10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

or

¨ 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: 000-27978

POLYCOM, INC.

(Exact name of registrant as specified in its charter)

Delaware	94-3128324
(State or other jurisdiction of incorporation or organization)	(IRS employer identification number)
6001 America Center Drive, San Jose, CA	95002
(Address of principal executive offices)	(Zip Code)

(408) 586-6000

(Registrant’s telephone number, including area code)

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  x    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  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 in Exchange Act).    Yes  ¨    No  x

There were 135,810,169 shares of the Company’s Common Stock, par value $0.0005, outstanding on August 1, 2016.

POLYCOM, INC.

INDEX

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2016

PART I FINANCIAL INFORMATION

Item 1 Financial Statements (unaudited):	3
Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	3
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015	4
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2016 and 2015	5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015	6
Notes to Condensed Consolidated Financial Statements	7
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3 Quantitative and Qualitative Disclosures About Market Risk	41
Item 4 Controls and Procedures	42
PART II OTHER INFORMATION
Item 1—Legal Proceedings	43
Item 1A—Risk Factors	44
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 3—Defaults Upon Senior Securities	63
Item 4—Mine Safety Disclosures	63
Item 5—Other Information	63
Item 6—Exhibits	64
SIGNATURES	65

2

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

POLYCOM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)

	June 30, 2016			December 31, 2015
ASSETS
Current assets
Cash and cash equivalents	$	576,516		$	435,093
Short-term investments		126,238			184,242
Trade receivables, net		154,212			187,888
Inventories		96,748			89,392
Prepaid expenses and other current assets		50,118			52,852
Total current assets		1,003,832			949,467
Property and equipment, net		93,123			101,853
Long-term investments		18,788			46,484
Goodwill		558,659			558,775
Purchased intangibles, net		9,648			14,065
Deferred taxes		86,659			89,865
Other assets		20,994			21,738
Total assets	$	1,791,703		$	1,782,247
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	78,444		$	73,472
Accrued payroll and related liabilities		32,977			38,781
Taxes payable		2,130			4,342
Deferred revenue		174,119			170,559
Current portion of long-term debt		5,717			5,717
Other accrued liabilities		74,607			85,095
Total current liabilities		367,994			377,966
Long-term deferred revenue		83,272			86,191
Taxes payable		10,382			9,983
Deferred taxes		—			135
Long-term debt		225,940			228,799
Other non-current liabilities		24,074			25,964
Total liabilities		711,662			729,038
Commitments and contingencies (Note 8)
Stockholders' equity
Common stock, $0.0005 par value; authorized: 350,000,000 shares; issued and    outstanding: 135,771,115 shares at June 30, 2016 and 132,665,165 shares at    December 31, 2015		68			66
Additional paid-in capital		1,202,263			1,167,701
Accumulated deficit		(120,017	)		(113,355	)
Accumulated other comprehensive loss		(2,273	)		(1,203	)
Total stockholders' equity		1,080,041			1,053,209
Total liabilities and stockholders' equity	$	1,791,703		$	1,782,247

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

3

POLYCOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Revenues:
Product revenues	$	201,715		$	221,896		$	404,975		$	455,583
Service revenues		86,064			94,679			172,879			191,692
Total revenues		287,779			316,575			577,854			647,275
Cost of revenues:
Cost of product revenues		94,029			95,752			189,084			197,021
Cost of service revenues		32,478			34,898			63,669			71,509
Total cost of revenues		126,507			130,650			252,753			268,530
Gross profit		161,272			185,925			325,101			378,745
Operating expenses:
Sales and marketing		82,505			89,433			161,968			180,292
Research and development		43,981			46,545			87,051			95,882
General and administrative		20,291			22,269			40,401			43,436
Amortization of purchased intangibles		2,017			2,417			4,217			4,834
Restructuring costs		6,007			343			13,509			367
Transaction-related costs		7,887			—			12,131			—
Total operating expenses		162,688			161,007			319,277			324,811
Operating (loss) income		(1,416	)		24,918			5,824			53,934
Interest and other income (expense), net:
Interest expense		(1,668	)		(1,523	)		(3,305	)		(3,007	)
Other income (expense), net		1,966			1,345			2,835			1,367
Interest and other income (expense), net		298			(178	)		(470	)		(1,640	)
(Loss) income before provision for income taxes		(1,118	)		24,740			5,354			52,294
Provision for income taxes		8,879			5,093			12,016			11,449
Net (loss) income	$	(9,997	)	$	19,647		$	(6,662	)	$	40,845
Basic net (loss) income per share	$	(0.07	)	$	0.15		$	(0.05	)	$	0.30
Diluted net (loss) income per share	$	(0.07	)	$	0.14		$	(0.05	)	$	0.30
Number of shares used in computation of net (loss) income per    share:
Basic		135,700			134,057			134,934			134,417
Diluted		135,700			137,347			134,934			138,290

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

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

4

POLYCOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(in thousands)

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Net (loss) income	$	(9,997	)	$	19,647		$	(6,662	)	$	40,845
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments		(2,015	)		8			(951	)		191
Unrealized gains/losses on investments:
Unrealized holding gains (losses) arising during the    period		66			(27	)		292			62
Net losses reclassified into earnings		(15	)		(1	)		(8	)		(4	)
Net unrealized gains (losses) on investments		51			(28	)		284			58
Unrealized gains/losses on hedging securities:
Unrealized hedge gains (losses) arising during the period		728			(1,723	)		(899	)		4,575
Net gains reclassified into earnings for revenue hedges		(308	)		(3,629	)		(1,606	)		(10,265	)
Net losses reclassified into earnings for expense hedges		745			2,202			2,102			6,280
Net unrealized gains/(losses) on hedging securities		1,165			(3,150	)		(403	)		590
Other comprehensive (loss) income		(799	)		(3,170	)		(1,070	)		839
Comprehensive (loss) income	$	(10,796	)	$	16,477		$	(7,732	)	$	41,684

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

5

POLYCOM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Six Months Ended
	June 30, 2016			June 30, 2015
Cash flows from operating activities:
Net (loss) income	$	(6,662	)	$	40,845
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		23,663			27,210
Amortization of purchased intangibles		4,417			5,629
Amortization of capitalized software development costs for products to be sold		2,140			1,354
Amortization of debt issuance costs		267			266
Amortization of discounts and premiums on investments, net		645			1,090
Write-down of excess and obsolete inventories		5,477			6,810
Stock-based compensation expense		33,087			18,943
Excess tax benefits from stock-based compensation expense		(1,405	)		(3,487	)
Loss on disposal of property and equipment		175			544
Changes in assets and liabilities:
Trade receivables		33,601			8,245
Inventories		(12,880	)		(6,791	)
Deferred taxes		(4,435	)		(2,744	)
Prepaid expenses and other assets		2,362			4,960
Accounts payable		4,058			(19,229	)
Taxes payable		5,296			9,663
Other accrued liabilities and deferred revenue		(17,540	)		(30,160	)
Net cash provided by operating activities		72,266			63,148
Cash flows from investing activities:
Purchases of property and equipment		(13,508	)		(23,922	)
Capitalized software development costs for products to be sold		(1,446	)		(2,311	)
Purchases of investments		(78,222	)		(107,675	)
Proceeds from sales of investments		13,937			6,892
Proceeds from maturities of investments		149,699			97,187
Net cash provided by (used in) investing activities		70,460			(29,829	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee option and stock    purchase plans		10,811			12,528
Payments on debt		(3,126	)		(3,125	)
Purchase and retirement of common stock under share repurchase plan		—			(64,999	)
Purchase and retirement of common stock for tax withholdings on vesting    of employee stock-based awards		(9,772	)		(11,769	)
Excess tax benefits from stock-based compensation expense		1,405			3,487
Net cash used in financing activities		(682	)		(63,878	)
Effect of exchange rate changes on cash and cash equivalents		(621	)		—
Net increase (decrease) in cash and cash equivalents		141,423			(30,559	)
Cash and cash equivalents, beginning of period		435,093			443,132
Cash and cash equivalents, end of period	$	576,516		$	412,573

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

6

POLYCOM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited financial statements, consisting of the condensed consolidated balance sheet as of June 30, 2016, the condensed consolidated statements of operations for the three and six months ended June 30, 2016 and 2015, the condensed consolidated statements of comprehensive (loss) income for the three and six months ended June 30, 2016 and 2015, and the condensed consolidated statements of cash flows for the six months ended June 30, 2016 and 2015, have been prepared in accordance with accounting principles generally accepted in the United States of America in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. In addition, the condensed consolidated balance sheet at December 31, 2015 has been derived from the audited consolidated financial statements as of that date. Accordingly, these condensed consolidated financial statements do not include all of the information and notes typically found in the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of Polycom, Inc. and its subsidiaries (the “Company”). In the opinion of management, the accompanying unaudited financial statements have been prepared on a basis consistent with the Company’s December 31, 2015 audited financial statements and all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement have been included. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as amended for the year ended December 31, 2015.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates and operating results for the three and six months ended June 30, 2016 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

Definitive Agreement and Plan of Merger with Mitel Networks Corporation

On April 15, 2016, the Company entered into a definitive Agreement and Plan of Merger with Mitel Networks Corporation (“Mitel”) to be acquired for $3.12 in cash and 1.31 common shares of Mitel for each share of our common stock.

Subsequent Event

On July 8, 2016, the Company terminated the definitive Agreement and Plan of Merger with Mitel and entered into a definitive Agreement and Plan of Merger with Triangle Private Holdings I, LLC (“NewCo”), an entity affiliated with Siris Capital Group, LLC (“Siris”) to be acquired for $12.50 in cash for each share of the Polycom common stock (the “Merger”). Consummation of the Merger is subject to customary closing conditions, including, without limitation, (i) the absence of certain legal impediments, (ii) the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) antitrust regulatory approval in Germany and Russia, and (iv) approval by the Company’s stockholders of the Merger.

In connection with terminating the definitive agreement with Mitel, the Company paid a termination fee of $60.0 million to Mitel (the “Mitel Termination Fee”) on July 8, 2016, which was reimbursed by NewCo on July 22, 2016. If the Company terminates the definitive agreement with NewCo under specified circumstances, the Company may be required to pay NewCo a $60.0 million termination fee and/or repay to NewCo the Mitel Termination Fee that NewCo reimbursed to the Company.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update which amends the current guidance related to accounting for credit losses on certain financial instruments by replacing the incurred loss model with a forward-looking expected loss model. The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In March 2016, the FASB issued an accounting standard update which simplifies accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

7

In March 2016, the FASB issued an accounting standard update which clarifiesthat a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not require de-designation provided that all other hedge accounting criteria continue to be met. The standard is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal year beginning after December 15, 2016. Early adoption is permitted. The standard can be applied either on a prospective basis or a modified retrospective basis. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In February 2016, the FASB issued an accounting standard update which requires a lessee to generally recognize a right-of-use asset and a lease liability on the balance sheet. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted. The standard will be applied using a modified retrospective approach. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In May 2014, the FASB issued an accounting standard update which provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. In August 2015, the FASB issued an accounting standard update to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt the standard. In March 2016, the FASB issued an accounting standard update which clarifies the principal versus agent assessment in the new revenue recognition guidance. In April 2016, the FASB issued an accounting standard update which clarifies identifying performance obligations and the licensing implementation guidance in the new revenue recognition guidance. In May 2016, the FASB issued an accounting standard update which provides various narrow-scope improvements and practical expedients related to the new revenue recognition guidance. The Company is evaluating the potential effects of the adoption of these standards on its consolidated financial statements and disclosures.

3. DISCONTINUED OPERATIONS

On December 4, 2012, the Company completed the disposition of the net assets of its enterprise wireless voice solutions (“EWS”) business to Mobile Devices Holdings, LLC, a Delaware limited liability corporation. Additional cash consideration of up to $12.5 million is payable to Polycom over this fiscal year subject to certain conditions, including meeting certain agreed-upon EBITDA-based milestones for the fiscal year ending December 31, 2016. These conditions were not met for the fiscal year ended December 31, 2015. Such additional cash consideration will be accounted for as a gain on sale of discontinued operations, net of taxes, when it is realized or realizable. For the six months ended June 30, 2016 and 2015, there were no realized gains on sale of discontinued operations.

4. ACCOUNTS RECEIVABLE FINANCING

The Company has a financing agreement with an unrelated third party financing company (the “Financing Agreement”) whereby the Company offers distributors and resellers direct or indirect financing on their purchases of the Company’s products and services. In return, the Company agrees to pay the financing company a fee based on a defined percentage of the transaction amount financed. In certain instances, these financing arrangements result in a transfer of the Company’s receivables, without recourse, to the financing company. If the transaction meets the applicable criteria under Accounting Standards Codification (“ASC”) 860 and is accounted for as a sale of financial assets, the accounts receivable are excluded from the balance sheet upon the third party financing company’s payment remittance to the Company. In certain legal jurisdictions, the arrangement fees that involve maintenance services or products bundled with maintenance at one price do not qualify as a sale of financial assets in accordance with the authoritative guidance. Accordingly, accounts receivable related to these arrangements are accounted for as a secured borrowing in accordance with ASC 860, and the Company records a liability for any cash received, while maintaining the associated accounts receivable balance until the distributor or reseller remits payment to the third-party financing company.

In the three and six months ended June 30, 2016, total transactions entered into pursuant to the terms of the Financing Agreement were $53.1 million and $104.9 million, respectively, of which $29.4 million and $59.5 million, respectively, were related to the transfer of the financial assets arrangement. In the three and six months ended June 30, 2015, total transactions entered into were $53.0 million and $117.6 million, respectively, of which $33.7 million and $72.9 million, respectively, were related to the transfer of the financial assets arrangement. The financing of these receivables accelerated the collection of the Company’s cash and reduced its credit exposure. The amount due from the financing company as of June 30, 2016 and December 31, 2015 was $31.4 million and $32.7 million, respectively, of which $16.4 million and $22.1 million, respectively, was related to the accounts

8

receivable transferred, and is included in “Trade receivables, net” in the Company’s condensed consolidated balance sheets. Fees incurred pursuant to the Financing Agreement were $1.0 million and $0.8 million for the three months ended June 30, 2016 and 2015, respectively, and were $1.8million and $1.7 million for the six months ended June 30, 2016 and 2015, respectively. Those fees were recorded as reductions to revenues.

5. GOODWILL, PURCHASED INTANGIBLES, AND SOFTWARE DEVELOPMENT COSTS

Goodwill

The following table presents the changes to the Company’s goodwill by segment during the six months ended June 30, 2016 (in thousands):

	Americas		EMEA		APAC			Total
Balance at December 31, 2015	$	308,159	$	101,882	$	148,734		$	558,775
Foreign currency translation		—		—		(116	)		(116	)
Balance at June 30, 2016	$	308,159	$	101,882	$	148,618		$	558,659

Purchased Intangible Assets and Software Development Costs

The following table presents details of the Company’s total purchased intangible assets and capitalized software development costs for products to be sold as of the following periods (in thousands):

	June 30, 2016							December 31, 2015
	Gross Value		Accumulated Amortization &Impairment			Net Value		Gross Value		Accumulated Amortization & Impairment			Net Value
Core and developed technology	$	81,178	$	(81,145	)	$	33	$	81,178	$	(80,945	)	$	233
Customer and partner relationships		79,525		(70,828	)		8,697		79,525		(66,742	)		12,783
Non-compete agreements		1,800		(1,800	)		—		1,800		(1,700	)		100
Trade name		3,400		(3,400	)		—		3,400		(3,369	)		31
Finite-lived intangible assets		165,903		(157,173	)		8,730		165,903		(152,756	)		13,147
Indefinite-lived trade name		918		—			918		918		—			918
Total acquired intangible assets	$	166,821	$	(157,173	)	$	9,648	$	166,821	$	(152,756	)	$	14,065
Capitalized software development costs for    products to be sold	$	14,604	$	(7,142	)	$	7,462	$	12,993	$	(5,002	)	$	7,991

Purchased intangibles include a purchased trade name of $0.9 million with an indefinite life as the Company expects to generate cash flows related to this asset indefinitely.

The following table summarizes the amortization expenses recorded in the following periods (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Amortization of purchased intangibles in revenues	$	—	$	19	$	—	$	38
Amortization of purchased intangibles in cost of product    revenues		100		100		200		757
Amortization of purchased intangibles in operating expenses		2,017		2,417		4,217		4,834
Total amortization of purchased intangibles	$	2,117	$	2,536	$	4,417	$	5,629

Amortization of purchased intangibles is not allocated to the Company’s segments.

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The estimated future amortization expense as of June 30, 2016 is as follows (in thousands):

Year ending December 31,	Amount
Remainder of 2016	$	4,061
2017		4,669
Total	$	8,730

In the six months ended June 30, 2016 and 2015, the Company capitalized approximately $1.6 million and $2.5 million of software development costs, respectively, for internally developed software products to be marketed and sold to customers after the point that technological feasibility has been reached and before the products are available for general release. The capitalized costs are being amortized over the estimated product useful life, generally three years, beginning when the products are available for general release. Management expects that the capitalized software development costs are recoverable from future gross profits generated by these products and services.

6. RESTRUCTURING COSTS

The Company recorded $6.0 million and $0.3 million of net restructuring costs during the three months ended June 30, 2016 and 2015, respectively, and $13.5 million and $0.4 million during the six months ended June 30, 2016 and 2015, respectively. The restructuring costs during the six months ended June 30, 2016 were primarily related to certain actions announced in December 2015, which included reduction of approximately 11 percent of the Company’s global workforce that is expected to be substantially complete by the fourth quarter of 2016 and charges related to vacating certain leased facilities. These actions were designed to improve the Company's profitability by strategically investing in more accretive areas of the business and further leveraging its outsource partners. As of June 30, 2016, the Company has recorded a cumulative amount of $24.0 million in restructuring costs in connection with these actions, of which $13.5 million of restructuring costs were incurred during the six months ended June 30, 2016, and expects the remaining charges related to these actions to be approximately $1 million. 

The following table summarizes the changes in the Company’s restructuring reserves during the six months ended June 30, 2016 (in thousands):

	Severance/Other			Facilities			Other			Total
Balance at December 31, 2015	$	8,072		$	18,455		$	801		$	27,328
Additions to the reserve, net		9,072			3,958			—			13,030
Interest accretion		—			479			—			479
Non-cash adjustments		—			3			—			3
Cash payments		(12,027	)		(4,391	)		(801	)		(17,219	)
Balance at June 30, 2016	$	5,117		$	18,504		$	—		$	23,621

As of June 30, 2016, the restructuring reserve was primarily comprised of facilities-related liabilities pertaining to previous restructuring actions. At the time the reserve was initially set up, the Company calculated the fair value of its facilities-related liabilities based on the discounted future lease payments less sublease assumptions. This fair value measurement is classified as a Level 3 measurement under ASC 820. The key assumptions used in the valuation model include discount rates, cash flow projections, and estimated sublease income. These assumptions involve significant judgment, are based on management’s estimate of current and forecasted market conditions and are sensitive and susceptible to change.To the extent that actual sublease income, the timing of subleasing the facility, or the associated cost of, or the recorded liability related to subleasing or terminating the Company’s lease obligations for these facilities is different than initial estimates, the Company adjusts its restructuring reserves in the period during which such information becomes known.

7. BALANCE SHEET DETAILS

Trade receivables, net consist of the following (in thousands):

	June 30, 2016			December 31, 2015
Gross trade receivables	$	211,748		$	242,911
Returns and other reserves		(54,572	)		(52,000	)
Allowance for doubtful accounts		(2,964	)		(3,023	)
Total	$	154,212		$	187,888

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Inventories consist of the following (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	671	$	824
Work in process		—		117
Finished goods		96,077		88,451
Total	$	96,748	$	89,392

Prepaid expenses and other current assets consist of the following (in thousands):

	June 30, 2016		December 31, 2015
Non-trade receivables	$	8,147	$	7,689
Prepaid expenses		33,200		33,174
Derivative assets		6,873		10,396
Other current assets		1,898		1,593
Total	$	50,118	$	52,852

Deferred revenue consists of the following (in thousands):

	June 30, 2016		December 31, 2015
Short-term:
Service	$	170,545	$	165,594
License		3,574		4,965
Total	$	174,119	$	170,559
Long-term:
Service	$	78,398	$	82,598
License		4,874		3,593
Total	$	83,272	$	86,191

Changes in deferred service revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015
Balance at beginning of period	$	248,192		$	257,280
Additions to deferred service revenue		180,307			167,332
Amortization of deferred service revenue		(179,556	)		(170,232	)
Balance at end of period	$	248,943		$	254,380

Changes in deferred license revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015
Balance at beginning of period	$	8,558		$	5,524
Additions to deferred license revenue		2,508			1,766
Amortization of deferred license revenue		(2,618	)		(1,238	)
Balance at end of period	$	8,448		$	6,052

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The current portion of other accrued liabilities consists of the following (in thousands):

	June 30, 2016		December 31, 2015
Accrued expenses	$	27,703	$	25,179
Accrued co-op expenses		1,979		2,670
Restructuring reserves		13,054		16,187
Warranty obligations		8,526		10,172
Derivative liabilities		6,722		6,031
Employee stock purchase plan withholdings		—		9,668
Other accrued liabilities		16,623		15,188
Total	$	74,607	$	85,095

Changes in warranty obligations during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015
Balance at beginning of period	$	10,172		$	11,613
Accruals for warranties issued during the period		4,797			6,811
Actual charges against warranty reserve during the period		(6,443	)		(7,277	)
Balance at end of period	$	8,526		$	11,147

8. COMMITMENTS AND CONTINGENCIES

Litigation and SEC Investigation

From time to time, the Company is involved in claims and legal proceedings that arise in the ordinary course of business. The Company expects that the number and significance of these matters will increase as its business expands. In particular, the Company faces an increasing number of patent and other intellectual property claims as the number of products and competitors in Polycom’s industry grows and the functionality of video, voice, data and web conferencing products overlap. Any claims or proceedings against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, result in the diversion of significant operational resources, or require the Company to enter into royalty or licensing agreements which, if required, may not be available on terms favorable to the Company or at all. If management believes that a loss arising from these matters is probable and can be reasonably estimated, the Company will record a reserve for the loss. As additional information becomes available, any potential liability related to these matters is assessed and the estimates revised. Based on currently available information, management does not believe that the ultimate outcomes of these unresolved matters, individually and in the aggregate, are likely to have a material adverse effect on the Company’s financial position, liquidity or results of operations. However, litigation is subject to inherent uncertainties, and the Company’s view of these matters may change in the future. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position and results of operations or liquidity for the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods.

Following the announcement of the execution of the merger agreement with Mitel Networks Corporation, a purported stockholder class action, styled Solak v. Leav, et al., No. 5:16-cv-03128-HRL, was filed on June 8, 2016 in the United States District Court for the Northern District of California, which is referred to as the Solak complaint. The Solak complaint named as defendants current and former members of the Polycom Board, Mitel, and the merger sub, which are collectively referred to as the defendants. The Solak complaint alleged that the defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder by failing to disclose all material information in connection with the proxy statement/prospectus related to the Mitel transaction. The Solak complaint also alleged that the current and former members of the Polycom Board violated Section 20(a) of the Exchange Act by acting as control persons of Polycom in connection with the purported omissions from the proxy statement/prospectus described above. Finally, the Solak complaint alleged that the current and former members of the Polycom Board breached their fiduciary duties to Polycom’s stockholders in connection with the merger and that Mitel and its merger sub aided and abetted the purported breaches of fiduciary duty. In support of these claims, the Solak complaint alleged, among other things, that the Polycom Board failed to disclose all material information regarding the merger, that the merger consideration undervalued Polycom, that the sales process that resulted in entry into the merger agreement was flawed, and that the merger agreement contained unreasonable deal protection devices that purportedly preclude competing offers and unduly favor Mitel. The action sought injunctive relief, including enjoining or rescinding the merger, and an award of other unspecified attorneys’ and other fees and costs, in addition to other relief. As a result of the transaction with Mitel being terminated and Polycom’s entry into the merger agreement with an entity affiliated with Siris, the suit was dismissed.

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On July 23, 2013, the Company announced that Andrew M. Miller had resigned from the positions of Chief Executive Officer and President of Polycom and from Polycom’s Board of Directors. The Company disclosed that Mr. Miller’s resignation came after a review by the Audit Committee of certain expense submissions by Mr. Miller, where the Audit Committee found certain irregularities in the submissions, for which Mr. Miller had accepted responsibility. Specifically, the Audit Committee determined that Mr. Miller improperly submitted personal expenses to Polycom for payment as business expenses and, in doing so, submitted to Polycom false information about the nature and purpose of expenses.Mr. Miller has reached a settlement with the SEC.

SEC Investigation. As previously disclosed, the Company has cooperated with the Enforcement Staff of the SEC in connection with its investigation focused on Mr. Miller's expenses and his resignation. On March 31, 2015 the Company entered into a settlement with the SEC. Under the terms of the settlement in which the Company did not admit or deny the SEC’s findings, the Company paid $750,000 in a civil penalty, and agreed not to commit or cause any violations of certain provisions of the Securities Exchange Act of 1934 and related rules. On January 26, 2016, Mr. Miller reached a settlement with the SEC. Under the terms of the settlement, Mr. Miller agreed to pay $450,000, of which, $200,000 was paid to Polycom.

Class Action Lawsuit. On July 26, 2013, a purported shareholder class action, initially captioned Neal v. Polycom Inc., et al., Case No. 3:13-cv-03476-SC, and presently captioned Nathanson v. Polycom, Inc., et al., Case No. 3:13-cv-03476-SC, was filed in the United States District Court for the Northern District of California against the Company and certain of its current and former officers and directors. On December 13, 2013, the Court appointed a lead plaintiff and approved lead and liaison counsel. On February 24, 2014, the lead plaintiff filed a first amended complaint. The amended complaint alleged that, between January 20, 2011 and July 23, 2013, the Company issued materially false and misleading statements or failed to disclose information regarding the Company’s business, operational and compliance policies, including with respect to its former Chief Executive Officer’s expense submissions and the Company’s internal controls. The lawsuit further alleged that the Company’s financial statements were materially false and misleading. The amended complaint alleged violations of the federal securities laws and sought unspecified compensatory damages and other relief. On April 3, 2015, the Court dismissed all claims against Polycom and granted plaintiffs leave to amend. The lead plaintiff filed a second complaint on May 4, 2015. Polycom and the individual defendants moved to dismiss the second amended complaint on June 26, 2015. On January 8, 2016, the parties executed a settlement agreement. The proposed settlement is subject to, and contingent upon, the Court’s review and approval. The lead plaintiff moved for preliminary approval of the settlement. The Court has issued an order preliminarily approving the settlement and has scheduled a hearing for August 2016 to consider final approval of the settlement.  If the settlement is approved, the settlement payment will be made by Polycom’s insurance carrier.

Derivative Lawsuits. On August 21, 2013 and October 16, 2013, two purported shareholder derivative suits, captioned Saraceni v. Miller, et al., Case No. 5:13-cv-03880, and Donnelly v. Miller, et al., Case No. 5:13-cv-04810, respectively, were filed in the United States District Court for the Northern District of California against certain of the Company’s current and former officers and directors. On October 31, 2013, these two federal derivative actions were consolidated into In re Polycom, Inc. Derivative Litigation, Lead Case No. 3:13-cv-03880. On January 13, 2015, the Court dismissed the operative complaint and granted plaintiffs leave to amend. On April 3, 2015, the Court approved a stipulation dismissing the action with prejudice and entering judgment in favor of defendants.

On November 22, 2013 and December 13, 2013, two purported shareholder derivative suits, captioned Ware v. Miller, et al., Case No. 1-13-cv-256608, and Clem v. Miller, et al., Case No. 1-13-cv-257664, respectively, were filed in the Superior Court of California, County of Santa Clara, against certain of the Company’s current and former officers and directors. On January 31, 2014, these two California state derivative actions were consolidated into In re Polycom, Inc. Derivative Shareholder Litigation, Lead Case No. 1-13-cv-256608. The Court stayed the California state derivative litigation pending resolution of both the federal derivative lawsuit and the federal securities class action.

The California state consolidated derivative lawsuit purports to assert claims on behalf of the Company, which is named as a nominal defendant in the actions. The original California state complaints allege claims for breach of fiduciary duty, unjust enrichment, and corporate waste, and allege certain defendants failed to maintain adequate internal controls and issued, or authorized the issuance of, materially false and misleading statements, including with respect to the Company’s former Chief Executive Officer’s expense submissions and the Company’s internal controls. The complaints further allege that certain defendants approved an unjustified separation agreement and caused the Company to repurchase its own stock at artificially inflated prices. The complaints seek unspecified compensatory damages, corporate governance reforms, and other relief. At this time, the Company is unable to estimate any range of reasonably possible loss relating to the derivative actions.

Officer and Director Indemnifications

As permitted or required under Delaware law and to the maximum extent allowable under that law, the Company has certain obligations to indemnify its current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be

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required to make under these indemnification obligations is unlimited; however, the Company has a director and officer insurance policy that mitigates the Company’s exposure and enables the Company to recover a portion of any future amounts paid.

Other Indemnifications

As is customary in the Company’s industry, as provided for in local law in the United States, and other jurisdictions, the Company’s standard contracts provide remedies to its customers, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of its products. From time to time, the Company indemnifies customers against combinations of loss, expense, or liability arising from various trigger events related to the sale and the use of its products and services. In addition, from time to time, the Company also provides protection to customers against claims related to undiscovered liabilities, additional product liability or environmental obligations.

9. DEBT

In September 2013, the Company entered into a Credit Agreement (the “Credit Agreement”) that provides for a $250.0 million term loan (the “Term Loan”) maturing on September 13, 2018 (the “Maturity Date”), which bears interest at the Company’s option at either a base rate as set forth in the Credit Agreement plus a spread of 0.50% to 1.00%, or a reserve adjusted LIBOR rate plus a spread of 1.50% to 2.00% based on the Company’s consolidated leverage ratio for the preceding four fiscal quarters.

The Term Loan is payable in quarterly installments of principal equal to approximately $1.6 million which began on December 31, 2013, with the remaining outstanding principal amount of the Term Loan being due and payable on the Maturity Date. The Company may prepay the Term Loan, in whole or in part, at any time without premium or penalty. Amounts repaid or prepaid may not be borrowed again. The Term Loan is secured by substantially all the assets of the Company and certain domestic subsidiaries of the Company that are guarantors under the Credit Agreement, subject to certain exceptions and limitations.

The Credit Agreement contains customary affirmative and negative covenants, and financial covenants consisting of a consolidated fixed charge coverage ratio and a consolidated secured leverage ratio. The Company was in compliance with these covenants as of June 30, 2016. The Credit Agreement also includes customary events of default, including in the event of change of control, the occurrence of which could result in the acceleration of the obligations under the Credit Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable for base rate loans for any other overdue amounts.

At June 30, 2016, the weighted average interest rate on the Term Loan was 2.46%, the accrued interest on the Term Loan was $0.6 million, and the current and noncurrent portion of the outstanding Term Loan was $5.7 million and $225.9 million, respectively, net of unamortized debt issuance costs of $1.2 million.

The following table sets forth total interest expense recognized on the Term Loan (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Contractual interest expense	$	1,426	$	1,292	$	2,852	$	2,550
Amortization of debt issuance costs		134		133		267		266
Total	$	1,560	$	1,425	$	3,119	$	2,816

As of June 30, 2016, future principal payments for long-term debt, including the current portion, are summarized as follows (in thousands):

	Amount
Remainder of 2016	$	3,126
2017		6,250
2018		223,437
Total	$	232,813

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10. INVESTMENTS

The Company had cash and cash equivalents of $576.5 million and $435.1 million at June 30, 2016 and December 31, 2015, respectively. Cash and cash equivalents generally consist of cash in banks, as well as highly liquid investments in money market funds, time deposits, savings accounts, commercial paper, U.S. government securities, U.S. government agency securities and corporate debt securities.

The Company’s U.S. government securities are mostly comprised of direct U.S. Treasury obligations that are guaranteed by the U.S. government and U.S. government agency securities that are mostly comprised of U.S. government agency instruments, including mortgage-backed securities. The Company’s non-U.S. government securities are mostly comprised of non-U.S. government instruments, mainly state, municipal and foreign government securities. To ensure that the investment portfolio is sufficiently diversified, the Company’s investment policy requires that a certain percentage of the Company’s portfolio be invested in these types of securities.

The Company’s corporate debt securities are comprised of publicly-traded domestic and foreign corporate debt securities. The Company does not purchase auction rate securities, and investments are in instruments that meet high quality credit rating standards, as specified in the Company’s investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issuer or type of instrument.

At June 30, 2016, the Company’s long-term investments had contractual maturities of one to two years.

The Company’s short-term and long-term investments in debt securities are summarized as follows (in thousands):

	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Balances at June 30, 2016:
Short-term investments:
U.S. government securities	$	43,081	$	40	$	—		$	43,121
U.S. government agency securities		40,788		27		(1	)		40,814
Non-U.S. government securities		2,004		—		—			2,004
Corporate debt securities		40,285		16		(2	)		40,299
Total short-term investments	$	126,158	$	83	$	(3	)	$	126,238
Long-term investments:
U.S. government securities	$	4,256	$	12	$	—		$	4,268
U.S. government agency securities		3,003		1		—			3,004
Corporate debt securities		11,499		23		(6	)		11,516
Total long-term investments	$	18,758	$	36	$	(6	)	$	18,788
Balances at December 31, 2015:
Short-term investments:
U.S. government securities	$	49,036	$	4	$	(45	)	$	48,995
U.S. government agency securities		67,723		1		(30	)		67,694
Non-U.S. government securities		7,303		—		(1	)		7,302
Corporate debt securities		60,290		1		(40	)		60,251
Total short-term investments	$	184,352	$	6	$	(116	)	$	184,242
Long-term investments:
U.S. government securities	$	8,058	$	—	$	(14	)	$	8,044
U.S. government agency securities		14,510		—		(48	)		14,462
Corporate debt securities		24,056		2		(80	)		23,978
Total long-term investments	$	46,624	$	2	$	(142	)	$	46,484

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Unrealized Losses

The following table summarizes the fair value and gross unrealized losses of investments that are in an unrealized loss position only. The unrealized losses are aggregated by type of investment instrument and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
June 30, 2016:
U.S. government agency securities	$	4,221	$	(1	)	$	—	$	—	$	4,221	$	(1	)
Corporate debt securities		11,475		(8	)		—		—		11,475		(8	)
Total investments	$	15,696	$	(9	)	$	—	$	—	$	15,696	$	(9	)
December 31, 2015:
U.S. government securities	$	48,445	$	(59	)	$	—	$	—	$	48,445	$	(59	)
U.S. government agency securities		71,861		(78	)		—		—		71,861		(78	)
Non-U.S. government securities		5,001		(1	)		—		—		5,001		(1	)
Corporate debt securities		52,571		(120	)		—		—		52,571		(120	)
Total investments	$	177,878	$	(258	)	$	—	$	—	$	177,878	$	(258	)

During six months ended June 30, 2016 and 2015, there were no investments in the Company’s portfolio that were other-than temporarily impaired and the Company did not incur any material realized net gains or losses.

11. FAIR VALUE MEASUREMENTS

The tables below set forth the Company’s recurring fair value measurements (in thousands):

			Fair Value Measurements at June 30, 2016 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
			(Level 1)		(Level 2)
Assets:
Fixed income available-for-sale securities
Cash and cash equivalents
Money market funds	$	47,894	$	47,894	$	—
U.S. government agency securities		29,980		—		29,980
Non U.S. government securities		1,000		—		1,000
Corporate debt securities		39,236		—		39,236
Short-term investments		126,238		—		126,238
Long-term investments		18,788		—		18,788
Total fixed income available-for-sale securities	$	263,136	$	47,894	$	215,242
Foreign currency forward contracts (a)	$	6,873	$	—	$	6,873
Liabilities:
Foreign currency forward contracts (b)	$	6,722	$	—	$	6,722

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			Fair Value Measurements at December 31, 2015 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
			(Level 1)		(Level 2)
Assets:
Fixed income available-for-sale securities
Cash and cash equivalents
Money market funds	$	10,313	$	10,313	$	—
Non-U.S. government securities		975		—		975
Corporate debt securities		19,799		—		19,799
Short-term investments		184,242		—		184,242
Long-term investments		46,484		—		46,484
Total fixed income available-for-sale securities	$	261,813	$	10,313	$	251,500
Foreign currency forward contracts (a)	$	10,396	$	—	$	10,396
Liabilities:
Foreign currency forward contracts (b)	$	6,031	$	—	$	6,031

(a) Included in short-term derivative assets as “Prepaid expenses and other current assets” in the condensed consolidated balance sheets.

(b) Included in short-term derivative liabilities as “Other accrued liabilities” in the condensed consolidated balance sheets.

There were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2016 and 2015. There were no investments classified as Level 3 as of June 30, 2016 and December 31, 2015.

In addition, the Company has facilities-related liabilities related to restructuring which were calculated based on the discounted future lease payments less sublease assumptions. This non-recurring fair value measurement is classified as a Level 3 measurement under ASC 820. See Note 6 for further details.

The fair value of the Company’s Term Loan under its Credit Agreement is measured using Level 2 inputs as the borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to the Company for debt with similar terms and maturities. The Company has elected not to record its Term Loan at fair value, but has measured it at fair value for disclosure purposes. At June 30, 2016 and December 31, 2015, the estimated fair value of the Term Loan was approximately $229.3 million and $226.5 million, respectively, using observable market inputs. See Note 9 for further details.

12. FOREIGN CURRENCY DERIVATIVES

The Company maintains a foreign currency risk management program that is designed to reduce the volatility of the Company’s economic value from the effects of unanticipated currency fluctuations. International operations generate both revenues and costs denominated in foreign currencies. The Company’s policy is to hedge significant foreign currency revenues and costs to improve margin visibility and reduce earnings volatility associated with unexpected changes in currency.

Non-Designated Hedges

The Company hedges its net foreign currency monetary assets and liabilities primarily resulting from foreign currency denominated receivables and payables with foreign exchange forward contracts to reduce the risk that the Company’s earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These derivative instruments do not subject the Company to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset remeasurement gains and losses on the hedged assets and liabilities. The Company executes non-designated foreign exchange forward contracts primarily denominated in Euros, British Pounds, Israeli Shekels, Japanese Yen, Brazilian Reals, Chinese Yuan, and Mexican Pesos.

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The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding non-designated hedges at June 30, 2016(in thousands):

	Original Maturities of 360 Days or Less					Original Maturities of Greater than 360 Days
	Foreign Currency		USD Equivalent		Positions	Foreign Currency		USD Equivalent		Positions
Brazilian Real		13,196	$	4,111	Buy		—	$	—	—
Brazilian Real		24,037	$	6,993	Sell		—	$	—	—
Chinese Yuan		—	$	—	—		45,457	$	7,098	Buy
Chinese Yuan		42,005	$	6,390	Sell		—	$	—	—
Euro		22,866	$	25,374	Buy		13,703	$	15,420	Buy
Euro		34,404	$	38,274	Sell		54,468	$	60,981	Sell
British Pound		5,368	$	7,218	Buy		14,718	$	22,741	Buy
British Pound		12,753	$	17,905	Sell		15,684	$	24,082	Sell
Israeli Shekel		29,300	$	7,609	Buy		—	$	—	—
Israeli Shekel		29,300	$	7,613	Sell		—	$	—	—
Japanese Yen		96,170	$	935	Buy		—	$	—	—
Japanese Yen		96,170	$	867	Sell		—	$	—	—
Mexican Peso		21,914	$	1,184	Buy		—	$	—	—
Mexican Peso		44,977	$	2,430	Sell		—	$	—	—

The following table shows the effect of the Company’s non-designated hedges in the condensed consolidated statements of operations (in thousands):

Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
		Three Months Ended
		June 30, 2016			June 30, 2015
Foreign exchange contracts	Interest and other income (expense), net	$	1,325		$	(1,056	)
		Six Months Ended
		June 30, 2016			June 30, 2015
Foreign exchange contracts	Interest and other income (expense), net	$	(822	)	$	3,617

Cash Flow Hedges

The Company designates forward contracts as cash flow hedges of foreign currency revenues and expenses, primarily the Chinese Yuan, Euros and British Pounds. All foreign exchange contracts are carried at fair value on the condensed consolidated balance sheets and the maximum duration of foreign exchange forward contracts does not exceed 13 months.  

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding cash flow hedges at June 30, 2016 (in thousands):

	Original Maturities of 360 Days or Less					Original Maturities of Greater than 360 Days
	Foreign Currency		USD Equivalent		Positions	Foreign Currency		USD Equivalent		Positions
Chinese Yuan		—	$	—	—		85,643	$	12,851	Buy
Euro		—	$	—	—		19,597	$	21,909	Buy
Euro		—	$	—	—		58,032	$	65,094	Sell
British Pound		—	$	—	—		16,782	$	24,405	Buy
British Pound		—	$	—	—		15,816	$	23,146	Sell

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The following tables show the effect of the Company’s derivative instruments designated as cash flow hedges in the condensed consolidated statements of operations for the following periods (in thousands):

	Gain (Loss) Recognized in OCI or OCL- Effective Portion						Location of Gain (Loss) Reclassified from OCI or OCL into Income-Effective Portion	Gain (Loss) Reclassified from OCI or OCL into Income-Effective Portion						Location of Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing	Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing (a)
	Three Months Ended							Three Months Ended							Three Months Ended
	June 30, 2016			June 30, 2015				June 30, 2016			June 30, 2015				June 30, 2016		June 30, 2015
Foreign    exchange    contracts	$	728		$	(1,723	)	Product revenues	$	308		$	3,629		Interest and other    income (expense),    net	$	744	$	357
							Cost of revenues		(161	)		(531	)
							Sales and marketing		(513	)		(1,007	)
							Research and development		(2	)		(268	)
							General and administrative		(69	)		(396	)
	$	728		$	(1,723	)		$	(437	)	$	1,427			$	744	$	357
	Six Months Ended							Six Months Ended							Six Months Ended
	June 30, 2016			June 30, 2015				June 30, 2016			June 30, 2015				June 30, 2016		June 30, 2015
Foreign    exchange    contracts	$	(899	)	$	4,575		Product revenues	$	1,606		$	10,265		Interest and other    income (expense),    net	$	735	$	326
							Cost of revenues		(458	)		(1,332	)
							Sales and marketing		(1,346	)		(2,794	)
							Research and development		(49	)		(983	)
							General and administrative		(249	)		(1,171	)
	$	(899	)	$	4,575			$	(496	)	$	3,985			$	735	$	326

(a) There were no gains or losses recognized in income due to ineffectiveness in the periods presented.

As of June 30, 2016, the Company estimated that all values reported in accumulated other comprehensive loss will be reclassified to income within the next twelve months. Effective gains and losses recorded in other comprehensive (loss) income are reclassified to revenue and operating expense as and when the underlying forecasted foreign currency transactions affect earnings.

In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge would be immediately reclassified to “Interest and other income (expense), net” on the condensed consolidated statements of operations. For the six months ended June 30, 2016 and 2015, there were no such gains orlosses.

The estimates of fair value are based on applicable and commonly quoted prices and prevailing financial market information as of June 30, 2016 and December 31, 2015. See Note 11 for additional information on the fair value measurements for all financial assets and liabilities, including derivative assets and derivative liabilities that are measured at fair value in the condensed consolidated financial statements on a recurring basis.

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The following table shows the Company’s derivative instruments measured at gross fair value as reflected in the condensed consolidated balance sheets(in thousands):

	Fair Value of Derivatives Designated as Hedge Instruments				Fair Value of Derivatives Not Designated as Hedge Instruments
	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015
Derivative assets (a):
Foreign exchange contracts	$	2,380	$	2,283	$	4,493	$	8,113
Derivative liabilities (b):
Foreign exchange contracts	$	2,418	$	2,269	$	4,304	$	3,762

(a) All derivative assets are recorded in “Prepaid and other current assets” in the condensed consolidated balance sheets.

(b) All derivative liabilities are recorded in “Other accrued liabilities” in the condensed consolidated balance sheets.

Offsetting Derivative Assets and Liabilities

The Company has entered into master netting arrangements with each of its derivative counterparties. These arrangements afford the right to net derivative assets against liabilities with the same counterparty. Under certain default provisions, the Company has the right to set off any other amounts payable to the payee whether or not arising under this agreement. As a result of the netting provisions, the Company’s maximum amount of loss under derivative transactions due to credit risk is limited to the net amounts due from the counterparties under the derivative contracts. Although netting is permitted, it is currently the Company’s policy and practice to record all derivative assets and liabilities on a gross basis in the condensed consolidated balance sheets.

The following table sets forth the offsetting of derivative assets (in thousands):

							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
As of June 30, 2016:
Foreign exchange contracts	$	6,873	$	—	$	6,873	$	(6,017	)	$	—	$	856
As of December 31, 2015:
Foreign exchange contracts	$	10,396	$	—	$	10,396	$	(5,413	)	$	—	$	4,983

The following table sets forth the offsetting of derivative liabilities (in thousands):

							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
As of June 30, 2016:
Foreign exchange contracts	$	6,722	$	—	$	6,722	$	(6,017	)	$	—	$	705
As of December 31, 2015:
Foreign exchange contracts	$	6,031	$	—	$	6,031	$	(5,413	)	$	—	$	618

13. STOCKHOLDERS’ EQUITY

Share Repurchase Program

From time to time, the Company’s Board of Directors has approved plans under which the Company may at its discretion purchase shares of its common stock in the open market or via privately negotiated transactions. In July 2014, the Company announced that its Board of Directors had approved a share repurchase plan (the “2014 repurchase plan”) under which the Company may at its discretion purchase shares in the open market with an aggregate value of up to $200.0 million. Any share repurchases will be funded through cash on hand and future cash flow from operations. During the three and six months ended June 30, 2016, the

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Company did not purchase anyshares of common stockin the open market. During the three and six months ended June 30, 2015, the Company purchased approximately 1.9million and 4.8 million shares of common stock, respectively, in the open market for $25.0million and $65.0 million, respectively. The purchase price for the shares of the Company’s stock repurchased is recorded as a reduction to stockholders’ equity. The excess of the cost of treasury stock that is retired over its par value and the portion allocated to additional paid-in capital based on the calculated average price in equity is recorded as a charge to retained earnings. The repurchased shares of common stock have been retired and reclassified as authorized and unissued shares. As of June 30, 2016, the Company had a remaining authorization to purchase up to an additional $60.1million of shares in the open market under the 2014 repurchase plan.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component (in thousands). The tax effects were not shown separately, as the impacts were not material.

Six Months Ended June 30, 2016	Unrealized Gains and Losses on Cash Flow Hedges			Unrealized Gains and Losses on Available-for- Sale Securities			ForeignCurrency Translation			Total
Balance as of December 31, 2015	$	(59	)	$	(197	)	$	(947	)	$	(1,203	)
Other comprehensive loss before reclassifications		(899	)		292			(951	)		(1,558	)
Amounts reclassified from accumulated other    comprehensive loss (a)		496			(8	)		—			488
Net current-period other comprehensive loss		(403	)		284			(951	)		(1,070	)
Balance as of June 30, 2016	$	(462	)	$	87		$	(1,898	)	$	(2,273	)

(a) See Note 12 for details of gains and losses, net of taxes, reclassified out of accumulated other comprehensive loss into net (loss) income related to cash flow hedges and each line item of net (loss) income affected by the reclassification. Gains and losses related to available-for-sale securities were reclassified into “Interest and other income (expense), net” in the condensed consolidated statement of operations for the six months ended June 30, 2016, net of taxes.

14. STOCK-BASED COMPENSATION

The following table summarizes stock-based compensation expense recorded for the periods presented and its allocation within the condensed consolidated statements of operations (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Cost of  product revenues	$	1,133	$	505	$	1,914	$	1,460
Cost of service revenues		2,373		877		3,484		2,185
Stock-based compensation expense included in cost    of revenues		3,506		1,382		5,398		3,645
Sales and marketing		7,550		2,698		11,293		5,311
Research and development		4,912		1,915		6,941		4,488
General and administrative		5,638		3,716		9,455		5,499
Stock-based compensation expense included in    operating expenses		18,100		8,329		27,689		15,298
Total stock-based compensation expense		21,606		9,711		33,087		18,943
Tax benefit		3,109		1,697		5,354		3,226
Total stock-based compensation expense, net of tax	$	18,497	$	8,014	$	27,733	$	15,717

Stock-based compensation expense is not allocated to segments because it is centrally managed at the corporate level.

Stock Options

There were no stock options granted during the six months ended June 30, 2016 and 2015.

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Performance Shares and Restricted Stock Units

During the six months ended June 30, 2016 and 2015, the Company granted 886,496 and 922,202 performance shares to certain employees and executives, at a weighted average fair value of $10.87 and $14.23 per share, respectively. The 2016 and 2015 grants are generally divided evenly over three annual performance periods commencing with calendar year 2016 and 2015, respectively, and will vest on the first, second and third anniversary of the grant date.

During the six months ended June 30, 2016 and 2015, the Company granted 2,976,147 and 2,788,043 restricted stock units to certain employees and executives, at a weighted average fair value of $10.86 and $13.80 per share, respectively.

During the six months ended June 30, 2016, there were no restricted stock units granted to non-employee directors. During the six months ended June 30, 2015, the Company granted 120,000 restricted stock units to non-employee directors, at a weighted average fair value of $13.14 per share.

Employee Stock Purchase Plan

During the six months ended June 30, 2016 and 2015, 1,236,759 and 1,183,426 shares, respectively, were purchased under the Company’s employee stock purchase plan (“ESPP”). As of June 30, 2016, there were 7,927,722 shares available to be issued under the ESPP.

Pursuant to the definitive Agreement and Plan of Merger entered into with Mitel, the Company suspended the ESPP and terminated all offering periods on April 15, 2016, and refunded ESPP contributions received from the participating employees toward the related purchases. Subsequently, the Company terminated the definitive Agreement and Plan of Merger with Mitel and entered into a definitive Agreement and Plan of Merger, dated July 8, 2016, to be acquired by an entity affiliated with Siris. Effective as of one day prior to the closing of the Merger, and contingent upon the closing of the Merger, the ESPP will be terminated. The Company expects that there will be no further offering periods under the ESPP prior to its termination in connection with the closing of the Merger. The Company recognized approximately $10.9 million of unamortized stock-based compensation expense in relation to the cancelled offering periods during the six months ended June 30, 2016. Refer to Note 1 for additional details regarding the proposed Merger.

Valuation Assumptions

For purchase rights granted pursuant to the ESPP, the estimated fair value per share of employee stock purchase rights for the two-year offering period commencing on February 1, 2016 ranged from $2.51 to $3.35, compared to the estimated fair value per share from $3.09 to $4.27 for the two-year offering period commencing on February 2, 2015.

The fair value of each employee stock purchase right grant is estimated on the date of grant using the Black-Scholes option valuation model and is recognized as expense using the graded vesting method using the following assumptions:

	Three and Six Months Ended
	June 30, 2016		June 30, 2015
Expected volatility	31.85-34.97%		30.04-30.73%
Risk-free interest rate	0.47-0.81%		0.07-0.49%
Expected dividends		0.0%		0.0%
Expected life (years)	0.5-2.0		0.5-2.0

The Company computed its expected volatility assumption based on blended volatility (50% historical volatility and 50% implied volatility). The selection of the blended volatility assumption was based upon the Company’s assessment that blended volatility is more representative of the Company’s future stock price trends as it weighs in the longer term historical volatility with the near term future implied volatility.

The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected life of the Company’s employee stock purchases.

The dividend yield assumption is based on the Company’s history of not paying dividends and no future expectation of dividend payouts.

The expected life of employee stock purchase rights represents the contractual terms of the underlying program.

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15. NET (LOSS) INCOME PER SHARE

The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except for per share amounts):

	Three Months Ended					Six Months Ended
	June 30, 2016			June 30, 2015		June 30, 2016			June 30, 2015
Numerator
Net (loss) income	$	(9,997	)	$	19,647	$	(6,662	)	$	40,845
Denominator
Weighted average shares outstanding, basic		135,700			134,057		134,934			134,417
Effect of dilutive potential common shares		—			3,290		—			3,873
Weighted average shares outstanding, diluted		135,700			137,347		134,934			138,290
Basic net (loss) income per share	$	(0.07	)	$	0.15	$	(0.05	)	$	0.30
Diluted net (loss) income per share	$	(0.07	)	$	0.14	$	(0.05	)	$	0.30
Antidilutive employee stock-based awards, excluded		2,757			637		3,337			483

Diluted shares outstanding include the dilutive effect of in-the-money employee equity share options, unvested performance shares, restricted stock units, and stock purchase rights under the ESPP. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Potentially dilutive shares are excluded from the computation of diluted net income per share when their effect is antidilutive. As a result of the net losses for the three and six months ended June 30, 2016, the shares used in computing basic and diluted net loss per share remained the same as the effect of all potentially issuable common shares is considered to be anti-dilutive.

16. BUSINESS SEGMENT INFORMATION

The Company conducts its business globally and is managed geographically in three segments: (1) Americas, which consists of North America and Caribbean and Latin America (“CALA”) reporting units, (2) Europe, Middle East and Africa (“EMEA”) and (3) Asia Pacific (“APAC”). The segments are determined in accordance with how management views and evaluates the Company’s business and allocates its resources, and are based on the criteria as outlined in the authoritative guidance.

Segment Revenue and Profit

Segment revenues consist of product and service revenues. Product revenues are attributed to a segment based on the ordering location of the customer. For internal reporting purposes and determination of segment contribution margins, geographic segment product revenues may differ slightly from actual geographic revenues due to internal revenue allocations between the Company’s segments. Service revenues are generally attributed to a segment based on the end-user’s location where services are performed. A significant portion of each segment’s expenses arises from shared services and infrastructure that Polycom has historically allocated to the segments in order to realize economies of scale and to use resources efficiently.

Segment contribution margin includes all geographic segment revenues less the related cost of sales and direct revenues and marketing expenses. Cost of revenues consists of the standard cost of revenues and does not include items such as warranty expense, royalties, and the allocation of overhead expenses, including facilities and IT costs, as well as stock-based compensation costs and amortization of purchased intangible assets. Management allocates some infrastructure costs, such as facilities and IT costs, in determining segment contribution margins. Contribution margin is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. Certain operating expenses are not allocated to segments because they are separately managed at the corporate level. These unallocated costs include corporate manufacturing costs, sales and marketing costs other than direct sales and marketing expenses, research and development expenses, general and administrative costs, such as legal and accounting, stock-based compensation costs, transaction-related costs, amortization of purchased intangibles, restructuring costs and interest and other income (expense), net.

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Segment Data

The results of the reportable segments are derived directly from Polycom’s management reporting system. Management measures the performance of each segment based on several metrics, including contribution margin as defined above. Asset data, with the exception of gross accounts receivable, is not reviewed by management at the segment level.

Financial information for each reportable geographical segment as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015, based on the Company’s internal management reporting system and as utilized by the Company’s Chief Operating Decision Maker (“CODM”), its Chief Executive Officer, is as follows (in thousands):

	Americas			EMEA			APAC			Total
For the three months ended June 30, 2016:
Revenue	$	142,019		$	72,660		$	73,100		$	287,779
% of total revenue		49	%		25	%		26	%		100	%
Contribution margin	$	52,721		$	27,820		$	31,341		$	111,882
% of segment revenue		37	%		38	%		43	%		39	%
For the three months ended June 30, 2015:
Revenue	$	158,333		$	80,865		$	77,377		$	316,575
% of total revenue		50	%		26	%		24	%		100	%
Contribution margin	$	60,765		$	31,987		$	35,975		$	128,727
% of segment revenue		38	%		40	%		46	%		41	%
For the six months ended June 30, 2016:
Revenue	$	297,513		$	146,189		$	134,152		$	577,854
% of total revenue		52	%		25	%		23	%		100	%
Contribution margin	$	115,588		$	54,772		$	58,498		$	228,858
% of segment revenue		39	%		37	%		44	%		40	%
For the six months ended June 30, 2015:
Revenue	$	315,687		$	174,714		$	156,874		$	647,275
% of total revenue		49	%		27	%		24	%		100	%
Contribution margin	$	121,616		$	74,764		$	72,088		$	268,468
% of segment revenue		39	%		43	%		46	%		41	%
As of June 30, 2016: Gross trade receivables	$	101,167		$	61,201		$	49,380		$	211,748
% of total gross trade receivables		48	%		29	%		23	%		100	%
As of December 31, 2015: Gross trade receivables	$	97,742		$	78,726		$	66,443		$	242,911
% of total gross trade receivables		40	%		33	%		27	%		100	%

During the three months ended June 30, 2016, two channel partners, ScanSource Communications (“ScanSource”) and Westcon Group, Inc. (“Westcon”), accounted for 23% and 11% of the Company’s total revenues, respectively. During the three months ended June 30, 2015, one channel partner, ScanSource, accounted for 23% of the Company’s total revenues. During the six months ended June 30, 2016, two channel partners, ScanSource and Westcon, accounted for 23% and 12% of the Company’s total revenues, respectively. During the six months ended June 30, 2015, one channel partner, ScanSource, accounted for 19% of the Company’s total revenues. ScanSource accounted for 24% and 20%, respectively, of total gross trade receivables at June 30, 2016 and December 31, 2015.

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The reconciliation of segment information to Polycom consolidated totals is as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Segment contribution margin	$	111,882		$	128,727		$	228,858		$	268,468
Corporate and unallocated costs		(75,446	)		(91,158	)		(159,549	)		(189,500	)
Stock-based compensation expense		(21,606	)		(9,711	)		(33,087	)		(18,943	)
Effect of stock-based compensation expense on warranty    rates expense		(235	)		(80	)		(341	)		(133	)
Amortization of purchased intangibles		(2,117	)		(2,517	)		(4,417	)		(5,591	)
Restructuring costs		(6,007	)		(343	)		(13,509	)		(367	)
Transaction-related costs		(7,887	)		—			(12,131	)		—
Interest and other income (expense), net		298			(178	)		(470	)		(1,640	)
(Loss) income before provision for income taxes	$	(1,118	)	$	24,740		$	5,354		$	52,294

The following table summarizes the Company’s revenues, which includes products and services, by product category (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Revenues:
UC group systems	$	171,411	$	195,169	$	350,315	$	399,820
UC personal devices		68,774		66,802		136,584		134,267
UC platform		47,594		54,604		90,955		113,188
Total	$	287,779	$	316,575	$	577,854	$	647,275

17. INCOME TAXES

The following table presents the income tax expense and the effective tax rates (in thousands):

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Provision for income taxes	$	8,879		$	5,093		$	12,016		$	11,449
Effective tax rate		(794.2	)%		20.6	%		224.4	%		21.9	%

The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions, and the effective tax rate reflects the applicable tax rates in effect in the various tax jurisdictions around the world where income is earned. During the three and six months ended June 30, 2016, the Company incurred losses in a jurisdiction where no tax benefit could be recorded. As a result, the forecasted losses from this jurisdiction were excluded from the determination of tax expense for the period. The tax impact of excluding the losses from the interim tax recorded was additional expense of $1.3 million and $3.1 million for the three and six months ended June 30, 2016, respectively. Additionally, the effective tax rate for the three and six months ended June 30, 2016 and 2015 differs from the U.S. federal statutory rate of 35% primarily due to impacts associated with proportional earnings from the Company’s operations in lower tax jurisdictions, recurring permanent adjustments, and discrete items recorded during the period presented. A significant portion of pretax (loss) income is generated and taxed outside the U.S. The impact on the tax provision due to lower statutory tax rates in foreign jurisdictions was additional expense of $0.3 million and a benefit of approximately $1.3 million for the three and six months ended June 30, 2016, respectively, and a benefit of $4.8 million and $10.1 million for the three and six months ended June 30, 2015, respectively.

The effective income tax rate can be impacted each period by discrete factors or events. For the three and six months ended June 30, 2016 and 2015, discrete benefits of $0.3 million and $0.7 million and $0.2 million and $0.7 million, respectively, were recorded for tax benefits realized on disqualifying dispositions of stock from the Company’s employee stock purchase plan. Additional discrete items recorded in the three months ended June 30, 2016 were $3.1 million in tax accrued related to accelerated non-deductible stock-based compensation expense related to the termination of the employee stock purchase plan and $1.6 million in aggregate to correct for out-of-period adjustment related to the transfer pricing charges for a foreign subsidiary for the years ended

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December 31, 2015 and 2014. The Company concluded that such amount is not material to any of its previously issued financial statements and therefore recorded the correction in the second quarter of 2016.

As of June 30, 2016, the amount of gross unrecognized tax benefits was $21.0 million, all of which would affect the Company’s effective tax rate if realized. The Company recognizes interest income and interest expense and penalties on tax overpayments and underpayments within income tax expense. As of June 30, 2016 and December 31, 2015, the Company had approximately $1.7 million and $1.4 million, respectively, of accrued interest and penalties related to uncertain tax positions. The Company anticipates that, except for $1.3 million in uncertain tax positions that may be reduced related to the lapse of various statutes of limitation, there will be no material changes in uncertain tax positions in the next 12 months.

The Company is a U.S. based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions, and has entered into agreements with the local governments in certain foreign jurisdictions where it has significant operations to provide it with favorable tax rates in those jurisdictions if certain criteria are met. The tax benefit realized from favorable tax rates for the three months ended June 30, 2016 and 2015 were not material in the aggregate and did not have a material impact on earnings per share.

The Company regularly assesses the ability to realize deferred tax assets recorded in all entities based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income. If the Company’s future business profits do not support the realization of deferred tax assets, an addition to the valuation allowance could be recorded. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

On July 27, 2015, the United States Tax Court (the “Court”) issued a taxpayer-favorable opinion with respect to Altera Corporation (“Altera”)’s litigation with the Internal Revenue Service (“IRS”). The litigation relates to the treatment of share-based compensation expense in an inter-company cost-sharing arrangement with the taxpayer’s foreign subsidiary for fiscal years 2004 through 2007. In its opinion, the Court accepted Altera’s position of excluding share-based compensation in its cost sharing arrangement and concluded that the related IRS Regulations were invalid. On December 1, 2015, the Court issued its final decision with respect to Altera’s litigation with the IRS. Subsequent to the decision, the IRS filed its appeal with the United States Court of Appeals for the Ninth Circuit on June 27, 2016, and as such, no adjustment to the consolidated financial statement is recorded at this time. The Company is monitoring this case for any material impact to its consolidated financial statement and potential favorable implications to the Company’s cost-sharing arrangement.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS IN CONJUNCTION WITH OUR CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES. EXCEPT FOR HISTORICAL INFORMATION, THE FOLLOWING DISCUSSION CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. WHEN USED IN THIS REPORT, THE WORDS “MAY,” “BELIEVE,” “COULD,” “ANTICIPATE,” “WOULD,” “MIGHT,” “PLAN,” “EXPECT,” “WILL,” “INTEND,” “POTENTIAL,” “OBJECTIVE,” “STRATEGY,” “SHOULD,” “DESIGNED,” AND SIMILAR EXPRESSIONS OR THE NEGATIVE OF THESE TERMS ARE INTENDED TO IDENTIFY FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS, INCLUDING, AMONG OTHER THINGS, STATEMENTS REGARDING OUR UNIQUE POSITION AND PRODUCTS, IMPORTANT DRIVERS, CUSTOMER AND GEOGRAPHIC REVENUE LEVELS AND MIX, GROSS MARGINS, OPERATING COSTS AND EXPENSES AND OUR CHANNEL INVENTORY LEVELS, INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE FUTURE RESULTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN “RISK FACTORS” IN THIS DOCUMENT, AS WELL AS OTHER INFORMATION FOUND IN THE DOCUMENTS WE FILE FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING OUR ANNUAL REPORT ON FORM 10-K AS AMENDED FOR THE YEAR ENDED DECEMBER 31, 2015.

Overview

We are a global leader in helping organizations achieve new levels of teamwork, efficiency and productivity by unleashing the power of human collaboration. We offer open, standards-based unified communications and collaboration (“UC&C”) solutions for voice, video and content sharing and a comprehensive line of support and service solutions to ensure customer success. Our solutions are powered by the Polycom^®RealPresence^® Platform, a flexible and comprehensive infrastructure offering with broad application programming interfaces (“APIs”) that can be deployed via software and/or hardware, on-premises or in the cloud, or in hybrid implementations. The RealPresence^® Platform interoperates with a broad set of communication, business, mobile, cloud applications and devices to deliver secure face-to-face collaboration across different environments. With RealPresence^® collaboration solutions, from infrastructure to endpoints for all environments, people all over the world can connect and collaborate naturally without being in the same physical location. Individuals and teams can communicate and collaborate with high definition (“HD”) voice, video and content experiences from their desktops, meeting rooms, classrooms, home offices, mobile devices, web browsers, and specialized solutions such as video carts for healthcare, education and manufacturing applications and solutions for government agencies and judicial applications. By removing the barriers of distance and time, connecting experts to where they are needed most, and creating greater trust and understanding through improved collaboration, Polycom enables teams to make better decisions faster and to increase their productivity while saving time and money and being environmentally responsible.

We sell our solutions globally through a high-touch sales model that leverages our broad network of channel partners, including distributors, value-added resellers, direct market resellers (“DMR”), system integrators, leading communications services providers, and retailers. We manufacture our products through an outsourced model optimized for quality, reliability and fulfillment agility.

We believe important drivers for the adoption of collaboration solutions include:

· ease of use and ease of deployment;

· growth of video as a preferred method of communication;

· increasing presence of video on desktop and laptop devices;

· growth of video-capable mobile devices (including tablets and smartphones);

· growth of Skype for Business in the corporate environment and the resulting impact on sales of Polycom’s Skype for Business-compatible voice and video devices;

· expansion of business applications with integrated web-based video and content collaboration;

· virtualization and the move to private, public, and hybrid clouds;

· adoption of UC&C by SMBs;

· growth of the number of teleworkers globally;

· new pricing models and options for video delivery, including subscription-based software pricing and as-a-service offerings;

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· emergence of Bring Your Own Device (“BYOD”) programs in businesses of all sizes, across all regions;  

· demand for UC&C solutions for B2B and B2C communications and the move of consumer applications into the business space; and

· continued commitment by organizations and individuals to reduce their carbon footprint and expenses by choosing voice, video and content collaboration over travel.

We believe we are uniquely positioned as the UC&C ecosystem partner of choice through our strategic partnerships, open support of standards, innovative technology, multiple delivery modes, and customer-centric go-to-market capabilities.

Revenues for the three and six months ended June 30, 2016 were $287.8 million and $577.9 million, respectively, a decrease of $28.8 million or 9%, and $69.4 million or 11%, respectively, from the same periods in 2015. Both product and service revenues declined on a year-over-year basis during the three and six months ended June 30, 2016. The overall decrease in product revenues was primarily due to lower revenues from our UC group systems and UC platform products. With the exception of the fourth quarter of 2014 for UC group systems, both our UC group system and UC platform product revenues have declined year-over-year since the first quarter of 2012. This is primarily due to lower group video product revenues and, to a lesser extent, decreased sales of our RealPresence^® Platform hardware and software products. We expect this trend to continue at least in the near term. Service revenues decreased from the same periods in 2015 as a result of lower maintenance service revenues due to the decrease in UC group systems and UC platform products revenues, a decrease in Halo related managed service revenues, and lower platform implementation service revenues. Halo related managed services resulted from the visual collaboration business we acquired in 2011. Revenues from these services have decreased as the managed services contracts expire and in some cases, customers elect to purchase other Polycom product solutions rather than renew their managed services contracts.

From a segment perspective, our Americas, EMEA, and APAC segment revenues accounted for 49%, 25%, and 26%, respectively, of our total revenues in the three months ended June 30, 2016. Our Americas, EMEA, and APAC segment revenues for the three months ended June 30, 2016 decreased by 10% for both Americas and EMEA, and 6% for APAC as compared to the same period in 2015. During the six months ended June 30, 2016, our Americas, EMEA, and APAC segment revenues accounted for 52%, 25%, and 23%, respectively, of our total revenues. Our Americas, EMEA, and APAC segment revenues for the six months ended June 30, 2016 decreased by 6%, 16%, and 14%, respectively, as compared to the same period of 2015. On a year-over-year basis, both product and service revenues declined across all of our geographic segments in the three and six months ended June 30, 2016 as compared to the same periods in 2015.

Operating margins for the three and six months ended June 30, 2016 decreased by approximately 8 percentage points and 7 percentage points, respectively, as compared to the same periods in 2015. The decrease in operating margins was primarily due to higher transaction-related costs, decreased gross margins resulting from a product mix shift toward lower margin UC personal devices products, higher restructuring costs, and higher stock-based compensation expense due to recognition of approximately $10.9 million of unamortized stock-based compensation expense in relation to the cancelled ESPP offering periods during the three and six months ended June 30, 2016. See Note 14 of Notes to Condensed Consolidated Financial Statements for further information on stock-based compensation expense.

During the six months ended June 30, 2016, we generated $72.3 million in cash flows from operating activities which, after the impact of investing and financing activities, and foreign exchange rate changes described in detail under “Liquidity and Capital Resources,” resulted in a $141.4 million net increase in our total cash and cash equivalents from December 31, 2015.

On April 15, 2016, we entered into a definitive Agreement and Plan of Merger with Mitel Networks Corporation (“Mitel”) to be acquired for $3.12 in cash and 1.31 common shares of Mitel for each share of our common stock.

On July 8, 2016, we terminated the definitive Agreement and Plan of Merger with Mitel and entered into a definitive Agreement and Plan of Merger with Triangle Private Holdings I, LLC (“NewCo”), an entity affiliated with Siris Capital Group, LLC (“Siris”) to be acquired for $12.50 in cash for each share of our common stock (the “Merger”). Consummation of the Merger is subject to customary closing conditions, including, without limitation, (i) the absence of certain legal impediments, (ii) the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) antitrust regulatory approval in Germany and Russia, and (iv) approval by our stockholders of the Merger. In connection with terminating the definitive agreement with Mitel, we paid a $60 million termination fee to Mitel (the “Mitel Termination Fee”) on July 8, 2016, which was reimbursed by NewCo on July 22, 2016. If we terminate the definitive agreement with NewCo under specified circumstances, we may be required to pay NewCo a $60 million termination fee and/or repay to NewCo the Mitel Termination Fee that NewCo reimbursed to us.

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Results of Operations for the Three and Six Months Ended June 30, 2016 and 2015

Revenues

We manage our business primarily on a geographic basis, organized into three geographic segments. Our revenues, which include product and service revenues, for each segment are summarized in the following table:

	Three Months Ended									Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			Decrease			June 30, 2016			June 30, 2015			Decrease
Americas	$	142,019		$	158,333			(10	)%	$	297,513		$	315,687			(6	)%
% of total revenues		49	%		50	%					52	%		49	%
EMEA	$	72,660		$	80,865			(10	)%	$	146,189		$	174,714			(16	)%
% of total revenues		25	%		26	%					25	%		27	%
APAC	$	73,100		$	77,377			(6	)%	$	134,152		$	156,874			(14	)%
% of total revenues		26	%		24	%					23	%		24	%
Total revenues	$	287,779		$	316,575			(9	)%	$	577,854		$	647,275			(11	)%

Revenues decreased across all of our geographic segments in the three and six months ended June 30, 2016 as compared to the same periods in 2015 primarily driven by decreased revenues in several of our key markets, primarily in the United States, CALA, China, the Middle East, and Germany, partially offset by year-over-year growth in India and Canada. Year-over-year results for EMEA revenues were primarily impacted by unfavorable foreign currency exchange rates. On a year-over-year basis, both product and service revenues declined across all of our geographic segments in the three and six months ended June 30, 2016.

The overall decrease in revenues in the three and six months ended June 30, 2016, as compared to the same periods in 2015, was primarily due to a decrease in product revenues of $20.2 million and $50.6 million, respectively, and to a lesser extent, service revenues which decreased by $8.6 million and $18.8 million, respectively, as compared to the same periods in 2015. The year-over-year decrease in product revenues was primarily due to lower revenues from our UC group systems and UC platform products primarily due to lower group video product revenues and, to a lesser extent, decreased sales of our RealPresence^® Platform hardware and software products. The decrease in service revenues was primarily driven by lower maintenance service revenues due to the decrease in UC group systems and UC platform products revenues, a decrease in Halo related managed service revenues, and lower platform implementation service revenues. As a result of declines in product revenues, as well as a greater mix of UC personal devices revenues which have lower service attach rates as compared to our UC group systems and UC platform products, service revenues from new maintenance contracts have declined over the last several quarters and this trend is likely to continue.

During the three months ended June 30, 2016, two channel partners, ScanSource Communications (“ScanSource”) and Westcon Group, Inc. (“Westcon”), accounted for 23% and 11% of our total revenues, respectively. During the three months ended June 30, 2015, one channel partner, ScanSource, accounted for 23% of our total revenues. During the six months ended June 30, 2016, two channel partners, ScanSource and Westcon, accounted for 23% and 12% of our total revenues, respectively. During the six months ended June 30, 2015, one channel partner, ScanSource, accounted for 19% of our total revenues. We believe it is unlikely that the loss of any of our channel partners would have a long-term material adverse effect on our consolidated revenues as we believe end-users would likely purchase our products from a different channel partner. However, a loss of any one of these channel partners could have a short-term material adverse impact.

The following table summarizes revenues, which includes products and services, by product category:

	Three Months Ended									Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			Increase (Decrease)			June 30, 2016			June 30, 2015			Increase (Decrease)
UC group systems	$	171,411		$	195,169			(12	)%	$	350,315		$	399,820			(12	)%
% of total revenues		60	%		62	%					60	%		62	%
UC personal devices	$	68,774		$	66,802			3	%	$	136,584		$	134,267			2	%
% of total revenues		24	%		21	%					24	%		21	%
UC platform	$	47,594		$	54,604			(13	)%	$	90,955		$	113,188			(20	)%
% of total revenues		16	%		17	%					16	%		17	%
Total revenues	$	287,779		$	316,575			(9	)%	$	577,854		$	647,275			(11	)%

UC group systems include all group video, group voice and immersive telepresence systems products and the related service elements. The decrease in UC group systems revenues for the three and six months ended June 30, 2016 compared to the same periods

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in 2015 was primarily driven by decreased sales of our UC group video products and the related servicesacross our three geographic segments and, to a lesser extent, decreased sales of immersive telepresence products and the related services across all three geographic segments.Sales of our UC group voice products and related services increased in the three months ended June 30, 2016 across all three of our geographic segments and decreased in the six months ended June 30, 2016 due to decreased sales in the Americas and APAC, offset in part by increased sales in EMEA. 

UC personal devices include desktop voice products and desktop video devices. The increase in UC personal devices revenues for the three and six months ended June 30, 2016 compared to the same periods in 2015 was primarily due to increased sales of our desktop voice products in our EMEA and, to a lesser extent, APAC segments, offset in part by decreased sales in the Americas.

UC platform includes our RealPresence^® Platform hardware and software products and the related service elements. The decrease in UC platform products and related services for the three and six months ended June 30, 2016 compared to the same periods in 2015 was primarily driven by decreased sales across all three geographic segments. A significant portion of UC Platform revenue typically comes from China, which had lower revenues on a year-over-year basis.

Cost of Revenues and Gross Margins

	Three Months Ended									Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			Decrease			June 30, 2016			June 30, 2015			Decrease
Cost of product revenues	$	94,029		$	95,752			(2	)%	$	189,084		$	197,021			(4	)%
% of product revenues		47	%		43	%					47	%		43	%
Product gross margins		53	%		57	%					53	%		57	%
Cost of service revenues	$	32,478		$	34,898			(7	)%	$	63,669		$	71,509			(11	)%
% of service revenues		38	%		37	%					37	%		37	%
Service gross margins		62	%		63	%					63	%		63	%
Total cost of revenues	$	126,507		$	130,650			(3	)%	$	252,753		$	268,530			(6	)%
% of total revenues		44	%		41	%					44	%		41	%
Total gross margins		56	%		59	%					56	%		59	%

Cost of Product Revenues and Product Gross Margins

Cost of product revenues consists primarily of contract manufacturer costs, including material and direct labor, our manufacturing organization costs, freight expense, tooling depreciation, outside services expense, stock-based compensation expense, an allocation of overhead expenses, including facilities and IT costs, warranty expense, and amortization of certain intangible assets. Cost of product revenues and product gross margins included charges for stock-based compensation expense of $1.1 million and $0.5 million for the three months ended June 30, 2016 and 2015, respectively, and $1.9 million and $1.5 million for the six months ended June 30, 2016 and 2015, respectively.

Our UC platform and UC group systems products typically have a higher gross margin than our UC personal products, and overall product gross margins will fluctuate depending upon the product mix in any given period or geography.

For the three and six months ended June 30, 2016, the decrease in product gross margins was primarily due to a change in product mix toward lower margin UC personal devices.

Cost of Service Revenues and Service Gross Margins

Cost of service revenues consists primarily of material and direct labor, including outside services, an allocation of overhead expenses, including facilities and IT costs, stock-based compensation expense, freight and repair costs, and managed network expenses. Cost of service revenues and service gross margins included charges for stock-based compensation expense of $2.4 million and $0.9 million for the three months ended June 30, 2016 and 2015, respectively, and $3.5 million and $2.2 million for the six months ended June 30, 2016 and 2015, respectively.

For the three months ended June 30, 2016, service gross margins decreased slightly compared to the same period in 2015 primarily due to increased cost of services as a percentage of revenues as a result of higher stock-based compensation expense, partially offset by lower headcount-related costs, including compensation, and lower managed network expenses. For the six months ended June 30, 2016, service gross margins remained relatively flat compared to the same period in 2015.

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Total Cost of Revenues and Total Gross Margins

Total gross margins in the three and six months ended June 30, 2016 decreased compared to the same periods in 2015 primarily due to the decrease in product gross margins as discussed above.

Forecasting future gross margin percentages is difficult, and there are a number of risks related to our ability to maintain or improve our current gross margin levels. Our cost of revenues as a percentage of revenues can vary significantly based upon a number of factors such as the following: uncertainties surrounding revenue levels, including future pricing and/or potential discounts, and related production level variances; the impact of foreign currency rate fluctuations; competition; the extent to which new services sales accompany our product sales as well as maintenance renewal rates; changes in technology; changes in product mix; variability of stock-based compensation costs; royalties to third parties; utilization of our professional services personnel as we develop our professional services practice and make investments to expand our professional services offerings; fluctuations in freight and repair costs; our ability to achieve greater efficiencies in the installations of our immersive telepresence products; manufacturing efficiencies of subcontractors; manufacturing and purchase price variances; changes in prices on commodity components; warranty and repair costs; and the timing of sales.

Sales and Marketing Expenses

	Three Months Ended									Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			Decrease			June 30, 2016			June 30, 2015			Decrease
Sales and marketing	$	82,505		$	89,433			(8	)%	$	161,968		$	180,292			(10	)%
% of total revenues		29	%		28	%					28	%		28	%

Sales and marketing expenses consist primarily of compensation costs, including stock-based compensation expense and commissions for our sales force, an allocation of overhead expenses, including facilities and IT costs, product marketing expenses, outside services expense, and advertising and promotional expenses. Sales and marketing expenses, except for direct sales and marketing expenses, are not allocated to our segments. Sales and marketing expenses included charges for stock-based compensation expense of $7.6 million and $2.7 million for the three months ended June 30, 2016 and 2015, respectively, and $11.3 million and $5.3 million for the six months ended June 30, 2016 and 2015, respectively.

During the three and six months ended June 30, 2016, sales and marketing expenses decreased compared to the same periods in 2015 primarily due to lower headcount-related costs, including compensation and commission expenses, and decreased spending on outside services, partially offset by higher stock-based compensation expense. Sales and marketing headcount decreased by 12% from June 30, 2015 to June 30, 2016. The overall decrease in sales and marketing expenses is in line with our plans to improve operating performance.

We expect our sales and marketing expenses to continue to decrease in the near term. Expenses will fluctuate depending on revenue levels as certain expenses, such as commissions, are determined based upon the revenues achieved. Forecasting sales and marketing expenses as a percentage of revenues is highly dependent on expected revenue levels and could vary significantly depending on actual revenues achieved in any given quarter and the timing of stock-based compensation expense. Marketing expenses will also fluctuate depending upon the timing and extent of marketing programs as we market new products.

Research and Development Expenses

	Three Months Ended									Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			Decrease			June 30, 2016			June 30, 2015			Decrease
Research and development	$	43,981		$	46,545			(6	)%	$	87,051		$	95,882			(9	)%
% of total revenues		15	%		15	%					15	%		15	%

Research and development costs are expensed as incurred and consist primarily of compensation costs, including stock-based compensation expense, an allocation of overhead expenses, including facilities and IT costs, outside services expense, depreciation, and expensed materials. Research and development costs are not allocated to our segments. Research and development expenses included charges for stock-based compensation expense of $4.9 million and $1.9 million for the three months ended June 30, 2016 and 2015, respectively, and $6.9 million and $4.5 million for the six months ended June 30, 2016 and 2015, respectively.

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During the three and six months ended June 30, 2016, research and development expensesdecreased compared to the same periods in 2015 primarily due to lower headcount-related costs, largely compensation and related benefits, and decreased facilities and IT costs, partially offset by higher stock-based compensation expense and increased outside services expense. Research and development headcount decreased by 16% from June 30, 2015 to June 30, 2016.The overall decrease in research and development expenses is in line with our plans to improve operating performance, while investing in accretive areas and development of new products.

We believe that innovation and technological leadership are critical to our future success, and we are committed to continuing a significant level of research and development to develop new technologies and products to remain competitive. We are also investing in research and development projects designed to further our key strategic initiatives with our strategic partners and service provider customers. Research and development expenses as a percentage of revenues are highly dependent on expected revenue levels and could vary significantly depending on actual revenues achieved, the timing of stock-based compensation expense and the number of development activities in any given quarter. We expect our research and development costs to continue to decrease in the near term due to decreased stock-based compensation expense.

General and Administrative Expenses

	Three Months Ended									Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			Decrease			June 30, 2016			June 30, 2015			Decrease
General and administrative	$	20,291		$	22,269			(9	)%	$	40,401		$	43,436			(7	)%
% of total revenues		7	%		7	%					7	%		7	%

General and administrative expenses consist primarily of compensation costs, including stock-based compensation expense, an allocation of overhead expenses, including facilities and IT costs, outside services expense, litigation costs, and professional service fees. General and administrative expenses are not allocated to our segments. General and administrative expenses included charges for stock-based compensation expense of $5.6 million and $3.7 million for the three months ended June 30, 2016 and 2015, respectively, and $9.5 million and $5.5 million for the six months ended June 30, 2016 and 2015, respectively.

During the three and six months ended June 30, 2016, general and administrative expenses decreased compared to the same periods in 2015 primarily due to lower headcount-related costs, including compensation and related benefits, partially offset by higher stock-based compensation expenses. General and administrative headcount decreased by 3% from June 30, 2015 to June 30, 2016. The overall decrease in general and administrative expenses is in line with our plans to improve operating performance.

Significant future charges due to costs associated with litigation or uncollectable receivables could increase our general and administrative expenses and negatively affect our profitability in the quarter in which they are recorded. Additionally, predicting the timing of litigation and bad debt expense associated with uncollectible receivables is difficult. Future general and administrative expense increases or decreases in absolute dollars are difficult to predict due to the lack of visibility of certain costs, including legal costs associated with defending claims against us, as well as legal costs associated with asserting and enforcing our intellectual property portfolio and other factors. We expect our general and administrative expenses to continue to decrease in the near term, but they could fluctuate depending on the level and timing of stock-based compensation expense and expenditures associated with litigation.

Amortization of Purchased Intangibles

During the three months ended June 30, 2016 and 2015, we recorded amortization of purchased intangibles related to acquisitions of approximately $2.0 million and $2.4 million, respectively, in operating expenses and $0.1 million in cost of product revenues in both periods. During the six months ended June 30, 2016 and 2015, we recorded amortization of purchased intangibles related to acquisitions of approximately $4.2 million and $4.8 million in operating expenses and $0.2 million and $0.8 million, in cost of product revenues, respectively. The year-over-year decrease in amortization expenses was primarily due to certain intangible assets acquired in prior years being fully amortized. We expect amortization expenses will continue to decline in the near term provided no purchases of new intangible assets, as certain existing intangible assets will be fully amortized in 2016.

Restructuring Costs

We recorded net restructuring charges of $6.0 million and $0.3 million, respectively, during the three months ended June 30, 2016 and 2015, and $13.5 million and $0.4 million, respectively, during the six months ended June 30, 2016 and 2015.

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Restructuring costs during the three and six months ended June 30, 2016were primarily related to certain actions announced in December 2015, which included the reduction of approximately 11 percent of our global workforce that is expected to be substantially complete by the fourth quarter of 2016 and charges related to vacating certain leased facilities.These actions were designed to improve our profitability by strategically investing in more accretive areas of the business and further leveraging our outsource partners.

The restructuring charges during the three and six months ended June 30, 2015 include accruals for severance payments for certain employees who were notified during this period, and adjustments related to a change in assumptions used in our facilities-related restructuring reserves estimate. See Note 6 of Notes to Condensed Consolidated Financial Statements for further information on restructuring.

In the future, we may take additional restructuring actions to gain operating efficiencies or reduce our operating expenses, while simultaneously implementing additional cost containment measures and expense control programs. Such restructuring actions are subject to significant risks, including delays in implementing expense control programs or workforce reductions and the failure to meet operational targets due to the loss of employees or a decrease in employee morale, all of which would impair our ability to achieve anticipated cost reductions. If we do not achieve the anticipated cost reductions, our business could be harmed. In addition, the restructuring reserve is net of estimated sublease income we expect to generate. Our estimate of sublease income is based on current comparable rates for leases in the respective markets. If actual sublease income is lower than our estimates for any reason, if it takes us longer than we estimated to sublease these facilities, or if the associated cost of, or our recorded liability related to, subleasing or terminating our lease obligations for these facilities is greater than we estimated, we would incur additional charges to operations which would harm our business, results of operations and cash flows.

Transaction-related Costs

Transaction-related costs during the three and six months ended June 30, 2016 were $7.9 million and $12.1 million, respectively, primarily related to legal and consulting fees incurred in relation to the transaction with Mitel which was subsequently terminated and the proposed Merger with an entity affiliated with Siris. There were no transaction-related costs during the three and six months ended June 30, 2015. We expense all acquisition-related and other transaction-related costs as incurred.

Interest and Other Income (Expense), Net

	Three Months Ended						Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Interest expense	$	(1,668	)	$	(1,523	)	$	(3,305	)	$	(3,007	)
Other income (expense), net		1,966			1,345			2,835			1,367
Interest and other income (expense), net	$	298		$	(178	)	$	(470	)	$	(1,640	)

Interest expense consists primarily of interest on our borrowings under the Credit Agreement entered into in September 2013 and imputed interest related to certain long term obligations. Other income (expense), net consists primarily of non-income based taxes and fees, interest earned on our cash, cash equivalents and investments less bank charges resulting from the use of our bank accounts, foreign exchange related gains and losses, and realized gains and losses on investments.

We expect interest expense to slightly increase in the near term. Interest expense will fluctuate due to changes in interest rates and outstanding debt balances or other long-term obligations for which we record imputed interest.

The increase in net other income during the three months ended June 30, 2016 compared to same period in 2015 was primarily due to higher interest income and, to a lesser extent, foreign exchange related gains.

The increase in net other income during the six months ended June 30, 2016 compared to same period in 2015 was primarily due to higher interest income and foreign exchanged related gains, partially offset by lower non-income based business tax.

Other income (expense), net will fluctuate due to changes in interest rates and returns on our cash and cash equivalents and investments, any future impairment of investments, foreign currency rate fluctuations on un-hedged exposures, fluctuations in costs associated with our hedging program and timing of non-income based taxes and license fees. The balance of cash and cash equivalents and investments could decrease depending upon the amount of cash used in our stock repurchase activity, any future acquisitions, and other factors, which would also impact our interest income.

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Provision for Income Taxes

	Three Months Ended						Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Provision for income taxes	$	8,879		$	5,093		$	12,016		$	11,449
Effective tax rate		(794.2	)%		20.6	%		224.4	%		21.9	%

We are subject to income taxes in the U.S. and numerous foreign jurisdictions, and the effective tax rate reflects the applicable tax rates in effect in the various tax jurisdictions around the world where income is earned. During the three and six months ended June 30, 2016, we incurred losses in a jurisdiction where no tax benefit could be recorded. As a result, the forecasted losses from this jurisdiction were excluded from the determination of tax expense for the period. The tax impact of excluding the losses from the interim tax recorded was additional expense of $1.3 million and $3.1 million for the three and six months ended June 30, 2016, respectively. Additionally, the effective tax rate for the three and six months ended June 30, 2016 and 2015 differs from the U.S. federal statutory rate of 35% primarily due to impacts associated with proportional earnings from our operations in lower tax jurisdictions, recurring permanent adjustments, and discrete items recorded during the period presented. A significant portion of pretax (loss) income is generated and taxed outside the U.S. The impact on the tax provision due to lower statutory tax rates in foreign jurisdictions was additional expense of $0.3 million and a benefit of approximately $1.3 million for the three and six months ended June 30, 2016, respectively, and a benefit of $4.8 million and $10.1 million, respectively, for the three and six months ended June 30, 2015.

The effective income tax rate can be impacted each period by discrete factors or events. For the three and six months ended June 30, 2016 and 2015, discrete benefits of $0.3 million and $0.7 million and $0.2 million and $0.7 million, respectively, were recorded for tax benefits realized on disqualifying dispositions of stock from our employee stock purchase plan. Additional discrete items recorded in the three months ended June 30, 2016 were $3.1 million in tax accrued related to accelerated non-deductible stock-based compensation expense related to the termination of the employee stock purchase plan and $1.6 million in aggregate to correct for out-of-period adjustment related to the transfer pricing charges for a foreign subsidiary for the years ended December 31, 2015 and 2014. The Company concluded that such amount is not material to any of its previously issued financial statements and therefore recorded the correction in the second quarter of 2016.

As of June 30, 2016, the amount of gross unrecognized tax benefits was $21.0 million, all of which would affect our effective tax rate if realized. We recognize interest income and interest expense and penalties on tax overpayments and underpayments within income tax expense. As of June 30, 2016 and December 31, 2015, we had approximately $1.7 million and $1.4 million, respectively, of accrued interest and penalties related to uncertain tax positions. We anticipate that, except for $1.3 million in uncertain tax positions that may be reduced related to the lapse of various statutes of limitation, there will be no material changes in uncertain tax positions in the next 12 months.

We are a U.S. based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions, and we have entered into agreements with the local governments in certain foreign jurisdictions where we have significant operations to provide us with favorable tax rates in those jurisdictions if certain criteria are met. The tax benefit realized from favorable tax rates for the quarters ended June 30, 2016 and 2015 were not material in the aggregate and did not have a material impact on earnings per share.

We regularly assess the ability to realize deferred tax assets recorded in all entities based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income. If our future business profits do not support the realization of deferred tax assets, an addition to the valuation allowance could be recorded. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

On July 27, 2015, the United States Tax Court (the “Court”) issued a taxpayer-favorable opinion with respect to Altera Corporation (“Altera”)’s litigation with the Internal Revenue Service (“IRS”). The litigation relates to the treatment of share-based compensation expense in an inter-company cost-sharing arrangement with the taxpayer’s foreign subsidiary for fiscal years 2004 through 2007. In its opinion, the Court accepted Altera’s position of excluding share-based compensation in its cost sharing arrangement and concluded that the related IRS Regulations were invalid. On December 1, 2015, the Court issued its final decision with respect to Altera’s litigation with the IRS. Subsequent to the decision, the IRS filed its appeal with the United States Court of Appeals for the Ninth Circuit on June 27, 2016, and as such, no adjustment to the consolidated financial statement is recorded at this time. We are monitoring this case for any material impact to our consolidated financial statement and potential favorable implications to the Company’s cost-sharing arrangement.

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Unanticipated changes in our tax rates could affect our future results of operations. Our future effective tax rates, which are difficult to predict, could be unfavorably affected by changes in, or interpretation of, tax rules and regulations in the jurisdictions in which we do business, by unanticipated decreases in the amount of revenue or earnings in countries with low statutory tax rates, by lapses of the availability of the U.S. research and development tax credit, or by changes in the valuation of our deferred tax assets and liabilities. Further, the accounting for stock-based compensation expense in accordance with ASC 718 and uncertain tax positions in accordance with ASC 740 could result in more unpredictability and variability to our future effective tax rates.

We are also subject to the periodic examination of our income tax returns by the IRS and other tax authorities, and in some cases, we have received additional tax assessments. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. We may underestimate the outcome of such examinations which, if significant, would have a material adverse effect on our results of operations and financial condition. The timing of the resolution of income tax examinations is highly uncertain and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. While it is reasonably possible that some issues in current on-going tax examinations could be resolved within the next 12 months, based on the current facts and circumstances, we cannot estimate the timing of such resolution or the range of potential changes as it relates to the unrecognized tax benefits that are recorded in our consolidated financial statements. We do not expect any material settlements in the next 12 months, but the outcomes of these examinations are inherently uncertain. For further discussion of our income tax provision, see Note 17 of the Notes to Condensed Consolidated Financial Statements.

Segment Information

Our business is conducted globally and managed geographically in three segments: (1) Americas, which consists of North America and Caribbean and Latin America (“CALA”) reporting units; (2) Europe, Middle East and Africa (“EMEA”); and (3) Asia Pacific (“APAC”). The segments are determined in accordance with how management views and evaluates its business and allocates its resources, and based on the criteria as outlined in the authoritative guidance.

A description of our products and services as well as selected financial data for each segment can be found in Note 16 of the Notes to Condensed Consolidated Financial Statements. Future changes to our organizational structure or business may result in changes to the reportable segments disclosed.

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The following is a summary of the financial information for each of our segments as of the dates and for the periods indicated (in thousands):

	Americas			EMEA			APAC			Total
For the three months ended June 30, 2016:
Revenues	$	142,019		$	72,660		$	73,100		$	287,779
% of total revenues		49	%		25	%		26	%		100	%
Contribution margin	$	52,721		$	27,820		$	31,341		$	111,882
% of segment revenues		37	%		38	%		43	%		39	%
For the three months ended June 30, 2015:
Revenues	$	158,333		$	80,865		$	77,377		$	316,575
% of total revenues		50	%		26	%		24	%		100	%
Contribution margin	$	60,765		$	31,987		$	35,975		$	128,727
% of segment revenues		38	%		40	%		46	%		41	%
For the six months ended June 30, 2016:
Revenues	$	297,513		$	146,189		$	134,152		$	577,854
% of total revenues		52	%		25	%		23	%		100	%
Contribution margin	$	115,588		$	54,772		$	58,498		$	228,858
% of segment revenues		39	%		37	%		44	%		40	%
For the six months ended June 30, 2015:
Revenues	$	315,687		$	174,714		$	156,874		$	647,275
% of total revenues		49	%		27	%		24	%		100	%
Contribution margin	$	121,616		$	74,764		$	72,088		$	268,468
% of segment revenues		39	%		43	%		46	%		41	%
As of June 30, 2016: Gross trade receivables	$	101,167		$	61,201		$	49,380		$	211,748
% of total gross trade receivables		48	%		29	%		23	%		100	%
As of December 31, 2015: Gross trade receivables	$	97,742		$	78,726		$	66,443		$	242,911
% of total gross trade receivables		40	%		33	%		27	%		100	%

Americas

	Three Months Ended									Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			Decrease			June 30, 2016			June 30, 2015			Decrease
Revenues	$	142,019		$	158,333			(10	)%	$	297,513		$	315,687			(6	)%
Contribution margin	$	52,721		$	60,765			(13	)%	$	115,588		$	121,616			(5	)%
Contribution margin (as a % of Americas    revenues)		37	%		38	%					39	%		39	%

The decrease in our Americas revenues in the three and six months ended June 30, 2016 as compared to the same periods in 2015 was primarily due to decreased revenues in the United States and CALA, partially offset by increased revenues in Canada. The decrease in Americas revenues in the three and six months ended June 30, 2016 was driven by decreased sales of UC group systems products and the related services, primarily due to decreased sales of UC group video, and decreased sales of UC platform products and the related services. UC personal devices products and the related services also decreased in the three and six months ended June 30, 2016 primarily due to decreased desktop voice sales. On a year-over-year basis, both product and service revenues decreased in our America segment in the three and six months ended June 30, 2016.

In the three months ended June 30, 2016, three channel partners in our Americas segment accounted for 39%, 15%, and 14%, respectively, of our Americas revenues. In the three months ended June 30, 2015, two channel partners in our Americas segment accounted for 44% and 12%, respectively, of our Americas revenues. In the six months ended June 30, 2016 and 2015, three channel partners in our Americas segment accounted for 38%, 15%, 14% and 39%, 13%, 10%, respectively, of our Americas revenues. We believe it is unlikely that the loss of any of our channel partners would have a long-term material adverse effect on our consolidated

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revenues, as we believe end-users would likely purchase our products from a different channel partner. However, a loss of any one of these channel partners could have a short-term material adverse impact.

The decrease in contribution margin as a percentage of Americas revenues for the three months ended June 30, 2016 compared to the same period in 2015 was primarily due to lower product gross margin driven by a product mix shift toward lower margin UC personal device products, partially offset by an increase in service gross margin. The contribution margin as a percentage of Americas revenues for the six months ended June 30, 2016 compared to the same period in 2015 remained relatively flat.

EMEA

	Three Months Ended									Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			Decrease			June 30, 2016			June 30, 2015			Decrease
Revenues	$	72,660		$	80,865			(10	)%	$	146,189		$	174,714			(16	)%
Contribution margin	$	27,820		$	31,987			(13	)%	$	54,772		$	74,764			(27	)%
Contribution margin (as a % of EMEA    revenues)		38	%		40	%					37	%		43	%

The decrease in our EMEA revenues in the three and six months ended June 30, 2016 as compared to the same periods in 2015 was primarily due to decreased revenues in the Middle East, Germany, and France. Revenues in Russia and the United Kingdom also decreased for the six months ended June 30, 2016. Revenues in Benelux increased for the three months ended June 30, 2016. Year-over-year results for EMEA were also impacted by unfavorable foreign currency exchange rates. The decrease in EMEA revenues in the three and six months ended June 30, 2016 was primarily driven by decreased sales of UC group systems products and the related services as a result of decreased sales of UC group video and immersive telepresence products and, to a lesser extent, decreased sales of UC platform products and the related services, partially offset by increased revenues from UC personal devices products and the related services primarily due to increased desktop voice sales. On a year-over-year basis, product and service revenues decreased in our EMEA segment in the three and six months ended June 30, 2016.

In the three months ended June 30, 2016 and 2015, one channel partner in our EMEA segment accounted for 14% and 18%, respectively, of our EMEA revenues. In the six months ended June 30, 2016, two channel partners in our EMEA segment accounted for 13% and 10%, respectively, of our EMEA revenues. In the six months ended June 30, 2015, one channel partner in our EMEA segment accounted for 17% of our EMEA revenues. We believe it is unlikely that the loss of any of our channel partners would have a long-term material adverse effect on our consolidated revenues, as we believe end-users would likely purchase our products from a different channel partner. However, a loss of any one of these channel partners could have a short-term material adverse impact.

The decrease in contribution margin as a percentage of EMEA revenues for the three and six months ended June 30, 2016 compared to the same periods in 2015 was primarily due to lower gross margins driven by a product mix shift toward lower margin UC personal devices products and the unfavorable impact of foreign currency exchange rates.

APAC

	Three Months Ended									Six Months Ended
$ in thousands	June 30, 2016			June 30, 2015			Decrease			June 30, 2016			June 30, 2015			Decrease
Revenues	$	73,100		$	77,377			(6	)%	$	134,152		$	156,874			(14	)%
Contribution margin	$	31,341		$	35,975			(13	)%	$	58,498		$	72,088			(19	)%
Contribution margin (as a % of APAC    revenues)		43	%		46	%					44	%		46	%

The decrease in our APAC revenues in the three and six months ended June 30, 2016 compared to the same periods in 2015 was primarily due to decreased revenues in China, partially offset by increased revenues in India and Australia. The overall decrease in APAC revenues was driven by decreased revenues from UC group systems products and the related services, primarily due to decreased sales of UC group video and, to a lesser extent, decreased sales of UC platform products and the related services, partially offset by increased revenues from UC personal devices products and the related services primarily due to increased desktop voice sales. On a year-over-year basis, product and services revenues decreased in our APAC segment in the three and six months ended June 30, 2016.

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In the three months ended June 30, 2016 and 2015, threechannel partners in our APAC segmentaccounted for 14%, 11%, 10%, and 18%, 15%, 11%, respectively, of our APAC revenues. In the six months ended June 30, 2016 and 2015, three channel partners in our APAC segmentaccounted for 11%, 10%, 10%, and 16%, 15%, 10%, respectively, of our APAC revenues. We believe it is unlikely that the loss of any of our channel partners would have a long-term material adverse effect on our consolidated revenues, as we believe end-users would likely purchase our products from a different channel partner. However, a loss of any one of these channel partners could have a short-term material adverse impact.

The decrease in contribution margin as a percentage of APAC revenues for the three and six months ended June 30, 2016 as compared to the same periods in 2015 was primarily due to lower gross margins resulting from a product mix shift and the impact of large deals in China, which typically have lower gross margins.

Liquidity and Capital Resources

Cash, Cash Equivalents and Investments

Our principal sources of liquidity include cash and cash equivalents, investments, and cash provided by operating activities.  Substantially all of our investments are comprised of U.S. government securities and agency securities, corporate debt securities, and non-U.S. government securities, which include state, municipal and foreign government securities. See Note 10 of the Notes to Condensed Consolidated Financial Statements for further information on our investments.

The following table presents our cash and cash equivalents, short-term investments, and long-term investments held by the United States and by foreign subsidiaries outside of the United States (in thousands):

	As of June 30, 2016
	United States		Foreign		Total
Cash and cash equivalents	$	213,622	$	362,894	$	576,516
Short-term investments		72,830		53,408		126,238
Long-term investments		10,627		8,161		18,788
Total cash, cash equivalents and investments	$	297,079	$	424,463	$	721,542

Our cash and cash equivalents and investments as of June 30, 2016 held by the United States totaled $297.1 million and the remaining $424.5 million was held by various foreign subsidiaries outside of the United States. If we need to access our cash and cash equivalents and investments held outside of the United States in order to fund acquisitions, share repurchases, or our working capital needs, we may be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. Our current intent is to permanently reinvest all earnings of our foreign operations as we have appropriate operational needs for this cash in our international business. Further, our current operating plans do not demonstrate a need to repatriate foreign earnings to fund our U.S. operations.

Cash Flows

The following table summarizes the condensed consolidated cash flow information (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015			Increase (Decrease)
Net cash provided by operating activities	$	72,266		$	63,148		$	9,118
Net cash provided by (used in) investing activities		70,460			(29,829	)		100,289
Net cash used in financing activities		(682	)		(63,878	)		63,196
Effect of exchange rate changes on cash and cash    equivalents		(621	)		—			(621	)
Net increase (decrease) in cash and cash    equivalents	$	141,423		$	(30,559	)	$	171,982

Operating Activities

The increase in net cash provided by operating activities was primarily due to higher cash inflows as a result of a decrease in trade receivables driven by the timing of receipt as well as increases in accounts payable and accrued liabilities driven by the timing of

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payments. These increases were partially offset by the year-over-year decrease in net incomeas adjusted for non-cash items and higher cash outflows related to inventories in the six months ended June 30, 2016 compared to the same period in 2015.

Our days-sales-outstanding (“DSO”) metric was 49 days and 46 days at June 30, 2016 and 2015, respectively. DSO could vary as a result of a number of factors such as fluctuations in revenue linearity, an increase in international receivables, and increases in receivables from service providers and government entities, which have customarily longer payment terms. DSO could also be negatively impacted in the current economic environment if our partners experience difficulty in financing purchases, which results in delays in payment to us.

Inventory turns were 5.1 turns at June 30, 2016 as compared to 5.2 turns at June 30, 2015. We believe inventory turns will fluctuate depending on our ability to reduce lead times, as well as due to changes in anticipated product demand and product mix and the mix of ocean freight versus air freight. Our inventory turns may also decrease in the future as a result of the flexibility required to respond to customer demands.

Investing Activities

The net cash provided by investing activities during the six months ended June 30, 2016 as compared to the net cash used in investing activities during the same period in 2015 was primarily due to higher proceeds from maturities of investments, net of sales and purchases.

Net cash provided by investing activities includes purchase of property and equipment of $13.5 million for the six months ended June 30, 2106 as compared to $23.9 million in the same period in 2015.  

Financing Activities

The decrease in net cash used in financing activities during the six months ended June 30, 2016 as compared to the same period in 2015 was primarily due to no share repurchases under the current share repurchase program as compared to $65.0 million of share repurchases in the same period in 2015.

Debt

In September 2013, we entered into a Credit Agreement (the “Credit Agreement”) which provides for a $250.0 million term loan (the “Term Loan”) that matures on September 13, 2018 (the “Maturity Date”). The Term Loan bears interest at our option under either a base rate formula or a LIBOR-based formula, each as set forth in the Credit Agreement. The Term Loan is payable in quarterly installments of principal equal to approximately $1.6 million that began on December 31, 2013, with the remaining outstanding principal amount of the Term Loan being due and payable on the Maturity Date. The Credit Agreement contains certain customary affirmative and negative covenants, and we are also required to maintain compliance with a consolidated fixed charge coverage ratio and a consolidated secured leverage ratio. As of June 30, 2016, the outstanding Term Loan was $231.7 million, net of unamortized debt issuance cost of $1.2 million, and we were in compliance with all debt covenants. See Note 9 of the Notes to Condensed Consolidated Financial Statements for further details.

We also have outstanding letters of credit totaling approximately $1.5 million, which are in place to satisfy certain of our facility lease requirements, as well as other legal, tax, and insurance obligations.

Foreign Currency

We enter into foreign currency forward contracts, which typically mature in one month, to hedge our exposure to foreign currency fluctuations of foreign currency-denominated receivables, payables, and cash balances. We record the fair value of our foreign currency forward contracts on the condensed consolidated balance sheet at each reporting period and record any fair value adjustments in the condensed consolidated statement of operations. Gains and losses associated with currency rate changes on contracts are recorded in “Interest and other income (expense), net” in the condensed consolidated statement of operations, offsetting remeasurement gains and losses on the related assets and liabilities. Additionally, our hedging costs can vary depending on the size of our hedging program, on whether we are purchasing or selling foreign currency relative to the U.S. dollar and on interest rates spreads between the U.S. and other foreign markets.

Additionally, we also have a hedging program that uses foreign currency forward contracts to hedge a portion of anticipated revenues, and operating expenses denominated in the Euro and British Pound, as well as operating expenses denominated in the Chinese Yuan and Israeli Shekel. At each reporting period, we record the fair value of our unrealized forward contracts on the condensed consolidated balance sheet with related unrealized gains and losses as a component of “Accumulated other comprehensive loss”, a

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separate element of stockholders’ equity. Realized gains and losses associated with the effective portion of the foreign currency forward contracts are recorded within revenues or operating expenses depending upon the underlying exposure being hedged. Any excluded and ineffective portions of a hedging instrument would be recorded in “Interest and other income (expense), net”.

Share Repurchases

From time to time, the Board of Directors has approved plans for us to purchase shares of our common stock in the open market or through privately negotiated transactions. In July 2014, our Board of Directors approved a new share repurchase plan (“the 2014 repurchase plan”) under which we may at our discretion purchase shares in the open market with an aggregate value of up to $200.0 million. During the six months ended June 30, 2016, we did not purchase any shares of common stock in the open market under the 2014 repurchase plan. During the six months ended June 30, 2015, we purchased 4.8 million shares of common stock in the open market for $65.0 million under the 2014 repurchase plan. As of June 30, 2016, $60.1 million remained authorized under the 2014 repurchase plan. See Note 13 of the Notes to Condensed Consolidated Financial Statements for further details.  

Contractual Obligations and Other Commitments

At June 30, 2016, we had open purchase orders related to our contract manufacturers and other contractual obligations of approximately $186.0 million primarily related to inventory purchases. We also currently have commitments that consist of obligations under our operating leases. In the event that we decide to cease using a facility and seek to sublease such facility or terminate a lease obligation through a lease buyout or other means, we may incur a material cash outflow at the time of such transaction, which will negatively impact our operating results and overall cash flows. In addition, if facilities rental rates decrease or if it takes longer than expected to sublease these facilities, we could incur a significant further charge to operations and our operating and overall cash flows could be negatively impacted in the period that these changes or events occur.

These purchase commitments and lease obligations are reflected in our condensed consolidated financial statements once goods or services have been received or at such time that we are obligated to make payments related to these goods, services or leases. In addition, our banks have issued letters of credit totaling approximately $1.5 million, which are used to secure the leases on some of our offices as well as other legal, tax, and insurance obligations. The table set forth below shows, as of June 30, 2016, the future minimum lease payments due under our current lease obligations. The table below excludes approximately $5.9 million related to the current portion of minimum lease payments associated with leased space that was restructured. The non-current portion of future minimum lease payments associated with leased space that was restructured is included in other long-term liabilities in the table below. In addition to these minimum lease payments, we are contractually obligated under the majority of our operating leases to pay certain operating expenses during the term of the lease, such as maintenance, taxes and insurance.

Our contractual obligations as of June 30, 2016 are as follows (in thousands):

	Minimum Lease Payments		Projected Annual Operating Lease Costs		Other Long- Term Liabilities		Purchase Commitments		Debt		Interest Payments (1)		Total
Remainder of 2016	$	17,504	$	2,914	$	—	$	175,935	$	3,126	$	2,968	$	202,447
2017		31,008		4,544		2,605		6,445		6,250		5,966		56,818
2018		23,202		2,909		2,722		1,598		223,437		4,272		258,140
2019		12,958		1,990		3,461		2,040		—		—		20,449
2020		10,668		1,659		1,994		—		—		—		14,321
Thereafter		11,472		1,505		13,292		—		—		—		26,269
Total payments	$	106,812	$	15,521	$	24,074	$	186,018	$	232,813	$	13,206	$	578,444

(1) The estimated future interest payments are calculated based on the assumptions that (a) there are no other principal repayments beyond the required quarterly principal amortization and (b) the borrowings are made under LIBOR tranches and bear interest at forecasted LIBOR rates at June 30, 2016 plus a spread of 1.75%.

Additionally, as discussed in Note 17 of the Notes to Condensed Consolidated Financial Statements, at June 30, 2016, we had unrecognized tax benefits, including related interest, totaling $22.7 million, $1.5 million of which may be released in the next 12 months due to the lapse of certain statutes of limitation in the applicable tax jurisdictions. In addition, payments we make for income taxes may increase during 2016 as our available net operating losses and research and development tax credits are depleted.

We believe that our available cash and cash equivalents and investments and continuing cash flows from operations will be sufficient to meet our operating expenses and capital requirements for at least the next 12 months based on our current business plans. However, we may require or desire additional funds to support our operating expenses and capital requirements or for other purposes,

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such as acquisitions, and may seek to raise such additional funds through public or private equity financing, debt financing or from other sources. We cannot assure that additional financing will be available, at all or that, if available; such financing will be obtainable on terms favorable to us and would not be dilutive.

Off-Balance Sheet Arrangements

As of June 30, 2016, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S‑K.

Critical Accounting Policies and Estimates

Our significant accounting policies were described in Note 1 to our audited Consolidated Financial Statements and under “Critical Accounting Policies and Estimates” in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K as amended for the year ended December 31, 2015. There have been no changes to our critical accounting estimates during the six months ended June 30, 2016.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see Note 2 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. We generally invest excess cash in marketable debt instruments of the U.S. government and its agencies and high-quality corporate debt securities, and by policy, limit the amount of credit exposure to any one issuer.

The estimated fair value of our cash and cash equivalents approximates the principal amounts reflected in our condensed consolidated balance sheets based on the short maturities of these financial instruments. Short-term and long-term investments consist of U.S. Treasury obligations and other government agency instruments, corporate debt securities, non-U.S. government securities and money market funds. The valuation of our investment portfolio is subject to uncertainties that are difficult to predict. If current market conditions deteriorate, we may realize losses on the sale of our investments or we may incur temporary impairment charges requiring us to record unrealized losses in accumulated other comprehensive loss. We could also incur additional other-than-temporary impairment charges resulting in realized losses in our condensed consolidated statements of operations, which would reduce net income. We consider various factors in determining whether we should recognize an impairment charge, including the length of time and extent to which the fair value has been less than our cost basis, the financial condition and near-term prospects of the security or issuer, and our intent and ability to hold the investment for a period of time sufficient to allow any anticipated recovery in the market value. Further, if we sell our investments prior to their maturity, we may incur a realized loss in our condensed consolidated statement of operations in the period the sale takes place.

A sensitivity analysis was performed on our investment portfolio as of June 30, 2016. The modeling technique used measures the change in fair values arising from hypothetical parallel shifts in the yield curve of various magnitudes.

The following table presents the hypothetical fair values of our securities, excluding cash and cash equivalents, held at June 30, 2016 that are sensitive to changes in interest rates (in thousands):

-150 BPS		-100 BPS		-50 BPS		Fair Value 6/30/2016		+50 BPS		+100 BPS		+150 BPS
$	145,515	$	145,498	$	145,368	$	145,026	$	144,667	$	144,308	$	143,949

In September 2013, we entered into a Credit Agreement which provides for a $250.0 million Term Loan which matures in September 2018 and bears interest at our option of either a base rate plus a spread of 0.50% to 1.00% or a reserve adjusted LIBOR rate as defined in the Credit Agreement plus a spread of 1.50% to 2.00%. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the reserve adjusted LIBOR rate. The Term Loan is payable in quarterly installments of principal equal to approximately $1.6 million that began on December 31, 2013, with the remaining outstanding principal amount of the Term Loan being due and payable on the Maturity Date. By entering into the Credit Agreement, we have assumed risks associated with variable interest rates based upon a variable base rate or LIBOR. As of June 30, 2016, the

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weighted average interest rate on the Term Loan was 2.46%.The effect of an immediate 10% change in interest rates would not have a significant impact on our results of operations.

Foreign Currency Exchange Rate Risk

While the majority of our sales are denominated in U.S. dollars, we also sell our products and services in certain European regions in Euros and in British Pounds, which has increased our foreign currency exchange rate fluctuation risk.

While we do not hedge for speculative purposes, as a result of our exposure to foreign currency exchange rate fluctuations, we enter into forward exchange contracts to hedge our foreign currency exposure to the Brazilian Real, Chinese Yuan, Euro, British Pound, Israeli Shekel, Japanese Yen and Mexican Peso relative to the United States Dollar. We mitigate bank counterparty risk related to our foreign currency hedging program through our policy that requires us to only enter into hedge contracts with banks that are among the world’s largest 100 banks, as ranked by total assets in U.S. dollars.

The following table summarizes our notional position by currency and average rate of the outstanding non-designated hedges at June 30, 2016 (in thousands):

	Original Maturities of 360 days or Less					Original Maturities of Greater than 360 days
Amounts in thousands	Position	Foreign Currency		Average Rate		Position	Foreign Currency		Average Rate
Brazilian Real	Sell		10,841		3.76	—		—		—
Chinese Yuan	Sell		42,005		6.57	Buy		45,457		6.40
Euro	Sell		11,538		1.12	Sell		40,765		1.12
British Pound	Sell		7,385		1.45	Sell		966		1.39
Mexican Peso	Sell		23,063		18.52	—		—		—

The following table summarizes our notional position by currency and average rate of the outstanding cash flow hedges at June 30, 2016 (in thousands):

	Original Maturities of 360 Days or Less						Original Maturities of Greater than 360 Days
Amounts in thousands	Position		Foreign Currency		Average Rate		Position	Foreign Currency		Average Rate
Chinese Yuan		—		—		—	Buy		85,643		6.66
Euro		—		—		—	Sell		38,435		1.12
British Pound		—		—		—	Sell		966		1.30

Based on our overall currency rate exposure as of June 30, 2016, a near-term 10% appreciation or depreciation in the United States Dollar, relative to our foreign local currencies, would have an immaterial impact on our results of operations. We may also decide to expand the type of products we sell in foreign currencies or may, for specific customer situations, choose to sell in foreign currencies in our other regions, thereby further increasing our foreign exchange risk. See Note 12 of Notes to Condensed Consolidated Financial Statements for further information on our foreign exchange derivatives.

Item 4. CONTROLS AND PROCEDURES

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 to provide reasonable assurance 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 Polycom’s management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting.

There was no change in our internal control over financial reporting that occurred during the three months ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

From time to time, we are involved in claims and legal proceedings that arise in the ordinary course of business. We expect that the number and significance of these matters will increase as our business expands. In particular, we face an increasing number of patent and other intellectual property claims as the number of products and competitors in our industry grows and the functionality of video, voice, data and web conferencing products overlap. Any claims or proceedings against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, result in the diversion of significant operational resources, or require us to enter into royalty or licensing agreements which, if required, may not be available on terms favorable to us or at all. However, litigation is subject to inherent uncertainties, and our view of these matters may change in the future. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on our financial position and results of operations or liquidity for the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods.

Litigation and SEC Investigation

Following the announcement of the execution of the merger agreement with Mitel Networks Corporation, a purported stockholder class action, styled Solak v. Leav, et al., No. 5:16-cv-03128-HRL, was filed on June 8, 2016 in the United States District Court for the Northern District of California, which is referred to as the Solak complaint. The Solak complaint named as defendants current and former members of the Polycom Board, Mitel, and the merger sub, which are collectively referred to as the defendants. The Solak complaint alleged that the defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder by failing to disclose all material information in connection with the proxy statement/prospectus related to the Mitel transaction. The Solak complaint also alleged that the current and former members of the Polycom Board violated Section 20(a) of the Exchange Act by acting as control persons of Polycom in connection with the purported omissions from the proxy statement/prospectus described above. Finally, the Solak complaint alleged that the current and former members of the Polycom Board breached their fiduciary duties to Polycom’s stockholders in connection with the merger and that Mitel and its merger sub aided and abetted the purported breaches of fiduciary duty. In support of these claims, the Solak complaint alleged, among other things, that the Polycom Board failed to disclose all material information regarding the merger, that the merger consideration undervalued Polycom, that the sales process that resulted in entry into the merger agreement was flawed, and that the merger agreement contained unreasonable deal protection devices that purportedly preclude competing offers and unduly favor Mitel. The action sought injunctive relief, including enjoining or rescinding the merger, and an award of other unspecified attorneys’ and other fees and costs, in addition to other relief.  As a result of the transaction with Mitel being terminated and our entry into the merger agreement with an entity affiliated with Siris, the suit was dismissed.

On July 23, 2013, we announced that Andrew M. Miller had resigned from the positions of Chief Executive Officer and President of Polycom and from Polycom’s Board of Directors. We disclosed that Mr. Miller’s resignation came after a review by the Audit Committee of certain expense submissions by Mr. Miller, where the Audit Committee found certain irregularities in the submissions, for which Mr. Miller had accepted responsibility. Specifically, the Audit Committee determined that Mr. Miller improperly submitted personal expenses to Polycom for payment as business expenses and, in doing so, submitted to Polycom false information about the nature and purpose of expenses.

SEC Investigation. As previously disclosed, we have cooperated with the Enforcement Staff of the SEC in connection with its investigation focused on Mr. Miller's expenses and his resignation. On March 31, 2015, we entered into a settlement with the SEC. Under the terms of the settlement in which we did not admit or deny the SEC’s findings, we paid $750,000 in a civil penalty, and agreed not to commit or cause any violations of certain provisions of the Securities Exchange Act of 1934 and related rules. On January 26, 2016, Mr. Miller reached a settlement with the SEC. Under the terms of the settlement, Mr. Miller agreed to pay $450,000, of which, $200,000 was paid to Polycom

Class Action Lawsuit. On July 26, 2013, a purported shareholder class action, initially captioned Neal v. Polycom Inc., et al., Case No. 3:13-cv-03476-SC, and presently captioned Nathanson v. Polycom, Inc., et al., Case No. 3:13-cv-03476-SC, was filed in the United States District Court for the Northern District of California against us and certain of our current and former officers and directors. On December 13, 2013, the Court appointed a lead plaintiff and approved lead and liaison counsel. On February 24, 2014, the lead plaintiff filed a first amended complaint. The amended complaint alleged that, between January 20, 2011 and July 23, 2013, we issued materially false and misleading statements or failed to disclose information regarding our business, operational and compliance policies, including with respect to our former Chief Executive Officer’s expense submissions and our internal controls. The lawsuit further alleged that our financial statements were materially false and misleading. The amended complaint alleged violations of the federal securities laws and sought unspecified compensatory damages and other relief. On April 3, 2015, the Court dismissed all claims against us and granted plaintiffs leave to amend. The lead plaintiff filed a second complaint on May 4, 2015. We

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and the individual defendants moved to dismiss the second amended complaint on June 26, 2015. On January 8, 2016, the parties executed a settlement agreement. The proposed settlement is subject to, and contingent upon, the Court’s review and approval. The lead plaintiff moved for preliminary approval of the settlement. The Court has issued an order preliminarily approving the settlement and has scheduled a hearing for August 2016 to consider final approval of the settlement.  If the settlement is approved, the settlement payment will be made by our insurance carrier.

Derivative Lawsuits. On August 21, 2013 and October 16, 2013, two purported shareholder derivative suits, captioned Saraceni v. Miller, et al., Case No. 5:13-cv-03880, and Donnelly v. Miller, et al., Case No. 5:13-cv-04810, respectively, were filed in the United States District Court for the Northern District of California against certain of our current and former officers and directors. On October 31, 2013, these two federal derivative actions were consolidated into In re Polycom, Inc. Derivative Litigation, Lead Case No. 3:13-cv-03880. On January 13, 2015, the Court dismissed the operative complaint and granted plaintiffs leave to amend. On April 3, 2015, the Court approved a stipulation dismissing the action with prejudice and entering judgment in favor of defendants.

On November 22, 2013 and December 13, 2013, two purported shareholder derivative suits, captioned Ware v. Miller, et al., Case No. 1-13-cv-256608, and Clem v. Miller, et al., Case No. 1-13-cv-257664, respectively, were filed in the Superior Court of California, County of Santa Clara, against certain of our current and former officers and directors. On January 31, 2014, these two California state derivative actions were consolidated into In re Polycom, Inc. Derivative Shareholder Litigation, Lead Case No. 1-13-cv-256608. The Court stayed the California state derivative litigation pending resolution of both the federal derivative lawsuit and the federal securities class action.

The California state consolidated derivative lawsuit purports to assert claims on behalf of Polycom, which is named as a nominal defendant in the actions. The original California state complaints allege claims for breach of fiduciary duty, unjust enrichment, and corporate waste, and allege certain defendants failed to maintain adequate internal controls and issued, or authorized the issuance of, materially false and misleading statements, including with respect to our former Chief Executive Officer’s expense submissions and our internal controls. The complaints further allege that certain defendants approved an unjustified separation agreement and caused us to repurchase our own stock at artificially inflated prices. The complaints seek unspecified compensatory damages, corporate governance reforms, and other relief. At this time, we are unable to estimate any range of reasonably possible loss relating to the derivative actions.

As permitted or required under Delaware law and to the maximum extent allowable under that law, we have certain obligations to indemnify our current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have a director and officer insurance policy that mitigates our exposure and enables us to recover a portion of any future amounts paid. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification obligations is not material.

As is customary in our industry, as provided for in local law in the U.S. and other jurisdictions, our standard contracts provide remedies to our customers, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of our products. From time to time, we indemnify customers against combinations of loss, expense, or liability arising from various trigger events related to the sale and the use of our products and services. In addition, from time to time we also provide protection to customers against claims related to undiscovered liabilities, additional product liabilities or environmental obligations.

ITEM 1A. RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN INVESTMENT DECISION. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY ONES WE FACE. ADDITIONAL RISKS THAT WE ARE NOT PRESENTLY AWARE OF OR THAT WE CURRENTLY BELIEVE ARE IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS. OUR BUSINESS COULD BE HARMED BY ANY OR ALL OF THESE RISKS. THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE SIGNIFICANTLY DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT. IN ASSESSING THESE RISKS, YOU SHOULD ALSO REFER TO THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN OUR ANNUAL REPORT ON FORM 10-K, AS AMENDED, INCLUDING OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES.

The pendency of the Merger or our failure to complete the Merger could have a material adverse effect on our business, results of operations, financial condition and stock price.

Consummation of the Merger is subject to the satisfaction of various conditions, including, without limitation, (i) the absence of certain legal impediments, (ii) the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) antitrust regulatory approval in Germany and Russia, and (iv) approval by our

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stockholders of the Merger. There is no assurance that all of the various conditions will be satisfied, or that the Merger will be completed on the proposed terms, within the expected timeframe, or at all.

The Merger gives rise to inherent risks that include:

· the inability to complete the Merger due to our failure to obtain stockholder approval or failure to satisfy the other conditions to the completion of the Merger, including receipt of the required regulatory approvals;

· pending and potential future stockholder litigation that could prevent or delay the Merger or otherwise negatively impact our business and operations;

· legal or regulatory proceedings, including regulatory approvals from various domestic and foreign governmental entities (including any conditions, limitations or restrictions placed on these approvals), and the risk that one or more governmental entities may delay or deny approval, or other matters that affect the timing or ability to complete the transaction as contemplated;

· the ability of Newco to obtain the necessary funds to complete the Merger;

· to the extent that the current market price of our stock reflects an assumption that the Merger will be completed, the price of our common stock could decrease if the Merger is not completed;

· the possibility of disruption to our business, including increased costs and diversion of management time and resources;

· the pendency of the Merger, even if ultimately completed, may create uncertainty in the marketplace and could lead current and prospective customers to purchase from other vendors or delay purchasing from us;

· difficulties maintaining business and operational relationships, including relationships with customers, suppliers, and other business partners;

· the inability to attract and retain key personnel pending consummation of the Merger, and the possibility that our employees could lose productivity as a result of uncertainty regarding their employment post-Merger;

· the inability to pursue alternative business opportunities or make changes to our business pending the completion of the Merger, and other restrictions on our ability to conduct our business;

· the amount of the costs, fees, expenses and charges related to the merger agreement or the Merger, including the requirement to pay a termination fee of $60 million if we terminate the merger agreement under certain circumstances;

· the fact that under the terms of the merger agreement, we are unable to solicit other acquisitions proposals during the pendency of the Merger;

· developments beyond our control including, but not limited to, changes in domestic or global economic conditions that may affect the timing or success of the Merger; and

· the risk that if the Merger is not completed, investor confidence could decline, additional stockholder litigation could be brought against us, relationships with existing and prospective customers, suppliers and other business partners may be adversely impacted, we may be unable to retain key personnel, and profitability may be adversely impacted due to costs incurred in connection with the proposed Merger.

Competition in each of our markets is intense, and our inability to compete effectively could significantly harm our business and results of operations.

We face intense competition in the Americas, EMEA, and APAC for our UC&C solutions, which can place pressure on average selling prices for our products. Some of our competitors compete with us in more than one geographic theater and across all of our product categories. Our major global competitor is Cisco Systems, Inc. (“Cisco”). Our other global competitors include Acano Limited (recently acquired by Cisco), Avaya Inc., Blue Jeans Network, ClearOne Communications, Inc., Huawei Technologies Co. Ltd., Logitech International S.A./LifeSize, Panasonic Corporation, PexIP AS, Snom Technology AG, Vidyo, Inc., Yamaha Corporation/Revolabs, Inc., Yealink, Zoom Video Communications, Inc., ZTE Corporation and others.

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Our competitive landscape continues to rapidly evolve as we move into new markets for collaboration such as mobile, browser-based, and cloud-delivered collaboration offerings. Competitors in these markets also continue to develop and introduce new technologies, sometimes proprietary, that represent threats through closed architectures. We also compete with other offerings such as Cisco’s Jabber and WebEx and Citrix Systems’ GoToMeeting with HD Faces. Many of these companies have substantial financial resources, entrenched and committed channel partners, and production, marketing, engineering and other capabilities to develop, manufacture, market and sell their products, which may result in our having to lower our product prices and increase our spending on sales and marketing, which would correspondingly have a negative impact on our revenues and operating margins.

Our principal competitive factors in the markets and categories in which we presently compete and may compete include the ability to:

· provide and sell a broad range of UC&C solutions and services, including mobile and cloud-based solutions, and our ability to bring new products and solutions to market on a timely basis;

· competitively price our products and solutions;

· provide competitive product performance;

· compete successfully in multiple markets with differing requirements, including, but not limited to, the enterprise, SMB, mobile video, social video, browser-based video, subscription-based video delivered from the cloud and service provider markets;

· reduce production and service costs;

· provide required functionality such as security, reliability, and scalability;

· ensure investment protection through broad interoperability and backwards- and forwards-compatibility with other UC&C systems and solutions;

· successfully integrate our products with, and operate our products on, existing customer platforms and consumer devices;

· gain market presence and brand recognition;

· extend credit to our partners;

· conform to open standards;

· successfully address disruptive technology shifts and new business models, such as cloud-based and software-based UC&C solutions and mobility and consumer solutions; and

· successfully address the transition in the market from point product to solution selling.

We may not be able to compete successfully against our current or future competitors. We expect our competitors to continue to improve the performance of their current products and to introduce new products or new technologies that provide improved performance. New product introductions by our current or future competitors, or our delay in bringing new products to market, could cause a significant decline in sales or loss of market acceptance of our products. We believe that ongoing competitive pressure may result in a reduction in the prices of our products and our competitors’ products. In addition, the introduction of additional lower priced competitive products or of new products or product platforms could render our existing products or technologies obsolete. For example, new software and web technologies like WebRTC will create additional competition.  We also believe we will face increasing competition from alternative UC&C solutions that employ new technologies or new combinations of technologies. Further, the commoditization of certain videoconferencing products is leading to the availability of alternative, lower cost UC&C products than ours that are targeted to consumers and small businesses, such as Skype, Google Talk/Hangouts, Apple FaceTime and others, which could drive down our sales prices and negatively impact our revenues.  

Increased consolidation and the formation of strategic partnerships in our industry may lead to increased competition, which could adversely affect our business and future results of operations.

Strategic partnerships and acquisitions are being formed and announced by our competitors on a regular basis, which increases competition and often results in increased downward pressure on our product prices. For instance, since Cisco acquired Tandberg ASA, previously our largest independent competitor, we have had to compete with a larger combined company with significantly greater financial and sales and marketing resources, an extensive channel network and an expanded video communications solutions product line. In addition, Cisco recently acquired Acano Limited, a producer of collaboration infrastructure and conferencing software and one of our global competitors. Cisco often sells its video communications solutions product line in conjunction with its proprietary network equipment and technology as a complete solution, making it more difficult for us to compete against them or to ascertain

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pricing on competitive products. In addition, Cisco may use its dominance in network equipment to foreclose competition in the UC&C solutions market. Cisco may continue to also preclude our competitive products from being fully interoperable with Cisco endpoints, video infrastructure and/or network products. These consolidations and partnerships have resulted in increased competition and pricing pressure, as the newly-combined entities have greater financial resources, deeper mass market sales channels and greater pricing flexibility than we do. Acquisitions or partnerships made by one of our strategic partners could also limit the potential contribution of our strategic relationships to our business and restrict our ability to form strategic relationships with these companies in the future and, as a result, harm our business. Rumored or actual consolidation of our partners and competitors will likely cause uncertainty and disruption to our business and can cause our stock price to fluctuate.

Global economic conditions have adversely affected our business in the past and could adversely affect our revenues and harm our business in the future.

Adverse economic conditions worldwide have contributed to slowdowns in the communications and networking industries and have caused a negative impact on the specific segments and markets in which we operate. Adverse changes in general global economic conditions can result in reductions in capital expenditures by end user customers for our products, longer sales cycles, the deferral or delay of purchase commitments for our products and increased competition. These factors have adversely impacted our operating results in prior periods and could also impact us again in the future. Global economic concerns, such as the varying pace of global economic recovery, European and domestic debt and budget issues and the impact of the referendum passed by British voters to exit the European Union (“Brexit”), continue to create uncertainty and unpredictability that have contributed to longer selling cycles and cause us to continue to be cautious about our future outlook, including our near-term revenue and profitability outlook. For example, we have seen weakening demand and longer sales cycles in the public sector, which includes federal, state and local governments, as well as healthcare and education, which we believe were due in large part to budget constraints, as well as political issues. A global economic downturn would negatively impact technology spending for our products and services and would materially adversely affect our business, operating results and financial condition. Further, we have seen slower growth compared to prior years in Brazil, China, Russia, and other growth markets, which we believe is due in part to macro-economic factors. Global economic conditions have resulted in a tightening in the credit markets, low liquidity levels in many financial markets, decrease in customer demand and ability to pay obligations, and extreme volatility in credit, equity, foreign currency and fixed income markets.

These adverse economic conditions could negatively impact our business, particularly our revenue potential, losses on investments and the collectability of our accounts receivable, due to the inability of our customers to obtain credit to finance purchases of our products and services, customer or partner insolvencies or bankruptcies, decreased customer confidence to make purchasing decisions resulting in delays in their purchasing decisions, and decreased customer demand or demand for lower-end products.

Our quarterly operating results may fluctuate significantly and are not necessarily a good indicator of future performance.

Our quarterly operating results have fluctuated in the past and may vary significantly in the future as a result of a number of factors, many of which are out of our control or can be difficult to predict. These factors include, but are not limited to:

· fluctuations in demand for our products and services, in part due to uncertain global economic conditions and increased competition, as well as transitions in the markets in which we sell products and services;

· our ability to execute on our strategic and operating plans;

· slowing sales or variations in sales rates by our channel partners to their customers;

· changes to our channel partner programs, contracts and strategy that could: (i) result in a reduction in the number of channel partners; (ii) adversely impact our revenues and gross margins as we realign our discount and rebate programs for our channels; or (iii) cause more of our channel partners to add our competitors’ products to their portfolio;

· the prices and performance of our products and those of our existing or potential new competitors;

· the timing and size of the orders for our products, as well as the mix of products, which could impact gross margins depending on the various product margins in the mix;

· the level and mix of inventory that we hold to meet future demand;

· changes to our global organization and retention of or changes in key personnel;

· changes in effective tax rates which are difficult to predict due to, among other things, the timing and geographical mix of our earnings, the outcome of current or future tax audits and potential new rules and regulations;

· changes in the underlying factors and assumptions used in determining stock-based compensation;

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· fluctuations in the level of international sales and our exposure to foreign currency fluctuations on both revenues and expenses;  

· dependence on component suppliers and third party manufacturers, which includes outside development manufacturers, and the associated manufacturing costs;

· the impact of changing costs of freight and components used in the manufacturing of our products and the potential negative impact on our gross margins;

· the magnitude of any costs that we must incur in the event of a product recall or of costs associated with product warranty claims;

· the impact of seasonality on our various product lines and geographic regions; and

· adverse outcomes in intellectual property litigation and other matters and the costs associated with asserting and enforcing our intellectual property portfolio.

As a result of these and potentially other factors, we believe that period-to-period comparisons of our historical results of operations are not necessarily a good predictor of our future performance. If our future operating results are below the expectations of stock market securities analysts or investors, or below any financial guidance we may provide to the market, our stock price will likely decline. Financial guidance beyond the current quarter is inherently subject to greater risk and uncertainty, and if the transitions in our markets accelerate, our ability to forecast becomes more difficult.

We face risks associated with developing and marketing our products, including new product development and new product lines.

Our success depends on our ability to assimilate new technologies in our products and to properly train our channel partners, sales force and end-user customers in the use and inherent value of those products.

The markets for our products are characterized by rapidly changing technology, such as the demand for HD video technology and lower cost video infrastructure products, the shift from on premises-based equipment to a mix of solutions that includes hardware and software and the option for customers to have video delivered as a service from the cloud or through a browser, evolving industry standards and frequent new product introductions, including an increased emphasis on software products and new, lower cost hardware products. Historically, our focus has been on premises-based solutions for the enterprise and public sector, targeted at vertical markets, including finance, manufacturing, government, education and healthcare. In addition, in response to emerging market trends, and the network effect driven by business-to-business and business-to-consumer adoption of UC&C, we are expanding our focus to capture opportunities within emerging markets including mobile, small and medium businesses (“SMBs”), and cloud-based delivery. If we are unable to successfully capture these markets to the extent anticipated, or to develop the new technologies and partnerships required to successfully compete in these markets, then our revenues may not grow as anticipated and our business may ultimately be harmed. Given the competitive nature of the mobile industry, changing end user behaviors and other industry dynamics, these relationships may not evolve into fully-developed product offerings or translate into any future revenues.

The success of our new products depends on several factors, including proper new product definition, product cost, infrastructure for services and cloud delivery, timely completion and introduction of new products, proper positioning and pricing of new products in relation to our total product portfolio and their relative pricing, differentiation of new products from those of our competitors and other products in our own portfolio, market acceptance of these products and the ability to sell our products to customers as comprehensive UC&C solutions. Other factors that may affect our success include properly addressing the complexities associated with compatibility issues, channel partner and sales force training, technical and sales support, and field support. As a result, it is possible that investments that we are making in developing new products and technologies may not yield the planned financial results. For example, in October 2015 we announced several new products which may not yield the financial results we expect.

We also need to continually educate and train our channel partners to avoid any confusion as to the desirability of new product offerings and solutions compared to our existing product offerings and to be able to articulate and differentiate the value of new offerings over those of our competitors. As the market evolves, our distribution model and channel partners may change as well. During the last few years, we have announced and launched several new product offerings, both independently and jointly with our strategic partners, including new software, hardware and cloud-based solutions, and these new products could cause confusion among our channel partners and end-users, thereby causing them to delay purchases of our new products until they determine their market acceptance, or as they consider a more comprehensive UC&C strategy versus point product or endpoint only deployments. Any delays in future purchases could adversely affect our revenues, gross margins and operating results in the period of the delay.

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The communications market shift to fully integrated solutions, cloud-based/hybrid offerings and new business modelsover time may require us to add new channel partners, enter new markets and gain new core technological competencies. We are attempting to address these needs and the need to develop new products through our internal development efforts, through joint developments with other companies and through acquisitions. However, we may not identify successful new product opportunities and develop and bring products to market in a timely manner. Further, as we introduce new products, these product transition cycles may not go smoothly, causing an increased risk of inventory obsolescence and relationship issues with our end-user customers and channel partners. The failure of our new product development efforts, any inability to service or maintain the necessary third-party interoperability licenses, our inability to properly manage product transitions or to anticipate new product demand, or our inability to enter new markets would harm our business and results of operations.

We may experience delays in product introductions and availability, and our products may contain defects which could seriously harm our results of operations.

We have experienced delays in the introduction of certain new products and enhancements in the past. The delays in product release dates that we experienced in the past have been due to factors such as unforeseen technology issues, manufacturing ramping issues and other factors, which we believe negatively impacted our revenue in the relevant periods. Any of these or other factors may occur again and delay our future product releases. Our product development groups are dispersed throughout the United States and other international locations such as China and India. As such, disruption due to geopolitical conflicts could create an increased risk of delays in new product introductions.

We produce highly complex communications equipment, which includes both hardware and software and incorporates new technologies and component parts from different suppliers. Resolving product defect and technology and quality issues could cause delays in new product introduction. Component part shortages could also cause delays in product delivery and lead to increased costs. Further, some defects may not be detected or cured prior to a new product launch, or may be detected after a product has already been launched and may be incurable or result in a product recall. The occurrence of any of these events could result in the failure of a partial or entire product line or a withdrawal of a product from the market. We may also have to invest significant capital and other resources to correct these problems, including product reengineering expenses and inventory, warranty and replacement costs. These problems might also result in claims against us by our customers or others and could harm our reputation and adversely affect future sales of our products.

Any delays for new product offerings recently announced or currently under development, including product offerings for mobile, cloud-based delivery, software delivery or any product quality issues, product defect issues or product recalls could adversely affect the market acceptance of these products, our ability to compete effectively in the market, and our reputation with our customers, and therefore could lead to decreased product sales and could harm our business. We may also experience cancellation of orders, difficulty in collecting accounts receivable, increased service and warranty costs in excess of our estimates, diversion of resources and increased insurance costs and other losses to our business or to end-user customers.

Product obsolescence or discontinuance and excess inventory can negatively affect our results of operations.

The pace of change in technology development and in the release of new products has increased and is expected to continue to increase, which can often render existing or developing technologies obsolete. In addition, the introduction of new products and any related actions to discontinue existing products can cause existing inventory to become obsolete. These obsolescence issues, or any failure by us to properly anticipate product life cycles, can require write-downs in inventory value. For each of our products, the potential exists for new products to render existing products obsolete, cause inventories of existing products to increase, cause us to discontinue a product or reduce the demand for existing products.

Further, we continually evaluate our product lines both strategically and in terms of potential growth rates and margins. Such evaluations could result in the discontinuance or divestiture of those products in the future, which could be disruptive and costly and may not yield the intended benefits.

We face risks related to the adoption rate of new technologies.

We have invested significant resources developing products that are dependent on the adoption rate of new technologies. For example, our Polycom^® RealPresence^® Clariti^TM platform software solutions are dependent on enterprise adoption of software-based video bridging applications. If the software related video bridging market does not grow as we anticipate, or if our strategy for addressing the market, or execution of such strategy, is not successful, our business and results of operations could be harmed. In addition, we develop new products or make product enhancements based upon anticipated demand for new features and functionality. Our business and revenues may be harmed if the use of new technologies that our future products are based on does not occur; if we do not anticipate shifts in technology appropriately or rapidly enough; if the development of suitable sales channels does not occur, or

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occurs more slowly than expected; if our products are not priced competitively or are not readily adopted; or if the adoption rates of such new technologies do not drive demand for our other products as we anticipate. For example, although we believe increased sales of UC&C solutions will drive increased demand for our UC hardware and software platform products, such increased demand may not occur or we may not benefit to the same extent as our competitors. We also may not be successful in creating demand in our installed customer base for products that we develop that incorporate new technologies or features. Conversely, as we see the adoption rate of new technologies increase, product sales of our legacy products may be negatively impacted, which could materially impact our revenues and results of operations.

Lower than expected market acceptance of our products, price competition and other price changes would negatively impact our business.

If the market does not accept our products, particularly our new product offerings on which we are relying on for future revenues, such as product offerings for platform software, new hardware products and cloud-based delivery, our business and operating results would be harmed. Further, revenues relating to new product offerings are unpredictable and new products typically have lower gross margins for a period of time after their introduction and higher marketing and sales costs. As we introduce new products, they could increasingly become a higher percentage of our revenues. Our profitability could also be negatively affected in the future as a result of continuing competitive price pressures in the sale of UC&C solutions equipment and UC platform products. Further, in the past we have reduced prices in order to expand the market for our products, and in the future, we may further reduce prices, introduce new products that carry lower margins in order to expand the market or stimulate demand for our products, or discontinue existing products as a means of stimulating growth in a new product.

Finally, if we do not fully anticipate, understand and fulfill the needs of end-user customers in the vertical markets that we serve, we may not be able to fully capitalize on product sales into those vertical markets and our revenues may, accordingly, fail to grow as anticipated or may be adversely impacted. We face similar risks as we expand and focus our business on the SMB and service provider markets.

Failure to adequately service and support our product offerings could harm our results of operations.

The increasing complexity of our products and associated technologies has increased the need for enhanced product warranty and service capabilities, including integration services, which may require us to develop or acquire additional advanced service capabilities and make additional investments. If we cannot adequately develop and train our internal support organization or maintain our relationships with our outside technical support providers, it could adversely affect our business.

In addition, sales of our immersive telepresence solutions are complex sales transactions, and the end-user customer typically purchases an enhanced level of support service from us so as to ensure that its significant investment can be fully operational and realized. This requires us to provide advanced services and project management in terms of resources and technical knowledge of the customer’s telecommunication network. If we are unable to provide the proper level of support on a cost efficient basis, it may cause damage to our reputation in this market and may harm our business and results of operations.

If we fail to successfully attract and retain highly qualified management personnel and key employees, our business may be harmed.

Our future success will depend in part on our continued ability to hire, assimilate and retain highly qualified senior executives and other key management personnel. As new hires assess their areas of responsibilities and define their organizations, disruption to the business and additional organizational changes or restructuring actions and charges could occur. Since 2013, we have had turnover in a number of senior executive positions, including our chief executive officer, chief financial officer, head of worldwide engineering, head of human resources and our heads of theater sales and channel sales. Most recently, we hired a new head of Americas Sales in the third quarter of 2015, and in the first quarter of 2016, we began transitioning the management responsibilities of our China operations to a new general manager. These transitions, along with any future changes to our executive and senior management teams, including new executive hires or departures, could cause further disruption to the business and have a negative impact on our operating performance, while these operational areas are in transition. Competition for qualified executive and other management personnel is intense, and we may not be successful in attracting or retaining such personnel.

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We face risks related to our dependence on channel partnersand strategic partners to sell our products.

Changes to our channel partner programs or channel partner contracts may not be favorably received and as a result our channel partner relationships and results of operations may be adversely impacted.

Our channel partners are eligible to participate in various incentive programs, depending upon their contractual arrangements with us. As part of these arrangements, we have the right to make changes in our programs and launch new programs as business conditions warrant. Further, from time to time, we may make changes to our channel partner contracts or realign our discount and rebate programs. These changes could upset our channel partners which could cause them to add competitive products to their portfolios, delay advertising or sales of our products, or shift more emphasis to selling our competitors’ products. Our channel partners may not be receptive to future changes, and we may not receive the positive benefits that we anticipate in making any program and contractual changes. For example, in the second quarter of 2015, we believe our results of operations were adversely impacted by changes we made to our partner program in North America.

Our strategic partnerships with companies may not yield the desired results which could harm our business.

We are focusing on our strategic partnerships and alliances with Microsoft and BroadSoft. Defining, managing and developing these partnerships is expensive and time-consuming and may not come to fruition or yield the desired results, impacting our ability to effectively compete in the market and to take advantage of anticipated future market growth. For example, our recently announced new series of video collaboration solutions built for Skype for Business with Microsoft may not produce the desired results in the desired timeframe. Our mobile solutions are also dependent on our ability to successfully partner with mobile device manufacturers.

In addition, as we enter into agreements with strategic partners to enable us to continue to expand our relationships with these partners, we may undertake additional obligations, such as development efforts, which could trigger unintended penalty or other provisions in the event that we fail to fully perform our contractual commitments or could result in additional costs beyond those that are planned in order to meet these contractual obligations.

Conflicts between our channel partners and strategic partners could arise which could harm our business.

Some of our current and future products are directly competitive with the products sold by both our channel and strategic partners. As a result of these conflicts, there is the potential for our channel and strategic partners to compete head-to-head with us or to significantly reduce or eliminate their orders of our products or design our technology out of their products. Further, as a result of our more direct-touch sales model, we may alienate some of our channel partners or cause a shift in product sales from our traditional channel model. Due to these and other factors, channel conflicts could arise which cause channel partners to devote resources to non-Polycom communications equipment, or to offer new products from our competitors, which would negatively affect our business and results of operations.

In addition, some of our products are reliant on strategic partnerships with call manager providers and wireless UC&C platform providers. These partnerships result in interoperable features between products to deliver a total solution to our mutual end-user customers. Competition with our partners in all of the markets in which we operate is likely to increase, which would adversely affect our revenues and could potentially strain our existing relationships with these companies.

We are subject to risks associated with our channel partners’ sales reporting, product inventories and product sell-through.

We sell a significant amount of our products to channel partners who maintain their own inventory of our products for sale to dealers and end-users. Our revenue forecasts associated with products stocked by some of our channel partners are based largely on end-user sales reports that our channel partners provide to us on a monthly basis. Even though we believe this data has been generally accurate, to the extent that this sales-out and channel inventory data is inaccurate or not received timely, our revenue forecasts for future periods may be less reliable. Further, if these channel partners are unable to sell an adequate amount of their inventory of our products in a given quarter or if channel partners decide to decrease their inventories for any reason, such as a recurrence of global economic uncertainty and downturn in technology spending, the volume of our sales to these channel partners and our revenues would be negatively affected. In addition, we also face the risk that some of our channel partners have inventory levels in excess of future anticipated sales. If such sales do not occur in the time frame anticipated by these channel partners for any reason, these channel partners may substantially decrease the amount of product they order from us in subsequent periods, or product returns may exceed historical or predicted levels, which would harm our business and create unexpected variations in our financial results.

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Consolidation of our channel partners and strategic partners may result in changes to our overall business relationships, less favorable contractual terms and disruption to our business.

We have seen consolidation among certain of our existing channel partners and strategic partners. In such instances, we may experience changes to our overall business and operational relationships due to dealing with a larger combined entity, and our ability to maintain such relationships on favorable contractual terms may be limited. Depending on the extent of these changes and other disruptions caused to the combined businesses during the integration period, the timing and extent of revenue from these channel partners may be adversely affected.

We are subject to risks associated with the success of the businesses of our channel partners.

Many of our channel partners that carry multiple Polycom products, and from whom we derive significant revenues, are thinly capitalized. Although we perform ongoing evaluations of the creditworthiness of our channel partners, the failure of these businesses to establish and sustain profitability, obtain financing or adequately fund capital expenditures could have a significant negative effect on our future revenue levels and profitability and our ability to collect our receivables. As we grow our revenues and our customer base, our exposure to credit risk increases. In addition, global economic uncertainty, and reductions in technology spending in the United States and other countries have restricted the availability of capital, which may delay collections from our channel partners beyond our historical experience or may cause companies to file for bankruptcy, jeopardizing the collectability of our receivables from such channel partners and negatively impacting our future results.

Our channel partner contracts are typically short-term and early termination of these contracts may harm our results of operations.

We do not typically enter into long-term contracts with our channel partners, and we cannot be certain as to future order levels from our channel partners. In the event of a termination of one of our major channel partners, we believe that the end-user customer would likely purchase from another one of our channel partners, but if this did not occur and we were unable to rapidly replace that revenue source, its loss would harm our results of operations.

If our channel partners fail to comply with laws or standards, our business could be harmed.

We expect our channel partners to meet certain standards of conduct and to comply with applicable laws, such as global anticorruption laws. Noncompliance with standards or laws could harm our reputation and could result in harm to our business and results of operations in the event we were to become involved in an investigation due to noncompliance by a channel partner.

We experience seasonal demand for our products and services, which may adversely impact our results of operations during certain periods.

Sales of some of our products have experienced seasonal fluctuations which have affected sequential growth rates for these products, particularly in our first and third quarters. For example, the first quarter of the year is typically the least predictable quarter of the year for us and there is generally a slowdown for sales of our products in the European region in the third quarter of each year. Further, the timing of fiscal year ends for our government and enterprise customers may result in significant fluctuations from quarter to quarter. Seasonal fluctuations could negatively affect our business, which could cause our operating results and cash flows to fall short of anticipated results for such quarters.

Our operating results are hard to predict as a significant amount of our sales may occur at the end of a quarter and certain of our sales contracts include contractual acceptance provisions.

The timing of our channel partner orders and product shipments and our inability to reduce expenses quickly may adversely impact our operating results.

Our quarterly revenues and operating results depend in large part upon the volume and timing of channel partner orders received during a given quarter and the percentage of each order that we are able to ship and recognize as revenue during a particular quarter, which is extremely difficult to forecast. We have experienced longer sales cycles in connection with our high-end UC&C solutions, which could also increase the level of unpredictability and fluctuation in the timing of orders. Further, depending upon the complexity of these solutions, such as immersive telepresence and some UC platform products, and the underlying contractual terms, revenue may not be recognized until the product has been accepted by the end-user, resulting in further revenue unpredictability.

Our expectations for both short and long-term future revenues are based almost exclusively on our own estimate of future demand and not on firm channel partner orders. Our expense levels are based largely on these estimates. In addition, a significant portion of our product orders are received in the last month of a quarter, typically the last few weeks of that quarter; thus, the unpredictability of the receipt of these orders could negatively impact our future results. Historically, we have experienced a high

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percentage of our bookings and resulting revenues in the third month of the quarter. For example, in the last four quarters, the percentage of our quarterly revenues that were recognized in the third month of the quarter ranged from approximately 49% to 55%. Accordingly, if for any reason orders and revenues do not meet our expectations in a particular period, we will be limited in our ability to reduce expenses quickly, and any significant shortfall in demand for our products in relation to our expectations could have an adverse impact on our operating results. Further, receiving a large number of product orders in the last few weeks of a quarter may cause our enterprise resource planning systems to experience delays that impede our ability to receive, process and ship orders in a timely manner,which may adversely impact our revenues and operating results in any particular quarter.

Delays in receiving contractual acceptance will cause delays in our ability to recognize revenue and may impact our quarterly revenues, depending upon the timing and shipment of orders under such contracts.

Certain of our sales contracts include product acceptance provisions which vary depending upon the type of product and individual terms of the contract. In addition, acceptance criteria may be required in other contracts in the future, depending upon the size and complexity of the sale and the type of products ordered. As we increase our focus on growing our service provider business and cloud and managed services, it is likely that an increased amount of our revenue will be subject to such contractual acceptance terms and milestones, and we may introduce new revenue models that could result in less revenue being recognized upfront. Accordingly, we defer revenue until the underlying acceptance criteria in any given contract have been met. Depending upon the acceptance terms, the timing of the receipt and subsequent shipment of an order may result in acceptance delays, may reduce the predictability of our revenues, and, consequently, may adversely impact our revenues and results of operations in any particular quarter.

International sales and expenses represent a significant portion of our revenues and operating expenses and risks inherent in international operations could harm our business.

International sales and expenses represent a significant portion of our revenues and operating expenses, and we anticipate that international sales and operating expenses will continue to increase. In 2015, international revenues represented 58% of our total revenues. International sales and expenses are subject to certain inherent risks, which would be amplified if our international business grows as anticipated, including the following:

· adverse economic conditions in international markets, such as the restricted credit environment and sovereign credit concerns in EMEA, the reduced government spending and elongated sales cycles we have seen in China, the impact of volatile oil prices on the economies of Russia and in the Middle East, and concerns over Brexit;

· information security, environmental and trade protection measures or sanctions and other legal and regulatory requirements, some of which may affect our ability to import our products, to export our products from, or sell our products in various countries;

· recent economic sanctions imposed, and the potential for additional economic sanctions, by the European Union and the U.S. on Russia and certain individuals and entities in Russia, as well as Russia’s potential response to such sanctions, some of which may affect our ability to sell or import our products to Russia;

· the impact of government-led initiatives to encourage the purchase of products from domestic vendors, as we have seen in China, which can affect the willingness of customers in those countries to purchase products from companies headquartered in the United States;

· the impact of changes in our international operations, including changes in key personnel;

· compliance with global anticorruption laws;

· foreign currency exchange rate fluctuations, including the recent volatility of the U.S. dollar, and the impact of our underlying hedging programs;

· unexpected changes in regulatory requirements and tariffs;

· longer payment cycles;

· cash repatriation restrictions, which could have an adverse impact on us, including adverse tax consequences, in the event we need to access cash and cash equivalents and investments held outside the U.S. to fund acquisitions, share repurchases or our working capital needs;

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· changes in tax law or interpretations thereof that could lead to potentially adverse tax consequences, such as legislation on revenue and expense allocations and transfer pricing among our subsidiaries; and  

· the impact of instability in the Middle East or military action or other hostilities on foreign markets, such as the recent events in Russia and the Ukraine.

International revenues may fluctuate as a percentage of total revenues in the future as we introduce new products. These fluctuations are primarily the result of our practice of introducing new products in North America first and the additional time and costs required for product homologation and regulatory approvals of new products in international markets. To the extent we are unable to expand international sales in a timely and cost-effective manner, our business could be harmed. We may not be able to maintain or increase international market demand for our products.

To date, a substantial majority of our international sales have been denominated in U.S. dollars, however, we maintain local currency pricing in the European Union and the United Kingdom whereby we price and invoice our products and services in Euros and British Pounds. In addition, some of our competitors currently invoice in foreign currency, which could be a disadvantage to us in those markets where we do not. Our international operating expenses are primarily denominated in foreign currency with no offsetting revenues in those currencies except for the Euro and British Pound. As a result of these factors, we expect our business will be vulnerable to currency fluctuations, which could adversely impact our revenues and margins. We will continue to evaluate whether it is necessary to denominate sales in local currencies other than the Euro and the British Pound, depending on customer requirements.

We do not hedge for speculative purposes. As a result of our increased exposure to currency fluctuations, we typically engage in currency hedging activities to mitigate currency fluctuation exposure. Our hedging costs can vary depending upon the size of our hedge program, whether we are purchasing or selling foreign currency relative to the U.S. dollar and interest rates spreads between the U.S. and other foreign markets. As a result, interest and other income (expense), net has become less predictable and more difficult to forecast. The impact in any given quarter of our hedging programs is dependent upon a number of factors, including the actual level of foreign currency denominated revenues, the exchange rate in our underlying hedge contracts and the actual exchange rate during the quarter. As a result of our cash flow hedging program, we increased operating income by $6.4 million in fiscal year 2015 and $2.3 million in fiscal year 2014. For further information on our hedging program, see the section entitled “Quantitative and Qualitative Disclosures About Market Risk.”

We have limited supply sources for some key components of our products and services and for the outside development and manufacture of certain of our products, and our operations could be harmed by supply or service interruptions, component defects or unavailability of these components or products.

Some key components used in our products are currently available from only one source and others are available from only a limited number of sources, including some key integrated circuits and displays. Because of such limited sources for component parts, we may have little or no ability to procure these parts on favorable pricing terms. We also obtain certain components from suppliers in China, Japan, and certain Southeast Asia countries, and any political or economic instability in these regions in the future, natural disasters, disruptions associated with infectious diseases, or future import restrictions, may cause delays or an inability to obtain these components. Further, we have suppliers in Israel and any military action or war with other Middle Eastern countries perceived as a threat by the United States government may cause delays or an inability to obtain supplies for our Polycom^® RealPresence^® Platform products.

We have no raw material supply commitments from our suppliers and generally purchase components on a purchase order basis either directly or through our contract manufacturers. Some of the components included in our products, such as microprocessors and other integrated circuits, have been subject to limited allocations by suppliers. Intellectual property infringement claims against component suppliers could also impact the availability of necessary components for our products. Component manufacturers may also announce the end of production of certain components that we require for our products necessitating the redesign and end of life purchases on our part. In addition, companies with limited or uncertain financial resources manufacture some of these components. Further, we do not always have direct control over the supply chain, as many of our component parts are procured for us by our contract manufacturers. In the event that we, or our contract manufacturers, are unable to obtain sufficient supplies of components, develop alternative sources as needed, or companies with limited financial resources go out of business, our operating results could be seriously harmed. In addition, we may incur additional costs to resolve these supply shortages, which would negatively impact our gross margins.

We have strategic relationships with third parties to develop and manufacture certain products for us. The loss of any such strategic relationship due to competitive reasons, contractual disputes, litigation, the financial instability of a strategic partner or their inability to obtain any financing necessary to adequately fund their operations, could have a negative impact on our ability to produce and sell certain products and product lines and, consequently, would adversely affect our revenues and results of operations. For

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example, increasing labor costs in China has increased the risk of bankruptcy for suppliers with operations in China, and has led to higher manufacturing costs for us and the need to identify alternate suppliers. We are also dependent upon third parties to provide our managed services for our immersive telepresence products. Any disruption in our managed services for our customers may materially adversely affect our ability to sell our immersive telepresence products and impact our relationship with the end users.

Additionally, our Polycom^® RealPresence^® Group Series and Polycom^® HDX^® video solutions and network system products are designed based on digital signal processors and integrated circuits produced by Texas Instruments Incorporated, cameras produced by JKC and processors built by Broadcom Corporation. If we could no longer obtain digital signal processors, integrated circuits or cameras from these suppliers, we would incur substantial expense and take substantial time in redesigning our products to be compatible with components from other manufacturers, and we might not be successful in obtaining these components from alternative sources in a timely or cost-effective manner. The failure to obtain adequate supplies of vital components could prevent or delay product shipments, which would harm our business. We also rely on the introduction schedules of some key components in the development or launch of new products. Any delays in the availability of these key components could harm our business.

Our operating results would be seriously harmed by receipt of a significant number of defective components or components that fail to fully comply with environmental or other regulatory requirements, an increase in component prices, or our inability to obtain lower component prices in response to competitive price reductions.

If we experience manufacturing disruptions or capacity constraints or our manufacturers fail to comply with laws or standards, our business would be harmed.

We subcontract the manufacture of most of our voice, video and network system products to Celestica, Askey, Foxconn, Pegatron and VTech, which are all third-party contract manufacturers. We use Celestica’s facilities in Thailand, Laos and China and Askey’s, Foxconn’s, Pegatron’s and VTech’s facilities in China. Should there be any disruption in the ability of these third party manufacturers to conduct business for any reason, our business and results of operations would be harmed. While we have begun to develop secondary manufacturing sources for certain products, Celestica’s facilities are currently the manufacturer for substantially all of our video products, and if Celestica experiences an interruption in operations, suffers from capacity constraints, or is otherwise unable to meet our current or future production requirements we would experience a delay or inability to ship our products, which would have an immediate negative impact on our revenues. Moreover, any incapacitation of any of our or our subcontractors’ current manufacturing sites or sites that we may plan to use in the future due to destruction, natural disaster or similar events could result in a loss of product inventory. As a result of any of the foregoing, we may not be able to meet demand for our products, which could negatively affect revenues in the quarter of the disruption or longer depending upon the magnitude of the event, and could harm our reputation. In addition, operating in the international environment exposes us to certain inherent risks, including unexpected changes in regulatory requirements and tariffs, difficulties in staffing and managing foreign operations and potentially adverse tax consequences, all of which could harm our business and results of operations.

In addition, we expect our contractors to meet certain standards of conduct, including standards related to the environment, health and safety, general working conditions, and compliance with laws. Significant or continuing noncompliance of such standards or applicable laws could harm our reputation or cause us to experience disruptions that could harm our business and results of operations. For example, the SEC has adopted rules imposing diligence and disclosure requirements around the use of “conflict minerals” in the products we have manufactured. These rules have resulted in additional time and cost to diligence our contractors and comply with the disclosure requirements and they may also affect the sourcing and availability of minerals we use in our products. Although we do not anticipate any material adverse effects based on these rules, we will need to ensure that our contractors comply with them.

If we experience disruptions or capacity constraints in air or ocean transportation, our business would be harmed.

We produce most of our subassemblies and finished goods for voice, video and network system products in Thailand, Laos and China, and we rely on third parties to transport these subassemblies and finished goods to our global distribution centers and final assembly sites. The incapacitation of any of our freight providers, or any transportation interruption due to airline strikes, dock workers strikes or management lockouts, could negatively affect revenues in the quarter of the disruption or longer, depending on the magnitude of the event.

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Cyber attacks on our networks, actual or perceived security vulnerabilities in our products and services, and loss of critical data and proprietary information could have a material adverse impact on our business and results of operations.

In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, state-sponsored intrusions, industrial espionage, employee malfeasance, and human or technological error. Computer hackers and others routinely attempt to breach the security of technology products, services, and systems such as ours, and those of customers, partners, third-parties contractors and vendors, and some of those attempts may be successful. We are not immune to these types of intrusions. 

Our products, services, network systems, and servers may store, process or transmit proprietary information and sensitive or confidential data, including valuable intellectual property and personal information, of ours and of our employees, customers, partners and other third parties. Our customers rely on our technologies for the secure transmission of such sensitive and confidential information in the conduct of their business. We are also subject to existing and proposed laws and regulations, as well as government policies and practices, related to cybersecurity, privacy and data protection worldwide.

Although we take cybersecurity seriously and devote significant resources and deploy protective network security tools and devices, data encryption and other security measures to prevent unwanted intrusions and to protect our systems, products and data, we have and will continue to experience cyber attacks of varying degrees in the conduct of our business. Cyber attackers tend to target the most popular products, services and technology companies, which can include our products, services or networks. As a result, our network is subject to unauthorized access, viruses, embedded malware and other malicious software programs.  In addition, outside parties may attempt to fraudulently induce employees or customers to disclose information in order to gain access to our employee, vendor or customer data. Unauthorized access our network, data or systems could result in disclosure, modification, misuse, loss, or destruction of company, employee, customer, or other third party data or systems, the theft of sensitive or confidential data including intellectual property and business and personal information, system disruptions, access to our financial reporting systems, operational interruptions, product or shipment disruptions or delays, and delays in or cessation of the services we offer.

Any such breaches or unauthorized access could ultimately result in significant legal and financial exposure, litigation, regulatory and enforcement action, and loss of valuable company intellectual property.  Affected parties or government authorities could initiate legal or regulatory actions against us in connection with any security breaches or improper disclosure of data, which could cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices.  Such breaches could also cause damage to our reputation, impact the market’s perception of us and of the products and services that we offer, and cause an overall loss of confidence in the security of our products and services, resulting in a potentially material adverse effect on our business, revenues and results of operations, as well as customer attrition.

In addition, the cost and operational consequences of investigating, remediating, eliminating and putting in place additional information technology tools and devices designed to prevent actual or perceived security breaches, as well as the costs to comply with any notification obligations resulting from such a breach, could be significant and impact margins. Further, due to the growing sophistication of the techniques used to obtain unauthorized access to or to sabotage networks and systems, which change frequently and often are not detected immediately by existing antivirus and other detection tools, we may be unable to anticipate these techniques or to implement adequate preventative measures. We can make no assurance that we will be able to detect, prevent, timely and adequately address or mitigate such cyber attacks or security breaches.

Other risks that may result from interruptions to our business due to cyber attacks are discussed in the risk factor entitled “Business interruptions could adversely affect our operations.”

Impairment of our goodwill or other assets would negatively affect our results of operations.

As of June 30, 2016, our goodwill was approximately $558.7 million and other purchased intangible assets were approximately $9.6 million, which together represent a significant portion of the assets recorded on our consolidated balance sheet. Goodwill and indefinite lived intangible assets are reviewed for impairment at least annually or sooner under certain circumstances. Other intangible assets that are deemed to have finite useful lives will continue to be amortized over their useful lives but must be reviewed for impairment when events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Screening for and assessing whether impairment indicators exist, or if events or changes in circumstances have occurred requires significant judgment. Therefore, we may be required to take a charge to operations as a result of future goodwill and intangible asset impairment tests. The decreases in revenue and stock price that have occurred as a result of global economic factors make such impairment more likely to result. If impairment is deemed to exist, we would write-down the recorded value of these intangible assets to their fair values and these write-downs could harm our business and results of operations. Further, we cannot assure you that future inventory, investment, license, fixed asset or other asset write-downs will not happen. If future write-downs do occur, they could harm our business and results of operations.

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We have outstanding borrowings under our credit facility, and may incur additional debt in the future, which may adversely affect our financial condition and future financial results.

As of June 30, 2016, we had $231.7 million in term loan borrowings outstanding, net of unamortized debt issuance cost of $1.2 million, under our credit agreement (the “Credit Agreement”). Our indebtedness could have important consequences to our business; for example, it could:

· require us to dedicate a significant portion of our cash flow to payments on our indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions and investments and other general corporate purposes;

· limit our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate;

· limit, along with the restrictive covenants contained in the credit agreement, our ability to borrow additional funds or to borrow funds at rates or on other terms we find acceptable;

· place us at a competitive disadvantage to our competitors that have less debt; and

· increase our vulnerability to adverse economic, financial, industry or competitive conditions, including increases in interest rates.

In addition, it is possible that we may need to incur additional indebtedness in the future in the ordinary course of business. If new debt is added to current debt levels, the risks described above could intensify.

Our credit facility contains covenants which may adversely impact our business, and the failure to comply with such covenants could cause our outstanding debt to become immediately payable.

The Credit Agreement includes a number of customary affirmative and negative covenants, including covenants that limit or restrict us and our subsidiaries’ ability to, among other things, grant liens, make investments, incur indebtedness, merge or consolidate, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock, enter into transactions with affiliates and enter into restrictive agreements, in each case subject to customary exceptions for a credit facility of this size and type. We are also required to maintain compliance with a consolidated fixed charge coverage ratio and a consolidated secured leverage ratio. Collectively, these covenants could constrain our ability to grow our business through acquisition or engage in other transactions. In addition, the Credit Agreement includes customary events of default that include, among other things, non-payment defaults, covenant defaults, inaccuracy of representations and warranties, cross default to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults and a change of control default. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement, which could have a material adverse effect on our liquidity and ability to conduct our business.

We continue to look for ways to improve and streamline our enterprise resource planning system and other information technology and processes, and if we do not appropriately manage these changes our operating results may be negatively affected.

To manage our business effectively, we must continue to improve and streamline our technology and business processes, including financial, operating and administrative systems and controls. This will require significant management time, support and cost. Moreover, there are inherent risks associated with new systems that may affect our ability to manage our data. If we do not successfully implement, improve or maintain these systems, our operations may be disrupted and our operating results could be harmed. In addition, these systems or their functionality may not operate as we expect them to, and we may be required to expend significant resources to correct problems or find alternative means by which to perform these functions. This may affect our ability to forecast and effectively control our operating expenses. For example, as part of our effort to improve efficiencies throughout our worldwide organization, we completed implementation of a new enterprise resource planning system in October 2015. The implementation of a new enterprise resource planning system, especially in the initial period after the cutover, can result in a number of risks due to decreased productivity and operational efficiency. There can be no assurance that there will be no adverse impact to our ability to receive and process channel partner orders, order components and finished goods, plan and execute appropriate manufacturing plans, receive and ship finished goods and accurately and timely prepare, analyze and report the financial data we use in making operating decisions and which form the basis of the financial information we include in the periodic reports we file with the SEC. For example, in the fourth quarter of 2015, we experienced some billing delays due to the cutover, which caused our days-sales-outstanding (“DSO”) to be higher than normal.

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Our failure to successfully implement restructuring plans could adversely impact our business.

We have in the past, and may in the future, take actions to streamline or further optimize our business, which may require us to consider restructuring, including workforce reduction or eliminating redundant facilities. The implementation of a restructuring plan may be disruptive to our business, and our business may not be more efficient or effective than prior to the implementation of the plan. Restructuring activities, including any related charges and the impact of headcount reductions, could have a material adverse effect on our business, operating results, and financial condition. If we identify redundant facilities, we would develop a plan to exit these as part of the integration of an acquired business or as part of the implementation of the restructuring plan. Any reserve would be net of estimated sublease income we expect to generate. Our estimate of sublease income is based on current comparable rates for leases in the respective markets. If actual sublease income is lower than our estimates for any reason, if it takes us longer than we estimated to sublease these facilities, or if the associated cost of, or our recorded liability related to, subleasing or terminating our lease obligations for these facilities is greater than we estimated, we would incur additional charges to operations which would harm our business, results of operations and cash flows.

Changing laws and increasingly complex corporate governance and public disclosure requirements could have an adverse effect on our business and operating results.

Changing laws, regulations and standards, including those relating to corporate governance, social/environmental responsibility, import and export requirements, data privacy, global anticorruption and public disclosure and newly enacted SEC regulations, have created additional compliance requirements for us. Our efforts to comply with these requirements have resulted in an increase in expenses and a diversion of management’s time from other business activities. While we believe we are compliant with laws and regulations in jurisdictions where we do business, we must continue to monitor and assess our compliance in the future, and we must also continue to expand our compliance procedures. For example, although we implement policies and procedures designed to facilitate compliance with global anticorruption laws, our employees, channel partners, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any failures in these procedures in the future, even if prohibited by our policies, could result in time-consuming and costly activities, potential fines and penalties, and diversion of management time, all of which could hurt our business.

Our products and services are subject to various federal, state, local, and foreign laws and regulations. Compliance with current laws and regulations has not had a material adverse effect on our financial condition. However, new laws and regulations or new or different interpretations of existing laws and regulations could deny or delay our access to certain markets or require us to incur costs or become the basis for new or increased liabilities that could have a material adverse effect on our financial condition and results of operations.

The telecommunications industry is regulated by the Federal Communications Commission in the United States and similar government agencies in other countries and is subject to changing political, economic, and regulatory influences. Changes in telecommunications requirements, or regulatory requirements in other industries in which we operate now or in the future, in the United States or other countries could materially adversely affect our business, operating results, and financial condition, including our managed services offering. Further, changes in the regulation of our activities, such as increased or decreased regulation affecting prices, could also have a material adverse effect upon our business and results of operations.

If we have insufficient proprietary rights or if we fail to protect those rights we have, our business could be materially impaired.

We rely on third-party license agreements and termination or impairment of these agreements may cause delays or reductions in product introductions or shipments which could harm our business.

We have licensing agreements with various suppliers for software incorporated into our products. In addition, certain of our products are developed and manufactured based largely or solely on third-party technology. These third-party software licenses and arrangements may not continue to be available to us on commercially reasonable or competitive terms, if at all. The termination or impairment of these licenses could result in delays or reductions in new product introductions or current product shipments until equivalent software could be developed, licensed and integrated, which could harm our business and results of operations. Further, if we are unable to obtain necessary technology licenses on commercially reasonable or competitive terms, we could be prohibited from marketing our products, forced to market products without certain features, or incur substantial costs to redesign our products, defend legal actions, or pay damages. In addition, some of our products may include “open source” software. Our ability to commercialize products or technologies incorporating open source software may be restricted because, among other factors, open source license terms may be unclear and may result in unanticipated obligations regarding our product offerings.

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We rely on patents, trademarks, copyrights and trade secrets to protect our proprietary rights which may not be sufficient to protect our intellectual property.

We rely on a combination of patent, copyright, trademark and trade secret laws and confidentiality procedures to protect our proprietary rights. Others may independently develop similar proprietary information and techniques or gain access to our intellectual property rights or disclose such technology. In addition, we cannot assure you that any patent or registered trademark owned by us will not be invalidated, circumvented or challenged in the U.S. or foreign countries or that the rights granted thereunder will provide competitive advantages to us or that any of our pending or future patent applications will be issued with the scope of the claims sought by us, if at all. Furthermore, others may develop similar products, duplicate our products or design around our patents. In addition, foreign intellectual property laws may not protect our intellectual property rights. Litigation may be necessary to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine the validity of and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Litigation could result in substantial costs and diversion of resources which could harm our business, and we could ultimately be unsuccessful in protecting our intellectual property rights. Further, our intellectual property protection controls across our global operations may not be adequate to fully protect us from the theft or misappropriation of our intellectual property, which could adversely harm our business.

We face litigation claims that might be costly to resolve and, if resolved adversely, may harm our operating results or financial condition.

We are a party to lawsuits in the normal course of our business. The results of, and costs associated with, complex litigation matters are difficult to predict, and the uncertainty associated with substantial unresolved lawsuits could harm our business, financial condition, and reputation. Negative developments with respect to pending lawsuits could cause our stock price to decline, and an unfavorable resolution of any particular lawsuit could have an adverse effect on our business and results of operations. In addition, we may become involved in regulatory investigations or other governmental or private legal proceedings, which could be distracting, expensive and time consuming for us, and if public, may also cause our stock price to be negatively impacted. We expect that the number and significance of claims and legal proceedings that assert patent infringement claims or other intellectual property rights covering our products, either directly against us or against our customers, will increase as our business expands. Any claims or proceedings against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, result in the diversion of significant operational resources, or require us to enter into royalty or licensing agreements or pay amounts to third parties pursuant to contractual indemnity provisions. Royalty or licensing agreements, if required, may not be available on terms favorable to us or at all. In addition, we expect that we may face legal proceedings for matters unrelated to intellectual property. For example, in 2013 a purported shareholder class action suit and shareholder derivative lawsuits were filed against us and certain of our current and former officers and directors. Such shareholder activities or lawsuits, and any related publicity, may result in substantial costs and, among other things, divert the attention of management and our employees. An unfavorable outcome in any claim or proceeding against us could have a material adverse impact on our financial position and results of operations for the period in which the unfavorable outcome occurs, and potentially in future periods. Further, any settlement announced by us may expose us to further claims against us by third parties seeking monetary or other damages which, even if unsuccessful, would divert management attention from the business and cause us to incur costs, possibly material, to defend such matters.

Difficulties in identifying and integrating acquisitions could adversely affect our business.

We have spent and may spend in the future, significant resources identifying and acquiring businesses. The process of identifying suitable candidates and integrating acquired companies into our operations requires significant resources and is time-consuming, expensive and disruptive to our business. Failure to achieve the anticipated benefits of any acquisitions could harm our business, results of operations and cash flows. Additionally, we may incur material charges in future quarters to reflect additional costs associated with any future acquisition we may make. We may not realize the benefits we anticipate from our acquisitions because of the following significant challenges:

· incorporating the acquired company’s technology and products and services into our current and future product lines, including providing services that are new for us;

· potential deterioration of the acquired company’s product sales and revenues due to integration activities and management distraction;

· managing integration issues;

· potentially creating confusion in the marketplace by ineffectively distinguishing or marketing the product and services offerings of the newly acquired company with our existing product and services lines;

· entering new businesses or product lines;

59

· potentially incompatible cultural differences between the two companies;  

· geographic dispersion of operations;

· interruption of manufacturing operations as we transition an acquired company’s manufacturing to our outsourced manufacturing model;

· generating marketing demand for an expanded product line;

· distraction of the existing and acquired sales force during the integration of the companies;

· distraction of and potential conflict with the acquired company’s products and services in regards to our existing channel partners;

· the difficulty in leveraging the combined technologies and capabilities across all product lines and customer bases; and

· retaining the customers or employees of an acquired company.

If we fail to manage our exposure to the volatility and economic uncertainty in the global financial marketplace successfully, our operating results could be adversely impacted.

We are exposed to financial risk associated with the global financial markets, which includes volatility in interest rates, uncertainty in the credit markets and instability in the foreign currency exchange market. Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio and our term loan debt facility. The valuation of our investment portfolio is subject to uncertainties that are difficult to predict. Factors that may impact its valuation include changes to credit ratings or quality of the securities, interest rate changes, the ongoing strength and quality of the global credit market and liquidity. All of the securities in our investment portfolio are investment-grade rated, but the instability of the credit market could impact those ratings and our decision to hold these securities, if they do not meet our minimum credit rating requirements. If we should decide to sell such securities, we may suffer losses in principal value that have significantly declined in value due to the declining credit rating of the securities and the ongoing strength and the global financial markets as a whole. With the instability in the financial markets, we could incur significant realized or other than temporary impairment losses associated with certain of our investments which would reduce our net income. We may also incur temporary impairment charges requiring us to record an unrealized loss in accumulated other comprehensive income. The interest rate on our term loan debt facility is based upon LIBOR and to the extent that LIBOR interest rates increase, our annual interest expense on this term loan debt will increase. For more information regarding the sensitivity of and risks associated with the market value of portfolio investments and interest rates, see the section entitled “Quantitative and Qualitative Disclosures About Market Risk.”

Delays or loss of government contracts or failure to obtain required government certifications could have a material adverse effect on our business.

We sell our products indirectly and provide services to governmental entities in accordance with certain regulated contractual arrangements. While reporting and compliance with government contracts is both our responsibility and the responsibility of our partner, a lack of reporting or compliance by us or our partners could have an impact on the sales of our products to government agencies. Further, the United States Federal government has certain certification and product requirements for products sold to them. If we are unable to meet applicable certification or other requirements within the timeframes specified by the United States Federal government, or if our competitors have certifications for competitive products for which we are not yet certified, our revenues and results of operations would be adversely impacted.

Changes in our tax rates could adversely affect our future results.

We are a U.S. based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Unanticipated changes in our tax rates could affect our future results of operations. Our future effective tax rates, which are difficult to predict, could be unfavorably affected by changes in, or interpretation of, tax rules and regulations in the jurisdictions in which we do business and by unanticipated decreases in the amount of revenue or earnings in countries with low statutory tax rates.

We are also subject to the periodic examination of our income tax returns by the Internal Revenue Service and other tax authorities, and currently are under examination in a few foreign jurisdictions. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. We may underestimate the outcome of such examinations which, if significant, would have a material adverse effect on our results of operations and financial condition.

60

Business interruptions could adversely affect our operations.

Our operations are vulnerable to interruption by fire, earthquake, or other natural disaster, quarantines or other disruptions associated with infectious diseases, national catastrophe, terrorist activities, war, ongoing disturbances in the Middle East, an attack on Israel, disruptions in our computing and communications infrastructure due to power loss, telecommunications failure, human error, physical or electronic security breaches and computer viruses (which could leave us vulnerable to the loss of our intellectual property or the confidential information of our customers, disruption of our business activities and potential litigation), and other events beyond our control. We have a business continuity program that is based on enterprise risk assessment which addresses the impact of natural, technological, man-made and geopolitical disasters on our critical business functions. This plan helps facilitate the continuation of critical business activities in the event of a disaster but may not prove to be sufficient. In addition, our business interruption insurance may not be sufficient to compensate us for losses that may occur, and any losses or damages incurred by us could have a material adverse effect on our business and results of operations. Further, given our linearity, any interruption of our business, business processes or systems late in a fiscal quarter could potentially negatively impact our financial results or financial reporting for such period.

In the case of our managed services business, any circuit failure or downtime could affect a significant portion of our customers. Since our ability to attract and retain customers depends on our ability to provide customers with highly reliable service, even minor interruptions could harm our reputation, require that we incur additional expense to acquire alternative telecommunications capacity, or cause us to miss contractual obligations, which could have a material adverse effect on our operating results and our business.

Our cash flow could fluctuate due to the potential difficulty of collecting our receivables and managing our inventories.

Over the past few years, we have made significant investments in EMEA and APAC to expand our business in these regions. In EMEA and APAC, as with other international regions, credit terms are typically longer than in the United States. Therefore, as EMEA, APAC and other international regions grow as a percentage of our revenues, accounts receivable balances increase and our days-sales-outstanding increase. Although from time to time we have been able to largely offset the effects of these influences through additional incentives offered to channel partners at the end of each quarter in the form of prepay discounts, these additional incentives have lowered our profitability. In addition, economic uncertainty or a downturn in technology spending in the United States and other countries could restrict the availability of capital, which may delay our collections from our channel partners beyond our historical experience or may cause companies to file for bankruptcy. Either a delay in collections or bankruptcy would harm our cash flow and accounts receivable day’s outstanding performance.

In addition, as we manage our business and focus on more cost effective shipment lead times for certain of our products and implement freight cost reduction programs, our inventory levels may increase, resulting in decreased inventory turns that could negatively impact our cash flow. We believe inventory turns will continue to fluctuate depending upon our ability to reduce lead times, as well as due to changes in anticipated product demand and product mix and the mix of ocean freight versus air freight.

Our stock price is volatile and fluctuates as a result of the conduct of our business and stock market.

The market price of our common stock has from time to time experienced significant fluctuations. The market price of our common stock may be significantly affected by a variety of factors, including:

· statements or changes in opinions, ratings or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business, including competitors, partners, suppliers or telecommunications industry leaders or relating to us specifically;

· changes in our executive team or speculation in the press or the investment community about changes;

· the announcement of new products, product enhancements or acquisitions by us or by our competitors;

· technological innovations by us or our competitors;

· quarterly variations in our results of operations;

· failure of our future operating results to meet expectations of stock market analysts or investors, which is inherently subject to greater risk and uncertainty as expectations increase, or any financial guidance we may provide to the market;

· general market conditions or market conditions specific to technology industries; and

· domestic and international macroeconomic factors.

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We have experienced volatility in our stock price, which sometimes results in attempts by shareholders to involve themselves in the governance and strategic direction of a company above and apart from normal interactions between shareholders and management. In addition, class action litigation is sometimes instituted following periods of volatility. Such shareholder activities or lawsuits, and any related publicity, may result in substantial costs and, among other things, divert the attention of management and our employees.

We are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), we are required to furnish a report by our management on our internal control over financial reporting. Such report contains, among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. While we were able to assert in our Annual Report on Form 10-K as amended for the fiscal year ended December 31, 2015, that our internal control over financial reporting was effective as of December 31, 2015, we must continue to monitor and assess our internal control over financial reporting. In addition, our control framework may suffer if we are unable to adapt our control framework appropriately as we continue to grow our business. If we are unable to assert in any future reporting period that our internal control over financial reporting is effective (or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal controls), we could lose investor confidence in the accuracy and completeness of our financial reports, which would have an adverse effect on our stock price.

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

There were no sales of unregistered securities during the six months ended June 30, 2016.

Issuer Purchases of Equity Securities

The following table provides a month-to-month summary of the stock purchase activity during the three months ended June 30, 2016:

Period	TotalNumberof Shares Purchased(1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan(2)		Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan(2)
4/1/16 to 4/30/16		254	$	—		—	$	60,100,000
5/1/16 to 5/31/16		58,116	$	—		—	$	60,100,000
6/1/16 to 6/30/16		1,186	$	—		—	$	60,100,000
Total		59,556				—

(1) These shares were repurchased in April through June 2016 to satisfy tax withholding obligations as a result of the vesting of performance shares and restricted stock units.

(2) In July 2014, our Board of Directors approved a share repurchase plan (the “2014 repurchase plan”) under which we may at our discretion purchase shares in the open market with an aggregate value of up to $200.0 million. Any share repurchases will be funded through cash on hand and future cash flow from operations. As of June 30, 2016, $60.1 million remained authorized under the 2014 repurchase plan. The repurchased shares of common stock have been retired and reclassified as authorized unissued shares.     

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

Item 4. MINE SAFETY DISCLOSURES

Not Applicable.

Item 5. OTHER INFORMATION

Not Applicable.

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Item 6. EXHIBITS

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of July 8, 2016, by and among Polycom, Inc., Triangle Private Holdings I, LLC, and Triangle Private Merger Sub Inc. (which is incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 8, 2016).
2.2	Agreement and Plan of Merger, dated as of April 15, 2016, by and among Polycom, Inc., Mitel Networks Corporation, and Meteor Two, Inc. (which is incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on April 18, 2016).
3.1	Amended and Restated Bylaws of Polycom, Inc., as amended effective April 18, 2016 (which is incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on April 20, 2016).
10.1	Amendment No. 1 to the Agreement and Plan of Merger, dated as of June 10, 2016, by and among Polycom, Inc., Mitel Networks Corporation and Meteor Two, LLC (which is incorporated by reference to Exhibit 2.1 to Mitel’s Amendment No. 1 to the Registration Statement on Form S-4 filed with the Commission on June 10, 2016).
10.2	Notice of Termination and Waiver, between Polycom and Mitel Networks Corporation (which is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 8, 2016).
31.1(1)	Certification of the President and Chief Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(c) and 15d-14(a).
31.2(1)	Certification of the Chief Financial Officer, Chief Accounting Officer and Executive Vice President pursuant to Securities Exchange Act Rules 13a-14(c) and 15d-14(a).
32.1(1)	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Calculation Linkbase Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

(1) Filed herewith.

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SIGNATURE

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.

Dated: August 4, 2016

POLYCOM, INC.

/s/ PETER A. LEAV

Peter A. Leav

President and Chief Executive Officer

(Principal Executive Officer)

/s/ LAURA J. DURR

Laura J. Durr

Chief Financial Officer, Chief Accounting Officer, and Executive Vice President

(Principal Financial Officer

and Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of July 8, 2016, by and among Polycom, Inc., Triangle Private Holdings I, LLC, and Triangle Private Merger Sub Inc. (which is incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 8, 2016).
2.2	Agreement and Plan of Merger, dated as of April 15, 2016, by and among Polycom, Inc., Mitel Networks Corporation, and Meteor Two, Inc. (which is incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on April 18, 2016).
3.1	Amended and Restated Bylaws of Polycom, Inc., as amended effective April 18, 2016 (which is incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on April 20, 2016).
10.1	Amendment No. 1 to the Agreement and Plan of Merger, dated as of June 10, 2016, by and among Polycom, Inc., Mitel Networks Corporation and Meteor Two, LLC (which is incorporated by reference to Exhibit 2.1 to Mitel’s Amendment No. 1 to the Registration Statement on Form S-4 filed with the Commission on June 10, 2016).
10.2	Notice of Termination and Waiver, between Polycom and Mitel Networks Corporation (which is incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 8, 2016).
31.1(1)	Certification of the President and Chief Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(c) and 15d-14(a).
31.2(1)	Certification of the Chief Financial Officer, Chief Accounting Officer and Executive Vice President pursuant to Securities Exchange Act Rules 13a-14(c) and 15d-14(a).
32.1(1)	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Calculation Linkbase Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

(1) Filed herewith.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Peter A. Leav, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Polycom, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 4, 2016	By:	/s/ PETER A. LEAV
	Name:	Peter A. Leav
	Title:	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Laura J. Durr, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Polycom, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 4, 2016	By:	/s/ LAURA J. DURR
	Name:	Laura J. Durr
	Title:	Chief Financial Officer, Chief Accounting Officer, and Executive Vice President

EX-32.1

Exhibit 32.1

Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Peter A. Leav, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Polycom, Inc. on Form 10-Q for the three months ended June 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Polycom, Inc.

August 4, 2016	By:	/s/ PETER A. LEAV
	Name:	Peter A. Leav
	Title:	President and Chief Executive Officer

Certification of the Chief Financial Officer, Executive Vice President, and Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Laura J. Durr, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Polycom, Inc. on Form 10-Q for the three months ended June 30, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Polycom, Inc.

August 4, 2016	By:	/s/ LAURA J. DURR
	Name:	Laura J. Durr
	Title:	Chief Financial Officer, Chief Accounting Officer, and Executive Vice President

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 01, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	PLCM
Entity Registrant Name	POLYCOM INC
Entity Central Index Key	0001010552
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		135,810,169

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 576,516	$ 435,093
Short-term investments	126,238	184,242
Trade receivables, net	154,212	187,888
Inventories	96,748	89,392
Prepaid expenses and other current assets	50,118	52,852
Total current assets	1,003,832	949,467
Property and equipment, net	93,123	101,853
Long-term investments	18,788	46,484
Goodwill	558,659	558,775
Purchased intangibles, net	9,648	14,065
Deferred taxes	86,659	89,865
Other assets	20,994	21,738
Total assets	1,791,703	1,782,247
Current liabilities
Accounts payable	78,444	73,472
Accrued payroll and related liabilities	32,977	38,781
Taxes payable	2,130	4,342
Deferred revenue	174,119	170,559
Current portion of long-term debt	5,717	5,717
Other accrued liabilities	74,607	85,095
Total current liabilities	367,994	377,966
Long-term deferred revenue	83,272	86,191
Taxes payable	10,382	9,983
Deferred taxes		135
Long-term debt	225,940	228,799
Other non-current liabilities	24,074	25,964
Total liabilities	711,662	729,038
Commitments and contingencies (Note 8)
Stockholders' equity
Common stock, $0.0005 par value; authorized: 350,000,000 shares; issued and outstanding: 135,771,115 shares at June 30, 2016 and 132,665,165 shares at December 31, 2015	68	66
Additional paid-in capital	1,202,263	1,167,701
Accumulated deficit	(120,017)	(113,355)
Accumulated other comprehensive loss	(2,273)	(1,203)
Total stockholders' equity	1,080,041	1,053,209
Total liabilities and stockholders' equity	$ 1,791,703	$ 1,782,247

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.0005	$ 0.0005
Common stock, shares authorized	350,000,000	350,000,000
Common stock, shares issued	135,771,115	132,665,165
Common stock, shares outstanding	135,771,115	132,665,165

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues:
Product revenues	$ 201,715	$ 221,896	$ 404,975	$ 455,583
Service revenues	86,064	94,679	172,879	191,692
Total revenues	287,779	316,575	577,854	647,275
Cost of revenues:
Cost of product revenues	94,029	95,752	189,084	197,021
Cost of service revenues	32,478	34,898	63,669	71,509
Total cost of revenues	126,507	130,650	252,753	268,530
Gross profit	161,272	185,925	325,101	378,745
Operating expenses:
Sales and marketing	82,505	89,433	161,968	180,292
Research and development	43,981	46,545	87,051	95,882
General and administrative	20,291	22,269	40,401	43,436
Amortization of purchased intangibles	2,017	2,417	4,217	4,834
Restructuring costs	6,007	343	13,509	367
Transaction-related costs	7,887		12,131
Total operating expenses	162,688	161,007	319,277	324,811
Operating (loss) income	(1,416)	24,918	5,824	53,934
Interest and other income (expense), net:
Interest expense	(1,668)	(1,523)	(3,305)	(3,007)
Other income (expense), net	1,966	1,345	2,835	1,367
Interest and other income (expense), net	298	(178)	(470)	(1,640)
(Loss) income before provision for income taxes	(1,118)	24,740	5,354	52,294
Provision for income taxes	8,879	5,093	12,016	11,449
Net (loss) income	$ (9,997)	$ 19,647	$ (6,662)	$ 40,845
Basic net (loss) income per share	$ (0.07)	$ 0.15	$ (0.05)	$ 0.30
Diluted net (loss) income per share	$ (0.07)	$ 0.14	$ (0.05)	$ 0.30
Number of shares used in computation of net (loss) income per share:
Basic	135,700	134,057	134,934	134,417
Diluted	135,700	137,347	134,934	138,290

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Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net (loss) income	$ (9,997)	$ 19,647	$ (6,662)	$ 40,845
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(2,015)	8	(951)	191
Unrealized gains/losses on investments:
Unrealized holding gains (losses) arising during the period	66	(27)	292	62
Net losses reclassified into earnings	(15)	(1)	(8)	(4)
Net unrealized gains (losses) on investments	51	(28)	284	58
Unrealized gains/losses on hedging securities:
Unrealized hedge gains (losses) arising during the period	728	(1,723)	(899)	4,575
Net unrealized gains/(losses) on hedging securities	1,165	(3,150)	(403)	590
Other comprehensive (loss) income	(799)	(3,170)	(1,070)	839
Comprehensive (loss) income	(10,796)	16,477	(7,732)	41,684
Product revenues
Unrealized gains/losses on hedging securities:
Net (gains) losses reclassified into earnings for revenue/expense hedges	(308)	(3,629)	(1,606)	(10,265)
Operating Expenses
Unrealized gains/losses on hedging securities:
Net (gains) losses reclassified into earnings for revenue/expense hedges	$ 745	$ 2,202	$ 2,102	$ 6,280

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net (loss) income	$ (6,662)	$ 40,845
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	23,663	27,210
Amortization of purchased intangibles	4,417	5,629
Amortization of capitalized software development costs for products to be sold	2,140	1,354
Amortization of debt issuance costs	267	266
Amortization of discounts and premiums on investments, net	645	1,090
Write-down of excess and obsolete inventories	5,477	6,810
Stock-based compensation expense	33,087	18,943
Excess tax benefits from stock-based compensation expense	(1,405)	(3,487)
Loss on disposal of property and equipment	175	544
Changes in assets and liabilities:
Trade receivables	33,601	8,245
Inventories	(12,880)	(6,791)
Deferred taxes	(4,435)	(2,744)
Prepaid expenses and other assets	2,362	4,960
Accounts payable	4,058	(19,229)
Taxes payable	5,296	9,663
Other accrued liabilities and deferred revenue	(17,540)	(30,160)
Net cash provided by operating activities	72,266	63,148
Cash flows from investing activities:
Purchases of property and equipment	(13,508)	(23,922)
Capitalized software development costs for products to be sold	(1,446)	(2,311)
Purchases of investments	(78,222)	(107,675)
Proceeds from sales of investments	13,937	6,892
Proceeds from maturities of investments	149,699	97,187
Net cash provided by (used in) investing activities	70,460	(29,829)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee option and stock purchase plans	10,811	12,528
Payments on debt	(3,126)	(3,125)
Purchase and retirement of common stock under share repurchase plan		(64,999)
Purchase and retirement of common stock for tax withholdings on vesting of employee stock-based awards	(9,772)	(11,769)
Excess tax benefits from stock-based compensation expense	1,405	3,487
Net cash used in financing activities	(682)	(63,878)
Effect of exchange rate changes on cash and cash equivalents	(621)
Net increase (decrease) in cash and cash equivalents	141,423	(30,559)
Cash and cash equivalents, beginning of period	435,093	443,132
Cash and cash equivalents, end of period	$ 576,516	$ 412,573

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Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

1. BASIS OF PRESENTATION

The accompanying unaudited financial statements, consisting of the condensed consolidated balance sheet as of June 30, 2016, the condensed consolidated statements of operations for the three and six months ended June 30, 2016 and 2015, the condensed consolidated statements of comprehensive (loss) income for the three and six months ended June 30, 2016 and 2015, and the condensed consolidated statements of cash flows for the six months ended June 30, 2016 and 2015, have been prepared in accordance with accounting principles generally accepted in the United States of America in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. In addition, the condensed consolidated balance sheet at December 31, 2015 has been derived from the audited consolidated financial statements as of that date. Accordingly, these condensed consolidated financial statements do not include all of the information and notes typically found in the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of Polycom, Inc. and its subsidiaries (the “Company”). In the opinion of management, the accompanying unaudited financial statements have been prepared on a basis consistent with the Company’s December 31, 2015 audited financial statements and all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement have been included. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K as amended for the year ended December 31, 2015.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates and operating results for the three and six months ended June 30, 2016 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

Definitive Agreement and Plan of Merger with Mitel Networks Corporation

On April 15, 2016, the Company entered into a definitive Agreement and Plan of Merger with Mitel Networks Corporation (“Mitel”) to be acquired for $3.12 in cash and 1.31 common shares of Mitel for each share of our common stock.

Subsequent Event

On July 8, 2016, the Company terminated the definitive Agreement and Plan of Merger with Mitel and entered into a definitive Agreement and Plan of Merger with Triangle Private Holdings I, LLC (“NewCo”), an entity affiliated with Siris Capital Group, LLC (“Siris”) to be acquired for $12.50 in cash for each share of the Polycom common stock (the “Merger”). Consummation of the Merger is subject to customary closing conditions, including, without limitation, (i) the absence of certain legal impediments, (ii) the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) antitrust regulatory approval in Germany and Russia, and (iv) approval by the Company’s stockholders of the Merger.

In connection with terminating the definitive agreement with Mitel, the Company paid a termination fee of $60.0 million to Mitel (the “Mitel Termination Fee”) on July 8, 2016, which was reimbursed by NewCo on July 22, 2016. If the Company terminates the definitive agreement with NewCo under specified circumstances, the Company may be required to pay NewCo a $60.0 million termination fee and/or repay to NewCo the Mitel Termination Fee that NewCo reimbursed to the Company.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Recent Accounting Pronouncements

2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update which amends the current guidance related to accounting for credit losses on certain financial instruments by replacing the incurred loss model with a forward-looking expected loss model. The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In March 2016, the FASB issued an accounting standard update which simplifies accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In March 2016, the FASB issued an accounting standard update which clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not require de-designation provided that all other hedge accounting criteria continue to be met. The standard is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal year beginning after December 15, 2016. Early adoption is permitted. The standard can be applied either on a prospective basis or a modified retrospective basis. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In February 2016, the FASB issued an accounting standard update which requires a lessee to generally recognize a right-of-use asset and a lease liability on the balance sheet. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted. The standard will be applied using a modified retrospective approach. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In May 2014, the FASB issued an accounting standard update which provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. In August 2015, the FASB issued an accounting standard update to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt the standard. In March 2016, the FASB issued an accounting standard update which clarifies the principal versus agent assessment in the new revenue recognition guidance. In April 2016, the FASB issued an accounting standard update which clarifies identifying performance obligations and the licensing implementation guidance in the new revenue recognition guidance. In May 2016, the FASB issued an accounting standard update which provides various narrow-scope improvements and practical expedients related to the new revenue recognition guidance. The Company is evaluating the potential effects of the adoption of these standards on its consolidated financial statements and disclosures.

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Discontinued Operations

6 Months Ended

Jun. 30, 2016

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

3. DISCONTINUED OPERATIONS

On December 4, 2012, the Company completed the disposition of the net assets of its enterprise wireless voice solutions (“EWS”) business to Mobile Devices Holdings, LLC, a Delaware limited liability corporation. Additional cash consideration of up to $12.5 million is payable to Polycom over this fiscal year subject to certain conditions, including meeting certain agreed-upon EBITDA-based milestones for the fiscal year ending December 31, 2016. These conditions were not met for the fiscal year ended December 31, 2015. Such additional cash consideration will be accounted for as a gain on sale of discontinued operations, net of taxes, when it is realized or realizable. For the six months ended June 30, 2016 and 2015, there were no realized gains on sale of discontinued operations.

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Accounts Receivable Financing

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Accounts Receivable Financing

4. ACCOUNTS RECEIVABLE FINANCING

The Company has a financing agreement with an unrelated third party financing company (the “Financing Agreement”) whereby the Company offers distributors and resellers direct or indirect financing on their purchases of the Company’s products and services. In return, the Company agrees to pay the financing company a fee based on a defined percentage of the transaction amount financed. In certain instances, these financing arrangements result in a transfer of the Company’s receivables, without recourse, to the financing company. If the transaction meets the applicable criteria under Accounting Standards Codification (“ASC”) 860 and is accounted for as a sale of financial assets, the accounts receivable are excluded from the balance sheet upon the third party financing company’s payment remittance to the Company. In certain legal jurisdictions, the arrangement fees that involve maintenance services or products bundled with maintenance at one price do not qualify as a sale of financial assets in accordance with the authoritative guidance. Accordingly, accounts receivable related to these arrangements are accounted for as a secured borrowing in accordance with ASC 860, and the Company records a liability for any cash received, while maintaining the associated accounts receivable balance until the distributor or reseller remits payment to the third-party financing company.

In the three and six months ended June 30, 2016, total transactions entered into pursuant to the terms of the Financing Agreement were $53.1 million and $104.9 million, respectively, of which $29.4 million and $59.5 million, respectively, were related to the transfer of the financial assets arrangement. In the three and six months ended June 30, 2015, total transactions entered into were $53.0 million and $117.6 million, respectively, of which $33.7 million and $72.9 million, respectively, were related to the transfer of the financial assets arrangement. The financing of these receivables accelerated the collection of the Company’s cash and reduced its credit exposure. The amount due from the financing company as of June 30, 2016 and December 31, 2015 was $31.4 million and $32.7 million, respectively, of which $16.4 million and $22.1 million, respectively, was related to the accounts receivable transferred, and is included in “Trade receivables, net” in the Company’s condensed consolidated balance sheets. Fees incurred pursuant to the Financing Agreement were $1.0 million and $0.8 million for the three months ended June 30, 2016 and 2015, respectively, and were $1.8 million and $1.7 million for the six months ended June 30, 2016 and 2015, respectively. Those fees were recorded as reductions to revenues.

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Goodwill, Purchased Intangibles, and Software Development Costs

6 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill, Purchased Intangibles, and Software Development Costs

5. GOODWILL, PURCHASED INTANGIBLES, AND SOFTWARE DEVELOPMENT COSTS

Goodwill

The following table presents the changes to the Company’s goodwill by segment during the six months ended June 30, 2016 (in thousands):

	Americas		EMEA		APAC			Total
Balance at December 31, 2015	$	308,159	$	101,882	$	148,734		$	558,775
Foreign currency translation		—		—		(116	)		(116	)
Balance at June 30, 2016	$	308,159	$	101,882	$	148,618		$	558,659

Purchased Intangible Assets and Software Development Costs

The following table presents details of the Company’s total purchased intangible assets and capitalized software development costs for products to be sold as of the following periods (in thousands):

	June 30, 2016							December 31, 2015
	Gross Value		Accumulated Amortization &Impairment			Net Value		Gross Value		Accumulated Amortization & Impairment			Net Value
Core and developed technology	$	81,178	$	(81,145	)	$	33	$	81,178	$	(80,945	)	$	233
Customer and partner relationships		79,525		(70,828	)		8,697		79,525		(66,742	)		12,783
Non-compete agreements		1,800		(1,800	)		—		1,800		(1,700	)		100
Trade name		3,400		(3,400	)		—		3,400		(3,369	)		31
Finite-lived intangible assets		165,903		(157,173	)		8,730		165,903		(152,756	)		13,147
Indefinite-lived trade name		918		—			918		918		—			918
Total acquired intangible assets	$	166,821	$	(157,173	)	$	9,648	$	166,821	$	(152,756	)	$	14,065
Capitalized software development costs for    products to be sold	$	14,604	$	(7,142	)	$	7,462	$	12,993	$	(5,002	)	$	7,991

Purchased intangibles include a purchased trade name of $0.9 million with an indefinite life as the Company expects to generate cash flows related to this asset indefinitely.

The following table summarizes the amortization expenses recorded in the following periods (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Amortization of purchased intangibles in revenues	$	—	$	19	$	—	$	38
Amortization of purchased intangibles in cost of product    revenues		100		100		200		757
Amortization of purchased intangibles in operating expenses		2,017		2,417		4,217		4,834
Total amortization of purchased intangibles	$	2,117	$	2,536	$	4,417	$	5,629

Amortization of purchased intangibles is not allocated to the Company’s segments.

The estimated future amortization expense as of June 30, 2016 is as follows (in thousands):

Year ending December 31,	Amount
Remainder of 2016	$	4,061
2017		4,669
Total	$	8,730

In the six months ended June 30, 2016 and 2015, the Company capitalized approximately $1.6 million and $2.5 million of software development costs, respectively, for internally developed software products to be marketed and sold to customers after the point that technological feasibility has been reached and before the products are available for general release. The capitalized costs are being amortized over the estimated product useful life, generally three years, beginning when the products are available for general release. Management expects that the capitalized software development costs are recoverable from future gross profits generated by these products and services.

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Restructuring Costs

6 Months Ended

Jun. 30, 2016

Restructuring And Related Activities [Abstract]

Restructuring Costs

6. RESTRUCTURING COSTS

The Company recorded $6.0 million and $0.3 million of net restructuring costs during the three months ended June 30, 2016 and 2015, respectively, and $13.5 million and $0.4 million during the six months ended June 30, 2016 and 2015, respectively. The restructuring costs during the six months ended June 30, 2016 were primarily related to certain actions announced in December 2015, which included reduction of approximately 11 percent of the Company’s global workforce that is expected to be substantially complete by the fourth quarter of 2016 and charges related to vacating certain leased facilities. These actions were designed to improve the Company's profitability by strategically investing in more accretive areas of the business and further leveraging its outsource partners. As of June 30, 2016, the Company has recorded a cumulative amount of $24.0 million in restructuring costs in connection with these actions, of which $13.5 million of restructuring costs were incurred during the six months ended June 30, 2016, and expects the remaining charges related to these actions to be approximately $1 million. 

The following table summarizes the changes in the Company’s restructuring reserves during the six months ended June 30, 2016 (in thousands):

	Severance/Other			Facilities			Other			Total
Balance at December 31, 2015	$	8,072		$	18,455		$	801		$	27,328
Additions to the reserve, net		9,072			3,958			—			13,030
Interest accretion		—			479			—			479
Non-cash adjustments		—			3			—			3
Cash payments		(12,027	)		(4,391	)		(801	)		(17,219	)
Balance at June 30, 2016	$	5,117		$	18,504		$	—		$	23,621

As of June 30, 2016, the restructuring reserve was primarily comprised of facilities-related liabilities pertaining to previous restructuring actions. At the time the reserve was initially set up, the Company calculated the fair value of its facilities-related liabilities based on the discounted future lease payments less sublease assumptions. This fair value measurement is classified as a Level 3 measurement under ASC 820. The key assumptions used in the valuation model include discount rates, cash flow projections, and estimated sublease income. These assumptions involve significant judgment, are based on management’s estimate of current and forecasted market conditions and are sensitive and susceptible to change.To the extent that actual sublease income, the timing of subleasing the facility, or the associated cost of, or the recorded liability related to subleasing or terminating the Company’s lease obligations for these facilities is different than initial estimates, the Company adjusts its restructuring reserves in the period during which such information becomes known.

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Balance Sheet Details

6 Months Ended

Jun. 30, 2016

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Details

7. BALANCE SHEET DETAILS

Trade receivables, net consist of the following (in thousands):

	June 30, 2016			December 31, 2015
Gross trade receivables	$	211,748		$	242,911
Returns and other reserves		(54,572	)		(52,000	)
Allowance for doubtful accounts		(2,964	)		(3,023	)
Total	$	154,212		$	187,888

Inventories consist of the following (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	671	$	824
Work in process		—		117
Finished goods		96,077		88,451
Total	$	96,748	$	89,392

Prepaid expenses and other current assets consist of the following (in thousands):

	June 30, 2016		December 31, 2015
Non-trade receivables	$	8,147	$	7,689
Prepaid expenses		33,200		33,174
Derivative assets		6,873		10,396
Other current assets		1,898		1,593
Total	$	50,118	$	52,852

Deferred revenue consists of the following (in thousands):

	June 30, 2016		December 31, 2015
Short-term:
Service	$	170,545	$	165,594
License		3,574		4,965
Total	$	174,119	$	170,559
Long-term:
Service	$	78,398	$	82,598
License		4,874		3,593
Total	$	83,272	$	86,191

Changes in deferred service revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015
Balance at beginning of period	$	248,192		$	257,280
Additions to deferred service revenue		180,307			167,332
Amortization of deferred service revenue		(179,556	)		(170,232	)
Balance at end of period	$	248,943		$	254,380

Changes in deferred license revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015
Balance at beginning of period	$	8,558		$	5,524
Additions to deferred license revenue		2,508			1,766
Amortization of deferred license revenue		(2,618	)		(1,238	)
Balance at end of period	$	8,448		$	6,052

The current portion of other accrued liabilities consists of the following (in thousands):

	June 30, 2016		December 31, 2015
Accrued expenses	$	27,703	$	25,179
Accrued co-op expenses		1,979		2,670
Restructuring reserves		13,054		16,187
Warranty obligations		8,526		10,172
Derivative liabilities		6,722		6,031
Employee stock purchase plan withholdings		—		9,668
Other accrued liabilities		16,623		15,188
Total	$	74,607	$	85,095

Changes in warranty obligations during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015
Balance at beginning of period	$	10,172		$	11,613
Accruals for warranties issued during the period		4,797			6,811
Actual charges against warranty reserve during the period		(6,443	)		(7,277	)
Balance at end of period	$	8,526		$	11,147

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. COMMITMENTS AND CONTINGENCIES

Litigation and SEC Investigation

From time to time, the Company is involved in claims and legal proceedings that arise in the ordinary course of business. The Company expects that the number and significance of these matters will increase as its business expands. In particular, the Company faces an increasing number of patent and other intellectual property claims as the number of products and competitors in Polycom’s industry grows and the functionality of video, voice, data and web conferencing products overlap. Any claims or proceedings against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, result in the diversion of significant operational resources, or require the Company to enter into royalty or licensing agreements which, if required, may not be available on terms favorable to the Company or at all. If management believes that a loss arising from these matters is probable and can be reasonably estimated, the Company will record a reserve for the loss. As additional information becomes available, any potential liability related to these matters is assessed and the estimates revised. Based on currently available information, management does not believe that the ultimate outcomes of these unresolved matters, individually and in the aggregate, are likely to have a material adverse effect on the Company’s financial position, liquidity or results of operations. However, litigation is subject to inherent uncertainties, and the Company’s view of these matters may change in the future. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position and results of operations or liquidity for the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods.

Following the announcement of the execution of the merger agreement with Mitel Networks Corporation, a purported stockholder class action, styled Solak v. Leav, et al., No. 5:16-cv-03128-HRL, was filed on June 8, 2016 in the United States District Court for the Northern District of California, which is referred to as the Solak complaint. The Solak complaint named as defendants current and former members of the Polycom Board, Mitel, and the merger sub, which are collectively referred to as the defendants. The Solak complaint alleged that the defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder by failing to disclose all material information in connection with the proxy statement/prospectus related to the Mitel transaction. The Solak complaint also alleged that the current and former members of the Polycom Board violated Section 20(a) of the Exchange Act by acting as control persons of Polycom in connection with the purported omissions from the proxy statement/prospectus described above. Finally, the Solak complaint alleged that the current and former members of the Polycom Board breached their fiduciary duties to Polycom’s stockholders in connection with the merger and that Mitel and its merger sub aided and abetted the purported breaches of fiduciary duty. In support of these claims, the Solak complaint alleged, among other things, that the Polycom Board failed to disclose all material information regarding the merger, that the merger consideration undervalued Polycom, that the sales process that resulted in entry into the merger agreement was flawed, and that the merger agreement contained unreasonable deal protection devices that purportedly preclude competing offers and unduly favor Mitel. The action sought injunctive relief, including enjoining or rescinding the merger, and an award of other unspecified attorneys’ and other fees and costs, in addition to other relief. As a result of the transaction with Mitel being terminated and Polycom’s entry into the merger agreement with an entity affiliated with Siris, the suit was dismissed.

On July 23, 2013, the Company announced that Andrew M. Miller had resigned from the positions of Chief Executive Officer and President of Polycom and from Polycom’s Board of Directors. The Company disclosed that Mr. Miller’s resignation came after a review by the Audit Committee of certain expense submissions by Mr. Miller, where the Audit Committee found certain irregularities in the submissions, for which Mr. Miller had accepted responsibility. Specifically, the Audit Committee determined that Mr. Miller improperly submitted personal expenses to Polycom for payment as business expenses and, in doing so, submitted to Polycom false information about the nature and purpose of expenses. Mr. Miller has reached a settlement with the SEC.

SEC Investigation. As previously disclosed, the Company has cooperated with the Enforcement Staff of the SEC in connection with its investigation focused on Mr. Miller's expenses and his resignation. On March 31, 2015 the Company entered into a settlement with the SEC. Under the terms of the settlement in which the Company did not admit or deny the SEC’s findings, the Company paid $750,000 in a civil penalty, and agreed not to commit or cause any violations of certain provisions of the Securities Exchange Act of 1934 and related rules. On January 26, 2016, Mr. Miller reached a settlement with the SEC. Under the terms of the settlement, Mr. Miller agreed to pay $450,000, of which, $200,000 was paid to Polycom.

Class Action Lawsuit. On July 26, 2013, a purported shareholder class action, initially captioned Neal v. Polycom Inc., et al., Case No. 3:13-cv-03476-SC, and presently captioned Nathanson v. Polycom, Inc., et al., Case No. 3:13-cv-03476-SC, was filed in the United States District Court for the Northern District of California against the Company and certain of its current and former officers and directors. On December 13, 2013, the Court appointed a lead plaintiff and approved lead and liaison counsel. On February 24, 2014, the lead plaintiff filed a first amended complaint. The amended complaint alleged that, between January 20, 2011 and July 23, 2013, the Company issued materially false and misleading statements or failed to disclose information regarding the Company’s business, operational and compliance policies, including with respect to its former Chief Executive Officer’s expense submissions and the Company’s internal controls. The lawsuit further alleged that the Company’s financial statements were materially false and misleading. The amended complaint alleged violations of the federal securities laws and sought unspecified compensatory damages and other relief. On April 3, 2015, the Court dismissed all claims against Polycom and granted plaintiffs leave to amend. The lead plaintiff filed a second complaint on May 4, 2015. Polycom and the individual defendants moved to dismiss the second amended complaint on June 26, 2015. On January 8, 2016, the parties executed a settlement agreement. The proposed settlement is subject to, and contingent upon, the Court’s review and approval. The lead plaintiff moved for preliminary approval of the settlement. The Court has issued an order preliminarily approving the settlement and has scheduled a hearing for August 2016 to consider final approval of the settlement.  If the settlement is approved, the settlement payment will be made by Polycom’s insurance carrier.

Derivative Lawsuits. On August 21, 2013 and October 16, 2013, two purported shareholder derivative suits, captioned Saraceni v. Miller, et al., Case No. 5:13-cv-03880, and Donnelly v. Miller, et al., Case No. 5:13-cv-04810, respectively, were filed in the United States District Court for the Northern District of California against certain of the Company’s current and former officers and directors. On October 31, 2013, these two federal derivative actions were consolidated into In re Polycom, Inc. Derivative Litigation, Lead Case No. 3:13-cv-03880. On January 13, 2015, the Court dismissed the operative complaint and granted plaintiffs leave to amend. On April 3, 2015, the Court approved a stipulation dismissing the action with prejudice and entering judgment in favor of defendants.

On November 22, 2013 and December 13, 2013, two purported shareholder derivative suits, captioned Ware v. Miller, et al., Case No. 1-13-cv-256608, and Clem v. Miller, et al., Case No. 1-13-cv-257664, respectively, were filed in the Superior Court of California, County of Santa Clara, against certain of the Company’s current and former officers and directors. On January 31, 2014, these two California state derivative actions were consolidated into In re Polycom, Inc. Derivative Shareholder Litigation, Lead Case No. 1-13-cv-256608. The Court stayed the California state derivative litigation pending resolution of both the federal derivative lawsuit and the federal securities class action.

The California state consolidated derivative lawsuit purports to assert claims on behalf of the Company, which is named as a nominal defendant in the actions. The original California state complaints allege claims for breach of fiduciary duty, unjust enrichment, and corporate waste, and allege certain defendants failed to maintain adequate internal controls and issued, or authorized the issuance of, materially false and misleading statements, including with respect to the Company’s former Chief Executive Officer’s expense submissions and the Company’s internal controls. The complaints further allege that certain defendants approved an unjustified separation agreement and caused the Company to repurchase its own stock at artificially inflated prices. The complaints seek unspecified compensatory damages, corporate governance reforms, and other relief. At this time, the Company is unable to estimate any range of reasonably possible loss relating to the derivative actions.

Officer and Director Indemnifications

As permitted or required under Delaware law and to the maximum extent allowable under that law, the Company has certain obligations to indemnify its current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited; however, the Company has a director and officer insurance policy that mitigates the Company’s exposure and enables the Company to recover a portion of any future amounts paid.

Other Indemnifications

As is customary in the Company’s industry, as provided for in local law in the United States, and other jurisdictions, the Company’s standard contracts provide remedies to its customers, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of its products. From time to time, the Company indemnifies customers against combinations of loss, expense, or liability arising from various trigger events related to the sale and the use of its products and services. In addition, from time to time, the Company also provides protection to customers against claims related to undiscovered liabilities, additional product liability or environmental obligations.

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Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt

9. DEBT

In September 2013, the Company entered into a Credit Agreement (the “Credit Agreement”) that provides for a $250.0 million term loan (the “Term Loan”) maturing on September 13, 2018 (the “Maturity Date”), which bears interest at the Company’s option at either a base rate as set forth in the Credit Agreement plus a spread of 0.50% to 1.00%, or a reserve adjusted LIBOR rate plus a spread of 1.50% to 2.00% based on the Company’s consolidated leverage ratio for the preceding four fiscal quarters.

The Term Loan is payable in quarterly installments of principal equal to approximately $1.6 million which began on December 31, 2013, with the remaining outstanding principal amount of the Term Loan being due and payable on the Maturity Date. The Company may prepay the Term Loan, in whole or in part, at any time without premium or penalty. Amounts repaid or prepaid may not be borrowed again. The Term Loan is secured by substantially all the assets of the Company and certain domestic subsidiaries of the Company that are guarantors under the Credit Agreement, subject to certain exceptions and limitations.

The Credit Agreement contains customary affirmative and negative covenants, and financial covenants consisting of a consolidated fixed charge coverage ratio and a consolidated secured leverage ratio. The Company was in compliance with these covenants as of June 30, 2016. The Credit Agreement also includes customary events of default, including in the event of change of control, the occurrence of which could result in the acceleration of the obligations under the Credit Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable for base rate loans for any other overdue amounts.

At June 30, 2016, the weighted average interest rate on the Term Loan was 2.46%, the accrued interest on the Term Loan was $0.6 million, and the current and noncurrent portion of the outstanding Term Loan was $5.7 million and $225.9 million, respectively, net of unamortized debt issuance costs of $1.2 million.

The following table sets forth total interest expense recognized on the Term Loan (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Contractual interest expense	$	1,426	$	1,292	$	2,852	$	2,550
Amortization of debt issuance costs		134		133		267		266
Total	$	1,560	$	1,425	$	3,119	$	2,816

As of June 30, 2016, future principal payments for long-term debt, including the current portion, are summarized as follows (in thousands):

	Amount
Remainder of 2016	$	3,126
2017		6,250
2018		223,437
Total	$	232,813

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Investments

6 Months Ended

Jun. 30, 2016

Investments Debt And Equity Securities [Abstract]

Investments

10. INVESTMENTS

The Company had cash and cash equivalents of $576.5 million and $435.1 million at June 30, 2016 and December 31, 2015, respectively. Cash and cash equivalents generally consist of cash in banks, as well as highly liquid investments in money market funds, time deposits, savings accounts, commercial paper, U.S. government securities, U.S. government agency securities and corporate debt securities.

The Company’s U.S. government securities are mostly comprised of direct U.S. Treasury obligations that are guaranteed by the U.S. government and U.S. government agency securities that are mostly comprised of U.S. government agency instruments, including mortgage-backed securities. The Company’s non-U.S. government securities are mostly comprised of non-U.S. government instruments, mainly state, municipal and foreign government securities. To ensure that the investment portfolio is sufficiently diversified, the Company’s investment policy requires that a certain percentage of the Company’s portfolio be invested in these types of securities.

The Company’s corporate debt securities are comprised of publicly-traded domestic and foreign corporate debt securities. The Company does not purchase auction rate securities, and investments are in instruments that meet high quality credit rating standards, as specified in the Company’s investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issuer or type of instrument.

At June 30, 2016, the Company’s long-term investments had contractual maturities of one to two years.

The Company’s short-term and long-term investments in debt securities are summarized as follows (in thousands):

	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Balances at June 30, 2016:
Short-term investments:
U.S. government securities	$	43,081	$	40	$	—		$	43,121
U.S. government agency securities		40,788		27		(1	)		40,814
Non-U.S. government securities		2,004		—		—			2,004
Corporate debt securities		40,285		16		(2	)		40,299
Total short-term investments	$	126,158	$	83	$	(3	)	$	126,238
Long-term investments:
U.S. government securities	$	4,256	$	12	$	—		$	4,268
U.S. government agency securities		3,003		1		—			3,004
Corporate debt securities		11,499		23		(6	)		11,516
Total long-term investments	$	18,758	$	36	$	(6	)	$	18,788
Balances at December 31, 2015:
Short-term investments:
U.S. government securities	$	49,036	$	4	$	(45	)	$	48,995
U.S. government agency securities		67,723		1		(30	)		67,694
Non-U.S. government securities		7,303		—		(1	)		7,302
Corporate debt securities		60,290		1		(40	)		60,251
Total short-term investments	$	184,352	$	6	$	(116	)	$	184,242
Long-term investments:
U.S. government securities	$	8,058	$	—	$	(14	)	$	8,044
U.S. government agency securities		14,510		—		(48	)		14,462
Corporate debt securities		24,056		2		(80	)		23,978
Total long-term investments	$	46,624	$	2	$	(142	)	$	46,484

Unrealized Losses

The following table summarizes the fair value and gross unrealized losses of investments that are in an unrealized loss position only. The unrealized losses are aggregated by type of investment instrument and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
June 30, 2016:
U.S. government agency securities	$	4,221	$	(1	)	$	—	$	—	$	4,221	$	(1	)
Corporate debt securities		11,475		(8	)		—		—		11,475		(8	)
Total investments	$	15,696	$	(9	)	$	—	$	—	$	15,696	$	(9	)
December 31, 2015:
U.S. government securities	$	48,445	$	(59	)	$	—	$	—	$	48,445	$	(59	)
U.S. government agency securities		71,861		(78	)		—		—		71,861		(78	)
Non-U.S. government securities		5,001		(1	)		—		—		5,001		(1	)
Corporate debt securities		52,571		(120	)		—		—		52,571		(120	)
Total investments	$	177,878	$	(258	)	$	—	$	—	$	177,878	$	(258	)

During six months ended June 30, 2016 and 2015, there were no investments in the Company’s portfolio that were other-than temporarily impaired and the Company did not incur any material realized net gains or losses.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

11. FAIR VALUE MEASUREMENTS

The tables below set forth the Company’s recurring fair value measurements (in thousands):

			Fair Value Measurements at June 30, 2016 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
			(Level 1)		(Level 2)
Assets:
Fixed income available-for-sale securities
Cash and cash equivalents
Money market funds	$	47,894	$	47,894	$	—
U.S. government agency securities		29,980		—		29,980
Non U.S. government securities		1,000		—		1,000
Corporate debt securities		39,236		—		39,236
Short-term investments		126,238		—		126,238
Long-term investments		18,788		—		18,788
Total fixed income available-for-sale securities	$	263,136	$	47,894	$	215,242
Foreign currency forward contracts (a)	$	6,873	$	—	$	6,873
Liabilities:
Foreign currency forward contracts (b)	$	6,722	$	—	$	6,722

			Fair Value Measurements at December 31, 2015 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
			(Level 1)		(Level 2)
Assets:
Fixed income available-for-sale securities
Cash and cash equivalents
Money market funds	$	10,313	$	10,313	$	—
Non-U.S. government securities		975		—		975
Corporate debt securities		19,799		—		19,799
Short-term investments		184,242		—		184,242
Long-term investments		46,484		—		46,484
Total fixed income available-for-sale securities	$	261,813	$	10,313	$	251,500
Foreign currency forward contracts (a)	$	10,396	$	—	$	10,396
Liabilities:
Foreign currency forward contracts (b)	$	6,031	$	—	$	6,031

(a) Included in short-term derivative assets as “Prepaid expenses and other current assets” in the condensed consolidated balance sheets.

(b) Included in short-term derivative liabilities as “Other accrued liabilities” in the condensed consolidated balance sheets.

There were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2016 and 2015. There were no investments classified as Level 3 as of June 30, 2016 and December 31, 2015.

In addition, the Company has facilities-related liabilities related to restructuring which were calculated based on the discounted future lease payments less sublease assumptions. This non-recurring fair value measurement is classified as a Level 3 measurement under ASC 820. See Note 6 for further details.

The fair value of the Company’s Term Loan under its Credit Agreement is measured using Level 2 inputs as the borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to the Company for debt with similar terms and maturities. The Company has elected not to record its Term Loan at fair value, but has measured it at fair value for disclosure purposes. At June 30, 2016 and December 31, 2015, the estimated fair value of the Term Loan was approximately $229.3 million and $226.5 million, respectively, using observable market inputs. See Note 9 for further details.

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Foreign Currency Derivatives

6 Months Ended

Jun. 30, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Foreign Currency Derivatives

12. FOREIGN CURRENCY DERIVATIVES

The Company maintains a foreign currency risk management program that is designed to reduce the volatility of the Company’s economic value from the effects of unanticipated currency fluctuations. International operations generate both revenues and costs denominated in foreign currencies. The Company’s policy is to hedge significant foreign currency revenues and costs to improve margin visibility and reduce earnings volatility associated with unexpected changes in currency.

Non-Designated Hedges

The Company hedges its net foreign currency monetary assets and liabilities primarily resulting from foreign currency denominated receivables and payables with foreign exchange forward contracts to reduce the risk that the Company’s earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These derivative instruments do not subject the Company to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset remeasurement gains and losses on the hedged assets and liabilities. The Company executes non-designated foreign exchange forward contracts primarily denominated in Euros, British Pounds, Israeli Shekels, Japanese Yen, Brazilian Reals, Chinese Yuan, and Mexican Pesos.

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding non-designated hedges at June 30, 2016 (in thousands):

	Original Maturities of 360 Days or Less					Original Maturities of Greater than 360 Days
	Foreign Currency		USD Equivalent		Positions	Foreign Currency		USD Equivalent		Positions
Brazilian Real		13,196	$	4,111	Buy		—	$	—	—
Brazilian Real		24,037	$	6,993	Sell		—	$	—	—
Chinese Yuan		—	$	—	—		45,457	$	7,098	Buy
Chinese Yuan		42,005	$	6,390	Sell		—	$	—	—
Euro		22,866	$	25,374	Buy		13,703	$	15,420	Buy
Euro		34,404	$	38,274	Sell		54,468	$	60,981	Sell
British Pound		5,368	$	7,218	Buy		14,718	$	22,741	Buy
British Pound		12,753	$	17,905	Sell		15,684	$	24,082	Sell
Israeli Shekel		29,300	$	7,609	Buy		—	$	—	—
Israeli Shekel		29,300	$	7,613	Sell		—	$	—	—
Japanese Yen		96,170	$	935	Buy		—	$	—	—
Japanese Yen		96,170	$	867	Sell		—	$	—	—
Mexican Peso		21,914	$	1,184	Buy		—	$	—	—
Mexican Peso		44,977	$	2,430	Sell		—	$	—	—

The following table shows the effect of the Company’s non-designated hedges in the condensed consolidated statements of operations (in thousands):

Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
		Three Months Ended
		June 30, 2016			June 30, 2015
Foreign exchange contracts	Interest and other income (expense), net	$	1,325		$	(1,056	)
		Six Months Ended
		June 30, 2016			June 30, 2015
Foreign exchange contracts	Interest and other income (expense), net	$	(822	)	$	3,617

Cash Flow Hedges

The Company designates forward contracts as cash flow hedges of foreign currency revenues and expenses, primarily the Chinese Yuan, Euros and British Pounds. All foreign exchange contracts are carried at fair value on the condensed consolidated balance sheets and the maximum duration of foreign exchange forward contracts does not exceed 13 months.  

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding cash flow hedges at June 30, 2016 (in thousands):

	Original Maturities of 360 Days or Less					Original Maturities of Greater than 360 Days
	Foreign Currency		USD Equivalent		Positions	Foreign Currency		USD Equivalent		Positions
Chinese Yuan		—	$	—	—		85,643	$	12,851	Buy
Euro		—	$	—	—		19,597	$	21,909	Buy
Euro		—	$	—	—		58,032	$	65,094	Sell
British Pound		—	$	—	—		16,782	$	24,405	Buy
British Pound		—	$	—	—		15,816	$	23,146	Sell

The following tables show the effect of the Company’s derivative instruments designated as cash flow hedges in the condensed consolidated statements of operations for the following periods (in thousands):

	Gain (Loss) Recognized in OCI or OCL- Effective Portion						Location of Gain (Loss) Reclassified from OCI or OCL into Income-Effective Portion	Gain (Loss) Reclassified from OCI or OCL into Income-Effective Portion						Location of Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing	Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing (a)
	Three Months Ended							Three Months Ended							Three Months Ended
	June 30, 2016			June 30, 2015				June 30, 2016			June 30, 2015				June 30, 2016		June 30, 2015
Foreign    exchange    contracts	$	728		$	(1,723	)	Product revenues	$	308		$	3,629		Interest and other    income (expense),    net	$	744	$	357
							Cost of revenues		(161	)		(531	)
							Sales and marketing		(513	)		(1,007	)
							Research and development		(2	)		(268	)
							General and administrative		(69	)		(396	)
	$	728		$	(1,723	)		$	(437	)	$	1,427			$	744	$	357
	Six Months Ended							Six Months Ended							Six Months Ended
	June 30, 2016			June 30, 2015				June 30, 2016			June 30, 2015				June 30, 2016		June 30, 2015
Foreign    exchange    contracts	$	(899	)	$	4,575		Product revenues	$	1,606		$	10,265		Interest and other    income (expense),    net	$	735	$	326
							Cost of revenues		(458	)		(1,332	)
							Sales and marketing		(1,346	)		(2,794	)
							Research and development		(49	)		(983	)
							General and administrative		(249	)		(1,171	)
	$	(899	)	$	4,575			$	(496	)	$	3,985			$	735	$	326

(a) There were no gains or losses recognized in income due to ineffectiveness in the periods presented.

As of June 30, 2016, the Company estimated that all values reported in accumulated other comprehensive loss will be reclassified to income within the next twelve months. Effective gains and losses recorded in other comprehensive (loss) income are reclassified to revenue and operating expense as and when the underlying forecasted foreign currency transactions affect earnings.

In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge would be immediately reclassified to “Interest and other income (expense), net” on the condensed consolidated statements of operations. For the six months ended June 30, 2016 and 2015, there were no such gains orlosses.

The estimates of fair value are based on applicable and commonly quoted prices and prevailing financial market information as of June 30, 2016 and December 31, 2015. See Note 11 for additional information on the fair value measurements for all financial assets and liabilities, including derivative assets and derivative liabilities that are measured at fair value in the condensed consolidated financial statements on a recurring basis.

The following table shows the Company’s derivative instruments measured at gross fair value as reflected in the condensed consolidated balance sheets (in thousands):

	Fair Value of Derivatives Designated as Hedge Instruments				Fair Value of Derivatives Not Designated as Hedge Instruments
	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015
Derivative assets (a):
Foreign exchange contracts	$	2,380	$	2,283	$	4,493	$	8,113
Derivative liabilities (b):
Foreign exchange contracts	$	2,418	$	2,269	$	4,304	$	3,762

(a) All derivative assets are recorded in “Prepaid and other current assets” in the condensed consolidated balance sheets.

(b) All derivative liabilities are recorded in “Other accrued liabilities” in the condensed consolidated balance sheets.

Offsetting Derivative Assets and Liabilities

The Company has entered into master netting arrangements with each of its derivative counterparties. These arrangements afford the right to net derivative assets against liabilities with the same counterparty. Under certain default provisions, the Company has the right to set off any other amounts payable to the payee whether or not arising under this agreement. As a result of the netting provisions, the Company’s maximum amount of loss under derivative transactions due to credit risk is limited to the net amounts due from the counterparties under the derivative contracts. Although netting is permitted, it is currently the Company’s policy and practice to record all derivative assets and liabilities on a gross basis in the condensed consolidated balance sheets.

The following table sets forth the offsetting of derivative assets (in thousands):

							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
As of June 30, 2016:
Foreign exchange contracts	$	6,873	$	—	$	6,873	$	(6,017	)	$	—	$	856
As of December 31, 2015:
Foreign exchange contracts	$	10,396	$	—	$	10,396	$	(5,413	)	$	—	$	4,983

The following table sets forth the offsetting of derivative liabilities (in thousands):

							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
As of June 30, 2016:
Foreign exchange contracts	$	6,722	$	—	$	6,722	$	(6,017	)	$	—	$	705
As of December 31, 2015:
Foreign exchange contracts	$	6,031	$	—	$	6,031	$	(5,413	)	$	—	$	618

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Stockholders' Equity

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Stockholders' Equity

13. STOCKHOLDERS’ EQUITY

Share Repurchase Program

From time to time, the Company’s Board of Directors has approved plans under which the Company may at its discretion purchase shares of its common stock in the open market or via privately negotiated transactions. In July 2014, the Company announced that its Board of Directors had approved a share repurchase plan (the “2014 repurchase plan”) under which the Company may at its discretion purchase shares in the open market with an aggregate value of up to $200.0 million. Any share repurchases will be funded through cash on hand and future cash flow from operations. During the three and six months ended June 30, 2016, the Company did not purchase any shares of common stock in the open market. During the three and six months ended June 30, 2015, the Company purchased approximately 1.9 million and 4.8 million shares of common stock, respectively, in the open market for $25.0 million and $65.0 million, respectively. The purchase price for the shares of the Company’s stock repurchased is recorded as a reduction to stockholders’ equity. The excess of the cost of treasury stock that is retired over its par value and the portion allocated to additional paid-in capital based on the calculated average price in equity is recorded as a charge to retained earnings. The repurchased shares of common stock have been retired and reclassified as authorized and unissued shares. As of June 30, 2016, the Company had a remaining authorization to purchase up to an additional $60.1 million of shares in the open market under the 2014 repurchase plan.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component (in thousands). The tax effects were not shown separately, as the impacts were not material.

Six Months Ended June 30, 2016	Unrealized Gains and Losses on Cash Flow Hedges			Unrealized Gains and Losses on Available-for- Sale Securities			ForeignCurrency Translation			Total
Balance as of December 31, 2015	$	(59	)	$	(197	)	$	(947	)	$	(1,203	)
Other comprehensive loss before reclassifications		(899	)		292			(951	)		(1,558	)
Amounts reclassified from accumulated other    comprehensive loss (a)		496			(8	)		—			488
Net current-period other comprehensive loss		(403	)		284			(951	)		(1,070	)
Balance as of June 30, 2016	$	(462	)	$	87		$	(1,898	)	$	(2,273	)

(a) See Note 12 for details of gains and losses, net of taxes, reclassified out of accumulated other comprehensive loss into net (loss) income related to cash flow hedges and each line item of net (loss) income affected by the reclassification. Gains and losses related to available-for-sale securities were reclassified into “Interest and other income (expense), net” in the condensed consolidated statement of operations for the six months ended June 30, 2016, net of taxes.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

14. STOCK-BASED COMPENSATION

The following table summarizes stock-based compensation expense recorded for the periods presented and its allocation within the condensed consolidated statements of operations (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Cost of  product revenues	$	1,133	$	505	$	1,914	$	1,460
Cost of service revenues		2,373		877		3,484		2,185
Stock-based compensation expense included in cost    of revenues		3,506		1,382		5,398		3,645
Sales and marketing		7,550		2,698		11,293		5,311
Research and development		4,912		1,915		6,941		4,488
General and administrative		5,638		3,716		9,455		5,499
Stock-based compensation expense included in    operating expenses		18,100		8,329		27,689		15,298
Total stock-based compensation expense		21,606		9,711		33,087		18,943
Tax benefit		3,109		1,697		5,354		3,226
Total stock-based compensation expense, net of tax	$	18,497	$	8,014	$	27,733	$	15,717

Stock-based compensation expense is not allocated to segments because it is centrally managed at the corporate level.

Stock Options

There were no stock options granted during the six months ended June 30, 2016 and 2015.

Performance Shares and Restricted Stock Units

During the six months ended June 30, 2016 and 2015, the Company granted 886,496 and 922,202 performance shares to certain employees and executives, at a weighted average fair value of $10.87 and $14.23 per share, respectively. The 2016 and 2015 grants are generally divided evenly over three annual performance periods commencing with calendar year 2016 and 2015, respectively, and will vest on the first, second and third anniversary of the grant date.

During the six months ended June 30, 2016 and 2015, the Company granted 2,976,147 and 2,788,043 restricted stock units to certain employees and executives, at a weighted average fair value of $10.86 and $13.80 per share, respectively.

During the six months ended June 30, 2016, there were no restricted stock units granted to non-employee directors. During the six months ended June 30, 2015, the Company granted 120,000 restricted stock units to non-employee directors, at a weighted average fair value of $13.14 per share.

Employee Stock Purchase Plan

During the six months ended June 30, 2016 and 2015, 1,236,759 and 1,183,426 shares, respectively, were purchased under the Company’s employee stock purchase plan (“ESPP”). As of June 30, 2016, there were 7,927,722 shares available to be issued under the ESPP.

Pursuant to the definitive Agreement and Plan of Merger entered into with Mitel, the Company suspended the ESPP and terminated all offering periods on April 15, 2016, and refunded ESPP contributions received from the participating employees toward the related purchases. Subsequently, the Company terminated the definitive Agreement and Plan of Merger with Mitel and entered into a definitive Agreement and Plan of Merger, dated July 8, 2016, to be acquired by an entity affiliated with Siris. Effective as of one day prior to the closing of the Merger, and contingent upon the closing of the Merger, the ESPP will be terminated. The Company expects that there will be no further offering periods under the ESPP prior to its termination in connection with the closing of the Merger. The Company recognized approximately $10.9 million of unamortized stock-based compensation expense in relation to the cancelled offering periods during the six months ended June 30, 2016. Refer to Note 1 for additional details regarding the proposed Merger.

Valuation Assumptions

For purchase rights granted pursuant to the ESPP, the estimated fair value per share of employee stock purchase rights for the two-year offering period commencing on February 1, 2016 ranged from $2.51 to $3.35, compared to the estimated fair value per share from $3.09 to $4.27 for the two-year offering period commencing on February 2, 2015.

The fair value of each employee stock purchase right grant is estimated on the date of grant using the Black-Scholes option valuation model and is recognized as expense using the graded vesting method using the following assumptions:

	Three and Six Months Ended
	June 30, 2016		June 30, 2015
Expected volatility	31.85-34.97%		30.04-30.73%
Risk-free interest rate	0.47-0.81%		0.07-0.49%
Expected dividends		0.0%		0.0%
Expected life (years)	0.5-2.0		0.5-2.0

The Company computed its expected volatility assumption based on blended volatility (50% historical volatility and 50% implied volatility). The selection of the blended volatility assumption was based upon the Company’s assessment that blended volatility is more representative of the Company’s future stock price trends as it weighs in the longer term historical volatility with the near term future implied volatility.

The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected life of the Company’s employee stock purchases.

The dividend yield assumption is based on the Company’s history of not paying dividends and no future expectation of dividend payouts.

The expected life of employee stock purchase rights represents the contractual terms of the underlying program.

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Net (Loss) Income Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Net (Loss) Income Per Share

15. NET (LOSS) INCOME PER SHARE

The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except for per share amounts):

	Three Months Ended					Six Months Ended
	June 30, 2016			June 30, 2015		June 30, 2016			June 30, 2015
Numerator
Net (loss) income	$	(9,997	)	$	19,647	$	(6,662	)	$	40,845
Denominator
Weighted average shares outstanding, basic		135,700			134,057		134,934			134,417
Effect of dilutive potential common shares		—			3,290		—			3,873
Weighted average shares outstanding, diluted		135,700			137,347		134,934			138,290
Basic net (loss) income per share	$	(0.07	)	$	0.15	$	(0.05	)	$	0.30
Diluted net (loss) income per share	$	(0.07	)	$	0.14	$	(0.05	)	$	0.30
Antidilutive employee stock-based awards, excluded		2,757			637		3,337			483

Diluted shares outstanding include the dilutive effect of in-the-money employee equity share options, unvested performance shares, restricted stock units, and stock purchase rights under the ESPP. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Potentially dilutive shares are excluded from the computation of diluted net income per share when their effect is antidilutive. As a result of the net losses for the three and six months ended June 30, 2016, the shares used in computing basic and diluted net loss per share remained the same as the effect of all potentially issuable common shares is considered to be anti-dilutive.

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Business Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Business Segment Information

16. BUSINESS SEGMENT INFORMATION

The Company conducts its business globally and is managed geographically in three segments: (1) Americas, which consists of North America and Caribbean and Latin America (“CALA”) reporting units, (2) Europe, Middle East and Africa (“EMEA”) and (3) Asia Pacific (“APAC”). The segments are determined in accordance with how management views and evaluates the Company’s business and allocates its resources, and are based on the criteria as outlined in the authoritative guidance.

Segment Revenue and Profit

Segment revenues consist of product and service revenues. Product revenues are attributed to a segment based on the ordering location of the customer. For internal reporting purposes and determination of segment contribution margins, geographic segment product revenues may differ slightly from actual geographic revenues due to internal revenue allocations between the Company’s segments. Service revenues are generally attributed to a segment based on the end-user’s location where services are performed. A significant portion of each segment’s expenses arises from shared services and infrastructure that Polycom has historically allocated to the segments in order to realize economies of scale and to use resources efficiently.

Segment contribution margin includes all geographic segment revenues less the related cost of sales and direct revenues and marketing expenses. Cost of revenues consists of the standard cost of revenues and does not include items such as warranty expense, royalties, and the allocation of overhead expenses, including facilities and IT costs, as well as stock-based compensation costs and amortization of purchased intangible assets. Management allocates some infrastructure costs, such as facilities and IT costs, in determining segment contribution margins. Contribution margin is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. Certain operating expenses are not allocated to segments because they are separately managed at the corporate level. These unallocated costs include corporate manufacturing costs, sales and marketing costs other than direct sales and marketing expenses, research and development expenses, general and administrative costs, such as legal and accounting, stock-based compensation costs, transaction-related costs, amortization of purchased intangibles, restructuring costs and interest and other income (expense), net.

Segment Data

The results of the reportable segments are derived directly from Polycom’s management reporting system. Management measures the performance of each segment based on several metrics, including contribution margin as defined above. Asset data, with the exception of gross accounts receivable, is not reviewed by management at the segment level.

Financial information for each reportable geographical segment as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015, based on the Company’s internal management reporting system and as utilized by the Company’s Chief Operating Decision Maker (“CODM”), its Chief Executive Officer, is as follows (in thousands):

	Americas			EMEA			APAC			Total
For the three months ended June 30, 2016:
Revenue	$	142,019		$	72,660		$	73,100		$	287,779
% of total revenue		49	%		25	%		26	%		100	%
Contribution margin	$	52,721		$	27,820		$	31,341		$	111,882
% of segment revenue		37	%		38	%		43	%		39	%
For the three months ended June 30, 2015:
Revenue	$	158,333		$	80,865		$	77,377		$	316,575
% of total revenue		50	%		26	%		24	%		100	%
Contribution margin	$	60,765		$	31,987		$	35,975		$	128,727
% of segment revenue		38	%		40	%		46	%		41	%
For the six months ended June 30, 2016:
Revenue	$	297,513		$	146,189		$	134,152		$	577,854
% of total revenue		52	%		25	%		23	%		100	%
Contribution margin	$	115,588		$	54,772		$	58,498		$	228,858
% of segment revenue		39	%		37	%		44	%		40	%
For the six months ended June 30, 2015:
Revenue	$	315,687		$	174,714		$	156,874		$	647,275
% of total revenue		49	%		27	%		24	%		100	%
Contribution margin	$	121,616		$	74,764		$	72,088		$	268,468
% of segment revenue		39	%		43	%		46	%		41	%
As of June 30, 2016: Gross trade receivables	$	101,167		$	61,201		$	49,380		$	211,748
% of total gross trade receivables		48	%		29	%		23	%		100	%
As of December 31, 2015: Gross trade receivables	$	97,742		$	78,726		$	66,443		$	242,911
% of total gross trade receivables		40	%		33	%		27	%		100	%

During the three months ended June 30, 2016, two channel partners, ScanSource Communications (“ScanSource”) and Westcon Group, Inc. (“Westcon”), accounted for 23% and 11% of the Company’s total revenues, respectively. During the three months ended June 30, 2015, one channel partner, ScanSource, accounted for 23% of the Company’s total revenues. During the six months ended June 30, 2016, two channel partners, ScanSource and Westcon, accounted for 23% and 12% of the Company’s total revenues, respectively. During the six months ended June 30, 2015, one channel partner, ScanSource, accounted for 19% of the Company’s total revenues. ScanSource accounted for 24% and 20%, respectively, of total gross trade receivables at June 30, 2016 and December 31, 2015.

The reconciliation of segment information to Polycom consolidated totals is as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Segment contribution margin	$	111,882		$	128,727		$	228,858		$	268,468
Corporate and unallocated costs		(75,446	)		(91,158	)		(159,549	)		(189,500	)
Stock-based compensation expense		(21,606	)		(9,711	)		(33,087	)		(18,943	)
Effect of stock-based compensation expense on warranty    rates expense		(235	)		(80	)		(341	)		(133	)
Amortization of purchased intangibles		(2,117	)		(2,517	)		(4,417	)		(5,591	)
Restructuring costs		(6,007	)		(343	)		(13,509	)		(367	)
Transaction-related costs		(7,887	)		—			(12,131	)		—
Interest and other income (expense), net		298			(178	)		(470	)		(1,640	)
(Loss) income before provision for income taxes	$	(1,118	)	$	24,740		$	5,354		$	52,294

The following table summarizes the Company’s revenues, which includes products and services, by product category (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Revenues:
UC group systems	$	171,411	$	195,169	$	350,315	$	399,820
UC personal devices		68,774		66,802		136,584		134,267
UC platform		47,594		54,604		90,955		113,188
Total	$	287,779	$	316,575	$	577,854	$	647,275

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

17. INCOME TAXES

The following table presents the income tax expense and the effective tax rates (in thousands):

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Provision for income taxes	$	8,879		$	5,093		$	12,016		$	11,449
Effective tax rate		(794.2	)%		20.6	%		224.4	%		21.9	%

The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions, and the effective tax rate reflects the applicable tax rates in effect in the various tax jurisdictions around the world where income is earned. During the three and six months ended June 30, 2016, the Company incurred losses in a jurisdiction where no tax benefit could be recorded. As a result, the forecasted losses from this jurisdiction were excluded from the determination of tax expense for the period. The tax impact of excluding the losses from the interim tax recorded was additional expense of $1.3 million and $3.1 million for the three and six months ended June 30, 2016, respectively. Additionally, the effective tax rate for the three and six months ended June 30, 2016 and 2015 differs from the U.S. federal statutory rate of 35% primarily due to impacts associated with proportional earnings from the Company’s operations in lower tax jurisdictions, recurring permanent adjustments, and discrete items recorded during the period presented. A significant portion of pretax (loss) income is generated and taxed outside the U.S. The impact on the tax provision due to lower statutory tax rates in foreign jurisdictions was additional expense of $0.3 million and a benefit of approximately $1.3 million for the three and six months ended June 30, 2016, respectively, and a benefit of $4.8 million and $10.1 million for the three and six months ended June 30, 2015, respectively.

The effective income tax rate can be impacted each period by discrete factors or events. For the three and six months ended June 30, 2016 and 2015, discrete benefits of $0.3 million and $0.7 million and $0.2 million and $0.7 million, respectively, were recorded for tax benefits realized on disqualifying dispositions of stock from the Company’s employee stock purchase plan. Additional discrete items recorded in the three months ended June 30, 2016 were $3.1 million in tax accrued related to accelerated non-deductible stock-based compensation expense related to the termination of the employee stock purchase plan and $1.6 million in aggregate to correct for out-of-period adjustment related to the transfer pricing charges for a foreign subsidiary for the years ended December 31, 2015 and 2014. The Company concluded that such amount is not material to any of its previously issued financial statements and therefore recorded the correction in the second quarter of 2016.

As of June 30, 2016, the amount of gross unrecognized tax benefits was $21.0 million, all of which would affect the Company’s effective tax rate if realized. The Company recognizes interest income and interest expense and penalties on tax overpayments and underpayments within income tax expense. As of June 30, 2016 and December 31, 2015, the Company had approximately $1.7 million and $1.4 million, respectively, of accrued interest and penalties related to uncertain tax positions. The Company anticipates that, except for $1.3 million in uncertain tax positions that may be reduced related to the lapse of various statutes of limitation, there will be no material changes in uncertain tax positions in the next 12 months.

The Company is a U.S. based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions, and has entered into agreements with the local governments in certain foreign jurisdictions where it has significant operations to provide it with favorable tax rates in those jurisdictions if certain criteria are met. The tax benefit realized from favorable tax rates for the three months ended June 30, 2016 and 2015 were not material in the aggregate and did not have a material impact on earnings per share.

The Company regularly assesses the ability to realize deferred tax assets recorded in all entities based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income. If the Company’s future business profits do not support the realization of deferred tax assets, an addition to the valuation allowance could be recorded. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

On July 27, 2015, the United States Tax Court (the “Court”) issued a taxpayer-favorable opinion with respect to Altera Corporation (“Altera”)’s litigation with the Internal Revenue Service (“IRS”). The litigation relates to the treatment of share-based compensation expense in an inter-company cost-sharing arrangement with the taxpayer’s foreign subsidiary for fiscal years 2004 through 2007. In its opinion, the Court accepted Altera’s position of excluding share-based compensation in its cost sharing arrangement and concluded that the related IRS Regulations were invalid. On December 1, 2015, the Court issued its final decision with respect to Altera’s litigation with the IRS. Subsequent to the decision, the IRS filed its appeal with the United States Court of Appeals for the Ninth Circuit on June 27, 2016, and as such, no adjustment to the consolidated financial statement is recorded at this time. The Company is monitoring this case for any material impact to its consolidated financial statement and potential favorable implications to the Company’s cost-sharing arrangement.

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Goodwill, Purchased Intangibles, and Software Development Costs (Tables)

6 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Goodwill by Segment

The following table presents the changes to the Company’s goodwill by segment during the six months ended June 30, 2016 (in thousands):

	Americas		EMEA		APAC			Total
Balance at December 31, 2015	$	308,159	$	101,882	$	148,734		$	558,775
Foreign currency translation		—		—		(116	)		(116	)
Balance at June 30, 2016	$	308,159	$	101,882	$	148,618		$	558,659

Schedule of Purchased Intangible Assets by Major Class

The following table presents details of the Company’s total purchased intangible assets and capitalized software development costs for products to be sold as of the following periods (in thousands):

	June 30, 2016							December 31, 2015
	Gross Value		Accumulated Amortization &Impairment			Net Value		Gross Value		Accumulated Amortization & Impairment			Net Value
Core and developed technology	$	81,178	$	(81,145	)	$	33	$	81,178	$	(80,945	)	$	233
Customer and partner relationships		79,525		(70,828	)		8,697		79,525		(66,742	)		12,783
Non-compete agreements		1,800		(1,800	)		—		1,800		(1,700	)		100
Trade name		3,400		(3,400	)		—		3,400		(3,369	)		31
Finite-lived intangible assets		165,903		(157,173	)		8,730		165,903		(152,756	)		13,147
Indefinite-lived trade name		918		—			918		918		—			918
Total acquired intangible assets	$	166,821	$	(157,173	)	$	9,648	$	166,821	$	(152,756	)	$	14,065
Capitalized software development costs for    products to be sold	$	14,604	$	(7,142	)	$	7,462	$	12,993	$	(5,002	)	$	7,991

Summary of Amortization Expenses

The following table summarizes the amortization expenses recorded in the following periods (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Amortization of purchased intangibles in revenues	$	—	$	19	$	—	$	38
Amortization of purchased intangibles in cost of product    revenues		100		100		200		757
Amortization of purchased intangibles in operating expenses		2,017		2,417		4,217		4,834
Total amortization of purchased intangibles	$	2,117	$	2,536	$	4,417	$	5,629

Estimated Future Amortization Expense of Purchased Intangible Assets

The estimated future amortization expense as of June 30, 2016 is as follows (in thousands):

Year ending December 31,	Amount
Remainder of 2016	$	4,061
2017		4,669
Total	$	8,730

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Restructuring Costs (Tables)

6 Months Ended

Jun. 30, 2016

Restructuring And Related Activities [Abstract]

Summary of Activity of Restructuring Reserves

The following table summarizes the changes in the Company’s restructuring reserves during the six months ended June 30, 2016 (in thousands):

	Severance/Other			Facilities			Other			Total
Balance at December 31, 2015	$	8,072		$	18,455		$	801		$	27,328
Additions to the reserve, net		9,072			3,958			—			13,030
Interest accretion		—			479			—			479
Non-cash adjustments		—			3			—			3
Cash payments		(12,027	)		(4,391	)		(801	)		(17,219	)
Balance at June 30, 2016	$	5,117		$	18,504		$	—		$	23,621

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Balance Sheet Details (Tables)

6 Months Ended

Jun. 30, 2016

Balance Sheet Related Disclosures [Abstract]

Schedule of Trade Receivables

Trade receivables, net consist of the following (in thousands):

	June 30, 2016			December 31, 2015
Gross trade receivables	$	211,748		$	242,911
Returns and other reserves		(54,572	)		(52,000	)
Allowance for doubtful accounts		(2,964	)		(3,023	)
Total	$	154,212		$	187,888

Schedule of Inventories

Inventories consist of the following (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	671	$	824
Work in process		—		117
Finished goods		96,077		88,451
Total	$	96,748	$	89,392

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

	June 30, 2016		December 31, 2015
Non-trade receivables	$	8,147	$	7,689
Prepaid expenses		33,200		33,174
Derivative assets		6,873		10,396
Other current assets		1,898		1,593
Total	$	50,118	$	52,852

Schedule of Deferred Revenue

Deferred revenue consists of the following (in thousands):

	June 30, 2016		December 31, 2015
Short-term:
Service	$	170,545	$	165,594
License		3,574		4,965
Total	$	174,119	$	170,559
Long-term:
Service	$	78,398	$	82,598
License		4,874		3,593
Total	$	83,272	$	86,191

Changes In Deferred Service Revenue

Changes in deferred service revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015
Balance at beginning of period	$	248,192		$	257,280
Additions to deferred service revenue		180,307			167,332
Amortization of deferred service revenue		(179,556	)		(170,232	)
Balance at end of period	$	248,943		$	254,380

Changes In Deferred License Revenue

Changes in deferred license revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015
Balance at beginning of period	$	8,558		$	5,524
Additions to deferred license revenue		2,508			1,766
Amortization of deferred license revenue		(2,618	)		(1,238	)
Balance at end of period	$	8,448		$	6,052

Schedule of Current Portion of Other Accrued Liabilities

The current portion of other accrued liabilities consists of the following (in thousands):

	June 30, 2016		December 31, 2015
Accrued expenses	$	27,703	$	25,179
Accrued co-op expenses		1,979		2,670
Restructuring reserves		13,054		16,187
Warranty obligations		8,526		10,172
Derivative liabilities		6,722		6,031
Employee stock purchase plan withholdings		—		9,668
Other accrued liabilities		16,623		15,188
Total	$	74,607	$	85,095

Changes in Warranty Obligations

Changes in warranty obligations during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

	Six Months Ended
	June 30, 2016			June 30, 2015
Balance at beginning of period	$	10,172		$	11,613
Accruals for warranties issued during the period		4,797			6,811
Actual charges against warranty reserve during the period		(6,443	)		(7,277	)
Balance at end of period	$	8,526		$	11,147

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Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Interest Expense Recognized on the Term Loan

The following table sets forth total interest expense recognized on the Term Loan (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Contractual interest expense	$	1,426	$	1,292	$	2,852	$	2,550
Amortization of debt issuance costs		134		133		267		266
Total	$	1,560	$	1,425	$	3,119	$	2,816

Future Principal Payments for Long-term Debt Including Current Portion

As of June 30, 2016, future principal payments for long-term debt, including the current portion, are summarized as follows (in thousands):

	Amount
Remainder of 2016	$	3,126
2017		6,250
2018		223,437
Total	$	232,813

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Investments (Tables)

6 Months Ended

Jun. 30, 2016

Investments Debt And Equity Securities [Abstract]

Short-Term and Long-Term Investments in Debt Securities

The Company’s short-term and long-term investments in debt securities are summarized as follows (in thousands):

	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Balances at June 30, 2016:
Short-term investments:
U.S. government securities	$	43,081	$	40	$	—		$	43,121
U.S. government agency securities		40,788		27		(1	)		40,814
Non-U.S. government securities		2,004		—		—			2,004
Corporate debt securities		40,285		16		(2	)		40,299
Total short-term investments	$	126,158	$	83	$	(3	)	$	126,238
Long-term investments:
U.S. government securities	$	4,256	$	12	$	—		$	4,268
U.S. government agency securities		3,003		1		—			3,004
Corporate debt securities		11,499		23		(6	)		11,516
Total long-term investments	$	18,758	$	36	$	(6	)	$	18,788
Balances at December 31, 2015:
Short-term investments:
U.S. government securities	$	49,036	$	4	$	(45	)	$	48,995
U.S. government agency securities		67,723		1		(30	)		67,694
Non-U.S. government securities		7,303		—		(1	)		7,302
Corporate debt securities		60,290		1		(40	)		60,251
Total short-term investments	$	184,352	$	6	$	(116	)	$	184,242
Long-term investments:
U.S. government securities	$	8,058	$	—	$	(14	)	$	8,044
U.S. government agency securities		14,510		—		(48	)		14,462
Corporate debt securities		24,056		2		(80	)		23,978
Total long-term investments	$	46,624	$	2	$	(142	)	$	46,484

Schedule of Investment in Unrealized Loss Position

The following table summarizes the fair value and gross unrealized losses of investments that are in an unrealized loss position only. The unrealized losses are aggregated by type of investment instrument and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
June 30, 2016:
U.S. government agency securities	$	4,221	$	(1	)	$	—	$	—	$	4,221	$	(1	)
Corporate debt securities		11,475		(8	)		—		—		11,475		(8	)
Total investments	$	15,696	$	(9	)	$	—	$	—	$	15,696	$	(9	)
December 31, 2015:
U.S. government securities	$	48,445	$	(59	)	$	—	$	—	$	48,445	$	(59	)
U.S. government agency securities		71,861		(78	)		—		—		71,861		(78	)
Non-U.S. government securities		5,001		(1	)		—		—		5,001		(1	)
Corporate debt securities		52,571		(120	)		—		—		52,571		(120	)
Total investments	$	177,878	$	(258	)	$	—	$	—	$	177,878	$	(258	)

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Marketable Securities and Foreign Currency Contracts

The tables below set forth the Company’s recurring fair value measurements (in thousands):

			Fair Value Measurements at June 30, 2016 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
			(Level 1)		(Level 2)
Assets:
Fixed income available-for-sale securities
Cash and cash equivalents
Money market funds	$	47,894	$	47,894	$	—
U.S. government agency securities		29,980		—		29,980
Non U.S. government securities		1,000		—		1,000
Corporate debt securities		39,236		—		39,236
Short-term investments		126,238		—		126,238
Long-term investments		18,788		—		18,788
Total fixed income available-for-sale securities	$	263,136	$	47,894	$	215,242
Foreign currency forward contracts (a)	$	6,873	$	—	$	6,873
Liabilities:
Foreign currency forward contracts (b)	$	6,722	$	—	$	6,722

			Fair Value Measurements at December 31, 2015 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
			(Level 1)		(Level 2)
Assets:
Fixed income available-for-sale securities
Cash and cash equivalents
Money market funds	$	10,313	$	10,313	$	—
Non-U.S. government securities		975		—		975
Corporate debt securities		19,799		—		19,799
Short-term investments		184,242		—		184,242
Long-term investments		46,484		—		46,484
Total fixed income available-for-sale securities	$	261,813	$	10,313	$	251,500
Foreign currency forward contracts (a)	$	10,396	$	—	$	10,396
Liabilities:
Foreign currency forward contracts (b)	$	6,031	$	—	$	6,031

(a) Included in short-term derivative assets as “Prepaid expenses and other current assets” in the condensed consolidated balance sheets.

(b) Included in short-term derivative liabilities as “Other accrued liabilities” in the condensed consolidated balance sheets.

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Foreign Currency Derivatives (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments Measured at Gross Fair Value as Reflected in Condensed Consolidated Balance Sheets

The following table shows the Company’s derivative instruments measured at gross fair value as reflected in the condensed consolidated balance sheets (in thousands):

	Fair Value of Derivatives Designated as Hedge Instruments				Fair Value of Derivatives Not Designated as Hedge Instruments
	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015
Derivative assets (a):
Foreign exchange contracts	$	2,380	$	2,283	$	4,493	$	8,113
Derivative liabilities (b):
Foreign exchange contracts	$	2,418	$	2,269	$	4,304	$	3,762

(a) All derivative assets are recorded in “Prepaid and other current assets” in the condensed consolidated balance sheets.

(b) All derivative liabilities are recorded in “Other accrued liabilities” in the condensed consolidated balance sheets.

Offsetting of Derivative Assets

The following table sets forth the offsetting of derivative assets (in thousands):

							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
As of June 30, 2016:
Foreign exchange contracts	$	6,873	$	—	$	6,873	$	(6,017	)	$	—	$	856
As of December 31, 2015:
Foreign exchange contracts	$	10,396	$	—	$	10,396	$	(5,413	)	$	—	$	4,983

Offsetting of Derivative Liabilities

The following table sets forth the offsetting of derivative liabilities (in thousands):

							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
As of June 30, 2016:
Foreign exchange contracts	$	6,722	$	—	$	6,722	$	(6,017	)	$	—	$	705
As of December 31, 2015:
Foreign exchange contracts	$	6,031	$	—	$	6,031	$	(5,413	)	$	—	$	618

Cash Flow Hedging

Schedule of Notional Amount of Foreign Currency

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding cash flow hedges at June 30, 2016 (in thousands):

	Original Maturities of 360 Days or Less					Original Maturities of Greater than 360 Days
	Foreign Currency		USD Equivalent		Positions	Foreign Currency		USD Equivalent		Positions
Chinese Yuan		—	$	—	—		85,643	$	12,851	Buy
Euro		—	$	—	—		19,597	$	21,909	Buy
Euro		—	$	—	—		58,032	$	65,094	Sell
British Pound		—	$	—	—		16,782	$	24,405	Buy
British Pound		—	$	—	—		15,816	$	23,146	Sell

Effect of Derivative Instruments in Condensed Consolidated Statements of Operations

The following tables show the effect of the Company’s derivative instruments designated as cash flow hedges in the condensed consolidated statements of operations for the following periods (in thousands):

	Gain (Loss) Recognized in OCI or OCL- Effective Portion						Location of Gain (Loss) Reclassified from OCI or OCL into Income-Effective Portion	Gain (Loss) Reclassified from OCI or OCL into Income-Effective Portion						Location of Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing	Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing (a)
	Three Months Ended							Three Months Ended							Three Months Ended
	June 30, 2016			June 30, 2015				June 30, 2016			June 30, 2015				June 30, 2016		June 30, 2015
Foreign    exchange    contracts	$	728		$	(1,723	)	Product revenues	$	308		$	3,629		Interest and other    income (expense),    net	$	744	$	357
							Cost of revenues		(161	)		(531	)
							Sales and marketing		(513	)		(1,007	)
							Research and development		(2	)		(268	)
							General and administrative		(69	)		(396	)
	$	728		$	(1,723	)		$	(437	)	$	1,427			$	744	$	357
	Six Months Ended							Six Months Ended							Six Months Ended
	June 30, 2016			June 30, 2015				June 30, 2016			June 30, 2015				June 30, 2016		June 30, 2015
Foreign    exchange    contracts	$	(899	)	$	4,575		Product revenues	$	1,606		$	10,265		Interest and other    income (expense),    net	$	735	$	326
							Cost of revenues		(458	)		(1,332	)
							Sales and marketing		(1,346	)		(2,794	)
							Research and development		(49	)		(983	)
							General and administrative		(249	)		(1,171	)
	$	(899	)	$	4,575			$	(496	)	$	3,985			$	735	$	326

(a) There were no gains or losses recognized in income due to ineffectiveness in the periods presented.

Not Designated as Hedging Instrument

Schedule of Notional Amount of Foreign Currency

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding non-designated hedges at June 30, 2016 (in thousands):

	Original Maturities of 360 Days or Less					Original Maturities of Greater than 360 Days
	Foreign Currency		USD Equivalent		Positions	Foreign Currency		USD Equivalent		Positions
Brazilian Real		13,196	$	4,111	Buy		—	$	—	—
Brazilian Real		24,037	$	6,993	Sell		—	$	—	—
Chinese Yuan		—	$	—	—		45,457	$	7,098	Buy
Chinese Yuan		42,005	$	6,390	Sell		—	$	—	—
Euro		22,866	$	25,374	Buy		13,703	$	15,420	Buy
Euro		34,404	$	38,274	Sell		54,468	$	60,981	Sell
British Pound		5,368	$	7,218	Buy		14,718	$	22,741	Buy
British Pound		12,753	$	17,905	Sell		15,684	$	24,082	Sell
Israeli Shekel		29,300	$	7,609	Buy		—	$	—	—
Israeli Shekel		29,300	$	7,613	Sell		—	$	—	—
Japanese Yen		96,170	$	935	Buy		—	$	—	—
Japanese Yen		96,170	$	867	Sell		—	$	—	—
Mexican Peso		21,914	$	1,184	Buy		—	$	—	—
Mexican Peso		44,977	$	2,430	Sell		—	$	—	—

Effect of Derivative Instruments in Condensed Consolidated Statements of Operations

The following table shows the effect of the Company’s non-designated hedges in the condensed consolidated statements of operations (in thousands):

Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
		Three Months Ended
		June 30, 2016			June 30, 2015
Foreign exchange contracts	Interest and other income (expense), net	$	1,325		$	(1,056	)
		Six Months Ended
		June 30, 2016			June 30, 2015
Foreign exchange contracts	Interest and other income (expense), net	$	(822	)	$	3,617

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Changes in Accumulated Other Comprehensive Income (Loss) by Component

The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component (in thousands). The tax effects were not shown separately, as the impacts were not material.

Six Months Ended June 30, 2016	Unrealized Gains and Losses on Cash Flow Hedges			Unrealized Gains and Losses on Available-for- Sale Securities			ForeignCurrency Translation			Total
Balance as of December 31, 2015	$	(59	)	$	(197	)	$	(947	)	$	(1,203	)
Other comprehensive loss before reclassifications		(899	)		292			(951	)		(1,558	)
Amounts reclassified from accumulated other    comprehensive loss (a)		496			(8	)		—			488
Net current-period other comprehensive loss		(403	)		284			(951	)		(1,070	)
Balance as of June 30, 2016	$	(462	)	$	87		$	(1,898	)	$	(2,273	)

(a) See Note 12 for details of gains and losses, net of taxes, reclassified out of accumulated other comprehensive loss into net (loss) income related to cash flow hedges and each line item of net (loss) income affected by the reclassification. Gains and losses related to available-for-sale securities were reclassified into “Interest and other income (expense), net” in the condensed consolidated statement of operations for the six months ended June 30, 2016, net of taxes.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary and Allocation of Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense recorded for the periods presented and its allocation within the condensed consolidated statements of operations (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Cost of  product revenues	$	1,133	$	505	$	1,914	$	1,460
Cost of service revenues		2,373		877		3,484		2,185
Stock-based compensation expense included in cost    of revenues		3,506		1,382		5,398		3,645
Sales and marketing		7,550		2,698		11,293		5,311
Research and development		4,912		1,915		6,941		4,488
General and administrative		5,638		3,716		9,455		5,499
Stock-based compensation expense included in    operating expenses		18,100		8,329		27,689		15,298
Total stock-based compensation expense		21,606		9,711		33,087		18,943
Tax benefit		3,109		1,697		5,354		3,226
Total stock-based compensation expense, net of tax	$	18,497	$	8,014	$	27,733	$	15,717

Significant Assumptions Used to Estimate Fair Value of Employee Stock Purchase Plan

The fair value of each employee stock purchase right grant is estimated on the date of grant using the Black-Scholes option valuation model and is recognized as expense using the graded vesting method using the following assumptions:

	Three and Six Months Ended
	June 30, 2016		June 30, 2015
Expected volatility	31.85-34.97%		30.04-30.73%
Risk-free interest rate	0.47-0.81%		0.07-0.49%
Expected dividends		0.0%		0.0%
Expected life (years)	0.5-2.0		0.5-2.0

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Net (Loss) Income Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Reconciliation of Numerator and Denominator of Basic and Diluted Net (Loss) Income Per Share

The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except for per share amounts):

	Three Months Ended					Six Months Ended
	June 30, 2016			June 30, 2015		June 30, 2016			June 30, 2015
Numerator
Net (loss) income	$	(9,997	)	$	19,647	$	(6,662	)	$	40,845
Denominator
Weighted average shares outstanding, basic		135,700			134,057		134,934			134,417
Effect of dilutive potential common shares		—			3,290		—			3,873
Weighted average shares outstanding, diluted		135,700			137,347		134,934			138,290
Basic net (loss) income per share	$	(0.07	)	$	0.15	$	(0.05	)	$	0.30
Diluted net (loss) income per share	$	(0.07	)	$	0.14	$	(0.05	)	$	0.30
Antidilutive employee stock-based awards, excluded		2,757			637		3,337			483

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Business Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Financial Information by Reportable Segment

Financial information for each reportable geographical segment as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015, based on the Company’s internal management reporting system and as utilized by the Company’s Chief Operating Decision Maker (“CODM”), its Chief Executive Officer, is as follows (in thousands):

	Americas			EMEA			APAC			Total
For the three months ended June 30, 2016:
Revenue	$	142,019		$	72,660		$	73,100		$	287,779
% of total revenue		49	%		25	%		26	%		100	%
Contribution margin	$	52,721		$	27,820		$	31,341		$	111,882
% of segment revenue		37	%		38	%		43	%		39	%
For the three months ended June 30, 2015:
Revenue	$	158,333		$	80,865		$	77,377		$	316,575
% of total revenue		50	%		26	%		24	%		100	%
Contribution margin	$	60,765		$	31,987		$	35,975		$	128,727
% of segment revenue		38	%		40	%		46	%		41	%
For the six months ended June 30, 2016:
Revenue	$	297,513		$	146,189		$	134,152		$	577,854
% of total revenue		52	%		25	%		23	%		100	%
Contribution margin	$	115,588		$	54,772		$	58,498		$	228,858
% of segment revenue		39	%		37	%		44	%		40	%
For the six months ended June 30, 2015:
Revenue	$	315,687		$	174,714		$	156,874		$	647,275
% of total revenue		49	%		27	%		24	%		100	%
Contribution margin	$	121,616		$	74,764		$	72,088		$	268,468
% of segment revenue		39	%		43	%		46	%		41	%
As of June 30, 2016: Gross trade receivables	$	101,167		$	61,201		$	49,380		$	211,748
% of total gross trade receivables		48	%		29	%		23	%		100	%
As of December 31, 2015: Gross trade receivables	$	97,742		$	78,726		$	66,443		$	242,911
% of total gross trade receivables		40	%		33	%		27	%		100	%

Reconciliation of Segment Information to Consolidated Totals

The reconciliation of segment information to Polycom consolidated totals is as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Segment contribution margin	$	111,882		$	128,727		$	228,858		$	268,468
Corporate and unallocated costs		(75,446	)		(91,158	)		(159,549	)		(189,500	)
Stock-based compensation expense		(21,606	)		(9,711	)		(33,087	)		(18,943	)
Effect of stock-based compensation expense on warranty    rates expense		(235	)		(80	)		(341	)		(133	)
Amortization of purchased intangibles		(2,117	)		(2,517	)		(4,417	)		(5,591	)
Restructuring costs		(6,007	)		(343	)		(13,509	)		(367	)
Transaction-related costs		(7,887	)		—			(12,131	)		—
Interest and other income (expense), net		298			(178	)		(470	)		(1,640	)
(Loss) income before provision for income taxes	$	(1,118	)	$	24,740		$	5,354		$	52,294

Revenues which Includes Products and Services by Product Category

The following table summarizes the Company’s revenues, which includes products and services, by product category (in thousands):

	Three Months Ended				Six Months Ended
	June 30, 2016		June 30, 2015		June 30, 2016		June 30, 2015
Revenues:
UC group systems	$	171,411	$	195,169	$	350,315	$	399,820
UC personal devices		68,774		66,802		136,584		134,267
UC platform		47,594		54,604		90,955		113,188
Total	$	287,779	$	316,575	$	577,854	$	647,275

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Tax Expense (Benefit) and Effective Tax Rates

The following table presents the income tax expense and the effective tax rates (in thousands):

	Three Months Ended						Six Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Provision for income taxes	$	8,879		$	5,093		$	12,016		$	11,449
Effective tax rate		(794.2	)%		20.6	%		224.4	%		21.9	%

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Basis of Presentation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions	Jul. 08, 2016	Apr. 15, 2016
Mitel
Basis Of Presentation [Line Items]
Business acquisition share price		$ 3.12
Number of Mitel shares to be acquired per share		1.31
Subsequent Event | Mitel
Basis Of Presentation [Line Items]
Termination fee	$ 60.0
Subsequent Event | NewCo
Basis Of Presentation [Line Items]
Business acquisition share price	$ 12.50
Termination fee to be paid upon termination of definitive agreement	$ 60.0
Repayment of reimbursement upon termination of definitive agreement	$ 60.0

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Discontinued Operations - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Gain from sale of discontinued operations, net of taxes	$ 0	$ 0
Mobile Devices Holdings LLC | Maximum
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Additional cash consideration payable over this fiscal year subject to certain conditions, including meeting certain agreed-upon EBITDA-based milestones	$ 12,500,000

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Accounts Receivable Financing - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Accounts Notes And Loans Receivable [Line Items]
Amount of total outstanding accounts receivable under a financing arrangement	$ 53.1	$ 53.0	$ 104.9	$ 117.6
Amount due from the financing company	31.4		31.4		$ 32.7
Fees incurred pursuant to the factoring agreement	1.0	0.8	1.8	1.7
Transfer of Financial Assets Under Financing Arrangement
Accounts Notes And Loans Receivable [Line Items]
Amount of total outstanding accounts receivable under a financing arrangement	29.4	$ 33.7	59.5	$ 72.9
Amount due from the financing company	$ 16.4		$ 16.4		$ 22.1

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Goodwill, Purchased Intangibles, and Software Development Costs - Schedule of Goodwill by Segment (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Goodwill [Line Items]
Beginning Balance	$ 558,775
Foreign currency translation	(116)
Ending Balance	558,659
Americas
Goodwill [Line Items]
Beginning Balance	308,159
Ending Balance	308,159
EMEA
Goodwill [Line Items]
Beginning Balance	101,882
Ending Balance	101,882
APAC
Goodwill [Line Items]
Beginning Balance	148,734
Foreign currency translation	(116)
Ending Balance	$ 148,618

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Goodwill, Purchased Intangibles, and Software Development Costs - Schedule of Purchased Intangible Assets by Major Class (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
Finite Lived Intangible Assets, Gross Value	$ 165,903	$ 165,903
Finite Lived Intangible Assets, Accumulated Amortization and Impairment	(157,173)	(152,756)
Finite Lived Intangible Assets, Net Value	8,730	13,147
Indefinite-lived trade name	918	918
Total intangible assets, Gross Value	166,821	166,821
Total intangible assets, Accumulated Amortization and Impairment	(157,173)	(152,756)
Total intangible assets, Net Value	9,648	14,065
Capitalized software development costs for products to be sold, Gross Value	14,604	12,993
Capitalized software development costs for products to be sold, Accumulated Amortization & Impairment	(7,142)	(5,002)
Capitalized software development costs for products to be sold, Net Value	7,462	7,991
Core and developed technology
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
Finite Lived Intangible Assets, Gross Value	81,178	81,178
Finite Lived Intangible Assets, Accumulated Amortization and Impairment	(81,145)	(80,945)
Finite Lived Intangible Assets, Net Value	33	233
Customer and partner relationships
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
Finite Lived Intangible Assets, Gross Value	79,525	79,525
Finite Lived Intangible Assets, Accumulated Amortization and Impairment	(70,828)	(66,742)
Finite Lived Intangible Assets, Net Value	8,697	12,783
Non-compete agreements
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
Finite Lived Intangible Assets, Gross Value	1,800	1,800
Finite Lived Intangible Assets, Accumulated Amortization and Impairment	(1,800)	(1,700)
Finite Lived Intangible Assets, Net Value		100
Trade name
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
Finite Lived Intangible Assets, Gross Value	3,400	3,400
Finite Lived Intangible Assets, Accumulated Amortization and Impairment	$ (3,400)	(3,369)
Finite Lived Intangible Assets, Net Value		$ 31

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Goodwill, Purchased Intangibles, and Software Development Costs - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Indefinite Lived Intangible Assets And Internally Developed Software [Line Items]
Indefinite-lived trade name	$ 918		$ 918
Capitalized software development costs	$ 1,600	$ 2,500
Computer Software, Intangible Asset
Indefinite Lived Intangible Assets And Internally Developed Software [Line Items]
Useful life of capitalized costs, in years	3 years

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Goodwill, Purchased Intangibles, and Software Development Costs - Summary of Amortization Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization of purchased intangibles in revenues		$ 19		$ 38
Amortization of purchased intangibles in cost of product revenues	$ 100	100	$ 200	757
Amortization of purchased intangibles in operating expenses	2,017	2,417	4,217	4,834
Total amortization of purchased intangibles	$ 2,117	$ 2,536	$ 4,417	$ 5,629

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Goodwill, Purchased Intangibles, and Software Development Costs - Estimated Future Amortization Expense of Purchased Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
Remainder of 2016	$ 4,061
2017	4,669
Finite Lived Intangible Assets, Net Value	$ 8,730	$ 13,147

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Restructuring Costs - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Restructuring Cost And Reserve [Line Items]
Restructuring costs	$ 6,007	$ 343	$ 13,509	$ 367
Global workforce elimination percentage under restructuring plan			11.00%
Restructuring and related activities, expected completion period			Dec. 31, 2016
Restructuring and related cost, expected cost remaining	$ 1,000		$ 1,000
December 2015 Restructuring
Restructuring Cost And Reserve [Line Items]
Accumulated Restructuring Costs			$ 24,000

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Restructuring Costs - Summary of Activity of Restructuring Reserves (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Restructuring Cost And Reserve [Line Items]
Beginning balance	$ 27,328
Additions to the reserve, net	13,030
Interest accretion	479
Non-cash adjustments	3
Cash payments	(17,219)
Ending balance	23,621
Severance / Other
Restructuring Cost And Reserve [Line Items]
Beginning balance	8,072
Additions to the reserve, net	9,072
Cash payments	(12,027)
Ending balance	5,117
Facilities
Restructuring Cost And Reserve [Line Items]
Beginning balance	18,455
Additions to the reserve, net	3,958
Interest accretion	479
Non-cash adjustments	3
Cash payments	(4,391)
Ending balance	18,504
Other
Restructuring Cost And Reserve [Line Items]
Beginning balance	801
Cash payments	$ (801)

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Balance Sheet Details - Schedule of Trade Receivables (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Receivables [Abstract]
Gross trade receivables	$ 211,748	$ 242,911
Returns and other reserves	(54,572)	(52,000)
Allowance for doubtful accounts	(2,964)	(3,023)
Total	$ 154,212	$ 187,888

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Balance Sheet Details - Schedule of Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 671	$ 824
Work in process		117
Finished goods	96,077	88,451
Total	$ 96,748	$ 89,392

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Balance Sheet Details - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]
Non-trade receivables	$ 8,147	$ 7,689
Prepaid expenses	33,200	33,174
Derivative assets	6,873	10,396
Other current assets	1,898	1,593
Total	$ 50,118	$ 52,852

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Balance Sheet Details - Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Deferred Revenue Arrangement [Line Items]
Short-term deferred revenue	$ 174,119	$ 170,559
Long-term deferred revenue	83,272	86,191
Software Service, Support and Maintenance Arrangement
Deferred Revenue Arrangement [Line Items]
Short-term deferred revenue	170,545	165,594
Long-term deferred revenue	78,398	82,598
Software License Arrangement
Deferred Revenue Arrangement [Line Items]
Short-term deferred revenue	3,574	4,965
Long-term deferred revenue	$ 4,874	$ 3,593

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Balance Sheet Details - Changes in Deferred Services Revenue (Details) - Software Service, Support and Maintenance Arrangement - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Deferred Revenue Arrangement [Line Items]
Balance at beginning of period	$ 248,192	$ 257,280
Additions to deferred service revenue	180,307	167,332
Amortization of deferred service revenue	(179,556)	(170,232)
Balance at end of period	$ 248,943	$ 254,380

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Balance Sheet Details - Changes in Deferred License Revenue (Details) - Deferred License Revenue - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Deferred Revenue Arrangement [Line Items]
Balance at beginning of period	$ 8,558	$ 5,524
Additions to deferred license revenue	2,508	1,766
Amortization of deferred license revenue	(2,618)	(1,238)
Balance at end of period	$ 8,448	$ 6,052

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Balance Sheet Details - Schedule of Current Portion of Other Current Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Payables And Accruals [Abstract]
Accrued expenses	$ 27,703	$ 25,179
Accrued co-op expenses	1,979	2,670
Restructuring reserves	13,054	16,187
Warranty obligations	8,526	10,172	$ 11,147	$ 11,613
Derivative liabilities	6,722	6,031
Employee stock purchase plan withholdings		9,668
Other accrued liabilities	16,623	15,188
Total	$ 74,607	$ 85,095

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Balance Sheet Details - Changes in Warranty Obligations (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Standard Product Warranty Disclosure [Abstract]
Balance at beginning of period	$ 10,172	$ 11,613
Accruals for warranties issued during the period	4,797	6,811
Actual charges against warranty reserve during the period	(6,443)	(7,277)
Balance at end of period	$ 8,526	$ 11,147

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Commitments and Contingencies - Additional Information (Details)	1 Months Ended
	Mar. 31, 2015 USD ($)
Commitment And Contingencies [Line Items]
Litigation settlement	$ 750,000
Mr. Miller
Commitment And Contingencies [Line Items]
Settlement agreement amount	450,000
Proceeds from litigation settlement	$ 200,000

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Debt - Additional Information (Details) - USD ($) $ in Thousands		6 Months Ended
	Sep. 13, 2013	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Term loan	$ 250,000
Maturity date of term loan	Sep. 13, 2018
Debt instrument description of variable rate basis		a $250.0 million term loan (the “Term Loan”) maturing on September 13, 2018 (the “Maturity Date”), which bears interest at the Company’s option at either a base rate as set forth in the Credit Agreement plus a spread of 0.50% to 1.00%, or a reserve adjusted LIBOR rate plus a spread of 1.50% to 2.00% based on the Company’s consolidated leverage ratio for the preceding four fiscal quarters.
Term loan quarterly installments		$ 1,600
Debt instrument, covenant compliance		The Company was in compliance with these covenants as of June 30, 2016.
Default interest rate applicable for any overdue principal		2.00%
Default interest rate for base rate loans for any other overdue amounts		2.00%
Weighted average interest rate		2.46%
Accrued interest on Term loan		$ 600
Term loan, current		5,717	$ 5,717
Term loan, non-current		225,940	$ 228,799
Term Loan - Current Portion
Debt Instrument [Line Items]
Unamortized debt issuance costs		$ 1,200
Base Rate | Minimum | Term Loan
Debt Instrument [Line Items]
Term loan interest rate, applicable margin	0.50%
Base Rate | Maximum | Term Loan
Debt Instrument [Line Items]
Term loan interest rate, applicable margin	1.00%
LIBOR rate plus | Minimum | Term Loan
Debt Instrument [Line Items]
Term loan interest rate, applicable margin	1.50%
LIBOR rate plus | Maximum | Term Loan
Debt Instrument [Line Items]
Term loan interest rate, applicable margin	2.00%

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Debt - Interest Expense Recognized on the Term Loan (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Debt Disclosure [Abstract]
Contractual interest expense	$ 1,426	$ 1,292	$ 2,852	$ 2,550
Amortization of debt issuance costs	134	133	267	266
Total	$ 1,560	$ 1,425	$ 3,119	$ 2,816

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Debt - Future Principal Payments for Long-term Debt Including Current Portion (Details) $ in Thousands	Jun. 30, 2016 USD ($)
Long Term Debt By Maturity [Abstract]
Remainder of 2016	$ 3,126
2017	6,250
2018	223,437
Total	$ 232,813

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Investments - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Investments Debt And Equity Securities [Abstract]
Cash and cash equivalents	$ 576,516,000	$ 412,573,000	$ 435,093,000	$ 443,132,000
Long-term investments, contractual maturity period, minimum	1 year
Long-term investments, contractual maturity period, maximum	2 years
Investments other than temporarily impaired	$ 0	0
Material realized gains (losses), net	$ 0	$ 0

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Investments - Short-Term and Long-Term Investments in Debt Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Short-term Investments
Schedule of Available for Sale Securities [Line Items]
Cost Basis	$ 126,158	$ 184,352
Unrealized Gains	83	6
Unrealized Losses	(3)	(116)
Fair Value	126,238	184,242
Short-term Investments | U.S. Government Securities
Schedule of Available for Sale Securities [Line Items]
Cost Basis	43,081	49,036
Unrealized Gains	40	4
Unrealized Losses		(45)
Fair Value	43,121	48,995
Short-term Investments | U.S. Government Agency Securities
Schedule of Available for Sale Securities [Line Items]
Cost Basis	40,788	67,723
Unrealized Gains	27	1
Unrealized Losses	(1)	(30)
Fair Value	40,814	67,694
Short-term Investments | Non-U.S. Government Securities
Schedule of Available for Sale Securities [Line Items]
Cost Basis	2,004	7,303
Unrealized Losses		(1)
Fair Value	2,004	7,302
Short-term Investments | Corporate Debt Securities
Schedule of Available for Sale Securities [Line Items]
Cost Basis	40,285	60,290
Unrealized Gains	16	1
Unrealized Losses	(2)	(40)
Fair Value	40,299	60,251
Long-term investments
Schedule of Available for Sale Securities [Line Items]
Cost Basis	18,758	46,624
Unrealized Gains	36	2
Unrealized Losses	(6)	(142)
Fair Value	18,788	46,484
Long-term investments | U.S. Government Securities
Schedule of Available for Sale Securities [Line Items]
Cost Basis	4,256	8,058
Unrealized Gains	12
Unrealized Losses		(14)
Fair Value	4,268	8,044
Long-term investments | U.S. Government Agency Securities
Schedule of Available for Sale Securities [Line Items]
Cost Basis	3,003	14,510
Unrealized Gains	1
Unrealized Losses		(48)
Fair Value	3,004	14,462
Long-term investments | Corporate Debt Securities
Schedule of Available for Sale Securities [Line Items]
Cost Basis	11,499	24,056
Unrealized Gains	23	2
Unrealized Losses	(6)	(80)
Fair Value	$ 11,516	$ 23,978

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Investments - Schedule of Investment in Unrealized Loss Position (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available for Sale Securities [Line Items]
Fair Value, Less than 12 Months	$ 15,696	$ 177,878
Gross Unrealized Losses, Less than 12 Months	(9)	(258)
Total Fair Value	15,696	177,878
Total Gross Unrealized Losses	(9)	(258)
U.S. Government Securities
Schedule of Available for Sale Securities [Line Items]
Fair Value, Less than 12 Months		48,445
Gross Unrealized Losses, Less than 12 Months		(59)
Total Fair Value		48,445
Total Gross Unrealized Losses		(59)
U.S. Government Agency Securities
Schedule of Available for Sale Securities [Line Items]
Fair Value, Less than 12 Months	4,221	71,861
Gross Unrealized Losses, Less than 12 Months	(1)	(78)
Total Fair Value	4,221	71,861
Total Gross Unrealized Losses	(1)	(78)
Non-U.S. Government Securities
Schedule of Available for Sale Securities [Line Items]
Fair Value, Less than 12 Months		5,001
Gross Unrealized Losses, Less than 12 Months		(1)
Total Fair Value		5,001
Total Gross Unrealized Losses		(1)
Corporate Debt Securities
Schedule of Available for Sale Securities [Line Items]
Fair Value, Less than 12 Months	11,475	52,571
Gross Unrealized Losses, Less than 12 Months	(8)	(120)
Total Fair Value	11,475	52,571
Total Gross Unrealized Losses	$ (8)	$ (120)

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Fair Value Measurements - Schedule of Fair Value of Marketable Securities and Foreign Currency Contracts (Details) - USD ($) $ in Thousands		Jun. 30, 2016	Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		$ 126,238	$ 184,242
Fixed income available-for-sale securities, long-term		18,788	46,484
Total fixed income available-for-sale securities		263,136	261,813
Foreign currency forward contracts, Assets	[1]	6,873	10,396
Foreign currency forward contracts, Liabilities	[2]	6,722	6,031
U.S. Government Agency Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		29,980
Non-U.S. Government Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		1,000	975
Corporate Debt Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		39,236	19,799
Money market funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		47,894	10,313
Quoted Prices in Active Markets for Identical Assets, Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total fixed income available-for-sale securities		47,894	10,313
Quoted Prices in Active Markets for Identical Assets, Level 1 | Money market funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		47,894	10,313
Significant Other Observable Inputs, Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total fixed income available-for-sale securities		215,242	251,500
Foreign currency forward contracts, Assets	[1]	6,873	10,396
Foreign currency forward contracts, Liabilities	[2]	6,722	6,031
Significant Other Observable Inputs, Level 2 | U.S. Government Agency Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		29,980
Significant Other Observable Inputs, Level 2 | Non-U.S. Government Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		1,000	975
Significant Other Observable Inputs, Level 2 | Corporate Debt Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		39,236	19,799
Short-term Investments
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		126,238	184,242
Short-term Investments | Significant Other Observable Inputs, Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, short-term		126,238	184,242
Long-term investments
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, long-term		18,788	46,484
Long-term investments | Significant Other Observable Inputs, Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed income available-for-sale securities, long-term		$ 18,788	$ 46,484

[1] Included in short-term derivative assets as “Prepaid expenses and other current assets” in the condensed consolidated balance sheets.

[2] Included in short-term derivative liabilities as “Other accrued liabilities” in the condensed consolidated balance sheets.

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Fair Value Measurements - Additional Information (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value transfers between Level 1 and Level 2	$ 0		$ 0
Fair value of Term Loan	229,300,000	$ 226,500,000
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Investments holdings	$ 0	$ 0

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Foreign Currency Derivatives - Notional Position by Currency of Outstanding Non-designated Hedges (Details) - Jun. 30, 2016 - Not Designated as Hedging Instrument € in Thousands, ₪ in Thousands, ¥ in Thousands, ¥ in Thousands, £ in Thousands, MXN in Thousands, BRL in Thousands, $ in Thousands	USD ($)	BRL	CNY (¥)	EUR (€)	GBP (£)	ILS (₪)	JPY (¥)	MXN
Brazilian Real | Original Maturities of 360 Days or Less | Buy
Derivative [Line Items]
Notional amount of foreign currency	$ 4,111	BRL 13,196
Brazilian Real | Original Maturities of 360 Days or Less | Sell
Derivative [Line Items]
Notional amount of foreign currency	6,993	BRL 24,037
Chinese Yuan | Original Maturities of 360 Days or Less | Sell
Derivative [Line Items]
Notional amount of foreign currency	6,390		¥ 42,005
Chinese Yuan | Original Maturities of Greater than 360 Days | Buy
Derivative [Line Items]
Notional amount of foreign currency	7,098		¥ 45,457
Euro Member Countries, Euro | Original Maturities of 360 Days or Less | Buy
Derivative [Line Items]
Notional amount of foreign currency	25,374			€ 22,866
Euro Member Countries, Euro | Original Maturities of 360 Days or Less | Sell
Derivative [Line Items]
Notional amount of foreign currency	38,274			34,404
Euro Member Countries, Euro | Original Maturities of Greater than 360 Days | Buy
Derivative [Line Items]
Notional amount of foreign currency	15,420			13,703
Euro Member Countries, Euro | Original Maturities of Greater than 360 Days | Sell
Derivative [Line Items]
Notional amount of foreign currency	60,981			€ 54,468
British Pound | Original Maturities of 360 Days or Less | Buy
Derivative [Line Items]
Notional amount of foreign currency	7,218				£ 5,368
British Pound | Original Maturities of 360 Days or Less | Sell
Derivative [Line Items]
Notional amount of foreign currency	17,905				12,753
British Pound | Original Maturities of Greater than 360 Days | Buy
Derivative [Line Items]
Notional amount of foreign currency	22,741				14,718
British Pound | Original Maturities of Greater than 360 Days | Sell
Derivative [Line Items]
Notional amount of foreign currency	24,082				£ 15,684
Israeli Shekel | Original Maturities of 360 Days or Less | Buy
Derivative [Line Items]
Notional amount of foreign currency	7,609					₪ 29,300
Israeli Shekel | Original Maturities of 360 Days or Less | Sell
Derivative [Line Items]
Notional amount of foreign currency	7,613					₪ 29,300
Japanese Yen | Original Maturities of 360 Days or Less | Buy
Derivative [Line Items]
Notional amount of foreign currency	935						¥ 96,170
Japanese Yen | Original Maturities of 360 Days or Less | Sell
Derivative [Line Items]
Notional amount of foreign currency	867						¥ 96,170
Mexican Peso | Original Maturities of 360 Days or Less | Buy
Derivative [Line Items]
Notional amount of foreign currency	1,184							MXN 21,914
Mexican Peso | Original Maturities of 360 Days or Less | Sell
Derivative [Line Items]
Notional amount of foreign currency	$ 2,430							MXN 44,977

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Foreign Currency Derivatives - Effect of Non-Designated Hedges in Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Interest and other income (expense), net
Derivative Instruments Gain Loss [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivative	$ 1,325	$ (1,056)	$ (822)	$ 3,617

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Foreign Currency Derivatives - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments And Hedging Activities Disclosure [Abstract]
Maximum duration of foreign exchange forward contracts designated as cash flow hedges			13 months
Unrealized Gain (Loss) in income due to ineffectiveness	$ 0	$ 0	$ 0	$ 0

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Foreign Currency Derivatives - Notional Position by Currency of Outstanding Cash Flow Hedges (Details) - Jun. 30, 2016 - Cash Flow Hedging - Original Maturities of Greater than 360 Days € in Thousands, ¥ in Thousands, £ in Thousands, $ in Thousands	USD ($)	CNY (¥)	EUR (€)	GBP (£)
Buy | Chinese Yuan
Derivative [Line Items]
Notional amount of foreign currency	$ 12,851	¥ 85,643
Buy | Euro Member Countries, Euro
Derivative [Line Items]
Notional amount of foreign currency	21,909		€ 19,597
Buy | British Pound
Derivative [Line Items]
Notional amount of foreign currency	24,405			£ 16,782
Sell | Euro Member Countries, Euro
Derivative [Line Items]
Notional amount of foreign currency	65,094		€ 58,032
Sell | British Pound
Derivative [Line Items]
Notional amount of foreign currency	$ 23,146			£ 15,816

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Foreign Currency Derivatives - Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments Gain Loss [Line Items]
Foreign exchange contracts, Gain (loss) recognized in OCI or OCL-effective portion, total		$ 728	$ (1,723)	$ (899)	$ 4,575
Gain (loss) reclassified from OCI or OCL into income- effective portion, total		(437)	1,427	(496)	3,985
Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing	[1]	744	357	735	326
Product revenues
Derivative Instruments Gain Loss [Line Items]
Gain (loss) reclassified from OCI or OCL into income- effective portion, total		308	3,629	1,606	10,265
Cost of revenues
Derivative Instruments Gain Loss [Line Items]
Gain (loss) reclassified from OCI or OCL into income- effective portion, total		(161)	(531)	(458)	(1,332)
Sales and marketing
Derivative Instruments Gain Loss [Line Items]
Gain (loss) reclassified from OCI or OCL into income- effective portion, total		(513)	(1,007)	(1,346)	(2,794)
Research and development
Derivative Instruments Gain Loss [Line Items]
Gain (loss) reclassified from OCI or OCL into income- effective portion, total		(2)	(268)	(49)	(983)
General and administrative
Derivative Instruments Gain Loss [Line Items]
Gain (loss) reclassified from OCI or OCL into income- effective portion, total		(69)	(396)	(249)	(1,171)
Interest and other income (expense), net
Derivative Instruments Gain Loss [Line Items]
Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing	[1]	744	357	735	326
Foreign exchange contract
Derivative Instruments Gain Loss [Line Items]
Foreign exchange contracts, Gain (loss) recognized in OCI or OCL-effective portion, total		$ 728	$ (1,723)	$ (899)	$ 4,575

[1] There were no gains or losses recognized in income due to ineffectiveness in the periods presented.

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Foreign Currency Derivatives - Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations (Parenthetical) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments And Hedging Activities Disclosure [Abstract]
Unrealized Gain (Loss) in income due to ineffectiveness	$ 0	$ 0	$ 0	$ 0

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Foreign Currency Derivatives - Derivative Instruments Measured at Gross Fair Value as Reflected in Condensed Consolidated Balance Sheets (Details) - Foreign exchange contract - USD ($) $ in Thousands		Jun. 30, 2016	Dec. 31, 2015
Derivatives Fair Value [Line Items]
Derivative assets		$ 6,873	$ 10,396
Derivative liabilities		6,722	6,031
Designated as Hedge Instruments
Derivatives Fair Value [Line Items]
Derivative assets	[1]	2,380	2,283
Derivative liabilities	[2]	2,418	2,269
Not Designated as Hedging Instrument
Derivatives Fair Value [Line Items]
Derivative assets	[1]	4,493	8,113
Derivative liabilities	[2]	$ 4,304	$ 3,762

[1] All derivative assets are recorded in “Prepaid and other current assets” in the condensed consolidated balance sheets.

[2] All derivative liabilities are recorded in “Other accrued liabilities” in the condensed consolidated balance sheets.

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Foreign Currency Derivatives - Offsetting of Derivative Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Offsetting Assets [Line Items]
Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets	$ 6,873	$ 10,396
Foreign exchange contract
Offsetting Assets [Line Items]
Gross Amounts of Recognized Assets	6,873	10,396
Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets	6,873	10,396
Gross Amounts of Assets Not Offset in the Condensed Consolidated Balance Sheets, Financial Instruments	(6,017)	(5,413)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets, Net Amount	$ 856	$ 4,983

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Foreign Currency Derivatives - Offsetting of Derivative Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Offsetting Liabilities [Line Items]
Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets	$ 6,722	$ 6,031
Foreign exchange contract
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	6,722	6,031
Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets	6,722	6,031
Gross Amounts of Liabilities Not Offset in the Condensed Consolidated Balance Sheets, Financial Instruments	(6,017)	(5,413)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets, Net Amount	$ 705	$ 618

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Stockholders' Equity - Share Repurchase Programs - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Jul. 31, 2014
Share Repurchases Program [Line Items]
Shares repurchase authorized amount					$ 200,000,000
2014 Stock Repurchase Program
Share Repurchases Program [Line Items]
Purchase of common stock, shares	0	1,900,000	0	4,800,000
Purchase of common stock, value		$ 25,000,000		$ 65,000,000
Share repurchase plan, remaining authorized amount	$ 60,100,000		$ 60,100,000

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Stockholders' Equity - Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Beginning balance				$ (1,203)
Other comprehensive loss before reclassifications				(1,558)
Amounts reclassified from accumulated other comprehensive loss	[1]			488
Other comprehensive (loss) income		$ (799)	$ (3,170)	(1,070)	$ 839
Accumulated Other Comprehensive Income (loss) , Ending balance		(2,273)		(2,273)
Unrealized Gains and Losses on Cash Flow Hedges
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Beginning balance				(59)
Other comprehensive loss before reclassifications				(899)
Amounts reclassified from accumulated other comprehensive loss	[1]			496
Other comprehensive (loss) income				(403)
Accumulated Other Comprehensive Income (loss) , Ending balance		(462)		(462)
Unrealized Gains and Losses on Available-for-Sale Securities
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Beginning balance				(197)
Other comprehensive loss before reclassifications				292
Amounts reclassified from accumulated other comprehensive loss	[1]			(8)
Other comprehensive (loss) income				284
Accumulated Other Comprehensive Income (loss) , Ending balance		87		87
Foreign Currency Translation
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Beginning balance				(947)
Other comprehensive loss before reclassifications				(951)
Other comprehensive (loss) income				(951)
Accumulated Other Comprehensive Income (loss) , Ending balance		$ (1,898)		$ (1,898)

[1] See Note 12 for details of gains and losses, net of taxes, reclassified out of accumulated other comprehensive loss into net (loss) income related to cash flow hedges and each line item of net (loss) income affected by the reclassification. Gains and losses related to available-for-sale securities were reclassified into “Interest and other income (expense), net” in the condensed consolidated statement of operations for the six months ended June 30, 2016, net of taxes.

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Stock-Based Compensation - Summary and Allocation of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 21,606	$ 9,711	$ 33,087	$ 18,943
Tax benefit	3,109	1,697	5,354	3,226
Total stock-based compensation expense, net of tax	18,497	8,014	27,733	15,717
Cost of product revenues
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	1,133	505	1,914	1,460
Cost of service revenues
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	2,373	877	3,484	2,185
Cost of revenues
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	3,506	1,382	5,398	3,645
Sales and marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	7,550	2,698	11,293	5,311
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	4,912	1,915	6,941	4,488
General and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	5,638	3,716	9,455	5,499
Operating Expenses
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 18,100	$ 8,329	$ 27,689	$ 15,298

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Stock-Based Compensation - Stock Options - Additional Information (Details) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock options granted	0	0

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Stock-Based Compensation - Performance Shares and Restricted Stock Units - Additional Information (Details) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Performance Shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares granted	886,496	922,202
Weighted average estimated fair value of share granted	$ 10.87	$ 14.23
Number of performance periods	3 years	3 years
Vesting period description	The 2016 and 2015 grants are generally divided evenly over three annual performance periods commencing with calendar year 2016 and 2015, respectively, and will vest on the first, second and third anniversary of the grant date.
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares granted	2,976,147	2,788,043
Weighted average estimated fair value of share granted	$ 10.86	$ 13.80
Restricted Stock Units (RSUs) | Non Employee Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares granted	0	120,000
Weighted average estimated fair value of share granted	$ 0.00	$ 13.14

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Stock-Based Compensation - Stock Options and Employee Stock Purchase Plan - Additional Information (Details) - Employee Stock Purchase Plan - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares purchased	1,236,759	1,183,426
Number of shares approved and available under the Employee Stock Purchase Plan	7,927,722
Unamortized stock based compensation expense recognized	$ 10.9
Unamortized stock based compensation expense recognition period	6 months

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Stock-Based Compensation - Valuation Assumptions - Additional Information (Details) - $ / shares			6 Months Ended
	Feb. 01, 2016	Feb. 02, 2015	Jun. 30, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Offering period	2 years	2 years
Employee Stock Purchase Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted average estimated fair value of share granted	$ 2.51	$ 3.09
Employee Stock Purchase Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted average estimated fair value of share granted	$ 3.35	$ 4.27
Nonqualified Stock Option Plan And Employee Stock Purchase | Historical Volatility
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Blended volatility			50.00%
Nonqualified Stock Option Plan And Employee Stock Purchase | Implied Volatility
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Blended volatility			50.00%

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Stock-Based Compensation - Significant Assumptions Used to Estimate Fair Value of Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected dividends	0.00%	0.00%	0.00%	0.00%
Expected volatility, maximum	34.97%	30.73%	34.97%	30.73%
Risk-free interest rate, maximum	0.81%	0.49%	0.81%	0.49%
Expected volatility, minimum	31.85%	30.04%	31.85%	30.04%
Risk-free interest rate, minimum	0.47%	0.07%	0.47%	0.07%
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (years)	2 years	2 years	2 years	2 years
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (years)	6 months	6 months	6 months	6 months

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Net (Loss) Income Per Share - Reconciliation of Numerator and Denominator of Basic and Diluted Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Numerator
Net (loss) income	$ (9,997)	$ 19,647	$ (6,662)	$ 40,845
Denominator
Weighted average shares outstanding, basic	135,700	134,057	134,934	134,417
Effect of dilutive potential common shares		3,290		3,873
Weighted average shares outstanding, diluted	135,700	137,347	134,934	138,290
Basic net (loss) income per share	$ (0.07)	$ 0.15	$ (0.05)	$ 0.30
Diluted net (loss) income per share	$ (0.07)	$ 0.14	$ (0.05)	$ 0.30
Antidilutive employee stock-based awards, excluded	2,757	637	3,337	483

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Business Segment Information - Additional Information (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016 Customer	Jun. 30, 2015 Customer	Jun. 30, 2016 Location Customer	Jun. 30, 2015 Customer	Dec. 31, 2015
Segment Reporting Information [Line Items]
Business organized number of geographical theatres (area) | Location			3
Number of customer partners contributing more than 10% of total revenues | Customer	2	1	2	1
Customer Concentration Risk | Total Net Revenues
Segment Reporting Information [Line Items]
Concentration risk percentage	100.00%	100.00%	100.00%	100.00%
Customer Concentration Risk | Total Net Revenues | ScanSource Communications
Segment Reporting Information [Line Items]
Concentration risk percentage	23.00%	23.00%	23.00%	19.00%
Customer Concentration Risk | Total Net Revenues | Westcon Group, Inc
Segment Reporting Information [Line Items]
Concentration risk percentage	11.00%		12.00%
Customer Concentration Risk | Trade Receivables
Segment Reporting Information [Line Items]
Concentration risk percentage			100.00%		100.00%
Customer Concentration Risk | Trade Receivables | ScanSource Communications
Segment Reporting Information [Line Items]
Concentration risk percentage			24.00%		20.00%

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Business Segment Information - Financial Information by Reportable Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Segment Reporting Information [Line Items]
Revenue	$ 287,779	$ 316,575	$ 577,854	$ 647,275
Contribution margin	111,882	$ 128,727	228,858	$ 268,468
Gross trade receivables	$ 211,748		$ 211,748		$ 242,911
Total Revenue | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage	100.00%	100.00%	100.00%	100.00%
Contribution Margin | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage	39.00%	41.00%	40.00%	41.00%
Trade Receivables | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage			100.00%		100.00%
Americas
Segment Reporting Information [Line Items]
Revenue	$ 142,019	$ 158,333	$ 297,513	$ 315,687
Contribution margin	52,721	$ 60,765	115,588	$ 121,616
Gross trade receivables	$ 101,167		$ 101,167		$ 97,742
Americas | Total Revenue | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage	49.00%	50.00%	52.00%	49.00%
Americas | Contribution Margin | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage	37.00%	38.00%	39.00%	39.00%
Americas | Trade Receivables | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage			48.00%		40.00%
EMEA
Segment Reporting Information [Line Items]
Revenue	$ 72,660	$ 80,865	$ 146,189	$ 174,714
Contribution margin	27,820	$ 31,987	54,772	$ 74,764
Gross trade receivables	$ 61,201		$ 61,201		$ 78,726
EMEA | Total Revenue | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage	25.00%	26.00%	25.00%	27.00%
EMEA | Contribution Margin | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage	38.00%	40.00%	37.00%	43.00%
EMEA | Trade Receivables | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage			29.00%		33.00%
APAC
Segment Reporting Information [Line Items]
Revenue	$ 73,100	$ 77,377	$ 134,152	$ 156,874
Contribution margin	31,341	$ 35,975	58,498	$ 72,088
Gross trade receivables	$ 49,380		$ 49,380		$ 66,443
APAC | Total Revenue | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage	26.00%	24.00%	23.00%	24.00%
APAC | Contribution Margin | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage	43.00%	46.00%	44.00%	46.00%
APAC | Trade Receivables | Customer Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk percentage			23.00%		27.00%

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Business Segment Information - Reconciliation of Segment Information to Consolidated Totals (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting [Abstract]
Segment contribution margin	$ 111,882	$ 128,727	$ 228,858	$ 268,468
Corporate and unallocated costs	(75,446)	(91,158)	(159,549)	(189,500)
Stock-based compensation expense	(21,606)	(9,711)	(33,087)	(18,943)
Effect of stock-based compensation expense on warranty rates expense	(235)	(80)	(341)	(133)
Amortization of purchased intangibles	(2,117)	(2,517)	(4,417)	(5,591)
Restructuring costs	(6,007)	(343)	(13,509)	(367)
Transaction-related costs	(7,887)		(12,131)
Interest and other income (expense), net	298	(178)	(470)	(1,640)
(Loss) income before provision for income taxes	$ (1,118)	$ 24,740	$ 5,354	$ 52,294

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Business Segment Information - Revenues which Includes Products and Services by Product Category (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Entity Wide Information Revenue From External Customer [Line Items]
Net Revenues	$ 287,779	$ 316,575	$ 577,854	$ 647,275
UC Group Systems
Entity Wide Information Revenue From External Customer [Line Items]
Net Revenues	171,411	195,169	350,315	399,820
UC Personal Devices
Entity Wide Information Revenue From External Customer [Line Items]
Net Revenues	68,774	66,802	136,584	134,267
UC Platform
Entity Wide Information Revenue From External Customer [Line Items]
Net Revenues	$ 47,594	$ 54,604	$ 90,955	$ 113,188

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Income Taxes - Income Tax Expense and Effective Tax Rates (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 8,879	$ 5,093	$ 12,016	$ 11,449
Effective tax rate	(794.20%)	20.60%	224.40%	21.90%

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Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Income Tax Information [Line Items]
Income tax benefit	$ 0		$ 0
Additional expense due to losses from interim tax	$ 1,300,000		$ 3,100,000
U.S federal statutory rate	35.00%	35.00%	35.00%	35.00%
Discrete tax benefit realized on disqualifying dispositions of stock	$ 300,000	$ 200,000	$ 700,000	$ 700,000
Non-deductible stock compensation expense	3,100,000
Aggregate transfer pricing charges for foreign subsidiary					$ 1,600,000	$ 1,600,000
Unrecognized tax benefits	21,000,000		21,000,000
Accrued interest and penalties related to uncertain tax positions	1,700,000		1,700,000		$ 1,400,000
Anticipated reduction in uncertain tax positions	1,300,000		1,300,000
Foreign Jurisdiction
Income Tax Information [Line Items]
Tax benefit (expense) due to lower statutory tax rates	$ (300,000)	$ 4,800,000	$ 1,300,000	$ 10,100,000