Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

 

 

 

 

Poly is a leading global communications technology company that designs, manufactures, and markets integrated communications and collaboration solutions for professionals. We offer a comprehensive selection of premium audio and video products designed to work in an era where work is no longer a place and enterprise work forces are increasingly distributed. Our products and services are designed and engineered to connect people with high fidelity and incredible clarity. They are professional-grade, easy to use, and work seamlessly with major video-video and audio-conferencing platforms.

All of our 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.

We sell our products through a well-developed global network of distributors and channel partners, including value-added resellers, integrators, direct marketing resellers, and service providers, as well as through both traditional and online retailers,

The Company was originally founded and incorporated as Plantronics in 1961 and became a public company in 1994. In March 2019, the Company changed the name under which it markets itself to Poly. The Company is incorporated in the State of Delaware and iswas listed on the New York Stock Exchange ("NYSE"(“NYSE”) originally under the ticker symbol "PLT." On May 13, 2021, the“PLT.” The Company issued a press release announcing a change inchanged our symbol on the NYSE from "PLT" to "POLY" effective at the open of market trading on May 24, 2021.

Our principal executive office is located at 345 Encinal Street, Santa Cruz, California. Our telephone number is (831) 420-3002.  Our Company website is www.poly.com.

In the Investor Relations section of our website, we provide free access to the following filings: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. This access is provided directly or through a link on our website shortly after these documents are electronically filed with, or furnished to, the Securities and Exchange Commission.SEC. In addition, documents regarding our corporate governance, code of conduct, and the charters of the standing committees of our Board of Directors are also accessible in the Investor Relations section of our website.

We believe the end market for professional-grade communications equipment is no longer “home” or “office.” It is “anywhere” and “everywhere,” as the digital transformation of the enterprise continues, creating a corresponding increase in the volume and sophistication of communications requirements, especially high-quality video and audio. Existing trends toward remote and hybrid work and the increasing adoption of video communications have dramatically accelerated, and the number of communications usage scenarios and product needs have permanently multiplied:

We leverage state-of-the-art technologies in our solutions that can be easily used in conjunction with our strategic partners’ tools and common communication platforms in both personal and enterpriseoffice settings. The increased adoption of technologies such as UC&C, Bluetooth, Voice over Internet Protocol (“VoIP”), Digital Signal Processing (“DSP”), Digital Enhanced Cordless Telecommunications (“DECT”), and Video-as-a-Service (“VaaS”), each of which is described below, has contributed to increased demand for our solutions:

We serve these markets through our product categories listed below:

 

 

We compete broadly in the UC&C market, where we have multiple competitors (depending on the product line) on a global basis. These competitors include Avaya Inc., Aver Information, Inc., Cisco Systems, Inc., ClearOne Communications, Inc.,DTEN, EPOS Group A/S, GN Netcom,Group, Grandstream Networks, Inc., Huawei Technologies Co. Ltd., LifeSize Inc.,Huddly, Logitech International S.A., Neatframe, Inc., Sennheiser Electric Corp., Snom Technology GmbH, Vidyo, Inc.,Vaddio, LLC, Yamaha Corporation/Revolabs, Inc., Yealink Network Technology Co. Ltd., ZTE Corporation, and others. In some cases, we also cooperate and partner with these companies in programs and various industry initiatives. The market for our products is competitive and some of our competitors have greater financial resources than we do, as well as more substantial production, marketing, engineering, and other capabilities to develop, manufacture, market, and sell their products.

Our strategy of offering a best-in-class complete portfolio of UC&C Headset, Voice and Video endpointssolutions faces challenges from competitors, who can also create end-to-end device and service and endpoint solutions,offerings, as well as low costlow-cost competitors in specific categories, or other industry players, who are potentially able to develop unique technology or compete in a specific geography.

Some of our partners resell our maintenance and support services, while others sell their own branded services. To the extent that channel partners sell their own services, these partners compete with us; however, they typically purchase maintenance contracts from us to support these services. As we expand our professional services offering, we may compete more directly with partners in the future.

We believe the principal factors to be successful and competitive in each of the markets we serve are as follows:

We believe our products and strategy enable us to compete effectively based on these factors.

 

We conduct most of our research development, and engineeringdevelopment with an in-house staff and a limited use of contractors.  

During Fiscal Year 2021,2022, we developed and introduced innovative products that enabled us to better address changing customer demands and emerging market trends.  Our goal is to bring the right products to customers at the right time, utilizing best-in-class development processes.

 

The products we develop require significant technological knowledge and the ability to rapidly develop the products in intensely competitive and transforming markets. We believe our extensive technological knowledge and portfolio of intellectual property gives us a competitive advantage. We furthermore continually strive to improve the efficiency of our development processes through, among other things, strategic architecting, common platforms, and increased use of software and test tools.

 

We maintain a worldwide sales force to provide ongoing global customer support and service.  To support our partners in the enterprise market and their customers' needs, we have well-established, two-tiered distribution networks.

Our global channel network includes enterprise distributors, direct and indirect resellers, retailers, network and systems integrators, service providers, wireless carriers, and mass merchants.  

Our distributors, direct and indirect resellers, system integrators, managed service providers, e-commerce partners, telephony and computer equipment providers resellglobal channel network resells our commercial headsets, voice, and video endpoint products and related solutions and services. As we evolve into new markets and product categories, we expect to build relationships in new distribution and marketing models.go-to-market models that best serve our end user customers.

In addition, we have built a strong foundation of alliance partners, which allow existing and future distribution and reseller partners to sell into Microsoft, Zoom, Google, and other service provider environments. Our commercial distribution channel maintains an inventory of our products.  Our distribution of specialty products includes retail, government programs, customer service, hospitality and healthcare professionals. Poly branded headsets are sold through retailers to corporate customers, small businesses, and individuals who use them for a variety of personal and professional purposes. 

We continue to evaluate our logistics processes and implement new strategies to further reduce our transportation costs and improve lead-times to customers. Currently, we have distribution centers in the following locations:

With respect to the above locations, Thailand and the Czech Republic are third-party distribution centers. We operate the distribution centers in Mexico, China and the U.S.

 

We believe that backlog information is not material to understanding our overall business or estimating future performance and results due to the fact that sales of our products typically have relatively short lead-times. As a result of the COVID-19 pandemic and resulting global shelter-in-place orders creatingshift to a surge in the number of individuals working from home or from remote locations,hybrid work environment, we experienced an increase in demand and backlog.backlog, which was compounded by the effects of recent global supply-chain constraints. However, the backlog of unfulfilled orders is subject to rescheduling and in some cases may be subject to cancellation, especially as we manage through supply-chain constraints, including shortages in key components, such as semiconductor chips, and COVID-19.

 

 

Poly relies on our facility in Tijuana, Mexico and various original design and contract manufacturers in Asia to meet our manufacturing needs.

We source components for our products primarily from suppliers in Asia, Mexico, and the U.S., including semiconductor chips, electrical and mechanical components, and sub-assemblies. For most of our hardware products, we have existing alternate or

dual sources of supply or such sources are readily available. However, we do depend on sole sources for certain of our hardware products.

The combination of our manufacturing and distribution capabilities enables Poly to optimize labor and material costs, adapt to changing trade and tax considerations, strengthen the resilience of our supply chain, and enhance our ability to respond to customer needs.

 

As a public company with global operations, we are subject to various federal, state, local, and foreign laws and regulations that involve matters central to our business. These laws and regulations, which may differ among jurisdictions, include, among others, those related to financial and other disclosures, accounting standards, privacy and data protection, intellectual property, corporate governance, tax, government contracting, trade, antitrust, employment, immigration and travel, import/export, anti-corruption, consumer protection, national security, and environmental regulatory compliance. Many of these laws and regulations are still evolving and could be interpreted or applied in ways that could limit our business or require us to make certain fundamental and potentially detrimental changes to the products and services we offer. For example, the introduction of new products or services in our existing markets and the expansion of our business to other countries may subject us to additional laws and regulations, among others, resulting from the need to obtain additional licenses and approvals to conduct our businesses as envisioned. The processes by which regulatory approvals are obtained from the U.S. and foreign regulatory authorities to market and sell our products are complex, and may require a number of years, depending upon the type, complexity, and novelty of the product candidate, and involve the expenditure of substantial resources for research, development, and testing. Additionally, from time to time, we are also subject to a wide range of reporting requirements, certifications and compliance as prescribed by various federal and state governmental agencies. Expenditures relating to such regulations are made in the normal course of our business and are neither material nor place us at any competitive disadvantage. We do not currently expect that compliance with such laws will require us to make material additional expenditures, however, there is no assurance that existing or future laws and regulations applicable to our operations, products, and services will not have a material adverse effect on our business.

We also are subject to provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act intended to improve transparency and accountability concerning the supply of certain minerals originating from the conflict zones of the Democratic Republic of the Congo or adjoining countries. We incur costs to comply with the disclosure requirements of this law and other costs relating to the sourcing and availability of minerals used in our products.

We are also subject to laws and regulations governing data privacy in the U.S. and other jurisdictions, such as the General Data Protection Regulation (“GDPR”) in the European Union. Our customers can use certain of our product offerings that provide product management and analytics, such as Poly Lens, that collect, use, and store certain personally identifiable information (“PII”) regarding a variety of individuals in connection with their operations. National, state, and local governments and agencies in the countries in which we or our customers operate have adopted, are considering adopting, or may adopt laws and regulations regarding the collection, use, storage, transfer, processing, protection, and disclosure of PII obtained from individuals. Privacy and data protection laws are particularly stringent, and the costs of compliance with and other burdens imposed by such laws, regulations, and standards, or any alleged or actual violation, may limit the use and adoption of our products and services. Further, complying with privacy laws, regulations, and other obligations relating to privacy, data protection, and information security have caused and will continue to cause us to incur substantial operational costs and may require us to periodically modify our data handling practices. Moreover, compliance may impact demand for our offerings and force us to bear the burden of more onerous obligations in our contracts. Non-compliance could result in proceedings against us by governmental entities or others, could result in substantial fines or other liability, and may otherwise impact our business, financial condition, and operating results.

Our operations also are subject to numerous stringent and complex laws and regulations governing health and safety aspects of our operations, or otherwise relating to human health and environmental protection. In addition to environmental and worker safety regulations, we are subject to regulation by numerous other governmental regulatory agencies, including the U.S. Department of Labor and other state, local, and international bodies regulating worker rights and labor conditions. In addition, we are subject to certain requirements to contribute to retirement funds or other benefit plans and laws in some jurisdictions in which we operate restrict our ability to dismiss employees. Failure to comply with these laws or regulations or to obtain or comply with permits may result in the assessment of administrative, civil and criminal penalties, imposition of remedial or corrective action requirements, and the imposition of injunctions to prohibit certain activities or force future compliance.

Also, we are subject to a variety of laws and regulations relating to import and export controls. Regulations limiting or banning sales from or into certain countries, including China, or to certain companies, have impacted our ability to transact business. These laws and regulations are complex and may change or develop over time, sometimes with limited notice. We may incur significant expenditures in future periods related to compliance, which could restrict our business operations. For example, we are subject to the regulations of the U.S. and certain other jurisdictions in selling or shipping our products and technology outside the U.S. and to foreign nationals, including tariffs, trade protection measures, import or export licensing requirements, sanctions, and other trade barriers, such as U.S. Export Administration regulations and “Entity List” restrictions imposed by the Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce. In this regard, the U.S. government recently imposed significant new tariffs on China related to the importation of certain product categories following the U.S. Trade Representative’s Section 301 investigation. In addition, effective June 29, 2020, BIS tightened export controls with respect to goods, software, and technology, including increasing the licensing requirements and due diligence expectations that apply to trade with, China, Russia, and Venezuela, when “military end users” or “military end uses” are involved. This rule expands the scope of the licensing requirement by redefining “military end use” more broadly and by increasing the number of products subject to the restriction. In addition, the White House, the Department of Commerce, and other executive branch agencies have implemented additional restrictions and may implement still further restrictions that would affect conducting business with certain Chinese companies. We cannot predict whether these rules and restrictions will be implemented and acted upon by the Biden administration, or modified, overturned, or vacated by legal action. Although we continue to work with our vendors to mitigate our exposure to current or potential tariffs, there can be no assurance that we will be able to offset any increased costs.

We are committed to creating the right kind of long-term impact in the world, not just because it matters to our employees, our customers, and our investors, but because it is part of who we are as a company. We know we are part of a larger global community and make decisions as good stewards of the earth, its resources, and its people.

Fiscal Year 2020 was an important year for us as we developed our newOur Corporate and Social Responsibility ("CSR"(“CSR”) strategy which focuses on the Environmental, Social and Governance (“ESG”) issues that we believe will positively impact our stakeholders and wider society and drive value for our business. The strategy focuses on three key priorities: delivering low carbon solutions, keeping people safe and secure, and being a destination employer. These three pillars are underpinned by strong governance and supported by our deeply-ingraineddeeply ingrained culture, values, and behaviors.

We also recognize that climate change is a global emergency that requires urgent action, and we may be subject to new and future requirements relating to climate change laws and regulations. Our California corporate offices have historically experienced, and are projected to continue to experience, climate-related events including wildfires and air quality impacts, power shut-offs associated with wildfire prevention, drought and water scarcity, and warmer temperatures. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver products and services to our customers and cause us to incur substantial expense.

Our goal is to deliver absolute emissions reductions across Poly, our products, and for our customers. Our new Low Carbon strategy reflects our commitments to measuring, monitoring, and reducing emissions from both our direct (Scopes 1 and 2) and indirect (Scope 3) operations. In Fiscal Year 2020, we made notable progress in understanding our carbon footprint by implementing a new carbon management software system that enables us to collect, understand, and manage our energy use and operational emissions under our direct control. For the first time, weWe are reporting on our progress and performance in reducing energy use and operational carbon emissions, which has been third-party verified. We will setOur goals for energy usage and direct operational emissions reduction targets this year, including a target dateare as follows: 100% renewable energy used across all global sites by 2030; Carbon neutral emissions for scopes 1 and plan for reaching2 by 2035; and net zero greenhouse gas emissions.carbon emissions for scope 3 by 2050.

We also are committed to sustainable product design and in Fiscal Year 2020 beganperform life-cycle assessments (LCA’s), which include detailed greenhouse gas ("GHG"(“GHG”) emissions profiles for each key stage of development on three of our most popular products. We align these assessments to best practice guidelines and standards including PAS 2050:2011, a publicly available specification that provides a recognized method for assessing the life-cyclelife cycle GHG emissions of products. We use the findings to identify emissions hotspots and improve design where possible.

COVID-19 has been a critical catalyst to changing working habits, and a massive accelerant to the digital transformation already reshaping the working world. It has transformed the way people communicate, dramatically reducing the need for travel in the process. Hundreds of thousands of customers, companies, and institutions around the world use Poly products to come together and collaborate as if they were in the same place. Not only does this save them time and money, but it drastically reduces their impacts on climate change from travel.

 

The future success of our company depends on our ability to engage, attract, hire, motivate, grow, retain, and further develop top talent, including highly-skilledhighly skilled technical, management, sales, and marketing personnel. Competition for such personneltalent is intense and the salary, benefits, and other costs to employ the right personnelpeople may make it difficult to achieve our financial goals. Consequently, our management team, with the support of our Board of Directors ("Board"(“Board”), have increased focus and efforts in this area, including efforts to raise our employees' ambitions and inspire them to do more and go further, striving to make Poly an inclusive, diverse, accessible, and safe workplace with opportunities for our employees to grow and develop in their careers, supported by contemporary working practices and strong compensation, benefits, and health and wellness programs.

We nurturefoster a culture of allyship and growth mindset and are united by our collective purpose and common set of organizational values that are core to our mission and culture. To do that, our employees must feel empowered to bring their authentic selves to work. We lead with inclusion and empower everyone to do their best work as their best selves, regardless of their sex, gender identity or expression, race, age, religious creed, national origin, physical or mental disability, ancestry, color, marital status, sexual orientation, military or veteran status, status as a victim of domestic violence, sexual assault or stalking, medical condition, accessibility needs, genetic information, or any other protected class or category recognized by individual countries laws.

Our employee resource groups (PRIDE, Women’s Leadership Group, Accessibility and Inclusion, Veterans, and Parents & Caregivers)Caregivers, and Hue (our under-represented minorities community)) are a critical force within Poly. They tell our story through events and experiences, play a key role in our recruitment strategy, drive an inclusive culture, and ensure that diversity is front and center at Poly.

To help us drive change and make sure the initiatives we create resonate across the globe in every country in which we operate, we created our IDEA Council in Fiscal Year 2021.Council. This global team collaborates to learn, create, strategize, and make sure our diversity and inclusion programs hit the mark with our employees around the world. They are our ambassadors for all things inclusion and diversity and are our agents of change.

We monitor our progress. We are setting aspirational goals for our executives and functions around changing their demographics using data to drive change. Poly has an organization-wide focus to improve recruitment and retention of women and ethnic minorities. As of April 3, 2021,2, 2022, Poly had the following attributes:

The health, safety, and wellness of our employees is a priority in which we continue to invest. These investments and the prioritization of employee health, safety (both physical and psychological), and wellness took oncontinued to be of particular significance also in Fiscal Year 20212022 in light of COVID-19. We provide our employees and their families with access to a variety of innovative, flexible, and convenient health and wellness programs. Program benefits are intended to provide protection and security, so employees can have peace of mind concerning events that may require time away from work or that may impact their financial well-being. Additionally, we provide programs to help support employee physical and mental health by providing tools and resources to help them improve or maintain their health status, encourage engagement in healthy behaviors, and offer choices where possible so they are customized to meet their needs and the needs of their families.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate, in compliance with government regulations. This includes having the vast majority of our employees work from home whenever possible, while implementing additional safety measures for employees continuing critical on-site work. A number of employees critical to maintaining our essential engineering, manufacturing, repair, and logistics functions have continued to work from Poly locations globally. To protect and support our essential team members, we have implemented health and safety measures that included maximizing personal workspaces, changing shift schedules, providing personal protective equipment (PPE), and instituting mandatory screening before accessing buildings, including enhanced safety measures in our Tijuana manufacturing facility, which included those measures noted above, as well as providing COVID-19 vaccines to our employees and their immediate families, as well as other workers, at our manufacturing facility on a voluntary basis free of charge, on-premises medical staff, private bus transportation to and from the facility, routine temperature screenings, and increased sanitation measures.

Our team is global, and we offer compelling global incentives to reinforce our leadership and performance-driven culture and attract and reward leading talent. We offer global competitive and meaningful total rewards programs that meet the diverse needs of our employees, while also reflecting local market practices.

Our total rewards approach is designed to deliver cash, equity, and benefit programs that are competitive with those offered by leading companies in the technology industry and reflect anticipated local market demands and evolving business needs. Other than the base salary program, all of our cash and equity programs are dependent upon the achievement of individual and company performance. In addition to competitive salaries and bonuses, we grant equity-based compensation to a significant portion of our employees. Equity serves as a key component in attracting, retaining, and motivating our employees. We also provide the opportunity for equity ownership through our employee stock purchase plan.

We provide competitivemarket aligned benefits that include retirement planning, health care, parental leave, flexible paid time off, and appreciation events for employees. In addition, we offer benefits to support our employees’ physical and mental health by providing tools and resources in areas such as digital training programs to help people improve mental wellbeing, flexible fitness platforms for physical activity, and telehealth services. We also offer a support platform for maternity and family benefits and a caregiver solution providing support for families of children with learning, social, or behavioral challenges.challenges in selected locations.

We offer flexible work/life programs that embrace and engage our diverse population. We offer a unique peer to peer recognition program that reinforces our culture, values, leadership and operating principles.

We offer learning and development opportunities that enable our workforce to acquire and expand skills and knowledge and have a meaningful and fulfilling career. To help employees succeed in their current roles, we provide formal training programs and curriculums in addition to on-the-job training. Our learning and development portal provides our employees with valuable resources such as a comprehensive online learning management program with training and development tools on a broad range of topics and skills.

We are committed to strong governance systems and policies that ensure fair, transparent and efficient business practices. Our Board has tasked its Nominating and Corporate Governance Committee (“NCG”), along with senior leadership and support of the full Board, with oversight responsibility for our ESG strategy and related initiatives. The NCG periodically receives updates from management on, and reviews, significant ESG and other corporate social responsibility and sustainability initiatives,

policies and practices, and makes recommendations to the Board as appropriate. We also review and seek input from our investment community on their views on sustainability and ESG. The NCG's oversight responsibility also includes reviewing shareholder proposals, if any, received on ESG matters, and providing recommendations to the Board on the Company’s response to such proposals, as well

We have adopted a Code of Conduct with annual trainings and provisions related to global ethical behavior and compliance with applicable laws, human rights, sustainability, diversity and inclusion, anti-corruption and anti-bribery regulations, along with enforcement and other dimensions of ethical conduct. We offer our employees and others the opportunity to report violations on an anonymous basis through a third-party hosted hotline, and our Code of Conduct expressly provides for non-retaliation for good faith reporting. We expect Poly employees, officers, directors, and contractors, as well as everyone working on our behalf worldwide, to adhere to these standards.

We also are committed to responsible manufacturing of our products and responsible sourcing of materials. We require our suppliers to share in this commitment and have established the Supplier Code of Conduct, which outlines our expectations of Poly suppliers in conducting business in a legal, ethical, and responsible manner.

Set forth in the table below is certain information regarding the executive officers of the Company as of April 3, 2021:2, 2022:

Mr. Wiese joined the Company in January 2020 as Executive Vice President, Chief Revenue Officer. Prior to joining the Company, Mr. Wiese served as the President of Global Sales and Service of Blackberry Limited, a smartphone hardware and service provider, from 2015 until March 2019. While at Blackberry, Mr. Wiese was responsible for leading the company’s enterprise software business. Prior to that, Mr. Wiese held two positions at Cisco Systems, Inc., a provider of telecommunications equipment and services, serving as its Vice President, Advanced Technology Sales, North America from 2002 through 2009, and then as its Senior Vice President World Wide Collaboration Sales, from 2011 until 2014. Earlier in his career, Mr. Wiese has also held key positions at Apple, Avaya, Lucent Technologies Inc. and Texas Instruments. He holds a Bachelor of Science degree in business from the Spears School of Business at Oklahoma State University.

Mr. PuorroHoffman joined the Company in January 2021 as Executive Vice President, General Manager Group Systems in December 2018 and in May 2019 was promoted to Executive Vice President, General Manager, Products.Chief Supply Chain Officer. Prior to joining the Company, Mr. PuorroHoffman served in a variety of ever increasing roles at Cisco Systems, Inc., a global provider of networking equipment, during two separate periods from 2000 to 2007 and thereafter from September 2009 to December 2018.  During his most recent employment ending in 2018, Mr. Puorro was employed as Vice President and General Manager of Unified Communications Technology GroupSupply Chain for Lenovo's Mobile Phone business unit from October 2014June 2016 to December 2018, Senior Director2020. Before joining Lenovo, Mr. Hoffman held positions of Engineeringincreased responsibility at Motorola, Google, Continental Automotive Group and Del Monte Foods. Mr. Hoffman holds a masters degree in business administration and Bachelor of Science degree in Business Management from August 2011 to September 2014, and Senior Director, Product Management/Development from October 2009 to July 2011.  Mr. Puorro has also worked at Microsoft Corporation, a developer of computer software, consumer electronics, personal computers, and related services from August 2007 to September 2009.

Executive officers serve at the discretion of the Board. There are no family relationships between any of the directors and executive officers of the Company.

 

The following is a summary of the material risks and uncertainties we have identified, which should be read in conjunction with the more detailed description of each risk factor contained below.

ITEM 2.  PROPERTIES

We believe our existing facilities, including both owned and leased properties, are in good condition and suitable for our current business needs. We also believe that our future growth can be accommodated by our current facilities or by leasing additional space if necessary.

The graph below compares the annual percentage change in the cumulative return to the stockholders of our common stock with the cumulative return of the NASDAQ/NYSE American/NYSE (US Companies) index and a peer group index for the period commencing on the morning of April 2, 20161, 2017 and ending on April 3, 2021.2, 2022. The information contained in the performance graph shall not be deemed to be "soliciting material" or be "filed" with the Securities and Exchange Commission,SEC, nor shall such information be incorporated by reference into any future filing under the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

The graph assumes that $100 was invested on the morning of April 2, 20161, 2017 in our common stock (based on price at the close of trading on April 1, 2016)March 31, 2017) and in each index (based on prices at the close of trading on April 1, 2016)March 31, 2017), and that dividends, if any, were reinvested. The measurement date used for our common stock is the last day of our fiscal year for each period shown.

Past performance is no indication of future value and stockholder returns over the indicated period should not be considered indicative of future returns.

 

This item is no longer required as weData responsive to Item 6 have elected to early adopt the changesnot been presented in accordance with amendments to Item 301 of Regulation S-K contained in SEC Release No. 33-10890.

 

Poly is a leading global communications technology company that designs, manufactures, and markets integrated communications and collaboration solutions for professionals. We offer premium audio and video products designed to work in an era where work is no longer a place, and enterprise work forces are increasingly distributed. Our products and services are designed and engineered to connect people with high fidelity and incredible clarity. They are professional-grade, easy to use, and work seamlessly with major video- and audio-conferencing platforms. Our major product categories are Headsets, Video, Voice, Video, and Services. Headsets include wired

On March 25, 2022, the Company entered into an Agreement and wireless communication headsets; Voice, includes open SIPPlan of Merger (the “Merger Agreement”) with HP Inc. (“HP”) and native ecosystem desktop phones,Prism Subsidiary Corp. (“Merger Sub”), a wholly-owned subsidiary of HP, providing for Poly's acquisition in an all-cash transaction for $40 per share by way of a merger of Merger Sub with and into Poly (the “Merger”), with Poly continuing as well as conference room phones; Video includes video conferencing solutionsa wholly-owned subsidiary of HP. The Merger is expected to occur, subject to Poly stockholder approval, required regulatory clearances and peripherals, such as cameras, speakers, and microphones. Allthe satisfaction of our solutions are designed to integrate seamlessly with the platform and services of our customers choiceother customary closing conditions, in a wide range of UC&C, UCaaS, and VaaS environments. Our cloud management and analytics software enables IT administrators to configure and update firmware, monitor device usage, troubleshoot, and gain deep understanding of user behavior. In addition, we have 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. calendar year 2022.

In addition, COVID-19 has continued to spread globally and continues to add uncertainty and influence global economic activity, the global supply chain, and financial markets. The impact of the pandemic on our operations has varied by local conditions, government mandates, and business limitations, including travel bans, remote work, and other restrictions.

The COVID-19 pandemic led to a massive increase in remote work. As a result, during Fiscal Year 20212020 we experienced elevated demand for certain enterprise Headsets and Video devices and a decline in demand for our Voice products and associated Services, as companies continued to shiftshifted from in-office to work-from-home arrangements for many of their office workers. The accelerationBeginning in customer and partner demand for these products to support remote work environments, remote learning, and telemedicine opportunities led to increased sales and operating income. During the fourth quarter of Fiscal Year 2021 and continuing throughout Fiscal Year 2022, we experienced elevated

demand for certain Video and Voice devices as companies began to shift from work-from-home arrangements to hybrid work models.

However, the impact of COVID-19 is fluid and uncertain, and it has caused, and may continue to cause, various negative effects as we continue to experience periodic constraints in our supply chain, specifically the sourcing of certain components and raw materials, and increased logistics costs and suffer other adverse effects on our gross margins to meet customer demand, for specific Headsets and Video products.which, in turn, adversely impacts our gross margins. As a result, the impact of COVID-19 to date has had mixed effects on our results of operationsoperations.

The full extent and we expect supply chain constraintsduration of the impact of the COVID-19 pandemic on our business continues to limit our abilitybe uncertain and difficult to meet demand in the short-term.

In responding to this pandemic, employee safety continues to be a critical concern for Poly and we have taken measures to protect our employees globally by adherence to public safety and shelter in place directives, physical distancing protocols within offices and manufacturing facilities, providing personal protective equipment, including face masks and hand sanitizers, conducting routine sanitation of facilities, requiring health monitoring before entry into Poly facilities and restricting the number of visitors to our sites. The safety protocols implemented globally meet or exceed current regulations,regulations; however, we continue to monitor employees’ safety and evolving regulatory requirements. Although our manufacturing facility remains open and certain office employees may utilize our offices when necessary, the majority of all non-factory employees continue to work from home, using headsets and other Poly-issued equipment.

Total Net Revenuesnet revenues for Fiscal Year 20212022 were $1.7 billion, an increase$1,681.1 million, a decrease of $30.6$46.5 million or 1.8%2.7%, compared to Fiscal Year 2020,2021, primarily driven by decreased sales in our Headsets and Services product categories, partially offset by increased sales in our Video and enterprise HeadsetVoice product categories, partially offset by decreases in Voice and consumer Headset sales.categories.

Product Gross Margingross margin for Fiscal Year 2021 increased2022 decreased from 26.7%41.3% in the prior year to 41.3%37.0%, primarily due to the one-time long-lived asset impairment of existing technology related to our Voice products taken in the fourth quarter of Fiscal Year 2020 and the associated reduction in intangible asset amortization expense, partially offset by COVID-19 related incremental manufacturing and logistics costs and Video product transitions.

During the fourth quarter of Fiscal Year 2020, the Company made key changes to its executive management. We realigned our segment reporting structure commensurate with this change. The Company’s reportable segments are consistent with how the segments report to and are managed by Poly’s Chief Executive Officer (the Chief Operating Decision Maker). As a result, the Company’s reportable segments consist of Products and Services. Our Products reportable segment consists ofincludes the Headsets, Voice, and Video product categories and ourlines. Our Services reportable segment consists ofincludes maintenance support on hardware devices, as well as professional, managed, and cloud services and solutions. Prior periods have been reclassified to conform to current reportable segment presentation.

The following table sets forth Total Net Revenuestotal net revenues by reportable segment for Fiscal Years 2022, 2021, 2020, and 2019:2020:

Total Product Net Revenues increasedproduct net revenues decreased in Fiscal Year 20212022 compared to the prior fiscal year primarily due to the following:

Total Services Net Revenuesservices net revenues decreased in Fiscal Year 20212022 compared to the prior fiscal year primarily due to the continued Video product mix shift from legacy Platform and Telepresence to recently launched Studio video bars, which are less complex, easier to install and operate, and carry optional service contracts. The decrease was partially offset by the impact of the deferred revenue fair value adjustment resulting from the Acquisition.

The following table sets forth Total Net Revenuestotal net revenues by geographic region for Fiscal Years 2022, 2021, 2020, and 2019:2020:

ComparedU.S. total net revenues increased in Fiscal Year 2022 as compared to the same prior fiscal year period, U.S. Net Revenues for Fiscal Year 2021 decreased primarily due to declinesincreased net sales in ourthe Video and Voice product revenues, which was a result of COVID-19 shift in demand toward "work from home" products. Our consumer Headset product revenues declined driven by our decision to eliminate lower margin consumer products from our portfolio, including the Fiscal Year 2020 sale of gaming Headset assets. These declines werecategories, partially offset by growthdecreased net sales in our Video productthe Services category. U.S. Headsets total net revenues as new products ramp and an increasewere materially unchanged in sales of our enterprise Headset products.Fiscal Year 2022 compared to the prior fiscal year.

Cost of Revenuesrevenues consists primarily of direct and contract manufacturing costs, amortization of acquired technology, freight, warranty, charges for excess and obsolete inventory, depreciation, duties, royalties, and overhead expenses.

ComparedGross profit as a percentage of total product net revenues decreased in Fiscal Year 2022 as compared to the prior fiscal year, Gross Profit as a percentage of Total Product Net Revenues increased in Fiscal Year 2021, due primarily to the one-time long-lived asset impairment of existing technology related to our Voice products taken in the fourth quarter of Fiscal Year 2020 and the associated reduction in intangible asset amortization expense. Gross Profit as a percentage of Total Product Net Revenues also increased due to lower inventory reserve charges in Fiscal Year 2021 as compared to Fiscal Year 2020, primarily due to the charges recorded during the third quarterincreased component costs, unfavorable product mix, and increased transportation costs. The increase in component costs was primarily driven by increased spot market purchases of Fiscal Year 2020 in connection with the optimizationcertain key components, such as semiconductor chips, due to global supply shortages. Transportation costs increased as a result of high global demand and limited capacity of air freight carriers and increased air freight usage to mitigate longer component lead times to meet our consumer product portfolio, which did not recur. Partially offsetting these favorable items was COVID-19 related incremental manufacturing and logistics costs and Video product transitions.commitments to customers.

Gross Profitprofit as a percentage of Total Services Net Revenues increased primarily duetotal services net revenues was materially unchanged in Fiscal Year 2022 as compared to the decrease in the Acquisition-related deferred revenue fair value adjustment and a lower fixed cost base.prior fiscal year.

 

Operating Expensesexpenses for Fiscal Years 2022, 2021, 2020, and 20192020 were as follows: