UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
April 20, 2016
 
POLYCOM, INC.
(Exact name of registrant as specified in its charter)

State of Delaware	000-27978	94-3128324	
(State or Other Jurisdiction
of Incorporation)	(Commission
File Number)	(IRS Employer
Identification No.)	
 
6001 America Center Drive
San Jose, California	 	95002	
(Address of principal executive offices)	 	(Zip Code)	
(408) 586-6000
Registrant’s telephone number, including area code
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 2.02. Results of Operations and Financial Condition
On April 20, 2016, Polycom, Inc. issued a press release announcing its financial results for the three months ended March 31, 2016. The full text of the press release is furnished as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release, dated April 20, 2016, entitled “Polycom Announces Financial Results for First Quarter 2016.”

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 hereunto duly authorized.
 
POLYCOM, INC.	
 	 	
By:	/S/ LAURA J. DURR	
 	Laura J. Durr	
 	Chief Financial Officer, Chief Accounting Officer, and Executive Vice President	
Date: April 20, 2016

EXHIBIT INDEX
 
Exhibit No.	 	Description	
99.1	 	Press Release, dated April 20, 2016, entitled “Polycom Announces Financial Results for First Quarter 2016.”	

Exhibit 99.1

Investor Contact:	 	Laura Graves	
 	 	Polycom, Inc.	
 	 	1.408.586.4271	
 	 	laura.graves@polycom.com	
 	 	 	
Press Contact:	 	Cameron Craig	
 	 	Polycom, Inc.	
 	 	1.408.586.3776	
 	 	cameron.craig@polycom.com	
Polycom Announces Financial Results for First Quarter 2016
 
SAN JOSE, Calif. – April 20, 2016 – Polycom, Inc . (Nasdaq: PLCM) today reported first quarter 2016 revenues of $290 million, non-GAAP net income of $26 million and non-GAAP earnings per diluted share of 0.19 cents. GAAP net income for the first quarter of 2016 was $3 million, or 0.02 cents per diluted share. Polycom’s quarterly reconciliation of GAAP to non-GAAP performance is provided in the tables at the end of this press release.
“Polycom continued to deliver operating margins and earnings per share pursuant to our guidance,” said Peter Leav, President and Chief Executive Officer. “We were pleased with the performance of our new solutions, particularly Polycom ® RealPresence Trio TM , which exceeded our expectations again this quarter.”
 
Non-GAAP	 	 	 	 	 	
($ in millions, except per share data)	Q1 2016 Actuals	 	 	Q1 2016 Guidance	
Revenues	$	290.1	 	 	$295.0 - $305.0	
Non-GAAP gross profit margin	 	57.2	%	 	57.0% - 57.3%	
Non-GAAP operating expenses	$	133.1	 	 	$136.9 - $140.3	
Non-GAAP operating margin	 	11.3	%	 	10.6% - 11.3%	
Non-GAAP EPS	$	0.19	 	 	$0.18 - $0.20	
 
GAAP	 	 	 	 	 	
($ in millions, except per share data)	Q1 2016 Actuals	 	 	Q1 2016 Guidance	
Revenues	$	290.1	 	 	$295.0 - $305.0	
GAAP gross profit margin	 	56.5	%	 	56.4% - 56.8%	
GAAP operating expenses	$	156.6	 	 	$162.3 - $165.6	
GAAP operating margin	 	2.5	%	 	1.5% - 2.4%	
GAAP EPS	$	0.02	 	 	$0.02 - $0.04	
 
“Polycom continued to exhibit sound financial management,” said Laura Durr, Chief Financial Officer. “Our profitability enables us to continue to generate strong operating cash flow, including $53 million in the first quarter of 2016.”
Revenues in the first quarter were lower on both a sequential and year-over-year basis. In spite of lower revenues, Polycom again delivered non-GAAP gross margin, operating income and diluted earnings per share in line with our guidance.
On a comparative basis, consolidated financial results were:
 
($ in millions, except per share data)	Q1 2016	 	 	Q4 2015	 	 	Q1 2015	 	 	Quarter-Over-Quarter Change	 	 	Year-Over-Year Change	 	
Revenues	$	290.1	 	 	$	316.8	 	 	$	330.7	 	 	 	(8	)%	 	 	(12	)%	
Non-GAAP Net Income	$	25.7	 	 	$	32.1	 	 	$	32.2	 	 	 	(20	)%	 	 	(20	)%	
Non-GAAP EPS	$	0.19	 	 	$	0.23	 	 	$	0.23	 	 	 	(17	)%	 	 	(17	)%	
GAAP Net Income	$	3.3	 	 	$	15.6	 	 	$	21.2	 	 	 	(79	)%	 	 	(84	)%	
GAAP EPS	$	0.02	 	 	$	0.11	 	 	$	0.15	 	 	 	(82	)%	 	 	(87	)%	

T he Americas grew sequentially , including both sequential and year-over-year growth in the U nited States . R esults in EMEA were affected by lower revenue s in Russia and Middle East Africa. Year-over-year results for EMEA were also impacted by foreign exchange. Results in Asia Pacific were affected by macro-economic factors and a recent Polycom leadership change in China, as previously disclosed . Polycom will continue to monitor macro-economic factors in key regions and looks for improved revenue levels in China going forward.
In terms of product category results, both UC Group and UC Platform revenues showed year-over-year declines.  UC Group was affected by China, Russia and Middle East Africa, as well as mix within the product category. A significant portion of UC Platform revenue typically comes from China and Russia, which saw lower overall revenue this quarter.
 
On a geographic basis, consolidated revenues were comprised of:
 
($ in millions)	Q1 2016	 	 	Q4 2015	 	 	Q1 2015	 	 	Quarter-Over-Quarter Change	 	 	Year-Over-Year Change	 	
Americas	$	155.5	 	 	$	153.4	 	 	$	157.4	 	 	 	1	%	 	 	(1	)%	
% of total revenues	 	54	%	 	 	48	%	 	 	48	%	 	 	 	 	 	 	 	 	
Europe, Middle East & Africa
   (EMEA)	 	73.5	 	 	 	84.9	 	 	 	93.8	 	 	 	(13	)%	 	 	(22	)%	
% of total revenues	 	25	%	 	 	27	%	 	 	28	%	 	 	 	 	 	 	 	 	
Asia Pacific	 	61.1	 	 	 	78.6	 	 	 	79.5	 	 	 	(22	)%	 	 	(23	)%	
% of total revenues	 	21	%	 	 	25	%	 	 	24	%	 	 	 	 	 	 	 	 	
Totals *	$	290.1	 	 	$	316.8	 	 	$	330.7	 	 	 	(8	)%	 	 	(12	)%	
 
* may not foot due to rounding
By product category, inclusive of its service component, consolidated revenues were comprised of:
 
($ in millions)	Q1 2016	 	 	Q4 2015	 	 	Q1 2015	 	 	Quarter-Over-Quarter Change	 	 	Year-Over-Year Change	 	
UC Group Systems	$	178.9	 	 	$	188.1	 	 	$	204.6	 	 	 	(5	)%	 	 	(13	)%	
% of total revenues	 	62	%	 	 	59	%	 	 	62	%	 	 	 	 	 	 	 	 	
UC Personal Devices	 	67.8	 	 	 	69.7	 	 	 	67.5	 	 	 	(3	)%	 	 	1	%	
% of total revenues	 	23	%	 	 	22	%	 	 	20	%	 	 	 	 	 	 	 	 	
UC Platform	 	43.4	 	 	 	59.1	 	 	 	58.6	 	 	 	(27	)%	 	 	(26	)%	
% of total revenues	 	15	%	 	 	19	%	 	 	18	%	 	 	 	 	 	 	 	 	
Totals *	$	290.1	 	 	$	316.8	 	 	$	330.7	 	 	 	(8	)%	 	 	(12	)%	
 
* may not foot due to rounding
In Q1 2016, Polycom generated a total of $53 million in operating cash flow. Cash and investments at the end of Q1 2016 totaled $713 million, of which approximately $267 million is located in the United States. Net of existing debt, cash and investments at the end of Q1 2016 totaled $480 million.

Forward Looking Statements and Risk Factors
This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding future profitability and operating cash flow and improved future revenue performance in China. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact on our business of the recent announcement regarding the proposed acquisition of Polycom by Mitel Networks Corporation, the impact of competition on our product sales and on our customers and partners, and any resulting loss of business; the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources than we do; potential fluctuations in results and future growth rates; risks associated with global economic conditions and external market factors; the market acceptance of our products and changing market demands, including demands for differing technologies or product and services offerings; our ability to successfully implement process improvements and cost containment initiatives; changes to our strategic areas of focus and investment; our ability to successfully integrate our acquisitions into our business; possible delays in the development, availability and shipment of new products due to engineering, manufacturing or other delays; increasing costs and the availability of capital; changes in key sales and other personnel that may cause disruption to the business; the impact of restructuring actions; and the impact of global conflicts that may adversely impact our business. Many of these risks and uncertainties are discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.
GAAP to non-GAAP Reconciliation
To supplement our consolidated financial statements presented on a GAAP basis, Polycom uses non-GAAP measures of operating results, net income and income per share, which are adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Polycom’s underlying operational results and trends and our marketplace performance. The non-GAAP results are an indication of our baseline performance before gains, losses, or other charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or diluted net income per share prepared in accordance with GAAP in the United States.
About Polycom
Polycom helps organizations unleash the power of human collaboration. More than 400,000 companies and institutions worldwide defy distance with secure video, voice and content solutions from Polycom to increase productivity, speed time to market, provide better customer service, expand education and save lives. Polycom and its global partner ecosystem provide flexible collaboration solutions for any environment that deliver the best user experience, the broadest multi-vendor interoperability and unmatched investment protection. Visit www.polycom.com or connect with us on Twitter, Facebook and LinkedIn to learn more.
© 2016 Polycom, Inc. All rights reserved. POLYCOM ® , the Polycom logo, and the names and marks associated with Polycom’s products are trademarks and/or service marks of Polycom, Inc. and are registered and/or common law marks in the United States and various other countries. All other trademarks are property of their respective owners.

POLYCOM, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
 	Three Months Ended	 	
 	March 31,
2016	 	 	March 31,
2015	 	
Revenues:	 	 	 	 	 	 	 	
Product revenues	$	203,260	 	 	$	233,687	 	
Service revenues	 	86,815	 	 	 	97,013	 	
Total revenues	 	290,075	 	 	 	330,700	 	
Cost of revenues:	 	 	 	 	 	 	 	
Cost of product revenues	 	95,055	 	 	 	101,269	 	
Cost of service revenues	 	31,191	 	 	 	36,611	 	
Total cost of revenues	 	126,246	 	 	 	137,880	 	
Gross profit	 	163,829	 	 	 	192,820	 	
Operating expenses:	 	 	 	 	 	 	 	
Sales and marketing	 	79,463	 	 	 	90,859	 	
Research and development	 	43,070	 	 	 	49,337	 	
General and administrative	 	20,110	 	 	 	21,167	 	
Amortization of purchased intangibles	 	2,200	 	 	 	2,417	 	
Restructuring costs	 	7,502	 	 	 	24	 	
Transaction-related costs	 	4,244	 	 	 	—	 	
Total operating expenses	 	156,589	 	 	 	163,804	 	
Operating income	 	7,240	 	 	 	29,016	 	
Interest and other income (expense), net	 	 	 	 	 	 	 	
Interest expense	 	(1,637	)	 	 	(1,484	)	
Other income (expense), net	 	869	 	 	 	22	 	
Interest and other income (expense), net	 	(768	)	 	 	(1,462	)	
Income before provision for income taxes	 	6,472	 	 	 	27,554	 	
Provision for income taxes	 	3,137	 	 	 	6,356	 	
Net income	$	3,335	 	 	$	21,198	 	
 	 	 	 	 	 	 	 	
Basic net income per share	$	0.02	 	 	$	0.16	 	
 	 	 	 	 	 	 	 	
Diluted net income per share	$	0.02	 	 	$	0.15	 	
 	 	 	 	 	 	 	 	
Number of shares used in computation of net income per share:	 	 	 	 	 	 	 	
Basic	 	134,168	 	 	 	134,777	 	
Diluted	 	137,292	 	 	 	139,233	 	

POLYCOM, INC.
Reconciliation of GAAP to Non-GAAP Net Income
(In thousands, except per share amounts)
(Unaudited)
 
 	Three Months Ended	 	
 	March   31,
2016	 	 	December 31,
2015	 	 	March 31,
2015	 	
GAAP net income	$	3,335	 	 	$	15,557	 	 	$	21,198	 	
Amortization of purchased intangibles	 	2,300	 	 	 	2,361	 	 	 	3,074	 	
Restructuring costs	 	7,502	 	 	 	10,517	 	 	 	24	 	
Transaction-related costs	 	4,244	 	 	 	574	 	 	 	—	 	
Stock-based compensation expense	 	11,480	 	 	 	12,237	 	 	 	9,232	 	
Effect of stock-based compensation on warranty rates	 	106	 	 	 	107	 	 	 	53	 	
Costs associated with CEO separation and related SEC investigation	 	—	 	 	 	—	 	 	 	335	 	
Income tax effect of non-GAAP exclusions	 	(3,283	)	 	 	(9,297	)	 	 	(1,681	)	
Non-GAAP net income	$	25,684	 	 	$	32,056	 	 	$	32,235	 	
GAAP net income per share:	 	 	 	 	 	 	 	 	 	 	 	
Basic	$	0.02	 	 	$	0.12	 	 	$	0.16	 	
Diluted	$	0.02	 	 	$	0.11	 	 	$	0.15	 	
Non-GAAP net income per share:	 	 	 	 	 	 	 	 	 	 	 	
Basic	$	0.19	 	 	$	0.24	 	 	$	0.24	 	
Diluted	$	0.19	 	 	$	0.23	 	 	$	0.23	 	
Number of shares used in computation of net income per share:	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	134,168	 	 	 	132,545	 	 	 	134,777	 	
Diluted	 	137,292	 	 	 	137,203	 	 	 	139,233	 	

POLYCOM, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 	March 31,
2016	 	 	December 31,
2015	 	
ASSETS	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	
Cash and cash equivalents	$	500,766	 	 	$	435,093	 	
Short-term investments	 	171,265	 	 	 	184,242	 	
Trade receivables, net	 	162,896	 	 	 	187,888	 	
Inventories	 	98,281	 	 	 	89,392	 	
Prepaid expenses and other current assets	 	50,706	 	 	 	52,852	 	
Total current assets	 	983,914	 	 	 	949,467	 	
Property and equipment, net	 	97,301	 	 	 	101,853	 	
Long-term investments	 	41,168	 	 	 	46,484	 	
Goodwill and purchased intangibles, net	 	570,678	 	 	 	572,840	 	
Deferred taxes	 	85,221	 	 	 	89,865	 	
Other assets	 	21,407	 	 	 	21,738	 	
Total assets	$	1,799,689	 	 	$	1,782,247	 	
LIABILITIES AND STOCKHOLDERS' EQUITY	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	
Accounts payable	$	87,093	 	 	$	73,472	 	
Accrued payroll and related liabilities	 	29,390	 	 	 	38,781	 	
Taxes payable	 	1,469	 	 	 	4,342	 	
Deferred revenue	 	173,342	 	 	 	170,559	 	
Current portion of long-term debt	 	5,717	 	 	 	5,717	 	
Other accrued liabilities	 	79,835	 	 	 	85,095	 	
Total current liabilities	 	376,846	 	 	 	377,966	 	
Long-term deferred revenue	 	89,931	 	 	 	86,191	 	
Taxes payable	 	10,073	 	 	 	9,983	 	
Deferred taxes	 	149	 	 	 	135	 	
Long-term debt	 	227,369	 	 	 	228,799	 	
Other non-current liabilities	 	25,676	 	 	 	25,964	 	
Total liabilities	 	730,044	 	 	 	729,038	 	
Stockholders' equity	 	1,069,645	 	 	 	1,053,209	 	
Total liabilities and stockholders' equity	$	1,799,689	 	 	$	1,782,247	 	

POLYCOM, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 	Three Months Ended	 	
 	March 31,
2016	 	 	March 31,
2015	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	
Net income	$	3,335	 	 	$	21,198	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	
Depreciation and amortization	 	11,976	 	 	 	14,104	 	
Amortization of purchased intangibles	 	2,300	 	 	 	3,093	 	
Amortization of capitalized software development costs for products to be sold	 	1,017	 	 	 	685	 	
Amortization of debt issuance costs	 	133	 	 	 	133	 	
Amortization of discounts and premiums on investments, net	 	372	 	 	 	527	 	
Write-down of excess and obsolete inventories	 	2,314	 	 	 	4,530	 	
Stock-based compensation expense	 	11,480	 	 	 	9,232	 	
Excess tax benefits from stock-based compensation expense	 	(1,225	)	 	 	(3,120	)	
(Gain) loss on disposal of property and equipment	 	(32	)	 	 	541	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	
Trade receivables	 	25,171	 	 	 	304	 	
Inventories	 	(11,158	)	 	 	1,856	 	
Deferred taxes	 	(2,297	)	 	 	(1,469	)	
Prepaid expenses and other assets	 	426	 	 	 	(4,651	)	
Accounts payable	 	13,342	 	 	 	(1,120	)	
Taxes payable	 	4,307	 	 	 	8,498	 	
Other accrued liabilities and deferred revenue	 	(8,568	)	 	 	(23,969	)	
Net cash provided by operating activities	 	52,893	 	 	 	30,372	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	
Purchases of property and equipment	 	(6,772	)	 	 	(11,748	)	
Capitalized software development costs for products to be sold	 	(792	)	 	 	(606	)	
Purchases of investments	 	(63,926	)	 	 	(50,669	)	
Proceeds from sale of investments	 	1,600	 	 	 	5,185	 	
Proceeds from maturities of investments	 	80,548	 	 	 	42,796	 	
Net cash provided by (used in) investing activities	 	10,658	 	 	 	(15,042	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	
Proceeds from issuance of common stock under employee option and stock
   purchase plans	 	10,706	 	 	 	12,408	 	
Payments on debt	 	(1,563	)	 	 	(1,563	)	
Purchase and retirement of common stock under share repurchase plan	 	—	 	 	 	(39,993	)	
Purchase and retirement of common stock for tax withholdings on vesting of employee
   stock-based awards	 	(9,086	)	 	 	(10,922	)	
Excess tax benefits from stock-based compensation expense	 	1,225	 	 	 	3,120	 	
Net cash provided by (used in) financing activities	 	1,282	 	 	 	(36,950	)	
Effect of exchange rate changes on cash and cash equivalents	 	840	 	 	 	—	 	
Net increase (decrease) in cash and cash equivalents	 	65,673	 	 	 	(21,620	)	
Cash and cash equivalents, beginning of period	 	435,093	 	 	 	443,132	 	
Cash and cash equivalents, end of period	$	500,766	 	 	$	421,512	 	

POLYCOM, INC.
Selected Summary Data
(In millions except per share amounts and headcount)
(Unaudited)
 
 	 	March 31,
2016	 	 	December 31,
2015	 	 	March 31,
2015	 	
Balance Sheet Highlights	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and investments	 	$	713	 	 	$	666	 	 	$	669	 	
Number of shares outstanding	 	 	136	 	 	 	133	 	 	 	135	 	
Cash and investments per share	 	$	5.26	 	 	$	5.02	 	 	$	4.95	 	
Debt	 	$	233	 	 	$	235	 	 	$	239	 	
Operating cash flow - quarterly	 	$	53	 	 	$	31	 	 	$	30	 	
Operating cash flow - trailing 12 months	 	$	142	 	 	$	120	 	 	$	217	 	
DSO (Days Sales Outstanding)	 	 	51	 	 	 	54	 	 	 	47	 	
Inventory turns - GAAP	 	 	5.1	 	 	 	6.1	 	 	 	5.9	 	
Inventory turns - non-GAAP	 	 	5.1	 	 	 	6.0	 	 	 	5.7	 	
Deferred revenue	 	$	263	 	 	$	257	 	 	$	265	 	
Share repurchases:	 	 	 	 	 	 	 	 	 	 	 	 	
Quarter-to-date share repurchases - shares	 	 	—	 	 	 	—	 	 	 	2.9	 	
Quarter-to-date share repurchases - dollars	 	$	—	 	 	$	—	 	 	$	40	 	
Year-to-date share repurchases - shares	 	 	—	 	 	 	7.0	 	 	 	2.9	 	
Year-to-date share repurchases - dollars	 	$	—	 	 	$	90	 	 	$	40	 	
Ending headcount	 	 	3,275	 	 	 	3,451	 	 	 	3,497	 	
 
 	 	For the Three Months Ended	 	
 	 	March 31,
2016	 	 	December 31,
2015	 	 	March 31,
2015	 	
Income Statement Highlights	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP:	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	$	290	 	 	$	317	 	 	$	331	 	
Gross margin	 	 	56.5	%	 	 	57.2	%	 	 	58.3	%	
Operating expenses	 	$	157	 	 	$	167	 	 	$	164	 	
Operating margin	 	 	2.5	%	 	 	4.4	%	 	 	8.8	%	
Diluted EPS	 	$	0.02	 	 	$	0.11	 	 	$	0.15	 	
Non-GAAP:	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	$	290	 	 	$	317	 	 	$	331	 	
Gross margin	 	 	57.2	%	 	 	57.9	%	 	 	59.2	%	
Operating expenses	 	$	133	 	 	$	144	 	 	$	154	 	
Operating margin	 	 	11.3	%	 	 	12.5	%	 	 	12.6	%	
Diluted EPS	 	$	0.19	 	 	$	0.23	 	 	$	0.23	 	

POLYCOM, INC.
Reconciliations of GAAP Measures to Non-GAAP Measures
(In thousands)
(Unaudited)
 
 	Three Months Ended	 	
 	March 31,
2016	 	 	December 31,
2015	 	 	March 31,
2015	 	
GAAP cost of revenues used in inventory turns	$	126,246	 	 	$	135,722	 	 	$	137,880	 	
Stock-based compensation expense	 	(1,892	)	 	 	(1,997	)	 	 	(2,263	)	
Effect of stock-based compensation expense on warranty rates	 	(106	)	 	 	(107	)	 	 	(53	)	
Amortization of purchased intangibles	 	(100	)	 	 	(99	)	 	 	(657	)	
Non-GAAP cost of revenues used in inventory turns	$	124,148	 	 	$	133,519	 	 	$	134,907	 	
GAAP gross profit	$	163,829	 	 	$	181,118	 	 	$	192,820	 	
Stock-based compensation expense	 	1,892	 	 	 	1,997	 	 	 	2,263	 	
Effect of stock-based compensation expense on warranty rates	 	106	 	 	 	107	 	 	 	53	 	
Amortization of purchased intangibles	 	100	 	 	 	99	 	 	 	657	 	
Non-GAAP gross profit	$	165,927	 	 	$	183,321	 	 	$	195,793	 	
Non-GAAP gross margin	 	57.2	%	 	 	57.9	%	 	 	59.2	%	
 	 	 	 	 	 	 	 	 	 	 	 	
GAAP sales and marketing expense	$	79,463	 	 	$	82,525	 	 	$	90,859	 	
Stock-based compensation expense	 	(3,743	)	 	 	(3,659	)	 	 	(2,613	)	
Non-GAAP sales and marketing expense	$	75,720	 	 	$	78,866	 	 	$	88,246	 	
Non-GAAP sales and marketing expense as  a percent of revenues	 	26.1	%	 	 	24.9	%	 	 	26.7	%	
 	 	 	 	 	 	 	 	 	 	 	 	
GAAP research and development expense	$	43,070	 	 	$	48,830	 	 	$	49,337	 	
Stock-based compensation expense	 	(2,029	)	 	 	(2,094	)	 	 	(2,573	)	
Non-GAAP research and development expense	$	41,041	 	 	$	46,736	 	 	$	46,764	 	
Non-GAAP research and development expense as a percent of revenues	 	14.1	%	 	 	14.8	%	 	 	14.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	
GAAP general and administrative expense	$	20,110	 	 	$	22,469	 	 	$	21,167	 	
Stock-based compensation expense	 	(3,816	)	 	 	(4,487	)	 	 	(1,783	)	
Costs associated with CEO separation and related SEC investigation	 	—	 	 	 	—	 	 	 	(335	)	
Non-GAAP general and administrative expense	$	16,294	 	 	$	17,982	 	 	$	19,049	 	
Non-GAAP general and administrative expense as a percent of revenues	 	5.6	%	 	 	5.7	%	 	 	5.8	%	
 	 	 	 	 	 	 	 	 	 	 	 	
GAAP total operating expenses	$	156,589	 	 	$	167,177	 	 	$	163,804	 	
Stock-based compensation expense	 	(9,588	)	 	 	(10,240	)	 	 	(6,969	)	
Amortization of purchased intangibles	 	(2,200	)	 	 	(2,262	)	 	 	(2,417	)	
Restructuring costs	 	(7,502	)	 	 	(10,517	)	 	 	(24	)	
Transaction-related costs	 	(4,244	)	 	 	(574	)	 	 	—	 	
Costs associated with CEO separation and related SEC investigation	 	—	 	 	 	—	 	 	 	(335	)	
Non-GAAP total operating expenses	$	133,055	 	 	$	143,584	 	 	$	154,059	 	
Non-GAAP total operating expenses as a percent of revenues	 	45.9	%	 	 	45.3	%	 	 	46.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	
GAAP operating income	$	7,240	 	 	$	13,941	 	 	$	29,016	 	
Stock-based compensation expense	 	11,480	 	 	 	12,237	 	 	 	9,232	 	
Effect of stock-based compensation expense on warranty rates	 	106	 	 	 	107	 	 	 	53	 	
Amortization of purchased intangibles	 	2,300	 	 	 	2,361	 	 	 	3,074	 	
Restructuring costs	 	7,502	 	 	 	10,517	 	 	 	24	 	
Transaction-related costs	 	4,244	 	 	 	574	 	 	 	—	 	
Costs associated with CEO separation and related SEC investigation	 	—	 	 	 	—	 	 	 	335	 	
Non-GAAP operating income	$	32,872	 	 	$	39,737	 	 	$	41,734	 	
Non-GAAP operating margin	 	11.3	%	 	 	12.5	%	 	 	12.6	%	

POLYCOM, INC.
Summary of Stock-Based Compensation Expense
(In thousands)
(Unaudited)
 
 	Three Months Ended	 	
 	March 31,
2016	 	 	March 31,
2015	 	
Cost of product revenues	$	781	 	 	$	955	 	
Cost of service revenues	 	1,111	 	 	 	1,308	 	
Stock-based compensation expense in total cost of revenues	 	1,892	 	 	 	2,263	 	
Sales and marketing	 	3,743	 	 	 	2,613	 	
Research and development	 	2,029	 	 	 	2,573	 	
General and administrative	 	3,816	 	 	 	1,783	 	
Stock-based compensation expense in operating expenses	 	9,588	 	 	 	6,969	 	
Total stock-based compensation expense	$	11,480	 	 	$	9,232