(in thousands) Local Currency USD Equivalent Position Maturity
MXN $ 76,340
$ 3,935
Buy MXN Monthly over 6 months

Effect of Designated Derivative Contracts on ~~AOCI~~Accumulated Other Comprehensive Income (Loss) 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 (loss) and the condensed consolidated statements of operations for the three ~~and nine~~ months ended ~~December 31, 2016~~July 2, 2022 and ~~2017:~~July 3, 2021:


	Three Months Ended
(in thousands)	July 2, 2022		July 3, 2021
Loss included in accumulated other comprehensive income (loss), as of beginning of period	$	26,805	$	(10,062)

Gain (loss) recognized in other comprehensive income (loss)	10,094		440

Amount of (gain) loss reclassified from accumulated other comprehensive income (loss) into net revenues	(3,365)		1,772
Amount of gain reclassified from accumulated other comprehensive income (loss) into cost of revenues	(446)		(236)
Amount of loss reclassified from accumulated other comprehensive income (loss) into interest expense	622		3,089
Total amount of (gain) loss reclassified from accumulated other comprehensive income to the condensed consolidated statements of operations	(3,189)		4,625



Gain (loss) included in accumulated other comprehensive income (loss), as of end of period	$	33,710	$	(4,997)

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Three Months Ended December 31, Nine Months Ended
December 31,
(in thousands) 2016 2017 2016 2017
Gain (loss) included in AOCI as of beginning of period $ (471 ) $ (3,089 ) $ (1,106 ) $ 541

Amount of gain (loss) recognized in other comprehensive income (“OCI”)
(effective portion)
2,090
(446 ) 2,394
(5,093 )

Amount of gain (loss) reclassified from OCI into net revenues (effective portion) 2,178
1,357
3,163
2,506
Amount of gain (loss) reclassified from OCI into cost of revenues (effective portion) (756 ) (61 ) (2,072 ) (193 )
Total amount of gain (loss) reclassified from AOCI to income (loss) (effective portion) 1,422
1,296
1,091
2,313

Gain (loss) included in AOCI as of end of period $ 197
$ (2,239 ) $ 197
$ (2,239 )
11. FAIR VALUE MEASUREMENTS

~~During~~Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. In determining fair value, we use various valuation approaches. The hierarchy of those valuation approaches is in three levels based on the reliability of inputs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following is a summary of the hierarchy levels:

•Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.

•Level 2: Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly.

•Level 3: Inputs are unobservable for the asset or liability.


	Carrying Value at July 2, 2022		Fair Value at July 2, 2022 Using Inputs Considered as:
(in thousands)			Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	142,362	$	142,362	$	—	$	—
Short-term investments	11,908		11,908		—		—
Derivative instruments	40,032		—		40,032		—

Liabilities:
Derivative instruments	$	754	$	—	$	754	$	—
Long-term debt	1,501,337		—		1,507,708		—


	Carrying Value at April 2, 2022		Fair Value at April 2, 2022 Using Inputs Considered as:
(in thousands)			Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	170,000	$	170,000	$	—	$	—

Short-term investments	13,703		13,703		—		—
Derivative instruments	31,891		—		31,891		—

Liabilities:
Derivative instruments	$	1,828	$	—	$	1,828	$	—

Long-term debt	1,500,283		—		1,521,562		—

Valuation Techniques

•Cash and cash equivalents, short-term investments, and restricted cash are classified within Level 1 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets. The types of financial instruments the Company classifies within Level 1 include bank deposits, money market securities, and publicly traded mutual funds.

•The Company estimates the fair value of derivatives using pricing models that use observable market inputs. The significant Level 2 inputs used in the valuation of derivatives include spot rates and forward rates. These inputs were obtained from pricing services, broker quotes, and other sources.

•The fair value of long-term debt was determined based on inputs that were observable in the market, including the trading price, when available.

There were no transfers between fair value hierarchy levels during the three ~~and nine~~ months ended ~~December 31, 2016 and 2017 the Company recognized an immaterial gain and immaterial loss on the ineffective portion~~July 2, 2022 or July 3, 2021.

Table of ~~its cash flow hedges, respectively, which is reported in other non-operating income and (expense), net in the condensed consolidated statements of operations.~~Contents

~~13.~~12. 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 income tax benefit is determined using an estimated annual effective tax rate, adjusted for discrete items arising during the period. The effective tax rates for the three months ended ~~December 31, 2016~~July 2, 2022 and ~~2017~~July 3, 2021 were ~~11.0%~~3.0% and ~~255.1%~~10.4%, respectively. ~~The effective~~

Income tax ~~rates~~benefit for the ~~nine~~three months ended ~~December 31, 2016~~July 2, 2022 and ~~2017 were 18.4%~~July 3, 2021 was $1.0 million and ~~114.6%, respectively.~~$4.3 million, respectively.

~~On December 22, 2017,~~The difference between the Tax Cuts and Jobs Act (H.R. 1) (the “Act”) was signed into law in the United States. The Act includes several changes to existing tax law, including, among other things, a permanent reduction in the corporate income tax rate from 35% to 21% and the move from a worldwide to a territorial tax system.

The move to a territorial tax system was accompanied by federal taxation of a one-time deemed repatriation of accumulated unremitted earnings (hereafter, the "toll charge"), which the Company will elect to pay over an eight-year period as permitted

under the Act. The Company recorded a $69.3 million toll charge as part of income tax expense in the quarter ended December 31, 2017, representing a provisional estimate based on a 15.5% tax applied to foreign unremitted cash and cash equivalents and an 8% tax applied to permanently reinvested foreign assets. The provisional toll charge increased our effective tax rate ~~by 217.2%~~ and ~~94.1% for~~ the ~~three~~U.S. federal statutory rate primarily relates to the excess stock tax benefit, U.S. and ~~nine months ended December 30, 2017, respectively. As part of~~foreign income mix, and the ~~Act,~~valuation allowance on the ~~Company also completed its remeasurement of~~U.S. federal and state deferred tax assets (“DTAs”) that continues to be maintained as of ~~December 31, 2017~~July 2, 2022.

A significant portion of the Company's DTAs relate to the ~~new~~IP transfer 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 ~~federal~~that will allow the Company to realize the DTAs; however, failure to generate sufficient future 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 ~~rate~~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. During the three months ended July 2, 2022, the amount of ~~21%, thereby reducing~~gross unrecognized tax benefits decreased by $1.1 million. As of July 2, 2022, the ~~Company’s deferred~~Company has $14.3 million of unrecognized tax ~~assets by $2.1 million. The rate change resulted~~benefits, all of which could result in ~~an overall increase to~~a reduction of the Company’s effective tax rate ~~by 6.6% and 2.9% for~~if recognized.The reduction in gross unrecognized tax benefits is primarily attributable to the ~~three and nine months ended December 31, 2017, respectively.~~ lapse of applicable statute of limitations.

In ~~addition, prior~~September 2021, we transferred certain non-Americas intellectual property (“IP”) rights between our wholly-owned subsidiaries (“IP transfer”) to ~~its third quarter~~align with our evolving business operations, resulting in the derecognition of ~~Fiscal Year 2018, the Company did not recognize~~ a deferred tax ~~liability~~asset (“DTA”) of $91.1 million and the recognition of a new DTA of $204.5 million, which represents the book and tax basis difference in the IP and was based on the fair value of the IP, in the respective subsidiaries. This results in a net discrete deferred tax benefit of $113.4 million.

Management has concluded that an impairment for local statutory and tax reporting to the aforementioned IP exists and the impairment loss is deductible for local tax purposes. As such, a DTA related to ~~unremitted foreign earnings because its plans did not require~~net operating loss carryforward of $48.0 million was recognized, offset by a corresponding decrease in the Company to repatriate earnings from foreign operations to fund U.S. operations. The Company expects to fund payment of the toll charge by repatriating a portion of its foreign earnings and as such, has recorded a deferred tax liability of $5.0 millionDTA related to ~~state income taxes and foreign withholding taxes that will become due~~the intangible asset by the same amount as of April 2, 2022. Because the ~~Company repatriates foreign earnings. This increased~~IP intangible asset is the ~~Company’s effective tax rate by 15.6% and 6.8% for the three and nine months ended December 31, 2017, respectively. Finally, the Company files its federal tax return on a fiscal year-end and~~result of an intercompany transfer, there is ~~therefore required to pro-rate the new and old tax rates during Fiscal Year 2018. The blended, annualized tax rate applied to Fiscal Year 2018 income is 31.56%. This reduction~~no intangible asset recognized in the ~~federal tax rate reduced the Company’s global tax rate by 2.3% and 1.0% for the three and nine months ended December 31, 2017, respectively.~~

The provisional estimate for the toll charge will be finalized when the Company completes its substantive review of unremitted foreign earnings through examination of statutory filings and tax returns of the Company's foreign subsidiaries and fiscal branches that span a 30-year period. The Company must also analyze theconsolidated balance sheets. Accordingly, there is no net impact of foreign exchange rates and inflation on the historical information to support foreign tax credits available to offset the toll charge. In addition, the Company's estimate of the toll charge obligation may change due to legislative technical corrections, the IRS' promulgation of regulations to interpret the Act, and changes in accounting standards for income taxes or related interpretations in response to the Act. This review and finalization of the toll charge provisional estimate will be completed within a twelve month measurement period from the date of enactment.

The Company recorded a correction to the geographic mix of income during the three months ended June 30, 2017 related to Fiscal Year 2017, which reduced income in a high tax jurisdiction and increased income in a low tax jurisdiction. This correction resulted in a reduction to the Company’s effective tax rate by 3.5 percentage points for the nine months ended December 31, 2017 as compared to the prior year period and had no impact on the three months ended December 31, 2017. For additional details regarding this correction refer to Note 1, ~~Basis of Presentation~~.

The Company adopted new stock-based compensation accounting guidance effective the beginning of Fiscal Year 2018. Excess tax benefits associated with employee equity plans were previously recorded in additional paid-in capital and the adoption of this guidance had an immaterial impact on the Company's effective tax rate for the three months ended December 31, 2017, but resulted in a reduction to the Company's effective tax rate by 2.6 percentage points for the nine months ended December 31, 2017. The amount of excess tax benefits or deficiencies will fluctuate from period-to-period based on the price of the Company’s stock, the volume of share-based instruments settled or vested, and the value assigned to employee equity awards under U.S. GAAP.

Included in long-term income taxes payable in the condensed consolidated balance sheets as of March 31, 2017 and December 31, 2017 were unrecognized tax benefits of $12.9 million and $12.3 million, respectively, which would favorably impact the effective tax rate in future periods if recognized. The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense in the condensed consolidated statements of ~~operations. The accrued interest related to unrecognized tax benefits was $1.7 million and $1.4 million as~~operations, balance sheet, or cash flows.

Table of ~~March 31, 2017 and December 31, 2017, respectively. No penalties have been accrued.~~Contents

The Company and its subsidiaries are subject to taxation in the U.S. federal and various foreign and state jurisdictions. The Company’s Fiscal Year 2016 federal income tax return is currently under examination by the Internal Revenue Service. Foreign income tax matters for material tax jurisdictions have been concluded for tax years prior to Fiscal Year 2012.

The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations; however, the outcome of such examinations cannot be predicted with certainty. If any issues addressed in the tax examinations are resolved in a manner inconsistent with the Company's expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. The timing of any resolution and/or closure of tax examinations is not certain.

~~14.~~13. COMPUTATION OF ~~EARNINGS (LOSS)~~LOSS PER COMMON SHARE

Basic (loss) earnings ~~(loss)~~ per share is calculated by dividing net (loss) income ~~associated with common shareholders~~ by the weighted-average number of common shares outstanding during the period. Diluted (loss) 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). Refer to Note 1,~~ ~~Basis~~method. The potentially dilutive effect of ~~Presentation, for additional information regarding~~outstanding stock options and restricted stock has been excluded from the ~~Company's~~ computation of ~~earnings (loss)~~diluted loss per ~~common share.~~share in periods where the Company had a net loss, as their effect is anti-dilutive.

The following table sets forth the computation of basic and diluted (loss) earnings ~~(loss)~~ per common share for the three ~~and nine~~ months ended ~~December 31, 2016~~July 2, 2022 and ~~2017:~~July 3, 2021:


	Three Months Ended
(in thousands, except per share data)	July 2, 2022		July 3, 2021
Numerator:
Net loss	$	(33,087)	$	(36,811)

Denominator:
Weighted-average basic shares outstanding	43,428		42,061
Weighted-average diluted shares outstanding	43,428		42,061

Basic and diluted loss per common share	$	(0.76)	$	(0.88)
Diluted loss per common share	$	(0.76)	$	(0.88)

Potentially dilutive securities excluded from diluted loss per common share because their effect is anti-dilutive	175		405

Three Months Ended December 31, Nine Months Ended
December 31,
(in thousands) 2016 2017 2016 2017
Net revenues from unaffiliated customers:
Enterprise $ 157,345
$ 167,640
$ 467,784
$ 485,152
Consumer 75,588
58,894
204,438
155,608
Total net revenues $ 232,933
$ 226,534
$ 672,222
$ 640,760

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For reporting purposes, revenue is attributed to each geographic region based on the location of the customer. ~~Other than~~The following table presents total net revenues by geography:


	Three Months Ended
(in thousands)	July 2, 2022		July 3, 2021
Net product revenues
U.S.	$	171,408	$	175,970

Europe, Middle East, and Africa	107,683		111,460
Asia Pacific	55,729		58,270
Americas, excluding U.S.	29,388		25,503
Total international net product revenues	192,800		195,233
Total net product revenues	$	364,208	$	371,203

Net service revenues
U.S.	$	21,040	$	22,758

Europe, Middle East, and Africa	12,307		14,661
Asia Pacific	14,701		18,488
Americas, excluding U.S.	3,303		4,062
Total international net service revenues	30,311		37,211
Total net service revenues	$	51,351	$	59,969

Total net revenues	$	415,559	$	431,172

The Company's deferred revenue represents the ~~U.S., no country accounted for 10% or more~~aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of period end and is comprised of non-cancelable maintenance support performance obligations on hardware devices which are typically billed in advance and recognized ratably over the contract term as the services are delivered. As of July 2, 2022 and April 2, 2022, the Company's deferred revenue balance was $183.6 million and $193.1 million, respectively, of which $122.4 million and $64.7 million, respectively, was classified as current. During the three months ended July 2, 2022, the Company recognized $42.9 million in total net revenues that were recorded in deferred revenue at the beginning of the period.

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, upon the start of service entitlement, or upon completion of services. The balance of contract assets was $3.5 million and $4.3 million as of July 2, 2022 and April 2, 2022, respectively. None of the Company's contracts are deemed to have significant financing components.

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 capitalized amount of incremental and recoverable costs of obtaining contracts and related amortization was not material as of and for the three months ended July 2, 2022.

15. 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 2 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.

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In managing the 2 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.

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ITEM 2. 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to our intentions, beliefs, projections, outlook, analyses or current expectations that are subject to many risks and uncertainties. All of our forward-looking statements are subject to risks and uncertainties relating to our pending merger (the “Merger”) with HP Inc. (“HP”) and Prism Subsidiary Corp. pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated March 25, 2022, and corresponding impacts on our business, including (i) that the consummation of the Merger with HP is contingent upon the satisfaction of a number of conditions, including regulatory approvals, that may be outside of our or HP’s control and that we and HP may be unable to satisfy or obtain or that may delay the consummation of the Merger or cause the parties to abandon the Merger; (ii) while the Merger is pending, we are subject to business uncertainties and contractual restrictions that could harm our financial condition, operating results, and business; (iii) uncertainty about the Merger may adversely affect relationships with our customers, suppliers and employees, whether or not the Merger is completed; (iv) as a result of the Merger, our current and prospective employees could experience uncertainty about their future with us, which may result in key employees departing because of issues relating to such uncertainty or a desire not to remain with HP following the completion of the Merger; and (v) the ability to complete the Merger is subject to the receipt of consents and approvals from government entities, which may impose conditions that could have an adverse effect on us or could cause us and/or HP to abandon the Merger. Additionally, such forward-looking statements and the associated risks and uncertainties include, but are not limited to: (i) our beliefs with respect to the length and severity of the COVID-19 pandemic, and its impact across our businesses, our operations and global supply chain, including, our expectations that the virus has caused, and will continue to cause, a shift to a hybrid work environment and that the elevated demand we have experienced in certain product lines, including our Video and Voice devices, will continue over the long term; (ii) risks related to global supply chain disruptions, including continued uncertainty and potential impact on future quarters relating to a shortage of adequate component supply, including integrated circuits and manufacturing capacity, long lead times for raw materials and components, increased costs to us and increased pass-through costs to our customers, increased purchase commitments and a delay in our ability to fulfill orders, including as a result of Russia's conflict with Ukraine, all of which has had, and may continue to have, an adverse impact on our business and operating results and which could continue to negatively affect our profitability and/or market share; (iii) expectations related to our ability to manage profitability and improve margins in light of supply chain challenges, including our efforts to implement productivity improvements in our Tijuana manufacturing facility, while making investments for long-term growth, including investments in strategic alliances and/or acquisitions, in light of the supply chain challenges; (iv) our expectations regarding growth objectives related to our strategic initiatives designed to expand our product and service offerings, including our expectations related to increased demand for our solutions to facilitate hybrid working in and out of offices for our enterprise customers, as well as our expectations related to building strategic alliances and key partnerships with providers of collaboration tools and platforms to drive revenue growth and market share, including expectations related to our expansion of our presence in China; (v) our belief that we will continue to experience increased customer and partner demand in collaboration endpoints, and that we will be able to design new product offerings to meet changes in demand due to a global hybrid work environment; (vi) expectations related to our ability to fulfill the backlog generated by supply constraints and to timely supply the number of products to fulfill current and future customer demand in a timely manner to satisfy perishable demand; (vii) risks associated with our dependence on manufacturing operations conducted in our own facility in Tijuana, Mexico and through contract manufacturers, original design manufacturers, and suppliers to manufacture our products, to timely obtain sufficient quantities of materials and/or finished products of acceptable quality, at acceptable prices, and in the quantities necessary for us to meet critical schedules for the delivery of our own products and services and fulfill our anticipated customer demand; (viii) risks associated with our ability to secure critical components from sole source suppliers or identify alternative suppliers and/or buy component parts on the open market or completed goods in quantities sufficient to meet our requirements on a timely basis, affecting our ability to deliver products and services to our customers; (ix) risks related to increased cost of goods sold, including increased freight and other costs associated with expediting shipment and delivery of high-demand products to key markets in order to meet customer demand; (x) risks associated with passing on increased costs through price increases to customers; (xi) 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; (xii) risks associated with significant and/or abrupt changes in product demand which increases the complexity of management’s evaluation of potential excess or obsolete inventory; (xiii) expectations related to our Services reportable segment revenues, particularly as we introduce next-generation, less complex, product solutions, or as companies shift from on premises to work from home options for their workforce, which have resulted and may continue to result in decreased demand for our professional, installation and/or managed service offerings; (xiv) expectations related to our efforts to drive sales and sustainable profitable revenue growth, to improve our profitability and cash

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flow, and accelerate debt reduction and de-levering; (xv) risks associated with forecasting sales and procurement demands, which are inherently difficult, particularly with continuing uncertainty in regional and global economic conditions; (xvi) our expectations regarding 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 financial projections, particularly as economic uncertainty, including, without limitation, uncertainty related to the continued impact of COVID-19, the current constraints in our ability to source key components for our products, continued uncertainty in the macro-economic climate and other external factors, puts further pressure on management judgments used to develop prospective financial information; (xviii) expectations related to U.S. GAAP and non-GAAP financial results for the full Fiscal Year 2022, including total net revenues, adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), tax rates, intangibles amortization, diluted weighted average shares outstanding, and diluted earnings per share (EPS); (xix) our forecast and estimates with respect to tax matters, including expectations with respect to the valuation of our intellectual property or expectations regarding utilization of our deferred tax assets; and (xx) our expectations regarding pending and potential future litigation, in addition to other matters discussed in this Quarterly Report on Form 10-Q that 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 April 2, 2022, filed with the SEC on May 27, 2022; 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

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 and audio-conferencing platforms.

Our major product categories are Headsets, Voice, Video, and Services. Headsets include wired and wireless communication headsets; Voice includes open Session Initiation Protocol (“SIP”) and native ecosystem desktop phones, as well as conference room phones and speakerphones; Video includes conferencing solutions and peripherals, such as cameras, speakers, and microphones; Services includes a broad portfolio of offerings including video interoperability, maintenance and troubleshooting support for our solutions, as well as professional, hosted, and managed services that are grounded in our deep expertise aimed at helping our customers achieve their collaboration goals.Additionally, our cloud management and analytics software enable Information Technology (“IT”) administrators to configure and update firmware, monitor device usage, troubleshoot, and gain a deep understanding of user behavior.

All of our solutions are designed to integrate seamlessly with a wide range of Unified Communications & Collaboration (“UC&C”), Unified Communication as a Service (“UCaaS”), and Video as a Service (“VaaS”) platforms, allowing our customers the flexibility to use the communications platform of their choice.

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, office supply distributors, and e-commerce channels. We have well-established distribution channels in the Americas, Europe, Middle East, Africa, and Asia Pacific, where use of our products is widespread.

Our fiscal year ends on the Saturday closest to the last day of March. The years ended April 1, 2023 (“Fiscal Year 2023”) and April 2, 2022 (“Fiscal Year 2022”) have 52 weeks. The three months ended July 2, 2022 (“first quarter Fiscal Year 2023”) and July 3, 2021 (“first quarter Fiscal Year 2022”) each have 13 weeks.

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Acquisition by HP Inc.

On March 25, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with HP Inc. (“HP”) and Prism Subsidiary Corp. (“Merger Sub”), a wholly owned subsidiary of HP, providing for Poly's acquisition by HP in an all-cash transaction for $40.00 per share by way of a merger of Merger Sub with and into Poly (the “Merger”), with Poly continuing as a wholly owned subsidiary of HP. On June 23, 2022, Poly stockholders voted to adopt the Merger Agreement. The Merger is expected to close, subject to receipt of required regulatory clearances and the satisfaction of other customary closing conditions, in calendar year 2022.

Impact of the Current Environment, Supply Chain Disruptions, and COVID-19 on Our Business

We have experienced and continue to monitor limited supply and longer lead times for certain key components, such as semiconductor chips, necessary to complete production and meet customer demand, including fulfillment of our backlog. We do not manufacture these component parts and currently purchase certain parts, including semiconductor chips and sub-assemblies that require semiconductor chips, from single or limited sources. Additionally, constrained supply has resulted in price inflation for certain components, including semiconductor chips, increased spot market prices and purchases, increased transportation costs, inefficiencies at our owned manufacturing facility in Tijuana, Mexico, entry into multi-year commitments at increased cost to secure supply, and inability to fulfill backlog for certain products timely. For certain of our products, our additional supply increases our exposure to risks associated with significant and/or abrupt changes in product demand, which could result in potential excess of obsolete inventory. Additionally, to the extent we pass through increased costs to our customers, this may result in reduced demand. These factors, among others, are affecting and are expected to continue to affect total net revenue and gross margin rates. We continue to monitor our supply chain and are taking action to mitigate future disruption including outreach to critical suppliers, migration of multiple product lines to newer technologies, and incorporating supply chain design concepts into the earliest phases of product development.

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 and hybrid work driving elevated demand for certain of our products and solutions. 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 constraints in our supply chain, specifically the sourcing of certain components and raw materials, and increased logistics costs to meet customer demand, 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 operations.

The full extent and duration of the impact of the COVID-19 pandemic on our business continues to be uncertain and difficult to predict and will depend on many factors outside of our control, including the extent and duration of the pandemic, mutations, and variants of the virus, the development and availability of effective treatments, including the availability of vaccines for our global workforce, mandates of protective public safety measures, and the impact of the pandemic on the global economy, global supply chains, and demand for our products. It is not possible at this time to foresee whether or when the outbreak of COVID-19 or other events beyond our control will be effectively contained, nor can we estimate the entirety of the impact that COVID-19 or such other pandemics or natural or man-made disaster will have on the global economy, our business, customers, suppliers, or other business partners. As such, impacts from such events on Poly are highly uncertain and we will continue to assess the impact from such events on our condensed consolidated financial statements.

First Quarter Fiscal Year 2023 Highlights

Total net revenues for the ~~three~~first quarter of Fiscal Year 2023 were $415.6 million, a decrease of $15.6 million or 3.6%, compared to the first quarter of Fiscal Year 2022, primarily driven by declines in our Video and ~~nine months ended December 31, 2016~~Services product categories. Products gross margin rate for the first quarter of Fiscal Year 2023 decreased from 36.6% in the first quarter of Fiscal Year 2022 to 36.4%, primarily driven by increased component costs as well as transportation costs. We continued to experience the effects of the current supply environment including constrained supply and ~~2017.~~ longer lead times for certain components, such as semiconductor chips.

During the first quarter of Fiscal Year 2023, Poly continues to expand its portfolio of smart devices with the introduction of the Poly Studio R30 video bar, the Poly Sync 10 speakerphone, and enhancements to the Poly Lens platform. These pro-grade solutions, combined with developments to Poly DirectorAI smart camera technology help deliver meeting equity for hybrid and office workers alike. These products were available during the first quarter of Fiscal Year 2023 and did not have a material impact on total net revenues.

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RESULTS OF OPERATIONS

The Company’s reportable segments are Products and Services. Our Products reportable segment includes the Headsets, Voice, and Video product lines. Our Services reportable segment includes maintenance support on hardware devices, as well as professional, managed, and cloud services and solutions.

Total Net Revenues

The following table ~~presents~~sets forth total net revenues by ~~geography:~~

Three Months Ended December 31, Nine Months Ended
December 31,
(in thousands) 2016 2017 2016 2017
Net revenues from unaffiliated customers:
U.S. $ 123,719
$ 106,455
$ 371,019
$ 326,360

Europe and Africa 63,233
73,620
168,722
184,761
Asia Pacific 27,164
27,553
81,979
75,664
Americas, excluding U.S. 18,817
18,906
50,502
53,975
Total international net revenues 109,214
120,079
301,203
314,400
Total net revenues $ 232,933
$ 226,534
$ 672,222
$ 640,760

~~One customer, Ingram Micro Group, accounted for 10.5% and 10.6% of net revenues~~reportable segment for the three ~~and nine~~ months ended ~~December 31, 2016. One customer, Ingram Micro Group, accounted for 10.7%~~July 2, 2022 and ~~11.6%~~July 3, 2021:


	Three Months Ended
(in thousands, except percentages)	July 2, 2022		July 3, 2021		Change
Products	$	364,208	$	371,203	(1.9)	%
Services	51,351		59,969		(14.4)	%
Total net revenues	$	415,559	$	431,172	(3.6)	%

Products

Total product net revenues decreased in the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022, due to a decline in our Video product category primarily due to constrained supply of certain components, such as semiconductor chips.

Services

Total services net revenues decreased in the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022, primarily due to a mix shift within our Video product category away from legacy platforms to our recently launched video bars, which are less complex, less expensive, and easier to install and operate.

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Geographic Region

The following table sets forth total net revenues by geographic region for the three ~~and nine~~ months ended ~~December 31, 2017, respectively.~~July 2, 2022 and July 3, 2021:

~~One customer, Ingram Micro Group, accounted~~


	Three Months Ended
(in thousands, except percentages)	July 2, 2022		July 3, 2021		Change
United States	$	192,448	$	198,728	(3.2)	%

International net revenues:
Europe, Middle East, and Africa	119,990		126,121		(4.9)	%
Asia Pacific	70,430		76,758		(8.2)	%
Americas, excluding United States	32,691		29,565		10.6	%
Total international net revenues	223,111		232,444		(4.0)	%

Total net revenues	$	415,559	$	431,172	(3.6)	%

United States

U.S. total net revenues decreased in the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022, primarily due to decreased net sales in the Video and Services product category, partially offset by increases in Voice and Headsets.

International

International total net revenues decreased in the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022, primarily due to decreased net sales in Video and Services product categories, partially offset by increases in Voice and Headsets.

During the first quarter of Fiscal Year 2023, changes in foreign exchange rates unfavorably impacted total net revenues by $6.3 million, net of the effects of hedging, compared to a $9.6 million favorable impact on revenue in the first quarter of Fiscal Year 2022.

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Cost of Revenues and Gross Profit

Cost of revenues consists primarily of direct and contract manufacturing costs, amortization of acquired technology, freight, warranty, charges for ~~17.6%~~excess and obsolete inventory, depreciation, duties, royalties, and overhead expenses.


(in thousands, except percentages)	Three Months Ended
	July 2, 2022			July 3, 2021			Change
Products:
Net revenues	$	364,208		$	371,203		(1.9)	%
Cost of revenues	231,677			235,196			(1.5)	%
Gross profit	$	132,531		$	136,007		(2.6)	%
Gross profit %	36.4		%	36.6		%
Services:
Net revenues	$	51,351		$	59,969		(14.4)	%
Cost of revenues	15,841			20,787			(23.8)	%
Gross profit	$	35,510		$	39,182		(9.4)	%
Gross profit %	69.2		%	65.3		%
Total:
Net revenues	$	415,559		$	431,172		(3.6)	%
Cost of revenues	247,518			255,983			(3.3)	%
Gross profit	$	168,041		$	175,189		(4.1)	%
Gross profit %	40.4		%	40.6		%

Products

Gross profit as a percentage of total product net revenues decreased in the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022, primarily due to increased component costs, unfavorable product mix, and increased transportation costs, partially offset by higher average selling price. The increase in component costs was primarily driven by increased spot market purchases of certain 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 commitments to customers.

Services

Gross profit as a percentage of total services net revenues increased in the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022 due to lower support costs including compensation and other headcount related expenses.

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Operating Expenses

Operating expenses for the three months ended July 2, 2022 and July 3, 2021 were as follows:


	Three Months Ended
(in thousands, except percentages)	July 2, 2022			July 3, 2021			Change
Research, development, and engineering	$	51,269		$	45,466		12.8	%
% of total net revenues	12.3		%	10.5		%
Selling, general, and administrative	131,903			120,734			9.3	%
% of total net revenues	31.7		%	28.0		%


Restructuring and other related charges	(49)			28,972			(100.2)	%
% of total net revenues	—		%	6.7		%
Total operating expenses	$	183,123		$	195,172		(6.2)	%
% of total net revenues	44.1		%	45.3		%

Research, Development, and Engineering

Research, development, and engineering costs are expensed as incurred and consist primarily of compensation costs, outside services, expensed materials, and overhead expenses. Research, development, and engineering expenses increased during the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022, primarily due to higher incentive compensation.

Selling, General, and Administrative

Selling, general, and administrative costs are expensed as incurred and consist primarily of compensation costs, marketing costs, travel expenses, professional service fees, and overhead expenses. Selling, general and administrative expenses increased during the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022, primarily due to higher incentive compensation, travel expenses and charges incurred in connection with the pending Merger with HP partially offset by lower advertising expense.

Restructuring and Other Related Charges

Restructuring and other related charges decreased during the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022. During the three months ended July 3, 2021 we recorded restructuring and other related charges to reduce expenses and optimize our cost structure. These actions consisted of headcount reductions and office closures.

Interest Expense

Interest expense for the three months ended July 2, 2022 and July 3, 2021 was as follows:


	Three Months Ended
(in thousands, except percentages)	July 2, 2022			July 3, 2021			Change
Interest expense	$	16,121		$	21,782		26.0	%
% of total net revenues	3.9		%	5.1		%

Interest expense decreased during the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022, primarily due to lower outstanding balance of Senior Notes. During the first quarter of Fiscal Year 2022 we incurred interest expense related to the 2025 Senior Notes as well as the amortization of the remaining debt issuance costs upon their redemption in May 2021.

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Other Non-Operating Expense (Income), Net

Other non-operating income, net for the three months ended July 2, 2022 and July 3, 2021 was as follows:


	Three Months Ended
(in thousands, except percentages)	July 2, 2022			July 3, 2021			Change
Other non-operating expense (income), net	$	2,922		$	(692)		(522.3)	%
% of total net revenues	0.7		%	(0.2)		%

Other non-operating expense, net increased during the first quarter of Fiscal Year 2023 compared to the first quarter of Fiscal Year 2022, primarily due to unrealized losses on the deferred compensation asset portfolio and higher immaterial foreign exchange losses.

Income Tax Benefit


	Three Months Ended
(in thousands except percentages)	July 2, 2022			July 3, 2021			Change
Loss before income taxes	$	(34,125)		$	(41,073)		16.9	%
Income tax benefit	(1,038)			(4,262)			75.6	%
Net loss	$	(33,087)		$	(36,811)		10.1	%
Effective tax rate	3.0		%	10.4		%

The difference between the effective tax rate and the U.S. federal statutory rate primarily relates to the excess stock tax benefit, U.S. and foreign income mix, and the valuation allowance on the U.S. federal and state DTAs that continues to be maintained as of July 2, 2022.

In September 2021, we transferred certain non-Americas intellectual property (“IP”) rights between our wholly-owned subsidiaries (“IP transfer”) to align with our evolving business operations, resulting in the derecognition of a deferred tax asset (“DTA”) of $91.1 million and the recognition of a new DTA of $204.5 million, which represents the book and tax basis difference in the IP and was based on the fair value of the IP, in the respective subsidiaries. This results in a net discrete deferred tax benefit of $113.4 million.

Management has concluded that an impairment for local statutory and tax reporting to the aforementioned IP exists and the impairment loss is deductible for local tax purposes. As such, a DTA related to net operating loss carryforward of $48.0 million was recognized, offset by a corresponding decrease in the DTA related to the intangible asset by the same amount as of April 2, 2022. Because the IP intangible asset is the result of an intercompany transfer, there is no intangible asset recognized in the consolidated balance sheets. Accordingly, there is no net impact to the Company’s consolidated statements of operations, balance sheet, or cash flows.

Valuation allowances are established when necessary to reduce DTA's to the amounts that are more-likely-than-not expected to be realized. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing DTA's. Valuation allowances are established when necessary to reduce DTA's to the amounts that are more-likely-than-not to be realized. On the basis of this evaluation, as of July 2, 2022, a valuation allowance against our U.S. federal and state DTA's continues to be maintained.

A significant portion of the Company's DTAs relate to internal intellectual 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. The amount of the DTA's considered realizable, however, could be adjusted if estimates of future taxable income increase or decrease, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence, such as our future projections.

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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. During the three months ended July 2, 2022, the amount of gross unrecognized tax benefits decreased by $1.1 million. As of July 2, 2022, the Company has $14.3 million of unrecognized tax benefits, all of which could result in a reduction of the Company’s effective tax rate if recognized. The reduction in gross unrecognized tax benefits is primarily attributable to the lapse of applicable statutes of limitations.

FINANCIAL CONDITION

Liquidity and Capital Resources

The following tables present selected financial information and statistics as of July 2, 2022 and April 2, 2022 and for the three months ended July 2, 2022 and July 3, 2021 (in thousands):


	July 2, 2022		April 3, 2021
Cash and cash equivalents and short-term investments	$	154,270	$	183,703
Property, plant, and equipment, net	124,052		127,021

Long-term debt, net	1,501,337		1,500,283
Working capital	274,845		271,691


	Three Months Ended
	July 2, 2022		July 3, 2021
Cash (used in) provided by operating activities	$	(2,981)	$	849
Cash used in investing activities	(7,197)		(10,456)
Cash used in financing activities	(14,233)		(490,905)

Our cash and cash equivalents as of July 2, 2022 consisted of bank deposits with third-party financial institutions. As of July 2, 2022, of our $154.3 million of cash and cash equivalents and short-term investments, $59.6 million was held domestically while $94.7 million was held by foreign subsidiaries, and approximately 64% was based in USD-denominated instruments. As of July 2, 2022, our short-term investments were composed of mutual funds. An additional source of liquidity is $97.6 million of availability from our revolving credit facility, net of outstanding letters of credit.

Historically, we use cash provided by operating activities as our primary source of liquidity. We expect that cash provided by operating activities will fluctuate in future periods, including the current quarter as a result of a number of factors, including fluctuations in our revenues, the timing of compensation-related payments, such as our annual bonus/variable compensation plan, interest payments on our long-term debt, product shipments, accounts receivable ~~at March 31, 2017. Two customers, Ingram Micro Group~~collections, inventory and ~~D&H Distributors, accounted~~supply chain management, and the timing and amount of tax and other payments.

During the first quarter of Fiscal Year 2023, cash used in operating activities of $(3.0) million was a result of a $(33.1) million net loss, $(22.8) million of cash used in net working capital and $(2.9) million of cash payments for ~~13.5%~~restructuring charges, partially offset by $55.8 million in net favorable non-cash adjustments. Cash used in investing activities of $(7.2) million consisted primarily of capital expenditures. Cash used in financing activities of $(14.2) million consisted of employees' tax withheld and ~~13.8%, respectively,~~paid for restricted stock units.

During the first quarter of Fiscal Year 2022, cash provided by operating activities of $0.8 million was a result of non-cash adjustments to net loss of $66.3 million, partially offset by $(36.8) million of net loss and a decrease in the net change in operating assets and liabilities of $(28.7) million. Cash used in investing activities of ($10.4) million consisted primarily of capital expenditures of ($6.1) million and other investing activities of ($4.0) million. Cash used in financing activities consisted primarily of ($480.7) million of repayments of long-term debt and $($10.2) million of employees' tax withheld and paid for restricted stock and restricted stock units.

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Capital Expenditures

We anticipate our current cash and cash flows from operating activities will be sufficient to fund our capital expenditures in Fiscal Year 2023, relating primarily to investments in our manufacturing capabilities, including tooling for new products, new IT investments, and facilities upgrades. We will continue to evaluate new business opportunities and new markets. As a result, our future growth within the existing business or new opportunities and markets may dictate the need for additional facilities and capital expenditures to support that growth.

Debt

In July 2018, in connection with the acquisition of Polycom, the Company entered into a Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto and borrowed the full amount available under the term loan facility of $1.245 billion, net of approximately $30 million of discounts and issuance costs. During the first three months of Fiscal Year 2023, we did not repay any of our outstanding principal. As of July 2, 2022, we had $1.0 billion of principal outstanding.

In December 2021, the Company entered into an Amendment to the Credit Agreement in order to relax certain financial covenants on the revolving line of credit. The financial covenants under the Credit Agreement are for the benefit of the revolving credit lenders only and do not apply to any other debt of the Company. As of July 2, 2022, the Company has three outstanding letters of credit on the revolving credit facility for a total ~~net accounts receivable at December 31, 2017.~~of $2.4 million and had $97.6 million available under the revolving credit facility. As of July 2, 2022, the Company was in compliance with the financial covenants.

~~16. SUBSEQUENT EVENTS~~

~~On January 30,~~In July 2018, the Company ~~announced that~~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. In June 2021, the Company entered into a three-year amortizing interest rate swap agreement with Bank of America, N.A. The swap has an initial notional amount of $680 million and matures on July 31, 2024. During the three months ended July 2, 2022, the Company reclassified into interest expense $0.6 million and recorded a $28.3 million unrealized gain on its ~~Audit Committee had declared~~interest rate swaps derivatives designated as a cash flow hedge.

In March 2021, the Company issued $500.0 million aggregate principal amount of 4.75% Senior Notes. The 4.75% Senior Notes mature in March 2029 and ~~approved~~bear interest at a rate of 4.75% per annum, payable semi-annually on March 1 and September 1 of each year. A portion of the proceeds from the 4.75% Senior Notes was used to redeem the outstanding principal and accrued interest on the 5.50% Senior Notes of $493.9 million in May 2021. As of July 2, 2022, $500 million of principal was outstanding. On July 25, 2022, the Company entered into a supplemental indenture to, among other changes, eliminate substantially all of the restrictive covenants with respect to certain change of control triggering events, effective no earlier than the closing date of the Merger with HP. See Note 7, Debt, of the accompanying notes to the condensed consolidated financial statements included within “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q.

Our ability to make scheduled payments or to refinance our obligations with respect to the Senior Notes and our other indebtedness under our Credit Agreement will depend on our financial and operating performance, which, in turn, is subject to prevailing economic and industry conditions and other factors, including the availability of financing in the banking and capital markets, beyond our control. In addition, any refinancing of our indebtedness may be at higher interest rates, particularly in the current environment of rising interest rates, and may require us to comply with more onerous covenants, which could further restrict our operations.

We may at any time and from time to time, depending on market conditions and 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. Under the terms of the Merger Agreement, from the date of the Merger Agreement to the termination or consummation of the Merger, we are restricted in our ability to drawdown or incur additional indebtedness, under certain conditions, without the prior written consent of HP.

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In addition, our liquidity, capital resources, and results of operations in any period could be affected by repurchases of our common stock, the payment in the future of cash dividends if the Board determines to reinstate the dividend program, the exercise of outstanding stock options, restricted stock grants under stock plans, and the issuance of common stock under the Employee Stock Purchase Program (“ESPP”). We receive cash from the exercise of outstanding stock options under our stock plan and the issuance of shares under our ESPP. However, the resulting increase in the number of outstanding shares from these equity grants and issuances could affect our earnings per share. We cannot predict the timing or amount of proceeds from the sale or exercise of these securities or whether they will be exercised, forfeited, canceled, or will expire.

For further information regarding our debt issuances and related hedging activity refer to Note 7, Debt, and Note 10, Derivatives, of the accompanying notes to the condensed consolidated financial statements included within “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q.

We believe that our current cash and cash equivalents, short-term investments, cash provided by operations, and availability of additional funds under the Credit Agreement, as amended from time to time, will be sufficient to fund our operations for one year from the date of issuance of these financial statements; however, any projections of future financial needs and sources of working capital are subject to uncertainty, particularly in light of the uncertainty resulting from the impact of COVID-19 on our financial results. Readers are cautioned to review the risks, uncertainties, and assumptions set forth in this Quarterly Report on Form 10-Q, including the section entitled “Certain Forward-Looking Information” and the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended April 2, 2022, filed with the SEC on May 27, 2022, and other periodic filings with the SEC, any of which could affect our estimates for future financial needs and sources of working capital.

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We have not entered into any transactions with unconsolidated entities whereby 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 ~~dividend~~variable interest in an unconsolidated entity that provides us with financing and liquidity support, market risk, or credit risk support.

Unconditional Purchase Obligations

The Company's off-balance sheet unconditional purchase obligations are comprised of ~~$0.15~~ ~~per share~~third-party manufacturing, component purchases, and other general and administrative commitments.

We use several contract manufacturers to manufacture raw materials, components, and subassemblies for our products through our supply and demand information that can cover periods up to 78 weeks. 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 using a combination of purchase orders, supplier contracts, including annual minimum purchase obligations, and open orders based on ~~March 9, 2018~~projected demand information.

A substantial portion of the raw materials, components, and subassemblies used in our products are provided by our suppliers on a consignment basis. These consigned inventories are not recorded on our condensed consolidated balance sheets until we take title to ~~holders~~the raw materials, components, and subassemblies, which occurs when they are consumed in the production process. Prior to consumption in the production process, our suppliers bear the risk of ~~record~~loss and retain title to the consigned inventory. The agreements allow us to return parts in excess of maximum order quantities to the suppliers at the supplier’s expense. Returns for other reasons are negotiated with the suppliers on ~~February 20, 2018~~.a case-by-case basis and to date have been immaterial. If our suppliers were to discontinue financing consigned inventory, it would require us to make cash outlays and we could incur expenses which, if material, could negatively affect our business and financial results.

As of July 2, 2022, our unconditional purchase obligations were primarily comprised of third-party manufacturing and component purchase commitments, including $77.4 million of consigned inventories. We expect to consume unconditional purchase obligations in the normal course of business, net of an immaterial purchase commitments reserve. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs in partnering with our suppliers given the current environment.

~~Quantitative~~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 April 2, 2022.

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CRITICAL ACCOUNTING ESTIMATES

For a complete description of what we believe to be the critical accounting estimates used in the preparation of our condensed consolidated financial statements, refer to our Annual Report on Form 10-K for the fiscal year ended April 2, 2022. There have been no material changes to our critical accounting estimates during Fiscal Year 2023.

Recent Accounting Pronouncements

Recent accounting pronouncements issued by the FASB did not and ~~Qualitative Disclosures About Market Risk~~are not expected to have a material impact on the Company's financial position, results of operations, or cash flows.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The discussion of our exposure to market risk related to changes in interest rates and foreign currency exchange rates contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors, including those discussed in Part I, ~~"Item~~“Item 1A. Risk ~~Factors"~~Factors” in our Annual Report on Form 10-K for the fiscal year ended ~~March 31, 2017, filed with the SEC on~~ ~~May 10, 2017~~.April 2, 2022, which could materially affect our business, financial position, or future results of operations.

INTEREST RATE RISK

~~We reported the following balances in cash and cash equivalents, short-term investments, and long-term investments as follows:~~

(in millions) March 31, 2017 December 31, 2017
Cash and cash equivalents $ 302.0
$ 280.3
Short-term investments $ 178.2
$ 218.8
Long-term investments $ 127.2
$ 118.9

~~As of~~ ~~December 31, 2017, our investments were composed of Mutual Funds, US Treasury Notes, Government Agency Securities, Commercial Paper, Corporate Bonds, and Certificates of Deposits ("CDs").~~

~~Our investment policy and strategy are focused on preservation of capital and supporting our liquidity requirements.~~ Our exposure to market risk for changes in interest rates relates primarily to our ~~investment portfolio. Our investment policy generally limits~~floating-rate interest payments under our $1.275 billion term loan facility. Borrowings under the ~~amount~~Credit Agreement bear interest at a variable rate equal to (i) LIBOR plus a specified margin, or (ii) the base rate (which is the highest of ~~credit~~(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.

On July 30, 2018, we entered into a four-year amortizing interest rate swap agreement, and on June 15, 2021, we entered into a three-year amortizing interest rate swap agreement, both with Bank of America, N.A., as part of our overall strategy to manage our exposure to ~~any one issuer~~market risks associated with fluctuations in interest rates on the $1.275 billion term loan facility. As a matter of policy, we only enter into transactions that we believe will be highly effective at offsetting the underlying risk and requires investments to be high credit quality, primarily rated A or A2 and above, with the objective of minimizing the potential risk of principal loss. All highly liquid investments with initial maturities of three months or less at the date of purchase are classified as cash equivalents. We classify our investments as either short-term or long-term based on each instrument's underlying effective maturity date. All short-term investments have effective maturities of less than 12 months, while all long-term investments have effective maturities greater than 12 months or we do not ~~currently~~use derivatives for trading or speculative purposes. Our objective is to mitigate the impact of interest expense fluctuations on our profitability related to interest rate changes by minimizing movements in future debt payments with these interest rate swaps.

The first swap has an initial notional amount of $831 million and matures on July 31, 2022. The second swap has an initial notional amount of $680 million and matures on July 31, 2024. The swaps involve the receipt of floating-rate interest payments for fixed interest rate payments over the life of the agreement. We have designated these interest rate swaps as cash flow hedges. Changes in the ~~ability~~fair value of the derivatives are recorded to ~~liquidate~~other comprehensive income on the ~~investment. We may sell our investments prior~~condensed consolidated statements of comprehensive (loss) income and are reclassified to ~~their stated maturities for strategic purposes, in anticipation~~interest expense over the life of ~~credit deterioration, or for duration management. No material realized or unrealized gains or losses were recognized during~~the agreements. For additional details, refer to Note 10, Derivatives, of the accompanying notes to the condensed consolidated financial statements within “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q. During the three ~~and nine~~ months ended ~~December 31, 2016~~July 2, 2022, we made payments of approximately $0.7 million on our interest rate swaps and ~~2017.~~recognized $0.6 million within interest expense on the condensed consolidated statement of operations. As of July 2, 2022, we had an immaterial amount of interest accrued within accrued liabilities on the condensed consolidated balance sheet. A hypothetical 10% increase or decrease on market interest rates could result in a corresponding immaterial increase or decrease in annual interest expense due to the two interest rate swaps.

Interest rates were ~~relatively unchanged in~~ higher in the three ~~and nine~~ months ended ~~December 31, 2017~~July 2, 2022 compared to the same period in the prior year. InInterest income was not material in the three ~~and nine~~ months ended ~~December 31, 2016~~July 2, 2022 and 2017 we generated interest income of $0.9 million and $2.6 million and $1.4 million and $3.4 million, respectively.. We incurred no significant interest expense from our revolving line of credit in the three and nine months ended December 31, 2017. The 5.50% Senior Notes are at a fixed interest rate and we have not elected the fair value option for these instruments; accordingly we are not exposed to any economic interest rate risk related to this indebtedness; however, the fair value of this instrument fluctuates as market interest rates change. The increase in interest expense caused by a 10 basis point increase in the interest rates of our variable-rate revolving line of credit indebtedness would not be significant. A hypothetical 10 basis points increase or decrease on market interest rates related to our investment portfolio would have an immaterial impact on our results of operations.July 3, 2021.

FOREIGN CURRENCY EXCHANGE RATE RISK

We are a net receiver of currencies other than the United States Dollar (“USD.”) Accordingly, changes in exchange rates, and in particular a strengthening of the USD, could negatively affect our total net revenues and gross margins, as expressed in USD. There is a risk that we will have to adjust local currency product pricing due to competitive pressures if there is significant volatility in foreign currency exchange rates.

The primary currency fluctuations to which we are exposed are the Euro ~~("EUR"~~(“EUR”), ~~British~~Great Britain Pound Sterling ~~("GBP"~~(“GBP”), ~~Australian Dollar ("AUD"), Canadian Dollar ("CAD"),~~and Mexican Peso ~~("MXN"~~(“MXN.”)~~, and the Chinese Renminbi ("RMB").~~ We use a hedging strategy to diminish, and make more predictable, the effect of currency fluctuations. All of our hedging activities are entered into with large financial institutions, which we periodically evaluate for credit risks. We hedge our balance sheet exposure by hedging EUR ~~GBP, AUD,~~ and ~~CAD~~GBP denominated cash, accounts receivable, and accounts payable balances, and our economic exposure by hedging a portion of anticipated EUR and GBP denominated sales and our MXN denominated expenditures. We can provide no assurance that our strategy will be successful in the future orand that exchange rate fluctuations will not materially adversely affect our business. We do not hold or issue derivative financial instruments for speculative trading purposes. While our existing hedges cover a certain amount of exposure for the upcoming fiscal year, long-term strengthening of the USD relative to the currencies of other countries in which we sell may have a material adverse impact on our financial results. In addition, our results may be adversely impacted by future changes in foreign currency exchange rates relative to original hedging contracts.

Table of Contents

The impact of changes in foreign currency rates recognized in other non-operating income, ~~and (expense),~~ net ~~was~~was immaterial in ~~both the~~the three ~~and nine~~ months ended ~~December 31, 2016 and 2017.~~July 2, 2022. Although we hedge a portion of our foreign currency exchange exposure, the weakening of certain foreign currencies, particularly the EUR and GBP in comparison to the USD, could result in material foreign exchange losses in future periods.

~~Non-designated~~Non-Designated Hedges

We hedge our EUR ~~GBP, AUD,~~ and ~~CAD~~GBP denominated cash, accounts receivable, and accounts payable balances by entering into foreign exchange forward contracts. The table below presents the impact on the foreign exchange gain (loss) of a hypothetical 10% appreciation and a 10% depreciation of the USD against the forward currency contracts as of ~~December 31, 2017~~July 2, 2022 (in millions):


Currency - forward contracts	Position	USD Notional 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	$	54.1	$	5.4	$	(5.4)
GBP	Sell GBP	8.7		0.9		(0.9)

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 $ 46.6
$ 4.7
$ (4.7 )
GBP Sell GBP $ 6.9
$ 0.7
$ (0.7 )
AUD Sell AUD $ 11.1
$ 1.1
$ (1.1 )
CAD Sell CAD $ 2.3
$ 0.2
$ (0.2 )

Cash Flow Hedges

In the ~~nine~~three months ended ~~December 31, 2017, 49%~~July 2, 2022, approximately 54% of our total net revenues were derived from sales outside of the U.S. and were denominated primarily in EUR and GBP.

As of ~~December 31, 2017~~,July 2, 2022, we had foreign currency put and call option contracts with notional amounts of approximately ~~€75.8~~€84.4 million and ~~£22.9~~£17.3 million denominated in EUR and GBP, respectively. ~~Collectively,~~Collectively, our option contracts hedge against a portion of our forecasted foreign currency denominated sales. If the USD is subjected to either a 10% appreciation or 10% depreciation versus these net exposed currency positions, we could realize a gain of ~~$7.7~~$10.8 million or incur a loss of ~~$9.5~~$3.6 million,, respectively.

The table below presents the impact on the Black-Scholes valuation of our currency option contracts of a hypothetical 10% appreciation and a 10% depreciation of the USD against the indicated ~~open~~ option contract type for cash flow hedges as of ~~December 31, 2017~~July 2, 2022 (in millions):


Derivative	USD Notional Value of Net Foreign Exchange Contracts		Foreign Exchange Gain From 10% Appreciation of USD		Foreign Exchange (Loss) From 10% Depreciation of USD
Call options	$	119.5	$	0.5	$	(3.7)
Put options	110.1		7.7		(2.6)
Forwards	94.6		8.8		(8.8)

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 $ 122.0
$ 4.9
$ (9.2 )
Put options $ 112.6
$ 2.8
$ (0.3 )
Forwards $ 21.0
$ 2.1
$ (2.1 )

Collectively, our swap contracts hedge against a portion of our forecasted MXN denominated expenditures. As of ~~December 31, 2017~~,July 2, 2022, we had cross-currency swap contracts with notional amounts of approximately MXN ~~76.3~~363.0 million.

The table below presents the impact on the valuation of our cross-currency swap contracts of a hypothetical 10% appreciation and a 10% depreciation of the USD as of ~~December 31, 2017~~July 2, 2022 (in millions):


Derivative	USD Notional Value of Cross-Currency Swap Contracts		Foreign Exchange (Loss) From 10% Appreciation of USD		Foreign Exchange Gain From 10% Depreciation of USD
Position: Buy MXN	$	17.3	$	(1.7)	$	1.7

Except as described above, there have been no material changes in our market risk as described in our Annual Report on Form 10-K for the fiscal year ended April 2, 2022.

Currency - cross-currency swap contracts Position USD Value of Net Foreign Exchange Contracts Foreign Exchange Loss From 10% Appreciation of USD Foreign Exchange Gain From 10% Depreciation of USD
MXN Buy MXN $ 3.9
$ (0.3 ) $ 0.4

Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

~~Controls~~(a)Evaluation of disclosure controls and ~~Procedures~~procedures


~~(a)~~	~~Evaluation of disclosure controls and procedures~~

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.


~~(b)~~	~~Changes in internal control over financial reporting~~

(b)Changes in internal control over financial reporting

There have ~~not~~ been ~~any~~no changes in the Company’s internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II --– OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are presently engaged in various legal actions arising in the normal course of business. We ~~believe that it is unlikely~~do not expect that any of these actions will have a material adverse impact on our operating results; however, because of the inherent uncertainties of litigation, the outcome of any of these actions could be unfavorable and could have a material adverse effect on our financial condition, results of operations, or cash flows. For additional information about our material legal proceedings, please see Note 6, Commitments and Contingencies, of the accompanying notes to the condensed consolidated financial ~~statements.~~statements within “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

You should carefully consider the risk factors discussed in Part I, ~~"Item~~“Item 1A. Risk ~~Factors"~~Factors” in our Annual Report on Form 10-K for the fiscal year ended ~~March 31, 2017, filed with the SEC on May 10, 2017 (the "Form 10-K"),~~April 2, 2022, each of which could materially affect our business, financial position, or future results of operations. ~~Except as described below, there have been no material changes to the risk factors included in the Form 10-K.~~

~~Changes in applicable tax regulations and resolutions of tax disputes could negatively affect our financial results.~~

The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The changes included in the Tax Act are broad and complex. As rule making bodies and new legislation is enacted to interpret the Tax Act, these changes may adjust the estimates provided in this report. The changes may possibly be material, due to, among other things, the Treasury Department’s promulgation of regulations and guidance that interpret the Tax Act, corrective technical legislative amendments that may change the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries.

In addition, it is uncertain how each country where we do business may react to the Tax Act. Moreover, the evolving global tax landscape accompanying the adoption and guidance associated with the Base Erosion and Profit Shifting reporting requirements (“BEPS") recommended by the G8, G20 and Organization for Economic Cooperation and Development ("OECD") may require us to make adjustments to our financial results. As these and other tax laws and related regulations change, our financial results could be materially impacted. Given the unpredictability of these possible changes, it is difficult to assess whether the overall effect of these potential tax changes would be positive or negative for our earnings and cash flow, but such changes could adversely impact our financial results.

We are also subject to examination by the Internal Revenue Service ("IRS") and other tax authorities, including state revenue agencies and foreign governments. While we regularly assess the likelihood of favorable or unfavorable outcomes resulting from examinations by the IRS and other tax authorities to determine the adequacy of our provision for income taxes, there can be no assurance that the actual outcome resulting from these examinations will not materially adversely affect our financial condition and results of operations.

The risks described ~~here~~within this Quarterly Report on Form 10-Q and in the Annual Report on ~~the~~ Form 10-K for the fiscal year ended April 2, 2022 are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial position, or future results of operations.

Table of Contents

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

~~Share Repurchase Programs~~

During the three months ended July 2, 2022, we did not repurchase any shares of our common stock. As of July 2, 2022, there remained 1,369,014 shares authorized for repurchase under the existing stock repurchase program. The following table presents ~~a month-to-month summary~~information with respect to shares that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock ~~purchase activity in~~grants under our stock plans during the ~~third quarter of fiscal year 2018:~~three months ended July 2, 2022:


	Total Number of Shares Purchased (4)	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)
April 3, 2022 to April 30, 2022	0	N/A	—	1,369,014
May 1, 2022 to May 28, 2022	356,765	N/A	—	1,369,014
May 29, 2022 to July 2, 2022	4,676	N/A	—	1,369,014

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 Programs⁶
October 1, 2017 to October 28, 2017 212,580
³
$ 45.06
210,370
818,216
October 29, 2017 to November 25, 2017 74,371
⁴
$ 47.82
72,678
745,538
November 26, 2017 to December 30, 2017 18,821
⁵
$ 50.48
14,606
730,932



1		(1)	On ~~July 27, 2017 the~~November 28, 2018, our Board ~~of Directors authorized~~approved a 1.0 million shares repurchase program expanding our capacity to repurchase ~~1,000,000~~ shares ~~of our common stock~~to approximately 1.7 million shares. We may repurchase shares from time to time in ~~the~~open market transactions or inthrough privately negotiated ~~repurchases as determined by management.~~transactions. There is no expiration date associated with the repurchase activity.
(2)
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 repurchase program approved by the Board on November 28, 2018.
3(4)				~~Includ~~es ~~2,210 shares~~Represents only shares that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock ~~granted~~grants under our stock plans.

4	~~Includes 1,693 shares~~ ~~that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under our stock plans.~~

5	~~Includes 4,215 shares~~ ~~that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under our stock plans.~~

6	~~These shares reflect the available shares authorized for repurchase under the program approved by the Board on July 27, 2017.~~

Table of Contents

ITEM 6. EXHIBITS

We have filed the following documents as Exhibits to this Quarterly Report on Form 10-Q:

EXHIBITS INDEX

Exhibit Number

Incorporation by Reference

Filed Herewith

Exhibit Description

Form

File No.

Exhibit

Filing Date

4.1

First Supplemental Indenture, dated as of July 25, 2022, to the Indenture, dated March 4, 2021, by and among Plantronics, Inc. the Subsidiary Guarantor party thereto and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee

8-K

001-12696

4.1

7/27/2022

31.1

Certification of the President and CEO Pursuant to Rule 13a-14(a)/15d-14(a)

31.2

Certification of Executive Vice President and CFO Pursuant to Rule 13a-14(a)/15d-14(a)

32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

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

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

Inline XBRL Taxonomy Definition Linkbase Document

104

Cover Page Interactive Data File, (formatted as Inline XBRL and contained in Exhibit 101)

~~Exhibit Number~~

~~Incorporation by Reference~~

~~Filed Herewith~~

~~Exhibit Description~~

~~Form~~

~~File No.~~

~~Exhibit~~

~~Filing Date~~

~~31.1~~

~~Certification of the President and CEO Pursuant to Rule 13a-14(a)/15d-14(a).~~

~~31.2~~

~~Certification of Senior Vice President and CFO Pursuant to Rule 13a-14(a)/15d-14(a).~~

~~32.1~~

~~Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.~~

~~101.INS~~

~~XBRL Instance Document~~

~~101.SCH~~

~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~

~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.LAB~~

~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~

~~XBRL Taxonomy Extension Presentation Linkbase Document~~

~~101.DEF~~

~~XBRL Taxonomy Definition Linkbase Document~~

~~Plantronics, Inc.~~

~~FORM 10-Q~~

~~CROSS REFERENCE TABLE~~

Table of Contents

Item Number Page(s)
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
15
-
34

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
3
-
14

Item 3. Quantitative and Qualitative Disclosures about Market Risk
35
-
37

Item 4. Control and Procedures
37

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
37

Item 1A. Risk Factors
37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
39

Item 6. Exhibits
40

Signatures
41

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		PLANTRONICS, INC.

Date:	~~January 30, 2018~~August 11, 2022	By:	/s/ ~~Pamela Strayer~~Charles D. Boynton
		Name:	~~Pamela Strayer~~Charles D. Boynton
		Title:	~~Senior~~Executive Vice President and Chief Financial Officer (on behalf of the Registrant and as principal financial officer and principal accounting officer)



Delaware			77-0207692
(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
Common Stock, $0.01 par value	POLY	New York Stock Exchange



Large accelerated filerx	☒		Accelerated filero	☐
Non-accelerated filero	☐		Smaller reporting companyo	☐
			Emerging growth companyo
		~~(Do not check if a smaller reporting company)~~	☐



~~PART I. FINANCIAL INFORMATION~~		Page ~~No.~~
PART I		FINANCIAL INFORMATION
Item 1.		Condensed Consolidated Financial Statements (Unaudited)	3
		Condensed Consolidated Balance Sheets as of July 2, 2022 and April 2, 2022	3
		Condensed Consolidated Statements of Operations for the Three Months Ended July 2, 2022 and July 3, 2021	4
		Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended July 2, 2022 and July 3, 2021	5
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended July 2, 2022 and July 3, 2021	6
		Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the Three Months Ended July 2, 2022 and July 3, 2021	7
		Notes to the Condensed Consolidated Financial Statements	8
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	327

Overview	328

Results of Operations	530

Financial Condition	1035

Off Balance Sheet Arrangements and Contractual Obligations	1337

Critical Accounting Estimates	1438

~~Financial Statements (Unaudited):~~Item 3.	15

~~Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2017~~	15

~~Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2016 and 2017~~	16

~~Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended December 31, 2016 and 2017~~	17

~~Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2016 and 2017~~	18

~~Notes to Condensed Consolidated Financial Statements~~	19

Quantitative and Qualitative Disclosures About Market Risk	3539
Item 4.
Controls and Procedures	3741

PART ~~II.~~ II		OTHER INFORMATION

Item 1.		Legal Proceedings	3741
Item 1A.		Risk Factors	41
~~Risk Factors~~Item 2.		37

Unregistered Sales of Equity Securities and Use of Proceeds	3942
Item 6.		Exhibits	43

~~Exhibits~~Signatures		40

~~Cross Reference Table~~	4044

~~Signatures~~	41


	July 2, 2022		April 2, 2022
ASSETS
Current assets
Cash and cash equivalents	$	142,362	$	170,000

Short-term investments	11,908		13,703
Accounts receivable, net	274,939		277,924
Inventory, net	245,189		234,102
Other current assets	90,918		83,410
Total current assets	765,316		779,139
Non-current assets

Property, plant, and equipment, net	124,052		127,021
Purchased intangibles, net	202,437		230,478
Goodwill	796,216		796,216
Deferred tax assets	214,229		215,861
Other non-current assets	68,449		76,639
Total assets	$	2,170,699	$	2,225,354

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities
Accounts payable	$	173,252	$	168,610
Accrued liabilities	317,219		338,836

Total current liabilities	490,471		507,446
Non-current liabilities
Long-term debt, net	1,501,337		1,500,283

Long-term income taxes payable	66,770		68,082

Other non-current liabilities	118,515		129,381
Total liabilities	2,177,093		2,205,192
Commitments and contingencies (Note 6)	0		0
Stockholders' (deficit) equity
Common stock	940		930
Additional paid-in capital	1,630,792		1,616,198
Accumulated other comprehensive income	39,081		32,911
Accumulated deficit	(780,403)		(747,316)
Total stockholders' equity before treasury stock	890,410		902,723
Less: Treasury stock, at cost	(896,804)		(882,561)
Total stockholders' (deficit) equity	(6,394)		20,162
Total liabilities and stockholders' (deficit) equity	$	2,170,699	$	2,225,354



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



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended July 2, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Treasury Stock		Total Stockholders' (Deficit) Equity
	Shares	Amount
Balances at April 2, 2022	43,073	$	930	$	1,616,198	$	32,911	$	(747,316)	$	(882,561)	$	20,162
Net loss	—	—		—		—		(33,087)		—		(33,087)

Net unrealized gains on cash flow hedges, net of tax	—	—		—		6,170		—		—		6,170

Proceeds from issuances under stock-based compensation plans	651	10		—		—		—		—		10



Stock-based compensation	—	—		14,594		—		—		—		14,594


Employees' tax withheld and paid for restricted stock units	—	—		—		—		—		(14,243)		(14,243)




Balances at July 2, 2022	43,724	$	940	$	1,630,792	$	39,081	$	(780,403)	$	(896,804)	$	(6,394)


	Three Months Ended July 3, 2021
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Treasury Stock		Total Stockholders' Deficit
	Shares	Amount
Balances at April 3, 2021	41,751	$	912	$	1,556,272	$	(3,221)	$	(765,233)	$	(869,496)	$	(80,766)
Net loss	—	—		—		—		(36,811)		—		(36,811)

Net unrealized gains on cash flow hedges, net of tax	—	—		—		4,823		—		—		4,823

Proceeds from issuances under stock-based compensation plans	569	9		—		—		—		—		9


Stock-based compensation	—	—		10,416		—		—		—		10,416


Employees' tax withheld and paid for restricted stock and restricted stock units	—	—		—		—		—		(10,225)		(10,225)




Balances at July 3, 2021	42,320	$	921	$	1,566,688	$	1,602	$	(802,044)	$	(879,721)	$	(112,554)



~~Net Revenues~~ ~~(in millions)~~	~~Operating Income~~ ~~(in millions)~~



	Three Months Ended											Nine Months Ended
	December 31,						Increase					December 31,						Increase
(in thousands, except percentages)	2016			2017			(Decrease)					2016			2017			(Decrease)
Net revenues	$	232,933		$	226,534		$	(6,399	)	(2.7	)%	$	672,222		$	640,760		$	(31,462	)	(4.7	)%
Cost of revenues	122,753			112,409			(10,344		)	(8.4	)%	338,523			315,720			(22,803		)	(6.7	)%
Gross profit	$	110,180		$	114,125		$	3,945		3.6	%	$	333,699		$	325,040		$	(8,659	)	(2.6	)%
Gross profit %	47.3		%	50.4		%						49.6		%	50.7		%


(in thousands)	Amount
2023 (remaining nine months)	84,124
2024	66,869
2025	22,544
2026	12,844
2027	12,844
Thereafter	3,212
Total	$	202,437


(in thousands)	Operating Leases(1)
2023 (remaining nine months)	$	9,983
2024	12,485
2025	9,166
2026	7,956
2027	6,344
Thereafter	10,802
Total lease payments	56,736
Less: Imputed interest(2)	(6,167)
Present value of lease liabilities	$	50,569



~~Operating Cash Flow~~ ~~(in millions)~~	~~Investing Cash Flow(in millions)~~	~~Financing Cash Flow~~ ~~(in millions)~~



(in millions)	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Toll charge	$	69.3	$	5.5	$	11.0	$	11.2	$	41.6


	Three Months Ended
(in thousands)	July 2, 2022		July 3, 2021
Warranty obligation at beginning of period	$	18,711	$	17,384

Warranty provision related to products shipped	4,733		4,157
Deductions for warranty claims processed	(6,494)		(6,800)
Adjustments related to preexisting warranties	1,848		3,603
Warranty obligation at end of period	$	18,798	$	18,344


	July 2, 2022							April 2, 2022
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing Assets
Existing technology	$	429,923	$	(358,575)	$	71,348	1.1 years	$	429,923	$	(342,103)	$	87,820
Customer relationships	240,024		(173,157)		66,867		2.0 years	240,024		(164,799)		75,225
Trade name/Trademarks	115,600		(51,378)		64,222		5.0 years	115,600		(48,167)		67,433
Total intangible assets	$	785,547	$	(583,110)	$	202,437	2.6 years	$	785,547	$	(555,069)	$	230,478



December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash & Cash Equivalents		Short-term investments (due in 1 year or less)		Long-term investments (due in 1 to 3 years)
Cash	$	272,063	$	—	$	—		$	272,063	$	272,063	$	—	$	—
Level 1:
Mutual Funds	14,298		399		(70		)	14,627		—		14,627		—
US Treasury Notes	71,684		—		(210		)	71,474		4,998		42,348		24,128
Money Market Funds	239		—		—			239		239		—		—
Subtotal	86,221		399		(280		)	86,340		5,237		56,975		24,128
Level 2:
Government Agency Securities	56,667		—		(276		)	56,391		—		31,300		25,091
Commercial Paper	32,944		—		—			32,944		2,993		29,951		—
Corporate Bonds	142,148		45		(375		)	141,818		—		77,175		64,643
Certificates of Deposits ("CDs")	28,383		—		(3		)	28,380		—		23,372		5,008
Subtotal	260,142		45		(654		)	259,533		2,993		161,798		94,742

Total cash, cash equivalents and investments measured at fair value	$	618,426	$	444	$	(934	)	$	617,936	$	280,293	$	218,773	$	118,870



March 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash & Cash Equivalents		Short-term investments (due in 1 year or less)		Long-term investments (due in 1 to 3 years)
Cash	$	295,877	$	—	$	—		$	295,877	$	295,877	$	—	$	—
Level 1:
Mutual Funds	12,079		352		(32		)	12,399		—		12,399		—
US Treasury Notes	35,960		—		(68		)	35,892		—		17,560		18,332
Money Market Funds	—		—		—			—		—		—		—
Subtotal	48,039		352		(100		)	48,291		—		29,959		18,332
Level 2:
Government Agency Securities	54,415		20		(164		)	54,271		—		15,309		38,962
Commercial Paper	47,152		—		—			47,152		6,093		41,059		—
Corporate Bonds	141,508		64		(224		)	141,348		—		73,676		67,672
Certificates of Deposits ("CDs")	20,383		3		—			20,386		—		18,176		2,210
Subtotal	263,458		87		(388		)	263,157		6,093		148,220		108,844

Total cash, cash equivalents and investments measured at fair value	$	607,374	$	439	$	(488	)	$	607,325	$	301,970	$	178,179	$	127,176



	March 31, 2017			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	301,970		$	280,293
Short-term investments	178,179			218,773
Accounts receivable, net	141,177			143,919
Inventory, net	55,456			64,574
Other current assets	22,195			19,460
Total current assets	698,977			727,019
Long-term investments	127,176			118,870
Property, plant, and equipment, net	150,307			144,802
Goodwill and purchased intangibles, net	15,577			15,498
Deferred tax assets	23,242			14,783
Other assets	1,880			1,681
Total assets	$	1,017,159		$	1,022,653

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	42,885		$	45,685
Accrued liabilities	74,285			61,906
Total current liabilities	117,170			107,591
Long term debt, net of issuance costs	491,059			492,146
Long-term income taxes payable	11,729			74,476
Other long-term liabilities	15,045			19,419
Total liabilities	$	635,003		$	693,632
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock	$	804		$	814
Additional paid-in capital	818,777			858,253
Accumulated other comprehensive income	4,694			1,905
Retained earnings	319,931			294,200
Total stockholders' equity before treasury stock	1,144,206			1,155,172
Less: Treasury stock, at cost	(762,050		)	(826,151		)
Total stockholders' equity	382,156			329,021
Total liabilities and stockholders' equity	$	1,017,159		$	1,022,653



	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2017			2016			2017
Net revenues	$	232,933		$	226,534		$	672,222		$	640,760
Cost of revenues	122,753			112,409			338,523			315,720
Gross profit	110,180			114,125			333,699			325,040
Operating expenses:
Research, development, and engineering	21,393			21,257			66,116			62,402
Selling, general, and administrative	56,919			56,196			169,581			170,125
(Gain) loss, net from litigation settlements	(103		)	(15		)	4,287			(295		)
Restructuring and other related charges (credits)	113			(84		)	(1,350		)	2,438
Total operating expenses	78,322			77,354			238,634			234,670
Operating income	31,858			36,771			95,065			90,370
Interest expense	(7,322		)	(7,341		)	(21,867		)	(21,904		)
Other non-operating income and (expense), net	427			2,490			4,119			5,230
Income before income taxes	24,963			31,920			77,317			73,696
Income tax expense	2,742			81,424			14,235			84,419
Net income (loss)	$	22,221		$	(49,504	)	$	63,082		$	(10,723	)

Earnings (Loss) per common share:
Basic	$	0.69		$	(1.54	)	$	1.96		$	(0.33	)
Diluted	$	0.68		$	(1.54	)	$	1.92		$	(0.33	)

Shares used in computing earnings (loss) per common share:
Basic	32,242			32,075			32,260			32,384
Diluted	32,826			32,075			32,895			32,384

Cash dividends declared per common share	$	0.15		$	0.15		$	0.45		$	0.45



	March 31,			December 31,
(in thousands)	2017			2017
Accounts receivable	$	184,759		$	196,175
Provisions for returns	(10,541		)	(11,438		)
Provisions for promotions, rebates, and other	(32,438		)	(39,886		)
Provisions for doubtful accounts and sales allowances	(603		)	(932		)
Accounts receivable, net	$	141,177		$	143,919


(in thousands)	As of April 2, 2022		Accruals (1)		Cash Payments		As of July 2, 2022



















Severance	$	4,502	$	(422)	$	(2,244)	$	1,836
Facility	642		151		(490)		303
Other	85		132		(125)		92
Total	$	5,229	$	(139)	$	(2,859)	$	2,231



	Nine months ended December 31, 2017
(in millions)	Total Charges		Restructuring and Other Related Charges (Credits)		Cost of Revenues		Selling, General, and Administrative
Severance benefits from reduction-in-force	$	1.3	$	1.3	$	—	$	—
Lease exit charge and asset impairments in Netherlands	0.7		0.7		—		—
Write-off of unrecoverable indirect tax asset in Brazil	0.7		—		0.7		—
Asset impairments related to previous Clarity operations	0.4		0.4		—		—
Loss on Clarity asset sale	0.9		—		0.9		—
Accelerated vesting of restricted stock	0.2		—		—		0.2
Totals	$	4.2	$	2.4	$	1.6	$	0.2


	Gross Amount of Derivative Assets Presented in the Condensed Consolidated Balance Sheets		Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet that are Subject to Master Netting Agreements
(in thousands)			Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets
Derivatives subject to master netting agreements	$	40,032	$	(778)	$	—	$	39,254
Derivatives not subject to master netting agreements	—						—
Total	$	40,032					$	39,254


	Gross Amount of Derivative Liabilities Presented in the Condensed Consolidated Balance Sheets		Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet that are Subject to Master Netting Agreements
(in thousands)			Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Received		Net Amount of Derivative Liabilities
Derivatives subject to master netting agreements	$	(778)	$	778	$	—	$	—
Derivatives not subject to master netting agreements	—						—
Total	$	(778)					$	—


(in thousands)	Local Currency		USD Equivalent		Position	Maturity
EUR	€	51,900	$	54,070	Sell EUR	1 month
GBP	£	7,200	$	8,664	Sell GBP	1 month



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	$	46.6	$	4.7	$	(4.7	)
GBP	Sell GBP	$	6.9	$	0.7	$	(0.7	)
AUD	Sell AUD	$	11.1	$	1.1	$	(1.1	)
CAD	Sell CAD	$	2.3	$	0.2	$	(0.2	)



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	$	122.0	$	4.9	$	(9.2	)
Put options	$	112.6	$	2.8	$	(0.3	)
Forwards	$	21.0	$	2.1	$	(2.1	)



	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 Programs⁶
October 1, 2017 to October 28, 2017	212,580	³	$	45.06	210,370	818,216
October 29, 2017 to November 25, 2017	74,371	⁴	$	47.82	72,678	745,538
November 26, 2017 to December 30, 2017	18,821	⁵	$	50.48	14,606	730,932



Item Number	Page(s)
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements	15	-	34

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	3	-	14

Item 3. Quantitative and Qualitative Disclosures about Market Risk	35	-	37

Item 4. Control and Procedures	37

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	37

Item 1A. Risk Factors	37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 6. Exhibits	40

Signatures	41