate our acquisitions into our business; possible delays in the development, availability and shipment of new products due to engineering, manufacturing or other delays; increasing costs and differing uses of capital; changes in key personnel that may cause disruption to the business; 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 June 30, 2013, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.

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

GAAP to non-GAAP Reconciliation

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

About Polycom

Polycom is the global leader in open, standards-based unified communications and collaboration (UC&C) solutions for voice and video collaboration, trusted by more than 415,000 customers around the world. Polycom solutions are powered by the Polycom^® RealPresence^® Platform, comprehensive software infrastructure and rich APIs that interoperate with the broadest set of communication, business, mobile and cloud applications and devices to deliver secure face-to-face video collaboration in any environment. Polycom and its ecosystem of over 7,000 partners provide truly unified communications solutions that deliver the best user experience, highest multi-vendor interoperability, and lowest TCO. Visit www.polycom.com or connect with us on Twitter, Facebook, and LinkedIn to learn how we’re pushing the greatness of human collaboration forward.

^© 2013 Polycom, Inc. All rights reserved. POLYCOM^®, the Polycom logo, and the names and marks associated with Polycom’s products are trademarks and/or service marks of Polycom, Inc. and are registered and/or common law marks in the United States and various other countries. All other trademarks are property of their respective owners.

POLYCOM, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
Revenues:
Product revenues	$	242,515		$	247,058		$	740,066		$	780,611
Service revenues		93,946			88,334			280,381			258,991
Total revenues		336,461			335,392			1,020,447			1,039,602
Cost of revenues:
Cost of product revenues		102,830			102,235			309,994			316,863
Cost of service revenues		38,587			36,799			114,714			106,123
Total cost of revenues		141,417			139,034			424,708			422,986
Gross profit		195,044			196,358			595,739			616,616
Operating expenses:
Sales and marketing		107,292			117,853			325,663			348,041
Research and development		54,220			53,997			164,782			153,425
General and administrative		28,468			27,376			76,461			72,375
Amortization of purchased intangibles		2,487			2,512			7,535			7,318
Restructuring costs		24,887			6,171			34,639			21,829
Acquisition-related expenses		39			6,334			3,411			11,793
Total operating expenses		217,393			214,243			612,491			614,781
Operating income (loss)		(22,349	)		(17,885	)		(16,752	)		1,835
Interest expense		(850	)		(287	)		(1,736	)		(470	)
Interest income and other income (expense)		(784	)		57			(1,041	)		(2,540	)
Interest and other income (expense), net		(1,634	)		(230	)		(2,777	)		(3,010	)
Loss from continuing operations before provision for income taxes		(23,983	)		(18,115	)		(19,529	)		(1,175	)
Provision for (benefit from) income taxes		(5	)		(2,709	)		(2,963	)		105
Loss from continuing operations		(23,978	)		(15,406	)		(16,566	)		(1,280	)
Income from operations of discontinued operations, net of taxes		—			645			—			7,710
Gain from sale of discontinued operations, net of taxes		—			—			459			—
Net income (loss)	$	(23,978	)	$	(14,761	)	$	(16,107	)	$	6,430
Basic and diluted net income (loss) per share:
Loss per share from continuing operations	$	(0.14	)	$	(0.09	)	$	(0.10	)	$	(0.01	)
Income per share from discontinued operations, net of taxes	$	—		$	—		$	—		$	0.04
Gain per share from sale of discontinued operations, net of taxes	$	—		$	—		$	—		$	—
Basic net income (loss) per share	$	(0.14	)	$	(0.08	)	$	(0.09	)	$	0.04
Number of shares used in computation of net income (loss) per share:
Basic and diluted		170,310			176,847			172,644			177,331

Note:

Earnings per share amounts for continuing operations, discontinued operations and net income, as presented above, are calculated individually and may not sum due to rounding differences.

As a result of the net loss from continuing operations for all periods presented, all potentially issuable common shares have been excluded from the diluted shares used in the computation of earnings per share as their effect is anti-dilutive.

The tax provision and net income for the three and nine months ended September 30, 2012 have been revised from previously issued financial statements to correct an error. These adjustments were not considered material to previously issued financial statements. However, because of the significance of these adjustments to the current period, the Company has revised the prior periods contained herein. The adjustments had no impact on income before provision for income taxes or net cash flows.

POLYCOM, INC.

Reconciliation of GAAP to Non-GAAP Net Income

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
GAAP net income (loss)	$	(23,978	)	$	(14,761	)	$	(16,107	)	$	6,430
Income from discontinued operations, net of taxes		—			(645	)		—			(7,710	)
Gain from sale of discontinued operations, net of taxes		—			—			(459	)		—
Amortization of purchased intangibles		3,735			4,421			11,279			13,044
Restructuring costs		24,887			6,171			34,639			21,829
Acquisition-related expenses		39			6,334			3,411			11,793
Stock-based compensation expense		17,202			24,823			53,300			65,071
Effect of stock-based compensation on warranty rates		120			169			421			541
Severance costs associated with CFO retirement		—			—			—			929
Legal costs associated with the indemnification of a former officer		—			121			—			236
Costs associated with CEO separation and related SEC investigation		2,107			—			2,107			—
Income tax effect of non-GAAP exclusions		(4,826	)		(9,396	)		(20,088	)		(21,038	)
Non-GAAP net income	$	19,286		$	17,237		$	68,503		$	91,125
GAAP earnings per share
Basic and diluted	$	(0.14	)	$	(0.08	)	$	(0.09	)	$	0.04
Non-GAAP earnings per share
Basic	$	0.11		$	0.10		$	0.40		$	0.51
Diluted	$	0.11		$	0.10		$	0.39		$	0.51
						��
Number of shares used in computation of GAAP earnings per share:
Basic and diluted		170,310			176,847			172,644			177,331
Number of shares used in computation of non-GAAP earnings per share:
Basic		170,310			176,847			172,644			177,331
Diluted		173,992			178,292			176,241			179,276

Note: As a result of the GAAP net loss from continuing operations for all periods presented, all potentially issuable common shares have been excluded from the diluted shares used in the computation of GAAP earnings per share as their effect is anti-dilutive

POLYCOM, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	September 30, 2013		December 31, 2012
ASSETS
Current assets
Cash and cash equivalents	$	712,694	$	477,073
Short-term investments		161,339		197,196
Trade receivables, net		175,223		194,654
Inventories		107,681		99,960
Deferred taxes		48,562		48,916
Prepaid expenses and other current assets		66,861		52,539
Total current assets		1,272,360		1,070,338
Property and equipment, net		122,379		133,319
Long-term investments		79,776		50,333
Goodwill and purchased intangibles		605,411		608,802
Deferred taxes		26,702		28,406
Other assets		28,864		21,238
Total assets	$	2,135,492	$	1,912,436
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	91,136	$	89,983
Accrued payroll and related liabilities		33,878		39,469
Taxes payable		4,880		4,736
Deferred revenue		172,056		158,482
Current portion of long term debt		6,250		—
Other accrued liabilities		71,592		63,018
Total current liabilities		379,792		355,688
Non-current liabilities
Deferred revenue		88,112		91,061
Long term debt		243,750		—
Taxes payable		14,926		15,598
Deferred taxes		229		236
Other non-current liabilities		34,381		22,079
Total liabilities		761,190		484,662
Stockholders’ equity		1,374,302		1,427,774
Total liabilities and stockholders’ equity	$	2,135,492	$	1,912,436

The tax provision and net income for the year ended December 31, 2012 have been revised from previously issued financial statements to correct an error. These adjustments were not considered material to previously issued financial statements. However, because of the significance of these adjustments to the current period, the Company has revised the prior periods contained herein. The adjustments had no impact on income before provision for income taxes or net cash flows.

POLYCOM, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended
	September 30, 2013			September 30, 2012
Cash flows from operating activities:
Net income (loss)	$	(16,107	)	$	6,430
Adjustments to reconcile net income to net cash provided by operating activities:
Gain from sale of discontinued operations, net of tax		(459	)		—
Depreciation and amortization		49,654			45,592
Amortization of purchased intangibles		11,335			15,878
Amortization of debt issue costs		52			—
Write-down of excess and obsolete inventories		5,625			5,297
Provision for doubtful accounts		—			800
Stock-based compensation expense		53,300			66,256
Excess tax benefits from stock-based compensation		(780	)		(9,587	)
Loss on disposals of property and equipment		3,658			3,502
Changes in assets and liabilities, net of the effect of acquisitions:
Trade receivables		21,857			20,435
Inventories		(13,346	)		(13,858	)
Deferred taxes		2,058			(12,947	)
Prepaid expenses and other assets		(18,915	)		4,188
Accounts payable		(1,118	)		(31,552	)
Taxes payable		(4,006	)		1,032
Other accrued liabilities		24,661			19,958
Net cash provided by operating activities		117,469			121,424
Cash flows from investing activities:
Purchases of property and equipment		(41,793	)		(51,979	)
Purchases of investments		(200,945	)		(212,377	)
Proceeds from sale of investments		21,802			37,794
Proceeds from maturities of investments		185,634			178,162
Net cash received from sale of discontinued operations		556			—
Net cash paid in purchase acquisitions		(7,974	)		(4,583	)
Net cash used in investing activities		(42,720	)		(52,983	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee option and stock purchase plans		23,326			24,362
Proceeds from debt, net of debt issue costs		247,582			—
Repurchase of common stock		(110,816	)		(62,073	)
Excess tax benefits from stock-based compensation		780			9,587
Net cash provided by (used in) financing activities		160,872			(28,124	)
Net increase in cash and cash equivalents		235,621			40,317
Cash and cash equivalents, beginning of period		477,073			375,441
Cash and cash equivalents, end of period	$	712,694		$	415,758

POLYCOM, INC.

Selected Summary Data

(In millions except per share amounts and headcount)

(Unaudited)

	September 30, 2013			June 30, 2013			September 30, 2012
Balance Sheet Highlights
Cash and investments	$	954		$	694		$	629
Number of shares outstanding		170			170			175
Cash and investments per share	$	5.60		$	4.08		$	3.59
Debt	$	250.00		$	—		$	—
Operating cash flow - quarterly	$	36		$	32		$	48
Operating cash flow - trailing 12 months	$	183		$	195		$	243
DSO (Days Sales Outstanding)		47			54			51
Inventory turns - GAAP		5.3			5.7			5.4
Inventory turns - non-GAAP		5.1			5.6			5.2
Deferred revenues	$	260		$	259		$	249
Share repurchases:
Quarter-to-date share repurchases - shares		1.7			4.7			2.9
Quarter-to-date share repurchases - dollars	$	18		$	50		$	30
Year-to-date share repurchases - shares		9.8			8.1			4.7
Year-to-date share repurchases - dollars	$	102		$	84		$	50
Remaining authorization for share repurchases (1)	$	400		$	89		$	28
Ending headcount		3,789			3,844			3,733
	For the three months ended
	September 30, 2013			June 30, 2013			September 30, 2012
Income Statement Highlights
GAAP:
Revenues	$	336		$	345		$	335
Gross margin		58.0	%		58.4	%		58.5	%
Operating expenses	$	217		$	196		$	214
Operating margin		-6.6	%		1.8	%		-5.3	%
Diluted EPS	$	(0.14	)	$	0.03		$	(0.08	)
Non-GAAP:
Revenues	$	336		$	345		$	335
Gross margin		59.0	%		59.5	%		60.0	%
Operating expenses	$	173		$	173		$	177
Operating margin		7.7	%		9.5	%		7.2	%
Diluted EPS	$	0.11		$	0.15		$	0.10

(1) Polycom is not obligated to purchase any specific number of shares under its Share Repurchase Program and the program may bemodified, suspended or discontinued at any time. On September 11, 2013, Polycom’s Board of Directors authorized the repurchaseof $400 million though a $250 million modified Dutch Auction self-tender offer and subsequent open market purchases of privately negotiatedtransactions. The program is expected to be funded by $150 million in cash and a $250 million term loan.

POLYCOM, INC.

Reconciliations of GAAP Measures to Non-GAAP Measures

(In thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
GAAP cost of revenues used in inventory turns	$	141,417		$	139,034		$	424,708		$	422,986
Stock-based compensation expense		(2,165	)		(2,889	)		(6,852	)		(7,672	)
Effect of stock-based compensation on warranty rates		(120	)		(169	)		(421	)		(541	)
Amortization of purchased intangibles		(1,248	)		(1,909	)		(3,744	)		(5,726	)
Non-GAAP cost of revenues used in inventory turns	$	137,884		$	134,067		$	413,691		$	409,047
GAAP gross profit	$	195,044		$	196,358		$	595,739		$	616,616
Stock-based compensation expense		2,165			2,889			6,852			7,672
Effect of stock-based compensation on warranty rates		120			169			421			541
Amortization of purchased intangibles		1,248			1,909			3,744			5,726
Non-GAAP gross profit	$	198,577		$	201,325		$	606,756		$	630,555
Non-GAAP gross margin		59.0	%		60.0	%		59.5	%		60.7	%
GAAP sales and marketing expense	$	107,292		$	117,853		$	325,663		$	348,041
Stock-based compensation expense		(5,889	)		(9,765	)		(19,742	)		(27,069	)
Non-GAAP sales and marketing expense	$	101,403		$	108,088		$	305,921		$	320,972
Non-GAAP sales and marketing expense as percent of revenues		30.1	%		32.2	%		30.0	%		30.9	%
GAAP research and development expense	$	54,220		$	53,997		$	164,782		$	153,425
Stock-based compensation expense		(3,669	)		(5,409	)		(12,578	)		(14,808	)
Non-GAAP research and development expense	$	50,551		$	48,588		$	152,204		$	138,617
Non-GAAP research and development expense as percent of revenues		15.0	%		14.5	%		14.9	%		13.3	%
GAAP general and administrative expense	$	28,468		$	27,376		$	76,461		$	72,375
Stock-based compensation expense		(5,479	)		(6,760	)		(14,128	)		(15,522	)
Severance costs associated with CFO retirement		—			—			—			(929	)
Legal costs associated with the indemnification of a former officer		—			(121	)		—			(236	)
Costs associated with CEO separation and related SEC investigation		(2,107	)		—			(2,107	)		—
Non-GAAP general and administrative expense	$	20,882		$	20,495		$	60,226		$	55,688
Non-GAAP general and administrative expense as percent of revenues		6.2	%		6.1	%		5.9	%		5.4	%
GAAP total operating expenses	$	217,393		$	214,243		$	612,491		$	614,781
Stock-based compensation expense		(15,037	)		(21,934	)		(46,448	)		(57,399	)
Amortization of purchased intangibles		(2,487	)		(2,512	)		(7,535	)		(7,318	)
Restructuring costs		(24,887	)		(6,171	)		(34,639	)		(21,829	)
Acquisition-related expenses		(39	)		(6,334	)		(3,411	)		(11,793	)
Severance costs associated with CFO retirement		—			—			—			(929	)
Legal costs associated with the indemnification of a former officer		—			(121	)		—			(236	)
Costs associated with CEO separation and related SEC investigation		(2,107	)		—			(2,107	)		—
Non-GAAP total operating expenses	$	172,836		$	177,171		$	518,351		$	515,277
Non-GAAP total operating expenses as percent of revenues		51.4	%		52.8	%		50.8	%		49.6	%
GAAP operating income (loss)	$	(22,349	)	$	(17,885	)	$	(16,752	)	$	1,835
Stock-based compensation expense		17,202			24,823			53,300			65,071
Effect of stock-based compensation on warranty rates		120			169			421			541
Amortization of purchased intangibles		3,735			4,421			11,279			13,044
Restructuring costs		24,887			6,171			34,639			21,829
Acquisition-related expenses		39			6,334			3,411			11,793
Severance costs associated with CFO retirement		—			—			—			929
Legal costs associated with the indemnification of a former officer		—			121			—			236
Costs associated with CEO separation and related SEC investigation		2,107			—			2,107			—
Non-GAAP operating income	$	25,741		$	24,154		$	88,405		$	115,278
Non-GAAP operating margin		7.7	%		7.2	%		8.7	%		11.1	%

POLYCOM, INC.

Summary of Stock-Based Compensation Expense

(In thousands)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30, 2013		September 30, 2012		September 30, 2013		September 30, 2012
Cost of sales - product	$	686	$	969	$	2,252	$	2,720
Cost of sales - service		1,479		1,920		4,600		4,952
Stock-based compensation expense in cost of sales		2,165		2,889		6,852		7,672
Sales and marketing		5,889		9,765		19,742		27,069
Research and development		3,669		5,409		12,578		14,808
General and administrative		5,479		6,760		14,128		15,522
Stock-based compensation expense in operating expenses		15,037		21,934		46,448		57,399
Total stock-based compensation expense	$	17,202	$	24,823	$	53,300	$	65,071