ADTRAN INC, 10-Q filed on 5/6/2015
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2015
Apr. 21, 2015
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Mar. 31, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
ADTN 
 
Entity Registrant Name
ADTRAN INC 
 
Entity Central Index Key
0000926282 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
53,319,159 
Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Current Assets
 
 
Cash and cash equivalents
$ 87,009 
$ 73,439 
Short-term investments
78,760 
46,919 
Accounts receivable, less allowance for doubtful accounts of $20 and $136 at March 31, 2015 and December 31, 2014, respectively
90,869 
88,502 
Other receivables
29,962 
33,295 
Inventory, net
93,123 
86,710 
Prepaid expenses
5,092 
5,129 
Deferred tax assets, net
16,297 
17,095 
Total Current Assets
401,112 
351,089 
Property, plant and equipment, net
73,987 
74,828 
Deferred tax assets, net
18,831 
17,694 
Goodwill
3,492 
3,492 
Other assets
10,080 
10,942 
Long-term investments
236,678 
280,649 
Total Assets
744,180 
738,694 
Current Liabilities
 
 
Accounts payable
73,696 
56,414 
Unearned revenue
16,815 
22,762 
Accrued expenses
12,773 
11,077 
Accrued wages and benefits
15,605 
13,855 
Income tax payable, net
13,088 
14,901 
Total Current Liabilities
131,977 
119,009 
Non-current unearned revenue
10,088 
10,948 
Other non-current liabilities
30,646 
30,924 
Bonds payable
28,800 
28,800 
Total Liabilities
201,511 
189,681 
Commitments and contingencies (see Note 14)
   
   
Stockholders' Equity
 
 
Common stock, par value $0.01 per share; 200,000 shares authorized; 79,652 shares issued and 53,319 shares outstanding at March 31, 2015 and 79,652 shares issued and 53,431 shares outstanding at December 31, 2014
797 
797 
Additional paid-in capital
243,476 
241,829 
Accumulated other comprehensive loss
(3,828)
(75)
Retained earnings
905,884 
907,751 
Less treasury stock at cost: 26,333 and 26,221 shares at March 31, 2015 and December 31, 2014, respectively
(603,660)
(601,289)
Total Stockholders' Equity
542,669 
549,013 
Total Liabilities and Stockholders' Equity
$ 744,180 
$ 738,694 
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 20 
$ 136 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
200,000,000 
200,000,000 
Common stock, shares issued
79,652,000 
79,652,000 
Common stock, shares outstanding
53,319,000 
53,431,000 
Treasury stock, shares
26,333,000 
26,221,000 
Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Income Statement [Abstract]
 
 
Sales
$ 142,835 
$ 147,004 
Cost of sales
77,272 
69,214 
Gross Profit
65,563 
77,790 
Selling, general and administrative expenses
31,064 
33,939 
Research and development expenses
32,536 
32,553 
Operating Income
1,963 
11,298 
Interest and dividend income
933 
1,294 
Interest expense
(148)
(227)
Net realized investment gain
3,115 
2,192 
Other income (expense), net
(353)
122 
Income before provision for income taxes
5,510 
14,679 
Provision for income taxes
(2,193)
(5,072)
Net Income
$ 3,317 
$ 9,607 
Weighted average shares outstanding - basic
53,399 
56,751 
Weighted average shares outstanding - diluted
53,634 
57,368 
Earnings per common share - basic
$ 0.06 
$ 0.17 
Earnings per common share - diluted
$ 0.06 
$ 0.17 
Dividend per share
$ 0.09 
$ 0.09 
Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
 
 
Net Income
$ 3,317 
$ 9,607 
Other Comprehensive Loss, net of tax:
 
 
Net unrealized losses on available-for-sale securities
(503)
(921)
Defined benefit plan adjustments
68 
 
Foreign currency translation
(3,318)
252 
Other Comprehensive Loss, net of tax
(3,753)
(669)
Comprehensive Income (Loss), net of tax
$ (436)
$ 8,938 
Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Cash flows from operating activities:
 
 
Net Income
$ 3,317 
$ 9,607 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
3,728 
3,580 
Amortization of net premium on available-for-sale investments
910 
1,135 
Net realized gain on long-term investments
(3,115)
(2,192)
Net (gain) loss on disposal of property, plant and equipment
(3)
Stock-based compensation expense
1,639 
2,057 
Deferred income taxes
(692)
627 
Tax benefit from stock option exercises
57 
Excess tax benefits from stock-based compensation arrangements
(9)
(55)
Changes in operating assets and liabilities:
 
 
Accounts receivable, net
(4,571)
(15,971)
Other receivables
511 
(9,407)
Inventory
(7,784)
2,739 
Prepaid expenses and other assets
(213)
(2,024)
Accounts payable
20,084 
11,043 
Accrued expenses and other liabilities
(282)
8,431 
Income tax payable, net
(524)
275 
Net cash provided by operating activities
13,015 
9,899 
Cash flows from investing activities:
 
 
Purchases of property, plant and equipment
(2,442)
(2,042)
Proceeds from disposals of property, plant and equipment
 
Proceeds from sales and maturities of available-for-sale investments
58,075 
85,072 
Purchases of available-for-sale investments
(44,584)
(69,182)
Net cash provided by investing activities
11,049 
13,849 
Cash flows from financing activities:
 
 
Proceeds from stock option exercises
280 
1,541 
Purchases of treasury stock
(3,035)
(9,427)
Dividend payments
(4,811)
(5,102)
Payments on long-term debt
 
(16,500)
Excess tax benefits from stock-based compensation arrangements
55 
Net cash used in financing activities
(7,557)
(29,433)
Net increase (decrease) in cash and cash equivalents
16,507 
(5,685)
Effect of exchange rate changes
(2,937)
202 
Cash and cash equivalents, beginning of period
73,439 
58,298 
Cash and cash equivalents, end of period
87,009 
52,815 
Supplemental disclosure of non-cash investing activities:
 
 
Purchases of property, plant and equipment included in accounts payable
$ 784 
$ 85 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements of ADTRAN®, Inc. and its subsidiaries (ADTRAN) have been prepared pursuant to the rules and regulations for reporting on Quarterly Reports on Form 10-Q. Accordingly, certain information and notes required by generally accepted accounting principles for complete financial statements are not included herein. The December 31, 2014 Consolidated Balance Sheet is derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

In the opinion of management, all adjustments necessary to fairly state these interim statements have been recorded and are of a normal and recurring nature. The results of operations for an interim period are not necessarily indicative of the results for the full year. The interim statements should be read in conjunction with the financial statements and notes thereto included in ADTRAN’s Annual Report on Form 10-K for the year ended December 31, 2014, filed on February 24, 2015 with the SEC.

Changes in Classifications

We reclassified $2.3 million from other receivables to accounts receivable at December 31, 2014 to conform to the current period presentation.

Out of Period Adjustment

In connection with the preparation of our Condensed Consolidated Financial Statements, we recorded corrections of certain out of period, immaterial misstatements that occurred in prior periods, the most significant of which resulted in an increase in Other Expense of $1.3 million in the first quarter. The aggregate impact of the corrections was a $0.8 million reduction to pre-tax income for the three months ended March 31, 2015 and is not expected to be material to the current year annual results.

Use of Estimates

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, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Our more significant estimates include the obsolete and excess inventory reserves, warranty reserves, customer rebates, determination of the deferred revenue components of multiple element sales agreements, estimated costs to complete obligations associated with deferred revenues, estimated income tax provision and income tax contingencies, the fair value of stock-based compensation, impairment of goodwill, valuation and estimated lives of intangible assets, estimated pension liability, fair value of investments, and the evaluation of other-than-temporary declines in the value of investments. Actual amounts could differ significantly from these estimates.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. The core principle of ASU 2014-09 is to recognize revenues 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. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early application is not permitted. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. We are currently evaluating the transition method that will be elected and the impact that the adoption of ASU 2014-09 will have on our financial position, results of operations and cash flows.

 

Income Taxes
Income Taxes

2. INCOME TAXES

Our effective tax rate increased from 34.6% in the three months ended March 31, 2014 to 39.8% in the three months ended March 31, 2015. The increase in the effective tax rate between the two periods is primarily attributable to the release of a valuation allowance attributable to a foreign subsidiary in 2014.

Pension Benefit Plan
Pension Benefit Plan

3. PENSION BENEFIT PLAN

We maintain a defined benefit pension plan covering employees in certain foreign countries.

The following table summarizes the components of net periodic pension cost for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended
March 31,
 
(In thousands)    2015      2014  

Service cost

   $ 340       $ 305   

Interest cost

     159         215   

Expected return on plan assets

     (261      (279

Amortization of actuarial losses

     105         —     
  

 

 

    

 

 

 

Net periodic pension cost

$ 343    $ 241   
  

 

 

    

 

 

 

Stock-Based Compensation
Stock-Based Compensation

4. STOCK-BASED COMPENSATION

The following table summarizes the stock-based compensation expense related to stock options, restricted stock units (RSUs) and restricted stock for the three months ended March 31, 2015 and 2014, which was recognized as follows:

 

     Three Months Ended
March 31,
 
(In thousands)    2015      2014  

Stock-based compensation expense included in cost of sales

   $ 90       $ 116   
  

 

 

    

 

 

 

Selling, general and administrative expense

  691      1,026   

Research and development expense

  858      915   
  

 

 

    

 

 

 

Stock-based compensation expense included in operating expenses

  1,549      1,941   
  

 

 

    

 

 

 

Total stock-based compensation expense

  1,639      2,057   

Tax benefit for expense associated with

non-qualified options

  (180   (284
  

 

 

    

 

 

 

Total stock-based compensation expense, net of tax

$ 1,459    $ 1,773   
  

 

 

    

 

 

 

The fair value of our stock options is estimated using the Black-Scholes model. The determination of the fair value of stock options on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables that may have a significant impact on the fair value estimate.

 

The weighted-average assumptions and value of options granted for the three months ended March 31, 2015 and 2014 are summarized as follows:

 

     Three Months Ended  
     March 31,
2015
    March 31,
2014
 

Expected volatility

     38.75     39.57

Risk-free interest rate

     1.46     1.86

Expected dividend yield

     1.60     1.38

Expected life (in years)

     6.47        6.25   

Weighted-average estimated value

   $ 7.63      $ 9.28   

The fair value of our RSUs is calculated using a Monte Carlo Simulation valuation method. No RSUs were granted or vested during the three months ended March 31, 2015 or 2014. Twelve thousand RSUs were forfeited during the three months ended March 31, 2015.

The fair value of restricted stock is equal to the closing price of our stock on the date of grant. No restricted stock was granted, forfeited, or vested during the three months ended March 31, 2015 or 2014.

Stock-based compensation expense recognized in our Consolidated Statements of Income for the three months ended March 31, 2015 and 2014 is based on options, RSUs and restricted stock ultimately expected to vest, and has been reduced for estimated forfeitures. Estimated forfeitures for stock options are based upon historical experience and approximate 3.1% annually. We estimated a 0% forfeiture rate for our RSUs and restricted stock due to the limited number of recipients and historical experience for these awards.

As of March 31, 2015, total compensation expense related to non-vested stock options, RSUs and restricted stock not yet recognized was approximately $15.2 million, which is expected to be recognized over an average remaining recognition period of 2.7 years.

The following table is a summary of our stock options outstanding as of December 31, 2014 and March 31, 2015 and the changes that occurred during the three months ended March 31, 2015:

 

(In thousands, except per share amounts)    Number of
Options
     Weighted Avg.
Exercise Price
     Weighted Avg.
Remaining
Contractual
Life In Years
     Aggregate
Intrinsic
Value
 

Options outstanding, December 31, 2014

     6,981       $ 23.62         6.45       $ 10,625   

Options granted

     2       $ 22.56         

Options forfeited

     (79    $ 20.87         

Options expired

     (19    $ 27.19         

Options exercised

     (17    $ 16.58         
  

 

 

    

 

 

    

 

 

    

 

 

 

Options outstanding, March 31, 2015

  6,868    $ 23.66      6.18    $ 3,037   
  

 

 

    

 

 

    

 

 

    

 

 

 

Options vested and expected to vest, March 31, 2015

  6,678    $ 23.73      6.11    $ 2,553   
  

 

 

    

 

 

    

 

 

    

 

 

 

Options exercisable, March 31, 2015

  4,362    $ 25.17      4.74    $ 2,303   
  

 

 

    

 

 

    

 

 

    

 

 

 

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between the closing price of our stock on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2015. The aggregate intrinsic value will change based on the fair market value of our stock.

The total pre-tax intrinsic value of options exercised during the three months ended March 31, 2015 was $0.1 million.

Investments
Investments

5. INVESTMENTS

At March 31, 2015, we held the following securities and investments, recorded at either fair value or cost.

 

(In thousands)    Amortized
Cost
     Gross Unrealized      Carrying
Value
 
      Gains      Losses     

Deferred compensation plan assets

   $ 14,071       $ 2,555       $ (54    $ 16,572   

Corporate bonds

     132,343         250         (205      132,388   

Municipal fixed-rate bonds

     92,810         318         (11      93,117   

Municipal variable rate demand notes

     4,245         —           —           4,245   

Marketable equity securities

     26,608         11,496         (481      37,623   
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities held at fair value

$ 270,077    $ 14,619    $ (751 $ 283,945   
  

 

 

    

 

 

    

 

 

    

Restricted investment held at cost

  30,000   

Other investments held at cost

  1,493   
           

 

 

 

Total carrying value of available-for-sale investments

$ 315,438   
           

 

 

 

At December 31, 2014, we held the following securities and investments, recorded at either fair value or cost.

 

(In thousands)    Amortized
Cost
     Gross Unrealized      Carrying
Value
 
      Gains      Losses     

Deferred compensation plan assets

   $ 13,897       $ 2,409       $ (12    $ 16,294   

Corporate bonds

     111,261         186         (186      111,261   

Municipal fixed-rate bonds

     127,341         480         (34      127,787   

Municipal variable rate demand notes

     2,465         —           —           2,465   

Marketable equity securities

     26,399         12,395         (539      38,255   
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities held at fair value

$ 281,363    $ 15,470    $ (771 $ 296,062   
  

 

 

    

 

 

    

 

 

    

Restricted investment held at cost

  30,000   

Other investments held at cost

  1,506   
           

 

 

 

Total carrying value of available-for-sale investments

$ 327,568   
           

 

 

 

 

As of March 31, 2015, our corporate bonds and municipal fixed-rate bonds had the following contractual maturities:

 

(In thousands)    Corporate
bonds
     Municipal
fixed-rate
bonds
 

Less than one year

   $ 44,108       $ 30,407   

One to two years

     39,163         39,660   

Two to three years

     49,117         21,826   

Three to five years

     —           1,224   
  

 

 

    

 

 

 

Total

$ 132,388    $ 93,117   
  

 

 

    

 

 

 

Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

Our investment policy provides limitations for issuer concentration, which limits, at the time of purchase, the concentration in any one issuer to 5% of the market value of our total investment portfolio.

At March 31, 2015, we held a $30.0 million restricted certificate of deposit, which is carried at cost. This investment serves as a collateral deposit against the principal amount outstanding under loans made to ADTRAN pursuant to an Alabama State Industrial Development Authority revenue bond (the Bond). At March 31, 2015, the estimated fair value of the Bond using a level 2 valuation technique was approximately $29.7 million, based on a debt security with a comparable interest rate and maturity and a Standard and Poor’s credit rating of AAA. For more information on the Bond, see “Debt” under “Liquidity and Capital Resources” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Item 2 of Part I of this report.

We review our investment portfolio for potential “other-than-temporary” declines in value on an individual investment basis. We assess, on a quarterly basis, significant declines in value which may be considered other-than-temporary and, if necessary, recognize and record the appropriate charge to write-down the carrying value of such investments. In making this assessment, we take into consideration qualitative and quantitative information, including but not limited to the following: the magnitude and duration of historical declines in market prices, credit rating activity, assessments of liquidity, public filings, and statements made by the issuer. We generally begin our identification of potential other-than-temporary impairments by reviewing any security with a fair value that has declined from its original or adjusted cost basis by 25% or more for six or more consecutive months. We then evaluate the individual security based on the previously identified factors to determine the amount of the write-down, if any. For the three months ended March 31, 2015 and 2014, other-than-temporary impairment charges were not significant.

Realized gains and losses on sales of securities are computed under the specific identification method. The following table presents gross realized gains and losses related to our investments.

 

     Three Months Ended
March 31,
 
(In thousands)    2015      2014  

Gross realized gains

   $ 3,145       $ 2,228   

Gross realized losses

   $ (30    $ (36

As of March 31, 2015 and 2014, gross unrealized losses related to individual securities in a continuous loss position for 12 months or longer were not significant.

 

We have categorized our cash equivalents held in money market funds and our investments held at fair value into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique for the cash equivalents and investments as follows: Level 1 - Values based on unadjusted quoted prices for identical assets or liabilities in an active market; Level 2 - Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly; Level 3 - Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs include information supplied by investees.

 

     Fair Value Measurements at March 31, 2015 Using  
(In thousands)    Fair Value      Quoted Prices
in Active
Market for
Identical
Assets

(Level 1)
     Significant
Other
Observable
Inputs

(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Cash equivalents

           

Commercial paper

   $ 11,997       $ —         $ 11,997       $ —     

Money market funds

     3,228         3,228         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash equivalents

  15,225      3,228      11,997      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

Deferred compensation plan assets

  16,572      16,572      —        —     

Available-for-sale debt securities

Corporate bonds

  132,388      —        132,388      —     

Municipal fixed-rate bonds

  93,117      —        93,117      —     

Municipal variable rate demand notes

  4,245      —        4,245      —     

Available-for-sale marketable equity securities

Marketable equity securities – technology industry

  9,034      9,034      —        —     

Marketable equity securities – other

  28,589      28,589      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

  283,945      54,195      229,750      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 299,170    $ 57,423    $ 241,747    $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Fair Value Measurements at December 31, 2014 Using  
(In thousands)    Fair Value      Quoted Prices
in Active
Market for
Identical
Assets

(Level 1)
     Significant
Other
Observable
Inputs

(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Cash equivalents

           

Money market funds

   $ 1,163       $ 1,163       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

Deferred compensation plan assets

  16,294      16,294      —        —     

Available-for-sale debt securities

Corporate bonds

  111,261      —        111,261      —     

Municipal fixed-rate bonds

  127,787      —        127,787      —     

Municipal variable rate demand notes

  2,465      —        2,465      —     

Available-for-sale marketable equity securities

Marketable equity securities – technology industry

  9,661      9,661      —        —     

Marketable equity securities – other

  28,594      28,594      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

  296,062      54,549      241,513      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 297,225    $ 55,712    $ 241,513    $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair value of our Level 2 securities is calculated using a weighted average market price for each security. Market prices are obtained from a variety of industry standard data providers, security master files from large financial institutions, and other third-party sources. These multiple market prices are used as inputs into a distribution-curve-based algorithm to determine the daily market value of each security.

Our municipal variable rate demand notes have a structure that implies a standard expected market price. The frequent interest rate resets make it reasonable to expect the price to stay at par. These securities are priced at the expected market price.

Derivative Instruments and Hedging Activities
Derivative Instruments and Hedging Activities

6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We have certain customers and suppliers who are invoiced or pay in a non-functional currency. Changes in the monetary exchange rates may adversely affect our results of operations and financial condition. When appropriate, we enter into various derivative transactions to enhance our ability to manage the volatility relating to these typical business exposures. We do not hold or issue derivative instruments for trading or other speculative purposes. Our derivative instruments are recorded in the Consolidated Balance Sheets at their fair values. Our derivative instruments do not qualify for hedge accounting, and accordingly, all changes in the fair value of the instruments are recognized as other income (expense) in the Consolidated Statements of Income. The maximum contractual period for our derivatives is currently less than twelve months. Our derivative instruments are not subject to master netting arrangements and are not offset in the Consolidated Balance Sheets.

As of March 31, 2015, we had forward contracts outstanding with notional amounts totaling €63.0 million ($67.7 million), which mature at various times throughout 2015.

 

The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of March 31, 2015 and December 31, 2014 were as follows:

 

(In thousands)    Balance Sheet
Location
   March 31,
2015
     December 31,
2014
 

Derivatives Not Designated as Hedging Instruments (Level 2):

        

Foreign exchange contracts – asset derivatives

   Other receivables    $ 1,692       $ 249   

Foreign exchange contracts – liability derivatives

   Accounts payable    $ (607    $ (10

The change in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the three months ended March 31, 2015 and 2014 were as follows:

 

          Three Months Ended  
     Income Statement
Location
   March 31,  
(In thousands)       2015      2014  

Derivatives Not Designated as Hedging Instruments:

        

Foreign exchange contracts

   Other income (expense)    $ 1,476       $ (110

Inventory
Inventory

7. INVENTORY

At March 31, 2015 and December 31, 2014, inventory consisted of the following:

 

(In thousands)    March 31,
2015
     December 31,
2014
 

Raw materials

   $ 35,891       $ 34,831   

Work in process

     2,613         3,750   

Finished goods

     54,619         48,129   
  

 

 

    

 

 

 

Total

$ 93,123    $ 86,710   
  

 

 

    

 

 

 

We establish reserves for estimated excess, obsolete, or unmarketable inventory equal to the difference between the cost of the inventory and the estimated fair value of the inventory based upon assumptions about future demand and market conditions. At March 31, 2015 and December 31, 2014, raw materials reserves totaled $16.9 million, and finished goods inventory reserves totaled $7.6 million and $7.8 million, respectively.

Goodwill and Intangible Assets
Goodwill and Intangible Assets

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill, all of which relates to our acquisition of Bluesocket, Inc. and is included in our Enterprise Networks division, was $3.5 million at March 31, 2015 and December 31, 2014. We evaluate the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. We have elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit to which the goodwill is assigned is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step impairment test. If we determine that it is more likely than not that its fair value is less than its carrying amount, then the two-step impairment test will be performed. There have been no impairment losses recorded since acquisition.

Intangible assets are included in other assets in the accompanying Consolidated Balance Sheets and include intangibles acquired in conjunction with our acquisitions of Objectworld Communications Corporation on September 15, 2009, Bluesocket, Inc. on August 4, 2011, and the NSN BBA business on May 4, 2012.

 

The following table presents our intangible assets as of March 31, 2015 and December 31, 2014:

 

(In thousands)    March 31, 2015      December 31, 2014  
     Gross
Value
     Accumulated
Amortization
    Net Value      Gross
Value
     Accumulated
Amortization
    Net Value  

Customer relationships

   $ 5,787       $ (2,146   $ 3,641       $ 6,310       $ (2,136   $ 4,174   

Developed technology

     5,696         (3,660     2,036         6,005         (3,577     2,428   

Intellectual property

     2,340         (1,603     737         2,340         (1,520     820   

Trade names

     270         (220     50         270         (205     65   

Other

     11         (11     —           12         (11     1   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total

$ 14,104    $ (7,640 $ 6,464    $ 14,937    $ (7,449 $ 7,488   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Amortization expense, all of which relates to business acquisitions, was $0.5 million and $0.6 million for the three months ended March 31, 2015 and 2014, respectively.

As of March 31, 2015, the estimated future amortization expense of our intangible assets is as follows:

 

(In thousands)    Amount  

Remainder of 2015

   $ 1,413   

2016

     1,648   

2017

     1,145   

2018

     691   

2019

     298   

Thereafter

     1,269   
  

 

 

 

Total

$ 6,464   
  

 

 

 

Stockholders' Equity
Stockholders' Equity

9. STOCKHOLDERS’ EQUITY

A summary of the changes in stockholders’ equity for the three months ended March 31, 2015 is as follows:

 

(In thousands)    Stockholders’
Equity
 

Balance, December 31, 2014

   $  549,013   

Net income

     3,317   

Dividend payments

     (4,811

Dividends accrued for unvested restricted stock units

     11   

Net unrealized losses on available-for-sale securities (net of tax)

     (503

Defined benefit plan adjustments

     68   

Foreign currency translation adjustment

     (3,318

Proceeds from stock option exercises

     280   

Purchase of treasury stock

     (3,035

Income tax benefit from exercise of stock options

     8   

Stock-based compensation expense

     1,639   
  

 

 

 

Balance, March 31, 2015

$ 542,669   
  

 

 

 

Stock Repurchase Program

Since 1997, our Board of Directors has approved multiple share repurchase programs that have authorized open market repurchase transactions of up to 45.0 million shares of our common stock. During the three months ended March 31, 2015, we repurchased 0.1 million shares of our common stock at an average price of $21.52 per share. We currently have the authority to purchase an additional 4.7 million shares of our common stock under the current plans approved by the Board of Directors.

 

Stock Option Exercises

We issued 17 thousand shares of treasury stock during the three months ended March 31, 2015 to accommodate employee stock option exercises. The stock options had exercise prices ranging from $15.29 to $22.53. We received proceeds totaling $0.3 million from the exercise of these stock options during the three months ended March 31, 2015.

Dividend Payments

During the three months ended March 31, 2015, we paid cash dividends as follows (in thousands except per share amounts):

 

Record Date

   Payment Date      Per Share Amount      Total Dividend Paid  

February 5, 2015

     February 19, 2015       $ 0.09       $ 4,811   

Other Comprehensive Income

Other comprehensive income consists of unrealized gains (losses) on available-for-sale securities, reclassification adjustments for amounts included in net income related to impairments of available-for-sale securities, realized gains (losses) on available-for-sale securities, and amortization of actuarial gains (losses) related to our defined benefit plan, defined benefit plan adjustments and foreign currency translation adjustments.

The following tables present changes in accumulated other comprehensive income, net of tax, by component for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended March 31, 2015  

(In thousands)

   Unrealized
Gains
(Losses) on
Available-
for-Sale
Securities
     Defined
Benefit Plan
Adjustments
     Foreign
Currency
Adjustments
     Total  

Beginning balance

   $ 8,964       $ (5,757    $ (3,282    $ (75

Other comprehensive income (loss) before reclassifications

     1,360         —           (3,318      (1,958

Amounts reclassified from accumulated other comprehensive income

     (1,863      68         —           (1,795
  

 

 

    

 

 

    

 

 

    

 

 

 

Net current period other comprehensive income(loss)

  (503   68      (3,318   (3,753
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

$ 8,461    $ (5,689 $ (6,600 $ (3,828
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended March 31, 2014  

(In thousands)

   Unrealized
Gains
(Losses) on
Available-
for-Sale
Securities
     Defined
Benefit Plan
Adjustments
     Foreign
Currency
Adjustments
     Total  

Beginning balance

   $ 10,737       $ (891    $ 907       $ 10,753   

Other comprehensive income (loss) before reclassifications

     402         —           252         654   

Amounts reclassified from accumulated other comprehensive income

     (1,323      —           —           (1,323
  

 

 

    

 

 

    

 

 

    

 

 

 

Net current period other comprehensive income(loss)

  (921   —        252      (669
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

$ 9,816    $ (891 $ 1,159    $ 10,084   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The following tables present the details of reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2015 and 2014:

 

(In thousands)    Three Months Ended March 31, 2015

Details about Accumulated Other Comprehensive Income
Components

   Amount Reclassified
from Accumulated
Other Comprehensive
Income
     Affected Line Item in the
Statement Where Net
Income Is Presented

Unrealized gains (losses) on available-for-sale securities:

     

Net realized gain on sales of securities

   $ 3,076       Net realized investment gain

Impairment expense

     (22    Net realized investment gain

Defined benefit plan adjustments – actuarial losses

     (98    1
  

 

 

    

Total reclassifications for the period, before tax

  2,956   

Tax (expense) benefit

  (1,161
  

 

 

    

Total reclassifications for the period, net of tax

$ 1,795   
  

 

 

    

 

1 Included in the computation of net periodic pension cost. See Note 3 of Notes to Consolidated Financial Statements.

 

(In thousands)    Three Months Ended March 31, 2014  

Details about Accumulated Other Comprehensive Income
Components

   Amount Reclassified
from Accumulated
Other Comprehensive
Income
     Affected Line Item in the
Statement Where Net
Income Is Presented
 

Unrealized gains (losses) on available-for-sale securities:

     

Net realized gain on sales of securities

   $ 2,170         Net realized investment gain   

Impairment expense

     —           Net realized investment gain   
  

 

 

    

Total reclassifications for the period, before tax

  2,170   

Tax (expense) benefit

  (847
  

 

 

    

Total reclassifications for the period, net of tax

$ 1,323   
  

 

 

    

The following table presents the tax effects related to the change in each component of other comprehensive income for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended
March 31, 2015
    Three Months Ended
March 31, 2014
 
(In thousands)    Before-Tax
Amount
    Tax
(Expense)
Benefit
    Net-of-Tax
Amount
    Before-Tax
Amount
    Tax
Benefit
    Net-of-Tax
Amount
 

Unrealized gains (losses) on available-for-sale securities

   $ 2,230      $ (870   $ 1,360      $ 659      $ (257   $ 402   

Reclassification adjustment for amounts included in net income

     (2,956     1,161        (1,795     (2,170     847        (1,323

Foreign currency translation adjustment

     (3,318     —          (3,318     252        —          252   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Other Comprehensive Income (Loss)

$ (4,044 $ 291    $ (3,753 $ (1,259 $ 590    $ (669
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Earnings per Share
Earnings per Share

10. EARNINGS PER SHARE

A summary of the calculation of basic and diluted earnings per share for the three months ended March 31, 2015 and 2014 is as follows:

 

     Three Months Ended
March 31,
 
(In thousands, except per share amounts)    2015      2014  

Numerator

     

Net income

   $ 3,317       $ 9,607   
  

 

 

    

 

 

 

Denominator

Weighted average number of shares – basic

  53,399      56,751   

Effect of dilutive securities

Stock options

  220      602   

Restricted stock and restricted stock units

  15      15   
  

 

 

    

 

 

 

Weighted average number of shares – diluted

  53,634      57,368   
  

 

 

    

 

 

 

Net income per share – basic

$ 0.06    $ 0.17   

Net income per share – diluted

$ 0.06    $ 0.17   

Anti-dilutive options to purchase common stock outstanding were excluded from the above calculations. Anti-dilutive options totaled 5.6 million and 3.1 million for the three months ended March 31, 2015 and 2014, respectively.

Segment Information
Segment Information

11. SEGMENT INFORMATION

We operate in two reportable segments: (1) the Carrier Networks Division and (2) the Enterprise Networks Division. We evaluate the performance of our segments based on gross profit; therefore, selling, general and administrative expenses, research and development expenses, interest and dividend income, interest expense, net realized investment gain/loss, other income/expense and provision for taxes are reported on an entity-wide basis only. There are no inter-segment revenues.

The following table presents information about the reported sales and gross profit of our reportable segments for the three months ended March 31, 2015 and 2014. Asset information by reportable segment is not reported, since we do not produce such information internally.

 

     Three Months Ended  
     March 31, 2015      March 31, 2014  
(In thousands)    Sales      Gross Profit      Sales      Gross Profit  

Carrier Networks

   $ 116,014       $ 49,859       $ 118,162       $ 61,353   

Enterprise Networks

     26,821         15,704         28,842         16,437   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 142,835    $ 65,563    $ 147,004    $ 77,790   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Sales by Product

Our three major product categories are Carrier Systems, Business Networking and Loop Access.

Carrier Systems products are used by communications service providers to provide data, voice, and video services to consumers and enterprises. This category includes the following product areas and related services:

 

    Broadband Access

 

    Total Access® 5000 Series of Multi-Service Access Node (MSAN)

 

    hiX 5600 Series of MSANs

 

    Total Access 1100/1200 Series of Fiber to the Node (FTTN) products

 

    hiX 1100 Series of Fiber to the Node (FTTN) products

 

    VDSL2 Vectoring based Digital Subscriber Line Access Multiplexer (DSLAM) products

 

    ADTRAN 500 Series of FTTdp G.fast Distribution Point Units (DPU)

 

    Optical

 

    Optical Networking Edge (ONE)

 

    NetVanta 8000 Series of Fiber Ethernet Access Devices (EAD)

 

    NetVanta 8400 Series of 10Gig Multi-service Edge Switches

 

    OPTI-6100 and Total Access 3000 optical Multi-Service Provisioning Platforms (MSPP)

 

    Pluggable Optical Products, including SFP, XFP, and SFP+

 

    Time Division Multiplexed (TDM) systems

Business Networking products provide access to communication services and facilitate the delivery of cloud connectivity and enterprise communications to the small and mid-sized enterprise (SME) market. This category includes the following product areas and related services:

 

    Internetworking products

 

    Total Access IP Business Gateways

 

    Optical Network Terminals (ONTs)

 

    Bluesocket® virtual Wireless LAN (vWLAN®)

 

    NetVanta®

 

    Access Routers

 

    Enterprise Session Border Controllers (eSBC)

 

    Managed Ethernet Switches

 

    IP Business Gateways

 

    Unified Communications (UC) solutions

 

    Carrier Ethernet Network Terminating Equipment (NTE)

 

    Carrier Ethernet Routers and Gateways

 

    Network Management Solutions

Loop Access products are used by carrier and enterprise customers for access to copper-based communications networks. This category includes the following product areas and related services:

 

    High bit-rate Digital Subscriber Line (HDSL) products

 

    Digital Data Service (DDS)

 

    Integrated Services Digital Network (ISDN) products

 

    T1/E1/T3 Channel Service Units/Data Service Units (CSUs/DSUs)

 

    TRACER fixed-wireless products

 

The table below presents sales information by product category for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended  
     March 31,  
(In thousands)    2015      2014  

Carrier Systems

   $ 100,439       $ 99,553   

Business Networking

     35,381         37,919   

Loop Access

     7,015         9,532   
  

 

 

    

 

 

 

Total

$ 142,835    $ 147,004   
  

 

 

    

 

 

 

In addition, we identify subcategories of product revenues, which we divide into core products and legacy products. Our core products consist of Broadband Access and Optical products (included in Carrier Systems), and Internetworking products (included in Business Networking). Our legacy products include HDSL products (included in Loop Access) and other products not included in the aforementioned core products.

The table below presents subcategory revenues for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended  
     March 31,  
(In thousands)    2015      2014  

Core Products

     

Broadband Access (included in Carrier Systems)

   $ 84,794       $ 81,527   

Optical (included in Carrier Systems)

     12,504         12,789   

Internetworking (included in Business Networking)

     34,159         36,946   
  

 

 

    

 

 

 

Subtotal

  131,457      131,262   

Legacy Products

HDSL (does not include T1) (included in Loop Access)

  6,703      8,877   

Other products (excluding HDSL)

  4,675      6,865   
  

 

 

    

 

 

 

Subtotal

  11,378      15,742   
  

 

 

    

 

 

 

Total

$ 142,835    $ 147,004   
  

 

 

    

 

 

 

Liability for Warranty Returns
Liability for Warranty Returns

12. LIABILITY FOR WARRANTY RETURNS

Our products generally include warranties of 90 days to ten years for product defects. We accrue for warranty returns at the time revenue is recognized based on our estimate of the cost to repair or replace the defective products. We engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers. Our products continue to become more complex in both size and functionality as many of our product offerings migrate from line card applications to systems products. The increasing complexity of our products will cause warranty incidences, when they arise, to be more costly. Our estimates regarding future warranty obligations may change due to product failure rates, material usage, and other rework costs incurred in correcting a product failure. In addition, from time to time, specific warranty accruals may be recorded if unforeseen problems arise. Should our actual experience relative to these factors be worse than our estimates, we will be required to record additional warranty expense. Alternatively, if we provide for more reserves than we require, we will reverse a portion of such provisions in future periods. The liability for warranty obligations totaled $8.7 million at March 31, 2015 and $8.4 million at December 31, 2014. These liabilities are included in accrued expenses in the accompanying Consolidated Balance Sheets.

 

A summary of warranty expense and write-off activity for the three months ended March 31, 2015 and 2014 is as follows:

 

     Three Months Ended  
     March 31,  
     2015      2014  
(In thousands)              

Balance at beginning of period

   $ 8,415       $ 8,977   

Plus: Amounts charged to cost and expenses

     461         434   

Less: Deductions

     (192      (2,019
  

 

 

    

 

 

 

Balance at end of period

$ 8,684    $ 7,392   
  

 

 

    

 

 

 

Related Party Transactions
Related Party Transactions

13. RELATED PARTY TRANSACTIONS

During 2014, we employed the law firm of our director emeritus for legal services. All bills for services rendered by this firm were reviewed and approved by our Chief Financial Officer. We believe that the fees for such services were comparable to those charged by other firms for services rendered to us. The services of our director emeritus ended with his death on September 7, 2014. For the three months ended March 31, 2014, we incurred fees of $10 thousand per month for these legal services.

Commitments and Contingencies
Commitments and Contingencies

14. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, we may be subject to various legal proceedings and claims, including employment disputes, patent claims, disputes over contract agreements and other commercial disputes. In some cases, claimants seek damages or other relief, such as royalty payments related to patents, which, if granted, could require significant expenditures. Although the outcome of any claim or litigation can never be certain, it is our opinion that the outcome of all contingencies of which we are currently aware will not materially affect our business, operations, financial condition or cash flows.

We have committed to invest up to an aggregate of $7.9 million in two private equity funds, and we have contributed $8.4 million as of March 31, 2015, of which $7.7 million has been applied to these commitments.

Subsequent Events
Subsequent Events

15. SUBSEQUENT EVENTS

On April 21, 2015, we announced that our Board of Directors declared a quarterly cash dividend of $0.09 per common share to be paid to stockholders of record at the close of business on May 7, 2015. The payment date will be May 21, 2015. The quarterly dividend payment will be approximately $4.7 million. In July 2003, our Board of Directors elected to begin declaring quarterly dividends on our common stock considering the tax treatment of dividends and adequate levels of Company liquidity.

During the second quarter and as of May 6, 2015, we have repurchased 1.2 million shares of our common stock through open market purchases at an average cost of $16.33 per share. We currently have the authority to purchase an additional 3.4 million shares of our common stock under the current plan approved by the Board of Directors.

Summary of Significant Accounting Policies (Policies)

Basis of Presentation

The accompanying unaudited consolidated financial statements of ADTRAN®, Inc. and its subsidiaries (ADTRAN) have been prepared pursuant to the rules and regulations for reporting on Quarterly Reports on Form 10-Q. Accordingly, certain information and notes required by generally accepted accounting principles for complete financial statements are not included herein. The December 31, 2014 Consolidated Balance Sheet is derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

In the opinion of management, all adjustments necessary to fairly state these interim statements have been recorded and are of a normal and recurring nature. The results of operations for an interim period are not necessarily indicative of the results for the full year. The interim statements should be read in conjunction with the financial statements and notes thereto included in ADTRAN’s Annual Report on Form 10-K for the year ended December 31, 2014, filed on February 24, 2015 with the SEC.

Changes in Classifications

We reclassified $2.3 million from other receivables to accounts receivable at December 31, 2014 to conform to the current period presentation.

Out of Period Adjustment

In connection with the preparation of our Condensed Consolidated Financial Statements, we recorded corrections of certain out of period, immaterial misstatements that occurred in prior periods, the most significant of which resulted in an increase in Other Expense of $1.3 million in the first quarter. The aggregate impact of the corrections was a $0.8 million reduction to pre-tax income for the three months ended March 31, 2015 and is not expected to be material to the current year annual results.

Use of Estimates

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, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Our more significant estimates include the obsolete and excess inventory reserves, warranty reserves, customer rebates, determination of the deferred revenue components of multiple element sales agreements, estimated costs to complete obligations associated with deferred revenues, estimated income tax provision and income tax contingencies, the fair value of stock-based compensation, impairment of goodwill, valuation and estimated lives of intangible assets, estimated pension liability, fair value of investments, and the evaluation of other-than-temporary declines in the value of investments. Actual amounts could differ significantly from these estimates.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. The core principle of ASU 2014-09 is to recognize revenues 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. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early application is not permitted. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. We are currently evaluating the transition method that will be elected and the impact that the adoption of ASU 2014-09 will have on our financial position, results of operations and cash flows.

Pension Benefit Plan (Tables)
Summarization of Components of Net Periodic Pension Cost

The following table summarizes the components of net periodic pension cost for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended
March 31,
 
(In thousands)    2015      2014  

Service cost

   $ 340       $ 305   

Interest cost

     159         215   

Expected return on plan assets

     (261      (279

Amortization of actuarial losses

     105         —     
  

 

 

    

 

 

 

Net periodic pension cost

$ 343    $ 241   
  

 

 

    

 

 

Stock-Based Compensation (Tables)

The following table summarizes the stock-based compensation expense related to stock options, restricted stock units (RSUs) and restricted stock for the three months ended March 31, 2015 and 2014, which was recognized as follows:

 

     Three Months Ended
March 31,
 
(In thousands)    2015      2014  

Stock-based compensation expense included in cost of sales

   $ 90       $ 116   
  

 

 

    

 

 

 

Selling, general and administrative expense

  691      1,026   

Research and development expense

  858      915   
  

 

 

    

 

 

 

Stock-based compensation expense included in operating expenses

  1,549      1,941   
  

 

 

    

 

 

 

Total stock-based compensation expense

  1,639      2,057   

Tax benefit for expense associated with

non-qualified options

  (180   (284
  

 

 

    

 

 

 

Total stock-based compensation expense, net of tax

$ 1,459    $ 1,773   
  

 

 

    

 

 

 

The weighted-average assumptions and value of options granted for the three months ended March 31, 2015 and 2014 are summarized as follows:

 

     Three Months Ended  
     March 31,
2015
    March 31,
2014
 

Expected volatility

     38.75     39.57

Risk-free interest rate

     1.46     1.86

Expected dividend yield

     1.60     1.38

Expected life (in years)

     6.47        6.25   

Weighted-average estimated value

   $ 7.63      $ 9.28   

The following table is a summary of our stock options outstanding as of December 31, 2014 and March 31, 2015 and the changes that occurred during the three months ended March 31, 2015:

 

(In thousands, except per share amounts)    Number of
Options
     Weighted Avg.
Exercise Price
     Weighted Avg.
Remaining
Contractual
Life In Years
     Aggregate
Intrinsic
Value
 

Options outstanding, December 31, 2014

     6,981       $ 23.62         6.45       $ 10,625   

Options granted

     2       $ 22.56         

Options forfeited

     (79    $ 20.87         

Options expired

     (19    $ 27.19         

Options exercised

     (17    $ 16.58         
  

 

 

    

 

 

    

 

 

    

 

 

 

Options outstanding, March 31, 2015

  6,868    $ 23.66      6.18    $ 3,037   
  

 

 

    

 

 

    

 

 

    

 

 

 

Options vested and expected to vest, March 31, 2015

  6,678    $ 23.73      6.11    $ 2,553   
  

 

 

    

 

 

    

 

 

    

 

 

 

Options exercisable, March 31, 2015

  4,362    $ 25.17      4.74    $ 2,303   
  

 

 

    

 

 

    

 

 

    

 

 

 

Investments (Tables)

At March 31, 2015, we held the following securities and investments, recorded at either fair value or cost.

 

(In thousands)    Amortized
Cost
     Gross Unrealized      Carrying
Value
 
      Gains      Losses     

Deferred compensation plan assets

   $ 14,071       $ 2,555       $ (54    $ 16,572   

Corporate bonds

     132,343         250         (205      132,388   

Municipal fixed-rate bonds

     92,810         318         (11      93,117   

Municipal variable rate demand notes

     4,245         —           —           4,245   

Marketable equity securities

     26,608         11,496         (481      37,623   
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities held at fair value

$ 270,077    $ 14,619    $ (751 $ 283,945   
  

 

 

    

 

 

    

 

 

    

Restricted investment held at cost

  30,000   

Other investments held at cost

  1,493   
           

 

 

 

Total carrying value of available-for-sale investments

$ 315,438   
           

 

 

 

At December 31, 2014, we held the following securities and investments, recorded at either fair value or cost.

 

(In thousands)    Amortized
Cost
     Gross Unrealized      Carrying
Value
 
      Gains      Losses     

Deferred compensation plan assets

   $ 13,897       $ 2,409       $ (12    $ 16,294   

Corporate bonds

     111,261         186         (186      111,261   

Municipal fixed-rate bonds

     127,341         480         (34      127,787   

Municipal variable rate demand notes

     2,465         —           —           2,465   

Marketable equity securities

     26,399         12,395         (539      38,255   
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities held at fair value

$ 281,363    $ 15,470    $ (771 $ 296,062   
  

 

 

    

 

 

    

 

 

    

Restricted investment held at cost

  30,000   

Other investments held at cost

  1,506   
           

 

 

 

Total carrying value of available-for-sale investments

$ 327,568   
           

 

 

 

As of March 31, 2015, our corporate bonds and municipal fixed-rate bonds had the following contractual maturities:

 

(In thousands)    Corporate
bonds
     Municipal
fixed-rate
bonds
 

Less than one year

   $ 44,108       $ 30,407   

One to two years

     39,163         39,660   

Two to three years

     49,117         21,826   

Three to five years

     —           1,224   
  

 

 

    

 

 

 

Total

$ 132,388    $ 93,117   
  

 

 

    

 

 

 
The following table presents gross realized gains and losses related to our investments.

 

     Three Months Ended
March 31,
 
(In thousands)    2015      2014  

Gross realized gains

   $ 3,145       $ 2,228   

Gross realized losses

   $ (30    $ (36

We have categorized our cash equivalents held in money market funds and our investments held at fair value into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique for the cash equivalents and investments as follows: Level 1 - Values based on unadjusted quoted prices for identical assets or liabilities in an active market; Level 2 - Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly; Level 3 - Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs include information supplied by investees.

 

     Fair Value Measurements at March 31, 2015 Using  
(In thousands)    Fair Value      Quoted Prices
in Active
Market for
Identical
Assets

(Level 1)
     Significant
Other
Observable
Inputs

(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Cash equivalents

           

Commercial paper

   $ 11,997       $ —         $ 11,997       $ —     

Money market funds

     3,228         3,228         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash equivalents

  15,225      3,228      11,997      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

Deferred compensation plan assets

  16,572      16,572      —        —     

Available-for-sale debt securities

Corporate bonds

  132,388      —        132,388      —     

Municipal fixed-rate bonds

  93,117      —        93,117      —     

Municipal variable rate demand notes

  4,245      —        4,245      —     

Available-for-sale marketable equity securities

Marketable equity securities – technology industry

  9,034      9,034      —        —     

Marketable equity securities – other

  28,589      28,589      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

  283,945      54,195      229,750      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 299,170    $ 57,423    $ 241,747    $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Fair Value Measurements at December 31, 2014 Using  
(In thousands)    Fair Value      Quoted Prices
in Active
Market for
Identical
Assets

(Level 1)
     Significant
Other
Observable
Inputs

(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 

Cash equivalents

           

Money market funds

   $ 1,163       $ 1,163       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

Deferred compensation plan assets

  16,294      16,294      —        —     

Available-for-sale debt securities

Corporate bonds

  111,261      —        111,261      —     

Municipal fixed-rate bonds

  127,787      —        127,787      —     

Municipal variable rate demand notes

  2,465      —        2,465      —     

Available-for-sale marketable equity securities

Marketable equity securities – technology industry

  9,661      9,661      —        —     

Marketable equity securities – other

  28,594      28,594      —        —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

  296,062      54,549      241,513      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 297,225    $ 55,712    $ 241,513    $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative Instruments and Hedging Activities (Tables)

The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of March 31, 2015 and December 31, 2014 were as follows:

 

(In thousands)    Balance Sheet
Location
   March 31,
2015
     December 31,
2014
 

Derivatives Not Designated as Hedging Instruments (Level 2):

        

Foreign exchange contracts – asset derivatives

   Other receivables    $ 1,692       $ 249   

Foreign exchange contracts – liability derivatives

   Accounts payable    $ (607    $ (10

The change in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the three months ended March 31, 2015 and 2014 were as follows:

 

          Three Months Ended  
     Income Statement
Location
   March 31,  
(In thousands)       2015      2014  

Derivatives Not Designated as Hedging Instruments:

        

Foreign exchange contracts

   Other income (expense)    $ 1,476       $ (110

Inventory (Tables)
Components of Inventory

At March 31, 2015 and December 31, 2014, inventory consisted of the following:

 

(In thousands)    March 31,
2015
     December 31,
2014
 

Raw materials

   $ 35,891       $ 34,831   

Work in process

     2,613         3,750   

Finished goods

     54,619         48,129   
  

 

 

    

 

 

 

Total

$ 93,123    $ 86,710   
  

 

 

    

 

 

 
Goodwill and Intangible Assets (Tables)

The following table presents our intangible assets as of March 31, 2015 and December 31, 2014:

 

(In thousands)    March 31, 2015      December 31, 2014  
     Gross
Value
     Accumulated
Amortization
    Net Value      Gross
Value
     Accumulated
Amortization
    Net Value  

Customer relationships

   $ 5,787       $ (2,146   $ 3,641       $ 6,310       $ (2,136   $ 4,174   

Developed technology

     5,696         (3,660     2,036         6,005         (3,577     2,428   

Intellectual property

     2,340         (1,603     737         2,340         (1,520     820   

Trade names

     270         (220     50         270         (205     65   

Other

     11         (11     —           12         (11     1   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total

$ 14,104    $ (7,640 $ 6,464    $ 14,937    $ (7,449 $ 7,488   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

As of March 31, 2015, the estimated future amortization expense of our intangible assets is as follows:

 

(In thousands)    Amount  

Remainder of 2015

   $ 1,413   

2016

     1,648   

2017

     1,145   

2018

     691   

2019

     298   

Thereafter

     1,269   
  

 

 

 

Total

$ 6,464   
  

 

 

 
Stockholders' Equity (Tables)

A summary of the changes in stockholders’ equity for the three months ended March 31, 2015 is as follows:

 

(In thousands)    Stockholders’
Equity
 

Balance, December 31, 2014

   $  549,013   

Net income

     3,317   

Dividend payments

     (4,811

Dividends accrued for unvested restricted stock units

     11   

Net unrealized losses on available-for-sale securities (net of tax)

     (503

Defined benefit plan adjustments

     68   

Foreign currency translation adjustment

     (3,318

Proceeds from stock option exercises

     280   

Purchase of treasury stock

     (3,035

Income tax benefit from exercise of stock options

     8   

Stock-based compensation expense

     1,639   
  

 

 

 

Balance, March 31, 2015

$ 542,669   
  

 

 

 

During the three months ended March 31, 2015, we paid cash dividends as follows (in thousands except per share amounts):

 

Record Date

   Payment Date      Per Share Amount      Total Dividend Paid  

February 5, 2015

     February 19, 2015       $ 0.09       $ 4,811   

The following tables present changes in accumulated other comprehensive income, net of tax, by component for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended March 31, 2015  

(In thousands)

   Unrealized
Gains
(Losses) on
Available-
for-Sale
Securities
     Defined
Benefit Plan
Adjustments
     Foreign
Currency
Adjustments
     Total  

Beginning balance

   $ 8,964       $ (5,757    $ (3,282    $ (75

Other comprehensive income (loss) before reclassifications

     1,360         —           (3,318      (1,958

Amounts reclassified from accumulated other comprehensive income

     (1,863      68         —           (1,795
  

 

 

    

 

 

    

 

 

    

 

 

 

Net current period other comprehensive income(loss)

  (503   68      (3,318   (3,753
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

$ 8,461    $ (5,689 $ (6,600 $ (3,828
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended March 31, 2014  

(In thousands)

   Unrealized
Gains
(Losses) on
Available-
for-Sale
Securities
     Defined
Benefit Plan
Adjustments
     Foreign
Currency
Adjustments
     Total  

Beginning balance

   $ 10,737       $ (891    $ 907       $ 10,753   

Other comprehensive income (loss) before reclassifications

     402         —           252         654   

Amounts reclassified from accumulated other comprehensive income

     (1,323      —           —           (1,323
  

 

 

    

 

 

    

 

 

    

 

 

 

Net current period other comprehensive income(loss)

  (921   —        252      (669
  

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

$ 9,816    $ (891 $ 1,159    $ 10,084   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following tables present the details of reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2015 and 2014:

 

(In thousands)    Three Months Ended March 31, 2015

Details about Accumulated Other Comprehensive Income
Components

   Amount Reclassified
from Accumulated
Other Comprehensive
Income
     Affected Line Item in the
Statement Where Net
Income Is Presented

Unrealized gains (losses) on available-for-sale securities:

     

Net realized gain on sales of securities

   $ 3,076       Net realized investment gain

Impairment expense

     (22    Net realized investment gain

Defined benefit plan adjustments – actuarial losses

     (98    1
  

 

 

    

Total reclassifications for the period, before tax

  2,956   

Tax (expense) benefit

  (1,161
  

 

 

    

Total reclassifications for the period, net of tax

$ 1,795   
  

 

 

    

 

1 Included in the computation of net periodic pension cost. See Note 3 of Notes to Consolidated Financial Statements.

 

(In thousands)    Three Months Ended March 31, 2014  

Details about Accumulated Other Comprehensive Income
Components

   Amount Reclassified
from Accumulated
Other Comprehensive
Income
     Affected Line Item in the
Statement Where Net
Income Is Presented
 

Unrealized gains (losses) on available-for-sale securities:

     

Net realized gain on sales of securities

   $ 2,170         Net realized investment gain   

Impairment expense

     —           Net realized investment gain   
  

 

 

    

Total reclassifications for the period, before tax

  2,170   

Tax (expense) benefit

  (847
  

 

 

    

Total reclassifications for the period, net of tax

$ 1,323   
  

 

 

    

The following table presents the tax effects related to the change in each component of other comprehensive income for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended
March 31, 2015
    Three Months Ended
March 31, 2014
 
(In thousands)    Before-Tax
Amount
    Tax
(Expense)
Benefit
    Net-of-Tax
Amount
    Before-Tax
Amount
    Tax
Benefit
    Net-of-Tax
Amount
 

Unrealized gains (losses) on available-for-sale securities

   $ 2,230      $ (870   $ 1,360      $ 659      $ (257   $ 402   

Reclassification adjustment for amounts included in net income

     (2,956     1,161        (1,795     (2,170     847        (1,323

Foreign currency translation adjustment

     (3,318     —          (3,318     252        —          252   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Other Comprehensive Income (Loss)

$ (4,044 $ 291    $ (3,753 $ (1,259 $ 590    $ (669
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Earnings per Share (Tables)
Summary of Calculation of Basic and Diluted Earnings Per Share

A summary of the calculation of basic and diluted earnings per share for the three months ended March 31, 2015 and 2014 is as follows:

 

     Three Months Ended
March 31,
 
(In thousands, except per share amounts)    2015      2014  

Numerator

     

Net income

   $ 3,317       $ 9,607   
  

 

 

    

 

 

 

Denominator

Weighted average number of shares – basic

  53,399      56,751   

Effect of dilutive securities

Stock options

  220      602   

Restricted stock and restricted stock units

  15      15   
  

 

 

    

 

 

 

Weighted average number of shares – diluted

  53,634      57,368   
  

 

 

    

 

 

 

Net income per share – basic

$ 0.06    $ 0.17   

Net income per share – diluted

$ 0.06    $ 0.17   

Segment Information (Tables)

The following table presents information about the reported sales and gross profit of our reportable segments for the three months ended March 31, 2015 and 2014. Asset information by reportable segment is not reported, since we do not produce such information internally.

 

     Three Months Ended  
     March 31, 2015      March 31, 2014  
(In thousands)    Sales      Gross Profit      Sales      Gross Profit  

Carrier Networks

   $ 116,014       $ 49,859       $ 118,162       $ 61,353   

Enterprise Networks

     26,821         15,704         28,842         16,437   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 142,835    $ 65,563    $ 147,004    $ 77,790   
  

 

 

    

 

 

    

 

 

    

 

 

 

The table below presents sales information by product category for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended  
     March 31,  
(In thousands)    2015      2014  

Carrier Systems

   $ 100,439       $ 99,553   

Business Networking

     35,381         37,919   

Loop Access

     7,015         9,532   
  

 

 

    

 

 

 

Total

$ 142,835    $ 147,004   
  

 

 

    

 

 

 

The table below presents subcategory revenues for the three months ended March 31, 2015 and 2014:

 

     Three Months Ended  
     March 31,  
(In thousands)    2015      2014  

Core Products

     

Broadband Access (included in Carrier Systems)

   $ 84,794       $ 81,527   

Optical (included in Carrier Systems)

     12,504         12,789   

Internetworking (included in Business Networking)

     34,159         36,946   
  

 

 

    

 

 

 

Subtotal

  131,457      131,262   

Legacy Products

HDSL (does not include T1) (included in Loop Access)

  6,703      8,877   

Other products (excluding HDSL)

  4,675      6,865   
  

 

 

    

 

 

 

Subtotal

  11,378      15,742   
  

 

 

    

 

 

 

Total

$ 142,835    $ 147,004   
  

 

 

    

 

 

 

Liability for Warranty Returns (Tables)
Summary of Warranty Expense and Write-Off Activity

A summary of warranty expense and write-off activity for the three months ended March 31, 2015 and 2014 is as follows:

 

     Three Months Ended  
     March 31,  
     2015      2014  
(In thousands)              

Balance at beginning of period

   $ 8,415       $ 8,977   

Plus: Amounts charged to cost and expenses

     461         434   

Less: Deductions

     (192      (2,019
  

 

 

    

 

 

 

Balance at end of period

$ 8,684    $ 7,392   
  

 

 

    

 

 

 
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Other Receivables [Member]
Dec. 31, 2014
Accounts Receivable [Member]
Summary of Significant Accounting Policy [Line Items]
 
 
 
Reduction of pre-tax income
$ 0.8 
 
 
Increase in other expenses
1.3 
 
 
Prior period reclassification adjustment
 
$ (2.3)
$ 2.3 
Income Taxes - Additional Information (Detail)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Income Tax Disclosure [Abstract]
 
 
Effective tax rate
39.80% 
34.60% 
Pension Benefit Plan - Summarization of Components of Net Periodic Pension Cost (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
 
 
Service cost
$ 340 
$ 305 
Interest cost
159 
215 
Expected return on plan assets
(261)
(279)
Amortization of actuarial losses
105 
 
Net periodic pension cost
$ 343 
$ 241 
Stock-Based Compensation - Summary of Weighted-Average Assumptions and Value of Options Granted (Detail) (Stock Options [Member], USD $)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Stock Options [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expected volatility
38.75% 
39.57% 
Risk-free interest rate
1.46% 
1.86% 
Expected dividend yield
1.60% 
1.38% 
Expected life (in years)
6 years 5 months 19 days 
6 years 3 months 
Weighted-average estimated value
$ 7.63 
$ 9.28 
Stock-Based Compensation - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Estimated forfeitures for stock options
3.10% 
 
Compensation expense related to non-vested stock options, RSUs and restricted stock not yet recognized
$ 15.2 
 
Recognition period of non-vested compensation cost
2 years 8 months 12 days 
 
Total pre-tax intrinsic value of options exercised
$ 0.1 
 
Restricted Stock Units (RSUs) [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of RSUs and restricted stock grants in period
Number of RSUs and restricted stock forfeitures in period
12,000 
 
Number of RSUs and restricted stock vesting in period
Restricted Stock [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of RSUs and restricted stock grants in period
Number of RSUs and restricted stock forfeitures in period
Number of RSUs and restricted stock vesting in period
RSUs and Restricted Stock [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Forfeiture rate for RSUs and restricted stock
0.00% 
 
Stock-Based Compensation - Summary of Stock Options Outstanding (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
Number of Options, outstanding, Beginning Balance
6,981 
 
Number of Options, granted
 
Number of Options, forfeited
(79)
 
Number of Options, expired
(19)
 
Number of Options, exercised
(17)
 
Number of Options, outstanding, Ending Balance
6,868 
6,981 
Number of Options, vested and expected to vest, Ending Balance
6,678 
 
Number of Options, Options exercisable
4,362 
 
Weighted Average Exercise Price, outstanding, Beginning Balance
$ 23.62 
 
Weighted Average Exercise Price, granted
$ 22.56 
 
Weighted Average Exercise Price, forfeited
$ 20.87 
 
Weighted Average Exercise Price, expired
$ 27.19 
 
Weighted Average Exercise Price, exercised
$ 16.58 
 
Weighted Average Exercise Price, outstanding, Ending Balance
$ 23.66 
$ 23.62 
Weighted Average Exercise Price, vested and expected to vest, Ending Balance
$ 23.73 
 
Weighted Average Exercise Price, Options exercisable
$ 25.17 
 
Weighted Average Remaining Contractual Life In Years, Options outstanding
6 years 2 months 5 days 
6 years 5 months 12 days 
Weighted Average Remaining Contractual Life In Years, Options vested and expected to vest
6 years 1 month 10 days 
 
Weighted Average Remaining Contractual Life In Years, Options exercisable
4 years 8 months 27 days 
 
Aggregate Intrinsic Value, Options outstanding, Beginning Balance
$ 3,037 
$ 10,625 
Aggregate Intrinsic Value, Options vested and expected to vest
2,553 
 
Aggregate Intrinsic Value, Options exercisable
$ 2,303 
 
Investments - Securities and Investments, Recorded at Either Fair Value or Cost (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
$ 270,077 
$ 281,363 
Gross Unrealized Gains
14,619 
15,470 
Gross Unrealized Losses
(751)
(771)
Available-for-sale-securities, Carrying Value
283,945 
296,062 
Restricted investment held at cost
30,000 
30,000 
Other investments held at cost
1,493 
1,506 
Total carrying value of available-for-sale investments
315,438 
327,568 
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
14,071 
13,897 
Gross Unrealized Gains
2,555 
2,409 
Gross Unrealized Losses
(54)
(12)
Available-for-sale-securities, Carrying Value
16,572 
16,294 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
132,343 
111,261 
Gross Unrealized Gains
250 
186 
Gross Unrealized Losses
(205)
(186)
Available-for-sale-securities, Carrying Value
132,388 
111,261 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
92,810 
127,341 
Gross Unrealized Gains
318 
480 
Gross Unrealized Losses
(11)
(34)
Available-for-sale-securities, Carrying Value
93,117 
127,787 
Municipal Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
4,245 
2,465 
Available-for-sale-securities, Carrying Value
4,245 
2,465 
Marketable Equity Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
26,608 
26,399 
Gross Unrealized Gains
11,496 
12,395 
Gross Unrealized Losses
(481)
(539)
Available-for-sale-securities, Carrying Value
$ 37,623 
$ 38,255 
Investments - Contractual Maturities of Corporate Bonds and Municipal Fixed-Rate Bonds (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale-securities, Fair Value/Carrying Value
$ 283,945 
$ 296,062 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
44,108 
 
One to two years
39,163 
 
Two to three years
49,117 
 
Available-for-sale-securities, Fair Value/Carrying Value
132,388 
111,261 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
30,407 
 
One to two years
39,660 
 
Two to three years
21,826 
 
Three to five years
1,224 
 
Available-for-sale-securities, Fair Value/Carrying Value
$ 93,117 
$ 127,787 
Investments - Additional Information (Detail) (USD $)
3 Months Ended
Mar. 31, 2015
Dec. 31, 2014
Schedule of Investments [Line Items]
 
 
Restricted certificate of deposit held
$ 30,000,000 
$ 30,000,000 
Identification of potential other-than-temporary impairments
25.00% 
 
Alabama State Industrial Development Authority [Member] |
Taxable Revenue Bond [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Investments [Line Items]
 
 
Estimated fair value of bond
$ 29,700,000 
 
Investment [Member] |
Issuer Concentration [Member] |
Market Value of Total Investment Portfolio [Member]
 
 
Schedule of Investments [Line Items]
 
 
Investment concentration risk percentage
5.00% 
 
Investments - Gross Realized Gains and Losses on Sale of Securities (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Investments, Debt and Equity Securities [Abstract]
 
 
Gross realized gains
$ 3,145 
$ 2,228 
Gross realized losses
$ (30)
$ (36)
Investments - Fair Value Measurements of Cash Equivalents Held in Money Market Funds and Investments (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
$ 283,945 
$ 296,062 
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
16,572 
16,294 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
132,388 
111,261 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
93,117 
127,787 
Municipal Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
4,245 
2,465 
Fair Value, Measurements, Recurring [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
15,225 
 
Available-for-sale securities
283,945 
296,062 
Total
299,170 
297,225 
Fair Value, Measurements, Recurring [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
3,228 
 
Available-for-sale securities
54,195 
54,549 
Total
57,423 
55,712 
Fair Value, Measurements, Recurring [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
11,997 
 
Available-for-sale securities
229,750 
241,513 
Total
241,747 
241,513 
Fair Value, Measurements, Recurring [Member] |
Money Market Funds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
3,228 
1,163 
Fair Value, Measurements, Recurring [Member] |
Money Market Funds [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
3,228 
1,163 
Fair Value, Measurements, Recurring [Member] |
Commercial Paper [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
11,997 
 
Fair Value, Measurements, Recurring [Member] |
Commercial Paper [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
11,997 
 
Fair Value, Measurements, Recurring [Member] |
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
16,572 
16,294 
Fair Value, Measurements, Recurring [Member] |
Deferred Compensation Plan Assets [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
16,572 
16,294 
Fair Value, Measurements, Recurring [Member] |
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
132,388 
111,261 
Fair Value, Measurements, Recurring [Member] |
Corporate Bonds [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
132,388 
111,261 
Fair Value, Measurements, Recurring [Member] |
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
93,117 
127,787 
Fair Value, Measurements, Recurring [Member] |
Municipal Fixed-Rate Bonds [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
93,117 
127,787 
Fair Value, Measurements, Recurring [Member] |
Municipal Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
4,245 
2,465 
Fair Value, Measurements, Recurring [Member] |
Municipal Variable Rate Demand Notes [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
4,245 
2,465 
Fair Value, Measurements, Recurring [Member] |
Marketable Equity Securities - Technology Industry [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
9,034 
9,661 
Fair Value, Measurements, Recurring [Member] |
Marketable Equity Securities - Technology Industry [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
9,034 
9,661 
Fair Value, Measurements, Recurring [Member] |
Marketable Equity Securities - Other [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
28,589 
28,594 
Fair Value, Measurements, Recurring [Member] |
Marketable Equity Securities - Other [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
$ 28,589 
$ 28,594 
Derivative Instruments and Hedging Activities - Additional Information (Detail)
3 Months Ended
Mar. 31, 2015
Mar. 31, 2015
Forward Contracts [Member]
USD ($)
Mar. 31, 2015
Forward Contracts [Member]
EUR (€)
Derivative [Line Items]
 
 
 
Maximum contractual period for derivatives
12 months 
 
 
Derivative, notional amount
 
$ 67,700,000 
€ 63,000,000 
Derivative maturity year
 
2015 
2015 
Derivative Instruments and Hedging Activities - Schedule of Fair Values of Hedging Instruments Recorded in Consolidated Balance Sheet (Detail) (Significant Other Observable Inputs (Level 2) [Member], Foreign Exchange Contracts [Member], USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Other Receivables [Member]
 
 
Derivatives Not Designated as Hedging Instruments (Level 2):
 
 
Derivatives asset, fair value
$ 1,692 
$ 249 
Accounts Payable [Member]
 
 
Derivatives Not Designated as Hedging Instruments (Level 2):
 
 
Derivatives liability, fair value
$ (607)
$ (10)
Derivative Instruments and Hedging Activities - Schedule of Change in Fair Values of Derivative Instruments Recorded in Consolidated Statements of Income (Detail) (Foreign Exchange Contracts [Member], Other Income (Expense) [Member], USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Foreign Exchange Contracts [Member] |
Other Income (Expense) [Member]
 
 
Derivatives Not Designated as Hedging Instruments:
 
 
Derivative instrument, gain or loss
$ 1,476 
$ (110)
Inventory - Components of Inventory (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 35,891 
$ 34,831 
Work in process
2,613 
3,750 
Finished goods
54,619 
48,129 
Total
$ 93,123 
$ 86,710 
Inventory - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Raw Materials [Member]
 
 
Inventory [Line Items]
 
 
Inventory valuation reserves
$ 16.9 
$ 16.9 
Finished Goods [Member]
 
 
Inventory [Line Items]
 
 
Inventory valuation reserves
$ 7.6 
$ 7.8 
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
Goodwill, relates to acquisition
$ 3,500,000 
 
$ 3,500,000 
Impairment losses
 
 
Amortization expense
$ 500,000 
$ 600,000 
 
Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2015
Dec. 31, 2014
Goodwill [Line Items]
 
 
Gross Value
$ 14,104 
$ 14,937 
Accumulated Amortization
(7,640)
(7,449)
Net Value
6,464 
7,488 
Customer Relationships [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
5,787 
6,310 
Accumulated Amortization
(2,146)
(2,136)
Net Value
3,641 
4,174 
Developed Technology [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
5,696 
6,005 
Accumulated Amortization
(3,660)
(3,577)
Net Value
2,036 
2,428 
Intellectual Property [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
2,340 
2,340 
Accumulated Amortization
(1,603)
(1,520)
Net Value
737 
820 
Trade Names [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
270 
270 
Accumulated Amortization
(220)
(205)
Net Value
50 
65 
Other [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
11 
12 
Accumulated Amortization
(11)
(11)
Net Value
 
$ 1 
Stockholders' Equity - Summary of Changes in Stockholders' Equity (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Equity [Abstract]
 
 
Beginning Balance
$ 549,013 
 
Net Income
3,317 
9,607 
Dividend payments
(4,811)
 
Dividends accrued for unvested restricted stock units
11 
 
Net unrealized losses on available-for-sale securities (net of tax)
(503)
(921)
Defined benefit plan adjustments
68 
 
Foreign currency translation adjustment
(3,318)
252 
Proceeds from stock option exercises
280 
1,541 
Purchase of treasury stock
(3,035)
 
Income tax benefit from exercise of stock options
 
Stock-based compensation expense
1,639 
2,057 
Ending Balance
$ 542,669 
 
Stockholders' Equity - Additional Information (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2015
Mar. 31, 2014
Equity, Class of Treasury Stock [Line Items]