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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to _________

Commission File Number: 001-12696
poly-20220101_g1.jpg
Plantronics, Inc.
(Exact name of registrant as specified in its charter)
Delaware77-0207692
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

345 Encinal Street
Santa Cruz, California 95060
(Address of principal executive offices)
(Zip Code)

(831) 420-3002
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valuePOLYNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of February 3, 2022, 42,778,870 shares of the registrant's common stock were outstanding.
1


PLANTRONICS, INC.
FORM 10-Q
TABLE OF CONTENTS
Page
PART IFINANCIAL INFORMATION
PART IIOTHER INFORMATION 

Plantronics, Poly, the Propeller design, the Poly logo, and Polycom are trademarks of Plantronics, Inc.
All other trademarks are the property of their respective owners.
2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PLANTRONICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)

January 1, 2022April 3,
2021
ASSETS  
Current assets  
Cash and cash equivalents$182,700 $202,560 
Restricted cash  493,908 
Short-term investments17,017 14,559 
Accounts receivable, net275,913 267,464 
Inventory, net216,750 194,405 
Other current assets61,484 65,214 
Total current assets753,864 1,238,110 
Non-current assets
Property, plant, and equipment, net126,973 140,875 
Purchased intangibles, net255,564 341,614 
Goodwill796,216 796,216 
Deferred tax assets211,543 95,800 
Other non-current assets70,332 51,654 
Total assets$2,214,492 $2,664,269 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  
Current liabilities  
Accounts payable$160,529 $151,244 
Accrued liabilities328,551 394,084 
Current portion of long-term debt 478,807 
Total current liabilities489,080 1,024,135 
Non-current liabilities
Long-term debt, net1,499,228 1,496,064 
Long-term income taxes payable76,095 86,227 
Other non-current liabilities139,469 138,609 
Total liabilities2,203,872 2,745,035 
Commitments and contingencies (Note 6)
Stockholders' equity (deficit)  
Common stock926 912 
Additional paid-in capital1,596,313 1,556,272 
Accumulated other comprehensive income (loss)11,454 (3,221)
Accumulated deficit(716,423)(765,233)
Total stockholders' equity before treasury stock892,270 788,730 
Less: Treasury stock, at cost(881,650)(869,496)
Total stockholders' equity (deficit)10,620 (80,766)
Total liabilities and stockholders' equity (deficit)$2,214,492 $2,664,269 

The accompanying notes are an integral part of these condensed consolidated financial statements.
3

PLANTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

Three Months EndedNine Months Ended
 January 1, 2022December 26, 2020January 1, 2022December 26, 2020
Net revenues
Net product revenues$354,022 $420,711 $1,086,607 $1,059,846 
Net service revenues55,544 63,974 173,155 191,529 
Total net revenues409,566 484,685 1,259,762 1,251,375 
Cost of revenues
Cost of product revenues226,994 236,842 682,360 622,718 
Cost of service revenues18,386 21,186 58,334 64,921 
Total cost of revenues245,380 258,028 740,694 687,639 
Gross profit164,186 226,657 519,068 563,736 
Operating expenses
Research, development, and engineering46,216 54,150 136,090 156,327 
Selling, general, and administrative121,387 129,641 364,417 361,892 
Loss, net from litigation settlements   17,561 
Restructuring and other related charges2,398 13,977 33,977 49,477 
Total operating expenses170,001 197,768 534,484 585,257 
Operating (loss) income(5,815)28,889 (15,416)(21,521)
Interest expense15,948 18,417 53,871 58,182 
Other non-operating income, net(995)(2,596)(1,664)(4,188)
(Loss) income before income taxes(20,768)13,068 (67,623)(75,515)
Income tax benefit(9,604)(7,045)(116,433)(7,208)
Net (loss) income$(11,164)$20,113 $48,810 $(68,307)
Per share data
Basic (loss) earnings per common share$(0.26)$0.49 $1.15 $(1.67)
Diluted (loss) earnings per common share$(0.26)$0.48 $1.11 $(1.67)
Basic shares used in computing (loss) earnings per common share 42,745 41,252 42,450 40,894 
Diluted shares used in computing (loss) earnings per common share 42,745 42,184 43,811 40,894 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

PLANTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands)
(Unaudited)
Three Months EndedNine Months Ended
January 1, 2022December 26, 2020January 1, 2022December 26, 2020
Net (loss) income$(11,164)$20,113 $48,810 $(68,307)
Other comprehensive income, before tax
Unrealized gains on cash flow hedges
Unrealized cash flow hedge gains (losses)7,846 (3,754)8,520 (8,339)
Net (gains) losses reclassified into net revenues(1,804)1,054 (671)1,797 
Net gains reclassified into cost of revenues(10) (489) 
Net losses reclassified into interest expense2,100 3,039 7,582 10,290 
Net unrealized gains on cash flow hedges8,132 339 14,942 3,748 
Income tax benefit (expense) in other comprehensive income38 599 (267)1,122 
Other comprehensive income 8,170 938 14,675 4,870 
Comprehensive (loss) income$(2,994)$21,051 $63,485 $(63,437)

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

PLANTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

Nine Months Ended
 January 1, 2022December 26, 2020
Cash flows from operating activities  
Net income (loss)$48,810 $(68,307)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities
Depreciation and amortization112,796 124,881 
Amortization of debt issuance costs5,046 3,962 
Stock-based compensation34,214 31,104 
Deferred income taxes(115,660)(15,373)
Provision for excess and obsolete inventories8,160 12,767 
Restructuring and other related charges33,977 49,477 
Cash payments for restructuring charges(27,515)(28,794)
Other operating activities(1,526)(6,000)
Changes in assets and liabilities 
Accounts receivable, net(8,569)(71,439)
Inventory, net(24,699)(39,941)
Current and other assets(9,129)(15,246)
Accounts payable9,170 62,454 
Accrued liabilities(45,502)47,529 
Income taxes(19,625)(15,925)
Net cash (used in) provided by operating activities(52)71,149 
Cash flows from investing activities 
Proceeds from sales of short-term investments264 667 
Purchases of short-term investments(760)(394)
Capital expenditures(20,682)(16,753)
Proceeds from sale of property, plant, and equipment 1,900 
Other investing activities(4,000) 
Net cash used in investing activities(25,178)(14,580)
Cash flows from financing activities 
Employees' tax withheld and paid for restricted stock and restricted stock units(12,154)(3,193)
Proceeds from issuances under stock-based compensation plans5,841 5,731 
Proceeds from revolving line of credit 50,000 
Repayments of revolving line of credit (50,000)
Repayments of long-term debt(480,689)(46,980)
Net cash used in financing activities(487,002)(44,442)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(1,536)4,059 
Net (decrease) increase in cash and cash equivalents and restricted cash(513,768)16,186 
Cash and cash equivalents and restricted cash at beginning of period696,468 213,879 
Cash and cash equivalents and restricted cash at end of period$182,700 $230,065 
6

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:

(in thousands)January 1, 2022April 3, 2021
Cash and cash equivalents$182,700 $202,560 
Restricted cash 493,908 
Total cash and cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows$182,700 $696,468 

The accompanying notes are an integral part of these condensed consolidated financial statements.
7

PLANTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands)
(Unaudited)

Three Months Ended January 1, 2022
 Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTreasury StockTotal Stockholders' (Deficit) Equity
 SharesAmount
Balances at October 2, 202142,721 $926 $1,584,088 $3,284 $(705,259)$(880,806)$2,233 
Net loss— — — — (11,164)— (11,164)
Net unrealized gains on cash flow hedges, net of tax— — — 8,170 — — 8,170 
Proceeds from issuances under stock-based compensation plans43 — — — —  
Stock-based compensation— — 12,225— — — 12,225 
Employees' tax withheld and paid for restricted stock and restricted stock units — — — — (844)(844)
Balances at January 1, 202242,764 $926 $1,596,313 $11,454 $(716,423)$(881,650)$10,620 

Three Months Ended December 26, 2020
 Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTreasury StockTotal Stockholders' Deficit
 SharesAmount
Balances at September 26, 2020 41,246 $907 $1,526,677 $(9,650)$(796,324)$(866,615)$(145,005)
Net income— — — — 20,113 — 20,113 
Net unrealized gains on cash flow hedges, net of tax— — — 938 — — 938 
Proceeds from issuances under stock-based compensation plans19  — — — —  
Stock-based compensation— — 11,486 — — — 11,486 
Employees' tax withheld and paid for restricted stock and restricted stock units(6)— — — — (144)(144)
Other equity changes— — (3)(409)3 — (409)
Balances at December 26, 202041,259 $907 $1,538,160 $(9,121)$(776,208)$(866,759)$(113,021)

Nine Months Ended January 1, 2022
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTreasury StockTotal Stockholders' (Deficit) Equity
SharesAmount
Balances at April 3, 202141,751 $912 $1,556,272 $(3,221)$(765,233)$(869,496)$(80,766)
Net income— — — — 48,810— 48,810 
Net unrealized gains on cash flow hedges, net of tax— — — 14,675— — 14,675 
Proceeds from issuances under stock-based compensation plans78511— — — — 11 
Stock-based compensation— — 34,214— — — 34,214 
Employees' tax withheld and paid for restricted stock and restricted stock units — — — — (12,154)(12,154)
Proceeds from Employee Stock Purchase Program22835,827— — — 5,830 
Balances at January 1, 202242,764 $926 $1,596,313 $11,454 $(716,423)$(881,650)$10,620 
8

Nine Months Ended December 26, 2020
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTreasury StockTotal Stockholders' Deficit
SharesAmount
Balances at March 28, 202040,406 $896 $1,501,340 $(13,582)$(707,904)$(863,566)$(82,816)
Net loss— — — — (68,307)— (68,307)
Net unrealized gains on cash flow hedges, net of tax— — — 4,870 — — 4,870 
Proceeds from issuances under stock-based compensation plans667 6  — — — 6 
Repurchase of restricted common stock(10)— — — — — — 
Stock-based compensation— — 31,104 — — — 31,104 
Employees' tax withheld and paid for restricted stock and restricted stock units(261)— — — — (3,193)(3,193)
Proceeds from Employee Stock Purchase Program457 5 5,719 — — — 5,724 
Other equity changes— — (3)(409)3 — (409)
Balances at December 26, 202041,259 $907 $1,538,160 $(9,121)$(776,208)$(866,759)$(113,021)

The accompanying notes are an integral part of these condensed consolidated financial statements.
9

PLANTRONICS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. BACKGROUND AND BASIS OF PRESENTATION

Plantronics, Inc. (“Poly,” the “Company”) is a leading global communications company that designs, manufactures, and markets integrated communications and collaboration solutions that span headsets, open Session Initiation Protocol ("SIP") and native ecosystem desktop phones, conference room phones, video conferencing solutions and peripherals, including cameras, speakers, and microphones, cloud management and analytics software solutions, and services. The Company has two operating and reportable segments, Products and Services, and offers its products under the poly-20220101_g2.jpg, Plantronics and Polycom brands.

Founded in 1961, the Company is incorporated in the state of Delaware under the name Plantronics, Inc. and in March 2019, the Company changed the name under which it markets itself to Poly. The Company is listed on the New York Stock Exchange ("NYSE") under the ticker symbol "POLY."

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on a basis materially consistent with, and should be reviewed in conjunction with, the Company's audited consolidated financial statements as of and for the year ended April 3, 2021 and notes thereto included in the Company's Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission ("SEC") on May 18, 2021 and include all adjustments necessary to fairly state the information set forth herein. Certain information and footnote disclosures normally included in financial statements prepared pursuant to the rules and regulations of the SEC applicable to interim financial information and in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements contain all adjustments necessary for a fair presentation of the Company’s consolidated financial position and the consolidated results of operations and cash flows as of the dates and for the periods presented and are normal and recurring in nature. The Company's reporting currency is United States Dollars ("USD.") The interim period results are subject to variation and are not necessarily indicative of the results of operations to be expected for the full fiscal year. The financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All intercompany balances and transactions have been eliminated.

The Company’s fiscal year ends on the Saturday closest to the last day of March. The Company’s current fiscal year ends on April 2, 2022 and consists of 52 weeks. The Company's prior fiscal year ended on April 3, 2021 and consisted of 53 weeks. The three and nine months ended January 1, 2022 and December 26, 2020 each contain 13 and 39 weeks, respectively.

Risks and uncertainties

The Company is subject to a greater degree of uncertainty than normal in making the judgments and estimates needed to apply its significant accounting policies due to the ongoing COVID-19 pandemic and supply chain disruptions. The Company has assessed accounting estimates and other matters, including those using prospective financial information, using information that is reasonably available as of the issuance date of the condensed consolidated financial statements. The accounting estimates and other matters the Company has assessed included, but were not limited to, impairment of goodwill and other long-lived assets, provisions for doubtful accounts, valuation allowances for deferred tax assets, inventory and related reserves, and revenue recognition and related reserves. The Company may make changes to these estimates and judgments, which could result in material impacts to the condensed consolidated financial statements in future periods. The extent and duration of the impact of the COVID-19 pandemic and the shortage of adequate component supply on the Company's business is highly uncertain and difficult to predict. The Company relies on contract manufacturers and sourcing of materials from the Asia Pacific region, as well as its owned manufacturing facility in Mexico. The Company has experienced disruptions in both its own supply chain as well as those of its contract manufacturers and suppliers both as a result of COVID-19 as well as the global shortage of key components. Such disruptions have had, and may continue to have, a material impact on the Company's ability to source critical component parts, complete production of its products, fulfill customer orders, and adversely affect the ability to meet customer demands as companies utilize work-from-home and hybrid work models. Additionally, if a significant number of the Company's workforce employed in any of these manufacturing facilities or in the Company's offices were to contract the virus, the Company may experience delays or the inability to develop, produce, and deliver the Company's products on a timely basis. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic and the supply chain disruptions, and it is possible that it could cause a local and/or global economic recession.

10

The severity of the impact of the COVID-19 pandemic and supply chain disruptions on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of these factors and the extent and severity of the impact on its customers and suppliers, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, including potential write-offs due to financial weakness and/or bankruptcy of its customers, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by its customers and suppliers.

As of the issuance date of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic and supply chain disruptions may materially impact the Company's financial condition, liquidity, or results of operations is uncertain.

Reclassifications

Certain prior year amounts have been reclassified for consistency with current year presentation. Each of the reclassifications was immaterial and had no effect on the Company's results of operations or cash flows.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements issued by the Financial Accounting Standards Board ("FASB") did not and are not expected to have a material impact on the Company's financial position, results of operations, or cash flows.

3.  DEFERRED COMPENSATION

As of January 1, 2022, the Company held investments in mutual funds with a fair value totaling $17.0 million, whose holdings are publicly traded debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans. The total related deferred compensation liability was $17.0 million as of January 1, 2022. As of April 3, 2021, the Company held investments in mutual funds with a fair value totaling $14.6 million, all of which related to debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans. The total related deferred compensation liability as of April 3, 2021 was $14.6 million. The investments are recorded at fair value in short-term investments in the condensed consolidated balance sheets. The liability is recorded in accrued liabilities and other non-current liabilities in the condensed consolidated balance sheets.

4. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS

Accounts receivable, net
(in thousands)January 1, 2022April 3, 2021
Accounts receivable$358,877 $352,108 
Provisions for promotions, rebates, and other(82,155)(82,315)
Provisions for doubtful accounts and sales allowances(809)(2,329)
Accounts receivable, net$275,913 $267,464 

The Company maintains a provision for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company regularly performs credit evaluations of its customers’ financial conditions and considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic or country-specific risks, and economic conditions that may affect a customer's ability to pay. 

Inventory, net
(in thousands)January 1, 2022April 3, 2021
Raw materials$85,820 $87,050 
Work in process3,277 9,511 
Finished goods127,653 97,844 
Inventory, net$216,750 $194,405 

11

Accrued Liabilities
(in thousands)January 1, 2022April 3, 2021
Short-term deferred revenue$132,498 $141,375 
Employee compensation and benefits65,757 84,318 
Operating lease liabilities, current16,504 21,701 
Warranty obligation16,044 14,774 
Provision for returns14,133 25,133 
Accrued other83,615 106,783 
Accrued liabilities$328,551 $394,084 

The Company's warranty obligation is recorded in accrued liabilities and other non-current liabilities in the condensed consolidated balance sheets. Changes in the warranty obligation during the nine months ended January 1, 2022 and December 26, 2020 were as follows:
Nine Months Ended
(in thousands)January 1, 2022December 26, 2020
Warranty obligation at beginning of period$17,384 $15,261 
Warranty provision related to products shipped13,179 17,092 
Deductions for warranty claims processed(19,424)(12,736)
Adjustments related to preexisting warranties8,307 (4,097)
Warranty obligation at end of period$19,446 $15,520 

5.    PURCHASED INTANGIBLE ASSETS

As of January 1, 2022 and April 3, 2021, the carrying value of purchased intangible assets, excluding fully amortized assets and goodwill, is as follows:
January 1, 2022April 3, 2021
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted Average Remaining Useful LifeGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Amortizing Assets
Existing technology$427,123 $(325,787)$101,336 1.6 years$427,123 $(277,071)$150,052 
Customer relationships240,024 (156,441)83,583 2.5 years240,024 (128,740)111,284 
Trade name/Trademarks115,600 (44,955)70,645 5.5 years115,600 (35,322)80,278 
Total intangible assets$782,747 $(527,183)$255,564 3.0 years$782,747 $(441,133)$341,614 

During the three and nine months ended January 1, 2022, the Company recognized amortization expense of $27.8 million and $86.0 million, respectively. During the three and nine months ended December 26, 2020, the Company recognized amortization expense of $30.7 million and $94.5 million, respectively.

12

Expected amortization expense attributable to purchased intangible assets for each of the next five years and thereafter as of January 1, 2022 is as follows:
(in thousands)Amount
2022 (remaining three months)27,808
2023111,232
202465,936
202521,688
202612,844
Thereafter16,056
Total$255,564 

6. COMMITMENTS AND CONTINGENCIES

Future Minimum Lease Payments

Future minimum lease payments under non-cancelable operating leases as of January 1, 2022 were as follows:
(in thousands)
Operating Leases(1)
2022 (remaining three months)$6,443 
202314,875 
202413,419 
20259,669 
20268,100 
Thereafter17,244 
Total lease payments69,750 
Less: Imputed interest(2)
(7,958)
Present value of lease liabilities$61,792 
(1) The weighted average remaining lease term was 4.8 years as of January 1, 2022.
(2) The weighted average discount rate was 4.6% as of January 1, 2022.

Unconditional Purchase Obligations

We use several contract manufacturers to manufacture raw materials, components, and subassemblies for our products through our supply and demand information that can cover periods up to 78 weeks. The contract manufacturers use this information to acquire components and build products. We also obtain individual components for our products from a wide variety of individual suppliers using a combination of purchase orders, supplier contracts, including annual minimum purchase obligations, and open orders based on projected demand information. As of January 1, 2022, we had outstanding off-balance sheet third-party manufacturing, component purchase, and other general and administrative commitments of $615.5 million, including off-balance sheet consigned inventories of $65.3 million. A substantial portion of the raw materials, components, and subassemblies used in our products are provided by our suppliers on a consignment basis. These consigned inventories are not recorded on our condensed consolidated balance sheets until we take title to the raw materials, components, and subassemblies, which occurs when they are consumed in the production process. Prior to consumption in the production process, our suppliers bear the risk of loss and retain title to the consigned inventory. The agreements allow us to return parts in excess of maximum order quantities to the suppliers at the supplier’s expense. Returns for other reasons are negotiated with the suppliers on a case-by-case basis and to date have been immaterial. If our suppliers were to discontinue financing consigned inventory, it would require us to make cash outlays and we could incur expenses which, if material, could negatively affect our business and financial results. We expect to consume unconditional purchase obligations in the normal course of business, net of an immaterial purchase commitments reserve. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs in partnering with our suppliers given the current environment.

13

Other Guarantees and Obligations

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, purchasers of assets or subsidiaries and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company's breach of agreements or representations and warranties made by the Company, services to be provided by the Company, intellectual property infringement claims made by third parties or, with respect to the sale of assets of a subsidiary, matters related to the Company's conduct of business and tax matters prior to the sale. From time to time, the Company indemnifies customers against combinations of loss, expense, or liability arising from various triggering events relating to the sale and use of its products and services.

In addition, the Company also provides indemnification to customers against claims related to undiscovered liabilities, additional product liability, or environmental obligations. The Company has also entered into indemnification agreements with its directors, officers, and certain other personnel that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers of the Company or certain of its affiliated entities. The Company maintains director and officer liability insurance, which may cover certain liabilities arising from its obligation to indemnify its directors, officers, and certain other personnel in certain circumstances. It is not possible to determine the aggregate maximum potential loss under these agreements due to the limited history of prior claims and the unique facts and circumstances involved in each particular claim. Such indemnification obligations might not be subject to maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations under these agreements and it has not accrued any liabilities related to such indemnification obligations in the condensed consolidated financial statements.

Claims and Litigation

On January 23, 2018, FullView, Inc. filed a complaint in the United States District Court of the Northern District of California against Polycom, Inc. alleging infringement of two patents and thereafter filed a similar complaint in connection with the same patents in Canada. Polycom thereafter filed an inter partes reexamination ("IPR") of one of the patents, which was then appealed to Federal Circuit Court. Litigation in both matters in the United States and Canada, respectively, were stayed pending the results of that appeal. Polycom also filed an IPR of the second patent and the U.S. Patent Trial and Appeal Board (“PTAB”) denied institution of the IPR petition. FullView also initiated arbitration proceedings under a terminated license agreement with Polycom alleging that Polycom had failed to pay certain royalties due under that agreement. The arbitration panel awarded an immaterial amount to FullView. FullView filed a First and Second Amended Complaint and Polycom filed a motion to dismiss. The Court granted Polycom's partial motion to dismiss without prejudice and invalidated one of the patents in suit. Litigation on the remaining patent is ongoing.

On June 21, 2018, directPacket Research Inc. filed a complaint alleging patent infringement by Polycom, Inc. in the United States District Court for the Eastern District of Virginia, Norfolk Division. The Court granted Polycom’s Motion to Transfer Venue to the Northern District of California. Polycom filed petitions for IPR of the asserted patents which were granted by the PTAB. The District Court matter was stayed pending resolution of the IPRs. After oral argument held in October 2020, on January 11, 2021, the PTAB issued final written decisions invalidating two of the asserted patents. The remaining claims of the third patent were unasserted against the Company. On February 12, 2021, directPacket filed a notice of appeal to the United States Court of Appeals for the Federal Circuit with respect to the PTAB’s final written decision regarding the ’588 patent. On March 15, 2021, Polycom filed a notice of appeal to the United States Court of Appeals for the Federal Circuit with respect to the PTAB’s final written decision regarding the ’978 patent. On December 13, 2021, the Court issued an affirmance of the decision regarding the invalidity of all asserted claims of the ‘978 patent. On January 27, 2022, the Court vacated the PTAB’s finding that certain claims were invalid as obvious and remanded the case for further proceedings at the PTAB. Litigation is ongoing.

On November 15, 2019, Felice Bassuk, individually and on behalf of others similarly situated, filed a complaint against the Company, its former CEO, Joseph Burton, its CFO, Charles Boynton, and its former CFO, Pamela Strayer, alleging various securities law violations. The Company disputes the allegations. The Court appointed lead plaintiff and lead counsel and renamed the action “In re Plantronics, Inc. Securities Litigation” on February 13, 2020. Plaintiffs filed the amended complaint on June 5, 2020 and the Company filed a Motion to Dismiss the Amended Complaint on August 7, 2020. Plaintiffs filed their opposition on October 2, 2020 and the Company replied on November 16, 2020. The hearing scheduled for January 13, 2021 was vacated and on March 29, 2021, the Court issued its order granting the Company’s motion to dismiss, but allowing the Plaintiffs leave to amend their complaint. On April 13, 2021, pursuant to the parties’ mutual agreement, the Court issued its order granting a stipulation and scheduling order which provides the plaintiffs until June 15, 2021 (subsequently extended to June 22, 2021) to consider whether or not to file a second amended complaint, and if filed, allowing defendants until August 16, 2021 to file a motion to dismiss, with plaintiffs’ opposition to such motion due on or before September 30, 2021, and with
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defendants’ reply to be filed on or before November 1, 2021. The Plaintiff filed its second amended complaint on June 22, 2021 and the Company filed its Motion to Dismiss on September 7, 2021. The court is expected to rule based on the briefs without a hearing and the parties are awaiting the court's ruling.

On December 17, 2019, Cisco Systems, Inc. filed a First Amended Complaint for Trade Secret Misappropriation against Plantronics, Inc. and certain individuals which amends a previously filed complaint against certain other individuals. The Company disputes the allegations. The Company filed a Motion to Dismiss and the Court granted the Motion with leave to amend as to defendants He, Chung and Williams, granted the Motion to Compel Arbitration for defendant Williams and granted in part and denied in part the Motion to Dismiss by defendants Puorro and the Company. Cisco filed an Amended Complaint and the defendants moved to dismiss or strike portions of the Amended Complaint. The Court granted in part and denied in part the Motion to Dismiss. On September 10, 2020, the Company filed a Motion for Protective Order and a Motion to Strike and Challenge the Sufficiency of Cisco’s Trade Secret Disclosure. On December 21, 2020, the Court granted in part and denied in part such Motions. On December 30, 2020, Cisco filed a motion for leave to file a Motion for Reconsideration. On January 11, 2021 the Company filed its opposition. The Court issued its Case Management and Pretrial order setting a settlement conference which occurred on April 1, 2021. During such mediation conference, the parties were unable to reach settlement. The Texas arbitration proceeding between Mr. Williams and Cisco was settled pursuant to an agreement by the parties, and Mr. Williams was dismissed with prejudice from both that proceeding and from the district court action. On August 13, 2021, Mr. He settled with Cisco pursuant to which he will be permanently enjoined and forever prohibited from receiving, using, and/or distributing Cisco Confidential Business Information except in limited circumstances. Discovery is ongoing.

On July 22, 2020, Koss Corporation filed a complaint alleging patent infringement by the Company and Polycom, Inc. in the United States District Court for the Western District of Texas, Waco Division. The Company answered the Complaint on October 1, 2020 disputing the claims. On December 18, 2020, the Company filed a Motion to Transfer Venue to the Northern District of California. On January 29, 2021, the plaintiff amended its infringement contentions to add new accused products. On February 12, 2021, the plaintiff filed its opposition to the Motion to Transfer. On May 20, 2021, the judge granted the Company’s Motion to Transfer Venue to the Northern District of California. On November 1, 2021, the Company filed a Motion to Dismiss the suit with the District Court on the grounds of non-patentable subject matter. The Court will rule based on the briefs without a hearing and the parties are awaiting the Court's ruling.

In addition to the specific matters discussed above, the Company is involved in various legal proceedings and investigations arising in the normal course of conducting business. Where applicable, in relation to the matters described above, the Company has accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to the Company's financial condition, results of operations, or cash flows. The Company is not able to estimate an amount or range of any reasonably possible loss, including in excess of any amount accrued, because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the variable treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings.

However, based upon the Company's historical experience, the resolution of these proceedings is not expected to have a material effect on the Company's financial condition, results of operations or cash flows. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings.

7. DEBT

The carrying value of the Company's outstanding debt as of January 1, 2022 and April 3, 2021 was as follows:
(in thousands)January 1, 2022April 3, 2021
4.75% Senior Notes$494,549 $493,985 
5.50% Senior Notes 478,807 
Term loan facility1,004,679 1,002,079 

As of January 1, 2022 and April 3, 2021, the net unamortized discount, premium, and debt issuance costs on the Company's outstanding debt were $17.6 million and $22.6 million, respectively.

4.75% Senior Notes

On March 4, 2021, the Company issued $500.0 million aggregate principal amount of 4.75% Senior Notes. The 4.75% Senior Notes mature on March 1, 2029 and bear interest at a rate of 4.75% per annum, payable semi-annually on March 1 and
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September 1 of each year, commencing on September 1, 2021. The Company received proceeds of $493.9 million from issuance of the 4.75% Senior Notes, net of issuance costs of $6.1 million, which are presented in the condensed consolidated balance sheets as a reduction to the outstanding amount payable and are being amortized to interest expense using the straight-line method, which approximates the effective interest method for this debt, over the term of the 4.75% Senior Notes. A portion of the proceeds was used to repay the outstanding principal of the 5.50% Senior Notes on May 17, 2021.

The Company may redeem all or part of the 4.75% Senior Notes, upon not less than a 15-day or more than a 60-day notice, however, the applicable redemption price will be determined as follows:

Redemption Period Requiring Payment of:
Redemption Up To 40% Using Cash Proceeds From An Equity Offering (3)
Make-Whole (1)
Premium (2)
DateSpecific Price
4.75% Senior NotesPrior to March 1, 2024On or after March 1, 2024Prior to March 1, 2024104.75%
(1) If the Company redeems the notes prior to the applicable date, the price is principal plus a make-whole premium, which means, the greater of (i) 1.0% of the principal or (ii) the excess of the present value of the redemption price at March 1, 2024 plus interest through March 1, 2024 over the principal amount.
(2) If the Company redeems the notes on or after the applicable date, the price is principal plus a premium which declines over time, as specified in the applicable indenture, together with accrued and unpaid interest.
(3) If the Company redeems the notes prior to the applicable date with net cash proceeds of one or more equity offerings, the price is equal to the amount specified above, together with accrued and unpaid interest, subject to a maximum redemption of 40% of the aggregate principal amount of the respective note being redeemed and at least 50% of the aggregate principal amount remains outstanding immediately after any such redemption (unless the notes are redeemed or repurchased substantially concurrently).

In addition, upon the occurrence of certain change of control triggering events, the Company may be required to repurchase the 4.75% Senior Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 4.75% Senior Notes contain restrictive covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to incur or guarantee additional indebtedness, make certain investments and other restricted payments, transfer and sell assets, create liens, enter into transactions with affiliates, and engage in mergers, consolidations, or sales of assets.

5.50% Senior Notes

In May 2015, the Company issued $500.0 million aggregate principal amount of 5.50% Senior Notes. The 5.50% Senior Notes mature on May 31, 2023, and bear interest at a rate of 5.50% per annum, payable semi-annually on May 15 and November 15 of each year, commencing on November 15, 2015. The Company received net proceeds of $488.4 million from issuance of the 5.50% Senior Notes, net of issuance costs of $11.6 million, which are being amortized to interest expense over the term of the 5.50% Senior Notes using the straight-line method, which approximates the effective interest method for this debt. A portion of the proceeds was used to repay all then-outstanding amounts under the Company's revolving line of credit agreement with Wells Fargo Bank and the remaining proceeds were used primarily for share repurchases.

On May 17, 2021, the Company used a portion of the proceeds from the 4.75% Senior Notes to redeem the outstanding principal and accrued interest of the 5.50% Senior Notes of $493.9 million.

Term Loan Facility

In connection with the acquisition of Polycom completed on July 2, 2018, the Company entered into a Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (the “Credit Agreement.”) The Credit Agreement replaced the Company’s prior revolving credit facility in its entirety. The Credit Agreement provides for (i) a revolving credit facility with an initial maximum aggregate amount of availability of $100 million that matures in July 2023 and (ii) a $1.275 billion term loan facility priced at LIBOR plus 2.50% due in quarterly principal installments commencing on the last business day of March, June, September and December beginning with the first full fiscal quarter ending after the closing date under the Credit Agreement for the aggregate principal amount funded on the closing date under the Credit Agreement multiplied by 0.25% (subject to prepayments outlined in the Credit Agreement) and all remaining outstanding principal due at maturity in July 2025. The Company has paid the full amount of term debt principal due prior to maturity. The Company borrowed the full amount available under the term loan facility of $1.245 billion, net of approximately $30 million of discounts and issuance costs which are being amortized to interest expense over the term of the Credit Agreement using the straight-line method, which approximates the effective interest method for this debt. The proceeds from the initial borrowing under the Credit Agreement were used to finance the acquisition of Polycom, to refinance certain debt of Polycom, and to pay related
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fees, commissions and transaction costs. The Company has additional borrowing capacity under the Credit Agreement through the revolving credit facility, which could be used to provide ongoing working capital and capital for other general corporate purposes of the Company and its subsidiaries. The Company’s obligations under the Credit Agreement are currently guaranteed by Polycom and will from time to time be guaranteed by, subject to certain exceptions, any domestic subsidiaries that may become material in the future. Subject to certain exceptions, the Credit Agreement is secured by first-priority perfected lien on, and security interests in, substantially all of the personal property of the Company and each subsidiary guarantor and will from time to time also be secured by certain material real property that the Company or any subsidiary guarantor may acquire. Borrowings under the Credit Agreement bear interest due on a quarterly basis at a variable rate equal to (i) LIBOR plus a specified margin, or (ii) the base rate (which is the highest of (a) the prime rate publicly announced from time to time by Wells Fargo Bank, National Association, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin. The Company must also pay (i) an unused commitment fee ranging from 0.200% to 0.300% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement, and (ii) a per annum fee equal to (a) for each performance standby letter of credit outstanding under the Credit Agreement with respect to non-financial contractual obligations, 50% of the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn under such letter of credit, and (b) for each other letter of credit outstanding under the Credit Agreement, the applicable margin over LIBOR under the revolving credit facility in effect from time to time multiplied by the daily amount available to be drawn under such letter of credit.

On December 29, 2021, the Company entered into Amendment No. 3 to Credit Agreement (“Amendment No. 3”) by and among the Company, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as administrative agent. Amendment No. 3 amended the Credit Agreement, as previously amended, to (i) increase the maximum Secured Net Leverage Ratio (as defined in the Credit Agreement) permitted to 3.75 to 1.00 as of the end of any fiscal quarter ending during the period beginning on January 2, 2022 through December 31, 2022 and to 3.00 to 1.00 as of the end of any fiscal quarter ending thereafter, except that the maximum Secured Net Leverage Ratio shall be deemed to be 3.00 to 1.00 at all times for purposes of determining pro forma compliance with each Specified Pro Forma Financial Covenant Test (as defined in the Credit Agreement).

Additionally, Amendment No. 3 modified the calculation of the Secured Net Leverage Ratio solely for purposes of determining compliance with Section 7.11(a) of the Credit Agreement for any fiscal quarter ending between January 2, 2022 through December 31, 2022 by amending the definition of Consolidated EBITDA to (a) limit the aggregate amount added back pursuant to clause (vii) thereof (relating to certain acquisition expenses) to the greater of $30,000,000 and 10% of Consolidated EBITDA for such Measurement Period (as defined in the Credit Agreement) (calculated before giving effect to any such expenses to be added back pursuant to such clause (vii) for such Measurement Period), (b) limit the aggregate amount added back pursuant to clause (vii) thereof in respect of integration expenses related to the Polycom Acquisition (as defined in the Credit Agreement) to $30,000,000, and (c) limit the aggregate amount added back pursuant to clause (viii) thereof (relating to certain non-recurring or unusual items reducing consolidated net income) to the greater of $30,000,000 and 10% of Consolidated EBITDA for such Measurement Period (calculated before giving effect to any such items to be added back pursuant to such clause (viii) for such Measurement Period).

The financial covenants under the Credit Agreement, as amended, are for the benefit of the revolving credit lenders only and do not apply to any other debt of the Company. The Credit Agreement also contains various other restrictions and covenants, some of which have become more stringent over time, including restrictions on our, and certain of our subsidiaries, ability to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions, make investments, and pay dividends and other distributions. The Company has the unilateral ability to terminate the revolving line of credit such that the financial covenants described above are no longer applicable. The Credit Agreement also contains customary events of default. If an event of default under the Credit Agreement occurs and is continuing, then the lenders may declare any outstanding obligations under the Credit Agreement to be immediately due and payable; provided, however, that the occurrence of an event of default as a result of a breach of a financial covenant under the Credit Agreement does not constitute a default or event of default with respect to any term facility under the Credit Agreement unless and until the required revolving lenders shall have terminated their revolving commitments and declared all amounts outstanding under the revolving credit facility to be due and payable. In addition, if the Company, any subsidiary guarantor or, with certain exceptions, any other subsidiary becomes the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the Credit Agreement will automatically become immediately due and payable. Loans outstanding under the Credit Agreement will bear interest at a rate of 2.00% per annum in excess of the otherwise applicable rate (i) while a payment or bankruptcy event of default exists or (ii) upon the lenders’ request, during the continuance of any other event of default. As of January 1, 2022, the Company was in compliance with all financial covenants.

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The Company may prepay the loans and terminate the commitments under the Credit Agreement at any time without penalty. Additionally, the Company is subject to mandatory debt repayments five business days after the filing of its consolidated financial statements for any annual period in which the Company generates Excess Cash (as defined in the Credit Agreement). In accordance with the terms of the Credit Agreement, the Company did not generate Excess Cash during the fiscal year ended April 3, 2021 and therefore is not required to make any debt repayments in the fiscal year ended April 2, 2022. During the three and nine months ended January 1, 2022, the Company did not prepay any aggregate principal amount of the term loan facility. As of January 1, 2022, the Company had five letters of credit outstanding under the revolving credit facility for a total of $2.9 million.

8. RESTRUCTURING AND OTHER RELATED CHARGES

Summary of Restructuring Plans

Fiscal Year 2022 Restructuring Plan

During the nine months ended January 1, 2022, the Company committed to actions to reduce expenses to enable strategic investments in revenue growth. The costs incurred to date under this plan include severance benefits related to headcount reductions in the Company's global workforce and facility related charges due to the closure or consolidation of offices.

Fiscal Year 2021 Restructuring Plan

During Fiscal Year 2021, the Company committed to additional actions to reduce expenses and align its overall cost structure better with projected revenue levels, as well as reorganize its executive management to align to its new Chief Executive Officer's management structure. The costs incurred to date under this plan include severance benefits related to headcount reductions in the Company's global workforce and facility related charges due to the closure or consolidation of leased offices.

Legacy Restructuring Plans

In connection with the Polycom acquisition, in Fiscal Years 2019 and 2020 the Company initiated actions to rationalize post-acquisition operations and realign its cost structure. These actions included streamlining the global workforce, closure or consolidation of leased offices and distribution centers, consumer product portfolio optimization efforts, and legal entity rationalization.

The following table summarizes the restructuring and other related charges recognized in the Company's condensed consolidated statements of operations:
Three Months EndedNine Months Ended
(in thousands)January 1, 2022December 26, 2020January 1, 2022December 26, 2020
Severance$191 $3,969 $19,592 $27,161 
Facility 1,658 (503)3,300 
Other (1)
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