Basis of Presentation

9 Months Ended

Sep. 30, 2013

Basis of Presentation

1. BASIS OF PRESENTATION

The accompanying unaudited financial statements, consisting of the condensed consolidated balance sheet as of September30, 2013, the condensed consolidated statements of operations for the three and nine months ended September30, 2013 and 2012, the condensed consolidated statements of comprehensive income for the three and nine months ended September30, 2013 and 2012, and the condensed consolidated statements of cash flows for the nine months ended September30, 2013 and 2012, 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. Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes typically found in the audited consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K of Polycom, Inc. and its subsidiaries (the “Company”). In the opinion of management, all adjustments (primarily consisting of normal recurring adjustments) considered necessary for a fair statement have been included.

The condensed consolidated balance sheet at December31, 2012 has been derived from the audited consolidated financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form10-K for the year ended December31, 2012. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December31, 2012.

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 nine months ended September30, 2013 and are not necessarily indicative of the results that may be expected for the year ending December31, 2013.

Certain prior year service costs have been reclassified amongst our segments to conform to the current year presentation in order to more appropriately align those costs with the associated revenues. See Note 16.

Revision of Prior Period Financial Statements

During the quarter ended June 30, 2013, the Company discovered an error that impacted the Company’s previously issued interim and annual consolidated financial statements for the fiscal years ended December 31, 2010 through 2012 and the quarter ended March 31, 2013.The error was related to certain royalty related expenses not being properly allocated between the Company’s U.S. entity and its international subsidiary which led to an understated income tax provision in fiscal years 2010 through 2012.

In evaluating whether the Company’s previously issued consolidated financial statements were materially misstated, the Company considered the guidance in ASC Topic 250, Accounting Changes and Error Corrections, ASC Topic 250-10-S99-1, Assessing Materiality, and ASC Topic 250-10-S99-2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. The Company concluded that these errors were not material to any of the prior reporting periods, and therefore, amendments of previously filed reports are not required. However, if the entire correction was recorded in the quarter ended June 30, 2013, the cumulative amount would be material in the year ending December 31, 2013 and would impact comparisons to prior periods. As such, the revisions for these corrections are reflected in the financial information of the applicable prior periods and will be reflected in future filings containing such financial information.

The following tables set forth a summary of the revisions to the CondensedConsolidated Financial Statements for the three and nine months ended September 30, 2012:

	Three Months Ended September 30, 2012												Nine Months Ended September 30, 2012
	As Previously Reported			Adjustment				As Revised				As Previously Reported					Adjustment				As Revised
Condensed Consolidated Statements of Operations
Provision for (benefit from) income taxes for continuing operations	$	(3,384	)	$	675		$		(2,709	)	$			(1,025	)	$		1,130		$		105
Net loss from continuing operations	$	(14,731	)	$	(675	)	$		(15,406	)	$			(150	)	$		(1,130	)	$		(1,280	)
Net income (loss)	$	(14,086	)	$	(675	)	$		(14,761	)	$			7,560		$		(1,130	)	$		6,430
Basic Net Income (loss) Per Share:
Net loss per share from continuing operations	$	(0.08	)	$	(0.00	)	$		(0.09	)	$			0.00		$		(0.01	)	$		(0.01	)
Basic net income (loss) per share	$	(0.08	)	$	(0.00	)	$		(0.08	)	$			0.04		$		(0.01	)	$		0.04
Diluted net income (loss) per share:
Net loss per share from continuing operations	$	(0.08	)	$	(0.00	)	$		(0.09	)	$			0.00		$		(0.01	)	$		(0.01	)
Diluted net income (loss) per share	$	(0.08	)	$	(0.00	)	$		(0.08	)	$			0.04		$		(0.01	)	$		0.04
Condensed Consolidated Statements of Comprehensive Income (loss)
Net income (loss)	$	(14,086	)	$	(675	)	$		(14,761	)	$			7,560		$		(1,130	)	$		6,430
Comprehensive income (loss)	$	(14,221	)	$	(675	)	$		(14,896	)	$			4,496		$		(1,130	)	$		3,366
Condensed Consolidated Statements of Cash Flows
Operating activities
Net income											$			7,560		$		(1,130	)	$		6,430
Changes in prepaid expenses and other current assets											$			3,058		$		1,130		$		4,188
Net cash provided by operating activities											$			121,424		$		—		$		121,424