POLYCOM INC, 10-Q filed on 7/31/2015
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2015
Jul. 24, 2015
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
PLCM 
 
Entity Registrant Name
POLYCOM INC 
 
Entity Central Index Key
0001010552 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
133,360,183 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Current assets
 
 
Cash and cash equivalents
$ 412,573 
$ 443,132 
Short-term investments
198,160 
185,783 
Trade receivables, net of allowance for doubtful accounts of $3,014 and $3,040 at June 30, 2015 and December 31, 2014, respectively
161,155 
169,400 
Inventories
99,909 
100,328 
Deferred taxes
38,739 
38,805 
Prepaid expenses and other current assets
57,377 
61,072 
Total current assets
967,913 
998,520 
Property and equipment, net
107,878 
109,195 
Long-term investments
49,391 
59,197 
Goodwill
559,249 
559,231 
Purchased intangibles, net
18,938 
24,567 
Deferred taxes
49,856 
54,019 
Other assets
25,689 
26,493 
Total assets
1,778,914 
1,831,222 
Current liabilities
 
 
Accounts payable
90,285 
108,172 
Accrued payroll and related liabilities
39,912 
42,901 
Taxes payable
3,774 
4,056 
Deferred revenue
176,890 
173,532 
Current portion of long-term debt
6,250 
6,250 
Other accrued liabilities
75,664 
86,193 
Total current liabilities
392,775 
421,104 
Long-term deferred revenue
83,551 
89,366 
Taxes payable
11,847 
11,719 
Deferred taxes
169 
173 
Long-term debt
232,813 
235,938 
Other non-current liabilities
34,609 
49,189 
Total liabilities
755,764 
807,489 
Commitments and contingencies (Note 8)
   
   
Stockholders' equity
 
 
Common stock, $0.0005 par value; Authorized: 350,000,000 shares; Issued and outstanding: 133,358,381 shares at June 30, 2015 and 135,204,948 shares at December 31, 2014
67 
68 
Additional paid-in capital
1,149,273 
1,155,829 
Accumulated deficit
(131,140)
(136,275)
Accumulated other comprehensive income
4,950 
4,111 
Total stockholders' equity
1,023,150 
1,023,733 
Total liabilities and stockholders' equity
$ 1,778,914 
$ 1,831,222 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Statement Of Financial Position [Abstract]
 
 
Trade receivables, allowance for doubtful accounts
$ 3,014 
$ 3,040 
Common stock, par value
$ 0.0005 
$ 0.0005 
Common stock, shares authorized
350,000,000 
350,000,000 
Common stock, shares issued
133,358,381 
135,204,948 
Common stock, shares outstanding
133,358,381 
135,204,948 
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Revenues:
 
 
 
 
Product revenues
$ 221,896 
$ 236,565 
$ 455,583 
$ 468,074 
Service revenues
94,679 
95,454 
191,692 
192,469 
Total revenues
316,575 
332,019 
647,275 
660,543 
Cost of revenues:
 
 
 
 
Cost of product revenues
95,752 
97,710 
197,021 
195,346 
Cost of service revenues
34,898 
39,087 
71,509 
77,990 
Total cost of revenues
130,650 
136,797 
268,530 
273,336 
Gross profit
185,925 
195,222 
378,745 
387,207 
Operating expenses:
 
 
 
 
Sales and marketing
89,433 
97,836 
180,292 
191,804 
Research and development
46,545 
49,031 
95,882 
97,178 
General and administrative
22,269 
24,636 
43,436 
48,429 
Amortization of purchased intangibles
2,417 
2,436 
4,834 
4,928 
Restructuring costs
343 
9,175 
367 
39,518 
Transaction-related costs
 
 
 
156 
Total operating expenses
161,007 
183,114 
324,811 
382,013 
Operating income
24,918 
12,108 
53,934 
5,194 
Interest and other income (expense), net:
 
 
 
 
Interest expense
(1,523)
(1,460)
(3,007)
(2,934)
Other income (expense), net
1,345 
(236)
1,367 
543 
Interest and other income (expense), net
(178)
(1,696)
(1,640)
(2,391)
Income before provision for (benefit from) income taxes
24,740 
10,412 
52,294 
2,803 
Provision for (benefit from) income taxes
5,093 
1,855 
11,449 
(1,763)
Net income
$ 19,647 
$ 8,557 
$ 40,845 
$ 4,566 
Basic net income per share
$ 0.15 
$ 0.06 
$ 0.30 
$ 0.03 
Diluted net income per share
$ 0.14 
$ 0.06 
$ 0.30 
$ 0.03 
Number of shares used in computation of net income per share:
 
 
 
 
Basic
134,057 
138,016 
134,417 
137,406 
Diluted
137,347 
142,876 
138,290 
142,521 
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Net income
$ 19,647 
$ 8,557 
$ 40,845 
$ 4,566 
Other comprehensive income (loss), net of tax:
 
 
 
 
Foreign currency translation adjustments
117 
191 
(1,086)
Unrealized gains/losses on investments:
 
 
 
 
Unrealized holding gains (losses) arising during the period
(27)
62 
 
Net losses reclassified into earnings
(1)
(1)
(4)
(2)
Net unrealized gains (losses) on investments
(28)
58 
(2)
Unrealized gains/losses on hedging securities:
 
 
 
 
Unrealized hedge gains (losses) arising during the period
(1,723)
422 
4,575 
Net unrealized gains/losses on hedging securities
(3,150)
313 
590 
558 
Other comprehensive income (loss)
(3,170)
436 
839 
(530)
Comprehensive income
16,477 
8,993 
41,684 
4,036 
Product revenues
 
 
 
 
Unrealized gains/losses on hedging securities:
 
 
 
 
Net (gains) losses reclassified into earnings for revenue / expense hedges
(3,629)
1,409 
(10,265)
4,274 
Operating Expenses
 
 
 
 
Unrealized gains/losses on hedging securities:
 
 
 
 
Net (gains) losses reclassified into earnings for revenue / expense hedges
$ 2,202 
$ (1,518)
$ 6,280 
$ (3,717)
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Cash flows from operating activities:
 
 
Net income
$ 40,845 
$ 4,566 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
27,210 
29,034 
Amortization of purchased intangibles
5,629 
6,538 
Amortization of capitalized software development costs for products to be sold
1,354 
702 
Amortization of debt issuance costs
266 
267 
Amortization of discounts and premiums on investments, net
1,090 
944 
Provision for doubtful accounts
 
600 
Write-down of excess and obsolete inventories
6,810 
2,253 
Stock-based compensation expense
18,943 
19,410 
Excess tax benefits from stock-based compensation expense
(3,487)
(1,819)
Loss on disposal of property and equipment
544 
4,965 
Changes in assets and liabilities:
 
 
Trade receivables
8,245 
5,805 
Inventories
(6,791)
(4,848)
Deferred taxes
(2,744)
(4,848)
Prepaid expenses and other assets
4,960 
(7,327)
Accounts payable
(19,229)
6,130 
Taxes payable
9,663 
4,124 
Other accrued liabilities and deferred revenue
(30,160)
14,125 
Net cash provided by operating activities
63,148 
80,621 
Cash flows from investing activities:
 
 
Purchases of property and equipment
(23,922)
(24,338)
Capitalized software development costs for products to be sold
(2,311)
(2,474)
Purchases of investments
(107,675)
(151,611)
Proceeds from sales of investments
6,892 
37,056 
Proceeds from maturities of investments
97,187 
77,440 
Net cash used in investing activities
(29,829)
(63,927)
Cash flows from financing activities:
 
 
Proceeds from issuance of common stock under employee option and stock purchase plans
12,528 
13,542 
Payments on debt
(3,125)
(3,125)
Purchase and retirement of common stock under share repurchase plan
(64,999)
 
Purchase and retirement of common stock for tax withholdings on vesting of employee stock-based awards
(11,769)
(8,426)
Excess tax benefits from stock-based compensation expense
3,487 
1,819 
Net cash (used in) provided by financing activities
(63,878)
3,810 
Net (decrease) increase in cash and cash equivalents
(30,559)
20,504 
Cash and cash equivalents, beginning of period
443,132 
392,629 
Cash and cash equivalents, end of period
$ 412,573 
$ 413,133 
Basis of Presentation
Basis of Presentation

1. BASIS OF PRESENTATION

The accompanying unaudited financial statements, consisting of the condensed consolidated balance sheet as of June 30, 2015, the condensed consolidated statements of operations for the three and six months ended June 30, 2015 and 2014, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2015 and 2014, and the condensed consolidated statements of cash flows for the six months ended June 30, 2015 and 2014, have been prepared in accordance with accounting principles generally accepted in the United States of America in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. In addition, the condensed consolidated balance sheet at December 31, 2014 has been derived from the audited consolidated financial statements as of that date. Accordingly, these condensed consolidated financial statements do not include all of the information and notes typically found in the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of Polycom, Inc. and its subsidiaries (the “Company”). In the opinion of management, the accompanying unaudited financial statements have been prepared on a basis consistent with the Company’s December 31, 2014 audited financial statements and all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement have been included. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates and operating results for the three and six months ended June 30, 2015 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

Recent Accounting Pronouncements
Recent Accounting Pronouncements

 

2. RECENT ACCOUNTING PRONOUNCEMENTS

In April 2015, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update which provides guidance on whether a cloud computing arrangement includes a software license to a customer of such an arrangement. If a cloud computing arrangement includes a software license, a customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses, otherwise the customer should account for the arrangement as a service contract. The standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted. The standard can be applied prospectively to all arrangements entered into or materially modified after the effective date, or retrospectively. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In April 2015, the FASB issued an accounting standard update which requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted. The standard will be applied retrospectively to each prior period presented.  The accounting standard update is a change in balance sheet presentation only and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In May 2014, the FASB issued an accounting standard update which provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. In July 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt the standard. The Company is evaluating the potential effects of the adoption of this standard on its Consolidated Financial Statements.

Discontinued Operations
Discontinued Operations

3. DISCONTINUED OPERATIONS

On December 4, 2012, the Company completed the disposition of the net assets of its enterprise wireless voice solutions (“EWS”) business to Mobile Devices Holdings, LLC, a Delaware limited liability corporation. Additional cash consideration of up to $25.0 million is payable to Polycom over the next two years subject to certain conditions, including meeting certain agreed-upon EBITDA-based milestones for the fiscal years ending December 31, 2015 and 2016. These conditions were not met for the fiscal years ended December 31, 2014 and 2013. Such additional cash consideration will be accounted for as a gain on sale of discontinued operations, net of taxes, when it is realized or realizable. For the six months ended June 30, 2015 and 2014, there were no realized gains on sale of discontinued operations.

Accounts Receivable Financing
Accounts Receivable Financing

4. ACCOUNTS RECEIVABLE FINANCING

The Company has a financing agreement with an unrelated third party financing company (the “Financing Agreement”) whereby the Company offers distributors and resellers’ direct or indirect financing on their purchases of the Company’s products and services. In return, the Company agrees to pay the financing company a fee based on a defined percentage of the transaction amount financed. In certain instances, these financing arrangements result in a transfer of its receivables, without recourse, to the financing company. If the transaction meets the applicable criteria under Accounting Standards Codification (“ASC”) 860 and is accounted for as a sale of financial assets, the accounts receivable are excluded from the balance sheet upon the third party financing company’s payment remittance to the Company. In certain legal jurisdictions, the arrangement fees that involve maintenance services or products bundled with maintenance at one price do not qualify as a sale of financial assets in accordance with the authoritative guidance. Accordingly, accounts receivable related to these arrangements are accounted for as a secured borrowing in accordance with ASC 860, and the Company records a liability for any cash received, while maintaining the associated accounts receivable balance until the distributor or reseller remits payment to the third-party financing company.

In the three and six months ended June 30, 2015, total transactions entered into pursuant to the terms of the Financing Agreement were approximately $53.0 million and $117.6 million, respectively, of which $33.7 million and $72.9 million, respectively, were related to the transfer of the financial assets arrangement. In the three and six months ended June 30, 2014, total transactions entered were approximately $51.7 million and $83.7 million, respectively, of which $37.5 million and $68.6 million, respectively, were related to the transfer of the financial assets arrangement. The financing of these receivables accelerated the collection of the Company’s cash and reduced its credit exposure. The amount due from the financing company as of June 30, 2015 and December 31, 2014 was approximately $26.1 million and $28.5 million, respectively, of which $20.9 million and $20.2 million, respectively, was related to the accounts receivable transferred, and is included in “Trade receivables” in the Company’s condensed consolidated balance sheets. Fees incurred pursuant to the Financing Agreement were approximately $0.8 million and $0.6 million for the three months ended June 30, 2015 and 2014, respectively, and were approximately $1.7 million and $1.1 million for the six months ended June 30, 2015 and 2014 respectively. Those fees were recorded as reductions to revenues.

Goodwill, Purchased Intangibles, and Software Development Costs
Goodwill, Purchased Intangibles, and Software Development Costs

5. GOODWILL, PURCHASED INTANGIBLES, AND SOFTWARE DEVELOPMENT COSTS

Goodwill

The following table presents the changes to the Company’s goodwill by segment during the six months ended June 30, 2015 (in thousands):

 

 

Americas

 

 

EMEA

 

 

APAC

 

 

Total

 

Balance at December 31, 2014

$

308,159

 

 

$

101,882

 

 

$

149,190

 

 

$

559,231

 

Foreign currency translation

 

 

 

 

 

 

 

18

 

 

 

18

 

Balance at June 30, 2015

$

308,159

 

 

$

101,882

 

 

$

149,208

 

 

$

559,249

 

 

Purchased Intangible Assets and Software Development Costs

The following table presents details of the Company’s total purchased intangible assets and capitalized software development costs for products to be sold as of the following periods (in thousands):

 

 

June 30, 2015

 

 

December 31, 2014

 

 

Gross

Value

 

 

Accumulated

Amortization

& Impairment

 

 

Net Value

 

 

Gross

Value

 

 

Accumulated

Amortization

& Impairment

 

 

Net Value

 

Core and developed technology

$

81,178

 

 

$

(80,745

)

 

$

433

 

 

$

81,178

 

 

$

(79,986

)

 

$

1,192

 

Customer and partner relationships

 

79,525

 

 

 

(62,446

)

 

 

17,079

 

 

 

79,525

 

 

 

(57,983

)

 

 

21,542

 

Non-compete agreements

 

1,800

 

 

 

(1,400

)

 

 

400

 

 

 

1,800

 

 

 

(1,100

)

 

 

700

 

Trade name

 

3,400

 

 

 

(3,299

)

 

 

101

 

 

 

3,400

 

 

 

(3,229

)

 

 

171

 

Other

 

4,462

 

 

 

(4,455

)

 

 

7

 

 

 

4,462

 

 

 

(4,418

)

 

 

44

 

Finite-lived intangible assets

 

170,365

 

 

 

(152,345

)

 

 

18,020

 

 

 

170,365

 

 

 

(146,716

)

 

 

23,649

 

Indefinite-lived trade name

 

918

 

 

 

 

 

 

918

 

 

 

918

 

 

 

 

 

 

918

 

Total acquired intangible assets

$

171,283

 

 

$

(152,345

)

 

$

18,938

 

 

$

171,283

 

 

$

(146,716

)

 

$

24,567

 

Capitalized software development costs for

   products to be sold

$

9,912

 

 

$

(3,254

)

 

$

6,658

 

 

$

7,416

 

 

$

(1,900

)

 

$

5,516

 

 

Purchased intangibles include a purchased trade name of $0.9 million with an indefinite life as the Company expects to generate cash flows related to this asset indefinitely. Consequently, this trade name is not amortized but is reviewed for impairment annually or sooner when indicators of potential impairment exist.

The following table summarizes the amortization expenses recorded in the following periods (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Amortization of purchased intangibles in revenues

$

19

 

 

$

19

 

 

$

38

 

 

$

38

 

Amortization of purchased intangibles in cost of product

   revenues

 

100

 

 

 

731

 

 

 

757

 

 

 

1,572

 

Amortization of purchased intangibles in operating

   expenses

 

2,417

 

 

 

2,436

 

 

 

4,834

 

 

 

4,928

 

Total amortization expenses of purchased intangibles

$

2,536

 

 

$

3,186

 

 

$

5,629

 

 

$

6,538

 

 

Amortization of purchased intangibles is not allocated to the Company’s segments.

The estimated future amortization expense as of June 30, 2015 is as follows (in thousands):

 

Year ending December 31,

 

Amount

 

Remainder of 2015

 

$

4,867

 

2016

 

 

8,484

 

2017

 

 

4,669

 

Total

 

$

18,020

 

 

In the six months ended June 30, 2015 and 2014, the Company capitalized approximately $2.5 million and $2.6 million of software development costs, respectively, for internally developed software products to be marketed and sold to customers after the point that technological feasibility has been reached and before the products are available for general release. The capitalized costs are being amortized over the estimated product useful life, generally three years, beginning when the products are available for general release. Management expects that the capitalized software development costs are recoverable from future gross profits generated by these products and services.

Restructuring Costs
Restructuring Costs

6. RESTRUCTURING COSTS

The Company recorded net restructuring costs of $0.3 million and $9.2 million during the three months ended June 30, 2015 and 2014, respectively, and $0.4 million and $ 39.5 million during the six months ended June 30, 2015 and 2014, respectively.  Pursuant to the announcement in January 2014, and certain discrete follow-on actions that were not material, management completed certain actions designed to better align expenses to the Company’s revenue and gross margin profile and position the Company for improved operating performance.  These actions included the elimination of approximately six percent of the global workforce and the reduction or elimination of certain leased facilities. The Company has recorded a cumulative amount of $40.7 million in restructuring costs (net of adjustments related to the assumptions used in the estimate of the related liabilities reserves) as of June 30, 2015 in connection with these actions, and does not expect any remaining charges to be material.

The following table summarizes the changes in the Company’s restructuring reserves during the six months ended June 30, 2015 (in thousands):

 

 

Severance/Other

 

 

Facilities

 

 

Total

 

Balance at December 31, 2014

$

664

 

 

$

40,909

 

 

$

41,573

 

Additions to the reserve, net

 

3,169

 

 

 

(3,785

)

 

 

(616

)

Interest accretion

 

 

 

 

977

 

 

 

977

 

Non-cash adjustments

 

 

 

 

(201

)

 

 

(201

)

Cash payments

 

(2,995

)

 

 

(13,185

)

 

 

(16,180

)

Balance at June 30, 2015

$

838

 

 

$

24,715

 

 

$

25,553

 

 

As of June 30, 2015, the restructuring reserve was primarily comprised of facilities-related liabilities. At the time the reserve is initially set up, the Company calculates the fair value of its facilities-related liabilities based on the discounted future lease payments less sublease assumptions. This fair value measurement is classified as a Level 3 measurement under ASC 820. The key assumptions used in the valuation model include discount rates, cash flow projections, and estimated sublease income. These assumptions involve significant judgment, are based on management’s estimate of current and forecasted market conditions and are sensitive and susceptible to change.

Balance Sheet Details
Balance Sheet Details

7. BALANCE SHEET DETAILS

Trade receivables, net consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Gross accounts receivables

$

216,034

 

 

$

214,664

 

Returns and related reserves

 

(51,865

)

 

 

(42,224

)

Allowance for doubtful accounts

 

(3,014

)

 

 

(3,040

)

Total

$

161,155

 

 

$

169,400

 

 

Inventories consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Raw materials

$

1,661

 

 

$

1,496

 

Work in process

 

488

 

 

 

545

 

Finished goods

 

97,760

 

 

 

98,287

 

Total

$

99,909

 

 

$

100,328

 

 

Prepaid expenses and other current assets consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Non-trade receivables

$

7,954

 

 

$

6,547

 

Prepaid expenses

 

35,930

 

 

 

37,385

 

Derivative assets

 

10,456

 

 

 

14,342

 

Other current assets

 

3,037

 

 

 

2,798

 

Total

$

57,377

 

 

$

61,072

 

 

Deferred revenue consists of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Short-term:

 

 

 

 

 

 

 

Service

$

174,213

 

 

$

171,355

 

Product

 

9

 

 

 

94

 

License

 

2,668

 

 

 

2,083

 

Total

$

176,890

 

 

$

173,532

 

Long-term:

 

 

 

 

 

 

 

Service

$

80,167

 

 

$

85,925

 

License

 

3,384

 

 

 

3,441

 

Total

$

83,551

 

 

$

89,366

 

 

Changes in the deferred service revenue during the six month period ended June 30, 2015 and 2014 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

Balance at beginning of period

$

257,280

 

 

$

253,793

 

Additions to deferred service revenue

 

167,332

 

 

 

170,459

 

Amortization of deferred service revenue

 

(170,232

)

 

 

(171,257

)

Balance at end of period

$

254,380

 

 

$

252,995

 

 

Other accrued liabilities consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Accrued expenses

$

26,095

 

 

$

27,523

 

Accrued co-op expenses

 

3,059

 

 

 

4,102

 

Restructuring reserves

 

9,980

 

 

 

12,207

 

Warranty obligations

 

11,147

 

 

 

11,613

 

Derivative liabilities

 

5,606

 

 

 

8,175

 

Employee stock purchase plan withholdings

 

9,088

 

 

 

10,658

 

Other accrued liabilities

 

10,689

 

 

 

11,915

 

Total

$

75,664

 

 

$

86,193

 

 

Changes in the warranty obligation during the six month period ended June 30, 2015 and 2014 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

Balance at beginning of period

$

11,613

 

 

$

9,475

 

Accruals for warranties issued during the period

 

6,811

 

 

 

8,131

 

Actual charges against warranty reserve during the period

 

(7,277

)

 

 

(7,256

)

Balance at end of period

$

11,147

 

 

$

10,350

 

 

Commitments and Contingencies
Commitments and Contingencies

8. COMMITMENTS AND CONTINGENCIES

Litigation and SEC Investigation

From time to time, the Company is involved in claims and legal proceedings that arise in the ordinary course of business. The Company expects that the number and significance of these matters will increase as business expands. In particular, the Company faces an increasing number of patent and other intellectual property claims as the number of products and competitors in Polycom’s industry grows and the functionality of video, voice, data and web conferencing products overlap. Any claims or proceedings against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time, result in the diversion of significant operational resources, or require the Company to enter into royalty or licensing agreements which, if required, may not be available on terms favorable to the Company or at all. If management believes that a loss arising from these matters is probable and can be reasonably estimated, the Company will record a reserve for the loss. As additional information becomes available, any potential liability related to these matters is assessed and the estimates revised. Based on currently available information, management does not believe that the ultimate outcomes of these unresolved matters, individually and in the aggregate, are likely to have a material adverse effect on the Company’s financial position, liquidity or results of operations. However, litigation is subject to inherent uncertainties, and the Company’s view of these matters may change in the future. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position and results of operations or liquidity for the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods.

On July 23, 2013, the Company announced that Andrew M. Miller had resigned from the positions of Chief Executive Officer and President of Polycom and from Polycom’s Board of Directors. The Company disclosed that Mr. Miller’s resignation came after a review by the Audit Committee of certain expense submissions by Mr. Miller, where the Audit Committee found certain irregularities in the submissions, for which Mr. Miller had accepted responsibility. Specifically, the Audit Committee determined that Mr. Miller improperly submitted personal expenses to Polycom for payment as business expenses and, in doing so, submitted to Polycom false information about the nature and purpose of expenses.

SEC Investigation. As previously disclosed, the Company has been cooperating with the Enforcement Staff of the Securities and Exchange Commission (“SEC”) in connection with its investigation focused on Mr. Miller's expenses and his resignation. On March 31, 2015 the Company entered into a settlement with the SEC. Under the terms of the settlement in which the Company did not admit or deny the SEC’s findings, the Company paid $750,000 in a civil penalty, and agreed not to commit or cause any violations of certain provisions of the Securities Exchange Act of 1934 and related rules.  

Class Action Lawsuit. On July 26, 2013, a purported shareholder class action, initially captioned Neal v. Polycom Inc., et al., Case No. 3:13-cv-03476-SC, and presently captioned Nathanson v. Polycom, Inc., et al., Case No. 3:13-cv-03476-SC, was filed in the United States District Court for the Northern District of California against the Company and certain of its current and former officers and directors. On December 13, 2013, the Court appointed a lead plaintiff and approved lead and liaison counsel. On February 24, 2014, the lead plaintiff filed a first amended complaint. The amended complaint alleged that, between January 20, 2011 and July 23, 2013, the Company issued materially false and misleading statements or failed to disclose information regarding the Company’s business, operational and compliance policies, including with respect to its former Chief Executive Officer’s expense submissions and the Company’s internal controls. The lawsuit further alleged that the Company’s financial statements were materially false and misleading. The amended complaint alleged violations of the federal securities laws and sought unspecified compensatory damages and other relief. On April 3, 2015, the Court dismissed all claims against Polycom and granted plaintiffs leave to amend. The lead plaintiff filed a second complaint on May 4, 2015.  Polycom and the individual defendants moved to dismiss the second amended complaint on June 26, 2015.  Those motions are pending.  At this time, the Company is unable to estimate any range of reasonably possible loss relating to the securities class action.

Derivative Lawsuits. On August 21, 2013 and October 16, 2013, two purported shareholder derivative suits, captioned Saraceni v. Miller, et al., Case No. 5:13-cv-03880, and Donnelly v. Miller, et al., Case No. 5:13-cv-04810, respectively, were filed in the United States District Court for the Northern District of California against certain of the Company’s current and former officers and directors. On October 31, 2013, these two federal derivative actions were consolidated into In re Polycom, Inc. Derivative Litigation, Lead Case No. 3:13-cv-03880. On January 13, 2015, the Court dismissed the operative complaint and granted plaintiffs leave to amend. On April 3, 2015, the Court approved a stipulation dismissing the action with prejudice and entering judgment in favor of defendants.

On November 22, 2013 and December 13, 2013, two purported shareholder derivative suits, captioned Ware v. Miller, et al., Case No. 1-13-cv-256608, and Clem v. Miller, et al., Case No. 1-13-cv-257664, respectively, were filed in the Superior Court of California, County of Santa Clara, against certain of the Company’s current and former officers and directors. On January 31, 2014, these two California state derivative actions were consolidated into In re Polycom, Inc. Derivative Shareholder Litigation, Lead Case No. 1-13-cv-256608. The Court has stayed the California state derivative litigation pending resolution of both the federal derivative lawsuit and the federal securities class action.

The California state consolidated derivative lawsuit purports to assert claims on behalf of the Company, which is named as a nominal defendant in the actions. The original California state complaints allege claims for breach of fiduciary duty, unjust enrichment, and corporate waste, and allege certain defendants failed to maintain adequate internal controls and issued, or authorized the issuance of, materially false and misleading statements, including with respect to the Company’s former Chief Executive Officer’s expense submissions and the Company’s internal controls. The complaints further allege that certain defendants approved an unjustified separation agreement and caused the Company to repurchase its own stock at artificially inflated prices. The complaints seek unspecified compensatory damages, corporate governance reforms, and other relief. At this time, the Company is unable to estimate any range of reasonably possible loss relating to the derivative actions.

Officer and Director Indemnifications

As permitted or required under Delaware law and to the maximum extent allowable under that law, the Company has certain obligations to indemnify its current and former officers and directors for certain events or occurrences while the officer or director is, or was serving, at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited; however, the Company has a director and officer insurance policy that mitigates the Company’s exposure and enables the Company to recover a portion of any future amounts paid. As a result of the Company’s insurance policy coverage, the Company believes the estimated fair value of these indemnification obligations is not material.

Other Indemnifications

As is customary in the Company’s industry, as provided for in local law in the United States, and other jurisdictions, the Company’s standard contracts provide remedies to its customers, such as defense, settlement, or payment of judgment for intellectual property claims related to the use of its products. From time to time, the Company indemnifies customers against combinations of loss, expense, or liability arising from various trigger events related to the sale and the use of its products and services. In addition, from time to time, the Company also provides protection to customers against claims related to undiscovered liabilities, additional product liability or environmental obligations.

Debt
Debt

9. DEBT

In September 2013, the Company entered into a Credit Agreement (the “Credit Agreement”) that provides for a $250.0 million term loan (the “Term Loan”) maturing on September 13, 2018 (the “Maturity Date”), which bears interest at the Company’s option at either a base rate plus a spread of 0.50% to 1.00%, or a reserve adjusted LIBOR rate plus a spread of 1.50% to 2.00% based on the Company’s consolidated leverage ratio for the preceding four fiscal quarters.

The Company entered into the Credit Agreement in conjunction with and for purposes of funding purchases of the Company’s common stock pursuant to a $250.0 million modified “Dutch Auction” self-tender offer announced in September 2013. The Term Loan is payable in quarterly installments of principal equal to $1.6 million which began on December 31, 2013, with the remaining outstanding principal amount of the Term Loan being due and payable on the Maturity Date. The Company may prepay the Term Loan, in whole or in part, at any time without premium or penalty. Amounts repaid or prepaid may not be reborrowed. The Term Loan is secured by substantially all the assets of the Company and of certain domestic subsidiaries of the Company that are guarantors under the Credit Agreement, subject to certain exceptions and limitations.

The Credit Agreement contains customary affirmative and negative covenants, and financial covenants consisting of a consolidated fixed charge coverage ratio and a consolidated secured leverage ratio. The Company was in compliance with these covenants as of June 30, 2015. The Credit Agreement also includes customary events of default, the occurrence of which could result in the acceleration of the obligations under the Credit Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Credit Agreement at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable for base rate loans for any other overdue amounts.

At June 30, 2015, the weighted average interest rate on the Term Loan was 2.14%, the accrued interest on the Term Loan was $0.5 million, and the current and non-current portion of the outstanding Term Loan was $6.3 million and $232.8 million, respectively.

The following table sets forth total interest expense recognized on the Term Loan (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Contractual interest expense

$

1,292

 

 

$

1,225

 

 

$

2,550

 

 

$

2,454

 

Amortization of debt issuance costs

 

133

 

 

 

133

 

 

 

266

 

 

 

267

 

Total

$

1,425

 

 

$

1,358

 

 

$

2,816

 

 

$

2,721

 

 

Investments
Investments

10. INVESTMENTS

The Company had cash and cash equivalents of $412.6 million and $443.1 million at June 30, 2015 and December 31, 2014, respectively. Cash and cash equivalents generally consist of cash in banks, as well as highly liquid investments in money market funds, time deposits, savings accounts, commercial paper, and corporate debt securities.

The Company’s U.S. government securities are mostly comprised of direct U.S. Treasury obligations that are guaranteed by the U.S. government and U.S. government agency securities are mostly comprised of U.S. government agency instruments, including mortgage-backed securities. The Company’s non-U.S. government securities are mostly comprised of non-U.S. government instruments, mainly municipal and foreign government securities. To ensure that the investment portfolio is sufficiently diversified, the Company’s investment policy requires that a certain percentage of the Company’s portfolio be invested in these types of securities.

The Company’s corporate debt securities are comprised of publicly-traded domestic and foreign corporate debt securities. The Company does not purchase auction rate securities, and investments are in instruments that meet high quality credit rating standards, as specified in the Company’s investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issuer or type of instrument.

At June 30, 2015, the Company’s long-term investments had contractual maturities of one to two years.

In addition, the Company has short-term and long-term investments in debt securities which are summarized as follows (in thousands):

 

 

Cost Basis

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair Value

 

Balances at June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments-Short-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

33,637

 

 

$

27

 

 

$

 

 

$

33,664

 

U.S. government agency securities

 

61,810

 

 

 

13

 

 

 

(4

)

 

 

61,819

 

Non-U.S. government securities

 

11,035

 

 

 

1

 

 

 

(1

)

 

 

11,035

 

Corporate debt securities

 

91,673

 

 

 

8

 

 

 

(39

)

 

 

91,642

 

Total investments - short-term

$

198,155

 

 

$

49

 

 

$

(44

)

 

$

198,160

 

Investments-Long-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

14,985

 

 

$

19

 

 

$

 

 

$

15,004

 

U.S. government agency securities

 

18,333

 

 

 

8

 

 

 

(5

)

 

 

18,336

 

Corporate debt securities

 

16,074

 

 

 

1

 

 

 

(24

)

 

 

16,051

 

Total investments - long-term

$

49,392

 

 

$

28

 

 

$

(29

)

 

$

49,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments-Short-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

26,930

 

 

$

7

 

 

$

(2

)

 

$

26,935

 

U.S. government agency securities

 

59,336

 

 

 

7

 

 

 

(6

)

 

 

59,337

 

Non-U.S. government securities

 

8,764

 

 

 

2

 

 

 

 

 

 

8,766

 

Corporate debt securities

 

90,782

 

 

 

10

 

 

 

(47

)

 

 

90,745

 

Total investments - short-term

$

185,812

 

 

$

26

 

 

$

(55

)

 

$

185,783

 

Investments-Long-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

25,320

 

 

$

4

 

 

$

(10

)

 

$

25,314

 

U.S. government agency securities

 

17,369

 

 

 

1

 

 

 

(14

)

 

 

17,356

 

Corporate debt securities

 

16,540

 

 

 

2

 

 

 

(15

)

 

 

16,527

 

Total investments - long-term

$

59,229

 

 

$

7

 

 

$

(39

)

 

$

59,197

 

 

Unrealized Losses

The following table summarizes the fair value and gross unrealized losses of the Company’s investments, including investments categorized as cash equivalents, with unrealized losses aggregated by type of investment instrument and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

 

 

Less than 12 Months

 

 

12 Months or Greater

 

 

Total

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

1,015

 

 

$

 

 

$

 

 

$

 

 

$

1,015

 

 

$

 

U.S. government agency securities

 

23,454

 

 

 

(9

)

 

 

 

 

 

 

 

 

23,454

 

 

 

(9

)

Non-U.S. government securities

 

6,220

 

 

 

(1

)

 

 

 

 

 

 

 

 

6,220

 

 

 

(1

)

Corporate debt securities

 

58,428

 

 

 

(63

)

 

 

 

 

 

 

 

 

58,428

 

 

 

(63

)

Total investments

$

89,117

 

 

$

(73

)

 

$

 

 

$

 

 

$

89,117

 

 

$

(73

)

December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government  securities

$

22,355

 

 

$

(12

)

 

$

 

 

$

 

 

$

22,355

 

 

$

(12

)

U.S. government agency securities

 

27,348

 

 

 

(20

)

 

 

 

 

 

 

 

 

27,348

 

 

 

(20

)

Corporate debt securities

 

59,667

 

 

 

(62

)

 

 

 

 

 

 

 

 

59,667

 

 

 

(62

)

Total investments

$

109,370

 

 

$

(94

)

 

$

 

 

$

 

 

$

109,370

 

 

$

(94

)

 

During the six months ended June 30, 2015 and 2014, there were no investments in the Company’s portfolio that were other-than temporarily impaired and the Company did not incur any material realized net gains or losses.

Fair Value Measurements
Fair Value Measurements

11. FAIR VALUE MEASUREMENTS

 

The tables below set forth the Company’s recurring fair value measurements (in thousands):

 

 

 

 

 

 

 

Fair Value Measurements at

June 30, 2015 Using

 

Description

 

Total

 

 

Quoted Prices in Active

Markets for

Identical Assets

 

 

Significant Other

Observable Inputs

 

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

3,421

 

 

$

3,421

 

 

$

 

U.S. government agency securities

 

 

1,200

 

 

 

 

 

 

1,200

 

Non-U.S. government securities

 

 

1,600

 

 

 

 

 

 

1,600

 

Commercial paper

 

 

7,779

 

 

 

 

 

 

7,779

 

Short-term investments

 

 

198,160

 

 

 

 

 

 

198,160

 

Long-term investments

 

 

49,391

 

 

 

 

 

 

49,391

 

Total fixed income available-for-sale

   securities

 

$

261,551

 

 

$

3,421

 

 

$

258,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (a)

 

$

10,456

 

 

$

 

 

$

10,456

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (b)

 

$

5,606

 

 

$

 

 

$

5,606

 

 

 

 

 

 

 

 

Fair Value Measurements at

December 31, 2014 Using

 

Description

 

Total

 

 

Quoted Prices in Active

Markets for

Identical Assets

 

 

Significant Other

Observable Inputs

 

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

1,395

 

 

$

1,395

 

 

$

 

Commercial paper

 

 

7,549

 

 

 

 

 

 

7,549

 

Short-term investments

 

 

185,783

 

 

 

 

 

 

185,783

 

Long-term investments

 

 

59,197

 

 

 

 

 

 

59,197

 

Total fixed income available-for-sale

   securities

 

$

253,924

 

 

$

1,395

 

 

$

252,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (a)

 

$

14,342

 

 

$

 

 

$

14,342

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (b)

 

$

8,175

 

 

$

 

 

$

8,175

 

 

(a)

Included in short-term derivative assets as “Prepaid expenses and other current assets” in the condensed consolidated balance sheets.

(b)

Included in short-term derivative liabilities as “Other accrued liabilities” in the condensed consolidated balance sheets.

There have been no transfers between Level 1 and Level 2 in the three and six months ended June 30, 2015 and 2014. There were no investments classified as Level 3 as of June 30, 2015 and December 31, 2014.

In addition, the Company has facilities-related liabilities related to restructuring which were calculated based on the discounted future lease payments less sublease assumptions. This non-recurring fair value measurement is classified as a Level 3 measurement under ASC 820. See Note 6 for further details.

The fair value of the Company’s Term Loan under its Credit Agreement is measured using Level 2 inputs as the borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to the Company for debt with similar terms and maturities. The Company has elected not to record its Term Loan at fair value, but has measured it at fair value for disclosure purposes. At June 30, 2015 and December 31, 2014, the estimated fair value of the Term Loan was approximately $227.1 million and $234.9 million, respectively, using observable market inputs. See Note 9 for further details.

Foreign Currency Derivatives
Foreign Currency Derivatives

12. FOREIGN CURRENCY DERIVATIVES

The Company maintains a foreign currency risk management program that is designed to reduce the volatility of the Company’s economic value from the effects of unanticipated currency fluctuations. International operations generate both revenues and costs denominated in foreign currencies. The Company’s policy is to hedge significant foreign currency revenues and costs to improve margin visibility and reduce earnings volatility associated with unexpected changes in currency.

Non-Designated Hedges

The Company hedges its net foreign currency monetary assets and liabilities primarily resulting from foreign currency denominated receivables and payables with foreign exchange forward contracts to reduce the risk that the Company’s earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These derivative instruments are carried at fair value with changes in the fair value recorded in “Interest and other income (expense), net” on the condensed consolidated statements of operations. These derivative instruments do not subject the Company to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset remeasurement gains and losses on the hedged assets and liabilities. The Company executes non-designated foreign exchange forward contracts primarily denominated in Euros, British Pounds, Israeli Shekels, Brazilian Reals, Chinese Yuan, Japanese Yen and Mexican Pesos.

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding non-designated hedges at June 30, 2015 (in thousands):

 

 

Original Maturities of 360 Days or Less

 

Original Maturities of Greater than 360 Days

 

Foreign

Currency

 

 

USD

Equivalent

 

 

Positions

 

Foreign

Currency

 

 

USD

Equivalent

 

 

Positions

Brazilian Real

 

16,991

 

 

$

5,476

 

 

Buy

 

 

 

 

$

 

 

Brazilian Real

 

37,282

 

 

$

11,728

 

 

Sell

 

 

 

 

$

 

 

Chinese Yuan

 

40,500

 

 

$

6,414

 

 

Buy

 

 

4,920

 

 

$

769

 

 

Buy

Chinese Yuan

 

41,832

 

 

$

6,683

 

 

Sell

 

 

 

 

$

 

 

Euro

 

24,468

 

 

$

28,731

 

 

Buy

 

 

623

 

 

$

768

 

 

Buy

Euro

 

54,174

 

 

$

63,677

 

 

Sell

 

 

9,257

 

 

$

11,403

 

 

Sell

British Pound

 

15,878

 

 

$

25,200

 

 

Buy

 

 

3,875

 

 

$

6,034

 

 

Buy

British Pound

 

14,261

 

 

$

22,917

 

 

Sell

 

 

5,532

 

 

$

8,616

 

 

Sell

Israeli Shekel

 

53,288

 

 

$

14,379

 

 

Buy

 

 

8,171

 

 

$

2,103

 

 

Buy

Israeli Shekel

 

59,170

 

 

$

15,535

 

 

Sell

 

 

 

 

$

 

 

Japanese Yen

 

173,692

 

 

$

1,421

 

 

Buy

 

 

 

 

$

 

 

Japanese Yen

 

247,263

 

 

$

2,003

 

 

Sell

 

 

 

 

$

 

 

Mexican Peso

 

12,538

 

 

$

800

 

 

Buy

 

 

 

 

$

 

 

Mexican Peso

 

26,493

 

 

$

1,701

 

 

Sell

 

 

 

 

$

 

 

 

The following table shows the effect of the Company’s non-designated hedges in the condensed consolidated statements of operations (in thousands):

 

Derivatives Not Designated as

Hedging Instruments

 

Location of Gain or (Loss)

Recognized in Income on Derivative

 

Amount of Gain or (Loss)

Recognized in Income on Derivative

 

 

 

 

 

Three Months Ended

 

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

Foreign exchange contracts

 

Interest and other income (expense), net

 

$

(1,056

)

 

$

(35

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

Foreign exchange contracts

 

Interest and other income (expense), net

 

$

3,617

 

 

$

299

 

 

Cash Flow Hedges

The Company’s foreign exchange risk management program objective is to reduce volatility in the Company’s economic value from unanticipated foreign currency fluctuations. The Company designates forward contracts as cash flow hedges of foreign currency revenues and expenses, primarily the Chinese Yuan, Euros, British Pounds and Israeli Shekels. All foreign exchange contracts are carried at fair value on the condensed consolidated balance sheets and the maximum duration of foreign exchange forward contracts does not exceed 13 months. Speculation is prohibited by policy.

To receive hedge accounting treatment under ASC 815, Derivatives and Hedging, all cash flow hedging relationships are formally designated at hedge inception, and tested both prospectively and retrospectively to ensure the forward contracts are highly effective in offsetting changes to future cash flows on the hedged transactions. The Company records effective spot to spot changes in these cash flow hedges in accumulated other comprehensive income until they are reclassified to revenue, cost of revenue or operating expenses together with the hedged transaction. The time value on forward contracts is excluded from effectiveness testing and recorded to interest and other income (expense), net over the life of the contract together with any ineffective portion of the hedge.

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding cash flow hedges at June 30, 2015 (in thousands):

 

 

 

Original Maturities

of 360 Days or Less

 

 

Original Maturities

of Greater than 360 Days

 

 

Foreign

Currency

 

 

USD

Equivalent

 

 

Positions

 

 

Foreign

Currency

 

 

USD

Equivalent

 

 

Positions

Chinese Yuan

 

 

 

 

$

 

 

 

 

 

 

136,780

 

 

$

21,356

 

 

Buy

Euro

 

 

 

 

$

 

 

 

 

 

 

27,977

 

 

$

32,500

 

 

Buy

Euro

 

 

 

 

$

 

 

 

 

 

 

72,943

 

 

$

84,557

 

 

Sell

British Pound

 

 

 

 

$

 

 

 

 

 

 

25,325

 

 

$

39,033

 

 

Buy

British Pound

 

 

 

 

$

 

 

 

 

 

 

32,968

 

 

$

50,614

 

 

Sell

Israeli Shekel

 

 

 

 

$

 

 

 

 

 

 

67,829

 

 

$

17,373

 

 

Buy

 

The following tables show the effect of the Company’s derivative instruments designated as cash flow hedges in the condensed consolidated statements of operations for the following periods (in thousands):

 

 

 

Gain or (Loss)

Recognized in OCI-

Effective Portion

 

 

Location of Gain or

(Loss) Reclassified from

OCI into Income-

Effective Portion

 

Gain or (Loss)

Reclassified from OCI

into Income-Effective

Portion

 

 

Location of Gain or

(Loss) Recognized-

Ineffective Portion and

Amount Excluded from

Effectiveness Testing

 

Gain or (Loss)

Recognized-Ineffective

Portion and Amount

Excluded from

Effectiveness

Testing (a)

 

 

 

Three Months Ended

 

 

 

 

Three Months Ended

 

 

 

 

Three Months Ended

 

 

 

June 30,

2015

 

 

June 30,

2014

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

Foreign

   exchange

   contracts

 

$

(1,723

)

 

$

422

 

 

Product revenues

 

$

3,629

 

 

$

(1,409

)

 

Interest and other

   income (expense),

   net

 

$

357

 

 

$

(127

)

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

(531

)

 

 

330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

(1,007

)

 

 

717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and

   development

 

 

(268

)

 

 

277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and

   administrative

 

 

(396

)

 

 

194

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,723

)

 

$

422

 

 

 

 

$

1,427

 

 

$

109

 

 

 

 

$

357

 

 

$

(127

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

Six Months Ended

 

 

 

 

Six Months Ended

 

 

 

June 30,

2015

 

 

June 30,

2014

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

Foreign

   exchange

   contracts

 

$

4,575

 

 

$

1

 

 

Product revenues

 

$

10,265

 

 

$

(4,274

)

 

Interest and other

   income (expense),

   net

 

$

326

 

 

$

(52

)

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

(1,332

)

 

 

862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

(2,794

)

 

 

1,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and

   development

 

 

(983

)

 

 

692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and

   administrative

 

 

(1,171

)

 

 

366

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,575

 

 

$

1

 

 

 

 

$

3,985

 

 

$

(557

)

 

 

 

$

326

 

 

$

(52

)

  

 

(a)

There were no gains or losses recognized in income due to ineffectiveness in the periods presented.

As of June 30, 2015, the Company estimated that all values reported in accumulated other comprehensive income will be reclassified to income within the next twelve months.

In the event the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge would be immediately reclassified to “Interest and other income (expense), net” on the condensed consolidated statements of operations. For the six months ended June 30, 2015 and 2014, there were no such gains or losses.

The estimates of fair value are based on applicable and commonly quoted prices and prevailing financial market information as of June 30, 2015 and December 31, 2014. See Note 11 for additional information on the fair value measurements for all financial assets and liabilities, including derivative assets and derivative liabilities that are measured at fair value in the condensed consolidated financial statements on a recurring basis.

The following table shows the Company’s derivative instruments measured at gross fair value as reflected in the condensed consolidated balance sheets (in thousands):

 

 

Fair Value of

Derivatives Designated

as Hedge Instruments

 

 

Fair Value of Derivatives

Not Designated as Hedge

Instruments

 

 

June 30,

2015

 

 

December 31,

2014

 

 

June 30,

2015

 

 

December 31,

2014

 

Derivative assets (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

4,984

 

 

$

5,501

 

 

$

5,472

 

 

$

8,841

 

Derivative liabilities (b):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

2,720

 

 

$

4,041

 

 

$

2,886

 

 

$

4,134

 

  

 

(a)

All derivative assets are recorded in “Prepaid and other current assets” in the condensed consolidated balance sheets.

(b)

All derivative liabilities are recorded in “Other accrued liabilities” in the condensed consolidated balance sheets.

Offsetting Derivative Assets and Liabilities

The Company has entered into master netting arrangements with each of its derivative counterparties. These arrangements afford the right to net derivative assets against liabilities with the same counterparty. Under certain default provisions, the Company has the right to set off any other amounts payable to the payee whether or not arising under this agreement. As a result of the netting provisions, the Company’s maximum amount of loss under derivative transactions due to credit risk is limited to the net amounts due from the counterparties under the derivative contracts. Although netting is permitted, it is currently the Company’s policy and practice to record all derivative assets and liabilities on a gross basis in the condensed consolidated balance sheets.

The following table sets forth the offsetting of derivative assets (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amounts Not Offset in the

Condensed Consolidated Balance Sheets

 

 

 

Gross

Amounts of

Recognized Assets

 

 

Gross Amounts

Offset in the

Condensed

Consolidated

Balance Sheets

 

 

Net Amounts of

Assets Presented in

the Condensed

Consolidated

Balance Sheets

 

 

Financial

Instruments

 

 

Cash

Collateral

Pledged

 

 

Net

Amount

 

As of June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

10,456

 

 

$

 

 

$

10,456

 

 

$

(4,914

)

 

$

 

 

$

5,542

 

As of December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

14,342

 

 

$

 

 

$

14,342

 

 

$

(8,175

)

 

$

 

 

$

6,167

 

 

 

The following table sets forth the offsetting of derivative liabilities (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amounts Not Offset in the

Condensed Consolidated Balance Sheets

 

 

 

Gross

Amounts of

Recognized Liabilities

 

 

Gross Amounts

Offset in the

Condensed

Consolidated

Balance Sheets

 

 

Net Amounts of

Liabilities Presented

in the Condensed

Consolidated

Balance Sheets

 

 

Financial

Instruments

 

 

Cash

Collateral

Pledged

 

 

Net

Amount

 

As of June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

5,606

 

 

$

 

 

$

5,606

 

 

$

(4,915

)

 

$

 

 

$

691

 

As of December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

8,175

 

 

$

 

 

$

8,175

 

 

$

(8,175

)

 

$

 

 

$

 

 

Stockholders' Equity
Stockholders' Equity

13. STOCKHOLDERS’ EQUITY

Share Repurchase Program

From time to time, the Company’s Board of Directors has approved plans under which the Company may at its discretion purchase shares of its common stock in the open market or via privately negotiated transactions. In July 2014, the Company announced that its Board of Directors had approved a share repurchase plan (the “2014 repurchase plan”) under which the Company may at its discretion purchase shares in the open market with an aggregate value of up to $200.0 million. The Company expects to execute this new authorization through the end of June 2016 and to fund the share repurchases through cash on hand and future cash flow from operations. During the three and six months ended June 30, 2015, the Company purchased approximately 1.9 million and 4.8 million shares of common stock, respectively, in the open market for approximately $ 25.0 million and $65.0 million, respectively. During the three and six months ended June 30, 2014, the Company did not purchase any shares of common stock in the open market. However, the Company received 1.5 million shares in June 2014 under its accelerated share repurchase program as discussed below. The purchase price for the shares of the Company’s stock repurchased is recorded as a reduction to stockholders’ equity. The excess of the cost of treasury stock that is retired over its par value and the portion allocated to additional paid-in capital based on the calculated average price in equity is recorded as a charge to retained earnings. The repurchased shares of common stock have been retired and reclassified as authorized and unissued shares. As of June 30, 2015, the Company had a remaining authorization to purchase up to an additional $85.0 million of shares in the open market under the 2014 repurchase plan.

Accelerated Share Repurchase Agreements

On December 4, 2013, the Company entered into separate accelerated share repurchase (“ASR”) agreements with two financial institutions to repurchase an aggregate of $114.6 million of common stock as part of the last phase of the Company’s $400.0 million Return of Capital Program. Under the terms of the ASR agreements, the Company paid an aggregate $114.6 million of cash and received an initial delivery of approximately 8.0 million shares in December 2013. The ASR contracts were settled in June 2014, whereby the Company received an additional 1.5 million shares upon settlement. The aggregate 9.5 million shares ultimately purchased under the ASR program was determined based on the Company’s volume-weighted average stock price (“VWAP”) less an agreed upon discount during the term of the transactions. Total shares repurchased were immediately retired upon delivery and accounted for as a reduction to stockholders’ equity. The costs associated with the ASR transactions were recorded as an adjustment to the stockholders’ equity. Additionally, the Company accounted for the ASR transactions as repurchases of common stock for the purpose of calculating its earnings per share when the shares were received.

Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated other comprehensive income, net of tax, by component (in thousands). The tax effects were not shown separately, as the impacts were not material.

 

Six Months Ended June 30, 2015

 

Unrealized

Gains and

Losses on

Cash Flow

Hedges

 

 

Unrealized Gains

and Losses on

Available-for-

Sale Securities

 

 

Foreign Currency

Translation

 

 

Total

 

Balance as of December 31, 2014

 

$

1,366

 

 

$

(52

)

 

$

2,797

 

 

$

4,111

 

Other comprehensive income before

   reclassifications

 

 

4,575

 

 

 

62

 

 

 

191

 

 

 

4,828

 

Amounts reclassified from accumulated

   other comprehensive income (a)

 

 

(3,985

)

 

 

(4

)

 

 

 

 

 

(3,989

)

Net current-period other comprehensive income

 

 

590

 

 

 

58

 

 

 

191

 

 

 

839

 

Balance as of June 30, 2015

 

$

1,956

 

 

$

6

 

 

$

2,988

 

 

$

4,950

 

 

 

(a)

See Note 12 for details of gains and losses, net of taxes, reclassified out of accumulated other comprehensive income into net income related to cash flow hedges and each line item of net income affected by the reclassification. Gains and losses related to available-for-sale securities were reclassified into “Interest and other income (expense), net” in the condensed consolidated statement of operations for the six months ended June 30, 2015, net of taxes.

Stock-Based Compensation
Stock-Based Compensation

14. STOCK-BASED COMPENSATION

The following table summarizes stock-based compensation expense recorded for the periods presented and its allocation within the condensed consolidated statements of operations (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Cost of  product revenues

$

505

 

 

$

520

 

 

$

1,460

 

 

$

1,160

 

Cost of service revenues

 

877

 

 

 

1,101

 

 

 

2,185

 

 

 

2,062

 

Stock-based compensation expense included in cost

   of revenues

 

1,382

 

 

 

1,621

 

 

 

3,645

 

 

 

3,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

2,698

 

 

 

5,333

 

 

 

5,311

 

 

 

5,724

 

Research and development

 

1,915

 

 

 

3,059

 

 

 

4,488

 

 

 

4,101

 

General and administrative

 

3,716

 

 

 

3,750

 

 

 

5,499

 

 

 

6,363

 

Stock-based compensation expense included in

   operating expenses

 

8,329

 

 

 

12,142

 

 

 

15,298

 

 

 

16,188

 

Stock-based compensation expense related to

   employee equity awards and employee stock

   purchases

 

9,711

 

 

 

13,763

 

 

 

18,943

 

 

 

19,410

 

Tax benefit

 

1,697

 

 

 

2,777

 

 

 

3,226

 

 

 

3,762

 

Stock-based compensation expense related to

   employee equity awards and employee stock

   purchases, net of tax

$

8,014

 

 

$

10,986

 

 

$

15,717

 

 

$

15,648

 

 

Stock-based compensation expense is not allocated to segments because it is centrally managed at the corporate level.

Stock Options

There were no stock options granted in the six months ended June 30, 2015 and 2014.

Performance Shares and Restricted Stock Units

During the six months ended June 30, 2015 and 2014, the Company granted 922,202 and 556,550 performance shares to certain employees and executives, at a weighted average fair value of $14.23 and $13.76 per share, respectively. The 2015 and 2014 grants are generally divided evenly over three annual performance periods commencing with calendar year 2015 and 2014, respectively, and will vest on the first, second and third anniversary of the grant date.

During the six months ended June 30, 2015 and 2014, the Company granted 2,788,043 and 2,702,115 restricted stock units to certain employees, at a weighted average fair value of $13.80 and $12.95 per share, respectively.

During the six months ended June 30, 2015 and 2014, the Company granted 120,000 and 140,000, restricted stock units to non-employee directors at a weighted average fair value of $13.14 and $12.87 per share, respectively.

Employee Stock Purchase Plan

During the six months ended June 30, 2015 and 2014, 1,183,426 and 1,696,177 shares were purchased under the Company’s employee stock purchase plan (“ESPP”), respectively. As of June 30, 2015, there were 10,131,641 shares available to be issued under the ESPP.

Valuation Assumptions

For purchase rights granted pursuant to the ESPP, the estimated fair value per share of employee stock purchase rights for the two-year offering period commencing on February 2, 2015 ranged from $3.09 to $4.27, compared to the estimated fair value per share from $2.82 to $4.48 for the two-year offering period commencing on February 3, 2014.

The fair value of each employee stock purchase right grant is estimated on the date of grant using the Black-Scholes option valuation model and is recognized as expense using the graded vesting method using the following assumptions:

 

 

Three and Six Months Ended

 

June 30,

2015

 

June 30,

2014

Expected volatility

30.04-30.73%

 

32.30-42.11%

Risk-free interest rate

0.07-0.49%

 

0.07-0.30%

Expected dividends

0.0%

 

0.0%

Expected life (years)

0.5-2.0

 

0.5-2.0

 

The Company computed its expected volatility assumption based on blended volatility (50% historical volatility and 50% implied volatility). The selection of the blended volatility assumption was based upon the Company’s assessment that blended volatility is more representative of the Company’s future stock price trends as it weighs in the longer term historical volatility with the near term future implied volatility.

The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected life of the Company’s employee stock purchases.

The dividend yield assumption is based on the Company’s history of not paying dividends and no future expectation of dividend payouts.

The expected life of employee stock purchase rights represents the contractual terms of the underlying program.

 

Net Income Per Share
Net Income Per Share

15. NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income per share (in thousands, except for per share amounts):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

19,647

 

 

$

8,557

 

 

$

40,845

 

 

$

4,566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

134,057

 

 

 

138,016

 

 

 

134,417

 

 

 

137,406

 

Effect of dilutive potential common shares

 

3,290

 

 

 

4,860

 

 

 

3,873

 

 

 

5,115

 

Weighted average shares outstanding, diluted

 

137,347

 

 

 

142,876

 

 

 

138,290

 

 

 

142,521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

$

0.15

 

 

$

0.06

 

 

$

0.30

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per share

$

0.14

 

 

$

0.06

 

 

$

0.30

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antidilutive employee stock-based awards, excluded

 

637

 

 

 

242

 

 

 

483

 

 

 

364

 

 

Diluted shares outstanding include the dilutive effect of in-the-money employee equity share options, unvested performance shares, restricted stock units, and stock purchase rights under the ESPP. The dilutive effect of such equity awards is calculated based on the average share price for each fiscal period using the treasury stock method. Potentially dilutive shares are excluded from the computation of diluted net income per share when their effect is antidilutive.

Business Segment Information
Business Segment Information

16. BUSINESS SEGMENT INFORMATION

The Company conducts its business globally and is managed geographically in three segments: (1) Americas, which consists of North America and Caribbean and Latin America (“CALA”) reporting units, (2) Europe, Middle East and Africa (“EMEA”) and (3) Asia Pacific (“APAC”). The segments are determined in accordance with how management views and evaluates the Company’s business and allocates its resources, and are based on the criteria as outlined in the authoritative guidance.

Segment Revenue and Profit

Segment revenues consist of product and service revenues. Product revenues are attributed to a segment based on the ordering location of the customer. For internal reporting purposes and determination of segment contribution margins, geographic segment product revenues may differ slightly from actual geographic revenues due to internal revenue allocations between the Company’s segments. Service revenues are generally attributed to a segment based on the end-user’s location where services are performed. A significant portion of each segment’s expenses arises from shared services and infrastructure that Polycom has historically allocated to the segments in order to realize economies of scale and to use resources efficiently.

Segment contribution margin includes all geographic segment revenues less the related cost of sales and direct sales and marketing expenses. Management allocates some infrastructure costs, such as facilities and IT costs, in determining segment contribution margins. Contribution margin is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. Certain operating expenses are not allocated to segments because they are separately managed at the corporate level. These unallocated costs include corporate manufacturing costs, sales and marketing costs other than direct sales and marketing expenses, research and development expenses, general and administrative costs, such as legal and accounting, stock-based compensation costs, transaction-related costs, amortization of purchased intangibles, restructuring costs and interest and other income (expense), net.

Segment Data

The results of the reportable segments are derived directly from Polycom’s management reporting system. The results are based on Polycom’s method of internal reporting and are not reported in conformity with accounting principles generally accepted in the United States. Management measures the performance of each segment based on several metrics, including contribution margin as defined above. Asset data, with the exception of gross accounts receivable, is not reviewed by management at the segment level.

Financial information for each reportable geographical segment as of June 30, 2015 and December 31, 2014 and for the three and six months ended June 30, 2015 and 2014, based on the Company’s internal management reporting system and as utilized by the Company’s Chief Operating Decision Maker (“CODM”), its Chief Executive Officer, is as follows (in thousands):

 

 

Americas

 

 

EMEA

 

 

APAC

 

 

Total

 

For the three months ended June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

158,333

 

 

$

80,865

 

 

$

77,377

 

 

$

316,575

 

% of total revenue

 

50

%

 

 

26

%

 

 

24

%

 

 

100

%

Contribution margin

$

60,765

 

 

$

31,987

 

 

$

35,975

 

 

$

128,727

 

% of segment revenue

 

38

%

 

 

40

%

 

 

46

%

 

 

41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended June 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

167,806

 

 

$

83,067

 

 

$

81,146

 

 

$

332,019

 

% of total revenue

 

51

%

 

 

25

%

 

 

24

%

 

 

100

%

Contribution margin

$

69,155

 

 

$

35,108

 

 

$

33,366

 

 

$

137,629

 

% of segment revenue

 

41

%

 

 

42

%

 

 

41

%

 

 

41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

315,687

 

 

$

174,714

 

 

$

156,874

 

 

$

647,275

 

% of total revenue

 

49

%

 

 

27

%

 

 

24

%

 

 

100

%

Contribution margin

$

121,616

 

 

$

74,764

 

 

$

72,088

 

 

$

268,468

 

% of segment revenue

 

39

%

 

 

43

%

 

 

46

%

 

 

41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended June 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

330,875

 

 

$

172,104

 

 

$

157,564

 

 

$

660,543

 

% of total revenue

 

50

%

 

 

26

%

 

 

24

%

 

 

100

%

Contribution margin

$

139,128

 

 

$

72,774

 

 

$

65,020

 

 

$

276,922

 

% of segment revenue

 

42

%

 

 

42

%

 

 

41

%

 

 

42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2015: Gross accounts receivable

$

100,975

 

 

$

59,582

 

 

$

55,477

 

 

$

216,034

 

% of total gross accounts receivable

 

47

%

 

 

28

%

 

 

25

%

 

 

100

%

As of December 31, 2014: Gross accounts receivable

$

88,316

 

 

$

62,540

 

 

$

63,808

 

 

$

214,664

 

% of total gross accounts receivable

 

41

%

 

 

29

%

 

 

30

%

 

 

100

%

 

During the three months ended June 30, 2015 and 2014, one customer, ScanSource Communications (“ScanSource”), accounted for 23% and 18%, respectively, of the Company’s revenues. During the six months ended June 30, 2015 and 2014, ScanSource accounted for 19% and 18%, respectively, of the Company’s revenues. ScanSource accounted for 27% and 19%, respectively, of total gross accounts receivable at June 30, 2015 and December 31, 2014.

The reconciliation of segment information to Polycom consolidated totals is as follows (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Segment contribution margin

$

128,727

 

 

$

137,629

 

 

$

268,468

 

 

$

276,922

 

Corporate and unallocated costs

 

(91,158

)

 

 

(99,339

)

 

 

(189,500

)

 

 

(205,938

)

Stock-based compensation

 

(9,711

)

 

 

(13,763

)

 

 

(18,943

)

 

 

(19,410

)

Effect of stock-based compensation cost on warranty

   expense

 

(80

)

 

 

(77

)

 

 

(133

)

 

 

(206

)

Amortization of purchased intangibles

 

(2,517

)

 

 

(3,167

)

 

 

(5,591

)

 

 

(6,500

)

Restructuring costs

 

(343

)

 

 

(9,175

)

 

 

(367

)

 

 

(39,518

)

Transaction-related costs

 

 

 

 

 

 

 

 

 

 

(156

)

Interest and other income (expense), net

 

(178

)

 

 

(1,696

)

 

 

(1,640

)

 

 

(2,391

)

Income before benefit from income taxes

$

24,740

 

 

$

10,412

 

 

$

52,294

 

 

$

2,803

 

 

The following table summarizes the Company’s revenues by groups of similar products and services as follows (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UC group systems

$

195,169

 

 

$

218,448

 

 

$

399,820

 

 

$

431,820

 

UC personal devices

 

66,802

 

 

 

53,639

 

 

 

134,267

 

 

 

110,113

 

UC platform

 

54,604

 

 

 

59,932

 

 

 

113,188

 

 

 

118,610

 

Total

$

316,575

 

 

$

332,019

 

 

$

647,275

 

 

$

660,543

 

 

Income Taxes
Income Taxes

17. INCOME TAXES

The following table presents the income tax expense (benefit) and the effective tax rates (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Income tax expense (benefit)

$

5,093

 

 

$

1,855

 

 

$

11,449

 

 

$

(1,763

)

Effective tax rate

 

20.6

%

 

 

17.8

%

 

 

21.9

%

 

 

(62.9

)%

 

The effective tax rates for the three and six months ended June 30, 2015 and 2014 differ from the U.S. federal statutory rate of 35% primarily due to the impact associated with proportional earnings from the Company’s operations in lower tax jurisdictions, recurring permanent adjustments and discrete benefits recorded during the quarters.  For the six months ended June 30, 2014, a discrete benefit of $1.5 million was recorded for tax benefits realized on disqualifying dispositions of stock from the Company’s employee stock purchase plan. The discrete tax benefits realized on disqualifying dispositions of stock from the Company’s employee stock purchase plan were not material in each of the other periods presented. In addition, included in the tax rate for the three and six months ended June 30, 2014 is a discrete tax benefit of $0.9 million related to stock-based compensation expense adjustments for certain terminated employees.

As of June 30, 2015, the amount of gross unrecognized tax benefits was $21.7 million, all of which would affect the Company’s effective tax rate if realized. The Company recognizes interest income and interest expense and penalties on tax overpayments and underpayments within income tax expense. As of June 30, 2015 and December 31, 2014, the Company had approximately $1.7 million and $1.6 million, respectively, of accrued interest and penalties related to uncertain tax positions. The Company anticipates that, except for $0.6 million in uncertain tax positions that may be reduced related to the lapse of various statutes of limitation, there will be no material changes in uncertain tax positions in the next 12 months.

The Company regularly assesses the ability to realize deferred tax assets recorded in all entities based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income. If the Company’s future business profits do not support the realization of deferred tax assets, a valuation allowance could be recorded in the foreseeable future. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

 

Goodwill, Purchased Intangibles, and Software Development Costs (Tables)

The following table presents the changes to the Company’s goodwill by segment during the six months ended June 30, 2015 (in thousands):

 

 

Americas

 

 

EMEA

 

 

APAC

 

 

Total

 

Balance at December 31, 2014

$

308,159

 

 

$

101,882

 

 

$

149,190

 

 

$

559,231

 

Foreign currency translation

 

 

 

 

 

 

 

18

 

 

 

18

 

Balance at June 30, 2015

$

308,159

 

 

$

101,882

 

 

$

149,208

 

 

$

559,249

 

 

The following table presents details of the Company’s total purchased intangible assets and capitalized software development costs for products to be sold as of the following periods (in thousands):

 

 

June 30, 2015

 

 

December 31, 2014

 

 

Gross

Value

 

 

Accumulated

Amortization

& Impairment

 

 

Net Value

 

 

Gross

Value

 

 

Accumulated

Amortization

& Impairment

 

 

Net Value

 

Core and developed technology

$

81,178

 

 

$

(80,745

)

 

$

433

 

 

$

81,178

 

 

$

(79,986

)

 

$

1,192

 

Customer and partner relationships

 

79,525

 

 

 

(62,446

)

 

 

17,079

 

 

 

79,525

 

 

 

(57,983

)

 

 

21,542

 

Non-compete agreements

 

1,800

 

 

 

(1,400

)

 

 

400

 

 

 

1,800

 

 

 

(1,100

)

 

 

700

 

Trade name

 

3,400

 

 

 

(3,299

)

 

 

101

 

 

 

3,400

 

 

 

(3,229

)

 

 

171

 

Other

 

4,462

 

 

 

(4,455

)

 

 

7

 

 

 

4,462

 

 

 

(4,418

)

 

 

44

 

Finite-lived intangible assets

 

170,365

 

 

 

(152,345

)

 

 

18,020

 

 

 

170,365

 

 

 

(146,716

)

 

 

23,649

 

Indefinite-lived trade name

 

918

 

 

 

 

 

 

918

 

 

 

918

 

 

 

 

 

 

918

 

Total acquired intangible assets

$

171,283

 

 

$

(152,345

)

 

$

18,938

 

 

$

171,283

 

 

$

(146,716

)

 

$

24,567

 

Capitalized software development costs for

   products to be sold

$

9,912

 

 

$

(3,254

)

 

$

6,658

 

 

$

7,416

 

 

$

(1,900

)

 

$

5,516

 

 

The following table summarizes the amortization expenses recorded in the following periods (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Amortization of purchased intangibles in revenues

$

19

 

 

$

19

 

 

$

38

 

 

$

38

 

Amortization of purchased intangibles in cost of product

   revenues

 

100

 

 

 

731

 

 

 

757

 

 

 

1,572

 

Amortization of purchased intangibles in operating

   expenses

 

2,417

 

 

 

2,436

 

 

 

4,834

 

 

 

4,928

 

Total amortization expenses of purchased intangibles

$

2,536

 

 

$

3,186

 

 

$

5,629

 

 

$

6,538

 

 

The estimated future amortization expense as of June 30, 2015 is as follows (in thousands):

 

Year ending December 31,

 

Amount

 

Remainder of 2015

 

$

4,867

 

2016

 

 

8,484

 

2017

 

 

4,669

 

Total

 

$

18,020

 

 

Restructuring Costs (Tables)
Summary of Activity of Restructuring Reserves

The following table summarizes the changes in the Company’s restructuring reserves during the six months ended June 30, 2015 (in thousands):

 

 

Severance/Other

 

 

Facilities

 

 

Total

 

Balance at December 31, 2014

$

664

 

 

$

40,909

 

 

$

41,573

 

Additions to the reserve, net

 

3,169

 

 

 

(3,785

)

 

 

(616

)

Interest accretion

 

 

 

 

977

 

 

 

977

 

Non-cash adjustments

 

 

 

 

(201

)

 

 

(201

)

Cash payments

 

(2,995

)

 

 

(13,185

)

 

 

(16,180

)

Balance at June 30, 2015

$

838

 

 

$

24,715

 

 

$

25,553

 

 

Balance Sheet Details (Tables)

Trade receivables, net consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Gross accounts receivables

$

216,034

 

 

$

214,664

 

Returns and related reserves

 

(51,865

)

 

 

(42,224

)

Allowance for doubtful accounts

 

(3,014

)

 

 

(3,040

)

Total

$

161,155

 

 

$

169,400

 

 

Inventories consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Raw materials

$

1,661

 

 

$

1,496

 

Work in process

 

488

 

 

 

545

 

Finished goods

 

97,760

 

 

 

98,287

 

Total

$

99,909

 

 

$

100,328

 

 

Prepaid expenses and other current assets consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Non-trade receivables

$

7,954

 

 

$

6,547

 

Prepaid expenses

 

35,930

 

 

 

37,385

 

Derivative assets

 

10,456

 

 

 

14,342

 

Other current assets

 

3,037

 

 

 

2,798

 

Total

$

57,377

 

 

$

61,072

 

 

Deferred revenue consists of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Short-term:

 

 

 

 

 

 

 

Service

$

174,213

 

 

$

171,355

 

Product

 

9

 

 

 

94

 

License

 

2,668

 

 

 

2,083

 

Total

$

176,890

 

 

$

173,532

 

Long-term:

 

 

 

 

 

 

 

Service

$

80,167

 

 

$

85,925

 

License

 

3,384

 

 

 

3,441

 

Total

$

83,551

 

 

$

89,366

 

 

Changes in the deferred service revenue during the six month period ended June 30, 2015 and 2014 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

Balance at beginning of period

$

257,280

 

 

$

253,793

 

Additions to deferred service revenue

 

167,332

 

 

 

170,459

 

Amortization of deferred service revenue

 

(170,232

)

 

 

(171,257

)

Balance at end of period

$

254,380

 

 

$

252,995

 

 

Other accrued liabilities consist of the following (in thousands):

 

 

June 30,

2015

 

 

December 31,

2014

 

Accrued expenses

$

26,095

 

 

$

27,523

 

Accrued co-op expenses

 

3,059

 

 

 

4,102

 

Restructuring reserves

 

9,980

 

 

 

12,207

 

Warranty obligations

 

11,147

 

 

 

11,613

 

Derivative liabilities

 

5,606

 

 

 

8,175

 

Employee stock purchase plan withholdings

 

9,088

 

 

 

10,658

 

Other accrued liabilities

 

10,689

 

 

 

11,915

 

Total

$

75,664

 

 

$

86,193

 

 

Changes in the warranty obligation during the six month period ended June 30, 2015 and 2014 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

Balance at beginning of period

$

11,613

 

 

$

9,475

 

Accruals for warranties issued during the period

 

6,811

 

 

 

8,131

 

Actual charges against warranty reserve during the period

 

(7,277

)

 

 

(7,256

)

Balance at end of period

$

11,147

 

 

$

10,350

 

 

Debt (Tables)
Interest Expense Recognized Related to Term Loan

The following table sets forth total interest expense recognized on the Term Loan (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Contractual interest expense

$

1,292

 

 

$

1,225

 

 

$

2,550

 

 

$

2,454

 

Amortization of debt issuance costs

 

133

 

 

 

133

 

 

 

266

 

 

 

267

 

Total

$

1,425

 

 

$

1,358

 

 

$

2,816

 

 

$

2,721

 

 

Investments (Tables)

In addition, the Company has short-term and long-term investments in debt securities which are summarized as follows (in thousands):

 

 

Cost Basis

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair Value

 

Balances at June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments-Short-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

33,637

 

 

$

27

 

 

$

 

 

$

33,664

 

U.S. government agency securities

 

61,810

 

 

 

13

 

 

 

(4

)

 

 

61,819

 

Non-U.S. government securities

 

11,035

 

 

 

1

 

 

 

(1

)

 

 

11,035

 

Corporate debt securities

 

91,673

 

 

 

8

 

 

 

(39

)

 

 

91,642

 

Total investments - short-term

$

198,155

 

 

$

49

 

 

$

(44

)

 

$

198,160

 

Investments-Long-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

14,985

 

 

$

19

 

 

$

 

 

$

15,004

 

U.S. government agency securities

 

18,333

 

 

 

8

 

 

 

(5

)

 

 

18,336

 

Corporate debt securities

 

16,074

 

 

 

1

 

 

 

(24

)

 

 

16,051

 

Total investments - long-term

$

49,392

 

 

$

28

 

 

$

(29

)

 

$

49,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments-Short-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

26,930

 

 

$

7

 

 

$

(2

)

 

$

26,935

 

U.S. government agency securities

 

59,336

 

 

 

7

 

 

 

(6

)

 

 

59,337

 

Non-U.S. government securities

 

8,764

 

 

 

2

 

 

 

 

 

 

8,766

 

Corporate debt securities

 

90,782

 

 

 

10

 

 

 

(47

)

 

 

90,745

 

Total investments - short-term

$

185,812

 

 

$

26

 

 

$

(55

)

 

$

185,783

 

Investments-Long-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

25,320

 

 

$

4

 

 

$

(10

)

 

$

25,314

 

U.S. government agency securities

 

17,369

 

 

 

1

 

 

 

(14

)

 

 

17,356

 

Corporate debt securities

 

16,540

 

 

 

2

 

 

 

(15

)

 

 

16,527

 

Total investments - long-term

$

59,229

 

 

$

7

 

 

$

(39

)

 

$

59,197

 

 

The following table summarizes the fair value and gross unrealized losses of the Company’s investments, including investments categorized as cash equivalents, with unrealized losses aggregated by type of investment instrument and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

 

 

Less than 12 Months

 

 

12 Months or Greater

 

 

Total

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

1,015

 

 

$

 

 

$

 

 

$

 

 

$

1,015

 

 

$

 

U.S. government agency securities

 

23,454

 

 

 

(9

)

 

 

 

 

 

 

 

 

23,454

 

 

 

(9

)

Non-U.S. government securities

 

6,220

 

 

 

(1

)

 

 

 

 

 

 

 

 

6,220

 

 

 

(1

)

Corporate debt securities

 

58,428

 

 

 

(63

)

 

 

 

 

 

 

 

 

58,428

 

 

 

(63

)

Total investments

$

89,117

 

 

$

(73

)

 

$

 

 

$

 

 

$

89,117

 

 

$

(73

)

December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government  securities

$

22,355

 

 

$

(12

)

 

$

 

 

$

 

 

$

22,355

 

 

$

(12

)

U.S. government agency securities

 

27,348

 

 

 

(20

)

 

 

 

 

 

 

 

 

27,348

 

 

 

(20

)

Corporate debt securities

 

59,667

 

 

 

(62

)

 

 

 

 

 

 

 

 

59,667

 

 

 

(62

)

Total investments

$

109,370

 

 

$

(94

)

 

$

 

 

$

 

 

$

109,370

 

 

$

(94

)

 

Fair Value Measurements (Tables)
Schedule of Fair Value of Marketable Securities and Foreign Currency Contracts

The tables below set forth the Company’s recurring fair value measurements (in thousands):

 

 

 

 

 

 

 

Fair Value Measurements at

June 30, 2015 Using

 

Description

 

Total

 

 

Quoted Prices in Active

Markets for

Identical Assets

 

 

Significant Other

Observable Inputs

 

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

3,421

 

 

$

3,421

 

 

$

 

U.S. government agency securities

 

 

1,200

 

 

 

 

 

 

1,200

 

Non-U.S. government securities

 

 

1,600

 

 

 

 

 

 

1,600

 

Commercial paper

 

 

7,779

 

 

 

 

 

 

7,779

 

Short-term investments

 

 

198,160

 

 

 

 

 

 

198,160

 

Long-term investments

 

 

49,391

 

 

 

 

 

 

49,391

 

Total fixed income available-for-sale

   securities

 

$

261,551

 

 

$

3,421

 

 

$

258,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (a)

 

$

10,456

 

 

$

 

 

$

10,456

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (b)

 

$

5,606

 

 

$

 

 

$

5,606

 

 

 

 

 

 

 

 

Fair Value Measurements at

December 31, 2014 Using

 

Description

 

Total

 

 

Quoted Prices in Active

Markets for

Identical Assets

 

 

Significant Other

Observable Inputs

 

 

 

 

 

 

 

(Level 1)

 

 

(Level 2)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

1,395

 

 

$

1,395

 

 

$

 

Commercial paper

 

 

7,549

 

 

 

 

 

 

7,549

 

Short-term investments

 

 

185,783

 

 

 

 

 

 

185,783

 

Long-term investments

 

 

59,197

 

 

 

 

 

 

59,197

 

Total fixed income available-for-sale

   securities

 

$

253,924

 

 

$

1,395

 

 

$

252,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (a)

 

$

14,342

 

 

$

 

 

$

14,342

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (b)

 

$

8,175

 

 

$

 

 

$

8,175

 

 

(a)

Included in short-term derivative assets as “Prepaid expenses and other current assets” in the condensed consolidated balance sheets.

(b)

Included in short-term derivative liabilities as “Other accrued liabilities” in the condensed consolidated balance sheets.

Foreign Currency Derivatives (Tables)

The following table shows the Company’s derivative instruments measured at gross fair value as reflected in the condensed consolidated balance sheets (in thousands):

 

 

Fair Value of

Derivatives Designated

as Hedge Instruments

 

 

Fair Value of Derivatives

Not Designated as Hedge

Instruments

 

 

June 30,

2015

 

 

December 31,

2014

 

 

June 30,

2015

 

 

December 31,

2014

 

Derivative assets (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

4,984

 

 

$

5,501

 

 

$

5,472

 

 

$

8,841

 

Derivative liabilities (b):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

2,720

 

 

$

4,041

 

 

$

2,886

 

 

$

4,134

 

  

 

(a)

All derivative assets are recorded in “Prepaid and other current assets” in the condensed consolidated balance sheets.

(b)

All derivative liabilities are recorded in “Other accrued liabilities” in the condensed consolidated balance sheets.

The following table sets forth the offsetting of derivative assets (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amounts Not Offset in the

Condensed Consolidated Balance Sheets

 

 

 

Gross

Amounts of

Recognized Assets

 

 

Gross Amounts

Offset in the

Condensed

Consolidated

Balance Sheets

 

 

Net Amounts of

Assets Presented in

the Condensed

Consolidated

Balance Sheets

 

 

Financial

Instruments

 

 

Cash

Collateral

Pledged

 

 

Net

Amount

 

As of June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

10,456

 

 

$

 

 

$

10,456

 

 

$

(4,914

)

 

$

 

 

$

5,542

 

As of December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

14,342

 

 

$

 

 

$

14,342

 

 

$

(8,175

)

 

$

 

 

$

6,167

 

 

 

The following table sets forth the offsetting of derivative liabilities (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amounts Not Offset in the

Condensed Consolidated Balance Sheets

 

 

 

Gross

Amounts of

Recognized Liabilities

 

 

Gross Amounts

Offset in the

Condensed

Consolidated

Balance Sheets

 

 

Net Amounts of

Liabilities Presented

in the Condensed

Consolidated

Balance Sheets

 

 

Financial

Instruments

 

 

Cash

Collateral

Pledged

 

 

Net

Amount

 

As of June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

5,606

 

 

$

 

 

$

5,606

 

 

$

(4,915

)

 

$

 

 

$

691

 

As of December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

8,175

 

 

$

 

 

$

8,175

 

 

$

(8,175

)

 

$

 

 

$

 

 

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding cash flow hedges at June 30, 2015 (in thousands):

 

 

 

Original Maturities

of 360 Days or Less

 

 

Original Maturities

of Greater than 360 Days

 

 

Foreign

Currency

 

 

USD

Equivalent

 

 

Positions

 

 

Foreign

Currency

 

 

USD

Equivalent

 

 

Positions

Chinese Yuan

 

 

 

 

$

 

 

 

 

 

 

136,780

 

 

$

21,356

 

 

Buy

Euro

 

 

 

 

$

 

 

 

 

 

 

27,977

 

 

$

32,500

 

 

Buy

Euro

 

 

 

 

$

 

 

 

 

 

 

72,943

 

 

$

84,557

 

 

Sell

British Pound

 

 

 

 

$

 

 

 

 

 

 

25,325

 

 

$

39,033

 

 

Buy

British Pound

 

 

 

 

$

 

 

 

 

 

 

32,968

 

 

$

50,614

 

 

Sell

Israeli Shekel

 

 

 

 

$

 

 

 

 

 

 

67,829

 

 

$

17,373

 

 

Buy

 

 

The following tables show the effect of the Company’s derivative instruments designated as cash flow hedges in the condensed consolidated statements of operations for the following periods (in thousands):

 

 

 

Gain or (Loss)

Recognized in OCI-

Effective Portion

 

 

Location of Gain or

(Loss) Reclassified from

OCI into Income-

Effective Portion

 

Gain or (Loss)

Reclassified from OCI

into Income-Effective

Portion

 

 

Location of Gain or

(Loss) Recognized-

Ineffective Portion and

Amount Excluded from

Effectiveness Testing

 

Gain or (Loss)

Recognized-Ineffective

Portion and Amount

Excluded from

Effectiveness

Testing (a)

 

 

 

Three Months Ended

 

 

 

 

Three Months Ended

 

 

 

 

Three Months Ended

 

 

 

June 30,

2015

 

 

June 30,

2014

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

Foreign

   exchange

   contracts

 

$

(1,723

)

 

$

422

 

 

Product revenues

 

$

3,629

 

 

$

(1,409

)

 

Interest and other

   income (expense),

   net

 

$

357

 

 

$

(127

)

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

(531

)

 

 

330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

(1,007

)

 

 

717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and

   development

 

 

(268

)

 

 

277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and

   administrative

 

 

(396

)

 

 

194

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,723

)

 

$

422

 

 

 

 

$

1,427

 

 

$

109

 

 

 

 

$

357

 

 

$

(127

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

Six Months Ended

 

 

 

 

Six Months Ended

 

 

 

June 30,

2015

 

 

June 30,

2014

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

Foreign

   exchange

   contracts

 

$

4,575

 

 

$

1

 

 

Product revenues

 

$

10,265

 

 

$

(4,274

)

 

Interest and other

   income (expense),

   net

 

$

326

 

 

$

(52

)

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

(1,332

)

 

 

862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

(2,794

)

 

 

1,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and

   development

 

 

(983

)

 

 

692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and

   administrative

 

 

(1,171

)

 

 

366

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,575

 

 

$

1

 

 

 

 

$

3,985

 

 

$

(557

)

 

 

 

$

326

 

 

$

(52

)

  

 

(a)

There were no gains or losses recognized in income due to ineffectiveness in the periods presented.

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding non-designated hedges at June 30, 2015 (in thousands):

 

 

Original Maturities of 360 Days or Less

 

Original Maturities of Greater than 360 Days

 

Foreign

Currency

 

 

USD

Equivalent

 

 

Positions

 

Foreign

Currency

 

 

USD

Equivalent

 

 

Positions

Brazilian Real

 

16,991

 

 

$

5,476

 

 

Buy

 

 

 

 

$

 

 

Brazilian Real

 

37,282

 

 

$

11,728

 

 

Sell

 

 

 

 

$

 

 

Chinese Yuan

 

40,500

 

 

$

6,414

 

 

Buy

 

 

4,920

 

 

$

769

 

 

Buy

Chinese Yuan

 

41,832

 

 

$

6,683

 

 

Sell

 

 

 

 

$

 

 

Euro

 

24,468

 

 

$

28,731

 

 

Buy

 

 

623

 

 

$

768

 

 

Buy

Euro

 

54,174

 

 

$

63,677

 

 

Sell

 

 

9,257

 

 

$

11,403

 

 

Sell

British Pound

 

15,878

 

 

$

25,200

 

 

Buy

 

 

3,875

 

 

$

6,034

 

 

Buy

British Pound

 

14,261

 

 

$

22,917

 

 

Sell

 

 

5,532

 

 

$

8,616

 

 

Sell

Israeli Shekel

 

53,288

 

 

$

14,379

 

 

Buy

 

 

8,171

 

 

$

2,103

 

 

Buy

Israeli Shekel

 

59,170

 

 

$

15,535

 

 

Sell

 

 

 

 

$

 

 

Japanese Yen

 

173,692

 

 

$

1,421

 

 

Buy

 

 

 

 

$

 

 

Japanese Yen

 

247,263

 

 

$

2,003

 

 

Sell

 

 

 

 

$

 

 

Mexican Peso

 

12,538

 

 

$

800

 

 

Buy

 

 

 

 

$

 

 

Mexican Peso

 

26,493

 

 

$

1,701

 

 

Sell

 

 

 

 

$

 

 

 

The following table shows the effect of the Company’s non-designated hedges in the condensed consolidated statements of operations (in thousands):

 

Derivatives Not Designated as

Hedging Instruments

 

Location of Gain or (Loss)

Recognized in Income on Derivative

 

Amount of Gain or (Loss)

Recognized in Income on Derivative

 

 

 

 

 

Three Months Ended

 

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

Foreign exchange contracts

 

Interest and other income (expense), net

 

$

(1,056

)

 

$

(35

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

2015

 

 

June 30,

2014

 

Foreign exchange contracts

 

Interest and other income (expense), net

 

$

3,617

 

 

$

299

 

 

Stockholders' Equity (Tables)
Changes in Accumulated Other Comprehensive Income (Loss) by Component

The following table summarizes the changes in accumulated other comprehensive income, net of tax, by component (in thousands). The tax effects were not shown separately, as the impacts were not material.

 

Six Months Ended June 30, 2015

 

Unrealized

Gains and

Losses on

Cash Flow

Hedges

 

 

Unrealized Gains

and Losses on

Available-for-

Sale Securities

 

 

Foreign Currency

Translation

 

 

Total

 

Balance as of December 31, 2014

 

$

1,366

 

 

$

(52

)

 

$

2,797

 

 

$

4,111

 

Other comprehensive income before

   reclassifications

 

 

4,575

 

 

 

62

 

 

 

191

 

 

 

4,828

 

Amounts reclassified from accumulated

   other comprehensive income (a)

 

 

(3,985

)

 

 

(4

)

 

 

 

 

 

(3,989

)

Net current-period other comprehensive income

 

 

590

 

 

 

58

 

 

 

191

 

 

 

839

 

Balance as of June 30, 2015

 

$

1,956

 

 

$

6

 

 

$

2,988

 

 

$

4,950

 

 

 

(a)

See Note 12 for details of gains and losses, net of taxes, reclassified out of accumulated other comprehensive income into net income related to cash flow hedges and each line item of net income affected by the reclassification. Gains and losses related to available-for-sale securities were reclassified into “Interest and other income (expense), net” in the condensed consolidated statement of operations for the six months ended June 30, 2015, net of taxes.

Stock-Based Compensation (Tables)

The following table summarizes stock-based compensation expense recorded for the periods presented and its allocation within the condensed consolidated statements of operations (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Cost of  product revenues

$

505

 

 

$

520

 

 

$

1,460

 

 

$

1,160

 

Cost of service revenues

 

877

 

 

 

1,101

 

 

 

2,185

 

 

 

2,062

 

Stock-based compensation expense included in cost

   of revenues

 

1,382

 

 

 

1,621

 

 

 

3,645

 

 

 

3,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

2,698

 

 

 

5,333

 

 

 

5,311

 

 

 

5,724

 

Research and development

 

1,915

 

 

 

3,059

 

 

 

4,488

 

 

 

4,101

 

General and administrative

 

3,716

 

 

 

3,750

 

 

 

5,499

 

 

 

6,363

 

Stock-based compensation expense included in

   operating expenses

 

8,329

 

 

 

12,142

 

 

 

15,298

 

 

 

16,188

 

Stock-based compensation expense related to

   employee equity awards and employee stock

   purchases

 

9,711

 

 

 

13,763

 

 

 

18,943

 

 

 

19,410

 

Tax benefit

 

1,697

 

 

 

2,777

 

 

 

3,226

 

 

 

3,762

 

Stock-based compensation expense related to

   employee equity awards and employee stock

   purchases, net of tax

$

8,014

 

 

$

10,986

 

 

$

15,717

 

 

$

15,648

 

 

The fair value of each employee stock purchase right grant is estimated on the date of grant using the Black-Scholes option valuation model and is recognized as expense using the graded vesting method using the following assumptions:

 

 

Three and Six Months Ended

 

June 30,

2015

 

June 30,

2014

Expected volatility

30.04-30.73%

 

32.30-42.11%

Risk-free interest rate

0.07-0.49%

 

0.07-0.30%

Expected dividends

0.0%

 

0.0%

Expected life (years)

0.5-2.0

 

0.5-2.0

 

Net Income Per Share (Tables)
Reconciliation of Numerator and Denominator of Basic and Diluted Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share (in thousands, except for per share amounts):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

19,647

 

 

$

8,557

 

 

$

40,845

 

 

$

4,566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

134,057

 

 

 

138,016

 

 

 

134,417

 

 

 

137,406

 

Effect of dilutive potential common shares

 

3,290

 

 

 

4,860

 

 

 

3,873

 

 

 

5,115

 

Weighted average shares outstanding, diluted

 

137,347

 

 

 

142,876

 

 

 

138,290

 

 

 

142,521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share

$

0.15

 

 

$

0.06

 

 

$

0.30

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per share

$

0.14

 

 

$

0.06

 

 

$

0.30

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antidilutive employee stock-based awards, excluded

 

637

 

 

 

242

 

 

 

483

 

 

 

364

 

 

Business Segment Information (Tables)

Financial information for each reportable geographical segment as of June 30, 2015 and December 31, 2014 and for the three and six months ended June 30, 2015 and 2014, based on the Company’s internal management reporting system and as utilized by the Company’s Chief Operating Decision Maker (“CODM”), its Chief Executive Officer, is as follows (in thousands):

 

 

Americas

 

 

EMEA

 

 

APAC

 

 

Total

 

For the three months ended June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

158,333

 

 

$

80,865

 

 

$

77,377

 

 

$

316,575

 

% of total revenue

 

50

%

 

 

26

%

 

 

24

%

 

 

100

%

Contribution margin

$

60,765

 

 

$

31,987

 

 

$

35,975

 

 

$

128,727

 

% of segment revenue

 

38

%

 

 

40

%

 

 

46

%

 

 

41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended June 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

167,806

 

 

$

83,067

 

 

$

81,146

 

 

$

332,019

 

% of total revenue

 

51

%

 

 

25

%

 

 

24

%

 

 

100

%

Contribution margin

$

69,155

 

 

$

35,108

 

 

$

33,366

 

 

$

137,629

 

% of segment revenue

 

41

%

 

 

42

%

 

 

41

%

 

 

41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

315,687

 

 

$

174,714

 

 

$

156,874

 

 

$

647,275

 

% of total revenue

 

49

%

 

 

27

%

 

 

24

%

 

 

100

%

Contribution margin

$

121,616

 

 

$

74,764

 

 

$

72,088

 

 

$

268,468

 

% of segment revenue

 

39

%

 

 

43

%

 

 

46

%

 

 

41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended June 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

330,875

 

 

$

172,104

 

 

$

157,564

 

 

$

660,543

 

% of total revenue

 

50

%

 

 

26

%

 

 

24

%

 

 

100

%

Contribution margin

$

139,128

 

 

$

72,774

 

 

$

65,020

 

 

$

276,922

 

% of segment revenue

 

42

%

 

 

42

%

 

 

41

%

 

 

42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2015: Gross accounts receivable

$

100,975

 

 

$

59,582

 

 

$

55,477

 

 

$

216,034

 

% of total gross accounts receivable

 

47

%

 

 

28

%

 

 

25

%

 

 

100

%

As of December 31, 2014: Gross accounts receivable

$

88,316

 

 

$

62,540

 

 

$

63,808

 

 

$

214,664

 

% of total gross accounts receivable

 

41

%

 

 

29

%

 

 

30

%

 

 

100

%

 

The reconciliation of segment information to Polycom consolidated totals is as follows (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Segment contribution margin

$

128,727

 

 

$

137,629

 

 

$

268,468

 

 

$

276,922

 

Corporate and unallocated costs

 

(91,158

)

 

 

(99,339

)

 

 

(189,500

)

 

 

(205,938

)

Stock-based compensation

 

(9,711

)

 

 

(13,763

)

 

 

(18,943

)

 

 

(19,410

)

Effect of stock-based compensation cost on warranty

   expense

 

(80

)

 

 

(77

)

 

 

(133

)

 

 

(206

)

Amortization of purchased intangibles

 

(2,517

)

 

 

(3,167

)

 

 

(5,591

)

 

 

(6,500

)

Restructuring costs

 

(343

)

 

 

(9,175

)

 

 

(367

)

 

 

(39,518

)

Transaction-related costs

 

 

 

 

 

 

 

 

 

 

(156

)

Interest and other income (expense), net

 

(178

)

 

 

(1,696

)

 

 

(1,640

)

 

 

(2,391

)

Income before benefit from income taxes

$

24,740

 

 

$

10,412

 

 

$

52,294

 

 

$

2,803

 

 

 

The following table summarizes the Company’s revenues by groups of similar products and services as follows (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UC group systems

$

195,169

 

 

$

218,448

 

 

$

399,820

 

 

$

431,820

 

UC personal devices

 

66,802

 

 

 

53,639

 

 

 

134,267

 

 

 

110,113

 

UC platform

 

54,604

 

 

 

59,932

 

 

 

113,188

 

 

 

118,610

 

Total

$

316,575

 

 

$

332,019

 

 

$

647,275

 

 

$

660,543

 

 

Income Taxes (Tables)
Income Tax Expense (Benefit) and Effective Tax Rates

The following table presents the income tax expense (benefit) and the effective tax rates (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2015

 

 

June 30,

2014

 

 

June 30,

2015

 

 

June 30,

2014

 

Income tax expense (benefit)

$

5,093

 

 

$

1,855

 

 

$

11,449

 

 

$

(1,763

)

Effective tax rate

 

20.6

%

 

 

17.8

%

 

 

21.9

%

 

 

(62.9

)%

 

Discontinued Operations - Additional Information (Details) (USD $)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
 
 
Gain from sale of discontinued operations, net of taxes
$ 0 
$ 0 
Additional cash consideration payable to Polycom as a result of EWS disposition |
Maximum
 
 
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
 
 
Additional cash consideration payable over the next two years subject to certain conditions, including meeting certain agreed-upon EBITDA-based milestones
$ 25,000,000 
 
Accounts Receivable Financing - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
 
 
 
 
 
Amount of total outstanding accounts receivable under a financing arrangement
$ 53.0 
$ 51.7 
$ 117.6 
$ 83.7 
 
Amount due from the financing company
26.1 
 
26.1 
 
28.5 
Fees incurred pursuant to the factoring agreement
0.8 
0.6 
1.7 
1.1 
 
Transfer Of Financial Assets Under Financing Arrangement
 
 
 
 
 
Accounts Notes And Loans Receivable [Line Items]
 
 
 
 
 
Amount of total outstanding accounts receivable under a financing arrangement
33.7 
37.5 
72.9 
68.6 
 
Amount due from the financing company
$ 20.9 
 
$ 20.9 
 
$ 20.2 
Goodwill, Purchased Intangibles, and Software Development Costs - Schedule of Goodwill by Segment (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2015
Americas
Dec. 31, 2014
Americas
Jun. 30, 2015
EMEA
Dec. 31, 2014
EMEA
Jun. 30, 2015
APAC
Goodwill [Line Items]
 
 
 
 
 
 
Beginning Balance
$ 559,231 
$ 308,159 
$ 308,159 
$ 101,882 
$ 101,882 
$ 149,190 
Foreign currency translation
18 
 
 
 
 
18 
Ending Balance
$ 559,249 
$ 308,159 
$ 308,159 
$ 101,882 
$ 101,882 
$ 149,208 
Goodwill, Purchased Intangibles, and Software Development Costs - Schedule of Purchased Intangible Assets by Major Class (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
 
 
Finite Lived Intangible Assets, Gross Value
$ 170,365 
$ 170,365 
Finite Lived Intangible Assets, Accumulated Amortization and Impairment
(152,345)
(146,716)
Finite Lived Intangible Assets, Net Value
18,020 
23,649 
Indefinite-lived trade name
918 
918 
Total intangible assets, Gross Value
171,283 
171,283 
Total intangible assets, Accumulated Amortization and Impairment
(152,345)
(146,716)
Total intangible assets, Net Value
18,938 
24,567 
Capitalized software development costs for products to be sold, Gross Value
9,912 
7,416 
Capitalized software development costs for products to be sold, Accumulated Amortization & Impairment
(3,254)
(1,900)
Capitalized software development costs for products to be sold, Net Value
6,658 
5,516 
Core and developed technology
 
 
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
 
 
Finite Lived Intangible Assets, Gross Value
81,178 
81,178 
Finite Lived Intangible Assets, Accumulated Amortization and Impairment
(80,745)
(79,986)
Finite Lived Intangible Assets, Net Value
433 
1,192 
Customer and partner relationships
 
 
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
 
 
Finite Lived Intangible Assets, Gross Value
79,525 
79,525 
Finite Lived Intangible Assets, Accumulated Amortization and Impairment
(62,446)
(57,983)
Finite Lived Intangible Assets, Net Value
17,079 
21,542 
Non-compete agreement
 
 
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
 
 
Finite Lived Intangible Assets, Gross Value
1,800 
1,800 
Finite Lived Intangible Assets, Accumulated Amortization and Impairment
(1,400)
(1,100)
Finite Lived Intangible Assets, Net Value
400 
700 
Trade name
 
 
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
 
 
Finite Lived Intangible Assets, Gross Value
3,400 
3,400 
Finite Lived Intangible Assets, Accumulated Amortization and Impairment
(3,299)
(3,229)
Finite Lived Intangible Assets, Net Value
101 
171 
Other
 
 
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
 
 
Finite Lived Intangible Assets, Gross Value
4,462 
4,462 
Finite Lived Intangible Assets, Accumulated Amortization and Impairment
(4,455)
(4,418)
Finite Lived Intangible Assets, Net Value
$ 7 
$ 44 
Goodwill, Purchased Intangibles, and Software Development Costs - Additional Information (Details) (USD $)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Indefinite Lived Intangible Assets And Internally Developed Software [Line Items]
 
 
 
Indefinite-lived trade name
$ 918,000 
 
$ 918,000 
Capitalized software development costs
$ 2,500,000 
$ 2,600,000 
 
Computer Software, Intangible Asset
 
 
 
Indefinite Lived Intangible Assets And Internally Developed Software [Line Items]
 
 
 
Useful life of capitalized costs, in years
3 years 
 
 
Goodwill, Purchased Intangibles, and Software Development Costs - Summary of Amortization Expenses (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
 
 
Amortization of purchased intangibles in revenues
$ 19 
$ 19 
$ 38 
$ 38 
Amortization of purchased intangibles in cost of product revenues
100 
731 
757 
1,572 
Amortization of purchased intangibles
2,417 
2,436 
4,834 
4,928 
Total amortization expenses of purchased intangibles
$ 2,536 
$ 3,186 
$ 5,629 
$ 6,538 
Goodwill, Purchased Intangibles, and Software Development Costs - Estimated Future Amortization Expense of Purchased Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
Remainder of 2015
$ 4,867 
 
2016
8,484 
 
2017
4,669 
 
Finite Lived Intangible Assets, Net Value
$ 18,020 
$ 23,649 
Restructuring Costs - Additional Information (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Restructuring Cost And Reserve [Line Items]
 
 
 
 
Restructuring costs
$ 343,000 
$ 9,175,000 
$ 367,000 
$ 39,518,000 
Global workforce elimination percentage under restructuring plan
 
 
6.00% 
 
January 2014 Restructuring
 
 
 
 
Restructuring Cost And Reserve [Line Items]
 
 
 
 
Accumulated Restructuring Costs
 
 
$ 40,700,000 
 
Restructuring Costs - Summary of Activity of Restructuring Reserves (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Restructuring Cost And Reserve [Line Items]
 
Beginning balance
$ 41,573 
Additions to the reserve, net
(616)
Interest accretion
977 
Non-cash adjustments
(201)
Cash payments
(16,180)
Ending balance
25,553 
Severance / Other
 
Restructuring Cost And Reserve [Line Items]
 
Beginning balance
664 
Additions to the reserve, net
3,169 
Cash payments
(2,995)
Ending balance
838 
Facilities
 
Restructuring Cost And Reserve [Line Items]
 
Beginning balance
40,909 
Additions to the reserve, net
(3,785)
Interest accretion
977 
Non-cash adjustments
(201)
Cash payments
(13,185)
Ending balance
$ 24,715 
Balance Sheet Details - Schedule of Trade Receivables (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Receivables [Abstract]
 
 
Gross accounts receivables
$ 216,034 
$ 214,664 
Returns and related reserves
(51,865)
(42,224)
Allowance for doubtful accounts
(3,014)
(3,040)
Total
$ 161,155 
$ 169,400 
Balance Sheet Details - Schedule of Inventories (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 1,661 
$ 1,496 
Work in process
488 
545 
Finished goods
97,760 
98,287 
Total
$ 99,909 
$ 100,328 
Balance Sheet Details - Prepaid Expenses and Other Current Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]
 
 
Non-trade receivables
$ 7,954 
$ 6,547 
Prepaid expenses
35,930 
37,385 
Derivative assets
10,456 
14,342 
Other current assets
3,037 
2,798 
Total
$ 57,377 
$ 61,072 
Balance Sheet Details - Schedule of Deferred Revenues (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Deferred Revenue Arrangement [Line Items]
 
 
Short-term deferred revenue
$ 176,890 
$ 173,532 
Long-term deferred revenue
83,551 
89,366 
Software Service, Support and Maintenance Arrangement
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Short-term deferred revenue
174,213 
171,355 
Long-term deferred revenue
80,167 
85,925 
Software License Arrangement
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Short-term deferred revenue
2,668 
2,083 
Long-term deferred revenue
3,384 
3,441 
Product
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Short-term deferred revenue
$ 9 
$ 94 
Balance Sheet Details - Changes in Deferred Services Revenue (Details) (Software Service, Support and Maintenance Arrangement, USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Software Service, Support and Maintenance Arrangement
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Balance at beginning of period
$ 257,280 
$ 253,793 
Additions to deferred service revenue
167,332 
170,459 
Amortization of deferred service revenue
(170,232)
(171,257)
Balance at end of period
$ 254,380 
$ 252,995 
Balance Sheet Details - Schedule of Other Accrued Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Jun. 30, 2014
Dec. 31, 2013
Payables And Accruals [Abstract]
 
 
 
 
Accrued expenses
$ 26,095 
$ 27,523 
 
 
Accrued co-op expenses
3,059 
4,102 
 
 
Restructuring reserves
9,980 
12,207 
 
 
Warranty obligations
11,147 
11,613 
10,350 
9,475 
Derivative liabilities
5,606 
8,175 
 
 
Employee stock purchase plan withholdings
9,088 
10,658 
 
 
Other accrued liabilities
10,689 
11,915 
 
 
Total
$ 75,664 
$ 86,193 
 
 
Balance Sheet Details - Changes in Warranty Obligation (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Standard Product Warranty Disclosure [Abstract]
 
 
Balance at beginning of period
$ 11,613 
$ 9,475 
Accruals for warranties issued during the period
6,811 
8,131 
Actual charges against warranty reserve during the period
(7,277)
(7,256)
Balance at end of period
$ 11,147 
$ 10,350 
Commitments and Contingencies - Additional Information (Details) (USD $)
6 Months Ended
Jun. 30, 2015
Commitments And Contingencies Disclosure [Abstract]
 
Litigation settlement
$ 750,000 
Debt - Additional Information (Details) (USD $)
0 Months Ended 6 Months Ended 0 Months Ended
Jun. 30, 2015
Dec. 31, 2014
Sep. 13, 2013
Term Loan
Jun. 30, 2015
Term Loan
Sep. 30, 2013
Term Loan
Sep. 13, 2013
Base Rate
Minimum
Term Loan
Sep. 13, 2013
Base Rate
Maximum
Term Loan
Sep. 13, 2013
LIBOR rate plus
Minimum
Term Loan
Sep. 13, 2013
LIBOR rate plus
Maximum
Term Loan
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
Term loan
 
 
$ 250,000,000 
 
$ 250,000,000 
 
 
 
 
Maturity date of term loan
 
 
Sep. 13, 2018 
 
 
 
 
 
 
Term loan interest rate, applicable margin
 
 
 
 
 
0.50% 
1.00% 
1.50% 
2.00% 
Debt instrument description of variable rate basis
 
 
 
a $250.0 million term loan (the “Term Loan”) maturing on September 13, 2018 (the “Maturity Date”), which bears interest at the Company’s option at either a base rate plus a spread of 0.50% to 1.00%, or a reserve adjusted LIBOR rate plus a spread of 1.50% to 2.00% based on the Company’s consolidated leverage ratio for the preceding four fiscal quarters. 
 
 
 
 
 
Term loan quarterly installments
 
 
 
1,600,000 
 
 
 
 
 
Default interest rate applicable for any overdue principal
 
 
 
2.00% 
 
 
 
 
 
Default interest rate for base rate loans for any other overdue amounts
 
 
 
2.00% 
 
 
 
 
 
Weighted average interest rate
 
 
 
2.14% 
 
 
 
 
 
Accrued interest on Term loan
500,000 
 
 
 
 
 
 
 
 
Term loan, current
6,250,000 
6,250,000 
 
 
 
 
 
 
 
Long-term debt
$ 232,813,000 
$ 235,938,000 
 
 
 
 
 
 
 
Debt - Interest Expenses Recognized (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Debt Disclosure [Abstract]
 
 
 
 
Contractual interest expense
$ 1,292 
$ 1,225 
$ 2,550 
$ 2,454 
Amortization of debt issuance costs
133 
133 
266 
267 
Total
$ 1,425 
$ 1,358 
$ 2,816 
$ 2,721 
Investments - Additional Information (Details) (USD $)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Dec. 31, 2013
Investments Debt And Equity Securities [Abstract]
 
 
 
 
Cash and cash equivalents
$ 412,573,000 
$ 413,133,000 
$ 443,132,000 
$ 392,629,000 
Long-term investments, contractual maturity period, minimum
1 year 
 
 
 
Long-term investments, contractual maturity period, maximum
2 years 
 
 
 
Investments other than temporarily impaired
 
 
Material realized gains (losses), net
$ 0 
$ 0 
 
 
Investments - Short-Term and Long-Term Investments in Debt Securities (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Schedule Of Available For Sale Securities [Line Items]
 
 
Short-term investments
$ 198,160 
$ 185,783 
Long-term investments
49,391 
59,197 
Short-term Investments
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost Basis
198,155 
185,812 
Unrealized Gains
49 
26 
Unrealized Losses
(44)
(55)
Short-term investments
198,160 
185,783 
Short-term Investments |
U.S. Government Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost Basis
33,637 
26,930 
Unrealized Gains
27 
Unrealized Losses
 
(2)
Short-term investments
33,664 
26,935 
Short-term Investments |
U.S. Government Agency Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost Basis
61,810 
59,336 
Unrealized Gains
13 
Unrealized Losses
(4)
(6)
Short-term investments
61,819 
59,337 
Short-term Investments |
Non-U.S. Government Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost Basis
11,035 
8,764 
Unrealized Gains
Unrealized Losses
(1)
 
Short-term investments
11,035 
8,766 
Short-term Investments |
Corporate Debt Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost Basis
91,673 
90,782 
Unrealized Gains
10 
Unrealized Losses
(39)
(47)
Short-term investments
91,642 
90,745 
Long-term investments
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost Basis
49,392 
59,229 
Unrealized Gains
28 
Unrealized Losses
(29)
(39)
Long-term investments
49,391 
59,197 
Long-term investments |
U.S. Government Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost Basis
14,985 
25,320 
Unrealized Gains
19 
Unrealized Losses
 
(10)
Long-term investments
15,004 
25,314 
Long-term investments |
U.S. Government Agency Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost Basis
18,333 
17,369 
Unrealized Gains
Unrealized Losses
(5)
(14)
Long-term investments
18,336 
17,356 
Long-term investments |
Corporate Debt Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Cost Basis
16,074 
16,540 
Unrealized Gains
Unrealized Losses
(24)
(15)
Long-term investments
$ 16,051 
$ 16,527 
Investments - Schedule of Investment in Unrealized Loss Position (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Schedule Of Available For Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
$ 89,117 
$ 109,370 
Gross Unrealized Losses, Less than 12 Months
(73)
(94)
Total Fair Value
89,117 
109,370 
Total Gross Unrealized Losses
(73)
(94)
U.S. Government Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
1,015 
22,355 
Gross Unrealized Losses, Less than 12 Months
 
(12)
Total Fair Value
1,015 
22,355 
Total Gross Unrealized Losses
 
(12)
U.S. Government Agency Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
23,454 
27,348 
Gross Unrealized Losses, Less than 12 Months
(9)
(20)
Total Fair Value
23,454 
27,348 
Total Gross Unrealized Losses
(9)
(20)
Non-U.S. Government Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
6,220 
 
Gross Unrealized Losses, Less than 12 Months
(1)
 
Total Fair Value
6,220 
 
Total Gross Unrealized Losses
(1)
 
Corporate Debt Securities
 
 
Schedule Of Available For Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
58,428 
59,667 
Gross Unrealized Losses, Less than 12 Months
(63)
(62)
Total Fair Value
58,428 
59,667 
Total Gross Unrealized Losses
$ (63)
$ (62)
Fair Value Measurements - Schedule of Fair Value of Marketable Securities and Foreign Currency Contracts (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
$ 261,551 
$ 253,924 
Foreign currency forward contracts, Assets
10,456 1
14,342 1
Foreign currency forward contracts, Liabilities
5,606 2
8,175 2
U.S. Government Agency Securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
1,200 
 
Non-U.S. Government Securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
1,600 
 
Money market funds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
3,421 
1,395 
Commercial paper
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
7,779 
7,549 
Quoted Prices in Active Markets for Identical Assets, Level 1
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
3,421 
1,395 
Quoted Prices in Active Markets for Identical Assets, Level 1 |
Money market funds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
3,421 
1,395 
Significant Other Observable Inputs, Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
258,130 
252,529 
Foreign currency forward contracts, Assets
10,456 1
14,342 1
Foreign currency forward contracts, Liabilities
5,606 2
8,175 2
Significant Other Observable Inputs, Level 2 |
U.S. Government Agency Securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
1,200 
 
Significant Other Observable Inputs, Level 2 |
Non-U.S. Government Securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
1,600 
 
Significant Other Observable Inputs, Level 2 |
Commercial paper
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
7,779 
7,549 
Short-term Investments
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
198,160 
185,783 
Short-term Investments |
Significant Other Observable Inputs, Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
198,160 
185,783 
Long-term investments
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
49,391 
59,197 
Long-term investments |
Significant Other Observable Inputs, Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities
$ 49,391 
$ 59,197 
Fair Value Measurements - Additional Information (Details) (USD $)
Jun. 30, 2015
Dec. 31, 2014
Jun. 30, 2014
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
 
Fair value transfers between Level 1 and Level 2
$ 0 
 
$ 0 
Fair value of Term Loan
227,100,000 
234,900,000 
 
Level 3
 
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
 
Investments holdings
$ 0 
$ 0 
 
Foreign Currency Derivatives - Notional Position by Currency of Outstanding Non-designated Hedges (Details) (Not Designated as Hedging Instrument)
In Thousands, unless otherwise specified
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Brazilian Real
USD ($)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Brazilian Real
BRL
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Chinese Yuan
USD ($)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Chinese Yuan
CNY
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Euro Member Countries, Euro
USD ($)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Euro Member Countries, Euro
EUR (€)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
British Pound
USD ($)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
British Pound
GBP (£)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Israeli Shekel
USD ($)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Israeli Shekel
ILS
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Japanese Yen
USD ($)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Japanese Yen
JPY (¥)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Mexican Peso
USD ($)
Jun. 30, 2015
Buy
Original Maturities of 360 Days or Less
Mexican Peso
MXN ($)
Jun. 30, 2015
Buy
Original Maturities of Greater than 360 Days
Chinese Yuan
USD ($)
Jun. 30, 2015
Buy
Original Maturities of Greater than 360 Days
Chinese Yuan
CNY
Jun. 30, 2015
Buy
Original Maturities of Greater than 360 Days
Euro Member Countries, Euro
USD ($)
Jun. 30, 2015
Buy
Original Maturities of Greater than 360 Days
Euro Member Countries, Euro
EUR (€)
Jun. 30, 2015
Buy
Original Maturities of Greater than 360 Days
British Pound
USD ($)
Jun. 30, 2015
Buy
Original Maturities of Greater than 360 Days
British Pound
GBP (£)
Jun. 30, 2015
Buy
Original Maturities of Greater than 360 Days
Israeli Shekel
USD ($)
Jun. 30, 2015
Buy
Original Maturities of Greater than 360 Days
Israeli Shekel
ILS
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Brazilian Real
USD ($)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Brazilian Real
BRL
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Chinese Yuan
USD ($)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Chinese Yuan
CNY
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Euro Member Countries, Euro
USD ($)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Euro Member Countries, Euro
EUR (€)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
British Pound
USD ($)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
British Pound
GBP (£)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Israeli Shekel
USD ($)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Israeli Shekel
ILS
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Japanese Yen
USD ($)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Japanese Yen
JPY (¥)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Mexican Peso
USD ($)
Jun. 30, 2015
Sell
Original Maturities of 360 Days or Less
Mexican Peso
MXN ($)
Jun. 30, 2015
Sell
Original Maturities of Greater than 360 Days
Euro Member Countries, Euro
USD ($)
Jun. 30, 2015
Sell
Original Maturities of Greater than 360 Days
Euro Member Countries, Euro
EUR (€)
Jun. 30, 2015
Sell
Original Maturities of Greater than 360 Days
British Pound
USD ($)
Jun. 30, 2015
Sell
Original Maturities of Greater than 360 Days
British Pound
GBP (£)
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount of foreign currency
$ 5,476 
 16,991 
$ 6,414 
 40,500 
$ 28,731 
€ 24,468 
$ 25,200 
£ 15,878 
$ 14,379 
 53,288 
$ 1,421 
¥ 173,692 
$ 800 
$ 12,538 
$ 769 
 4,920 
$ 768 
€ 623 
$ 6,034 
£ 3,875 
$ 2,103 
 8,171 
$ 11,728 
 37,282 
$ 6,683 
 41,832 
$ 63,677 
€ 54,174 
$ 22,917 
£ 14,261 
$ 15,535 
 59,170 
$ 2,003 
¥ 247,263 
$ 1,701 
$ 26,493 
$ 11,403 
€ 9,257 
$ 8,616 
£ 5,532 
Foreign Currency Derivatives - Effect of Non-Designated Hedges in Condensed Consolidated Statements of Operations (Details) (Interest and other income (expense), net, USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Interest and other income (expense), net
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Amount of Gain or (Loss) Recognized in Income on Derivative
$ (1,056)
$ (35)
$ 3,617 
$ 299 
Foreign Currency Derivatives - Additional Information (Details)
6 Months Ended
Jun. 30, 2015
Derivative Instruments And Hedging Activities Disclosure [Abstract]
 
Maximum duration of foreign exchange forward contracts designated as cash flow hedges
13 months 
Foreign Currency Derivatives - Notional Position by Currency of Outstanding Cash Flow Hedges (Details) (Cash Flow Hedging, Original Maturities of Greater than 360 Days)
In Thousands, unless otherwise specified
Jun. 30, 2015
Buy
Chinese Yuan
USD ($)
Jun. 30, 2015
Buy
Chinese Yuan
CNY
Jun. 30, 2015
Buy
Euro Member Countries, Euro
USD ($)
Jun. 30, 2015
Buy
Euro Member Countries, Euro
EUR (€)
Jun. 30, 2015
Buy
British Pound
USD ($)
Jun. 30, 2015
Buy
British Pound
GBP (£)
Jun. 30, 2015
Buy
Israeli Shekel
USD ($)
Jun. 30, 2015
Buy
Israeli Shekel
ILS
Jun. 30, 2015
Sell
Euro Member Countries, Euro
USD ($)
Jun. 30, 2015
Sell
Euro Member Countries, Euro
EUR (€)
Jun. 30, 2015
Sell
British Pound
USD ($)
Jun. 30, 2015
Sell
British Pound
GBP (£)
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount of foreign currency
$ 21,356 
 136,780 
$ 32,500 
€ 27,977 
$ 39,033 
£ 25,325 
$ 17,373 
 67,829 
$ 84,557 
€ 72,943 
$ 50,614 
£ 32,968 
Foreign Currency Derivatives - Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Foreign exchange contracts, Gain or (loss) recognized in OCI-effective portion, total
$ (1,723)
$ 422 
$ 4,575 
$ 1 
Gain or (loss) reclassified from OCI into income- effective portion, total
1,427 
109 
3,985 
(557)
Gain or (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing
357 1
(127)1
326 1
(52)1
Product revenues
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain or (loss) reclassified from OCI into income- effective portion, total
3,629 
(1,409)
10,265 
(4,274)
Cost of revenues
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain or (loss) reclassified from OCI into income- effective portion, total
(531)
330 
(1,332)
862 
Sales and marketing
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain or (loss) reclassified from OCI into income- effective portion, total
(1,007)
717 
(2,794)
1,797 
Research and development
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain or (loss) reclassified from OCI into income- effective portion, total
(268)
277 
(983)
692 
General and administrative
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain or (loss) reclassified from OCI into income- effective portion, total
(396)
194 
(1,171)
366 
Interest and other income (expense), net
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain or (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing
357 1
(127)1
326 1
(52)1
Foreign exchange contract
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Foreign exchange contracts, Gain or (loss) recognized in OCI-effective portion, total
$ (1,723)
$ 422 
$ 4,575 
$ 1 
Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations (Parenthetical) (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Derivative Instruments And Hedging Activities Disclosure [Abstract]
 
 
 
 
Unrealized Gain (Loss) in income due to ineffectiveness
$ 0 
$ 0 
$ 0 
$ 0 
Foreign Currency Derivatives - Derivative Instruments Measured at Gross Fair Value as Reflected in Condensed Consolidated Balance Sheets (Details) (Foreign exchange contract, USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Derivatives Fair Value [Line Items]
 
 
Derivative assets
$ 10,456 
$ 14,342 
Derivative liabilities
5,606 
8,175 
Designated as Hedge Instruments
 
 
Derivatives Fair Value [Line Items]
 
 
Derivative assets
4,984 1
5,501 1
Derivative liabilities
2,720 2
4,041 2
Not Designated as Hedging Instrument
 
 
Derivatives Fair Value [Line Items]
 
 
Derivative assets
5,472 1
8,841 1
Derivative liabilities
$ 2,886 2
$ 4,134 2
Foreign Currency Derivatives - Offsetting of Derivative Assets (Details) (Foreign exchange contract, USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Foreign exchange contract
 
 
Offsetting Assets [Line Items]
 
 
Gross Amounts of Recognized Assets
$ 10,456 
$ 14,342 
Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets
10,456 
14,342 
Gross Amounts of Assets Not Offset in the Condensed Consolidated Balance Sheets, Financial Instruments
(4,914)
(8,175)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets, Net Amount
$ 5,542 
$ 6,167 
Foreign Currency Derivatives - Offsetting of Derivative Liabilities (Details) (Foreign exchange contract, USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Foreign exchange contract
 
 
Offsetting Liabilities [Line Items]
 
 
Gross Amounts of Recognized Liabilities
$ 5,606 
$ 8,175 
Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets
5,606 
8,175 
Gross Amounts of Liabilities Not Offset in the Condensed Consolidated Balance Sheets, Financial Instruments
(4,915)
(8,175)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets, Net Amount
$ 691 
 
Stockholders' Equity - Share Repurchase Programs - Additional Information (Details) (USD $)
Share data in Millions, unless otherwise specified
1 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended 1 Months Ended
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Jul. 31, 2014
Dec. 4, 2013
Return Of Capital Program
Jun. 30, 2014
Accelerated Share Repurchase Agreements
Dec. 31, 2013
Accelerated Share Repurchase Agreements
Dec. 4, 2013
Accelerated Share Repurchase Agreements
Jun. 30, 2014
Volume Weighted Average Stock Price Method
Share Repurchases Program [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Purchase of common stock, shares
1.5 
1.9 
4.8 
 
 
1.5 
8.0 
 
9.5 
Purchase of common stock, value
 
$ 25,000,000 
 
$ 65,000,000 
 
 
 
 
 
 
 
Shares repurchase authorized amount
 
 
 
 
 
200,000,000 
400,000,000 
 
 
114,600,000 
 
Share repurchase plan, remaining authorized amount
 
85,000,000 
 
85,000,000 
 
 
 
 
 
 
 
Payments for repurchase of common stock
 
 
 
$ 64,999,000 
 
 
 
 
$ 114,600,000 
 
 
Stockholders' Equity - Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Accumulated Other Comprehensive Income Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Beginning balance
 
 
$ 4,111 
 
Other comprehensive income before reclassifications
 
 
4,828 
 
Amounts reclassified from accumulated other comprehensive income
 
 
(3,989)1
 
Net current-period other comprehensive income
(3,170)
436 
839 
(530)
Accumulated Other Comprehensive Income (loss) , Ending balance
4,950 
 
4,950 
 
Unrealized Gains and Losses on Cash Flow Hedges
 
 
 
 
Accumulated Other Comprehensive Income Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Beginning balance
 
 
1,366 
 
Other comprehensive income before reclassifications
 
 
4,575 
 
Amounts reclassified from accumulated other comprehensive income
 
 
(3,985)1
 
Net current-period other comprehensive income
 
 
590 
 
Accumulated Other Comprehensive Income (loss) , Ending balance
1,956 
 
1,956 
 
Unrealized Gains and Losses on Available-for-Sale Securities
 
 
 
 
Accumulated Other Comprehensive Income Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Beginning balance
 
 
(52)
 
Other comprehensive income before reclassifications
 
 
62 
 
Amounts reclassified from accumulated other comprehensive income
 
 
(4)1
 
Net current-period other comprehensive income
 
 
58 
 
Accumulated Other Comprehensive Income (loss) , Ending balance
 
 
Foreign Currency Translation
 
 
 
 
Accumulated Other Comprehensive Income Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Beginning balance
 
 
2,797 
 
Other comprehensive income before reclassifications
 
 
191 
 
Net current-period other comprehensive income
 
 
191 
 
Accumulated Other Comprehensive Income (loss) , Ending balance
$ 2,988 
 
$ 2,988 
 
Stock-Based Compensation - Summary and Allocation of Stock-Based Compensation Expense (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Stock-based compensation expense
$ 9,711 
$ 13,763 
$ 18,943 
$ 19,410 
Tax benefit
1,697 
2,777 
3,226 
3,762 
Stock-based compensation expense related to employee equity awards and employee stock purchases, net of tax
8,014 
10,986 
15,717 
15,648 
Cost of product revenues
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Stock-based compensation expense
505 
520 
1,460 
1,160 
Cost of service revenues
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Stock-based compensation expense
877 
1,101 
2,185 
2,062 
Cost of revenues
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Stock-based compensation expense
1,382 
1,621 
3,645 
3,222 
Sales and marketing
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Stock-based compensation expense
2,698 
5,333 
5,311 
5,724 
Research and development
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Stock-based compensation expense
1,915 
3,059 
4,488 
4,101 
General and administrative
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Stock-based compensation expense
3,716 
3,750 
5,499 
6,363 
Operating Expenses
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Stock-based compensation expense
$ 8,329 
$ 12,142 
$ 15,298 
$ 16,188 
Stock-Based Compensation - Stock Options - Additional Information (Details)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
Stock options granted
Stock-Based Compensation - Performance Shares and Restricted Stock Units - Additional Information (Details) (USD $)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Performance Shares
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Shares granted
922,202 
556,550 
Weighted average estimated fair value of share granted
$ 14.23 
$ 13.76 
Number of performance periods
3 years 
3 years 
Vesting period description
The 2015 and 2014 grants are generally divided evenly over three annual performance periods commencing with calendar year 2015 and 2014, respectively, and will vest on the first, second and third anniversary of the grant date. 
 
Restricted Stock Units (RSUs)
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Shares granted
2,788,043 
2,702,115 
Weighted average estimated fair value of share granted
$ 13.80 
$ 12.95 
Restricted Stock Units (RSUs) |
Non Employee Directors
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Shares granted
120,000 
140,000 
Weighted average estimated fair value of share granted
$ 13.14 
$ 12.87 
Stock-Based Compensation - Stock Options and Employee Stock Purchase Plan - Additional Information (Details) (Employee Stock Purchase Plan)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Employee Stock Purchase Plan
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Number of shares purchased
1,183,426 
1,696,177 
Number of shares approved and available under the Employee Stock Purchase Plan
10,131,641 
 
Stock-Based Compensation - Valuation Assumptions - Additional Information (Details)
0 Months Ended 6 Months Ended
Feb. 2, 2015
Feb. 3, 2014
Feb. 2, 2015
Employee Stock Purchase Plan
Minimum
Feb. 3, 2014
Employee Stock Purchase Plan
Minimum
Feb. 2, 2015
Employee Stock Purchase Plan
Maximum
Feb. 3, 2014
Employee Stock Purchase Plan
Maximum
Jun. 30, 2015
Nonqualified Stock Option Plan And Employee Stock Purchase
Historical Volatility
Jun. 30, 2015
Nonqualified Stock Option Plan And Employee Stock Purchase
Implied Volatility
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
 
 
 
 
 
 
Offering period
2 years 
2 years 
 
 
 
 
 
 
Weighted average estimated fair value of share granted
 
 
$ 3.09 
$ 2.82 
$ 4.27 
$ 4.48 
 
 
Blended volatility
 
 
 
 
 
 
50.00% 
50.00% 
Stock-Based Compensation - Significant Assumptions Used to Estimate Fair Value of Employee Stock Purchase Plan (Details) (Employee Stock Purchase Plan)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Expected dividends
0.00% 
0.00% 
Expected volatility, maximum
30.73% 
42.11% 
Risk-free interest rate, maximum
0.49% 
0.30% 
Expected volatility, minimum
30.04% 
32.30% 
Risk-free interest rate, minimum
0.07% 
0.07% 
Maximum
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Expected life (years)
2 years 
2 years 
Minimum
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Expected life (years)
6 months 
6 months 
Net Income Per Share - Reconciliation of Numerator and Denominator of Basic and Diluted Net Income Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Numerator
 
 
 
 
Net income
$ 19,647 
$ 8,557 
$ 40,845 
$ 4,566 
Denominator
 
 
 
 
Weighted average shares outstanding, basic
134,057 
138,016 
134,417 
137,406 
Effect of dilutive potential common shares
3,290 
4,860 
3,873 
5,115 
Weighted average shares outstanding, diluted
137,347 
142,876 
138,290 
142,521 
Basic net income per share
$ 0.15 
$ 0.06 
$ 0.30 
$ 0.03 
Diluted net income per share
$ 0.14 
$ 0.06 
$ 0.30 
$ 0.03 
Antidilutive employee stock-based awards, excluded
637 
242 
483 
364 
Business Segment Information - Additional Information (Details)
6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2015
Location
Jun. 30, 2015
Customer Concentration Risk
Total Revenue
Jun. 30, 2014
Customer Concentration Risk
Total Revenue
Jun. 30, 2015
Customer Concentration Risk
Total Revenue
Jun. 30, 2014
Customer Concentration Risk
Total Revenue
Jun. 30, 2015
Customer Concentration Risk
Total Revenue
Americas
Jun. 30, 2014
Customer Concentration Risk
Total Revenue
Americas
Jun. 30, 2015
Customer Concentration Risk
Total Revenue
Americas
Jun. 30, 2014
Customer Concentration Risk
Total Revenue
Americas
Jun. 30, 2015
Customer Concentration Risk
Total Revenue
Americas
ScanSource Communications
Customer
Jun. 30, 2014
Customer Concentration Risk
Total Revenue
Americas
ScanSource Communications
Customer
Jun. 30, 2015
Customer Concentration Risk
Total Revenue
Americas
ScanSource Communications
Customer
Jun. 30, 2014
Customer Concentration Risk
Total Revenue
Americas
ScanSource Communications
Customer
Jun. 30, 2015
Customer Concentration Risk
Accounts Receivable
Dec. 31, 2014
Customer Concentration Risk
Accounts Receivable
Jun. 30, 2015
Customer Concentration Risk
Accounts Receivable
ScanSource Communications
Customer
Dec. 31, 2014
Customer Concentration Risk
Accounts Receivable
ScanSource Communications
Customer
Jun. 30, 2015
Customer Concentration Risk
Accounts Receivable
Americas
Dec. 31, 2014
Customer Concentration Risk
Accounts Receivable
Americas
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business organized number of geographical theatres (area)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Concentration risk percentage
 
100.00% 
100.00% 
100.00% 
100.00% 
50.00% 
51.00% 
49.00% 
50.00% 
23.00% 
18.00% 
19.00% 
18.00% 
100.00% 
100.00% 
27.00% 
19.00% 
47.00% 
41.00% 
Number of customer accounted for more than 10% of revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of customer accounted for more than 10% of gross accounts receivable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Segment Information - Financial Information by Reportable Segment (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Jun. 30, 2015
Total Revenue
Customer Concentration Risk
Jun. 30, 2014
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
Total Revenue
Customer Concentration Risk
Jun. 30, 2014
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
Contribution Margin
Customer Concentration Risk
Jun. 30, 2014
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
Contribution Margin
Customer Concentration Risk
Jun. 30, 2014
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
Accounts Receivable
Customer Concentration Risk
Dec. 31, 2014
Accounts Receivable
Customer Concentration Risk
Jun. 30, 2015
Americas
Jun. 30, 2014
Americas
Jun. 30, 2015
Americas
Jun. 30, 2014
Americas
Dec. 31, 2014
Americas
Jun. 30, 2015
Americas
Total Revenue
Customer Concentration Risk
Jun. 30, 2014
Americas
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
Americas
Total Revenue
Customer Concentration Risk
Jun. 30, 2014
Americas
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
Americas
Contribution Margin
Customer Concentration Risk
Jun. 30, 2014
Americas
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
Americas
Contribution Margin
Customer Concentration Risk
Jun. 30, 2014
Americas
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
Americas
Accounts Receivable
Customer Concentration Risk
Dec. 31, 2014
Americas
Accounts Receivable
Customer Concentration Risk
Jun. 30, 2015
EMEA
Jun. 30, 2014
EMEA
Jun. 30, 2015
EMEA
Jun. 30, 2014
EMEA
Dec. 31, 2014
EMEA
Jun. 30, 2015
EMEA
Total Revenue
Customer Concentration Risk
Jun. 30, 2014
EMEA
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
EMEA
Total Revenue
Customer Concentration Risk
Jun. 30, 2014
EMEA
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
EMEA
Contribution Margin
Customer Concentration Risk
Jun. 30, 2014
EMEA
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
EMEA
Contribution Margin
Customer Concentration Risk
Jun. 30, 2014
EMEA
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
EMEA
Accounts Receivable
Customer Concentration Risk
Dec. 31, 2014
EMEA
Accounts Receivable
Customer Concentration Risk
Jun. 30, 2015
APAC
Jun. 30, 2014
APAC
Jun. 30, 2015
APAC
Jun. 30, 2014
APAC
Dec. 31, 2014
APAC
Jun. 30, 2015
APAC
Total Revenue
Customer Concentration Risk
Jun. 30, 2014
APAC
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
APAC
Total Revenue
Customer Concentration Risk
Jun. 30, 2014
APAC
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
APAC
Contribution Margin
Customer Concentration Risk
Jun. 30, 2014
APAC
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
APAC
Contribution Margin
Customer Concentration Risk
Jun. 30, 2014
APAC
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
APAC
Accounts Receivable
Customer Concentration Risk
Dec. 31, 2014
APAC
Accounts Receivable
Customer Concentration Risk
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 316,575 
$ 332,019 
$ 647,275 
$ 660,543 
 
 
 
 
 
 
 
 
 
 
 
$ 158,333 
$ 167,806 
$ 315,687 
$ 330,875 
 
 
 
 
 
 
 
 
 
 
 
$ 80,865 
$ 83,067 
$ 174,714 
$ 172,104 
 
 
 
 
 
 
 
 
 
 
 
$ 77,377 
$ 81,146 
$ 156,874 
$ 157,564 
 
 
 
 
 
 
 
 
 
 
 
Concentration risk percentage
 
 
 
 
 
100.00% 
100.00% 
100.00% 
100.00% 
41.00% 
41.00% 
41.00% 
42.00% 
100.00% 
100.00% 
 
 
 
 
 
50.00% 
51.00% 
49.00% 
50.00% 
38.00% 
41.00% 
39.00% 
42.00% 
47.00% 
41.00% 
 
 
 
 
 
26.00% 
25.00% 
27.00% 
26.00% 
40.00% 
42.00% 
43.00% 
42.00% 
28.00% 
29.00% 
 
 
 
 
 
24.00% 
24.00% 
24.00% 
24.00% 
46.00% 
41.00% 
46.00% 
41.00% 
25.00% 
30.00% 
Contribution margin
128,727 
137,629 
268,468 
276,922 
 
 
 
 
 
 
 
 
 
 
 
60,765 
69,155 
121,616 
139,128 
 
 
 
 
 
 
 
 
 
 
 
31,987 
35,108 
74,764 
72,774 
 
 
 
 
 
 
 
 
 
 
 
35,975 
33,366 
72,088 
65,020 
 
 
 
 
 
 
 
 
 
 
 
Gross accounts receivable
$ 216,034 
 
$ 216,034 
 
$ 214,664 
 
 
 
 
 
 
 
 
 
 
$ 100,975 
 
$ 100,975 
 
$ 88,316 
 
 
 
 
 
 
 
 
 
 
$ 59,582 
 
$ 59,582 
 
$ 62,540 
 
 
 
 
 
 
 
 
 
 
$ 55,477 
 
$ 55,477 
 
$ 63,808 
 
 
 
 
 
 
 
 
 
 
Business Segment Information - Reconciliation of Segment Information to Consolidated Totals (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Segment Reporting [Abstract]
 
 
 
 
Segment contribution margin
$ 128,727 
$ 137,629 
$ 268,468 
$ 276,922 
Corporate and unallocated costs
(91,158)
(99,339)
(189,500)
(205,938)
Stock-based compensation
(9,711)
(13,763)
(18,943)
(19,410)
Effect of stock-based compensation cost on warranty expense
(80)
(77)
(133)
(206)
Amortization of purchased intangibles
(2,517)
(3,167)
(5,591)
(6,500)
Restructuring costs
(343)
(9,175)
(367)
(39,518)
Transaction-related costs
 
 
 
(156)
Interest and other income (expense), net
(178)
(1,696)
(1,640)
(2,391)
Income before provision for (benefit from) income taxes
$ 24,740 
$ 10,412 
$ 52,294 
$ 2,803 
Business Segment Information - Revenues by Groups of Similar Products and Services (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Entity Wide Information Revenue From External Customer [Line Items]
 
 
 
 
Net Revenues
$ 316,575 
$ 332,019 
$ 647,275 
$ 660,543 
UC Group Systems
 
 
 
 
Entity Wide Information Revenue From External Customer [Line Items]
 
 
 
 
Net Revenues
195,169 
218,448 
399,820 
431,820 
UC Personal Devices
 
 
 
 
Entity Wide Information Revenue From External Customer [Line Items]
 
 
 
 
Net Revenues
66,802 
53,639 
134,267 
110,113 
UC Platform
 
 
 
 
Entity Wide Information Revenue From External Customer [Line Items]
 
 
 
 
Net Revenues
$ 54,604 
$ 59,932 
$ 113,188 
$ 118,610 
Income Taxes - Income Tax Expense (Benefit) from Continuing Operations and Effective Tax Rates (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Income Tax Disclosure [Abstract]
 
 
 
 
Income tax expense (benefit)
$ 5,093 
$ 1,855 
$ 11,449 
$ (1,763)
Effective tax rate
20.60% 
17.80% 
21.90% 
(62.90%)
Income Taxes - Additional Information (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Income Tax Information [Line Items]
 
 
 
 
 
U.S federal statutory rate
35.00% 
35.00% 
35.00% 
35.00% 
 
Discrete tax benefit realized on disqualifying dispositions of stock
 
 
 
$ 1,500,000 
 
Discrete tax benefit as a result of stock-based compensation expense adjustments
1,697,000 
2,777,000 
3,226,000 
3,762,000 
 
Unrecognized tax benefits
21,700,000 
 
21,700,000 
 
 
Accrued interest and penalties related to uncertain tax positions
1,700,000 
 
1,700,000 
 
1,600,000 
Anticipated reduction in uncertain tax positions
600,000 
 
600,000 
 
 
Severance / Other
 
 
 
 
 
Income Tax Information [Line Items]
 
 
 
 
 
Discrete tax benefit as a result of stock-based compensation expense adjustments
 
$ 900,000 
 
$ 900,000