[1]

In 2016, as part of the TVN integration plan, the Company established the TVN VDP to enable the French employees of TVN to voluntarily terminate with certain benefits. The Company recorded a charge of $13.1 million for TVN VDP in the fourth quarter of 2016.

[2]

On February 29, 2016, the Company completed the acquisition of TVN and applied the acquisition method of accounting for the business combination. The selected quarterly financial data for the year ended December 31, 2016 of the combined entity includes 10 months of operating results of TVN beginning March 1, 2016.

[3]

In the first and third quarter of 2016 and the fourth quarter of 2017, the Company recorded impairment charges of $1.5 million, $1.2 million, and $0.5 million, respectively, for its investment in Vislink. (See Note 3, “Investments in Other Equity Securities,” of the notes to the Consolidated Financial Statements for additional information).

[4]

Revenue is attributed to countries based on the location of the customer.

[5]

The Company has historically employed an aggregate allocation methodology based on total revenues to attribute professional services revenue and sales expenses between its Video and Cable Edge segments. Beginning in the fourth quarter of 2017, the Company has prospectively changed to a more precise attribution methodology as the activities of selling and supporting the CableOS solution have become increasingly distinct from those of Video solutions. The impact of making this change in the fourth quarter of 2017 compared to the Company’s historical approach was a reduction in operating income of $2.4 million from the Video segment and a corresponding increase to the operating income of the Cable Edge segment. The Company believes that the updated allocation methodology will provide greater clarity regarding the operating metrics of the Video and Cable Edge business segments.

[6]

Gross margin decreased to 41.1% in the second quarter of 2017 compared to 48.7% in the first quarter of 2017, primarily due to lower service margins and higher inventory obsolescence charges for the Company’s legacy broadcast video inventory due to reduced demand, as well as higher inventory obsolescence charge for our older Cable Edge product lines. The factors negatively impacting the gross margin in the second quarter of 2017 were mostly absent in the third quarter of 2017, and together with a more favorable product mix, the gross margin increased to 51.1% in the third quarter of 2017 compared to 41.1% in the second quarter of 2017. Gross margin increased to 50.7% in the third quarter of 2016 compared to 46.6% in the second quarter of 2016 primarily due to the absence of the Cable Edge inventory obsolescence charge in the third quarter of 2016.

[7]

For the years ended December 31, 2017 and 2016, the unallocated corporate expenses included TVN acquisition- and integration-related costs, TVN VDP costs (see Note 10, “Restructuring and Related charges-TVN VDP,” for more information on TVN VDP ) and Cable Edge product line inventory obsolescence costs, totaling $7.9 million and $32.2 million, respectively. In addition, in fiscal year 2017, the unallocated corporate expenses included $8.0 million of Avid litigation settlement cost and associated legal fees (see Note 19, “Legal Proceedings,” for more information). The remaining unallocated corporate expenses for all years presented above include primarily other restructuring charges and excess facilities charges.