UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

The Bluetooth name and the Bluetooth® trademarks are owned by Bluetooth SIG, Inc. and are used by Plantronics, Inc. under license. All other trademarks are the property of their respective owners.

Part I -- FINANCIAL INFORMATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

CERTAIN FORWARD-LOOKING INFORMATION:

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, ("Securities Act"as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, ("Exchange Act"as amended (the “Exchange Act”).  Forward-lookingThese statements may generally be identified by the use of such words as "expect," "anticipate," "believe," “could,” "expect,"estimate," "intend," “may,” "plan,"predict," "potential,"project," "shall,"or "will," “would,” or variations of such words and similar expressions or the negative of these terms.are based on current expectations and entail various risks and uncertainties.  Specific forward-looking statements and the associated risks and uncertainties contained within this Form 10-Q include, but are not limited to: (i) our beliefs with respect to statementsthe length and severity of the COVID-19 (coronavirus) outbreak, and its impact across our businesses, our operations and global supply chain, including (a) our expectations the virus has caused and will continue to cause an increase in customer and partner demand for our product lines, including increased demand in collaboration endpoints, and our ability to design new product offerings to meet the change in demand due to a global hybrid work environment, (b) our inability to source component parts from key suppliers in sufficient quantities necessary to meet the high demand for certain product lines, including our Enterprise Headsets and continued uncertainty and potential impact on future quarters if these sourcing constraints continue and/or price volatility occurs, which could continue to negatively affect our profitability and/or market share, (c) expectations related to our voice product lines, as well as our services attachment rate for such products, which have been, and may continue to be, negatively impacted as companies have delayed returning their workforces to offices in many countries due to the continued impact of COVID-19; (d) expectations related to our ability to fulfill the backlog generated by supply constraints, to timely supply the number of products to fulfill current and future customer demand, including expectations that our manufacturing facility in Tijuana, Mexico will continue production at the capacity necessary to meet such demand, (e) the impact of the virus on our distribution partners, resellers, end-user customers and our production facilities, including our ability to obtain alternative sources of supply if our production facility or other suppliers are impacted by future shut downs, (f) the impact if global or regional economic conditions deteriorate further, on our customers and/or partners, including increased demand for pricing accommodations, delayed payments, delayed deployment plans, insolvency or other issues which may increase credit losses, (g) risks related to restrictions or delays in global return to worksites as a result of COVID-19, which continues to impact our employees worldwide and our customers, which has negatively impacted our voice product lines for the quarter, and restricted customer engagement; and (h) the complexity of the forecast analysis and the design and operation of internal controls; and (ii) our belief that we can manufacture or supply products in a timely manner to satisfy perishable demand; (iii) expectations related to our customers’ purchasing decisions and our ability to pivot quickly enough and/or match product production to demand, particularly given long lead times and the difficulty of forecasting unit volumes and acquiring the component parts and materials to meet demand without having excess inventory or incurring cancellation charges; (iv) risks associated with significant and abrupt changes in product demand which increases the complexity of management’s evaluation of potential excess or obsolete inventory; (v) risks associated with the bankruptcy or financial weakness of distributors or key customers, or the bankruptcy of or reduction in capacity of our key suppliers; (vi) risks associated with the potential interruption in the supply of sole-sourced critical components, our ability to move to a dual-source model, and the continuity of component supply at costs consistent with our plans, which has negatively impacted in the quarter and may continue to impact our ability to timely supply product to meet our customer demand; (vii) expectations related to our services segment revenues, particularly as we introduce new generation, less complex, product solutions, or as companies shift from on premises to work from home options for their workforce, which may result in decreased demand for our professional, installation and/or managed service offerings; (viii) expectations that our current cash on hand, additional cash generated from operations, together with sources of cash through our credit facility, either alone or in combination with our election to suspend our dividend payments, will meet our liquidity needs during and following the unknown duration and impact of the COVID-19 pandemic; (ix) expectations relating to our ability to generate sufficient cash flow from operations to meet our debt covenants and timely repay all principal and interest amounts drawn under our credit facility as they become due; (x) risks associated with our channel partners’ sales reporting, product inventories and product sell through since we sell a significant amount of products to channel partners who maintain their own inventory of our products; (xi) our efforts to execute to drive sales and sustainable profitable revenue growth, to improve our profitability and cash flow, and accelerate debt reduction and de-levering; (xii) our expectations for new products launches, the timing of their releases and their expected impact on future growth and on our existing products; (xiii) our belief that our Partner Program will drive growth and profitability for both us and our partners through the sale of our product, services and solutions; (xiv) risks associated with forecasting sales and procurement demands, which are inherently difficult, particularly with continuing uncertainty in regional and global economic conditions; (xv) uncertainties attributable to currency fluctuations, including fluctuations in foreign exchange rates and/or new or greater tariffs on our products; (xvi) our expectations regarding (i)our ability to control costs, streamline operations and successfully implement our various cost-reduction activities and realize anticipated cost savings under such cost-reduction initiatives; (xvii) expectations relating to our quarterly and annual earnings guidance, particularly as economic uncertainty, including, without limitation, uncertainty related to the

continued impact of COVID-19, the macro-economic and political climate and other external factors, puts further pressure on management judgments used to develop forward looking financial guidance and other prospective financial information; (xviii) expectations related to GAAP and non-GAAP financial results for the second quarter and full Fiscal Year 2021, including net revenues, adjusted EBITDA, tax rates, intangibles amortization, diluted weighted average shares outstanding and diluted EPS; (xix) our expectations of the impact of the acquisition of Polycom as it relates to our strategic vision and additional market and strategic partnership opportunities for our combined hardware, software and services offerings; (xx) our beliefs regarding the EnterpriseUC&C market, market dynamics and opportunities, and customer and partner behavior as well as our position in the market, (ii)including risks associated with the potential failure of our beliefs regardingUC&C solutions to be adopted with the Consumer market, our new product introductionsbreadth and the expected effect of such introductions, (iii)speed we anticipate; (xxi) our belief that our "as-a-service" offerings will benefit our growth long-term but their contribution will not be material in the near term, (iv) our intention to provide customer data insight through software and service solutions, (v) the Unified Communications ("UC") market, includingincreased adoption of UC products,certain technologies and our position,open architecture approach has and timingwill continue to increase demand for our solutions; (xxii) expectations related to the micro and macro-economic conditions in our domestic and international markets and their impact on our future business; (xxiii) our forecast and estimates with respect to tax matters, including expectations with respect to utilizing our deferred tax assets; (xxiv) our expectations related to building strategic alliances and key partnerships with providers of collaboration tools and platforms to drive revenue growth and market share; and (xxv) our expectations regarding pending and potential future litigation, in addition to other matters discussed in this market, (vi) our plans regarding our "as a service" offerings including sales and marketing efforts, (vii) our intentions regarding investments in long-term growth opportunities and our core research and development efforts, in particular in the UC market, (viii) our intentions regarding the focus of our sales, marketing and customer services and support teamsQuarterly Report on UC, (ix) the future of UC technologies, including the transition of businesses to UC-supported systems and the effects on headset adoption and use, enterprisesForm 10-Q that adopt UC and our revenue opportunity and profit growth, (x) our expenses, including research, development and engineering expenses and selling, general and administrative expenses, (xi) fluctuations in our cash provided by operating activities as a result of various factors, including fluctuations in revenues and operating expenses, timing of product shipments, accounts receivable collections, inventory and supply chain management, and the timing and amount of taxes and other payments, (xii) our future tax rate and payments related to unrecognized tax benefits, (xiii) our anticipated range of capital expenditures for the remainder of Fiscal Year 2018 and the sufficiency of our cash, cash equivalents, and cash from operations to sustain future operations and discretionary cash requirements, (xiv) our ability to pay future stockholder dividends, (xv) our ability to draw funds on our credit facility as needed, (xvi) the sufficiency of our capital resources to fund operations, and other statements regarding our future operations, financial condition and prospects, and business strategies.are not purely historical data. Such forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. Factors that could cause actual results and events to differ materially from such forward-looking statements are included, but not limited to, those discussed in this Quarterly Report on Form 10-Q; in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2017,28, 2020, filed with the Securities and Exchange Commission (“SEC”("SEC") on May 10, 2017;June 8, 2020; and other documents we have filed with the SEC. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

OVERVIEW

WePlantronics, Inc. (“Poly,” “Company,” “we,” “our,” or “us”) is a leading global communications company that designs, builds, and markets collaboration solutions. Poly combines legendary audio expertise and powerful video and conferencing capabilities to create endpoints that power meaningful human connections and provide solutions that make life easier when they work together and with our partner's services. Our headsets, video and audio conferencing, desk phones, analytics software and services are used worldwide and are a leading designer, manufacturer, and marketerchoice for every type of lightweight communications headsets, telephone headset systems, other communication endpoints, and accessories for the worldwide business and consumer markets under the Plantronics brand. home, workspace, or hybrid setting.

Our major product categories are Enterprise, whichHeadsets, Video, Voice, and Services. Headsets include wired and wireless communication headsets; Voice includes headsets optimizedopen Session Initiation Protocol (“SIP”) and native ecosystem desktop phones as well as conference room phones; Video includes video conferencing solutions and peripherals, such as cameras, speakers, and microphones. Our broad portfolio of Services include video interoperability, hardware and software support for our devices, as well as professional, hosted, and managed services that are grounded in our deep expertise aimed at helping customers achieve their collaboration goals.

All of our solutions are designed to integrate seamlessly with the platform and cloud conferencing services of our strategic alliance partners, whose solutions are generally deployed to create Unified Communications (“UC”& Collaboration ("UC&C"), other cordedUnified Communication as a Service ("UCaaS"), Video as a Service ("VaaS"), and/or Device as a Service ("DaaS") environments. Our cloud management and cordless communication headsets, audio processors,analytics software enable IT administrators to configure and telephone systems;update firmware, monitor device usage, troubleshoot, and Consumer, which includes Bluetooth and corded products for mobile device applications and personal computer gaming headsets. Until July 1, 2017, we also offered specialty products marketed for hearing impaired individuals under our Clarity brand, which was included in our Consumer product category.gain a deeper understanding of user behaviors.

We shipsell our products to approximately 80 countries 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, resellers, wireless carriers, original equipment manufacturers,office supply distributors, and telephony service providers.e-commerce channels. We have well-developedwell-established distribution channels in North America,the Americas, Europe, Middle East, Africa, and in some parts of the Asia Pacific region where use of our products is widespread.widespread

In responding to this pandemic, employee safety continues to be a critical concern to the thirdCompany 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 Company facilities and restricting the number of visitors to our sites. The safety protocols implemented globally meet or exceed current 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 Company-issued equipment.

RESULTS OF OPERATIONS

The following graphs displaytable sets forth net revenues by product categoryreportable segment for the three and ninesix months ended December 31, 2016September 26, 2020 and 2017:September 28, 2019:

COST OF REVENUES AND GROSS PROFIT

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

Interest expense for the three and ninesix months ended December 31, 2016September 26, 2020 and 2017September 28, 2019 was $7.3 millionas follows:

The Company and its subsidiaries are subject to taxation in the U.S. and in various foreign and state jurisdictions. Our income tax expense or benefit is determined using an estimate of our 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 December 31, 2017 increased primarily due to favorable changes in the Mexican Peso exchange rateSeptember 26, 2020 and an increase in interest income from higher average yields on our investment portfolio.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax rate by 2.6 percentage points forassets. A significant piece of objective negative evidence evaluated was the nine monthscumulative loss incurred over the two-year period ended December 31, 2017. The amount of excess tax benefits or deficiencies will fluctuate from period-to-period based on the price of our stock, the volume of share-based instruments settled or vested,March 28, 2020 and the value assigned to employee equity awards under U.S. GAAP.

FINANCIAL CONDITION

Liquidity and Capital Resources

Our cash and cash equivalents as of December 31, 2017September 26, 2020 consisted of bank deposits with third party financial institutions, US Treasury Bills, and Commercial Paper.institutions. We monitor bank balances in our operating accounts and adjust the balances as appropriate. Cash balances are held throughout the world, including substantial amounts held outside of the U.S. As of December 31, 2017,September 26, 2020, of our $499.1$227.9 million of cash, cash equivalents, and short-term investments, $17.8$129.4 million was held domestically while $481.2$98.5 million was held by foreign subsidiaries, and approximately 90% of which73% was based in USD-denominated investments.

In May 2011,July 2018, in connection with the Acquisition, we entered into a credit agreementCredit Agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, ("as administrative agent, and the Bank"), which was most recently amended in April 2017 (as amended,lenders party thereto and borrowed the "Credit Agreement"). Thefull amount available under the term loan facility of $1.245 billion, net of approximately $30 million of discounts and issuance costs. During the second quarter of Fiscal Year 2021, we repurchased $30.0 million of our outstanding principal and recorded an immaterial gain on the extinguishment of debt. As of September 26, 2020, we had $1.099 billion of the term loan outstanding.

On February 20, 2020, we entered into an Amendment No. 2 to the Credit Agreement provides for a $100.0 million unsecured(the “Amendment”) in order to relax certain financial covenants on the revolving credit facility. Revolving loansline of credit. The financial covenants under the Credit Agreement will bear interest, at our election, at (i)are for the Bank’s announced prime rate less 1.20% per annum or (ii) a daily one-month LIBOR rate plus 1.40% per annum. Principal, together with all accrued

benefit of the revolving credit lenders only and unpaid interest,do not apply to any other debt of the Company. As of September 26, 2020, the Company has five outstanding letters of credit on the revolving loans is duecredit facility for a total of $1.4 million and payable on May 9, 2020. We are also obligated to pay a commitment fee of 0.37% per annum on the average daily unused amount ofhad $98.6 million available under the revolving line of credit, which fee shall be payable quarterly in arrears. We may prepay the loans and terminate the commitments under the Credit Agreement at any time, without premium or penalty, subject to the reimbursement of certain costs. During the third quarter of Fiscal Year 2018 we borrowed and repaid $8 million from our line of credit and as of December 31, 2017, we had no outstanding borrowings. The line of credit requires us to comply with the following two financial covenant ratios, in each case at each fiscal quarter end and determined on a rolling four-quarter basis:

During Fiscal Year 2016, we obtained $488.4 million in aggregate principal amount,from debt financing, net of issuance costs, from the issuance of our 5.50% Senior Notes.costs. The Notes maturedebt matures on May 31, 2023 and bearbears interest at aan annual rate of 5.50% per annum, payable semi-annually. During the second quarter of Fiscal Year 2021 we repurchased $7.4 million of our outstanding principal and recorded an immaterial gain on the extinguishment of debt. As of September 26, 2020, we had $488.8 million of debt outstanding.

We may at any time and from time to time, depending on May 15market conditions and November 15. A portion prices, continue to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We have not entered into any transactions with unconsolidated entities giving rise towhereby we have financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides us with financing and liquidity support, market risk, or credit risk support.

We utilizeuse several contract manufacturers to procuremanufacture raw materials, components, and subassemblies for our products. We provide these contract manufacturers withproducts through our supply of demand information that typically covers periods up to 13 weeks, and theyweeks. The contract manufacturers use this information to acquire components and build products. We also obtain individual components for our products from a wide variety of individual suppliers. Consistent with industry practice, we acquire components throughsuppliers using a combination of purchase orders, supplier contracts, including annual minimum purchase obligations, and open orders based on projected demand information. As of December 31, 2017,September 26, 2020, we had outstanding off-balance sheet third-party manufacturing, component purchase, and other general and administrative commitments of $192.3$420.4 million, including the off-balance sheet consigned inventories of $56.1 million as discussed above.$42.1 million.

Except as described above, there have been no material changes in our contractual obligations as described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017.28, 2020.

CRITICAL ACCOUNTING ESTIMATES

Recent Accounting Pronouncements

Financial Statements (Unaudited)