SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

3 Months Ended

Jul. 02, 2022

Segments, Geographical Areas [Abstract]

SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

SEGMENT REPORTING

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

In managing the 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 costs: Represents charges incurred in connection with the pending Merger with HP.

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

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

	Three Months Ended
(in thousands)	July 2, 2022		July 3, 2021
Segment revenues, as reviewed by CODM
Products	$	364,299	$	371,379
Services	51,588		61,053
Total segment revenues, as reviewed by CODM	$	415,887	$	432,432
Segment gross profit, as reviewed by CODM
Products	$	151,095	$	153,548
Services	35,756		40,266
Total segment gross profit, as reviewed by CODM	$	186,851	$	193,814

	Three Months Ended
(in thousands)	July 2, 2022		July 3, 2021
Total segment revenues, as reviewed by CODM	$	415,887	$	432,432
Deferred revenue purchase accounting	(328)		(1,260)
GAAP net revenues	$	415,559	$	431,172
Total segment gross profit, as reviewed by CODM (1)	$	186,851	$	193,814
Purchase accounting amortization	(16,472)		(16,238)
Deferred revenue purchase accounting	(328)		(1,260)
Acquisition costs	(507)		—
Stock-based compensation	(1,503)		(1,127)
GAAP gross profit	$	168,041	$	175,189

(1) Includes depreciation expense of $3.2 million and $3.6 million for the three months ended July 2, 2022 and July 3, 2021, respectively.