QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
PART I. FINANCIAL INFORMATION | Page No. | ||||
PART II. OTHER INFORMATION | |||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | September 26, 2020 | September 28, 2019 | Change | September 26, 2020 | September 28, 2019 | Change | ||||||||||||||||||||||||||||||||||||||||||||
Net revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||
Products | $ | 347,677 | $ | 395,137 | $ | (47,460) | (12.0) | % | $ | 639,135 | $ | 777,882 | $ | (138,747) | (17.8) | % | ||||||||||||||||||||||||||||||||||
Services | 63,292 | 66,572 | (3,280) | (4.9) | % | 127,554 | 131,594 | (4,040) | (3.1) | % | ||||||||||||||||||||||||||||||||||||||||
Total net revenues | $ | 410,969 | $ | 461,709 | $ | (50,740) | (11.0) | % | $ | 766,689 | $ | 909,476 | $ | (142,787) | (15.7) | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | September 26, 2020 | September 28, 2019 | Change | September 26, 2020 | September 28, 2019 | Change | ||||||||||||||||||||||||||||||||||||||||||||
Net revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. | $ | 183,777 | $ | 213,127 | $ | (29,350) | (13.8) | % | $ | 352,058 | $ | 437,954 | $ | (85,896) | (19.6) | % | ||||||||||||||||||||||||||||||||||
Europe and Africa | 130,399 | 128,973 | 1,426 | 1.1 | % | 224,505 | 245,952 | (21,447) | (8.7) | % | ||||||||||||||||||||||||||||||||||||||||
Asia Pacific | 71,569 | 87,453 | (15,884) | (18.2) | % | 135,833 | 162,301 | (26,468) | (16.3) | % | ||||||||||||||||||||||||||||||||||||||||
Americas, excluding U.S. | 25,224 | 32,156 | (6,932) | (21.6) | % | 54,293 | 63,269 | (8,976) | (14.2) | % | ||||||||||||||||||||||||||||||||||||||||
Total international net revenues | 227,192 | 248,582 | (21,390) | (8.6) | % | 414,631 | 471,522 | (56,891) | (12.1) | % | ||||||||||||||||||||||||||||||||||||||||
Total net revenues | $ | 410,969 | $ | 461,709 | $ | (50,740) | (11.0) | % | $ | 766,689 | $ | 909,476 | $ | (142,787) | (15.7) | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | September 26, 2020 | September 28, 2019 | Change | September 26, 2020 | September 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
Products: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenues | $ | 347,677 | $ | 395,137 | $ | (47,460) | (12.0) | % | $ | 639,135 | $ | 777,882 | $ | (138,747) | (17.8) | % | |||||||||||||||||||||||||||||||||||||
Cost of revenues | 209,261 | 229,323 | (20,062) | (8.7) | % | 385,876 | 437,939 | (52,063) | (11.9) | % | |||||||||||||||||||||||||||||||||||||||||||
Gross profit | $ | 138,416 | $ | 165,814 | $ | (27,398) | (16.5) | % | $ | 253,259 | $ | 339,943 | $ | (86,684) | (25.5) | % | |||||||||||||||||||||||||||||||||||||
Gross profit % | 39.8 | % | 42.0 | % | 39.6 | % | 43.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
Services: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenues | $ | 63,292 | $ | 66,572 | $ | (3,280) | (4.9) | % | $ | 127,554 | $ | 131,594 | $ | (4,040) | (3.1) | % | |||||||||||||||||||||||||||||||||||||
Cost of revenues | 20,962 | 26,315 | (5,353) | (20.3) | % | 43,735 | 52,820 | (9,085) | (17.2) | % | |||||||||||||||||||||||||||||||||||||||||||
Gross profit | $ | 42,330 | $ | 40,257 | $ | 2,073 | 5.1 | % | $ | 83,819 | $ | 78,774 | $ | 5,045 | 6.4 | % | |||||||||||||||||||||||||||||||||||||
Gross profit % | 66.9 | % | 60.5 | % | 65.7 | % | 59.9 | % | |||||||||||||||||||||||||||||||||||||||||||||
Total: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenues | $ | 410,969 | $ | 461,709 | $ | (50,740) | (11.0) | % | $ | 766,689 | $ | 909,476 | $ | (142,787) | (15.7) | % | |||||||||||||||||||||||||||||||||||||
Cost of revenues | 230,223 | 255,638 | (25,415) | (9.9) | % | 429,611 | 490,759 | (61,148) | (12.5) | % | |||||||||||||||||||||||||||||||||||||||||||
Gross profit | $ | 180,746 | $ | 206,071 | $ | (25,325) | (12.3) | % | $ | 337,078 | $ | 418,717 | $ | (81,639) | (19.5) | % | |||||||||||||||||||||||||||||||||||||
Gross profit % | 44.0 | % | 44.6 | % | 44.0 | % | 46.0 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | September 26, 2020 | September 28, 2019 | Change | September 26, 2020 | September 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
Research, development, and engineering | $ | 52,148 | $ | 57,415 | $ | (5,267) | (9.2) | % | $ | 102,177 | $ | 116,939 | $ | (14,762) | (12.6) | % | |||||||||||||||||||||||||||||||||||||
Selling, general and administrative | 115,605 | 148,419 | (32,814) | (22.1) | % | 232,250 | 312,027 | (79,777) | (25.6) | % | |||||||||||||||||||||||||||||||||||||||||||
(Gain) loss, net from litigation settlements | — | — | — | — | % | 17,561 | (1,162) | 18,723 | 1,611.3 | % | |||||||||||||||||||||||||||||||||||||||||||
Restructuring and other related charges | 6,170 | 5,847 | 323 | 5.5 | % | 35,500 | 25,372 | 10,128 | 39.9 | % | |||||||||||||||||||||||||||||||||||||||||||
Total Operating Expenses | $ | 173,923 | $ | 211,681 | $ | (37,758) | (17.8) | % | $ | 387,488 | $ | 453,176 | $ | (65,688) | (14.5) | % | |||||||||||||||||||||||||||||||||||||
% of net revenues | 42.3 | % | 45.8 | % | 50.5 | % | 49.8 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | September 26, 2020 | September 28, 2019 | Change | September 26, 2020 | September 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | $ | (18,581) | $ | (23,797) | $ | 5,216 | 21.9 | % | $ | (39,765) | $ | (47,729) | $ | 7,964 | 16.7 | % | |||||||||||||||||||||||||||||||||||||
% of net revenues | (4.5) | % | (5.2) | % | (5.2) | % | (5.2) | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | September 26, 2020 | September 28, 2019 | Change | September 26, 2020 | September 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
Other non-operating income (loss), net | $ | 1,366 | $ | (625) | $ | 1,991 | (318.6) | % | $ | 1,592 | $ | (292) | $ | 1,884 | (645.2) | % | |||||||||||||||||||||||||||||||||||||
% of net revenues | 0.3 | % | (0.1) | % | 0.2 | % | — | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands except percentages) | September 26, 2020 | September 28, 2019 | Change | September 26, 2020 | September 28, 2019 | Change | |||||||||||||||||||||||||||||||||||||||||||||||
Loss before income taxes | $ | (10,392) | $ | (30,032) | $ | 19,640 | 65.4 | % | $ | (88,583) | $ | (82,480) | $ | (6,103) | (7.4) | % | |||||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 3,013 | (4,122) | 7,135 | 173.1 | % | (163) | (11,699) | 11,536 | 98.6 | % | |||||||||||||||||||||||||||||||||||||||||||
Net loss | $ | (13,405) | $ | (25,910) | $ | 12,505 | 48.3 | % | $ | (88,420) | $ | (70,781) | $ | (17,639) | (24.9) | % | |||||||||||||||||||||||||||||||||||||
Effective tax rate | (29.0) | % | 13.7 | % | 0.2 | % | 14.2 | % |
September 26, 2020 | March 28, 2020 | |||||||||||||
Cash, cash equivalents, and short-term investments | $ | 227,876 | $ | 225,720 | ||||||||||
Property, plant and equipment, net | $ | 150,348 | $ | 165,858 | ||||||||||
Long-term debt, net of issuance costs | $ | 1,587,556 | $ | 1,621,694 | ||||||||||
Working capital | $ | 193,057 | $ | 209,203 |
Six Months Ended | ||||||||||||||
September 26, 2020 | September 28, 2019 | |||||||||||||
Cash provided by operating activities | $ | 40,257 | $ | 33,566 | ||||||||||
Cash used for investing activities | $ | (9,219) | $ | (7,754) | ||||||||||
Cash used for financing activities | $ | (32,881) | $ | (39,587) | ||||||||||
September 26, 2020 | March 28, 2020 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Accounts receivable, net | |||||||||||
Inventory, net | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant, and equipment, net | |||||||||||
Goodwill | |||||||||||
Purchased intangibles, net | |||||||||||
Deferred tax assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued liabilities | |||||||||||
Total current liabilities | |||||||||||
Long term debt, net of issuance costs | |||||||||||
Long-term income taxes payable | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 7) | |||||||||||
Stockholders' deficit: | |||||||||||
Common stock | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Accumulated deficit | ( | ( | |||||||||
Total stockholders' equity before treasury stock | |||||||||||
Less: Treasury stock, at cost | ( | ( | |||||||||
Total stockholders' deficit | ( | ( | |||||||||
Total liabilities and stockholders' deficit | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||
Net revenues | |||||||||||||||||||||||
Net product revenues | $ | $ | $ | $ | |||||||||||||||||||
Net service revenues | |||||||||||||||||||||||
Total net revenues | |||||||||||||||||||||||
Cost of revenues | |||||||||||||||||||||||
Cost of product revenues | |||||||||||||||||||||||
Cost of service revenues | |||||||||||||||||||||||
Total cost of revenues | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research, development, and engineering | |||||||||||||||||||||||
Selling, general, and administrative | |||||||||||||||||||||||
(Gain) loss, net from litigation settlements | ( | ||||||||||||||||||||||
Restructuring and other related charges | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating income (loss) | ( | ( | ( | ||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Other non-operating income (loss), net | ( | ( | |||||||||||||||||||||
Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
Income tax expense (benefit) | ( | ( | ( | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Loss per common share: | |||||||||||||||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Shares used in computing loss per common share: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Foreign currency translation adjustments | ( | ||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedges: | |||||||||||||||||||||||
Unrealized cash flow hedge gains (losses) arising during the period | ( | ( | ( | ||||||||||||||||||||
Net (gains) losses reclassified into income for revenue hedges | ( | ( | |||||||||||||||||||||
Net (gains) losses reclassified into income for cost of revenue hedges | ( | ( | |||||||||||||||||||||
Net (gains) losses reclassified into income for interest rate swaps | |||||||||||||||||||||||
Net unrealized gains (losses) on cash flow hedges | ( | ||||||||||||||||||||||
Aggregate income tax benefit (expense) of the above items | ( | ||||||||||||||||||||||
Other comprehensive income (loss) | ( | ||||||||||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Six Months Ended | |||||||||||
September 26, 2020 | September 28, 2019 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of debt issuance costs | |||||||||||
Stock-based compensation | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Provision for excess and obsolete inventories | |||||||||||
Restructuring and related charges | |||||||||||
Cash payments for restructuring charges | ( | ( | |||||||||
Other operating activities | ( | ||||||||||
Changes in assets and liabilities, net of acquisition: | |||||||||||
Accounts receivable, net | |||||||||||
Inventory, net | ( | ( | |||||||||
Current and other assets | ( | ||||||||||
Accounts payable | |||||||||||
Accrued liabilities | ( | ||||||||||
Income taxes | ( | ||||||||||
Cash provided by operating activities | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Proceeds from sales of investments | |||||||||||
Purchase of investments | ( | ( | |||||||||
Capital expenditures | ( | ( | |||||||||
Proceeds from sale of property and equipment | |||||||||||
Cash used for investing activities | ( | ( | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Employees' tax withheld and paid for restricted stock and restricted stock units | ( | ( | |||||||||
Proceeds from issuances under stock-based compensation plans | |||||||||||
Proceeds from revolving line of credit | |||||||||||
Repayments of revolving line of credit | ( | ||||||||||
Payment of cash dividends | ( | ||||||||||
Repayments of long-term debt | ( | ( | |||||||||
Cash used for financing activities | ( | ( | |||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
SUPPLEMENTAL DISCLOSURES | |||||||||||
Cash paid for income taxes | $ | $ | |||||||||
Cash paid for interest | $ | $ | |||||||||
Three Months Ended September 26, 2020 | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In | Accumulated Other Comprehensive | Retained | Treasury | Total Stockholders' | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Loss | Earnings | Stock | Deficit | |||||||||||||||||||||||||||||||||||
Balances at June 27, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Net unrealized gains (losses) on cash flow hedges, net of tax | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Proceeds from issuances under stock-based compensation plans | — | — | — | ||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Employees' tax withheld and paid for restricted stock and restricted stock units | ( | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Proceeds from ESPP | — | — | — | ||||||||||||||||||||||||||||||||||||||
Other equity changes | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balances at September 26, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended September 28, 2019 | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In | Accumulated Other Comprehensive | Retained | Treasury | Total Stockholders' | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Loss | Earnings | Stock | Equity | |||||||||||||||||||||||||||||||||||
Balances at June 29, 2019 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Net unrealized gains (losses) on cash flow hedges, net of tax | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Proceeds from issuances under stock-based compensation plans | — | — | — | ||||||||||||||||||||||||||||||||||||||
Repurchase of restricted common stock | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Cash dividends | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Employees' tax withheld and paid for restricted stock and restricted stock units | ( | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Proceeds from ESPP | — | — | — | ||||||||||||||||||||||||||||||||||||||
Balances at September 28, 2019 | $ | $ | $ | ( | $ | $ | ( | $ |
Six Months Ended September 26, 2020 | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In | Accumulated Other Comprehensive | Retained | Treasury | Total Stockholders' | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Loss | Earnings | Stock | Deficit | |||||||||||||||||||||||||||||||||||
Balances at March 28, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Net unrealized gains (losses) on cash flow hedges, net of tax | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Proceeds from issuances under stock-based compensation plans | — | — | — | ||||||||||||||||||||||||||||||||||||||
Repurchase of restricted common stock | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Employees' tax withheld and paid for restricted stock and restricted stock units | ( | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Proceeds from ESPP | — | — | — | ||||||||||||||||||||||||||||||||||||||
Other equity changes | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balances at September 26, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( |
Six Months Ended September 28, 2019 | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In | Accumulated Other Comprehensive | Retained | Treasury | Total Stockholders' | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Loss | Earnings | Stock | Equity | |||||||||||||||||||||||||||||||||||
Balances at March 30, 2019 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Net unrealized gains (losses) on cash flow hedges, net of tax | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Proceeds from issuances under stock-based compensation plans | — | — | — | ||||||||||||||||||||||||||||||||||||||
Repurchase of restricted common stock | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Cash dividends | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Employees' tax withheld and paid for restricted stock and restricted stock units | ( | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Proceeds from ESPP | — | — | — | ||||||||||||||||||||||||||||||||||||||
Impact of new accounting standards adoption | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Other equity changes | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Balances at September 28, 2019 | $ | $ | $ | $ | ( | $ | $ | ( | $ |
September 26, 2020 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash & Cash Equivalents | Short-term investments (due in 1 year or less) | ||||||||||||||||||||||||||||||||
Cash | $ | $ | — | $ | — | $ | $ | $ | — | |||||||||||||||||||||||||||||
Level 1: | ||||||||||||||||||||||||||||||||||||||
Mutual Funds | ( | |||||||||||||||||||||||||||||||||||||
Money Market Funds | ||||||||||||||||||||||||||||||||||||||
Total cash, cash equivalents and investments measured at fair value | $ | $ | $ | ( | $ | $ | $ |
March 28, 2020 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash & Cash Equivalents | Short-term investments (due in 1 year or less) | ||||||||||||||||||||||||||||||||
Cash | $ | $ | — | $ | — | $ | $ | $ | — | |||||||||||||||||||||||||||||
Level 1: | ||||||||||||||||||||||||||||||||||||||
Mutual Funds | ( | |||||||||||||||||||||||||||||||||||||
Total cash, cash equivalents and investments measured at fair value | $ | $ | $ | ( | $ | $ | $ |
(in thousands) | September 26, 2020 | March 28, 2020 | ||||||||||||
Accounts receivable | $ | $ | ||||||||||||
Provisions for promotions, rebates, and other | ( | ( | ||||||||||||
Provisions for doubtful accounts and sales allowances | ( | ( | ||||||||||||
Accounts receivable, net | $ | $ |
(in thousands) | September 26, 2020 | March 28, 2020 | ||||||||||||
Raw materials | $ | $ | ||||||||||||
Work in process | ||||||||||||||
Finished goods | ||||||||||||||
Inventory, net | $ | $ |
(in thousands) | September 26, 2020 | March 28, 2020 | ||||||||||||
Short term deferred revenue | $ | $ | ||||||||||||
Employee compensation and benefits | ||||||||||||||
Operating lease liabilities, current | ||||||||||||||
Warranty obligation | ||||||||||||||
Provision for returns | ||||||||||||||
Accrued interest | ||||||||||||||
Marketing incentives liabilities | ||||||||||||||
Derivative liabilities | ||||||||||||||
Income tax payable | ||||||||||||||
VAT/Sales tax payable | ||||||||||||||
Accrued other | ||||||||||||||
Accrued liabilities | $ | $ |
Six Months Ended | ||||||||||||||
(in thousands) | September 26, 2020 | September 28, 2019 | ||||||||||||
Warranty obligation at beginning of period | $ | $ | ||||||||||||
Warranty provision related to products shipped | ||||||||||||||
Deductions for warranty claims processed | ( | ( | ||||||||||||
Adjustments related to preexisting warranties | ( | ( | ||||||||||||
Warranty obligation at end of period(1) | $ | $ |
(in thousands) | Poly Reportable Segment | Products Reportable Segment | Services Reportable Segment | Total Consolidated | ||||||||||||||||||||||
Balance as of March 30, 2019 | $ | $ | $ | $ | ||||||||||||||||||||||
Adjustments(1) | ||||||||||||||||||||||||||
Impairment prior to re-segmentation | ( | ( | ||||||||||||||||||||||||
Allocation due to re-segmentation | ( | |||||||||||||||||||||||||
Impairment after re-segmentation | ( | ( | ||||||||||||||||||||||||
Balance as of March 28, 2020 | $ | $ | $ | $ | ||||||||||||||||||||||
Balance as of September 26, 2020 | $ | $ | $ | $ |
As of | September 26, 2020 | March 28, 2020 | ||||||||||||||||||||||||||||||||||||||||||
(in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Remaining Useful Life | |||||||||||||||||||||||||||||||||||||
Amortizing Assets | ||||||||||||||||||||||||||||||||||||||||||||
Existing technology | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
Customer relationships | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Trade name/Trademarks | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ |
in thousands | Amount | |||||||
2021 (remaining six months) | $ | |||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
Thereafter | ||||||||
$ |
(in thousands) | Operating Leases(1) | |||||||
2021 (remaining six months) | $ | |||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
2025 | ||||||||
Thereafter | ||||||||
Total lease payments | $ | |||||||
Less: Imputed interest(2) | ( | |||||||
Present value of lease liabilities | $ |
September 26, 2020 | March 28, 2020 | ||||||||||||||||||||||
(in thousands) | Fair Value | Carrying Value | Fair Value | Carrying Value | |||||||||||||||||||
5.50% Senior Notes | $ | $ | $ | $ | |||||||||||||||||||
Term loan facility | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
(in thousands) | September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | |||||||||||||||||||
Severance | $ | $ | $ | $ | |||||||||||||||||||
Facility | ( | ||||||||||||||||||||||
Other (1) | |||||||||||||||||||||||
Non-cash charges (2) | |||||||||||||||||||||||
Total restructuring and other related charges | $ | $ | $ | $ |
As of March 28, 2020 | Accruals | Cash Payments | As of September 26, 2020 | |||||||||||
FY 2021 Plans | ||||||||||||||
Severance | $ | $ | $ | ( | $ | |||||||||
Facility | ( | |||||||||||||
Other | ( | |||||||||||||
Total FY2021 Plans | $ | $ | $ | ( | $ | |||||||||
FY 2020 Plans | ||||||||||||||
Severance | $ | $ | ( | $ | ( | $ | ||||||||
Facility | ( | |||||||||||||
Other | ( | |||||||||||||
Total FY2020 Plans | $ | $ | $ | ( | $ | |||||||||
FY 2019 Plans | ||||||||||||||
Severance | $ | $ | $ | ( | $ | |||||||||
Facility | ||||||||||||||
Other | ( | |||||||||||||
Total FY2019 Plans | $ | $ | $ | ( | $ | |||||||||
Severance | $ | $ | $ | ( | $ | |||||||||
Facility | ( | |||||||||||||
Other | ( | |||||||||||||
Grand Total | $ | $ | $ | ( | $ |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(in thousands) | September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||||
Cost of revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Research, development, and engineering | ||||||||||||||||||||||||||
Selling, general, and administrative | ||||||||||||||||||||||||||
Stock-based compensation included in operating expenses | ||||||||||||||||||||||||||
Total stock-based compensation | ||||||||||||||||||||||||||
Income tax benefit | ( | ( | ( | ( | ||||||||||||||||||||||
Total stock-based compensation, net of tax | $ | $ | $ | $ |
(in thousands) | September 26, 2020 | March 28, 2020 | |||||||||||||||
Accumulated unrealized loss on cash flow hedges (1) | $ | ( | $ | ( | |||||||||||||
Accumulated foreign currency translation adjustments | |||||||||||||||||
Accumulated other comprehensive loss | $ | ( | $ | ( |
(in thousands) | September 26, 2020 | March 28, 2020 | ||||||||||||
Derivative Assets(1) | ||||||||||||||
Non-designated hedges | $ | $ | ||||||||||||
Cash flow hedges | ||||||||||||||
Total derivative assets | $ | $ | ||||||||||||
Derivative Liabilities(2) | ||||||||||||||
Non-designated hedges | $ | $ | ||||||||||||
Cash flow hedges | ||||||||||||||
Interest rate swap | ||||||||||||||
Accrued interest | ||||||||||||||
Total derivative liabilities | $ | $ |
(in thousands) | Local Currency | USD Equivalent | Position | Maturity | |||||||||||||||||||
EUR | € | $ | |||||||||||||||||||||
GBP | £ | $ | |||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(in thousands) | September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||||
Gain (loss) on foreign exchange contracts | $ | ( | $ | $ | ( | $ |
(in millions) | September 26, 2020 | March 28, 2020 | ||||||||||||||||||||||||
EUR | GBP | EUR | GBP | |||||||||||||||||||||||
Option contracts | € | £ | € | £ | ||||||||||||||||||||||
Forward contracts | € | £ | € | £ |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(in thousands) | September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||||
Gain (loss) included in AOCI as of beginning of period | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Amount of gain (loss) recognized in other comprehensive income (“OCI”) (effective portion) | ( | ( | ( | |||||||||||||||||||||||
Amount of (gain) loss reclassified from OCI into net revenues (effective portion) | ( | ( | ||||||||||||||||||||||||
Amount of (gain) loss reclassified from OCI into cost of revenues (effective portion) | ( | ( | ||||||||||||||||||||||||
Amount of (gain) loss reclassified from OCI into interest expense (effective portion) | ||||||||||||||||||||||||||
Total amount of (gain) loss reclassified from AOCI to income (loss) (effective portion) | ( | ( | ||||||||||||||||||||||||
Gain (loss) included in AOCI as of end of period | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(in thousands, except per share data) | September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||||
Basic loss per common share: | ||||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||
Weighted average common shares, basic | ||||||||||||||||||||||||||
Weighted average common shares-diluted | ||||||||||||||||||||||||||
Basic loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Diluted loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Potentially dilutive securities excluded from diluted loss per common share because their effect is anti-dilutive |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(in thousands) | September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||||
Net revenues from unaffiliated customers: | ||||||||||||||||||||||||||
Headsets1 | ||||||||||||||||||||||||||
Voice2 | ||||||||||||||||||||||||||
Video2 | ||||||||||||||||||||||||||
Services2 | ||||||||||||||||||||||||||
Total net revenues | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(in thousands) | September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||||
Products | ||||||||||||||||||||||||||
Net revenues from unaffiliated customers: | ||||||||||||||||||||||||||
U.S. | $ | $ | $ | $ | ||||||||||||||||||||||
Europe and Africa | ||||||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||
Americas, excluding U.S. | ||||||||||||||||||||||||||
Total international net revenues | ||||||||||||||||||||||||||
Product net revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Services | ||||||||||||||||||||||||||
Net revenues from unaffiliated customers: | ||||||||||||||||||||||||||
U.S. | $ | $ | $ | $ | ||||||||||||||||||||||
Europe and Africa | ||||||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||
Americas, excluding U.S. | ||||||||||||||||||||||||||
Total international net revenues | ||||||||||||||||||||||||||
Service net revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Total net revenues | $ | $ | $ | $ |
September 26, 2020 | ||||||||||||||||||||
(in millions) | Current | Noncurrent | Total | |||||||||||||||||
Performance obligations | $ | $ | $ |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(in thousands) | September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||||
Segment revenues as reviewed by CODM | ||||||||||||||||||||||||||
Products | $ | $ | $ | $ | ||||||||||||||||||||||
Services | ||||||||||||||||||||||||||
Total segment revenues as reviewed by CODM | $ | $ | $ | $ | ||||||||||||||||||||||
Segment gross profit as reviewed by CODM | ||||||||||||||||||||||||||
Products | $ | $ | $ | $ | ||||||||||||||||||||||
Services | ||||||||||||||||||||||||||
Total segment gross profit as reviewed by CODM | $ | $ | $ | $ |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(in thousands) | September 26, 2020 | September 28, 2019 | September 26, 2020 | September 28, 2019 | ||||||||||||||||||||||
Total segment revenues as reviewed by CODM | $ | $ | $ | $ | ||||||||||||||||||||||
Deferred revenue purchase accounting | ( | ( | ( | ( | ||||||||||||||||||||||
Consolidated GAAP net revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Total segment gross profit as reviewed by CODM (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Purchase accounting amortization | ( | ( | ( | ( | ||||||||||||||||||||||
Deferred revenue purchase accounting | ( | ( | ( | ( | ||||||||||||||||||||||
Integration and rebranding costs | ( | ( | ||||||||||||||||||||||||
Stock-based compensation | ( | ( | ( | ( | ||||||||||||||||||||||
Consolidated GAAP gross profit | $ | $ | $ | $ |
Currency - forward contracts | Position | USD Value of Net Foreign Exchange Contracts | Foreign Exchange Gain From 10% Appreciation of USD | Foreign Exchange Loss From 10% Depreciation of USD | |||||||||||||||||||
EUR | Sell EUR | $ | 59.1 | $ | 5.9 | $ | (5.9) | ||||||||||||||||
GBP | Sell GBP | $ | 4.6 | $ | 0.5 | $ | (0.5) | ||||||||||||||||
Currency - option contracts | USD Value of Net Foreign Exchange Contracts | Foreign Exchange Gain From 10% Appreciation of USD | Foreign Exchange Loss From 10% Depreciation of USD | |||||||||||||||||
Call options | $ | 88.5 | $ | 1.2 | $ | (5.8) | ||||||||||||||
Put options | $ | 81.4 | $ | 3.6 | $ | (0.5) | ||||||||||||||
Forwards | $ | 73.6 | $ | 7.4 | $ | (7.4) |
Total Number of Shares Purchased 1 | Average Price Paid per Share 2 | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 1 | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs 3 | ||||||||||||||||||||
June 28, 2020 to July 25, 2020 | 3,170 | 4 | N/A | — | 1,369,014 | ||||||||||||||||||
July 26, 2020 to August 22, 2020 | 3,800 | 4 | N/A | — | 1,369,014 | ||||||||||||||||||
August 23, 2020 to September 26, 2020 | 15,201 | 4 | N/A | — | 1,369,014 |
1 | On November 28, 2018, our Board of Directors approved a 1 million shares repurchase program expanding our capacity to repurchase shares to approximately 1.7 million shares. We may repurchase shares from time to time in open market transactions or through privately negotiated transactions. There is no expiration date associated with the repurchase activity. | ||||
2 | "Average Price Paid per Share" reflects open market repurchases of common stock only. | ||||
3 | These shares reflect the available shares authorized for repurchase under the expanded program approved by the Board on November 28, 2018. | ||||
4 | Represents only shares that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock grants under our stock plans. |
Exhibit Number | Incorporation by Reference | Filed Herewith | ||||||||||||||||||||||||||||||||||||
Exhibit Description | Form | File No. | Exhibit | Filing Date | ||||||||||||||||||||||||||||||||||
10.1 | X | |||||||||||||||||||||||||||||||||||||
10.2 | X | |||||||||||||||||||||||||||||||||||||
10.3 | X | |||||||||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||||||||
101.INS | XBRL Instance Document - the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | X | ||||||||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Definition Linkbase Document | X | ||||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File, (formatted as Inline XBRL and contained in Exhibit 101) | X |
Item Number | Page(s) | ||||||||||
PART I. FINANCIAL INFORMATION | |||||||||||
- | |||||||||||
- | |||||||||||
- | |||||||||||
PART II. OTHER INFORMATION | |||||||||||
PLANTRONICS, INC. | |||||||||||
Date: | October 29, 2020 | By: | /s/ Charles D. Boynton | ||||||||
Name: | Charles D. Boynton | ||||||||||
Title: | Executive Vice President and Chief Financial Officer |
•Board | You will be appointed to serve as a member of the Board effective as of the start date. Thereafter, at each annual meeting of the Company's stockholders while you are the Company's President and Chief Executive Officer upon which your term as a Board member is scheduled to expire, the Company will nominate you to serve as a member of the Board. Your continued service as a member of the Board will be subject to any required stockholder approval. Upon the termination of your employment for any reason, unless otherwise requested by the Board, you will be deemed to have resigned from the Board (and all other positions held at the Company and its affiliates) voluntarily, without any further required action by you, as of the end of your employment and you, at the Board's request, will execute any documents necessary to reflect your resignation. | ||||
Membership | |||||
•Annualized Base | $800,000 per year, payable biweekly in accordance with our standard payroll practices and less applicable tax withholding. | ||||
Salary | |||||
•Annual Incentive | 125% of your Annual Base Salary or $1,000,000, at target performance, with a maximum bonus opportunity of 200% of your Annual Base Salary, or $1,600,000, for outstanding performance. Any bonus you receive for fiscal year 2021 will reflect a pro-ration based on your start date. | ||||
Plan | |||||
The purpose of the Plantronics, Inc. Annual Incentive Plan (“AIP” or the “Plan”) is to focus participants on achieving annual Company-wide financial performance goals as well as product group, segment, or functional objectives and individual performance goals by providing the opportunity to receive annual cash payments based on accomplishments during the year. |
Please refer to the Annual Incentive Plan "Administrative Guidelines" for further details on how bonuses may be earned. | |||||
•Target Total Cash | Up to $1,800,000 per year based on the compensation elements shown above assuming at target performance. There is no guarantee that total cash compensation will be achieved. | ||||
Compensation | |||||
•Signing Bonus | The Company will pay to you a Signing Bonus of $500,000, less applicable deductions and withholdings (the "Signing Bonus"). The Signing Bonus will be paid on your first paycheck following your start date. | ||||
•New Hire | It will be recommended to the Company's Board of Directors or a sub-committee thereof that you receive an award of 75,000 shares of the Company's common stock in the form of a restricted stock unit award {"RSUs") to be awarded on the 15th day of the month following the month in which the start date occurs (the "Grant Date"). If approved, the price to you of the RSUs will be $0.00 and the RSUs will be awarded and subject to the Company's 2003 Stock Plan, as amended and restated (the "Equity Incentive Plan") and RSU agreement in effect at the time of grant (the "RSU Documents"). If approved, the RSUs will vest and be settled in three equal annual installments on the first, second and third anniversaries of the Grant Date, respectively, in accordance with the terms of the RSU Documents. Subject to any vesting acceleration that may be provided for in the RSU Documents and the Change of Control Severance Agreement, all vesting is subject to your continued employment on each applicable vesting date. | ||||
Restricted Stock | |||||
Units | |||||
•New Hire | It will be recommended to the Company's Board of Directors or a sub-committee thereof that you receive an award of 250,000 shares of the Company's common stock in the form of performance stock unit awards ("PSUs") on the Grant Date with the performance period aligned to the FY21 performance-based Restricted Stock Unit ("PSU Plan") as summarized in Schedule A hereto. The number of PSUs that will ultimately vest will be subject to the provisions of the PSU Plan. If approved, the price to you of the PSUs will be $0.00 and the PSUs will be awarded and subject to the PSU Plan, the Equity Incentive Plan and the PSU agreement in effect at the time of grant (the "PSU Documents"). If approved, the PSUs will vest and be settled in accordance with the PSU documents. Subject to any vesting acceleration that may be provided for in the PSU Documents and the Change of Control Severance Agreement, all vesting is subject to your continued employment on each applicable vesting date. | ||||
Performance | |||||
Stock Units | |||||
•Change-in-Control | You and the Company will enter into the Change of Control Severance Agreement in the form attached hereto as Exhibit A (the "Change of Control Severance Agreement"), to become effective as of the start date. | ||||
Benefits | |||||
•Severance | You and the Company will enter into the Change of Control Severance Agreement to become effective as of the start date. | ||||
Benefits | |||||
•General Benefits | You will be eligible to participate in the Company's benefit programs as available or that become available to other similarly situated employees of the Company, subject to the generally applicable terms and conditions of each program. The continuation or termination of each program will be at the discretion of the Company. Life, Medical, Dental and Disability coverage will begin on your start date. | ||||
•Executive | You will be automatically enrolled in our Executive Health Exam Program, if and to the extent such program continues to remain in effect and is offered to other similarly situated executives of the Company. This program is aimed to give you guidance and direction on further health items to follow up on. To qualify you must schedule the appointment through the pre-identified network of doctors. | ||||
Physical Program | |||||
•401(k) | You are eligible to join the Company's 401(k) plan, subject to the terms and condition of the plan document. | ||||
•Non-Qualified | You will be eligible to participate in a non-qualified deferred compensation plan, subject to the terms and conditions of the plan document. An eligible participant may elect to defer prospective compensation not yet earned by submitting a Compensation Deferral Agreement during the enrollment periods. For more information regarding the Company's Deferred Compensation Plan, please see the Prospectus. | ||||
Deferred | |||||
Compensation | |||||
Plan | |||||
•ESPP | You will be eligible to participate in the Company's Employee Stock Purchase Plan, subject to the terms of the plan. | ||||
•Tax Preparation | The Company will reimburse you for your documented annual tax preparation expenses not to exceed $25,000 per year. Please see below for additional information regarding reimbursements. | ||||
Assistance | |||||
•Legal Preparation | The Company will reimburse you for your documented legal expenses incurred in the negotiation and review of this offer letter and the related documentation, in an amount not to exceed $25,000 (the "legal fee reimbursement"). In addition, the Company will pay you an amount, determined by the Company, necessary to pay federal, state and local income and employment taxes incurred by you arising from the legal fee reimbursement, and arising from the payments made to you pursuant to this sentence (the "legal fee reimbursement gross-up payment"). The legal fee reimbursement gross-up payment will be calculated by the Company based on the withholding rates that Company has in effect for you at the time the legal fee reimbursement is made to you. Please see below for additional information regarding reimbursements. | ||||
Assistance | |||||
•Company Policies | You agree to comply with all Company policies, including, for the avoidance of any doubt, any equity ownership guidelines, insider trading policies and compensation clawback policies currently in existence or that may be adopted by the Company during your employment. | ||||
Level | Growth Rate Delta | Percentage of Target Number of PSUs that Become Eligible PSUs | Number of Eligible PSUs | ||||||||
1 | >25% | 200% | Maximum Number of PSUs | ||||||||
2 | 0% | 100% | Target Number of PSUs | ||||||||
3 | <-33% | 0% | 0 |
October 29, 2020 | |||||
/s/ David M. Shull | |||||
David M. Shull | |||||
President, Chief Executive Officer and Director |
October 29, 2020 | |||||
/s/ Charles D. Boynton | |||||
Charles D. Boynton | |||||
Executive Vice President and Chief Financial Officer |
By: | /s/ David M. Shull | |||||||
Name: | David M. Shull | |||||||
Title: | President, Chief Executive Officer and Director | |||||||
Date: | October 29, 2020 |
By: | /s/ Charles D. Boynton | |||||||
Name: | Charles D. Boynton | |||||||
Title: | Executive Vice President and Chief Financial Officer | |||||||
Date: | October 29, 2020 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Net revenues | $ 410,969 | $ 461,709 | $ 766,689 | $ 909,476 |
Cost of revenues | 230,223 | 255,638 | 429,611 | 490,759 |
Gross profit | 180,746 | 206,071 | 337,078 | 418,717 |
Operating expenses: | ||||
Research, development, and engineering | 52,148 | 57,415 | 102,177 | 116,939 |
Selling, general, and administrative | 115,605 | 148,419 | 232,250 | 312,027 |
(Gain) loss, net from litigation settlements | 0 | 0 | 17,561 | (1,162) |
Restructuring and other related charges | 6,170 | 5,847 | 35,500 | 25,372 |
Total operating expenses | 173,923 | 211,681 | 387,488 | 453,176 |
Operating income (loss) | 6,823 | (5,610) | (50,410) | (34,459) |
Interest expense | (18,581) | (23,797) | (39,765) | (47,729) |
Other non-operating income (loss), net | 1,366 | (625) | 1,592 | (292) |
Loss before income taxes | (10,392) | (30,032) | (88,583) | (82,480) |
Income tax expense (benefit) | 3,013 | (4,122) | (163) | (11,699) |
Net loss | $ (13,405) | $ (25,910) | $ (88,420) | $ (70,781) |
Loss per common share: | ||||
Basic (in dollars per share) | $ (0.33) | $ (0.65) | $ (2.17) | $ (1.80) |
Diluted (in dollars per share) | $ (0.33) | $ (0.65) | $ (2.17) | $ (1.80) |
Shares used in computing loss per common share: | ||||
Basic (in shares) | 40,970 | 39,584 | 40,715 | 39,411 |
Diluted (in shares) | 40,970 | 39,584 | 40,715 | 39,411 |
Product | ||||
Net revenues | $ 347,677 | $ 395,137 | $ 639,135 | $ 777,882 |
Cost of revenues | 209,261 | 229,323 | 385,876 | 437,939 |
Service | ||||
Net revenues | 63,292 | 66,572 | 127,554 | 131,594 |
Cost of revenues | $ 20,962 | $ 26,315 | $ 43,735 | $ 52,820 |
BASIS OF PRESENTATION |
6 Months Ended |
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Sep. 26, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited condensed consolidated financial statements ("financial statements") of Plantronics, Inc. ("the Company") have been prepared on a basis materially consistent with the Company's March 28, 2020 audited consolidated financial statements and include all adjustments, consisting of normal recurring adjustments, necessary to fairly state the information set forth herein. Certain information and footnote disclosures normally included in financial statements prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to interim financial information and in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2020, which was filed with the SEC on June 8, 2020. The results of operations for the interim period ended September 26, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year or any future period. The financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. The Company’s fiscal year ends on the Saturday closest to the last day of March. The Company’s current and prior fiscal years end on March 27, 2021 and March 28, 2020, respectively, and both consist of 52 weeks. The Company’s results of operations for the three and six months ended September 26, 2020 and September 28, 2019 both contain 13 weeks. Risks and uncertainties As described in the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2020, which was filed with the SEC on June 8, 2020, the Company is subject to a greater degree of uncertainty than normal in making the judgments and estimates needed to apply its significant accounting policies as a result of the COVID-19 pandemic. The Company continues to assess various accounting estimates and other matters in context to the unknown future impacts of COVID-19 using information that is reasonably available as of the issuance date of the condensed consolidated financial statements. The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on its customers and suppliers, all of which are uncertain and cannot be predicted. As of the date of issuance of these condensed consolidated financial statements, the extent to which the pandemic may materially impact the Company's financial condition, liquidity, or results of operations is uncertain. Reclassifications Certain prior year amounts have been reclassified for consistency with current year presentation. Each of the reclassifications was immaterial and had no effect on the Company's results of operations.
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RECENT ACCOUNTING PRONOUNCEMENTS |
6 Months Ended |
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Sep. 26, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Pronouncement In June 2016, the Financial Accounting Standards Board ("FASB") issued guidance regarding the measurement of credit losses on financial instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. The Company adopted the new standard effective March 29, 2020, using a modified retrospective transition method, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. The adoption had an immaterial impact on the Company’s financial position, results of operations or cash flows.
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CASH, CASH EQUIVALENTS, AND INVESTMENTS |
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CASH, CASH EQUIVALENTS AND INVESTMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CASH, CASH EQUIVALENTS, AND INVESTMENTS | CASH, CASH EQUIVALENTS, AND INVESTMENTS The following tables summarize the Company’s cash, cash equivalents, and investments’ adjusted cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category recorded as cash and cash equivalents, and short-term investments as of September 26, 2020 and March 28, 2020 (in thousands):
As of September 26, 2020, and March 28, 2020, all of the Company's investments are classified as trading securities and are reported at fair value, with unrealized gains and losses included in current period earnings. For more information regarding the Company's deferred compensation plan, see Note 4, Deferred Compensation. The Company did not incur any material realized or unrealized gains or losses in the three months ended September 26, 2020, and September 28, 2019. The Company recognized an unrealized gain of $1.8 million during the six months ended September 26, 2020. The Company did not incur any material realized or unrealized gains or losses in the six months ended September 28, 2019. There were no transfers between fair value measurement levels during the three and six months ended September 26, 2020, and September 28, 2019. All financial assets and liabilities are recognized or disclosed at fair value in the financial statements. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 The Company's Level 1 financial assets consist of Mutual Funds and Money Market Funds. The fair value of Level 1 financial instruments is measured based on the quoted market price of identical securities. Level 2 The Company's Level 2 financial assets and liabilities consist of derivative foreign currency contracts, an interest rate swap, a term loan facility, and 5.50% Senior Notes. The fair value of the Level 2 derivative foreign currency contracts and interest rate swap are determined using pricing models that use observable market inputs. For more information regarding the Company's derivative assets and liabilities, see Note 13, Derivatives. The fair value of the Level 2 5.50% Senior Notes and term loan facility are determined based on inputs that were observable in the market, including the trading price of the notes when available. For more information regarding the Company's 5.50% Senior Notes and term loan facility, see Note 8, Debt. Level 3 The Company's revolving credit facility falls under the Level 3 hierarchy. The fair value of the Level 3 revolving credit facility is determined based on inputs that were unobservable in the market. For more information regarding the Company's debt, refer to Note 8, Debt.
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DEFERRED COMPENSATION |
6 Months Ended |
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Sep. 26, 2020 | |
Compensation Related Costs [Abstract] | |
DEFERRED COMPENSATION | DEFERRED COMPENSATION As of September 26, 2020, the Company held investments in mutual funds with a fair value totaling $14.0 million, all of which related to debt and equity securities that are held in rabbi trusts under non-qualified deferred compensation plans. The total related deferred compensation liability was $13.9 million at September 26, 2020. As of March 28, 2020, the Company held investments in mutual funds with a fair value totaling $11.8 million, all of which related to debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans. The total related deferred compensation liability at March 28, 2020 was $11.7 million. The securities are classified as trading securities and are recorded on the condensed consolidated balance sheets under "short-term investments". The liability is recorded on the condensed consolidated balance sheets under "other long-term liabilities" and "accrued liabilities".
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DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS | DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS Accounts receivable, net:
The Company maintains a provision for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company regularly performs credit evaluations of its customers’ financial conditions and considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic or country-specific risks, and economic conditions that may affect a customer’s ability to pay, including any reasonable and supportable forecasts of the future. For the three months ended September 26, 2020, our assessment considered business and market disruptions caused by COVID-19 and estimates of credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict, causing variability and volatility that may impact our allowance for credit losses in future periods. As a result of the Polycom Acquisition (the "Acquisition"), the Company assumed 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 Polycom's products and services. In return, the Company agrees to pay the financing company a fee based on a pre-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 Topic 860 and is accounted for as a sale of financial assets, the related accounts receivable is excluded from the balance sheet upon receipt of the third-party financing company's payment remittance. In certain legal jurisdictions, the arrangements 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 Topic 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. During the quarter ended September 26, 2020, total transactions entered pursuant to the terms of the Financing Agreement were approximately $23.6 million, of which $23.6 million was related to the transfer of the financial asset. During the quarter ended September 28, 2019, total transactions entered pursuant to the terms of the Financing Agreement were approximately $44.9 million, of which $27.9 million was related to the transfer of the financial assets. The financing of these receivables accelerated the collection of cash and reduced the Company's credit exposure. Included in "Accounts receivables, net" in the Company's condensed consolidated balance sheets as of September 26, 2020 and March 28, 2020 was approximately $13.0 million and $22.5 million, respectively due from the financing company, of which $13.0 million and $16.5 million, respectively was related to accounts receivable transferred. Total fees incurred pursuant to the Financing Agreement were immaterial for the quarters ended September 26, 2020 and September 28, 2019. These fees are recorded as a reduction to revenue on the Company's condensed consolidated statements of operations. Inventory, net:
Accrued Liabilities:
The Company's warranty obligation is included as a component of accrued liabilities on the condensed consolidated balance sheets. Changes in the warranty obligation during the six months ended September 26, 2020 and September 28, 2019 were as follows:
(1) Includes both short-term and long-term portion of warranty obligation; the prior table shows only the short-term portion included in accrued liabilities on the Company's condensed consolidated balance sheet. The long-term portion is included in other long-term liabilities.
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GOODWILL AND PURCHASED INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND PURCHASED INTANGIBLE ASSETS | GOODWILL AND PURCHASED INTANGIBLE ASSETS Goodwill The changes in the carrying amount of goodwill allocated to the Company's reporting segments for the periods ended September 26, 2020 and March 28, 2020 are as follows:
(1) Represents measurement period adjustments. During the fourth quarter of Fiscal Year 2020, the Company experienced a sustained decrease in its stock price and determined that it was more likely than not that the carrying value of the Company's reporting units exceeded their fair value. Additionally, during the fourth quarter of Fiscal Year 2020, the Company made key changes to its executive management, which ultimately resulted in a change to the composition of its reportable segments and consequently a change from one to four reporting units – Headsets, Voice, Video, and Services. These changes resulted in an impairment charge of $483.7 million in the fourth quarter of Fiscal Year 2020. Other Intangible Assets As of September 26, 2020, and March 28, 2020, the carrying value of other intangibles, is as follows:
During the three and six months ended September 26, 2020, the Company recognized $31.4 million and $63.8 million, respectively, in amortization expense. During the three and six months ended September 28, 2019 the Company recognized $46.0 million and $91.3 million, respectively, in amortization expense. As of September 26, 2020, expected amortization expense for other intangible assets for each of the next five years and thereafter is as follows:
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Future Minimum Rental Payments Future minimum lease payments under non-cancelable operating leases as of September 26, 2020 were as follows:
(1) The weighted average remaining lease term was 4.4 years as of September 26, 2020. (2) The weighted average discount rate was 4.8% as of September 26, 2020. Unconditional Purchase Obligations The Company purchases materials and services from a variety of suppliers and manufacturers. During the normal course of business and to manage manufacturing operations and general and administrative activities, the Company may enter into firm, non-cancelable, and unconditional purchase obligations for which amounts are not recorded on the consolidated balance sheets. As of September 26, 2020, the Company had outstanding off-balance sheet third-party manufacturing, component purchase, and other general and administrative commitments of $420.4 million. Other Guarantees and Obligations In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, purchasers of assets or subsidiaries and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company's breach of agreements or representations and warranties made by the Company, services to be provided by the Company, intellectual property infringement claims made by third parties or, with respect to the sale of assets of a subsidiary, matters related to the Company's conduct of business and tax matters prior to the sale. From time to time, the Company indemnifies customers against combinations of loss, expense, or liability arising from various triggering events relating to the sale and use of its products and services. In addition, the Company also provides indemnification to customers against claims related to undiscovered liabilities, additional product liability, or environmental obligations. The Company has also entered into indemnification agreements with its directors, officers and certain other personnel that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers of the Company or certain of its affiliated entities. The Company maintains director and officer liability insurance, which may cover certain liabilities arising from its obligation to indemnify its directors, officers and certain other personnel in certain circumstances. It is not possible to determine the aggregate maximum potential loss under these agreements due to the limited history of prior claims and the unique facts and circumstances involved in each particular claim. Such indemnification obligations might not be subject to maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations under these agreements and it has not accrued any liabilities related to such indemnification obligations in the condensed consolidated financial statements. Claims and Litigation On October 12, 2012, GN Netcom, Inc. (“GN”) filed a complaint against the Company in the United States District Court for the District of Delaware (“Court”), alleging violations of Sections 1 and 2 of the Sherman Act, Section 3 of the Clayton Act, and tortious interference with business relations in connection with the Company’s distribution of corded and wireless headsets. On July 13, 2020 the parties resolved the dispute and the matter was dismissed. On January 23, 2018, FullView, Inc. filed a complaint in the United States District Court of the Northern District of California against Polycom, Inc. alleging infringement of two patents and thereafter filed a similar complaint in connection with the same patents in Canada. Polycom thereafter filed an inter partes reexamination ("IPR") of one of the patents, which was then appealed to Federal Circuit Court and denied. Litigation in both matters in the United States and Canada, respectively, were stayed pending the results of that appeal. Polycom also filed an IPR of the second patent and the PTAB denied institution of the IPR petition. FullView had also initiated arbitration proceedings under a terminated license agreement with Polycom alleging that Polycom had failed to pay certain royalties due under that agreement. The arbitration panel awarded an immaterial amount to FullView. FullView filed a First and Second Amended Complaint and Polycom filed a motion to dismiss. The Court granted Polycom's partial motion to dismiss without prejudice and invalidated one of the patents in suit. Litigation on the remaining patent is ongoing. On June 21, 2018, directPacket Research Inc. filed a complaint alleging patent infringement by Polycom in the United States District Court for the Eastern District of Virginia, Norfolk Division. The Court granted Polycom’s Motion to Transfer Venue to the Northern District of California. Polycom filed petitions for Inter Partes Review of the asserted patents which were granted by the U.S. Patent Trial and Appeal Board. The District Court matter is stayed pending resolution of the IPRs. Oral argument was heard on the IPRs on October 20, 2020 with ruling expected on or around January 2021. On November 15, 2019, Felice Bassuk, individually and on behalf of others similarly situated, filed a complaint against Plantronics, its CEO Joseph Burton, its CFO Charles Boynton and its former CFO Pamela Strayer alleging various securities law violations. Plaintiffs filed the amended complaint on June 5, 2020 and the Company’s Motion to Dismiss the Amended Complaint was filed on August 7, 2020. Plaintiffs filed their Opposition on October 2, 2020 with Plantronics’ reply due on November 16, 2020. The hearing on the Motion to Dismiss currently is scheduled to occur on January 13, 2021. On December 17, 2019, Cisco Systems, Inc. filed a First Amended Complaint for Trade Secret Misappropriation against Plantronics, Inc. and certain individuals which amends a previously filed complaint against certain other individuals. The Company disputes the allegations. The Company filed a Motion to Dismiss. The Court granted the Motion to Dismiss with leave to amend as to Defendants He, Chung and Williams, granted the Motion to Compel Arbitration for Defendant Williams and granted in part and denied in part the Motion to Dismiss by Defendants Puorro and Poly. Cisco filed an Amended Complaint and the Defendants have moved to dismiss or strike portions of the Amended Complaint. The Court granted in part and denied in part the Motion to Dismiss. The matter is ongoing. On July 22, 2020, Koss Corporation sued Plantronics and Polycom in the Western District of Texas, Waco division alleging patent infringement with respect to four Koss patents. The Company answered the Complaint on October 1, 2020 disputing the claims. The matter is ongoing. In addition to the specific matters discussed above, the Company is involved in various legal proceedings and investigations arising in the normal course of conducting business. Where applicable, in relation to the on-going matters described above, the Company has accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to the Company's financial condition, results of operations, or cash flows. The Company is not able to estimate an amount or range of any reasonably possible loss, including in excess of any amount accrued, because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the variable treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings. However, based upon the Company's historical experience, the resolution of these proceedings is not expected to have a material effect on the Company's financial condition, results of operations or cash flows. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings.
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DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT The estimated fair value and carrying value of the Company's outstanding debt as of September 26, 2020 and March 28, 2020 were as follows:
As of September 26, 2020, and March 28, 2020, the net unamortized discount, premium and debt issuance costs on the Company's outstanding debt were $21.9 million and $25.1 million, respectively. 5.50% Senior Notes In May 2015, the Company issued $500.0 million aggregate principal amount of 5.50% senior notes (the “5.50% Senior Notes”). The 5.50% Senior Notes mature on May 31, 2023, and bear interest at a rate of 5.50% per annum, payable semi-annually on May 15 and November 15, commencing on November 15, 2015. The Company received net proceeds of $488.4 million from the issuance of the 5.50% Senior Notes, net of issuance costs of $11.6 million which are being amortized to interest expense over the term of the 5.50% Senior Notes using the effective interest method. A portion of the proceeds was used to repay all then-outstanding amounts under the Company's revolving line of credit agreement with Wells Fargo Bank and the remaining proceeds were used primarily for share repurchases. The fair value of the 5.50% Senior Notes was determined based on inputs that were observable in the market, including the trading price of the 5.50% Senior Notes when available (Level 2). The Company may redeem all or a part of the 5.50% Senior Notes, upon not less than 30 or more than a 60-day notice; however, the applicable redemption price is the principal plus a premium which declines over time as specified in the applicable indenture, together with accrued and unpaid interest. In addition, upon the occurrence of certain change of control triggering events, the Company may be required to repurchase the 5.50% Senior Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 5.50% Senior Notes contain restrictive covenants that, among other things, limit the Company's ability to create certain liens and enter into sale and lease-back transactions; create, assume, incur, or guarantee additional indebtedness of its subsidiaries without such subsidiary guaranteeing the 5.50% Senior Notes on an unsecured unsubordinated basis; and consolidate or merge with, or convey, transfer or lease all or substantially all of the assets of the Company and its subsidiaries, to another person. During the three months ended September 26, 2020, the Company repurchased $7.4 million aggregate principal amount of the 5.50% Senior Notes. The Company recorded an immaterial gain on the repurchase, which is included in interest expense of the Company's condensed consolidated statements of operations. Credit Facility Agreement In connection with the Polycom Acquisition completed on July 2, 2018, the Company entered into a Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (the “Credit Agreement”). The Credit Agreement replaced the Company’s prior revolving credit facility in its entirety. The Credit Agreement provides for (i) a revolving credit facility with an initial maximum aggregate amount of availability of $100 million that matures in July 2023 and (ii) a $1.275 billion term loan facility priced at LIBOR plus 250bps due in quarterly principal installments commencing on the last business day of March, June, September and December beginning with the first full fiscal quarter ending after the Closing Date for the aggregate principal amount funded on the Closing Date multiplied by 0.25% (subject to prepayments outlined in the Credit Agreement) and all remaining outstanding principal due at maturity in July 2025. The Company borrowed the full amount available under the term loan facility of $1.245 billion, net of approximately $30 million of discounts and issuance costs which are being amortized to interest expense over the term of the agreement using the straight-line method which approximates the effective interest method for this debt. The proceeds from the initial borrowing under the Credit Agreement were used to finance the Acquisition, to refinance certain debt of Polycom, and to pay related fees, commissions and transaction costs. The Company has additional borrowing capacity under the Credit Agreement through the revolving credit facility which could be used to provide ongoing working capital and capital for other general corporate purposes of the Company and its subsidiaries. The Company’s obligations under the Credit Agreement are currently guaranteed by Polycom and will from time to time be guaranteed by, subject to certain exceptions, any domestic subsidiaries that may become material in the future. Subject to certain exceptions, the Credit Agreement is secured by first-priority perfected liens and security interests in substantially all of the personal property of the Company and each subsidiary guarantor and will from time to time also be secured by certain material real property that the Company or any subsidiary guarantor may acquire. Borrowings under the Credit Agreement bear interest due on a quarterly basis at a variable rate equal to (i) LIBOR plus a specified margin, or (ii) the base rate (which is the highest of (a) the prime rate publicly announced from time to time by Wells Fargo Bank, National Association, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin. The Company must also pay (i) an unused commitment fee ranging from 0.200% to 0.300% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement, and (ii) a per annum fee equal to (a) for each performance standby letter of credit outstanding under the Credit Agreement with respect to non-financial contractual obligations, 50% of the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn under such letter of credit, and (b) for each other letter of credit outstanding under the Credit Agreement, the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn under such letter of credit. On February 20, 2020, the Company entered into an Amendment No. 2 to Credit Agreement (the “Amendment”) by and among the Company, the financial institutions party thereto as lenders and Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “Agent”). The Amendment amended the Credit Agreement, as previously amended to (i) increase the maximum Secured Net Leverage Ratio (as defined in the Credit Agreement) permitted under the Credit Agreement to 3.75 to 1.00 through December 26, 2020 and 3.00 to 1.00 thereafter and (ii) decrease the minimum Interest Coverage Ratio (as defined in the Credit Agreement) required under the Credit Agreement to 2.25 to 1.00 through December 26, 2020 and 2.75 to 1.00 thereafter. Additionally, the Amendment modified the calculation of the Secured Net Leverage Ratio and the Interest Coverage Ratio solely for purposes of compliance with Sections 7.11(a) and 7.11(b) of the Credit Agreement to (i) calculate the Secured Net Leverage Ratio net of the aggregate amount of unrestricted cash and Cash Equivalents (as defined in the Credit Agreement) on the balance sheet of the Company and its Restricted Subsidiaries (as defined in the Credit Agreement) as of the date of calculation up to an amount equal to $150,000,000 and (ii) solely for purposes of any fiscal quarter ending from December 29, 2019 through December 26, 2020, increase the cap on Expected Cost Savings (as defined in the Credit Agreement) in determining Consolidated EBITDA (as defined in the Credit Agreement) to the greater of (A) 20% of Consolidated EBITDA for such Measurement Period (as defined in the Credit Agreement) (calculated before giving effect to any such Expected Cost Savings to be added back pursuant to clause (a)(ix) of the definition of Consolidated EBITDA) and (B)(x) for the period from December 29, 2019 through March 28, 2020, $121,000,000, (y) for the period from March 29, 2020 through June 27, 2020, $107,000,000 and (z) for the period from June 28, 2020 through December 26, 2020, $88,000,000. The financial covenants under the Credit Agreement described above are for the benefit of the revolving credit lenders only and do not apply to any other debt of the Company. The Credit Agreement also contains various other restrictions and covenants, some of which have become more stringent over time, including restrictions on our, and certain of our subsidiaries, ability to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions, make investments and pay dividends and other distributions. The Company has the unilateral ability to terminate the revolving line of credit such that the financial covenants described above are no longer applicable. The Credit Agreement also contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable; provided, however, that the occurrence of an event of default as a result of a breach of a financial covenant under the Credit Agreement does not constitute a default or event of default with respect to any term facility under the Credit Agreement unless and until the required revolving lenders shall have terminated their revolving commitments and declared all amounts outstanding under the revolving credit facility to be due and payable. In addition, if the Company, any subsidiary guarantor or, with certain exceptions, any other subsidiary becomes the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Credit Agreement will automatically become immediately due and payable. Loans outstanding under the Credit Agreement will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) while a payment or bankruptcy event of default exists or (ii) upon the lenders’ request, during the continuance of any other event of default. As of September 26, 2020, the Company was in compliance with the financial covenants. The Company may prepay the loans and terminate the commitments under the Credit Facility Agreement at any time without penalty. Additionally, the Company is subject to mandatory debt repayments five business days after the filing of its financial statements for any annual period in which the Company generates excess cash as defined by the Credit Agreement. In accordance with the terms of the Credit Agreement, the Company did not generate excess cash during Fiscal Year 2020 and therefore is not required to make any debt repayments in Fiscal Year 2021. During the three months ended September 26, 2020, the Company repurchased $30.0 million aggregate principal amount of the term loan facility. The Company recorded an immaterial gain on the repurchase, which is included in interest expense on the Company's condensed consolidated statements of operations. As of September 26, 2020, the Company has five outstanding letters of credit on the revolving credit facility for a total of $1.4 million. The fair value of the term loan facility was determined based on inputs that were observable in the market (Level 2).
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RESTRUCTURING AND OTHER RELATED CHARGES (CREDITS) |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING AND OTHER RELATED CHARGES (CREDITS) | RESTRUCTURING AND OTHER RELATED CHARGES Summary of Restructuring Plans Fiscal Year 2021 restructuring plan During the six months ended September 26, 2020, the Company committed to additional actions to reduce expenses and right size its overall cost structure to better align with projected revenue levels. The costs incurred to date under this plan include severance benefits related to headcount reductions in the Company's global workforce and facility related charges due to closure or consolidation of leased offices. Fiscal Year 2020 restructuring plans During the Fiscal Year 2020, the Company committed to additional actions to rationalize post-Acquisition operations and costs to align the Company's cost structure to current revenue expectations. The costs incurred to date under these plans include severance benefits related to headcount reductions in the Company's global workforce, facility related charges due to consolidation of the Company's leased offices, asset impairments associated with consumer product portfolio optimization efforts, and other costs associated with legal entity rationalization. Fiscal Year 2019 restructuring plans During the Fiscal Year 2019, the Company initiated post-Acquisition restructuring plans to realign the Company's cost structure, including streamlining the global workforce, consolidation of certain distribution centers in North America, and reduction of redundant legal entities, in order to take advantage of operational efficiencies following the Acquisition. The costs incurred to date under these plans have primarily comprised of severance benefits from reduction in force actions, facilities related actions initiated by management, and legal entity rationalization. The following table summarizes the restructuring and other related charges recognized in the Company's condensed consolidated statements of operations:
(1) Other costs primarily represent associated legal and advisory services. (2) Non-cash charges primarily represent asset impairment The Company's restructuring liabilities as of September 26, 2020 is as follows (amounts in thousands):
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STOCK-BASED COMPENSATION |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based Compensation The Company recognizes the grant-date fair value of stock-based compensation as compensation expense using the straight-line attribution approach over the service period for which the stock-based compensation is expected to vest. The following table summarizes the amount of stock-based compensation included in the condensed consolidated statements of operations:
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COMMON STOCK REPURCHASES |
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Sep. 26, 2020 | |
Equity [Abstract] | |
COMMON STOCK REPURCHASES | COMMON STOCK REPURCHASES From time to time, the Company's Board of Directors (the "Board") has authorized programs under which the Company may repurchase shares of its common stock, depending on market conditions, in the open market or through privately negotiated transactions. Repurchased shares are held as treasury stock until they are retired or re-issued. On November 28, 2018, the Board approved a 1 million share repurchase program expanding its capacity to repurchase shares to approximately 1.7 million shares. As of September 26, 2020, there remained 1,369,014 shares authorized for repurchase under the repurchase program approved by the Board. For the periods ended September 26, 2020 and September 28, 2019, the Company did not repurchase any shares of its common stock. The total value of shares withheld in satisfaction of employee tax obligations on the vesting of equity awards for the three months ended September 26, 2020 and September 28, 2019 were $0.3 million and $0.7 million, respectively. The amounts withheld were equivalent to the employees' minimum statutory tax withholding requirements and are reflected as a financing activity within the Company's condensed consolidated statements of cash flows. These share withholdings have the same effect as share repurchases by the Company as they reduce the number of shares that would have otherwise been issued in connection with the vesting of shares subject to the restricted stock grants.
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ACCUMULATED OTHER COMPREHENSIVE INCOME |
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ACCUMULATED OTHER COMPREHENSIVE INCOME | ACCUMULATED OTHER COMPREHENSIVE LOSS The components of accumulated other comprehensive income ("AOCI"), net of immaterial tax effects, are as follows:
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DERIVATIVES |
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Sep. 26, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES | DERIVATIVES Foreign Currency Derivatives The Company's foreign currency derivatives consist primarily of foreign currency forward exchange contracts and option contracts. The Company does not purchase derivative financial instruments for speculative trading purposes. The derivatives expose the Company to credit risk to the extent the counterparties may be unable to meet the terms of the derivative instrument. The Company's maximum exposure to loss that it would incur due to credit risk if parties to derivative contracts failed completely to perform according to the terms of the contracts was equal to the carrying value of the Company's derivative assets as of September 26, 2020 and March 28, 2020. The Company seeks to mitigate such risk by limiting its counterparties to large financial institutions. In addition, the Company monitors the potential risk of loss with any one counterparty resulting from this type of credit risk on an ongoing basis. The Company enters into master netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions. A master netting arrangement may allow each counterparty to net settle amounts owed between the Company and the counterparty as a result of multiple, separate derivative transactions. As of September 26, 2020, the Company had International Swaps and Derivatives Association ("ISDA") agreements with four applicable banks and financial institutions which contained netting provisions. The Company has elected to present the fair value of derivative assets and liabilities within the Company's condensed consolidated balance sheet on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. For each counterparty, if netted, the Company would offset the asset and liability balances of all derivatives at the end of the reporting period. Derivatives not subject to master netting agreements are not eligible for net presentation. As of September 26, 2020, and March 28, 2020, no cash collateral had been received or pledged related to these derivative instruments. The gross fair value of the Company's outstanding derivative contracts at the end of each period was as follows:
(1) Short-term derivative assets are recorded in "other current assets" and long-term derivative assets are recorded in "deferred tax and other assets". As of September 26, 2020, the portion of derivative assets classified as long-term was immaterial. (2) Short-term derivative liabilities are recorded in "accrued liabilities" and long-term derivative liabilities are recorded in "other long-term liabilities". As of September 26, 2020, the portion of derivative liabilities classified as long-term was $5.5 million. Non-Designated Hedges As of September 26, 2020, the Company had foreign currency forward contracts denominated in Euros ("EUR") and British Pound Sterling ("GBP"). The Company does not elect to obtain hedge accounting for these forward contracts. These forward contracts hedge against a portion of the Company’s foreign currency-denominated cash balances, receivables, and payables. The following table summarizes the notional value of the Company’s outstanding foreign exchange currency contracts and approximate U.S. Dollar ("USD") equivalent at September 26, 2020:
Effect of Non-Designated Derivative Contracts on the Condensed Consolidated Statements of Operations The effect of non-designated derivative contracts recognized in other non-operating income and (expense), net in the condensed consolidated statements of operations was as follows:
Cash Flow Hedges Costless Collars The Company hedges a portion of the forecasted EUR and GBP denominated revenues with costless collars. On a monthly basis, the Company enters into option contracts with a to -month term. Collar contracts are scheduled to mature at the beginning of each fiscal quarter, at which time the instruments convert to forward contracts. The Company also enters into cash flow forwards with a -month term. Once the hedged revenues are recognized, the forward contracts become non-designated hedges to protect the resulting foreign monetary asset position for the Company. The notional value of the Company's outstanding EUR and GBP option and forward contracts at the end of each period was as follows:
The Company will reclassify all amounts accumulated in other comprehensive income into earnings within the next twelve months. Interest Rate Swap On July 30, 2018, the Company entered into a 4-year amortizing interest rate swap agreement with Bank of America, N.A. The swap has an initial notional amount of $831 million and matures on July 31, 2022. The swap involves the receipt of floating-rate interest payments for fixed interest rate payments at a rate of 2.78% over the life of the agreement. The Company has designated this interest rate swap as a cash flow hedge. The purpose of this swap is to hedge against changes in cash flows (interest payments) attributable to fluctuations in the Company's variable rate debt. The derivative is valued based on prevailing LIBOR rate curves on the date of measurement. The Company also evaluates counterparty credit risk when it calculates the fair value of the swap. The effective portion of changes in the fair value of the derivative is recorded to other comprehensive income (loss) on the accompanying balance sheets and reclassified into interest expense over the life of the underlying debt as interest on the Company's floating rate debt is accrued. The Company reviews the effectiveness of this instrument on a quarterly basis, recognize current period hedge ineffectiveness immediately in earnings and will discontinue hedge accounting if the Company no longer considers hedging to be highly effective. This hedge was fully effective at inception on July 30, 2018 and as of the six months ended September 26, 2020. During the six months ended September 26, 2020, the Company reclassified into interest expense $7.3 million and had a $15.9 million unrealized loss on its interest rate swap derivative designated as a cash flow hedge. Effect of Designated Derivative Contracts on AOCI and Condensed Consolidated Statements of Operations The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and six months ended September 26, 2020 and September 28, 2019:
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INCOME TAXES |
6 Months Ended |
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Sep. 26, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company and its subsidiaries are subject to taxation in the U.S. and in various foreign and state jurisdictions. The Company's tax benefit is determined using an estimate of its annual effective tax rate and adjusted for discrete items that are taken into account in the relevant period. The effective tax rates for the three months ended September 26, 2020 and September 28, 2019 were (29.0)% and 13.7%, respectively. The effective tax rates for the six months ended September 26, 2020 and September 28, 2019 were 0.2% and 14.2%. respectively. As of September 26, 2020, the Company had approximately $86.3 million in non-US net deferred tax assets ("DTAs") after valuation allowance, and continued to maintain a 100% valuation allowance against its U.S. federal and state deferred tax assets. A significant portion of the Company's DTAs relate to internal intangible property restructuring between wholly-owned subsidiaries. At this time, based on evidence currently available, the Company considers it more likely than not that it will have sufficient taxable income in the future that will allow the Company to realize the DTAs; however, failure to generate sufficient taxable income could result in some or all DTAs not being utilized in the future. If the Company is unable to generate sufficient future taxable income, a substantial valuation allowance to reduce the Company's DTAs may be required. The Company is subject to the examination of its income tax returns by the Internal Revenue Service and other tax authorities. Significant judgment is required in evaluating our uncertain tax positions and determining the Company's provision for income taxes. As of September 26, 2020, the Company had a total gross unrecognized tax benefits of $28.8 million compared with $37.2 million as of September 28, 2019. The reduction in gross unrecognized tax benefits is primarily attributed to examination closure and settlement by the IRS relating to our 2017 Fiscal Year income tax return related to reversal of the United States Tax Court’s holding in Altera Corp. v. Commissioner that upheld the portion of the Treasury regulations issued under IRC Section 482 requiring related-party participants in a cost sharing arrangement to share stock-based compensation costs. If recognized, the gross unrecognized tax benefits would reduce the effective tax rate in the period of recognition.
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COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE | COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE Basic earnings (loss) per share is calculated by dividing net income (loss) associated with common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share assumes the issuance of additional shares of common stock by the Company upon exercise of all outstanding stock options and vesting of restricted stock, if the effect is dilutive, in accordance with the treasury stock method or two-class method (whichever is more dilutive). The following table sets forth the computation of basic loss per common share for the three and six months ended September 26, 2020, and September 28, 2019:
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REVENUE AND MAJOR CUSTOMERS |
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REVENUE AND MAJOR CUSTOMERS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE AND MAJOR CUSTOMERS | REVENUE AND MAJOR CUSTOMERS The Company designs, manufactures, markets, and sells integrated communications and collaboration solutions that span headsets, open Session Initiation Protocol ("SIP") and native ecosystem desktop phones, conference room phones, video conferencing solutions and peripherals, including cameras, speakers, and microphones, cloud management and analytics software solutions, and services. Major product categories are Headsets, which includes wired and wireless communication headsets; Voice, Video, and Content Sharing Solutions, which includes open Session Initiation Protocol (“SIP”) and native ecosystem desktop phones, conference room phones, and video conferencing solutions and peripherals, including cameras, speakers, and microphones. All of the Company's solutions are designed to integrate seamlessly with the platform and services of our customers choice in a wide range of Unified Communications & Collaboration ("UC&C"), Unified Communication as a Service ("UCaaS"), and Video as a Service ("VaaS") environments. The Company's cloud management and analytics software enables IT administrators to configure and update firmware, monitor device usage, troubleshoot, and gain a deep understanding of user behavior. In addition, the Company has a broad portfolio of Services including video interoperability, support for our solutions and hardware devices, as well as professional, hosted, and managed services that are grounded in our deep expertise aimed at helping customers achieve their goals for collaboration. Product revenue is largely comprised of sales of hardware devices, peripherals, and platform software licenses used in communication and collaboration in offices and contact centers, with mobile devices, cordless phones, and computers. Services revenue primarily includes support on hardware devices, professional, hosted and managed services, and solutions to the Company's customers. The following table disaggregates revenues by major product category for the three and six months ended September 26, 2020 and September 28, 2019:
1 As announced on February 4, 2020, the Company entered into a definitive agreement with Nacon S.A. and closed the transaction on March 19, 2020, completing the sale of the Company's Consumer Gaming assets for a net amount that is not material to the Company's condensed consolidated financial statements. The remaining consumer headsets are included in the Company's Enterprise products and all prior periods have been reclassified to conform to current presentation. 2 Categories were introduced with the acquisition of Polycom on July 2, 2018, and amounts are presented net of purchase accounting adjustments. For reporting purposes, revenue is attributed to each geographic region based on the location of the customer. Other than the U.S., no country accounted for 10% or more of the Company's net revenues for the three and six months ended September 26, 2020 and September 28, 2019. The following table presents net revenues by geography:
Two customers, ScanSource and Ingram Micro Group, accounted for 25.0% and 18.3%, respectively, of net revenues for the three months ended September 26, 2020. Ingram Micro Group and ScanSource, accounted for 19.7% and 18.3%, respectively, of net revenues for the six months ended September 26, 2020. Two customers, ScanSource and Ingram Micro Group, accounted for 21.7% and 16.8% of net revenues for the three months ended September 28, 2019, respectively. ScanSource and Ingram Micro Group accounted for 19.6% and 16.8%, respectively, of net revenue for the six months ended September 28, 2019. Two customers, ScanSource and Ingram Micro Group accounted for 24.9% and 23.3%, respectively, of total net accounts receivable at September 26, 2020. Three customers, Ingram Micro Group, ScanSource, and Synnex Group, accounted for 22.2%, 17.3%, and 15.6%, respectively, of total net accounts receivable at March 28, 2020. Revenue is recognized when obligations under the terms of a contract with the Company's customer are satisfied; generally, this occurs with the transfer of control of its products or services. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The majority of the Company's business relates to physical product shipments, for which revenue is generally recognized once title and risk of loss of the product are transferred to the customer. The Company believes that transfer of title and risk of loss best represent the moment at which the customer’s ability to direct the use of and obtain substantially all the benefits of an asset have been achieved. The Company has elected to account for shipping and handling as fulfillment cost and recognize the related costs when control over products have transferred to the customer as an expense in Cost of Revenues. The Company's service revenue is recognized either over-time or at a point-in-time depending on the nature of the offering. Revenues associated with non-cancelable maintenance and support contracts comprise approximately 90% of the Company's overall service revenue and are recognized ratably over the contract term, which typically ranges between one and three years. The Company believes this recognition period faithfully depicts the pattern of transfer of control for maintenance and support as the services are a series of distinct services available and delivered daily over the term. For certain products, support is provided free of charge without the purchase of a separate maintenance contract. If the support is determined to rise to the level of a performance obligation, the Company allocates a portion of the transaction price to the implied support obligation and recognizes service revenue over the estimated implied support period which can range between one month to several years, depending on the circumstances. Revenues associated with Professional Services are recognized when the Company has objectively determined that the obligation has been satisfied, which is usually upon customer acceptance. The Company's contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company allocates the transaction price of a contract, to each identified performance obligation based on stand-alone selling price (“SSP”). The Company determines if variable consideration is associated with one or many, but not all of the performance obligations and allocates accordingly. Judgment is also required to determine the SSP for each distinct performance obligation. The Company derives SSP for its performance obligations through a stratification methodology and considers a few characteristics including consideration related to different service types, customer and geography characteristics. In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. On occasion, the Company will fulfill only part of a purchase order due to lack of current availability for one or more items requested on an order. Its practice is to ship what is on hand, with the remaining goods shipped once the product is in stock. Shipment generally occurs less than one year from the date of the order. Depending on the terms of the contract or operationally, undelivered or backordered items may be canceled by either party at their discretion. As of September 26, 2020, the Company's deferred revenue balance was $212.8 million. As of March 28, 2020, the Company's deferred revenue balance was $208.5 million. During the three months ended September 26, 2020, the Company recognized $50.9 million in revenues that were reflected in deferred revenue at the beginning of the period. The table below represents aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of September 26, 2020:
Upon establishment of creditworthiness, the Company may extend credit terms to its customers which typically ranges between 30 and 90 days from the date of invoice depending on geographic region and type of customer. The Company typically bills upon product hardware shipment, at time of software activation or upon completion of services. Revenue is not generally recognized in advance of billings. The balance of contract assets as of September 26, 2020 was $4.3 million. As of March 28, 2020, the Company's contract assets balance was $3.7 million. None of the Company's contracts are deemed to have significant financing components. Sales, value add, and other taxes collected concurrent with revenue producing activities are excluded from revenue. Commercial distributors and retailers represent the Company's largest sources of net revenues. Sales through its distribution and retail channels are made primarily under agreements allowing for rights of return and include various sales incentive programs, such as back end rebates, discounts, marketing development funds, price protection, and other sales incentives. The Company has an established sales history for these arrangements and the Company records the estimated reserves at the inception of the contract as a reflection of the reduced transaction price. Customer sales returns are estimated based on historical data, relevant current data, and the monitoring of inventory build-up in the distribution channel. Revenue reserves represent a reasonable estimation made by management and are subject to significant judgment. Estimated reserves may differ from actual returns or incentives provided, due to unforeseen customer return or claim patterns or changes in circumstances. For certain customer contracts which have historically demonstrated variability, the Company has considered the likelihood of being under-reserved and has considered a constraint accordingly. Provisions for Sales Returns are presented within accrued liabilities in the Company's condensed consolidated balance sheets. Provisions for promotions, rebates, and other sales incentives are presented as a reduction of accounts receivable unless there is no identifiable right offset, in which case they are presented within accrued liabilities on its condensed consolidated balance sheets. See Note 5, Details of Certain Balance Sheet Accounts above for additional details.For certain arrangements, the Company pays commissions, bonuses and taxes associated with obtaining the contracts. The Company capitalizes such costs if they are deemed to be incremental and recoverable. The Company has elected to use the practical expedient to record the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. Determining the amortization period of costs related to obtaining a contract involves judgment. Capitalized commissions and related expenses, on hardware sales and services recognized at a point in time generally have an amortization period of less than one year. Maintenance-related performance obligations generally have an amortization period greater than one year when considering renewals. Capitalized commissions are amortized to Sales and Marketing Expense on a straight-line basis. The capitalized amount of incremental and recoverable costs of obtaining contracts with an amortization period of greater than one year are $4.7 million as of September 26, 2020. Amortization of capitalized contract costs for the three and six months ended September 26, 2020 was immaterial.
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SEGMENT REPORTING AND GEOGRAPHIC INFORMATION |
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Segments, Geographical Areas [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING AND GEOGRAPHIC INFORMATION | SEGMENT REPORTING AND GEOGRAPHIC INFORMATION The Company's Chief Executive Officer is identified as its Chief Operating Decision Maker ("CODM"). The CODM has organized the Company, manages resource allocations and measures performance among its two operating segments — Products and Services. The Products segment includes the Company's Headsets, Voice and Video product lines. The Services segment includes maintenance support on hardware devices as well as professional, managed and cloud services and solutions. In managing the two operating segments the CODM uses information about their revenue and gross margin after adjustments to exclude certain non-cash transactions and activities that are not reflective of the Company's ongoing or core operations as further described below. The CODM does not review asset information by segment. Purchase accounting amortization: Represents the amortization of purchased intangible assets recorded in connection with the Acquisition of Polycom. Deferred revenue purchase accounting: Represents the impact of fair value purchase accounting adjustments related to deferred revenue recorded in connection with the Acquisition of Polycom. The Company's deferred revenue primarily relates to Service revenue associated with non-cancelable maintenance support on hardware devices which are typically billed in advance and recognized ratably over the contract term as those services are delivered. This adjustment represents the amount of additional revenue that would have been recognized during the period absent the write-down to fair value required under purchase accounting guidelines. Acquisition and integration fees: Represents charges incurred in connection with the Acquisition and integration of Polycom such as system implementations, legal and accounting fees. Stock compensation expense: Represents the non-cash expense associated with the Company's issuance of common stock and share-based awards to employees and non-employee directors. The following table presents segments results for revenue and gross margin, as reviewed by the CODM, and their reconciliation to the Company's condensed consolidated GAAP results:
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SUBSEQUENT EVENTS |
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Sep. 26, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSNone. |
BASIS OF PRESENTATION (Policies) |
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Sep. 26, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | In the opinion of management, the accompanying unaudited condensed consolidated financial statements ("financial statements") of Plantronics, Inc. ("the Company") have been prepared on a basis materially consistent with the Company's March 28, 2020 audited consolidated financial statements and include all adjustments, consisting of normal recurring adjustments, necessary to fairly state the information set forth herein. Certain information and footnote disclosures normally included in financial statements prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to interim financial information and in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2020, which was filed with the SEC on June 8, 2020. The results of operations for the interim period ended September 26, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year or any future period.The financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. |
Fiscal period | The Company’s fiscal year ends on the Saturday closest to the last day of March. The Company’s current and prior fiscal years end on March 27, 2021 and March 28, 2020, respectively, and both consist of 52 weeks. The Company’s results of operations for the three and six months ended September 26, 2020 and September 28, 2019 both contain 13 weeks. Risks and uncertainties As described in the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2020, which was filed with the SEC on June 8, 2020, the Company is subject to a greater degree of uncertainty than normal in making the judgments and estimates needed to apply its significant accounting policies as a result of the COVID-19 pandemic. The Company continues to assess various accounting estimates and other matters in context to the unknown future impacts of COVID-19 using information that is reasonably available as of the issuance date of the condensed consolidated financial statements. The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on its customers and suppliers, all of which are uncertain and cannot be predicted. As of the date of issuance of these condensed consolidated financial statements, the extent to which the pandemic may materially impact the Company's financial condition, liquidity, or results of operations is uncertain.
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CASH, CASH EQUIVALENTS, AND INVESTMENTS (Tables) |
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CASH, CASH EQUIVALENTS AND INVESTMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents, and Investments | The following tables summarize the Company’s cash, cash equivalents, and investments’ adjusted cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category recorded as cash and cash equivalents, and short-term investments as of September 26, 2020 and March 28, 2020 (in thousands):
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DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable, net | Accounts receivable, net:
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Inventory, net | Inventory, net:
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Accrued liabilities | Accrued Liabilities:
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Changes in the warranty obligation | Changes in the warranty obligation during the six months ended September 26, 2020 and September 28, 2019 were as follows:
(1) Includes both short-term and long-term portion of warranty obligation; the prior table shows only the short-term portion included in accrued liabilities on the Company's condensed consolidated balance sheet. The long-term portion is included in other long-term liabilities.
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GOODWILL AND PURCHASED INTANGIBLE ASSETS (Tables) |
3 Months Ended | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 27, 2020 |
Sep. 26, 2020 |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill by segment | The changes in the carrying amount of goodwill allocated to the Company's reporting segments for the periods ended September 26, 2020 and March 28, 2020 are as follows:
(1) Represents measurement period adjustments.
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Schedule of Intangible Assets and Goodwill | As of September 26, 2020, and March 28, 2020, the carrying value of other intangibles, is as follows:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | As of September 26, 2020, expected amortization expense for other intangible assets for each of the next five years and thereafter is as follows:
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COMMITMENTS AND CONTINGENCIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 27, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments under non-cancelable operating leases as of September 26, 2020 were as follows:
(1) The weighted average remaining lease term was 4.4 years as of September 26, 2020. (2) The weighted average discount rate was 4.8% as of September 26, 2020.
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DEBT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Debt at Fair Value | The estimated fair value and carrying value of the Company's outstanding debt as of September 26, 2020 and March 28, 2020 were as follows:
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Summary of Debt Redemption | The Company may redeem all or a part of the 5.50% Senior Notes, upon not less than 30 or more than a 60-day notice; however, the applicable redemption price is the principal plus a premium which declines over time as specified in the applicable indenture, together with accrued and unpaid interest. |
RESTRUCTURING AND OTHER RELATED CHARGES (CREDITS) (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The Company's restructuring liabilities as of September 26, 2020 is as follows (amounts in thousands):
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STOCK-BASED COMPENSATION (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense Included in Statements of Operations | The following table summarizes the amount of stock-based compensation included in the condensed consolidated statements of operations:
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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income | The components of accumulated other comprehensive income ("AOCI"), net of immaterial tax effects, are as follows:
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DERIVATIVES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Outstanding Derivative Contracts | The gross fair value of the Company's outstanding derivative contracts at the end of each period was as follows:
(1) Short-term derivative assets are recorded in "other current assets" and long-term derivative assets are recorded in "deferred tax and other assets". As of September 26, 2020, the portion of derivative assets classified as long-term was immaterial. (2) Short-term derivative liabilities are recorded in "accrued liabilities" and long-term derivative liabilities are recorded in "other long-term liabilities". As of September 26, 2020, the portion of derivative liabilities classified as long-term was $5.5 million.
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Notional Value of Outstanding Foreign Exchange Currency Contracts | The following table summarizes the notional value of the Company’s outstanding foreign exchange currency contracts and approximate U.S. Dollar ("USD") equivalent at September 26, 2020:
The notional value of the Company's outstanding EUR and GBP option and forward contracts at the end of each period was as follows:
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Effect of Non-Designated Derivative Contracts Recognized in Interest and Other Income, Net | The effect of non-designated derivative contracts recognized in other non-operating income and (expense), net in the condensed consolidated statements of operations was as follows:
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Reclassification out of Accumulated Other Comprehensive Income | The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three and six months ended September 26, 2020 and September 28, 2019:
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COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings per Common Share | The following table sets forth the computation of basic loss per common share for the three and six months ended September 26, 2020, and September 28, 2019:
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REVENUE AND MAJOR CUSTOMERS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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REVENUE AND MAJOR CUSTOMERS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Revenues by Product Group | The following table disaggregates revenues by major product category for the three and six months ended September 26, 2020 and September 28, 2019:
1 As announced on February 4, 2020, the Company entered into a definitive agreement with Nacon S.A. and closed the transaction on March 19, 2020, completing the sale of the Company's Consumer Gaming assets for a net amount that is not material to the Company's condensed consolidated financial statements. The remaining consumer headsets are included in the Company's Enterprise products and all prior periods have been reclassified to conform to current presentation. 2 Categories were introduced with the acquisition of Polycom on July 2, 2018, and amounts are presented net of purchase accounting adjustments.
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Net Revenues by Geography | The following table presents net revenues by geography:
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Schedule Of Revenue Performance Obligations [Table Text Block] | The table below represents aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of September 26, 2020:
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SEGMENT REPORTING AND GEOGRAPHIC INFORMATION (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 26, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments, Geographical Areas [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Revenue from Segments to Consolidated | The following table presents segments results for revenue and gross margin, as reviewed by the CODM, and their reconciliation to the Company's condensed consolidated GAAP results:
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DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS - Accounts Receivable, net (Details) - USD ($) $ in Thousands |
Sep. 26, 2020 |
Mar. 28, 2020 |
---|---|---|
Accounts receivable, net [Line Items] | ||
Accounts receivable | $ 326,062 | $ 350,642 |
Accounts receivable, net | 239,479 | 246,835 |
Provision for promotions, rebates and other [Member] | ||
Accounts receivable, net [Line Items] | ||
Accounts receivable, reserves | (84,823) | (101,666) |
Provisions for doubtful accounts and sales allowances [Member] | ||
Accounts receivable, net [Line Items] | ||
Accounts receivable, reserves | $ (1,760) | $ (2,141) |
DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS - Financing Agreement (Details) - USD ($) $ in Millions |
Sep. 26, 2020 |
Mar. 28, 2020 |
Sep. 28, 2019 |
---|---|---|---|
Balance Sheet Related Disclosures [Abstract] | |||
Accounts Receivable Financing, Gross | $ 23.6 | $ 44.9 | |
Transfer of Financial Assets Accounted for as Sales, Amount Derecognized | 23.6 | $ 27.9 | |
Accounts Receivable Financing, Current | 13.0 | $ 22.5 | |
Transfers Accounted for as Secured Borrowings, Assets, Carrying Amount | $ 13.0 | $ 16.5 |
DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS - Inventory, net (Details) - USD ($) $ in Thousands |
Sep. 26, 2020 |
Mar. 28, 2020 |
---|---|---|
Inventory, Net [Abstract] | ||
Raw materials | $ 75,440 | $ 97,371 |
Work in process | 4,790 | 459 |
Finished goods | 103,406 | 66,697 |
Inventory, net | $ 183,636 | $ 164,527 |
DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS - Accrued Liabilities (Details) - USD ($) $ in Thousands |
Sep. 26, 2020 |
Mar. 28, 2020 |
---|---|---|
Accrued Liabilities [Abstract] | ||
Short term deferred revenue | $ 144,383 | $ 144,040 |
Employee compensation and benefits | 61,956 | 48,153 |
Operating lease liabilities, current | 21,032 | 22,517 |
Warranty obligation | 16,006 | 12,772 |
Provision for returns | 14,211 | 20,146 |
Accrued interest | 14,099 | 14,617 |
Marketing incentives liabilities | 13,430 | 9,708 |
Derivative liabilities | 12,541 | 12,840 |
Income tax payable | 10,839 | 20,725 |
VAT/Sales tax payable | 10,223 | 9,673 |
Accrued other | 54,738 | 58,475 |
Accrued liabilities | $ 373,458 | $ 373,666 |
DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS - Warranty Obligation (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
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Changes in the Warranty Obligation [Roll Forward] | ||
Warranty obligation at beginning of period | $ 15,261 | $ 17,984 |
Warranty provision related to products shipped | 13,488 | 9,573 |
Deductions for warranty claims processed | (7,981) | (9,841) |
Adjustments related to preexisting warranties | (2,365) | (1,916) |
Warranty obligation at end of period | $ 18,403 | $ 15,800 |
GOODWILL AND PURCHASED INTANGIBLE ASSETS (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|---|
Sep. 26, 2020
USD ($)
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Mar. 28, 2020
USD ($)
unit
|
Sep. 28, 2019
USD ($)
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Sep. 26, 2020
USD ($)
|
Sep. 28, 2019
USD ($)
|
Dec. 28, 2019
unit
|
Mar. 28, 2020
USD ($)
|
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||
Number of Reporting Units | unit | 4 | 1 | |||||
Goodwill, Impairment Loss | $ 483,700 | $ 323,088 | |||||
Amortization of Intangible Assets | $ 31,400 | $ 46,000 | $ 63,800 | $ 91,300 |
GOODWILL AND PURCHASED INTANGIBLE ASSETS Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 26, 2020 |
Mar. 28, 2020 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2021 (remaining six months) | $ 61,088 | |
2022 | 113,858 | |
2023 | 111,232 | |
2024 | 65,936 | |
2025 | 21,688 | |
Thereafter | 29,308 | |
Finite-Lived Intangible Assets, Net | $ 403,110 | $ 466,915 |
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands |
Sep. 26, 2020
USD ($)
|
---|---|
Loss Contingencies [Line Items] | |
Operating Lease, Weighted Average Remaining Lease Term | 4 years 4 months 24 days |
Operating Lease, Weighted Average Discount Rate, Percent | 4.80% |
Unconditional purchase obligations | $ 420,400 |
Liability [Member] | |
Loss Contingencies [Line Items] | |
2021 (remaining six months) | 12,014 |
2022 | 21,022 |
2023 | 8,559 |
2024 | 6,845 |
2025 | 5,572 |
Thereafter | 16,215 |
Total lease payments | 70,227 |
Less: imputed interest | (8,036) |
Operating lease, liability | $ 62,191 |
RESTRUCTURING AND OTHER RELATED CHARGES (CREDITS) RESTRUCTURING AND OTHER RELATED CHARGES (CREDITS) - Restructuring Liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Restructuring and Related Activities [Abstract] | ||||
Severance | $ 881 | $ 77 | $ 23,192 | $ 13,772 |
Facility | (156) | 0 | 1,642 | 0 |
Other (1) | 867 | 1,037 | 2,308 | 6,867 |
Non-cash charges (2) | 4,578 | 4,733 | 8,358 | 4,733 |
Total restructuring and other related charges | $ 6,170 | $ 5,847 | $ 35,500 | $ 25,372 |
COMMON STOCK REPURCHASES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
Sep. 26, 2020 |
Sep. 28, 2019 |
Nov. 28, 2018 |
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Equity [Abstract] | |||||
Number of shares authorized to be repurchased | 1,700,000 | 1,700,000 | 1,000,000 | ||
Remaining shares authorized for repurchase under program | 1,369,014 | 1,369,014 | |||
Value of shares withheld in satisfaction of employee tax obligations | $ 300 | $ 700 | $ 3,049 | $ 9,281 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands |
Sep. 26, 2020 |
Mar. 28, 2020 |
---|---|---|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated other comprehensive loss | $ (9,650) | $ (13,582) |
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated unrealized gain (loss) on cash flow hedges | (14,265) | (18,197) |
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated foreign currency translation adjustments | 4,615 | 4,615 |
AOCI Attributable to Parent [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated other comprehensive loss | $ (9,650) | $ (13,582) |
DERIVATIVES (Details 2) - 6 months ended Sep. 26, 2020 € in Thousands, £ in Thousands, $ in Thousands |
EUR (€) |
USD ($) |
GBP (£) |
---|---|---|---|
Foreign Exchange Forward, EURO [Member] | |||
Derivative [Line Items] | |||
Notional amount of contracts | € 50,800 | $ 59,059 | |
Position | Sell EUR | ||
Maturity | 1 month | ||
Foreign Exchange Forward, GBP [Member] | |||
Derivative [Line Items] | |||
Notional amount of contracts | $ 4,574 | £ 3,600 | |
Position | Sell GBP | ||
Maturity | 1 month |
DERIVATIVES (Details 3) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Not Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Gain (loss) on foreign exchange contracts | $ (1,815) | $ 3,610 | $ (2,733) | $ 3,321 |
DERIVATIVES (Details 4) € in Millions, £ in Millions |
Sep. 26, 2020
EUR (€)
|
Sep. 26, 2020
GBP (£)
|
Mar. 28, 2020
EUR (€)
|
Mar. 28, 2020
GBP (£)
|
---|---|---|---|---|
Option contracts [Member] | ||||
Derivative [Line Items] | ||||
Notional amount of contracts | € 60.7 | £ 12.3 | € 67.0 | £ 18.4 |
Forward contracts [Member] | ||||
Derivative [Line Items] | ||||
Notional amount of contracts | € 51.8 | £ 11.0 | € 50.2 | £ 18.5 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | (29.00%) | 13.70% | 0.20% | 14.20% |
Net deferred tax assets | $ 86.3 | $ 86.3 | ||
Unrecognized tax benefits | $ 28.8 | $ 37.2 | $ 28.8 | $ 37.2 |
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Numerator: | ||||
Net loss | $ (13,405) | $ (25,910) | $ (88,420) | $ (70,781) |
Denominator: | ||||
Weighted average common shares-basic (in shares) | 40,970 | 39,584 | 40,715 | 39,411 |
Weighted average common shares-diluted (in shares) | 40,970 | 39,584 | 40,715 | 39,411 |
Basic earnings (loss) per common share (in dollars per share) | $ (0.33) | $ (0.65) | $ (2.17) | $ (1.80) |
Diluted earnings (loss) per common share (in dollars per share) | $ (0.33) | $ (0.65) | $ (2.17) | $ (1.80) |
Potentially dilutive securities excluded from diluted earnings per common share because their effect is anti-dilutive | 1,153 | 1,758 | 1,337 | 912 |
SEGMENT REPORTING AND GEOGRAPHIC INFORMATION - Narrative (Details) |
6 Months Ended |
---|---|
Sep. 26, 2020
segment
| |
Segments, Geographical Areas [Abstract] | |
Number of operating segments | 2 |
SEGMENT REPORTING AND GEOGRAPHIC INFORMATION - Segment Revenue and Gross Margin Reconciliation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 26, 2020 |
Sep. 28, 2019 |
Sep. 26, 2020 |
Sep. 28, 2019 |
|
Segment Reporting, Asset Reconciling Item [Line Items] | ||||
Net revenues | $ 410,969 | $ 461,709 | $ 766,689 | $ 909,476 |
Gross profit | 180,746 | 206,071 | 337,078 | 418,717 |
Depreciation, as reviewed by CODM | 3,600 | 3,600 | 6,900 | 7,300 |
Operating Segments | ||||
Segment Reporting, Asset Reconciling Item [Line Items] | ||||
Total segment revenues as reviewed by CODM | 415,206 | 470,233 | 776,008 | 930,159 |
Gross profit | 202,901 | 246,419 | 383,386 | 503,160 |
Purchase accounting amortization | (17,176) | (30,716) | (35,414) | (60,716) |
Segment Reconciling Items | ||||
Segment Reporting, Asset Reconciling Item [Line Items] | ||||
Deferred revenue purchase accounting | (4,237) | (8,524) | (9,319) | (20,683) |
Integration and rebranding costs | 0 | (111) | 0 | (1,069) |
Stock-based compensation | $ (742) | $ (997) | $ (1,575) | $ (1,975) |
Label | Element | Value |
---|---|---|
Poly Segment [Member] | ||
Goodwill | us-gaap_Goodwill | $ 0 |
Products Segment [Member] | ||
Goodwill | us-gaap_Goodwill | 628,968,000 |
Services Segment [Member] | ||
Goodwill | us-gaap_Goodwill | $ 167,248,000 |
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