POLYCOM INC, 10-Q filed on 8/4/2016
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2016
Aug. 1, 2016
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2016 
 
Document Fiscal Year Focus
2016 
 
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
 
135,810,169 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Current assets
 
 
Cash and cash equivalents
$ 576,516 
$ 435,093 
Short-term investments
126,238 
184,242 
Trade receivables, net
154,212 
187,888 
Inventories
96,748 
89,392 
Prepaid expenses and other current assets
50,118 
52,852 
Total current assets
1,003,832 
949,467 
Property and equipment, net
93,123 
101,853 
Long-term investments
18,788 
46,484 
Goodwill
558,659 
558,775 
Purchased intangibles, net
9,648 
14,065 
Deferred taxes
86,659 
89,865 
Other assets
20,994 
21,738 
Total assets
1,791,703 
1,782,247 
Current liabilities
 
 
Accounts payable
78,444 
73,472 
Accrued payroll and related liabilities
32,977 
38,781 
Taxes payable
2,130 
4,342 
Deferred revenue
174,119 
170,559 
Current portion of long-term debt
5,717 
5,717 
Other accrued liabilities
74,607 
85,095 
Total current liabilities
367,994 
377,966 
Long-term deferred revenue
83,272 
86,191 
Taxes payable
10,382 
9,983 
Deferred taxes
 
135 
Long-term debt
225,940 
228,799 
Other non-current liabilities
24,074 
25,964 
Total liabilities
711,662 
729,038 
Commitments and contingencies (Note 8)
   
   
Stockholders' equity
 
 
Common stock, $0.0005 par value; authorized: 350,000,000 shares; issued and outstanding: 135,771,115 shares at June 30, 2016 and 132,665,165 shares at December 31, 2015
68 
66 
Additional paid-in capital
1,202,263 
1,167,701 
Accumulated deficit
(120,017)
(113,355)
Accumulated other comprehensive loss
(2,273)
(1,203)
Total stockholders' equity
1,080,041 
1,053,209 
Total liabilities and stockholders' equity
$ 1,791,703 
$ 1,782,247 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Statement Of Financial Position [Abstract]
 
 
Common stock, par value
$ 0.0005 
$ 0.0005 
Common stock, shares authorized
350,000,000 
350,000,000 
Common stock, shares issued
135,771,115 
132,665,165 
Common stock, shares outstanding
135,771,115 
132,665,165 
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Revenues:
 
 
 
 
Product revenues
$ 201,715 
$ 221,896 
$ 404,975 
$ 455,583 
Service revenues
86,064 
94,679 
172,879 
191,692 
Total revenues
287,779 
316,575 
577,854 
647,275 
Cost of revenues:
 
 
 
 
Cost of product revenues
94,029 
95,752 
189,084 
197,021 
Cost of service revenues
32,478 
34,898 
63,669 
71,509 
Total cost of revenues
126,507 
130,650 
252,753 
268,530 
Gross profit
161,272 
185,925 
325,101 
378,745 
Operating expenses:
 
 
 
 
Sales and marketing
82,505 
89,433 
161,968 
180,292 
Research and development
43,981 
46,545 
87,051 
95,882 
General and administrative
20,291 
22,269 
40,401 
43,436 
Amortization of purchased intangibles
2,017 
2,417 
4,217 
4,834 
Restructuring costs
6,007 
343 
13,509 
367 
Transaction-related costs
7,887 
 
12,131 
 
Total operating expenses
162,688 
161,007 
319,277 
324,811 
Operating (loss) income
(1,416)
24,918 
5,824 
53,934 
Interest and other income (expense), net:
 
 
 
 
Interest expense
(1,668)
(1,523)
(3,305)
(3,007)
Other income (expense), net
1,966 
1,345 
2,835 
1,367 
Interest and other income (expense), net
298 
(178)
(470)
(1,640)
(Loss) income before provision for income taxes
(1,118)
24,740 
5,354 
52,294 
Provision for income taxes
8,879 
5,093 
12,016 
11,449 
Net (loss) income
$ (9,997)
$ 19,647 
$ (6,662)
$ 40,845 
Basic net (loss) income per share
$ (0.07)
$ 0.15 
$ (0.05)
$ 0.30 
Diluted net (loss) income per share
$ (0.07)
$ 0.14 
$ (0.05)
$ 0.30 
Number of shares used in computation of net (loss) income per share:
 
 
 
 
Basic
135,700 
134,057 
134,934 
134,417 
Diluted
135,700 
137,347 
134,934 
138,290 
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Net (loss) income
$ (9,997)
$ 19,647 
$ (6,662)
$ 40,845 
Other comprehensive (loss) income, net of tax:
 
 
 
 
Foreign currency translation adjustments
(2,015)
(951)
191 
Unrealized gains/losses on investments:
 
 
 
 
Unrealized holding gains (losses) arising during the period
66 
(27)
292 
62 
Net losses reclassified into earnings
(15)
(1)
(8)
(4)
Net unrealized gains (losses) on investments
51 
(28)
284 
58 
Unrealized gains/losses on hedging securities:
 
 
 
 
Unrealized hedge gains (losses) arising during the period
728 
(1,723)
(899)
4,575 
Net unrealized gains/(losses) on hedging securities
1,165 
(3,150)
(403)
590 
Other comprehensive (loss) income
(799)
(3,170)
(1,070)
839 
Comprehensive (loss) income
(10,796)
16,477 
(7,732)
41,684 
Product revenues
 
 
 
 
Unrealized gains/losses on hedging securities:
 
 
 
 
Net (gains) losses reclassified into earnings for revenue/expense hedges
(308)
(3,629)
(1,606)
(10,265)
Operating Expenses
 
 
 
 
Unrealized gains/losses on hedging securities:
 
 
 
 
Net (gains) losses reclassified into earnings for revenue/expense hedges
$ 745 
$ 2,202 
$ 2,102 
$ 6,280 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Cash flows from operating activities:
 
 
Net (loss) income
$ (6,662)
$ 40,845 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
Depreciation and amortization
23,663 
27,210 
Amortization of purchased intangibles
4,417 
5,629 
Amortization of capitalized software development costs for products to be sold
2,140 
1,354 
Amortization of debt issuance costs
267 
266 
Amortization of discounts and premiums on investments, net
645 
1,090 
Write-down of excess and obsolete inventories
5,477 
6,810 
Stock-based compensation expense
33,087 
18,943 
Excess tax benefits from stock-based compensation expense
(1,405)
(3,487)
Loss on disposal of property and equipment
175 
544 
Changes in assets and liabilities:
 
 
Trade receivables
33,601 
8,245 
Inventories
(12,880)
(6,791)
Deferred taxes
(4,435)
(2,744)
Prepaid expenses and other assets
2,362 
4,960 
Accounts payable
4,058 
(19,229)
Taxes payable
5,296 
9,663 
Other accrued liabilities and deferred revenue
(17,540)
(30,160)
Net cash provided by operating activities
72,266 
63,148 
Cash flows from investing activities:
 
 
Purchases of property and equipment
(13,508)
(23,922)
Capitalized software development costs for products to be sold
(1,446)
(2,311)
Purchases of investments
(78,222)
(107,675)
Proceeds from sales of investments
13,937 
6,892 
Proceeds from maturities of investments
149,699 
97,187 
Net cash provided by (used in) investing activities
70,460 
(29,829)
Cash flows from financing activities:
 
 
Proceeds from issuance of common stock under employee option and stock purchase plans
10,811 
12,528 
Payments on debt
(3,126)
(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
(9,772)
(11,769)
Excess tax benefits from stock-based compensation expense
1,405 
3,487 
Net cash used in financing activities
(682)
(63,878)
Effect of exchange rate changes on cash and cash equivalents
(621)
 
Net increase (decrease) in cash and cash equivalents
141,423 
(30,559)
Cash and cash equivalents, beginning of period
435,093 
443,132 
Cash and cash equivalents, end of period
$ 576,516 
$ 412,573 
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, 2016, the condensed consolidated statements of operations for the three and six months ended June 30, 2016 and 2015, the condensed consolidated statements of comprehensive (loss) income for the three and six months ended June 30, 2016 and 2015, and the condensed consolidated statements of cash flows for the six months ended June 30, 2016 and 2015, 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, 2015 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, 2015 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 as amended for the year ended December 31, 2015.

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, 2016 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

 

Definitive Agreement and Plan of Merger with Mitel Networks Corporation

On April 15, 2016, the Company entered into a definitive Agreement and Plan of Merger with Mitel Networks Corporation (“Mitel”) to be acquired for $3.12 in cash and 1.31 common shares of Mitel for each share of our common stock.

Subsequent Event

On July 8, 2016, the Company terminated the definitive Agreement and Plan of Merger with Mitel and entered into a definitive Agreement and Plan of Merger with Triangle Private Holdings I, LLC (“NewCo”), an entity affiliated with Siris Capital Group, LLC (“Siris”) to be acquired for $12.50 in cash for each share of the Polycom common stock (the “Merger”). Consummation of the Merger is subject to customary closing conditions, including, without limitation, (i) the absence of certain legal impediments, (ii) the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) antitrust regulatory approval in Germany and Russia, and (iv) approval by the Company’s stockholders of the Merger.

In connection with terminating the definitive agreement with Mitel, the Company paid a termination fee of $60.0 million to Mitel (the “Mitel Termination Fee”) on July 8, 2016, which was reimbursed by NewCo on July 22, 2016. If the Company terminates the definitive agreement with NewCo under specified circumstances, the Company may be required to pay NewCo a $60.0 million termination fee and/or repay to NewCo the Mitel Termination Fee that NewCo reimbursed to the Company.

 

Recent Accounting Pronouncements
Recent Accounting Pronouncements

2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update which amends the current guidance related to accounting for credit losses on certain financial instruments by replacing the incurred loss model with a forward-looking expected loss model. The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In March 2016, the FASB issued an accounting standard update which simplifies accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In March 2016, the FASB issued an accounting standard update which clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not require de-designation provided that all other hedge accounting criteria continue to be met. The standard is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal year beginning after December 15, 2016. Early adoption is permitted. The standard can be applied either on a prospective basis or a modified retrospective basis. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

In February 2016, the FASB issued an accounting standard update which requires a lessee to generally recognize a right-of-use asset and a lease liability on the balance sheet. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted. The standard will be applied using a modified retrospective approach. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures.

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 August 2015, the FASB issued an accounting standard update 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. In March 2016, the FASB issued an accounting standard update which clarifies the principal versus agent assessment in the new revenue recognition guidance. In April 2016, the FASB issued an accounting standard update which clarifies identifying performance obligations and the licensing implementation guidance in the new revenue recognition guidance. In May 2016, the FASB issued an accounting standard update which provides various narrow-scope improvements and practical expedients related to the new revenue recognition guidance. The Company is evaluating the potential effects of the adoption of these standards on its consolidated financial statements and disclosures.

 

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 $12.5 million is payable to Polycom over this fiscal year subject to certain conditions, including meeting certain agreed-upon EBITDA-based milestones for the fiscal year ending December 31, 2016. These conditions were not met for the fiscal year ended December 31, 2015. 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, 2016 and 2015, 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 the Company’s 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, 2016, total transactions entered into pursuant to the terms of the Financing Agreement were $53.1 million and $104.9 million, respectively, of which $29.4 million and $59.5 million, respectively, were related to the transfer of the financial assets arrangement. In the three and six months ended June 30, 2015, total transactions entered into were $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. 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, 2016 and December 31, 2015 was $31.4 million and $32.7 million, respectively, of which $16.4 million and $22.1 million, respectively, was related to the accounts receivable transferred, and is included in “Trade receivables, net” in the Company’s condensed consolidated balance sheets. Fees incurred pursuant to the Financing Agreement were $1.0 million and $0.8 million for the three months ended June 30, 2016 and 2015, respectively, and were $1.8 million and $1.7 million for the six months ended June 30, 2016 and 2015, 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, 2016 (in thousands):

 

 

Americas

 

 

EMEA

 

 

APAC

 

 

Total

 

Balance at December 31, 2015

$

308,159

 

 

$

101,882

 

 

$

148,734

 

 

$

558,775

 

Foreign currency translation

 

 

 

 

 

 

 

(116

)

 

 

(116

)

Balance at June 30, 2016

$

308,159

 

 

$

101,882

 

 

$

148,618

 

 

$

558,659

 

 

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, 2016

 

 

December 31, 2015

 

 

Gross

Value

 

 

Accumulated

Amortization

& Impairment

 

 

Net Value

 

 

Gross

Value

 

 

Accumulated

Amortization

& Impairment

 

 

Net Value

 

Core and developed technology

$

81,178

 

 

$

(81,145

)

 

$

33

 

 

$

81,178

 

 

$

(80,945

)

 

$

233

 

Customer and partner relationships

 

79,525

 

 

 

(70,828

)

 

 

8,697

 

 

 

79,525

 

 

 

(66,742

)

 

 

12,783

 

Non-compete agreements

 

1,800

 

 

 

(1,800

)

 

 

 

 

 

1,800

 

 

 

(1,700

)

 

 

100

 

Trade name

 

3,400

 

 

 

(3,400

)

 

 

 

 

 

3,400

 

 

 

(3,369

)

 

 

31

 

Finite-lived intangible assets

 

165,903

 

 

 

(157,173

)

 

 

8,730

 

 

 

165,903

 

 

 

(152,756

)

 

 

13,147

 

Indefinite-lived trade name

 

918

 

 

 

 

 

 

918

 

 

 

918

 

 

 

 

 

 

918

 

Total acquired intangible assets

$

166,821

 

 

$

(157,173

)

 

$

9,648

 

 

$

166,821

 

 

$

(152,756

)

 

$

14,065

 

Capitalized software development costs for

   products to be sold

$

14,604

 

 

$

(7,142

)

 

$

7,462

 

 

$

12,993

 

 

$

(5,002

)

 

$

7,991

 

 

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.

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Amortization of purchased intangibles in revenues

$

 

 

$

19

 

 

$

 

 

$

38

 

Amortization of purchased intangibles in cost of product

   revenues

 

100

 

 

 

100

 

 

 

200

 

 

 

757

 

Amortization of purchased intangibles in operating expenses

 

2,017

 

 

 

2,417

 

 

 

4,217

 

 

 

4,834

 

Total amortization of purchased intangibles

$

2,117

 

 

$

2,536

 

 

$

4,417

 

 

$

5,629

 

 

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

The estimated future amortization expense as of June 30, 2016 is as follows (in thousands):

 

Year ending December 31,

 

Amount

 

Remainder of 2016

 

$

4,061

 

2017

 

 

4,669

 

Total

 

$

8,730

 

 

In the six months ended June 30, 2016 and 2015, the Company capitalized approximately $1.6 million and $2.5 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 $6.0 million and $0.3 million of net restructuring costs during the three months ended June 30, 2016 and 2015, respectively, and $13.5 million and $0.4 million during the six months ended June 30, 2016 and 2015, respectively. The restructuring costs during the six months ended June 30, 2016 were primarily related to certain actions announced in December 2015, which included reduction of approximately 11 percent of the Company’s global workforce that is expected to be substantially complete by the fourth quarter of 2016 and charges related to vacating certain leased facilities. These actions were designed to improve the Company's profitability by strategically investing in more accretive areas of the business and further leveraging its outsource partners. As of June 30, 2016, the Company has recorded a cumulative amount of $24.0 million in restructuring costs in connection with these actions, of which $13.5 million of restructuring costs were incurred during the six months ended June 30, 2016, and expects the remaining charges related to these actions to be approximately $1 million. 

The following table summarizes the changes in the Company’s restructuring reserves during the six months ended June 30, 2016 (in thousands):

 

 

Severance/Other

 

 

Facilities

 

 

Other

 

 

Total

 

Balance at December 31, 2015

$

8,072

 

 

$

18,455

 

 

$

801

 

 

$

27,328

 

Additions to the reserve, net

 

9,072

 

 

 

3,958

 

 

 

 

 

 

13,030

 

Interest accretion

 

 

 

 

479

 

 

 

 

 

 

479

 

Non-cash adjustments

 

 

 

 

3

 

 

 

 

 

 

3

 

Cash payments

 

(12,027

)

 

 

(4,391

)

 

 

(801

)

 

 

(17,219

)

Balance at June 30, 2016

$

5,117

 

 

$

18,504

 

 

$

 

 

$

23,621

 

 

As of June 30, 2016, the restructuring reserve was primarily comprised of facilities-related liabilities pertaining to previous restructuring actions. At the time the reserve was initially set up, the Company calculated 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. To the extent that actual sublease income, the timing of subleasing the facility, or the associated cost of, or the recorded liability related to subleasing or terminating the Company’s lease obligations for these facilities is different than initial estimates, the Company adjusts its restructuring reserves in the period during which such information becomes known.

Balance Sheet Details
Balance Sheet Details

7. BALANCE SHEET DETAILS

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

 

 

June 30,

2016

 

 

December 31,

2015

 

Gross trade receivables

$

211,748

 

 

$

242,911

 

Returns and other reserves

 

(54,572

)

 

 

(52,000

)

Allowance for doubtful accounts

 

(2,964

)

 

 

(3,023

)

Total

$

154,212

 

 

$

187,888

 

 

Inventories consist of the following (in thousands):

 

 

June 30,

2016

 

 

December 31,

2015

 

Raw materials

$

671

 

 

$

824

 

Work in process

 

 

 

 

117

 

Finished goods

 

96,077

 

 

 

88,451

 

Total

$

96,748

 

 

$

89,392

 

 

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

 

 

June 30,

2016

 

 

December 31,

2015

 

Non-trade receivables

$

8,147

 

 

$

7,689

 

Prepaid expenses

 

33,200

 

 

 

33,174

 

Derivative assets

 

6,873

 

 

 

10,396

 

Other current assets

 

1,898

 

 

 

1,593

 

Total

$

50,118

 

 

$

52,852

 

 

Deferred revenue consists of the following (in thousands):

 

 

June 30,

2016

 

 

December 31,

2015

 

Short-term:

 

 

 

 

 

 

 

Service

$

170,545

 

 

$

165,594

 

License

 

3,574

 

 

 

4,965

 

Total

$

174,119

 

 

$

170,559

 

Long-term:

 

 

 

 

 

 

 

Service

$

78,398

 

 

$

82,598

 

License

 

4,874

 

 

 

3,593

 

Total

$

83,272

 

 

$

86,191

 

 

Changes in deferred service revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

Balance at beginning of period

$

248,192

 

 

$

257,280

 

Additions to deferred service revenue

 

180,307

 

 

 

167,332

 

Amortization of deferred service revenue

 

(179,556

)

 

 

(170,232

)

Balance at end of period

$

248,943

 

 

$

254,380

 

 

Changes in deferred license revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

Balance at beginning of period

$

8,558

 

 

$

5,524

 

Additions to deferred license revenue

 

2,508

 

 

 

1,766

 

Amortization of deferred license revenue

 

(2,618

)

 

 

(1,238

)

Balance at end of period

$

8,448

 

 

$

6,052

 

 

The current portion of other accrued liabilities consists of the following (in thousands):

 

 

June 30,

2016

 

 

December 31,

2015

 

Accrued expenses

$

27,703

 

 

$

25,179

 

Accrued co-op expenses

 

1,979

 

 

 

2,670

 

Restructuring reserves

 

13,054

 

 

 

16,187

 

Warranty obligations

 

8,526

 

 

 

10,172

 

Derivative liabilities

 

6,722

 

 

 

6,031

 

Employee stock purchase plan withholdings

 

 

 

 

9,668

 

Other accrued liabilities

 

16,623

 

 

 

15,188

 

Total

$

74,607

 

 

$

85,095

 

 

Changes in warranty obligations during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

Balance at beginning of period

$

10,172

 

 

$

11,613

 

Accruals for warranties issued during the period

 

4,797

 

 

 

6,811

 

Actual charges against warranty reserve during the period

 

(6,443

)

 

 

(7,277

)

Balance at end of period

$

8,526

 

 

$

11,147

 

 

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 its 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.

Following the announcement of the execution of the merger agreement with Mitel Networks Corporation, a purported stockholder class action, styled Solak v. Leav, et al., No. 5:16-cv-03128-HRL, was filed on June 8, 2016 in the United States District Court for the Northern District of California, which is referred to as the Solak complaint. The Solak complaint named as defendants current and former members of the Polycom Board, Mitel, and the merger sub, which are collectively referred to as the defendants. The Solak complaint alleged that the defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder by failing to disclose all material information in connection with the proxy statement/prospectus related to the Mitel transaction. The Solak complaint also alleged that the current and former members of the Polycom Board violated Section 20(a) of the Exchange Act by acting as control persons of Polycom in connection with the purported omissions from the proxy statement/prospectus described above. Finally, the Solak complaint alleged that the current and former members of the Polycom Board breached their fiduciary duties to Polycom’s stockholders in connection with the merger and that Mitel and its merger sub aided and abetted the purported breaches of fiduciary duty. In support of these claims, the Solak complaint alleged, among other things, that the Polycom Board failed to disclose all material information regarding the merger, that the merger consideration undervalued Polycom, that the sales process that resulted in entry into the merger agreement was flawed, and that the merger agreement contained unreasonable deal protection devices that purportedly preclude competing offers and unduly favor Mitel. The action sought injunctive relief, including enjoining or rescinding the merger, and an award of other unspecified attorneys’ and other fees and costs, in addition to other relief. As a result of the transaction with Mitel being terminated and Polycom’s entry into the merger agreement with an entity affiliated with Siris, the suit was dismissed.

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. Mr. Miller has reached a settlement with the SEC.

SEC Investigation. As previously disclosed, the Company has cooperated with the Enforcement Staff of the 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. On January 26, 2016, Mr. Miller reached a settlement with the SEC. Under the terms of the settlement, Mr. Miller agreed to pay $450,000, of which, $200,000 was paid to Polycom.

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. On January 8, 2016, the parties executed a settlement agreement. The proposed settlement is subject to, and contingent upon, the Court’s review and approval. The lead plaintiff moved for preliminary approval of the settlement. The Court has issued an order preliminarily approving the settlement and has scheduled a hearing for August 2016 to consider final approval of the settlement.  If the settlement is approved, the settlement payment will be made by Polycom’s insurance carrier.

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 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.

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 as set forth in the Credit Agreement 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 Term Loan is payable in quarterly installments of principal equal to approximately $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 borrowed again. The Term Loan is secured by substantially all the assets of the Company and 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, 2016. The Credit Agreement also includes customary events of default, including in the event of change of control, 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, 2016, the weighted average interest rate on the Term Loan was 2.46%, the accrued interest on the Term Loan was $0.6 million, and the current and noncurrent portion of the outstanding Term Loan was $5.7 million and $225.9 million, respectively, net of unamortized debt issuance costs of $1.2 million.

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Contractual interest expense

$

1,426

 

 

$

1,292

 

 

$

2,852

 

 

$

2,550

 

Amortization of debt issuance costs

 

134

 

 

 

133

 

 

 

267

 

 

 

266

 

Total

$

1,560

 

 

$

1,425

 

 

$

3,119

 

 

$

2,816

 

 

As of June 30, 2016, future principal payments for long-term debt, including the current portion, are summarized as follows (in thousands):

 

 

 

Amount

 

Remainder of 2016

 

$

3,126

 

2017

 

 

6,250

 

2018

 

 

223,437

 

Total

 

$

232,813

 

 

Investments
Investments

10. INVESTMENTS

The Company had cash and cash equivalents of $576.5 million and $435.1 million at June 30, 2016 and December 31, 2015, 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, U.S. government securities, U.S. government agency securities 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 that 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 state, 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, 2016, the Company’s long-term investments had contractual maturities of one to two years.

The Company’s short-term and long-term investments in debt securities are summarized as follows (in thousands):

 

 

Cost Basis

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair Value

 

Balances at June 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

43,081

 

 

$

40

 

 

$

 

 

$

43,121

 

U.S. government agency securities

 

40,788

 

 

 

27

 

 

 

(1

)

 

 

40,814

 

Non-U.S. government securities

 

2,004

 

 

 

 

 

 

 

 

 

2,004

 

Corporate debt securities

 

40,285

 

 

 

16

 

 

 

(2

)

 

 

40,299

 

Total short-term investments

$

126,158

 

 

$

83

 

 

$

(3

)

 

$

126,238

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

4,256

 

 

$

12

 

 

$

 

 

$

4,268

 

U.S. government agency securities

 

3,003

 

 

 

1

 

 

 

 

 

 

3,004

 

Corporate debt securities

 

11,499

 

 

 

23

 

 

 

(6

)

 

 

11,516

 

Total long-term investments

$

18,758

 

 

$

36

 

 

$

(6

)

 

$

18,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

49,036

 

 

$

4

 

 

$

(45

)

 

$

48,995

 

U.S. government agency securities

 

67,723

 

 

 

1

 

 

 

(30

)

 

 

67,694

 

Non-U.S. government securities

 

7,303

 

 

 

 

 

 

(1

)

 

 

7,302

 

Corporate debt securities

 

60,290

 

 

 

1

 

 

 

(40

)

 

 

60,251

 

Total short-term investments

$

184,352

 

 

$

6

 

 

$

(116

)

 

$

184,242

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

8,058

 

 

$

 

 

$

(14

)

 

$

8,044

 

U.S. government agency securities

 

14,510

 

 

 

 

 

 

(48

)

 

 

14,462

 

Corporate debt securities

 

24,056

 

 

 

2

 

 

 

(80

)

 

 

23,978

 

Total long-term investments

$

46,624

 

 

$

2

 

 

$

(142

)

 

$

46,484

 

 

Unrealized Losses

The following table summarizes the fair value and gross unrealized losses of investments that are in an unrealized loss position only. The unrealized losses are 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, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

$

4,221

 

 

$

(1

)

 

$

 

 

$

 

 

$

4,221

 

 

$

(1

)

Corporate debt securities

 

11,475

 

 

 

(8

)

 

 

 

 

 

 

 

 

11,475

 

 

 

(8

)

Total investments

$

15,696

 

 

$

(9

)

 

$

 

 

$

 

 

$

15,696

 

 

$

(9

)

December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

48,445

 

 

$

(59

)

 

$

 

 

$

 

 

$

48,445

 

 

$

(59

)

U.S. government agency securities

 

71,861

 

 

 

(78

)

 

 

 

 

 

 

 

 

71,861

 

 

 

(78

)

Non-U.S. government securities

 

5,001

 

 

 

(1

)

 

 

 

 

 

 

 

 

5,001

 

 

 

(1

)

Corporate debt securities

 

52,571

 

 

 

(120

)

 

 

 

 

 

 

 

 

52,571

 

 

 

(120

)

Total investments

$

177,878

 

 

$

(258

)

 

$

 

 

$

 

 

$

177,878

 

 

$

(258

)

 

During six months ended June 30, 2016 and 2015, 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, 2016 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

 

$

47,894

 

 

$

47,894

 

 

$

 

U.S. government agency securities

 

 

29,980

 

 

 

 

 

 

29,980

 

Non U.S. government securities

 

 

1,000

 

 

 

 

 

 

1,000

 

Corporate debt securities

 

 

39,236

 

 

 

 

 

 

39,236

 

Short-term investments

 

 

126,238

 

 

 

 

 

 

126,238

 

Long-term investments

 

 

18,788

 

 

 

 

 

 

18,788

 

Total fixed income available-for-sale securities

 

$

263,136

 

 

$

47,894

 

 

$

215,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (a)

 

$

6,873

 

 

$

 

 

$

6,873

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (b)

 

$

6,722

 

 

$

 

 

$

6,722

 

 

 

 

 

 

 

 

Fair Value Measurements at

December 31, 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

 

$

10,313

 

 

$

10,313

 

 

$

 

Non-U.S. government securities

 

 

975

 

 

 

 

 

 

975

 

Corporate debt securities

 

 

19,799

 

 

 

 

 

 

19,799

 

Short-term investments

 

 

184,242

 

 

 

 

 

 

184,242

 

Long-term investments

 

 

46,484

 

 

 

 

 

 

46,484

 

Total fixed income available-for-sale securities

 

$

261,813

 

 

$

10,313

 

 

$

251,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (a)

 

$

10,396

 

 

$

 

 

$

10,396

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (b)

 

$

6,031

 

 

$

 

 

$

6,031

 

 

(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 were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2016 and 2015. There were no investments classified as Level 3 as of June 30, 2016 and December 31, 2015.

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, 2016 and December 31, 2015, the estimated fair value of the Term Loan was approximately $229.3 million and $226.5 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 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, Japanese Yen, Brazilian Reals, Chinese Yuan, 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, 2016 (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

 

13,196

 

 

$

4,111

 

 

Buy

 

 

 

 

$

 

 

Brazilian Real

 

24,037

 

 

$

6,993

 

 

Sell

 

 

 

 

$

 

 

Chinese Yuan

 

 

 

$

 

 

 

 

45,457

 

 

$

7,098

 

 

Buy

Chinese Yuan

 

42,005

 

 

$

6,390

 

 

Sell

 

 

 

 

$

 

 

Euro

 

22,866

 

 

$

25,374

 

 

Buy

 

 

13,703

 

 

$

15,420

 

 

Buy

Euro

 

34,404

 

 

$

38,274

 

 

Sell

 

 

54,468

 

 

$

60,981

 

 

Sell

British Pound

 

5,368

 

 

$

7,218

 

 

Buy

 

 

14,718

 

 

$

22,741

 

 

Buy

British Pound

 

12,753

 

 

$

17,905

 

 

Sell

 

 

15,684

 

 

$

24,082

 

 

Sell

Israeli Shekel

 

29,300

 

 

$

7,609

 

 

Buy

 

 

 

 

$

 

 

Israeli Shekel

 

29,300

 

 

$

7,613

 

 

Sell

 

 

 

 

$

 

 

Japanese Yen

 

96,170

 

 

$

935

 

 

Buy

 

 

 

 

$

 

 

Japanese Yen

 

96,170

 

 

$

867

 

 

Sell

 

 

 

 

$

 

 

Mexican Peso

 

21,914

 

 

$

1,184

 

 

Buy

 

 

 

 

$

 

 

Mexican Peso

 

44,977

 

 

$

2,430

 

 

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,

2016

 

 

June 30,

2015

 

Foreign exchange contracts

 

Interest and other income (expense), net

 

$

1,325

 

 

$

(1,056

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

Foreign exchange contracts

 

Interest and other income (expense), net

 

$

(822

)

 

$

3,617

 

 

Cash Flow Hedges

The Company designates forward contracts as cash flow hedges of foreign currency revenues and expenses, primarily the Chinese Yuan, Euros and British Pounds. 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.  

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, 2016 (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

 

 

 

 

$

 

 

 

 

85,643

 

 

$

12,851

 

 

Buy

Euro

 

 

 

 

$

 

 

 

 

19,597

 

 

$

21,909

 

 

Buy

Euro

 

 

 

 

$

 

 

 

 

58,032

 

 

$

65,094

 

 

Sell

British Pound

 

 

 

 

$

 

 

 

 

16,782

 

 

$

24,405

 

 

Buy

British Pound

 

 

 

 

$

 

 

 

 

15,816

 

 

$

23,146

 

 

Sell

 

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 (Loss)

Recognized in OCI or OCL-

Effective Portion

 

 

Location of Gain (Loss) Reclassified from

OCI or OCL into Income-Effective Portion

 

Gain (Loss)

Reclassified from OCI or OCL

into Income-Effective

Portion

 

 

Location of Gain (Loss)

Recognized-Ineffective

Portion and Amount

Excluded from

Effectiveness Testing

 

Gain (Loss)

Recognized-Ineffective

Portion and Amount

Excluded from

Effectiveness

Testing (a)

 

 

 

Three Months Ended

 

 

 

 

Three Months Ended

 

 

 

 

Three Months Ended

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

Foreign

   exchange

   contracts

 

$

728

 

 

$

(1,723

)

 

Product revenues

 

$

308

 

 

$

3,629

 

 

Interest and other

   income (expense),

   net

 

$

744

 

 

$

357

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

(161

)

 

 

(531

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

(513

)

 

 

(1,007

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

(2

)

 

 

(268

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(69

)

 

 

(396

)

 

 

 

 

 

 

 

 

 

 

 

 

$

728

 

 

$

(1,723

)

 

 

 

$

(437

)

 

$

1,427

 

 

 

 

$

744

 

 

$

357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

Six Months Ended

 

 

 

 

Six Months Ended

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

   exchange

   contracts

 

$

(899

)

 

$

4,575

 

 

Product revenues

 

$

1,606

 

 

$

10,265

 

 

Interest and other

   income (expense),

   net

 

$

735

 

 

$

326

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

(458

)

 

 

(1,332

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

(1,346

)

 

 

(2,794

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

(49

)

 

 

(983

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(249

)

 

 

(1,171

)

 

 

 

 

 

 

 

 

 

 

 

 

$

(899

)

 

$

4,575

 

 

 

 

$

(496

)

 

$

3,985

 

 

 

 

$

735

 

 

$

326

 

  

 

(a)

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

As of June 30, 2016, the Company estimated that all values reported in accumulated other comprehensive loss will be reclassified to income within the next twelve months. Effective gains and losses recorded in other comprehensive (loss) income are reclassified to revenue and operating expense as and when the underlying forecasted foreign currency transactions affect earnings.

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, 2016 and 2015, 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, 2016 and December 31, 2015. 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,

2016

 

 

December 31,

2015

 

 

June 30,

2016

 

 

December 31,

2015

 

Derivative assets (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

2,380

 

 

$

2,283

 

 

$

4,493

 

 

$

8,113

 

Derivative liabilities (b):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

2,418

 

 

$

2,269

 

 

$

4,304

 

 

$

3,762

 

  

 

(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, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

6,873

 

 

$

 

 

$

6,873

 

 

$

(6,017

)

 

$

 

 

$

856

 

As of December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

10,396

 

 

$

 

 

$

10,396

 

 

$

(5,413

)

 

$

 

 

$

4,983

 

 

 

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, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

6,722

 

 

$

 

 

$

6,722

 

 

$

(6,017

)

 

$

 

 

$

705

 

As of December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

6,031

 

 

$

 

 

$

6,031

 

 

$

(5,413

)

 

$

 

 

$

618

 

 

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. Any share repurchases will be funded through cash on hand and future cash flow from operations. During the three and six months ended June 30, 2016, the Company did not purchase any shares of common stock in the open market. 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 $25.0 million and $65.0 million, respectively. 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, 2016, the Company had a remaining authorization to purchase up to an additional $60.1 million of shares in the open market under the 2014 repurchase plan.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss, 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, 2016

 

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, 2015

 

$

(59

)

 

$

(197

)

 

$

(947

)

 

$

(1,203

)

Other comprehensive loss before reclassifications

 

 

(899

)

 

 

292

 

 

 

(951

)

 

 

(1,558

)

Amounts reclassified from accumulated other

   comprehensive loss (a)

 

 

496

 

 

 

(8

)

 

 

 

 

 

488

 

Net current-period other comprehensive loss

 

 

(403

)

 

 

284

 

 

 

(951

)

 

 

(1,070

)

Balance as of June 30, 2016

 

$

(462

)

 

$

87

 

 

$

(1,898

)

 

$

(2,273

)

 

 

(a)

See Note 12 for details of gains and losses, net of taxes, reclassified out of accumulated other comprehensive loss into net (loss) income related to cash flow hedges and each line item of net (loss) 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, 2016, 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,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Cost of  product revenues

$

1,133

 

 

$

505

 

 

$

1,914

 

 

$

1,460

 

Cost of service revenues

 

2,373

 

 

 

877

 

 

 

3,484

 

 

 

2,185

 

Stock-based compensation expense included in cost

   of revenues

 

3,506

 

 

 

1,382

 

 

 

5,398

 

 

 

3,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

7,550

 

 

 

2,698

 

 

 

11,293

 

 

 

5,311

 

Research and development

 

4,912

 

 

 

1,915

 

 

 

6,941

 

 

 

4,488

 

General and administrative

 

5,638

 

 

 

3,716

 

 

 

9,455

 

 

 

5,499

 

Stock-based compensation expense included in

   operating expenses

 

18,100

 

 

 

8,329

 

 

 

27,689

 

 

 

15,298

 

Total stock-based compensation expense

 

21,606

 

 

 

9,711

 

 

 

33,087

 

 

 

18,943

 

Tax benefit

 

3,109

 

 

 

1,697

 

 

 

5,354

 

 

 

3,226

 

Total stock-based compensation expense, net of tax

$

18,497

 

 

$

8,014

 

 

$

27,733

 

 

$

15,717

 

 

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 during the six months ended June 30, 2016 and 2015.

Performance Shares and Restricted Stock Units

During the six months ended June 30, 2016 and 2015, the Company granted 886,496 and 922,202 performance shares to certain employees and executives, at a weighted average fair value of $10.87 and $14.23 per share, respectively. The 2016 and 2015 grants are generally divided evenly over three annual performance periods commencing with calendar year 2016 and 2015, respectively, and will vest on the first, second and third anniversary of the grant date.

During the six months ended June 30, 2016 and 2015, the Company granted 2,976,147 and 2,788,043 restricted stock units to certain employees and executives, at a weighted average fair value of $10.86 and $13.80 per share, respectively.

During the six months ended June 30, 2016, there were no restricted stock units granted to non-employee directors. During the six months ended June 30, 2015, the Company granted 120,000 restricted stock units to non-employee directors, at a weighted average fair value of $13.14 per share.

Employee Stock Purchase Plan

During the six months ended June 30, 2016 and 2015, 1,236,759 and 1,183,426 shares, respectively, were purchased under the Company’s employee stock purchase plan (“ESPP”). As of June 30, 2016, there were 7,927,722 shares available to be issued under the ESPP.

Pursuant to the definitive Agreement and Plan of Merger entered into with Mitel, the Company suspended the ESPP and terminated all offering periods on April 15, 2016, and refunded ESPP contributions received from the participating employees toward the related purchases. Subsequently, the Company terminated the definitive Agreement and Plan of Merger with Mitel and entered into a definitive Agreement and Plan of Merger, dated July 8, 2016, to be acquired by an entity affiliated with Siris. Effective as of one day prior to the closing of the Merger, and contingent upon the closing of the Merger, the ESPP will be terminated. The Company expects that there will be no further offering periods under the ESPP prior to its termination in connection with the closing of the Merger. The Company recognized approximately $10.9 million of unamortized stock-based compensation expense in relation to the cancelled offering periods during the six months ended June 30, 2016. Refer to Note 1 for additional details regarding the proposed Merger.

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 1, 2016 ranged from $2.51 to $3.35, compared to the estimated fair value per share from $3.09 to $4.27 for the two-year offering period commencing on February 2, 2015.

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,

2016

 

 

June 30,

2015

 

Expected volatility

31.85-34.97%

 

 

30.04-30.73%

 

Risk-free interest rate

0.47-0.81%

 

 

0.07-0.49%

 

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 (Loss) Income Per Share
Net (Loss) Income Per Share

15. NET (LOSS) INCOME PER SHARE

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

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(9,997

)

 

$

19,647

 

 

$

(6,662

)

 

$

40,845

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

135,700

 

 

 

134,057

 

 

 

134,934

 

 

 

134,417

 

Effect of dilutive potential common shares

 

 

 

 

3,290

 

 

 

 

 

 

3,873

 

Weighted average shares outstanding, diluted

 

135,700

 

 

 

137,347

 

 

 

134,934

 

 

 

138,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net (loss) income per share

$

(0.07

)

 

$

0.15

 

 

$

(0.05

)

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net (loss) income per share

$

(0.07

)

 

$

0.14

 

 

$

(0.05

)

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antidilutive employee stock-based awards, excluded

 

2,757

 

 

 

637

 

 

 

3,337

 

 

 

483

 

 

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. As a result of the net losses for the three and six months ended June 30, 2016, the shares used in computing basic and diluted net loss per share remained the same as the effect of all potentially issuable common shares is considered to be anti-dilutive.

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 revenues and marketing expenses. Cost of revenues consists of the standard cost of revenues and does not include items such as warranty expense, royalties, and the allocation of overhead expenses, including facilities and IT costs, as well as stock-based compensation costs and amortization of purchased intangible assets. 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. 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, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015, 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, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

142,019

 

 

$

72,660

 

 

$

73,100

 

 

$

287,779

 

% of total revenue

 

49

%

 

 

25

%

 

 

26

%

 

 

100

%

Contribution margin

$

52,721

 

 

$

27,820

 

 

$

31,341

 

 

$

111,882

 

% of segment revenue

 

37

%

 

 

38

%

 

 

43

%

 

 

39

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 six months ended June 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

297,513

 

 

$

146,189

 

 

$

134,152

 

 

$

577,854

 

% of total revenue

 

52

%

 

 

25

%

 

 

23

%

 

 

100

%

Contribution margin

$

115,588

 

 

$

54,772

 

 

$

58,498

 

 

$

228,858

 

% of segment revenue

 

39

%

 

 

37

%

 

 

44

%

 

 

40

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2016: Gross trade receivables

$

101,167

 

 

$

61,201

 

 

$

49,380

 

 

$

211,748

 

% of total gross trade receivables

 

48

%

 

 

29

%

 

 

23

%

 

 

100

%

As of December 31, 2015: Gross trade receivables

$

97,742

 

 

$

78,726

 

 

$

66,443

 

 

$

242,911

 

% of total gross trade receivables

 

40

%

 

 

33

%

 

 

27

%

 

 

100

%

 

During the three months ended June 30, 2016, two channel partners, ScanSource Communications (“ScanSource”) and Westcon Group, Inc. (“Westcon”), accounted for 23% and 11% of the Company’s total revenues, respectively. During the three months ended June 30, 2015, one channel partner, ScanSource, accounted for 23% of the Company’s total revenues. During the six months ended June 30, 2016, two channel partners, ScanSource and Westcon, accounted for 23% and 12% of the Company’s total revenues, respectively. During the six months ended June 30, 2015, one channel partner, ScanSource, accounted for 19% of the Company’s total revenues. ScanSource accounted for 24% and 20%, respectively, of total gross trade receivables at June 30, 2016 and December 31, 2015.

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Segment contribution margin

$

111,882

 

 

$

128,727

 

 

$

228,858

 

 

$

268,468

 

Corporate and unallocated costs

 

(75,446

)

 

 

(91,158

)

 

 

(159,549

)

 

 

(189,500

)

Stock-based compensation expense

 

(21,606

)

 

 

(9,711

)

 

 

(33,087

)

 

 

(18,943

)

Effect of stock-based compensation expense on warranty

   rates expense

 

(235

)

 

 

(80

)

 

 

(341

)

 

 

(133

)

Amortization of purchased intangibles

 

(2,117

)

 

 

(2,517

)

 

 

(4,417

)

 

 

(5,591

)

Restructuring costs

 

(6,007

)

 

 

(343

)

 

 

(13,509

)

 

 

(367

)

Transaction-related costs

 

(7,887

)

 

 

 

 

 

(12,131

)

 

 

 

Interest and other income (expense), net

 

298

 

 

 

(178

)

 

 

(470

)

 

 

(1,640

)

(Loss) income before provision for income taxes

$

(1,118

)

 

$

24,740

 

 

$

5,354

 

 

$

52,294

 

 

 

The following table summarizes the Company’s revenues, which includes products and services, by product category (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UC group systems

$

171,411

 

 

$

195,169

 

 

$

350,315

 

 

$

399,820

 

UC personal devices

 

68,774

 

 

 

66,802

 

 

 

136,584

 

 

 

134,267

 

UC platform

 

47,594

 

 

 

54,604

 

 

 

90,955

 

 

 

113,188

 

Total

$

287,779

 

 

$

316,575

 

 

$

577,854

 

 

$

647,275

 

 

Income Taxes
Income Taxes

17. INCOME TAXES

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Provision for income taxes

$

8,879

 

 

$

5,093

 

 

$

12,016

 

 

$

11,449

 

Effective tax rate

 

(794.2

)%

 

 

20.6

%

 

 

224.4

%

 

 

21.9

%

 

The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions, and the effective tax rate reflects the applicable tax rates in effect in the various tax jurisdictions around the world where income is earned. During the three and six months ended June 30, 2016, the Company incurred losses in a jurisdiction where no tax benefit could be recorded. As a result, the forecasted losses from this jurisdiction were excluded from the determination of tax expense for the period. The tax impact of excluding the losses from the interim tax recorded was additional expense of $1.3 million and $3.1 million for the three and six months ended June 30, 2016, respectively. Additionally, the effective tax rate for the three and six months ended June 30, 2016 and 2015 differs from the U.S. federal statutory rate of 35% primarily due to impacts associated with proportional earnings from the Company’s operations in lower tax jurisdictions, recurring permanent adjustments, and discrete items recorded during the period presented. A significant portion of pretax (loss) income is generated and taxed outside the U.S. The impact on the tax provision due to lower statutory tax rates in foreign jurisdictions was additional expense of $0.3 million and a benefit of approximately $1.3 million for the three and six months ended June 30, 2016, respectively, and a benefit of $4.8 million and $10.1 million for the three and six months ended June 30, 2015, respectively.

The effective income tax rate can be impacted each period by discrete factors or events. For the three and six months ended June 30, 2016 and 2015, discrete benefits of $0.3 million and $0.7 million and $0.2 million and $0.7 million, respectively, were recorded for tax benefits realized on disqualifying dispositions of stock from the Company’s employee stock purchase plan. Additional discrete items recorded in the three months ended June 30, 2016 were $3.1 million in tax accrued related to accelerated non-deductible stock-based compensation expense related to the termination of the employee stock purchase plan and $1.6 million in aggregate to correct for out-of-period adjustment related to the transfer pricing charges for a foreign subsidiary for the years ended December 31, 2015 and 2014. The Company concluded that such amount is not material to any of its previously issued financial statements and therefore recorded the correction in the second quarter of 2016.

As of June 30, 2016, the amount of gross unrecognized tax benefits was $21.0 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, 2016 and December 31, 2015, the Company had approximately $1.7 million and $1.4 million, respectively, of accrued interest and penalties related to uncertain tax positions. The Company anticipates that, except for $1.3 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 is a U.S. based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions, and has entered into agreements with the local governments in certain foreign jurisdictions where it has significant operations to provide it with favorable tax rates in those jurisdictions if certain criteria are met. The tax benefit realized from favorable tax rates for the three months ended June 30, 2016 and 2015 were not material in the aggregate and did not have a material impact on earnings per share.

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, an addition to the valuation allowance could be recorded. 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.

On July 27, 2015, the United States Tax Court (the “Court”) issued a taxpayer-favorable opinion with respect to Altera Corporation (“Altera”)’s litigation with the Internal Revenue Service (“IRS”). The litigation relates to the treatment of share-based compensation expense in an inter-company cost-sharing arrangement with the taxpayer’s foreign subsidiary for fiscal years 2004 through 2007. In its opinion, the Court accepted Altera’s position of excluding share-based compensation in its cost sharing arrangement and concluded that the related IRS Regulations were invalid. On December 1, 2015, the Court issued its final decision with respect to Altera’s litigation with the IRS. Subsequent to the decision, the IRS filed its appeal with the United States Court of Appeals for the Ninth Circuit on June 27, 2016, and as such, no adjustment to the consolidated financial statement is recorded at this time. The Company is monitoring this case for any material impact to its consolidated financial statement and potential favorable implications to the Company’s cost-sharing arrangement.

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, 2016 (in thousands):

 

 

Americas

 

 

EMEA

 

 

APAC

 

 

Total

 

Balance at December 31, 2015

$

308,159

 

 

$

101,882

 

 

$

148,734

 

 

$

558,775

 

Foreign currency translation

 

 

 

 

 

 

 

(116

)

 

 

(116

)

Balance at June 30, 2016

$

308,159

 

 

$

101,882

 

 

$

148,618

 

 

$

558,659

 

 

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, 2016

 

 

December 31, 2015

 

 

Gross

Value

 

 

Accumulated

Amortization

& Impairment

 

 

Net Value

 

 

Gross

Value

 

 

Accumulated

Amortization

& Impairment

 

 

Net Value

 

Core and developed technology

$

81,178

 

 

$

(81,145

)

 

$

33

 

 

$

81,178

 

 

$

(80,945

)

 

$

233

 

Customer and partner relationships

 

79,525

 

 

 

(70,828

)

 

 

8,697

 

 

 

79,525

 

 

 

(66,742

)

 

 

12,783

 

Non-compete agreements

 

1,800

 

 

 

(1,800

)

 

 

 

 

 

1,800

 

 

 

(1,700

)

 

 

100

 

Trade name

 

3,400

 

 

 

(3,400

)

 

 

 

 

 

3,400

 

 

 

(3,369

)

 

 

31

 

Finite-lived intangible assets

 

165,903

 

 

 

(157,173

)

 

 

8,730

 

 

 

165,903

 

 

 

(152,756

)

 

 

13,147

 

Indefinite-lived trade name

 

918

 

 

 

 

 

 

918

 

 

 

918

 

 

 

 

 

 

918

 

Total acquired intangible assets

$

166,821

 

 

$

(157,173

)

 

$

9,648

 

 

$

166,821

 

 

$

(152,756

)

 

$

14,065

 

Capitalized software development costs for

   products to be sold

$

14,604

 

 

$

(7,142

)

 

$

7,462

 

 

$

12,993

 

 

$

(5,002

)

 

$

7,991

 

 

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Amortization of purchased intangibles in revenues

$

 

 

$

19

 

 

$

 

 

$

38

 

Amortization of purchased intangibles in cost of product

   revenues

 

100

 

 

 

100

 

 

 

200

 

 

 

757

 

Amortization of purchased intangibles in operating expenses

 

2,017

 

 

 

2,417

 

 

 

4,217

 

 

 

4,834

 

Total amortization of purchased intangibles

$

2,117

 

 

$

2,536

 

 

$

4,417

 

 

$

5,629

 

 

The estimated future amortization expense as of June 30, 2016 is as follows (in thousands):

 

Year ending December 31,

 

Amount

 

Remainder of 2016

 

$

4,061

 

2017

 

 

4,669

 

Total

 

$

8,730

 

 

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, 2016 (in thousands):

 

 

Severance/Other

 

 

Facilities

 

 

Other

 

 

Total

 

Balance at December 31, 2015

$

8,072

 

 

$

18,455

 

 

$

801

 

 

$

27,328

 

Additions to the reserve, net

 

9,072

 

 

 

3,958

 

 

 

 

 

 

13,030

 

Interest accretion

 

 

 

 

479

 

 

 

 

 

 

479

 

Non-cash adjustments

 

 

 

 

3

 

 

 

 

 

 

3

 

Cash payments

 

(12,027

)

 

 

(4,391

)

 

 

(801

)

 

 

(17,219

)

Balance at June 30, 2016

$

5,117

 

 

$

18,504

 

 

$

 

 

$

23,621

 

 

Balance Sheet Details (Tables)

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

 

 

June 30,

2016

 

 

December 31,

2015

 

Gross trade receivables

$

211,748

 

 

$

242,911

 

Returns and other reserves

 

(54,572

)

 

 

(52,000

)

Allowance for doubtful accounts

 

(2,964

)

 

 

(3,023

)

Total

$

154,212

 

 

$

187,888

 

 

Inventories consist of the following (in thousands):

 

 

June 30,

2016

 

 

December 31,

2015

 

Raw materials

$

671

 

 

$

824

 

Work in process

 

 

 

 

117

 

Finished goods

 

96,077

 

 

 

88,451

 

Total

$

96,748

 

 

$

89,392

 

 

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

 

 

June 30,

2016

 

 

December 31,

2015

 

Non-trade receivables

$

8,147

 

 

$

7,689

 

Prepaid expenses

 

33,200

 

 

 

33,174

 

Derivative assets

 

6,873

 

 

 

10,396

 

Other current assets

 

1,898

 

 

 

1,593

 

Total

$

50,118

 

 

$

52,852

 

 

 

Deferred revenue consists of the following (in thousands):

 

 

June 30,

2016

 

 

December 31,

2015

 

Short-term:

 

 

 

 

 

 

 

Service

$

170,545

 

 

$

165,594

 

License

 

3,574

 

 

 

4,965

 

Total

$

174,119

 

 

$

170,559

 

Long-term:

 

 

 

 

 

 

 

Service

$

78,398

 

 

$

82,598

 

License

 

4,874

 

 

 

3,593

 

Total

$

83,272

 

 

$

86,191

 

 

Changes in deferred service revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

Balance at beginning of period

$

248,192

 

 

$

257,280

 

Additions to deferred service revenue

 

180,307

 

 

 

167,332

 

Amortization of deferred service revenue

 

(179,556

)

 

 

(170,232

)

Balance at end of period

$

248,943

 

 

$

254,380

 

 

Changes in deferred license revenue during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

Balance at beginning of period

$

8,558

 

 

$

5,524

 

Additions to deferred license revenue

 

2,508

 

 

 

1,766

 

Amortization of deferred license revenue

 

(2,618

)

 

 

(1,238

)

Balance at end of period

$

8,448

 

 

$

6,052

 

 

The current portion of other accrued liabilities consists of the following (in thousands):

 

 

June 30,

2016

 

 

December 31,

2015

 

Accrued expenses

$

27,703

 

 

$

25,179

 

Accrued co-op expenses

 

1,979

 

 

 

2,670

 

Restructuring reserves

 

13,054

 

 

 

16,187

 

Warranty obligations

 

8,526

 

 

 

10,172

 

Derivative liabilities

 

6,722

 

 

 

6,031

 

Employee stock purchase plan withholdings

 

 

 

 

9,668

 

Other accrued liabilities

 

16,623

 

 

 

15,188

 

Total

$

74,607

 

 

$

85,095

 

 

Changes in warranty obligations during the six months ended June 30, 2016 and 2015 are as follows (in thousands):

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

Balance at beginning of period

$

10,172

 

 

$

11,613

 

Accruals for warranties issued during the period

 

4,797

 

 

 

6,811

 

Actual charges against warranty reserve during the period

 

(6,443

)

 

 

(7,277

)

Balance at end of period

$

8,526

 

 

$

11,147

 

 

Debt (Tables)

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Contractual interest expense

$

1,426

 

 

$

1,292

 

 

$

2,852

 

 

$

2,550

 

Amortization of debt issuance costs

 

134

 

 

 

133

 

 

 

267

 

 

 

266

 

Total

$

1,560

 

 

$

1,425

 

 

$

3,119

 

 

$

2,816

 

 

As of June 30, 2016, future principal payments for long-term debt, including the current portion, are summarized as follows (in thousands):

 

 

 

Amount

 

Remainder of 2016

 

$

3,126

 

2017

 

 

6,250

 

2018

 

 

223,437

 

Total

 

$

232,813

 

 

Investments (Tables)

The Company’s short-term and long-term investments in debt securities are summarized as follows (in thousands):

 

 

Cost Basis

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair Value

 

Balances at June 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

43,081

 

 

$

40

 

 

$

 

 

$

43,121

 

U.S. government agency securities

 

40,788

 

 

 

27

 

 

 

(1

)

 

 

40,814

 

Non-U.S. government securities

 

2,004

 

 

 

 

 

 

 

 

 

2,004

 

Corporate debt securities

 

40,285

 

 

 

16

 

 

 

(2

)

 

 

40,299

 

Total short-term investments

$

126,158

 

 

$

83

 

 

$

(3

)

 

$

126,238

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

4,256

 

 

$

12

 

 

$

 

 

$

4,268

 

U.S. government agency securities

 

3,003

 

 

 

1

 

 

 

 

 

 

3,004

 

Corporate debt securities

 

11,499

 

 

 

23

 

 

 

(6

)

 

 

11,516

 

Total long-term investments

$

18,758

 

 

$

36

 

 

$

(6

)

 

$

18,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

49,036

 

 

$

4

 

 

$

(45

)

 

$

48,995

 

U.S. government agency securities

 

67,723

 

 

 

1

 

 

 

(30

)

 

 

67,694

 

Non-U.S. government securities

 

7,303

 

 

 

 

 

 

(1

)

 

 

7,302

 

Corporate debt securities

 

60,290

 

 

 

1

 

 

 

(40

)

 

 

60,251

 

Total short-term investments

$

184,352

 

 

$

6

 

 

$

(116

)

 

$

184,242

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

8,058

 

 

$

 

 

$

(14

)

 

$

8,044

 

U.S. government agency securities

 

14,510

 

 

 

 

 

 

(48

)

 

 

14,462

 

Corporate debt securities

 

24,056

 

 

 

2

 

 

 

(80

)

 

 

23,978

 

Total long-term investments

$

46,624

 

 

$

2

 

 

$

(142

)

 

$

46,484

 

 

The following table summarizes the fair value and gross unrealized losses of investments that are in an unrealized loss position only. The unrealized losses are 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, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

$

4,221

 

 

$

(1

)

 

$

 

 

$

 

 

$

4,221

 

 

$

(1

)

Corporate debt securities

 

11,475

 

 

 

(8

)

 

 

 

 

 

 

 

 

11,475

 

 

 

(8

)

Total investments

$

15,696

 

 

$

(9

)

 

$

 

 

$

 

 

$

15,696

 

 

$

(9

)

December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

$

48,445

 

 

$

(59

)

 

$

 

 

$

 

 

$

48,445

 

 

$

(59

)

U.S. government agency securities

 

71,861

 

 

 

(78

)

 

 

 

 

 

 

 

 

71,861

 

 

 

(78

)

Non-U.S. government securities

 

5,001

 

 

 

(1

)

 

 

 

 

 

 

 

 

5,001

 

 

 

(1

)

Corporate debt securities

 

52,571

 

 

 

(120

)

 

 

 

 

 

 

 

 

52,571

 

 

 

(120

)

Total investments

$

177,878

 

 

$

(258

)

 

$

 

 

$

 

 

$

177,878

 

 

$

(258

)

 

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, 2016 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

 

$

47,894

 

 

$

47,894

 

 

$

 

U.S. government agency securities

 

 

29,980

 

 

 

 

 

 

29,980

 

Non U.S. government securities

 

 

1,000

 

 

 

 

 

 

1,000

 

Corporate debt securities

 

 

39,236

 

 

 

 

 

 

39,236

 

Short-term investments

 

 

126,238

 

 

 

 

 

 

126,238

 

Long-term investments

 

 

18,788

 

 

 

 

 

 

18,788

 

Total fixed income available-for-sale securities

 

$

263,136

 

 

$

47,894

 

 

$

215,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (a)

 

$

6,873

 

 

$

 

 

$

6,873

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (b)

 

$

6,722

 

 

$

 

 

$

6,722

 

 

 

 

 

 

 

 

Fair Value Measurements at

December 31, 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

 

$

10,313

 

 

$

10,313

 

 

$

 

Non-U.S. government securities

 

 

975

 

 

 

 

 

 

975

 

Corporate debt securities

 

 

19,799

 

 

 

 

 

 

19,799

 

Short-term investments

 

 

184,242

 

 

 

 

 

 

184,242

 

Long-term investments

 

 

46,484

 

 

 

 

 

 

46,484

 

Total fixed income available-for-sale securities

 

$

261,813

 

 

$

10,313

 

 

$

251,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (a)

 

$

10,396

 

 

$

 

 

$

10,396

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts (b)

 

$

6,031

 

 

$

 

 

$

6,031

 

 

(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,

2016

 

 

December 31,

2015

 

 

June 30,

2016

 

 

December 31,

2015

 

Derivative assets (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

2,380

 

 

$

2,283

 

 

$

4,493

 

 

$

8,113

 

Derivative liabilities (b):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

$

2,418

 

 

$

2,269

 

 

$

4,304

 

 

$

3,762

 

  

 

(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, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

6,873

 

 

$

 

 

$

6,873

 

 

$

(6,017

)

 

$

 

 

$

856

 

As of December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

10,396

 

 

$

 

 

$

10,396

 

 

$

(5,413

)

 

$

 

 

$

4,983

 

 

 

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, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

6,722

 

 

$

 

 

$

6,722

 

 

$

(6,017

)

 

$

 

 

$

705

 

As of December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

6,031

 

 

$

 

 

$

6,031

 

 

$

(5,413

)

 

$

 

 

$

618

 

 

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, 2016 (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

 

 

 

 

$

 

 

 

 

85,643

 

 

$

12,851

 

 

Buy

Euro

 

 

 

 

$

 

 

 

 

19,597

 

 

$

21,909

 

 

Buy

Euro

 

 

 

 

$

 

 

 

 

58,032

 

 

$

65,094

 

 

Sell

British Pound

 

 

 

 

$

 

 

 

 

16,782

 

 

$

24,405

 

 

Buy

British Pound

 

 

 

 

$

 

 

 

 

15,816

 

 

$

23,146

 

 

Sell

 

 

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 (Loss)

Recognized in OCI or OCL-

Effective Portion

 

 

Location of Gain (Loss) Reclassified from

OCI or OCL into Income-Effective Portion

 

Gain (Loss)

Reclassified from OCI or OCL

into Income-Effective

Portion

 

 

Location of Gain (Loss)

Recognized-Ineffective

Portion and Amount

Excluded from

Effectiveness Testing

 

Gain (Loss)

Recognized-Ineffective

Portion and Amount

Excluded from

Effectiveness

Testing (a)

 

 

 

Three Months Ended

 

 

 

 

Three Months Ended

 

 

 

 

Three Months Ended

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

Foreign

   exchange

   contracts

 

$

728

 

 

$

(1,723

)

 

Product revenues

 

$

308

 

 

$

3,629

 

 

Interest and other

   income (expense),

   net

 

$

744

 

 

$

357

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

(161

)

 

 

(531

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

(513

)

 

 

(1,007

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

(2

)

 

 

(268

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(69

)

 

 

(396

)

 

 

 

 

 

 

 

 

 

 

 

 

$

728

 

 

$

(1,723

)

 

 

 

$

(437

)

 

$

1,427

 

 

 

 

$

744

 

 

$

357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

Six Months Ended

 

 

 

 

Six Months Ended

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

   exchange

   contracts

 

$

(899

)

 

$

4,575

 

 

Product revenues

 

$

1,606

 

 

$

10,265

 

 

Interest and other

   income (expense),

   net

 

$

735

 

 

$

326

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

(458

)

 

 

(1,332

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

(1,346

)

 

 

(2,794

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

(49

)

 

 

(983

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

(249

)

 

 

(1,171

)

 

 

 

 

 

 

 

 

 

 

 

 

$

(899

)

 

$

4,575

 

 

 

 

$

(496

)

 

$

3,985

 

 

 

 

$

735

 

 

$

326

 

  

 

(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, 2016 (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

 

13,196

 

 

$

4,111

 

 

Buy

 

 

 

 

$

 

 

Brazilian Real

 

24,037

 

 

$

6,993

 

 

Sell

 

 

 

 

$

 

 

Chinese Yuan

 

 

 

$

 

 

 

 

45,457

 

 

$

7,098

 

 

Buy

Chinese Yuan

 

42,005

 

 

$

6,390

 

 

Sell

 

 

 

 

$

 

 

Euro

 

22,866

 

 

$

25,374

 

 

Buy

 

 

13,703

 

 

$

15,420

 

 

Buy

Euro

 

34,404

 

 

$

38,274

 

 

Sell

 

 

54,468

 

 

$

60,981

 

 

Sell

British Pound

 

5,368

 

 

$

7,218

 

 

Buy

 

 

14,718

 

 

$

22,741

 

 

Buy

British Pound

 

12,753

 

 

$

17,905

 

 

Sell

 

 

15,684

 

 

$

24,082

 

 

Sell

Israeli Shekel

 

29,300

 

 

$

7,609

 

 

Buy

 

 

 

 

$

 

 

Israeli Shekel

 

29,300

 

 

$

7,613

 

 

Sell

 

 

 

 

$

 

 

Japanese Yen

 

96,170

 

 

$

935

 

 

Buy

 

 

 

 

$

 

 

Japanese Yen

 

96,170

 

 

$

867

 

 

Sell

 

 

 

 

$

 

 

Mexican Peso

 

21,914

 

 

$

1,184

 

 

Buy

 

 

 

 

$

 

 

Mexican Peso

 

44,977

 

 

$

2,430

 

 

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,

2016

 

 

June 30,

2015

 

Foreign exchange contracts

 

Interest and other income (expense), net

 

$

1,325

 

 

$

(1,056

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

2016

 

 

June 30,

2015

 

Foreign exchange contracts

 

Interest and other income (expense), net

 

$

(822

)

 

$

3,617

 

 

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

The following table summarizes the changes in accumulated other comprehensive loss, 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, 2016

 

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, 2015

 

$

(59

)

 

$

(197

)

 

$

(947

)

 

$

(1,203

)

Other comprehensive loss before reclassifications

 

 

(899

)

 

 

292

 

 

 

(951

)

 

 

(1,558

)

Amounts reclassified from accumulated other

   comprehensive loss (a)

 

 

496

 

 

 

(8

)

 

 

 

 

 

488

 

Net current-period other comprehensive loss

 

 

(403

)

 

 

284

 

 

 

(951

)

 

 

(1,070

)

Balance as of June 30, 2016

 

$

(462

)

 

$

87

 

 

$

(1,898

)

 

$

(2,273

)

 

 

(a)

See Note 12 for details of gains and losses, net of taxes, reclassified out of accumulated other comprehensive loss into net (loss) income related to cash flow hedges and each line item of net (loss) 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, 2016, 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,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Cost of  product revenues

$

1,133

 

 

$

505

 

 

$

1,914

 

 

$

1,460

 

Cost of service revenues

 

2,373

 

 

 

877

 

 

 

3,484

 

 

 

2,185

 

Stock-based compensation expense included in cost

   of revenues

 

3,506

 

 

 

1,382

 

 

 

5,398

 

 

 

3,645

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

7,550

 

 

 

2,698

 

 

 

11,293

 

 

 

5,311

 

Research and development

 

4,912

 

 

 

1,915

 

 

 

6,941

 

 

 

4,488

 

General and administrative

 

5,638

 

 

 

3,716

 

 

 

9,455

 

 

 

5,499

 

Stock-based compensation expense included in

   operating expenses

 

18,100

 

 

 

8,329

 

 

 

27,689

 

 

 

15,298

 

Total stock-based compensation expense

 

21,606

 

 

 

9,711

 

 

 

33,087

 

 

 

18,943

 

Tax benefit

 

3,109

 

 

 

1,697

 

 

 

5,354

 

 

 

3,226

 

Total stock-based compensation expense, net of tax

$

18,497

 

 

$

8,014

 

 

$

27,733

 

 

$

15,717

 

 

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,

2016

 

 

June 30,

2015

 

Expected volatility

31.85-34.97%

 

 

30.04-30.73%

 

Risk-free interest rate

0.47-0.81%

 

 

0.07-0.49%

 

Expected dividends

 

0.0%

 

 

 

0.0%

 

Expected life (years)

0.5-2.0

 

 

0.5-2.0

 

 

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

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

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(9,997

)

 

$

19,647

 

 

$

(6,662

)

 

$

40,845

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

135,700

 

 

 

134,057

 

 

 

134,934

 

 

 

134,417

 

Effect of dilutive potential common shares

 

 

 

 

3,290

 

 

 

 

 

 

3,873

 

Weighted average shares outstanding, diluted

 

135,700

 

 

 

137,347

 

 

 

134,934

 

 

 

138,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net (loss) income per share

$

(0.07

)

 

$

0.15

 

 

$

(0.05

)

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net (loss) income per share

$

(0.07

)

 

$

0.14

 

 

$

(0.05

)

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antidilutive employee stock-based awards, excluded

 

2,757

 

 

 

637

 

 

 

3,337

 

 

 

483

 

 

Business Segment Information (Tables)

Financial information for each reportable geographical segment as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015, 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, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

142,019

 

 

$

72,660

 

 

$

73,100

 

 

$

287,779

 

% of total revenue

 

49

%

 

 

25

%

 

 

26

%

 

 

100

%

Contribution margin

$

52,721

 

 

$

27,820

 

 

$

31,341

 

 

$

111,882

 

% of segment revenue

 

37

%

 

 

38

%

 

 

43

%

 

 

39

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 six months ended June 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

297,513

 

 

$

146,189

 

 

$

134,152

 

 

$

577,854

 

% of total revenue

 

52

%

 

 

25

%

 

 

23

%

 

 

100

%

Contribution margin

$

115,588

 

 

$

54,772

 

 

$

58,498

 

 

$

228,858

 

% of segment revenue

 

39

%

 

 

37

%

 

 

44

%

 

 

40

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2016: Gross trade receivables

$

101,167

 

 

$

61,201

 

 

$

49,380

 

 

$

211,748

 

% of total gross trade receivables

 

48

%

 

 

29

%

 

 

23

%

 

 

100

%

As of December 31, 2015: Gross trade receivables

$

97,742

 

 

$

78,726

 

 

$

66,443

 

 

$

242,911

 

% of total gross trade receivables

 

40

%

 

 

33

%

 

 

27

%

 

 

100

%

 

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Segment contribution margin

$

111,882

 

 

$

128,727

 

 

$

228,858

 

 

$

268,468

 

Corporate and unallocated costs

 

(75,446

)

 

 

(91,158

)

 

 

(159,549

)

 

 

(189,500

)

Stock-based compensation expense

 

(21,606

)

 

 

(9,711

)

 

 

(33,087

)

 

 

(18,943

)

Effect of stock-based compensation expense on warranty

   rates expense

 

(235

)

 

 

(80

)

 

 

(341

)

 

 

(133

)

Amortization of purchased intangibles

 

(2,117

)

 

 

(2,517

)

 

 

(4,417

)

 

 

(5,591

)

Restructuring costs

 

(6,007

)

 

 

(343

)

 

 

(13,509

)

 

 

(367

)

Transaction-related costs

 

(7,887

)

 

 

 

 

 

(12,131

)

 

 

 

Interest and other income (expense), net

 

298

 

 

 

(178

)

 

 

(470

)

 

 

(1,640

)

(Loss) income before provision for income taxes

$

(1,118

)

 

$

24,740

 

 

$

5,354

 

 

$

52,294

 

 

The following table summarizes the Company’s revenues, which includes products and services, by product category (in thousands):

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UC group systems

$

171,411

 

 

$

195,169

 

 

$

350,315

 

 

$

399,820

 

UC personal devices

 

68,774

 

 

 

66,802

 

 

 

136,584

 

 

 

134,267

 

UC platform

 

47,594

 

 

 

54,604

 

 

 

90,955

 

 

 

113,188

 

Total

$

287,779

 

 

$

316,575

 

 

$

577,854

 

 

$

647,275

 

 

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

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

2016

 

 

June 30,

2015

 

 

June 30,

2016

 

 

June 30,

2015

 

Provision for income taxes

$

8,879

 

 

$

5,093

 

 

$

12,016

 

 

$

11,449

 

Effective tax rate

 

(794.2

)%

 

 

20.6

%

 

 

224.4

%

 

 

21.9

%

 

Basis of Presentation - Additional Information (Details) (USD $)
In Millions, except Share data, unless otherwise specified
Apr. 15, 2016
Mitel
Jul. 8, 2016
Subsequent Event
Mitel
Jul. 8, 2016
Subsequent Event
NewCo
Basis Of Presentation [Line Items]
 
 
 
Business acquisition share price
$ 3.12 
 
$ 12.50 
Number of Mitel shares to be acquired per share
1.31 
 
 
Termination fee
 
$ 60 
 
Termination fee to be paid upon termination of definitive agreement
 
 
60.0 
Repayment of reimbursement upon termination of definitive agreement
 
 
$ 60.0 
Discontinued Operations - Additional Information (Details) (USD $)
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
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 
Mobile Devices Holdings LLC |
Maximum
 
 
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
 
 
Additional cash consideration payable over this fiscal year subject to certain conditions, including meeting certain agreed-upon EBITDA-based milestones
$ 12,500,000 
 
Accounts Receivable Financing - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Accounts Notes And Loans Receivable [Line Items]
 
 
 
 
 
Amount of total outstanding accounts receivable under a financing arrangement
$ 53.1 
$ 53.0 
$ 104.9 
$ 117.6 
 
Amount due from the financing company
31.4 
 
31.4 
 
32.7 
Fees incurred pursuant to the factoring agreement
1.0 
0.8 
1.8 
1.7 
 
Transfer of Financial Assets Under Financing Arrangement
 
 
 
 
 
Accounts Notes And Loans Receivable [Line Items]
 
 
 
 
 
Amount of total outstanding accounts receivable under a financing arrangement
29.4 
33.7 
59.5 
72.9 
 
Amount due from the financing company
$ 16.4 
 
$ 16.4 
 
$ 22.1 
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, 2016
Jun. 30, 2016
Americas
Dec. 31, 2015
Americas
Jun. 30, 2016
EMEA
Dec. 31, 2015
EMEA
Jun. 30, 2016
APAC
Goodwill [Line Items]
 
 
 
 
 
 
Beginning Balance
$ 558,775 
$ 308,159 
$ 308,159 
$ 101,882 
$ 101,882 
$ 148,734 
Foreign currency translation
(116)
 
 
 
 
(116)
Ending Balance
$ 558,659 
$ 308,159 
$ 308,159 
$ 101,882 
$ 101,882 
$ 148,618 
Goodwill, Purchased Intangibles, and Software Development Costs - Schedule of Purchased Intangible Assets by Major Class (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Acquired And Internally Developed Finite Lived Intangible Assets [Line Items]
 
 
Finite Lived Intangible Assets, Gross Value
$ 165,903 
$ 165,903 
Finite Lived Intangible Assets, Accumulated Amortization and Impairment
(157,173)
(152,756)
Finite Lived Intangible Assets, Net Value
8,730 
13,147 
Indefinite-lived trade name
918 
918 
Total intangible assets, Gross Value
166,821 
166,821 
Total intangible assets, Accumulated Amortization and Impairment
(157,173)
(152,756)
Total intangible assets, Net Value
9,648 
14,065 
Capitalized software development costs for products to be sold, Gross Value
14,604 
12,993 
Capitalized software development costs for products to be sold, Accumulated Amortization & Impairment
(7,142)
(5,002)
Capitalized software development costs for products to be sold, Net Value
7,462 
7,991 
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
(81,145)
(80,945)
Finite Lived Intangible Assets, Net Value
33 
233 
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
(70,828)
(66,742)
Finite Lived Intangible Assets, Net Value
8,697 
12,783 
Non-compete agreements
 
 
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
(1,800)
(1,700)
Finite Lived Intangible Assets, Net Value
 
100 
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
(3,400)
(3,369)
Finite Lived Intangible Assets, Net Value
 
$ 31 
Goodwill, Purchased Intangibles, and Software Development Costs - Additional Information (Details) (USD $)
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Indefinite Lived Intangible Assets And Internally Developed Software [Line Items]
 
 
 
Indefinite-lived trade name
$ 918,000 
 
$ 918,000 
Capitalized software development costs
$ 1,600,000 
$ 2,500,000 
 
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, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
 
 
Amortization of purchased intangibles in revenues
 
$ 19 
 
$ 38 
Amortization of purchased intangibles in cost of product revenues
100 
100 
200 
757 
Amortization of purchased intangibles in operating expenses
2,017 
2,417 
4,217 
4,834 
Total amortization of purchased intangibles
$ 2,117 
$ 2,536 
$ 4,417 
$ 5,629 
Goodwill, Purchased Intangibles, and Software Development Costs - Estimated Future Amortization Expense of Purchased Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
Remainder of 2016
$ 4,061 
 
2017
4,669 
 
Finite Lived Intangible Assets, Net Value
$ 8,730 
$ 13,147 
Restructuring Costs - Additional Information (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Restructuring Cost And Reserve [Line Items]
 
 
 
 
Restructuring costs
$ 6,007,000 
$ 343,000 
$ 13,509,000 
$ 367,000 
Global workforce elimination percentage under restructuring plan
 
 
11.00% 
 
Restructuring and related activities, expected completion period
 
 
Dec. 31, 2016 
 
Restructuring and related cost, expected cost remaining
1,000,000 
 
1,000,000 
 
December 2015 Restructuring
 
 
 
 
Restructuring Cost And Reserve [Line Items]
 
 
 
 
Accumulated Restructuring Costs
 
 
$ 24,000,000 
 
Restructuring Costs - Summary of Activity of Restructuring Reserves (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Restructuring Cost And Reserve [Line Items]
 
Beginning balance
$ 27,328 
Additions to the reserve, net
13,030 
Interest accretion
479 
Non-cash adjustments
Cash payments
(17,219)
Ending balance
23,621 
Severance / Other
 
Restructuring Cost And Reserve [Line Items]
 
Beginning balance
8,072 
Additions to the reserve, net
9,072 
Cash payments
(12,027)
Ending balance
5,117 
Facilities
 
Restructuring Cost And Reserve [Line Items]
 
Beginning balance
18,455 
Additions to the reserve, net
3,958 
Interest accretion
479 
Non-cash adjustments
Cash payments
(4,391)
Ending balance
18,504 
Other
 
Restructuring Cost And Reserve [Line Items]
 
Beginning balance
801 
Cash payments
$ (801)
Balance Sheet Details - Schedule of Trade Receivables (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Receivables [Abstract]
 
 
Gross trade receivables
$ 211,748 
$ 242,911 
Returns and other reserves
(54,572)
(52,000)
Allowance for doubtful accounts
(2,964)
(3,023)
Total
$ 154,212 
$ 187,888 
Balance Sheet Details - Schedule of Inventories (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 671 
$ 824 
Work in process
 
117 
Finished goods
96,077 
88,451 
Total
$ 96,748 
$ 89,392 
Balance Sheet Details - Prepaid Expenses and Other Current Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]
 
 
Non-trade receivables
$ 8,147 
$ 7,689 
Prepaid expenses
33,200 
33,174 
Derivative assets
6,873 
10,396 
Other current assets
1,898 
1,593 
Total
$ 50,118 
$ 52,852 
Balance Sheet Details - Schedule of Deferred Revenue (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Deferred Revenue Arrangement [Line Items]
 
 
Short-term deferred revenue
$ 174,119 
$ 170,559 
Long-term deferred revenue
83,272 
86,191 
Software Service, Support and Maintenance Arrangement
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Short-term deferred revenue
170,545 
165,594 
Long-term deferred revenue
78,398 
82,598 
Software License Arrangement
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Short-term deferred revenue
3,574 
4,965 
Long-term deferred revenue
$ 4,874 
$ 3,593 
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, 2016
Jun. 30, 2015
Software Service, Support and Maintenance Arrangement
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Balance at beginning of period
$ 248,192 
$ 257,280 
Additions to deferred service revenue
180,307 
167,332 
Amortization of deferred service revenue
(179,556)
(170,232)
Balance at end of period
$ 248,943 
$ 254,380 
Balance Sheet Details - Changes in Deferred License Revenue (Details) (Deferred License Revenue, USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Deferred License Revenue
 
 
Deferred Revenue Arrangement [Line Items]
 
 
Balance at beginning of period
$ 8,558 
$ 5,524 
Additions to deferred license revenue
2,508 
1,766 
Amortization of deferred license revenue
(2,618)
(1,238)
Balance at end of period
$ 8,448 
$ 6,052 
Balance Sheet Details - Schedule of Current Portion of Other Current Accrued Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2015
Dec. 31, 2014
Payables And Accruals [Abstract]
 
 
 
 
Accrued expenses
$ 27,703 
$ 25,179 
 
 
Accrued co-op expenses
1,979 
2,670 
 
 
Restructuring reserves
13,054 
16,187 
 
 
Warranty obligations
8,526 
10,172 
11,147 
11,613 
Derivative liabilities
6,722 
6,031 
 
 
Employee stock purchase plan withholdings
 
9,668 
 
 
Other accrued liabilities
16,623 
15,188 
 
 
Total
$ 74,607 
$ 85,095 
 
 
Balance Sheet Details - Changes in Warranty Obligations (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Standard Product Warranty Disclosure [Abstract]
 
 
Balance at beginning of period
$ 10,172 
$ 11,613 
Accruals for warranties issued during the period
4,797 
6,811 
Actual charges against warranty reserve during the period
(6,443)
(7,277)
Balance at end of period
$ 8,526 
$ 11,147 
Commitments and Contingencies - Additional Information (Details) (USD $)
1 Months Ended
Mar. 31, 2015
Commitment And Contingencies [Line Items]
 
Litigation settlement
$ 750,000 
Mr. Miller
 
Commitment And Contingencies [Line Items]
 
Settlement agreement amount
450,000 
Proceeds from litigation settlement
$ 200,000 
Debt - Additional Information (Details) (USD $)
0 Months Ended 6 Months Ended
Sep. 13, 2013
Jun. 30, 2016
Dec. 31, 2015
Debt Instrument [Line Items]
 
 
 
Term loan
$ 250,000,000 
 
 
Maturity date of term loan
Sep. 13, 2018 
 
 
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 as set forth in the Credit Agreement 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 
 
Debt instrument, covenant compliance
 
The Company was in compliance with these covenants as of June 30, 2016. 
 
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
 
2.46% 
 
Accrued interest on Term loan
 
600,000 
 
Term loan, current
 
5,717,000 
5,717,000 
Term loan, non-current
 
225,940,000 
228,799,000 
Term Loan - Current Portion
 
 
 
Debt Instrument [Line Items]
 
 
 
Unamortized debt issuance costs
 
$ 1,200,000 
 
Base Rate |
Minimum |
Term Loan
 
 
 
Debt Instrument [Line Items]
 
 
 
Term loan interest rate, applicable margin
0.50% 
 
 
Base Rate |
Maximum |
Term Loan
 
 
 
Debt Instrument [Line Items]
 
 
 
Term loan interest rate, applicable margin
1.00% 
 
 
LIBOR rate plus |
Minimum |
Term Loan
 
 
 
Debt Instrument [Line Items]
 
 
 
Term loan interest rate, applicable margin
1.50% 
 
 
LIBOR rate plus |
Maximum |
Term Loan
 
 
 
Debt Instrument [Line Items]
 
 
 
Term loan interest rate, applicable margin
2.00% 
 
 
Debt - Interest Expense Recognized on the Term Loan (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Debt Disclosure [Abstract]
 
 
 
 
Contractual interest expense
$ 1,426 
$ 1,292 
$ 2,852 
$ 2,550 
Amortization of debt issuance costs
134 
133 
267 
266 
Total
$ 1,560 
$ 1,425 
$ 3,119 
$ 2,816 
Debt - Future Principal Payments for Long-term Debt Including Current Portion (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Long Term Debt By Maturity [Abstract]
 
Remainder of 2016
$ 3,126 
2017
6,250 
2018
223,437 
Total
$ 232,813 
Investments - Additional Information (Details) (USD $)
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Dec. 31, 2014
Investments Debt And Equity Securities [Abstract]
 
 
 
 
Cash and cash equivalents
$ 576,516,000 
$ 412,573,000 
$ 435,093,000 
$ 443,132,000 
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, 2016
Dec. 31, 2015
Short-term Investments
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Cost Basis
$ 126,158 
$ 184,352 
Unrealized Gains
83 
Unrealized Losses
(3)
(116)
Fair Value
126,238 
184,242 
Short-term Investments |
U.S. Government Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Cost Basis
43,081 
49,036 
Unrealized Gains
40 
Unrealized Losses
 
(45)
Fair Value
43,121 
48,995 
Short-term Investments |
U.S. Government Agency Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Cost Basis
40,788 
67,723 
Unrealized Gains
27 
Unrealized Losses
(1)
(30)
Fair Value
40,814 
67,694 
Short-term Investments |
Non-U.S. Government Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Cost Basis
2,004 
7,303 
Unrealized Losses
 
(1)
Fair Value
2,004 
7,302 
Short-term Investments |
Corporate Debt Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Cost Basis
40,285 
60,290 
Unrealized Gains
16 
Unrealized Losses
(2)
(40)
Fair Value
40,299 
60,251 
Long-term investments
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Cost Basis
18,758 
46,624 
Unrealized Gains
36 
Unrealized Losses
(6)
(142)
Fair Value
18,788 
46,484 
Long-term investments |
U.S. Government Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Cost Basis
4,256 
8,058 
Unrealized Gains
12 
 
Unrealized Losses
 
(14)
Fair Value
4,268 
8,044 
Long-term investments |
U.S. Government Agency Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Cost Basis
3,003 
14,510 
Unrealized Gains
 
Unrealized Losses
 
(48)
Fair Value
3,004 
14,462 
Long-term investments |
Corporate Debt Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Cost Basis
11,499 
24,056 
Unrealized Gains
23 
Unrealized Losses
(6)
(80)
Fair Value
$ 11,516 
$ 23,978 
Investments - Schedule of Investment in Unrealized Loss Position (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Schedule of Available for Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
$ 15,696 
$ 177,878 
Gross Unrealized Losses, Less than 12 Months
(9)
(258)
Total Fair Value
15,696 
177,878 
Total Gross Unrealized Losses
(9)
(258)
U.S. Government Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
 
48,445 
Gross Unrealized Losses, Less than 12 Months
 
(59)
Total Fair Value
 
48,445 
Total Gross Unrealized Losses
 
(59)
U.S. Government Agency Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
4,221 
71,861 
Gross Unrealized Losses, Less than 12 Months
(1)
(78)
Total Fair Value
4,221 
71,861 
Total Gross Unrealized Losses
(1)
(78)
Non-U.S. Government Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
 
5,001 
Gross Unrealized Losses, Less than 12 Months
 
(1)
Total Fair Value
 
5,001 
Total Gross Unrealized Losses
 
(1)
Corporate Debt Securities
 
 
Schedule of Available for Sale Securities [Line Items]
 
 
Fair Value, Less than 12 Months
11,475 
52,571 
Gross Unrealized Losses, Less than 12 Months
(8)
(120)
Total Fair Value
11,475 
52,571 
Total Gross Unrealized Losses
$ (8)
$ (120)
Fair Value Measurements - Schedule of Fair Value of Marketable Securities and Foreign Currency Contracts (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities, short-term
$ 126,238 
$ 184,242 
Fixed income available-for-sale securities, long-term
18,788 
46,484 
Total fixed income available-for-sale securities
263,136 
261,813 
Foreign currency forward contracts, Assets
6,873 1
10,396 1
Foreign currency forward contracts, Liabilities
6,722 2
6,031 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, short-term
29,980 
 
Non-U.S. Government Securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities, short-term
1,000 
975 
Corporate Debt Securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities, short-term
39,236 
19,799 
Money market funds
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities, short-term
47,894 
10,313 
Quoted Prices in Active Markets for Identical Assets, Level 1
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fixed income available-for-sale securities
47,894 
10,313 
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, short-term
47,894 
10,313 
Significant Other Observable Inputs, Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Total fixed income available-for-sale securities
215,242 
251,500 
Foreign currency forward contracts, Assets
6,873 1
10,396 1
Foreign currency forward contracts, Liabilities
6,722 2
6,031 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, short-term
29,980 
 
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, short-term
1,000 
975 
Significant Other Observable Inputs, Level 2 |
Corporate Debt Securities
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities, short-term
39,236 
19,799 
Short-term Investments
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities, short-term
126,238 
184,242 
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, short-term
126,238 
184,242 
Long-term investments
 
 
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
 
 
Fixed income available-for-sale securities, long-term
18,788 
46,484 
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, long-term
$ 18,788 
$ 46,484 
Fair Value Measurements - Additional Information (Details) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2015
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
229,300,000 
226,500,000 
 
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, 2016
Brazilian Real
Original Maturities of 360 Days or Less
Buy
USD ($)
Jun. 30, 2016
Brazilian Real
Original Maturities of 360 Days or Less
Buy
BRL
Jun. 30, 2016
Brazilian Real
Original Maturities of 360 Days or Less
Sell
USD ($)
Jun. 30, 2016
Brazilian Real
Original Maturities of 360 Days or Less
Sell
BRL
Jun. 30, 2016
Chinese Yuan
Original Maturities of 360 Days or Less
Sell
USD ($)
Jun. 30, 2016
Chinese Yuan
Original Maturities of 360 Days or Less
Sell
CNY
Jun. 30, 2016
Chinese Yuan
Original Maturities of Greater than 360 Days
Buy
USD ($)
Jun. 30, 2016
Chinese Yuan
Original Maturities of Greater than 360 Days
Buy
CNY
Jun. 30, 2016
Euro Member Countries, Euro
Original Maturities of 360 Days or Less
Buy
USD ($)
Jun. 30, 2016
Euro Member Countries, Euro
Original Maturities of 360 Days or Less
Buy
EUR (€)
Jun. 30, 2016
Euro Member Countries, Euro
Original Maturities of 360 Days or Less
Sell
USD ($)
Jun. 30, 2016
Euro Member Countries, Euro
Original Maturities of 360 Days or Less
Sell
EUR (€)
Jun. 30, 2016
Euro Member Countries, Euro
Original Maturities of Greater than 360 Days
Buy
USD ($)
Jun. 30, 2016
Euro Member Countries, Euro
Original Maturities of Greater than 360 Days
Buy
EUR (€)
Jun. 30, 2016
Euro Member Countries, Euro
Original Maturities of Greater than 360 Days
Sell
USD ($)
Jun. 30, 2016
Euro Member Countries, Euro
Original Maturities of Greater than 360 Days
Sell
EUR (€)
Jun. 30, 2016
British Pound
Original Maturities of 360 Days or Less
Buy
USD ($)
Jun. 30, 2016
British Pound
Original Maturities of 360 Days or Less
Buy
GBP (£)
Jun. 30, 2016
British Pound
Original Maturities of 360 Days or Less
Sell
USD ($)
Jun. 30, 2016
British Pound
Original Maturities of 360 Days or Less
Sell
GBP (£)
Jun. 30, 2016
British Pound
Original Maturities of Greater than 360 Days
Buy
USD ($)
Jun. 30, 2016
British Pound
Original Maturities of Greater than 360 Days
Buy
GBP (£)
Jun. 30, 2016
British Pound
Original Maturities of Greater than 360 Days
Sell
USD ($)
Jun. 30, 2016
British Pound
Original Maturities of Greater than 360 Days
Sell
GBP (£)
Jun. 30, 2016
Israeli Shekel
Original Maturities of 360 Days or Less
Buy
USD ($)
Jun. 30, 2016
Israeli Shekel
Original Maturities of 360 Days or Less
Buy
ILS
Jun. 30, 2016
Israeli Shekel
Original Maturities of 360 Days or Less
Sell
USD ($)
Jun. 30, 2016
Israeli Shekel
Original Maturities of 360 Days or Less
Sell
ILS
Jun. 30, 2016
Japanese Yen
Original Maturities of 360 Days or Less
Buy
USD ($)
Jun. 30, 2016
Japanese Yen
Original Maturities of 360 Days or Less
Buy
JPY (¥)
Jun. 30, 2016
Japanese Yen
Original Maturities of 360 Days or Less
Sell
USD ($)
Jun. 30, 2016
Japanese Yen
Original Maturities of 360 Days or Less
Sell
JPY (¥)
Jun. 30, 2016
Mexican Peso
Original Maturities of 360 Days or Less
Buy
USD ($)
Jun. 30, 2016
Mexican Peso
Original Maturities of 360 Days or Less
Buy
MXN ($)
Jun. 30, 2016
Mexican Peso
Original Maturities of 360 Days or Less
Sell
USD ($)
Jun. 30, 2016
Mexican Peso
Original Maturities of 360 Days or Less
Sell
MXN ($)
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount of foreign currency
$ 4,111 
 13,196 
$ 6,993 
 24,037 
$ 6,390 
 42,005 
$ 7,098 
 45,457 
$ 25,374 
€ 22,866 
$ 38,274 
€ 34,404 
$ 15,420 
€ 13,703 
$ 60,981 
€ 54,468 
$ 7,218 
£ 5,368 
$ 17,905 
£ 12,753 
$ 22,741 
£ 14,718 
$ 24,082 
£ 15,684 
$ 7,609 
 29,300 
$ 7,613 
 29,300 
$ 935 
¥ 96,170 
$ 867 
¥ 96,170 
$ 1,184 
$ 21,914 
$ 2,430 
$ 44,977 
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, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Interest and other income (expense), net
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Amount of Gain or (Loss) Recognized in Income on Derivative
$ 1,325 
$ (1,056)
$ (822)
$ 3,617 
Foreign Currency Derivatives - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Derivative Instruments And Hedging Activities Disclosure [Abstract]
 
 
 
 
Maximum duration of foreign exchange forward contracts designated as cash flow hedges
 
 
13 months 
 
Unrealized Gain (Loss) in income due to ineffectiveness
$ 0 
$ 0 
$ 0 
$ 0 
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, 2016
Buy
Chinese Yuan
USD ($)
Jun. 30, 2016
Buy
Chinese Yuan
CNY
Jun. 30, 2016
Buy
Euro Member Countries, Euro
USD ($)
Jun. 30, 2016
Buy
Euro Member Countries, Euro
EUR (€)
Jun. 30, 2016
Buy
British Pound
USD ($)
Jun. 30, 2016
Buy
British Pound
GBP (£)
Jun. 30, 2016
Sell
Euro Member Countries, Euro
USD ($)
Jun. 30, 2016
Sell
Euro Member Countries, Euro
EUR (€)
Jun. 30, 2016
Sell
British Pound
USD ($)
Jun. 30, 2016
Sell
British Pound
GBP (£)
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
Notional amount of foreign currency
$ 12,851 
 85,643 
$ 21,909 
€ 19,597 
$ 24,405 
£ 16,782 
$ 65,094 
€ 58,032 
$ 23,146 
£ 15,816 
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, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Foreign exchange contracts, Gain (loss) recognized in OCI or OCL-effective portion, total
$ 728 
$ (1,723)
$ (899)
$ 4,575 
Gain (loss) reclassified from OCI or OCL into income- effective portion, total
(437)
1,427 
(496)
3,985 
Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing
744 1
357 1
735 1
326 1
Product revenues
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain (loss) reclassified from OCI or OCL into income- effective portion, total
308 
3,629 
1,606 
10,265 
Cost of revenues
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain (loss) reclassified from OCI or OCL into income- effective portion, total
(161)
(531)
(458)
(1,332)
Sales and marketing
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain (loss) reclassified from OCI or OCL into income- effective portion, total
(513)
(1,007)
(1,346)
(2,794)
Research and development
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain (loss) reclassified from OCI or OCL into income- effective portion, total
(2)
(268)
(49)
(983)
General and administrative
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain (loss) reclassified from OCI or OCL into income- effective portion, total
(69)
(396)
(249)
(1,171)
Interest and other income (expense), net
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Gain (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing
744 1
357 1
735 1
326 1
Foreign exchange contract
 
 
 
 
Derivative Instruments Gain Loss [Line Items]
 
 
 
 
Foreign exchange contracts, Gain (loss) recognized in OCI or OCL-effective portion, total
$ 728 
$ (1,723)
$ (899)
$ 4,575 
Foreign Currency Derivatives - Effect of Derivative Instruments Designated as Cash Flow Hedges in Condensed Consolidated Statements of Operations (Parenthetical) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
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, 2016
Dec. 31, 2015
Derivatives Fair Value [Line Items]
 
 
Derivative assets
$ 6,873 
$ 10,396 
Derivative liabilities
6,722 
6,031 
Designated as Hedge Instruments
 
 
Derivatives Fair Value [Line Items]
 
 
Derivative assets
2,380 1
2,283 1
Derivative liabilities
2,418 2
2,269 2
Not Designated as Hedging Instrument
 
 
Derivatives Fair Value [Line Items]
 
 
Derivative assets
4,493 1
8,113 1
Derivative liabilities
$ 4,304 2
$ 3,762 2
Foreign Currency Derivatives - Offsetting of Derivative Assets (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Offsetting Assets [Line Items]
 
 
Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets
$ 6,873 
$ 10,396 
Foreign exchange contract
 
 
Offsetting Assets [Line Items]
 
 
Gross Amounts of Recognized Assets
6,873 
10,396 
Net Amounts of Assets Presented in the Condensed Consolidated Balance Sheets
6,873 
10,396 
Gross Amounts of Assets Not Offset in the Condensed Consolidated Balance Sheets, Financial Instruments
(6,017)
(5,413)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets, Net Amount
$ 856 
$ 4,983 
Foreign Currency Derivatives - Offsetting of Derivative Liabilities (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Offsetting Liabilities [Line Items]
 
 
Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets
$ 6,722 
$ 6,031 
Foreign exchange contract
 
 
Offsetting Liabilities [Line Items]
 
 
Gross Amounts of Recognized Liabilities
6,722 
6,031 
Net Amounts of Liabilities Presented in the Condensed Consolidated Balance Sheets
6,722 
6,031 
Gross Amounts of Liabilities Not Offset in the Condensed Consolidated Balance Sheets, Financial Instruments
(6,017)
(5,413)
Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets, Net Amount
$ 705 
$ 618 
Stockholders' Equity - Share Repurchase Programs - Additional Information (Details) (USD $)
3 Months Ended 6 Months Ended
Jul. 31, 2014
Jun. 30, 2016
2014 Stock Repurchase Program
Jun. 30, 2015
2014 Stock Repurchase Program
Jun. 30, 2016
2014 Stock Repurchase Program
Jun. 30, 2015
2014 Stock Repurchase Program
Share Repurchases Program [Line Items]
 
 
 
 
 
Purchase of common stock, shares
 
1,900,000 
4,800,000 
Purchase of common stock, value
 
 
$ 25,000,000 
 
$ 65,000,000 
Shares repurchase authorized amount
200,000,000 
 
 
 
 
Share repurchase plan, remaining authorized amount
 
$ 60,100,000 
 
$ 60,100,000 
 
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, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Accumulated Other Comprehensive Income Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Beginning balance
 
 
$ (1,203)
 
Other comprehensive loss before reclassifications
 
 
(1,558)
 
Amounts reclassified from accumulated other comprehensive loss
 
 
488 1
 
Other comprehensive (loss) income
(799)
(3,170)
(1,070)
839 
Accumulated Other Comprehensive Income (loss) , Ending balance
(2,273)
 
(2,273)
 
Unrealized Gains and Losses on Cash Flow Hedges
 
 
 
 
Accumulated Other Comprehensive Income Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Beginning balance
 
 
(59)
 
Other comprehensive loss before reclassifications
 
 
(899)
 
Amounts reclassified from accumulated other comprehensive loss
 
 
496 1
 
Other comprehensive (loss) income
 
 
(403)
 
Accumulated Other Comprehensive Income (loss) , Ending balance
(462)
 
(462)
 
Unrealized Gains and Losses on Available-for-Sale Securities
 
 
 
 
Accumulated Other Comprehensive Income Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Beginning balance
 
 
(197)
 
Other comprehensive loss before reclassifications
 
 
292 
 
Amounts reclassified from accumulated other comprehensive loss
 
 
(8)1
 
Other comprehensive (loss) income
 
 
284 
 
Accumulated Other Comprehensive Income (loss) , Ending balance
87 
 
87 
 
Foreign Currency Translation
 
 
 
 
Accumulated Other Comprehensive Income Loss [Line Items]
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Beginning balance
 
 
(947)
 
Other comprehensive loss before reclassifications
 
 
(951)
 
Other comprehensive (loss) income
 
 
(951)
 
Accumulated Other Comprehensive Income (loss) , Ending balance
$ (1,898)
 
$ (1,898)
 
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, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Total stock-based compensation expense
$ 21,606 
$ 9,711 
$ 33,087 
$ 18,943 
Tax benefit
3,109 
1,697 
5,354 
3,226 
Total stock-based compensation expense, net of tax
18,497 
8,014 
27,733 
15,717 
Cost of product revenues
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Total stock-based compensation expense
1,133 
505 
1,914 
1,460 
Cost of service revenues
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Total stock-based compensation expense
2,373 
877 
3,484 
2,185 
Cost of revenues
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Total stock-based compensation expense
3,506 
1,382 
5,398 
3,645 
Sales and marketing
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Total stock-based compensation expense
7,550 
2,698 
11,293 
5,311 
Research and development
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Total stock-based compensation expense
4,912 
1,915 
6,941 
4,488 
General and administrative
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Total stock-based compensation expense
5,638 
3,716 
9,455 
5,499 
Operating Expenses
 
 
 
 
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
 
 
 
 
Total stock-based compensation expense
$ 18,100 
$ 8,329 
$ 27,689 
$ 15,298 
Stock-Based Compensation - Stock Options - Additional Information (Details)
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
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, 2016
Jun. 30, 2015
Performance Shares
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Shares granted
886,496 
922,202 
Weighted average estimated fair value of share granted
$ 10.87 
$ 14.23 
Number of performance periods
3 years 
3 years 
Vesting period description
The 2016 and 2015 grants are generally divided evenly over three annual performance periods commencing with calendar year 2016 and 2015, 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
2,976,147 
2,788,043 
Weighted average estimated fair value of share granted
$ 10.86 
$ 13.80 
Restricted Stock Units (RSUs) |
Non Employee Directors
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Shares granted
120,000 
Weighted average estimated fair value of share granted
$ 0.00 
$ 13.14 
Stock-Based Compensation - Stock Options and Employee Stock Purchase Plan - Additional Information (Details) (Employee Stock Purchase Plan, USD $)
In Millions, except Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Employee Stock Purchase Plan
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
Number of shares purchased
1,236,759 
1,183,426 
Number of shares approved and available under the Employee Stock Purchase Plan
7,927,722 
 
Unamortized stock based compensation expense recognized
$ 10.9 
 
Unamortized stock based compensation expense recognition period
6 months 
 
Stock-Based Compensation - Valuation Assumptions - Additional Information (Details)
0 Months Ended 6 Months Ended
Feb. 1, 2016
Feb. 2, 2015
Feb. 1, 2016
Employee Stock Purchase Plan
Minimum
Feb. 2, 2015
Employee Stock Purchase Plan
Minimum
Feb. 1, 2016
Employee Stock Purchase Plan
Maximum
Feb. 2, 2015
Employee Stock Purchase Plan
Maximum
Jun. 30, 2016
Nonqualified Stock Option Plan And Employee Stock Purchase
Historical Volatility
Jun. 30, 2016
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
 
 
$ 2.51 
$ 3.09 
$ 3.35 
$ 4.27 
 
 
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)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
 
 
Expected dividends
0.00% 
0.00% 
0.00% 
0.00% 
Expected volatility, maximum
34.97% 
30.73% 
34.97% 
30.73% 
Risk-free interest rate, maximum
0.81% 
0.49% 
0.81% 
0.49% 
Expected volatility, minimum
31.85% 
30.04% 
31.85% 
30.04% 
Risk-free interest rate, minimum
0.47% 
0.07% 
0.47% 
0.07% 
Maximum
 
 
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
 
 
Expected life (years)
2 years 
2 years 
2 years 
2 years 
Minimum
 
 
 
 
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
 
 
 
 
Expected life (years)
6 months 
6 months 
6 months 
6 months 
Net (Loss) Income Per Share - Reconciliation of Numerator and Denominator of Basic and Diluted Net (Loss) Income Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Numerator
 
 
 
 
Net (loss) income
$ (9,997)
$ 19,647 
$ (6,662)
$ 40,845 
Denominator
 
 
 
 
Weighted average shares outstanding, basic
135,700 
134,057 
134,934 
134,417 
Effect of dilutive potential common shares
 
3,290 
 
3,873 
Weighted average shares outstanding, diluted
135,700 
137,347 
134,934 
138,290 
Basic net (loss) income per share
$ (0.07)
$ 0.15 
$ (0.05)
$ 0.30 
Diluted net (loss) income per share
$ (0.07)
$ 0.14 
$ (0.05)
$ 0.30 
Antidilutive employee stock-based awards, excluded
2,757 
637 
3,337 
483 
Business Segment Information - Additional Information (Details)
3 Months Ended 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
Jun. 30, 2016
Customer
Jun. 30, 2015
Customer
Jun. 30, 2016
Location
Customer
Jun. 30, 2015
Customer
Jun. 30, 2016
Customer Concentration Risk
Total Net Revenues
Jun. 30, 2015
Customer Concentration Risk
Total Net Revenues
Jun. 30, 2016
Customer Concentration Risk
Total Net Revenues
Jun. 30, 2015
Customer Concentration Risk
Total Net Revenues
Jun. 30, 2016
Customer Concentration Risk
Total Net Revenues
ScanSource Communications
Jun. 30, 2015
Customer Concentration Risk
Total Net Revenues
ScanSource Communications
Jun. 30, 2016
Customer Concentration Risk
Total Net Revenues
ScanSource Communications
Jun. 30, 2015
Customer Concentration Risk
Total Net Revenues
ScanSource Communications
Jun. 30, 2016
Customer Concentration Risk
Total Net Revenues
Westcon Group, Inc
Jun. 30, 2016
Customer Concentration Risk
Total Net Revenues
Westcon Group, Inc
Jun. 30, 2016
Customer Concentration Risk
Trade Receivables
Dec. 31, 2015
Customer Concentration Risk
Trade Receivables
Jun. 30, 2016
Customer Concentration Risk
Trade Receivables
ScanSource Communications
Dec. 31, 2015
Customer Concentration Risk
Trade Receivables
ScanSource Communications
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business organized number of geographical theatres (area)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Concentration risk percentage
 
 
 
 
100.00% 
100.00% 
100.00% 
100.00% 
23.00% 
23.00% 
23.00% 
19.00% 
11.00% 
12.00% 
100.00% 
100.00% 
24.00% 
20.00% 
Number of customer partners contributing more than 10% of total revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Jun. 30, 2016
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
Total Revenue
Customer Concentration Risk
Jun. 30, 2016
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
Total Revenue
Customer Concentration Risk
Jun. 30, 2016
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
Contribution Margin
Customer Concentration Risk
Jun. 30, 2016
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
Contribution Margin
Customer Concentration Risk
Jun. 30, 2016
Trade Receivables
Customer Concentration Risk
Dec. 31, 2015
Trade Receivables
Customer Concentration Risk
Jun. 30, 2016
Americas
Jun. 30, 2015
Americas
Jun. 30, 2016
Americas
Jun. 30, 2015
Americas
Dec. 31, 2015
Americas
Jun. 30, 2016
Americas
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
Americas
Total Revenue
Customer Concentration Risk
Jun. 30, 2016
Americas
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
Americas
Total Revenue
Customer Concentration Risk
Jun. 30, 2016
Americas
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
Americas
Contribution Margin
Customer Concentration Risk
Jun. 30, 2016
Americas
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
Americas
Contribution Margin
Customer Concentration Risk
Jun. 30, 2016
Americas
Trade Receivables
Customer Concentration Risk
Dec. 31, 2015
Americas
Trade Receivables
Customer Concentration Risk
Jun. 30, 2016
EMEA
Jun. 30, 2015
EMEA
Jun. 30, 2016
EMEA
Jun. 30, 2015
EMEA
Dec. 31, 2015
EMEA
Jun. 30, 2016
EMEA
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
EMEA
Total Revenue
Customer Concentration Risk
Jun. 30, 2016
EMEA
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
EMEA
Total Revenue
Customer Concentration Risk
Jun. 30, 2016
EMEA
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
EMEA
Contribution Margin
Customer Concentration Risk
Jun. 30, 2016
EMEA
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
EMEA
Contribution Margin
Customer Concentration Risk
Jun. 30, 2016
EMEA
Trade Receivables
Customer Concentration Risk
Dec. 31, 2015
EMEA
Trade Receivables
Customer Concentration Risk
Jun. 30, 2016
APAC
Jun. 30, 2015
APAC
Jun. 30, 2016
APAC
Jun. 30, 2015
APAC
Dec. 31, 2015
APAC
Jun. 30, 2016
APAC
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
APAC
Total Revenue
Customer Concentration Risk
Jun. 30, 2016
APAC
Total Revenue
Customer Concentration Risk
Jun. 30, 2015
APAC
Total Revenue
Customer Concentration Risk
Jun. 30, 2016
APAC
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
APAC
Contribution Margin
Customer Concentration Risk
Jun. 30, 2016
APAC
Contribution Margin
Customer Concentration Risk
Jun. 30, 2015
APAC
Contribution Margin
Customer Concentration Risk
Jun. 30, 2016
APAC
Trade Receivables
Customer Concentration Risk
Dec. 31, 2015
APAC
Trade Receivables
Customer Concentration Risk
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 287,779 
$ 316,575 
$ 577,854 
$ 647,275 
 
 
 
 
 
 
 
 
 
 
 
$ 142,019 
$ 158,333 
$ 297,513 
$ 315,687 
 
 
 
 
 
 
 
 
 
 
 
$ 72,660 
$ 80,865 
$ 146,189 
$ 174,714 
 
 
 
 
 
 
 
 
 
 
 
$ 73,100 
$ 77,377 
$ 134,152 
$ 156,874 
 
 
 
 
 
 
 
 
 
 
 
Concentration risk percentage
 
 
 
 
 
100.00% 
100.00% 
100.00% 
100.00% 
39.00% 
41.00% 
40.00% 
41.00% 
100.00% 
100.00% 
 
 
 
 
 
49.00% 
50.00% 
52.00% 
49.00% 
37.00% 
38.00% 
39.00% 
39.00% 
48.00% 
40.00% 
 
 
 
 
 
25.00% 
26.00% 
25.00% 
27.00% 
38.00% 
40.00% 
37.00% 
43.00% 
29.00% 
33.00% 
 
 
 
 
 
26.00% 
24.00% 
23.00% 
24.00% 
43.00% 
46.00% 
44.00% 
46.00% 
23.00% 
27.00% 
Contribution margin
111,882 
128,727 
228,858 
268,468 
 
 
 
 
 
 
 
 
 
 
 
52,721 
60,765 
115,588 
121,616 
 
 
 
 
 
 
 
 
 
 
 
27,820 
31,987 
54,772 
74,764 
 
 
 
 
 
 
 
 
 
 
 
31,341 
35,975 
58,498 
72,088 
 
 
 
 
 
 
 
 
 
 
 
Gross trade receivables
$ 211,748 
 
$ 211,748 
 
$ 242,911 
 
 
 
 
 
 
 
 
 
 
$ 101,167 
 
$ 101,167 
 
$ 97,742 
 
 
 
 
 
 
 
 
 
 
$ 61,201 
 
$ 61,201 
 
$ 78,726 
 
 
 
 
 
 
 
 
 
 
$ 49,380 
 
$ 49,380 
 
$ 66,443 
 
 
 
 
 
 
 
 
 
 
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, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Segment Reporting [Abstract]
 
 
 
 
Segment contribution margin
$ 111,882 
$ 128,727 
$ 228,858 
$ 268,468 
Corporate and unallocated costs
(75,446)
(91,158)
(159,549)
(189,500)
Stock-based compensation expense
(21,606)
(9,711)
(33,087)
(18,943)
Effect of stock-based compensation expense on warranty rates expense
(235)
(80)
(341)
(133)
Amortization of purchased intangibles
(2,117)
(2,517)
(4,417)
(5,591)
Restructuring costs
(6,007)
(343)
(13,509)
(367)
Transaction-related costs
(7,887)
 
(12,131)
 
Interest and other income (expense), net
298 
(178)
(470)
(1,640)
(Loss) income before provision for income taxes
$ (1,118)
$ 24,740 
$ 5,354 
$ 52,294 
Business Segment Information - Revenues which Includes Products and Services by Product Category (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Entity Wide Information Revenue From External Customer [Line Items]
 
 
 
 
Net Revenues
$ 287,779 
$ 316,575 
$ 577,854 
$ 647,275 
UC Group Systems
 
 
 
 
Entity Wide Information Revenue From External Customer [Line Items]
 
 
 
 
Net Revenues
171,411 
195,169 
350,315 
399,820 
UC Personal Devices
 
 
 
 
Entity Wide Information Revenue From External Customer [Line Items]
 
 
 
 
Net Revenues
68,774 
66,802 
136,584 
134,267 
UC Platform
 
 
 
 
Entity Wide Information Revenue From External Customer [Line Items]
 
 
 
 
Net Revenues
$ 47,594 
$ 54,604 
$ 90,955 
$ 113,188 
Income Taxes - Income Tax Expense and Effective Tax Rates (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Income Tax Disclosure [Abstract]
 
 
 
 
Provision for income taxes
$ 8,879 
$ 5,093 
$ 12,016 
$ 11,449 
Effective tax rate
(794.20%)
20.60% 
224.40% 
21.90% 
Income Taxes - Additional Information (Details) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Dec. 31, 2014
Income Tax Information [Line Items]
 
 
 
 
 
 
Income tax benefit
$ 0 
 
$ 0 
 
 
 
Additional expense due to losses from interim tax
1,300,000 
 
3,100,000 
 
 
 
U.S federal statutory rate
35.00% 
35.00% 
35.00% 
35.00% 
 
 
Discrete tax benefit realized on disqualifying dispositions of stock
300,000 
200,000 
700,000 
700,000 
 
 
Non-deductible stock compensation expense
3,100,000 
 
 
 
 
 
Aggregate transfer pricing charges for foreign subsidiary
 
 
 
 
1,600,000 
1,600,000 
Unrecognized tax benefits
21,000,000 
 
21,000,000 
 
 
 
Accrued interest and penalties related to uncertain tax positions
1,700,000 
 
1,700,000 
 
1,400,000 
 
Anticipated reduction in uncertain tax positions
1,300,000 
 
1,300,000 
 
 
 
Foreign Jurisdiction
 
 
 
 
 
 
Income Tax Information [Line Items]
 
 
 
 
 
 
Tax benefit (expense) due to lower statutory tax rates
$ (300,000)
$ 4,800,000 
$ 1,300,000 
$ 10,100,000