ADTRAN INC, 10-Q filed on 5/7/2014
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2014
Apr. 23, 2014
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Mar. 31, 2014 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q1 
 
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
 
56,417,196 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Current Assets
 
 
Cash and cash equivalents
$ 52,815 
$ 58,298 
Short-term investments
89,160 
105,760 
Accounts receivable, less allowance for doubtful accounts of $133 and $130 at March 31, 2014 and December 31, 2013, respectively
100,524 
85,814 
Other receivables
28,967 
18,249 
Inventory
87,396 
90,111 
Prepaid expenses
5,005 
4,325 
Deferred tax assets, net
15,181 
17,083 
Total Current Assets
379,048 
379,640 
Property, plant and equipment, net
75,885 
76,739 
Deferred tax assets, net
11,491 
9,622 
Goodwill
3,492 
3,492 
Other assets
11,933 
11,180 
Long-term investments
309,452 
309,225 
Total Assets
791,301 
789,898 
Current Liabilities
 
 
Accounts payable
59,097 
48,282 
Unearned revenue
27,533 
22,205 
Accrued expenses
10,683 
12,776 
Accrued wages and benefits
17,448 
14,040 
Income tax payable, net
5,272 
5,002 
Total Current Liabilities
120,033 
102,305 
Non-current unearned revenue
15,116 
14,643 
Other non-current liabilities
23,476 
22,144 
Bonds payable
30,000 
46,200 
Total Liabilities
188,625 
185,292 
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 56,646 shares outstanding at March 31, 2014 and 79,652 shares issued and 56,918 shares outstanding at December 31, 2013
797 
797 
Additional paid-in capital
235,624 
233,511 
Accumulated other comprehensive income
10,084 
10,753 
Retained earnings
888,121 
884,451 
Less treasury stock at cost: 23,006 and 22,734 shares at March 31, 2014 and December 31, 2013, respectively
(531,950)
(524,906)
Total Stockholders' Equity
602,676 
604,606 
Total Liabilities and Stockholders' Equity
$ 791,301 
$ 789,898 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Statement Of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 133 
$ 130 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
200,000 
200,000 
Common stock, shares issued
79,652 
79,652 
Common stock, shares outstanding
56,646 
56,918 
Treasury stock, shares
23,006 
22,734 
Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Income Statement [Abstract]
 
 
Sales
$ 147,004 
$ 143,013 
Cost of sales
69,214 
73,336 
Gross Profit
77,790 
69,677 
Selling, general and administrative expenses
33,939 
30,603 
Research and development expenses
32,553 
32,511 
Operating Income
11,298 
6,563 
Interest and dividend income
1,294 
1,768 
Interest expense
(227)
(581)
Net realized investment gain
2,192 
3,645 
Other income (expense), net
122 
(1,672)
Income before provision for income taxes
14,679 
9,723 
Provision for income taxes
(5,072)
(1,833)
Net Income
$ 9,607 
$ 7,890 
Weighted average shares outstanding - basic
56,751 
61,847 
Weighted average shares outstanding - diluted
57,368 
62,030 
Earnings per common share - basic
$ 0.17 
$ 0.13 
Earnings per common share - diluted
$ 0.17 
$ 0.13 
Dividend per share
$ 0.09 
$ 0.09 
Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Statement Of Income And Comprehensive Income [Abstract]
 
 
Net income
$ 9,607 
$ 7,890 
Other Comprehensive Loss, net of tax:
 
 
Net unrealized losses on available-for-sale securities
(921)
(1,644)
Foreign currency translation
252 
323 
Other Comprehensive Income (Loss), net of tax
(669)
(1,321)
Comprehensive Income, net of tax
$ 8,938 
$ 6,569 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Cash flows from operating activities:
 
 
Net income
$ 9,607 
$ 7,890 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
3,580 
3,663 
Amortization of net premium on available-for-sale investments
1,135 
1,754 
Net realized gain on long-term investments
(2,192)
(3,645)
Net (gain) loss on disposal of property, plant and equipment
(3)
17 
Stock-based compensation expense
2,057 
2,232 
Deferred income taxes
627 
715 
Tax benefit from stock option exercises
57 
 
Excess tax benefits from stock-based compensation arrangements
(55)
 
Changes in operating assets and liabilities:
 
 
Accounts receivable, net
(14,668)
(1,306)
Other receivables
(10,710)
(224)
Inventory
2,739 
6,540 
Prepaid expenses and other assets
(2,024)
(217)
Accounts payable
11,043 
7,170 
Accrued expenses and other liabilities
8,431 
1,188 
Income tax payable, net
275 
379 
Net cash provided by operating activities
9,899 
26,156 
Cash flows from investing activities:
 
 
Purchases of property, plant and equipment
(2,042)
(643)
Proceeds from disposals of property, plant and equipment
 
Proceeds from sales and maturities of available-for-sale investments
85,072 
118,133 
Purchases of available-for-sale investments
(69,182)
(125,411)
Net cash provided by (used in) investing activities
13,849 
(7,921)
Cash flows from financing activities:
 
 
Proceeds from stock option exercises
1,541 
55 
Purchases of treasury stock
(9,427)
(22,546)
Dividend payments
(5,102)
(5,586)
Payments on long-term debt
(16,500)
 
Excess tax benefits from stock-based compensation arrangements
55 
 
Net cash used in financing activities
(29,433)
(28,077)
Net decrease in cash and cash equivalents
(5,685)
(9,842)
Effect of exchange rate changes
202 
25 
Cash and cash equivalents, beginning of period
58,298 
68,457 
Cash and cash equivalents, end of period
52,815 
58,640 
Supplemental disclosure of non-cash investing activities
 
 
Purchases of property, plant and equipment included in accounts payable
$ 85 
$ 92 
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, 2013 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 for a fair presentation of 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, 2013, filed on February 27, 2014 with the SEC.

Changes in Classifications

We corrected immaterial misclassifications between the operating and investing sections of our consolidated statements of cash flows and adjusted our cash flows for the three months ended March 31, 2013 in these categories by $0.1 million in order to be consistent with the 2014 presentation.

Out of Period Adjustment

During the year ended December 31, 2013, we identified two adjustments in the acquired NSN (formerly Nokia Siemens Networks) Broadband Access business (NSN BBA business) relating to customer payment discounts for one customer, and recoverable VAT taxes on certain vendor freight invoices that should have been recorded in prior periods. These adjustments resulted from a $0.3 million understatement of net income in the first quarter of 2013. We evaluated the impact of the adjustments on the results of our previously issued financial statements for first quarter of 2013 and concluded that the impact was not material. We also evaluated the impact of the cumulative effect of the adjustments in 2013 and concluded that the impact was not material to our results for the year 2013. Accordingly, during the three months ended September 30, 2013 we recorded an out of period adjustment to correct these issues.

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 working capital adjustments under negotiation related to the NSN BBA business acquisition, 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

During the three months ended March 31, 2014, no accounting pronouncements were issued that would have a material effect on our consolidated results of operations or financial condition.

Income Taxes
Income Taxes

2. INCOME TAXES

Our effective tax rate increased from 18.9% in the three months ended March 31, 2013 to 34.6% in the three months ended March 31, 2014. The increase in the effective tax rate between the two periods is primarily attributable to the net effect of recording the benefit for the research tax credit for the 2012 tax year in January 2013 pursuant to the American Taxpayer Relief Act of 2012, and the inclusion of the benefit of the estimated 2013 research tax credit in the estimated annual effective rate for 2013. Additionally, the effective tax rate in the first quarter of 2014 did not include a benefit for the research tax credit, which expired on December 31, 2013. This increase was partially offset

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, 2014 and 2013:

 

     Three Months Ended
March 31,
 
(In thousands)    2014     2013  

Service cost

   $ 305      $ 300   

Interest cost

     215        187   

Expected return on plan assets

     (279     (253
  

 

 

   

 

 

 

Net periodic pension cost

   $ 241      $ 234   
  

 

 

   

 

 

 
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, 2014 and 2013, which was recognized as follows:

 

     Three Months Ended
March 31,
 
(In thousands)    2014     2013  

Stock-based compensation expense included in cost of sales

   $ 116      $ 106   
  

 

 

   

 

 

 

Selling, general and administrative expense

     1,026        1,063   

Research and development expense

     915        1,063   
  

 

 

   

 

 

 

Stock-based compensation expense included in operating expenses

     1,941        2,126   
  

 

 

   

 

 

 

Total stock-based compensation expense

     2,057        2,232   

Tax benefit for expense associated with

non-qualified options

     (284     (307
  

 

 

   

 

 

 

Total stock-based compensation expense, net of tax

   $ 1,773      $ 1,925   
  

 

 

   

 

 

 

The fair value of our stock options was 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.

 

There were no options granted during the three months ended March 31, 2013. The weighted-average assumptions and value of options granted for the three months ended March 31, 2014 are summarized as follows:

 

     Three Months Ended
March 31,

2014
 

Expected volatility

     39.57

Risk-free interest rate

     1.86

Expected dividend yield

     1.38

Expected life (in years)

     6.25   

Weighted-average estimated value

   $ 9.28   

The fair value of our RSUs is calculated using a Monte Carlo Simulation valuation method. No RSUs were granted, forfeited, or vested during the three months ended March 31, 2014 or 2013.

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, 2014 or 2013.

Stock-based compensation expense recognized in our Consolidated Statements of Income for the three months ended March 31, 2014 and 2013 is based on options, RSUs and restricted stock ultimately expected to vest, and has been reduced for estimated forfeitures. Estimated forfeitures for stock options were based upon historical experience and approximate 2.5% 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, 2014, total compensation expense related to non-vested stock options, RSUs and restricted stock not yet recognized was approximately $16.4 million, which is expected to be recognized over an average remaining recognition period of 2.5 years.

The following table is a summary of our stock options outstanding as of December 31, 2013 and March 31, 2014 and the changes that occurred during the three months ended March 31, 2014:

 

(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, 2013

     6,358      $ 24.43         6.60       $ 25,878   

Options granted

     2      $ 26.03         

Options cancelled/forfeited

     (61   $ 25.16         

Options exercised

     (78   $ 19.71         
  

 

 

   

 

 

    

 

 

    

 

 

 

Options outstanding, March 31, 2014

     6,221      $ 24.48         6.35       $ 14,478   
  

 

 

   

 

 

    

 

 

    

 

 

 

Options exercisable, March 31, 2014

     3,826      $ 24.84         4.93       $ 8,526   
  

 

 

   

 

 

    

 

 

    

 

 

 

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, 2014. 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, 2014 was $0.5 million.

Investments
Investments

5. INVESTMENTS

At March 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

   $ 12,523       $ 2,770       $ (16   $ 15,277   

Corporate bonds

     130,437         456         (30     130,863   

Municipal fixed-rate bonds

     157,851         673         (137     158,387   

Municipal variable rate demand notes

     24,840         —           —          24,840   

Marketable equity securities

     25,166         12,798         (378     37,586   
  

 

 

    

 

 

    

 

 

   

 

 

 

Available-for-sale securities held at fair value

   $ 350,817       $ 16,697       $ (561   $ 366,953   
  

 

 

    

 

 

    

 

 

   

Restricted investment held at cost

             30,000   

Other investments held at cost

             1,659   
          

 

 

 

Total carrying value of available-for-sale investments

           $ 398,612   
          

 

 

 

At December 31, 2013, 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

   $ 12,300       $ 2,847       $ (24   $ 15,123   

Corporate bonds

     166,370         534         (45     166,859   

Municipal fixed-rate bonds

     135,773         583         (54     136,302   

Municipal variable rate demand notes

     8,310         —           —          8,310   

Marketable equity securities

     24,654         13,975         (177     38,452   
  

 

 

    

 

 

    

 

 

   

 

 

 

Available-for-sale securities held at fair value

   $ 347,407       $ 17,939       $ (300   $ 365,046   
  

 

 

    

 

 

    

 

 

   

Restricted investment held at cost

             48,250   

Other investments held at cost

             1,689   
          

 

 

 

Total carrying value of available-for-sale investments

           $ 414,985   
          

 

 

 

 

As of March 31, 2014, 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

   $ 34,248       $ 34,630   

One to two years

     52,222         60,991   

Two to three years

     44,393         47,713   

Three to five years

     —           15,053   
  

 

 

    

 

 

 

Total

   $ 130,863       $ 158,387   
  

 

 

    

 

 

 

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, 2014, 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). During the first quarter of 2014, we made a principal payment on the Bond of $16.5 million. At March 31, 2014, the estimated fair value of the Bond using a level 2 valuation technique was approximately $29.6 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. As a result of our review, we recorded no other-than-temporary impairment charges during the three months ended March 31, 2014. For the three months ended March 31, 2013, we recorded an other-than-temporary impairment charge of $4 thousand related to one marketable equity security.

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)    2014     2013  

Gross realized gains

   $ 2,228      $ 3,727   

Gross realized losses

   $ (36   $ (82

As of March 31, 2014 and 2013, 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, 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

   $ 11,742       $ 11,742       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

           

Deferred compensation plan assets

     15,277         15,277         —           —     

Available-for-sale debt securities

           

Corporate bonds

     130,863         —           130,863         —     

Municipal fixed-rate bonds

     158,387         —           158,387         —     

Municipal variable rate demand notes

     24,840         —           24,840         —     

Available-for-sale marketable equity securities

           

Equity securities – technology industry

     10,639         10,639         —           —     

Equity securities – other

     26,947         26,947         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

     366,953         52,863         314,090         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 378,695       $ 64,605       $ 314,090       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 
     Fair Value Measurements at December 31, 2013 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

   $ 3,949       $ 3,949       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

           

Deferred compensation plan assets

     15,123         15,123         —           —     

Available-for-sale debt securities

           

Corporate bonds

     166,859         —           166,859         —     

Municipal fixed-rate bonds

     136,302         —           136,302         —     

Municipal variable rate demand notes

     8,310         —           8,310         —     

Available-for-sale marketable equity securities

           

Equity securities – technology industry

     11,398         11,398         —           —     

Equity securities – other

     27,054         27,054         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

     365,046         53,575         311,471         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 368,995       $ 57,524       $ 311,471       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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 international customers who are billed in their local 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, 2014, we had forward contracts outstanding with notional amounts totaling €20.7 million ($28.5 million), which mature through 2014.

The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of March 31, 2014 and December 31, 2013 were as follows:

 

(In thousands)   

Balance Sheet
Location

   March 31,
2014
    December 31,
2013
 

Derivatives Not Designated as Hedging Instruments (Level 2):

       

Foreign exchange contracts – asset derivatives

   Other receivables    $ 1      $ 18   

Foreign exchange contracts – liability derivatives

   Accounts payable    $ (8   $ (15

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

 

          Three Months Ended  
(In thousands)   

Income Statement Location

   March 31, 2014     March 31, 2013  

Derivatives Not Designated as Hedging Instruments:

       

Foreign exchange contracts

   Other income (expense)    $ (110   $ (224

 

Inventory
Inventory

7. INVENTORY

At March 31, 2014 and December 31, 2013, inventory consisted of the following:

 

     March 31,      December 31,  
(In thousands)    2014      2013  

Raw materials

   $ 41,546       $ 44,093   

Work in process

     3,217         3,484   

Finished goods

     42,633         42,534   
  

 

 

    

 

 

 

Total

   $ 87,396       $ 90,111   
  

 

 

    

 

 

 

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, 2014 and December 31, 2013, raw materials reserves totaled $17.0 million and $16.9 million, respectively, and finished goods inventory reserves totaled $4.9 million and $6.1 million, respectively. The decrease in finished goods inventory reserve from December 31, 2013 to March 31, 2014 is primarily attributable to the disposal of inventory that was fully reserved.

Goodwill and Intangible Assets
Goodwill and Intangible Assets

8. GOODWILL AND INTANGIBLE ASSETS

The change in the carrying value of goodwill, all of which is included in our Enterprise Networks division, for the three months ended March 31, 2014 is as follows:

 

(In thousands)       

Balance, December 31, 2013

   $  3,492   

Acquisitions

     —     

Impairment losses

     —     
  

 

 

 

Balance, March 31, 2014

   $ 3,492   
  

 

 

 

Balance as of March 31, 2014

  

Goodwill

   $ 3,492   

Accumulated impairment losses

     —     
  

 

 

 

Total goodwill

   $ 3,492   
  

 

 

 

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. When evaluating whether goodwill is impaired, we compare the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, then the amount of the impairment loss is measured. There were no impairment losses recorded during the three months ended March 31, 2014 or 2013.

Intangible assets are included in other assets in the accompanying Consolidated Balance Sheets and include intangibles acquired in conjunction with our acquisition 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, 2014 and December 31, 2013:

 

(In thousands)    March 31, 2014      December 31, 2013  
   Gross
Value
     Accumulated
Amortization
    Net Value      Gross
Value
     Accumulated
Amortization
    Net Value  

Customer relationships

   $ 6,963       $ (1,742   $ 5,221       $ 6,996       $ (1,555   $ 5,441   

Developed technology

     6,392         (2,939     3,453         6,537         (2,692     3,845   

Intellectual property

     2,340         (1,269     1,071         2,340         (1,185     1,155   

Trade names

     270         (160     110         270         (145     125   

Other

     14         (9     5         14         (8     6   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 15,979       $ (6,119   $ 9,860       $ 16,157       $ (5,585   $ 10,572   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

Amortization expense, all of which relates to business acquisitions, was $0.6 million for the three months ended March 31, 2014 and 2013.

As of March 31, 2014, the estimated future amortization expense of our intangible assets is as follows:

 

(In thousands)    Amount  

Remainder of 2014

   $ 1,718   

2015

     2,168   

2016

     1,893   

2017

     1,290   

2018

     782   

Thereafter

     2,009   
  

 

 

 

Total

   $ 9,860   
  

 

 

 
Stockholders' Equity
Stockholders' Equity

9. STOCKHOLDERS’ EQUITY

A summary of the changes in stockholders’ equity for the three months ended March 31, 2014 is as follows:

 

     Stockholders’  
(In thousands)    Equity  

Balance, December 31, 2013

   $  604,606   

Net income

     9,607   

Dividend payments

     (5,102

Dividends accrued for unvested restricted stock units

     6   

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

     (921

Foreign currency translation adjustment

     252   

Proceeds from stock option exercises

     1,541   

Purchase of treasury stock

     (9,427

Income tax benefit from exercise of stock options

     57   

Stock-based compensation expense

     2,057   
  

 

 

 

Balance, March 31, 2014

   $ 602,676   
  

 

 

 

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 40.0 million shares of our common stock. During the three months ended March 31, 2014, we repurchased 0.4 million shares of our common stock at an average price of $25.13 per share. We currently have the authority to purchase an additional 3.1 million shares of our common stock under the current plan approved by the Board of Directors on May 1, 2013.

Stock Option Exercises

We issued 0.1 million shares of treasury stock during the three months ended March 31, 2014 to accommodate employee stock option exercises. The stock options had exercise prices ranging from $15.29 to $23.46. We received proceeds totaling $1.5 million from the exercise of these stock options during the three months ended March 31, 2014.

Dividend Payments

During the three months ended March 31, 2014, we paid cash dividends as follows (in thousands except per share amounts):

 

Record Date

   Payment Date      Per Share Amount      Total Dividend Paid  

February 6, 2014

     February 20, 2014       $ 0.09       $ 5,102   

 

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 and realized gains (losses) on available-for-sale securities, 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, 2014 and 2013:

 

     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   
  

 

 

   

 

 

   

 

 

    

 

 

 

 

     Three Months Ended March 31, 2013  
(In thousands)    Unrealized
Gains
(Losses) on
Available-
for-Sale
Securities
    Defined
Benefit Plan
Adjustments
    Foreign
Currency
Adjustments
     Total  

Beginning balance

   $  10,108      $ (1,952   $ 3,112       $ 11,268   

Other comprehensive income (loss) before reclassifications

     454        —          323         777   

Amounts reclassified from accumulated other comprehensive income

     (2,098     —          —           (2,098
  

 

 

   

 

 

   

 

 

    

 

 

 

Net current period other comprehensive income (loss)

     (1,644     —          323         (1,321
  

 

 

   

 

 

   

 

 

    

 

 

 

Ending balance

   $ 8,464      $ (1,952   $ 3,435       $ 9,947   
  

 

 

   

 

 

   

 

 

    

 

 

 

 

The following tables present the details of reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2014 and 2013:

 

(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     
  

 

 

   

 

(In thousands)    Three Months Ended March 31, 2013

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

   $ 3,444      Net realized investment gain

Impairment expense

     (4   Net realized investment gain
  

 

 

   

Total reclassifications for the period, before tax

     3,440     

Tax (expense) benefit

     (1,342  
  

 

 

   

Total reclassifications for the period, net of tax

   $ 2,098     
  

 

 

   

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, 2014 and 2013:

 

     Three Months Ended
March 31, 2014
    Three Months Ended
March 31, 2013
 
(In thousands)    Before-Tax
Amount
    Tax
(Expense)
Benefit
    Net-of-Tax
Amount
    Before-Tax
Amount
    Tax
(Expense)
Benefit
    Net-of-Tax
Amount
 

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

   $ 659      $ (257   $ 402      $ 744      $ (290   $ 454   

Reclassification adjustment for amounts included in net income

     (2,170     847        (1,323     (3,440     1,342        (2,098

Foreign currency translation adjustment

     252        —          252        323        —          323   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Other Comprehensive Income (Loss)

   $ (1,259   $ 590      $ (669   $ (2,373   $ 1,052      $ (1,321
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
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, 2014 and 2013 is as follows:

 

     Three Months Ended
March 31,
 
(In thousands, except per share amounts)    2014      2013  

Numerator

     

Net income

   $ 9,607       $ 7,890   
  

 

 

    

 

 

 

Denominator

     

Weighted average number of shares – basic

     56,751         61,847   

Effect of dilutive securities

     

Stock options

     602         162   

Restricted stock and restricted stock units

     15         21   
  

 

 

    

 

 

 

Weighted average number of shares – diluted

     57,368         62,030   
  

 

 

    

 

 

 

Net income per share – basic

   $ 0.17       $ 0.13   

Net income per share – diluted

   $ 0.17       $ 0.13   

Anti-dilutive options to purchase common stock outstanding were excluded from the above calculations. Anti-dilutive options totaled 3.1 million and 5.4 million for the three months ended March 31, 2014 and 2013, 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 expense, research and development expenses, interest income 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, 2014 and 2013. Asset information by reportable segment is not reported, since we do not produce such information internally.

 

     Three Months Ended  
     March 31, 2014      March 31, 2013  
(In thousands)    Sales      Gross Profit      Sales      Gross Profit  

Carrier Networks

   $ 118,162       $ 61,353       $ 109,887       $ 51,591   

Enterprise Networks

     28,842         16,437         33,126         18,086   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 147,004       $ 77,790       $ 143,013       $ 69,677   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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 Multi-Service Access Node (MSAN)

 

    hiX family of MSANs

 

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

 

    Ultra Broadband Ethernet (UBE)

 

    Digital Subscriber Line Access Multiplexer (DSLAM) products

 

    Optical

 

    Optical Networking Edge (ONE)

 

    NetVanta 8000 Series of Fiber Ethernet Access Devices (EAD)

 

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

 

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

 

    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®

 

    Multiservice Routers

 

    Managed Ethernet Switches

 

    IP Business Gateways

 

    Unified Communications (UC) solutions

 

    Carrier Ethernet Network Terminating Equipment (NTE)

 

    Network Management Solutions

 

    Integrated Access Devices (IADs)

Loop Access products are used by carrier and enterprise customers for access to copper-based communications networks. The Loop Access 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, 2014 and 2013:

 

     Three Months Ended
March 31,
 
(In thousands)    2014      2013  

Carrier Systems

   $ 99,553       $ 92,804   

Business Networking

     37,919         38,076   

Loop Access

     9,532         12,133   
  

 

 

    

 

 

 

Total

   $ 147,004       $ 143,013   
  

 

 

    

 

 

 

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, 2014 and 2013:

 

     Three Months Ended
March 31,
 
(In thousands)    2014      2013  

Core Products

     

Broadband Access (included in Carrier Systems)

   $ 81,527       $ 72,234   

Optical (included in Carrier Systems)

     12,789         8,874   

Internetworking (included in Business Networking)

     36,946         36,912   
  

 

 

    

 

 

 

Subtotal

     131,262         118,020   

Legacy Products

     

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

     8,877         11,407   

Other products (excluding HDSL)

     6,865         13,586   
  

 

 

    

 

 

 

Subtotal

     15,742         24,993   
  

 

 

    

 

 

 

Total

   $ 147,004       $ 143,013   
  

 

 

    

 

 

 
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 $7.4 million at March 31, 2014 and $9.0 million at December 31, 2013. The decrease from December 31, 2013 to March 31, 2014 includes a $1.5 million decrease related to the settlement of an outstanding warranty claim, which corresponds to a reduction in Other Receivables. 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, 2014 and 2013 is as follows:

 

     Three Months Ended
March 31,
 
     2014     2013  
(In thousands)             

Balance at beginning of period

   $ 8,977      $ 9,653   

Plus: Amounts charged to cost and expenses

     434        397   

Less: Deductions

     (2,019     (1,258
  

 

 

   

 

 

 

Balance at end of period

   $ 7,392      $ 8,792   
  

 

 

   

 

 

 

Deductions for the three months ended March 31, 2014 include a $1.5 million reduction that relates to the settlement of an outstanding warranty claim, which corresponds to a reduction in Other Receivables.

Related Party Transactions
Related Party Transactions

13. RELATED PARTY TRANSACTIONS

We employ the law firm of our director emeritus for legal services. All bills for services rendered by this firm are reviewed and approved by our Chief Financial Officer. We believe that the fees for such services are comparable to those charged by other firms for services rendered to us. For the three months ended March 31, 2014 and 2013, 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, 2014, of which $7.7 million has been applied to these commitments.

Subsequent Events
Subsequent Events

15. SUBSEQUENT EVENTS

On April 15, 2014, 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 1, 2014. The payment date will be May 15, 2014. The quarterly dividend payment will be approximately $5.0 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 7, 2014, we have repurchased 1.3 million shares of our common stock through open market purchases at an average cost of $22.63 per share. We currently have the authority to purchase an additional 1.8 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, 2013 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 for a fair presentation of 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, 2013, filed on February 27, 2014 with the SEC.

Changes in Classifications

We corrected immaterial misclassifications between the operating and investing sections of our consolidated statements of cash flows and adjusted our cash flows for the three months ended March 31, 2013 in these categories by $0.1 million in order to be consistent with the 2014 presentation.

Out of Period Adjustment

During the year ended December 31, 2013, we identified two adjustments in the acquired NSN (formerly Nokia Siemens Networks) Broadband Access business (NSN BBA business) relating to customer payment discounts for one customer, and recoverable VAT taxes on certain vendor freight invoices that should have been recorded in prior periods. These adjustments resulted from a $0.3 million understatement of net income in the first quarter of 2013. We evaluated the impact of the adjustments on the results of our previously issued financial statements for first quarter of 2013 and concluded that the impact was not material. We also evaluated the impact of the cumulative effect of the adjustments in 2013 and concluded that the impact was not material to our results for the year 2013. Accordingly, during the three months ended September 30, 2013 we recorded an out of period adjustment to correct these issues.

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 working capital adjustments under negotiation related to the NSN BBA business acquisition, 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

During the three months ended March 31, 2014, no accounting pronouncements were issued that would have a material effect on our consolidated results of operations or financial condition.

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, 2014 and 2013:

 

     Three Months Ended
March 31,
 
(In thousands)    2014     2013  

Service cost

   $ 305      $ 300   

Interest cost

     215        187   

Expected return on plan assets

     (279     (253
  

 

 

   

 

 

 

Net periodic pension cost

   $ 241      $ 234   
  

 

 

   

 

 

 
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, 2014 and 2013, which was recognized as follows:

 

     Three Months Ended
March 31,
 
(In thousands)    2014     2013  

Stock-based compensation expense included in cost of sales

   $ 116      $ 106   
  

 

 

   

 

 

 

Selling, general and administrative expense

     1,026        1,063   

Research and development expense

     915        1,063   
  

 

 

   

 

 

 

Stock-based compensation expense included in operating expenses

     1,941        2,126   
  

 

 

   

 

 

 

Total stock-based compensation expense

     2,057        2,232   

Tax benefit for expense associated with

non-qualified options

     (284     (307
  

 

 

   

 

 

 

Total stock-based compensation expense, net of tax

   $ 1,773      $ 1,925   
  

 

 

   

 

 

 

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

 

     Three Months Ended
March 31,

2014
 

Expected volatility

     39.57

Risk-free interest rate

     1.86

Expected dividend yield

     1.38

Expected life (in years)

     6.25   

Weighted-average estimated value

   $ 9.28   

The following table is a summary of our stock options outstanding as of December 31, 2013 and March 31, 2014 and the changes that occurred during the three months ended March 31, 2014:

 

(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, 2013

     6,358      $ 24.43         6.60       $ 25,878   

Options granted

     2      $ 26.03         

Options cancelled/forfeited

     (61   $ 25.16         

Options exercised

     (78   $ 19.71         
  

 

 

   

 

 

    

 

 

    

 

 

 

Options outstanding, March 31, 2014

     6,221      $ 24.48         6.35       $ 14,478   
  

 

 

   

 

 

    

 

 

    

 

 

 

Options exercisable, March 31, 2014

     3,826      $ 24.84         4.93       $ 8,526   
  

 

 

   

 

 

    

 

 

    

 

 

 
Investments (Tables)

At March 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

   $ 12,523       $ 2,770       $ (16   $ 15,277   

Corporate bonds

     130,437         456         (30     130,863   

Municipal fixed-rate bonds

     157,851         673         (137     158,387   

Municipal variable rate demand notes

     24,840         —           —          24,840   

Marketable equity securities

     25,166         12,798         (378     37,586   
  

 

 

    

 

 

    

 

 

   

 

 

 

Available-for-sale securities held at fair value

   $ 350,817       $ 16,697       $ (561   $ 366,953   
  

 

 

    

 

 

    

 

 

   

Restricted investment held at cost

             30,000   

Other investments held at cost

             1,659   
          

 

 

 

Total carrying value of available-for-sale investments

           $ 398,612   
          

 

 

 

At December 31, 2013, 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

   $ 12,300       $ 2,847       $ (24   $ 15,123   

Corporate bonds

     166,370         534         (45     166,859   

Municipal fixed-rate bonds

     135,773         583         (54     136,302   

Municipal variable rate demand notes

     8,310         —           —          8,310   

Marketable equity securities

     24,654         13,975         (177     38,452   
  

 

 

    

 

 

    

 

 

   

 

 

 

Available-for-sale securities held at fair value

   $ 347,407       $ 17,939       $ (300   $ 365,046   
  

 

 

    

 

 

    

 

 

   

Restricted investment held at cost

             48,250   

Other investments held at cost

             1,689   
          

 

 

 

Total carrying value of available-for-sale investments

           $ 414,985   
          

 

 

 

As of March 31, 2014, 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

   $ 34,248       $ 34,630   

One to two years

     52,222         60,991   

Two to three years

     44,393         47,713   

Three to five years

     —           15,053   
  

 

 

    

 

 

 

Total

   $ 130,863       $ 158,387   
  

 

 

    

 

 

 

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

 

     Three Months Ended
March 31,
 
(In thousands)    2014     2013  

Gross realized gains

   $ 2,228      $ 3,727   

Gross realized losses

   $ (36   $ (82

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, 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

   $ 11,742       $ 11,742       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

           

Deferred compensation plan assets

     15,277         15,277         —           —     

Available-for-sale debt securities

           

Corporate bonds

     130,863         —           130,863         —     

Municipal fixed-rate bonds

     158,387         —           158,387         —     

Municipal variable rate demand notes

     24,840         —           24,840         —     

Available-for-sale marketable equity securities

           

Equity securities – technology industry

     10,639         10,639         —           —     

Equity securities – other

     26,947         26,947         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

     366,953         52,863         314,090         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 378,695       $ 64,605       $ 314,090       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 
     Fair Value Measurements at December 31, 2013 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

   $ 3,949       $ 3,949       $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

           

Deferred compensation plan assets

     15,123         15,123         —           —     

Available-for-sale debt securities

           

Corporate bonds

     166,859         —           166,859         —     

Municipal fixed-rate bonds

     136,302         —           136,302         —     

Municipal variable rate demand notes

     8,310         —           8,310         —     

Available-for-sale marketable equity securities

           

Equity securities – technology industry

     11,398         11,398         —           —     

Equity securities – other

     27,054         27,054         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Available-for-sale securities

     365,046         53,575         311,471         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 368,995       $ 57,524       $ 311,471       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 
Derivative Instruments and Hedging Activities (Tables)

The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of March 31, 2014 and December 31, 2013 were as follows:

 

(In thousands)   

Balance Sheet
Location

   March 31,
2014
    December 31,
2013
 

Derivatives Not Designated as Hedging Instruments (Level 2):

       

Foreign exchange contracts – asset derivatives

   Other receivables    $ 1      $ 18   

Foreign exchange contracts – liability derivatives

   Accounts payable    $ (8   $ (15

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

 

          Three Months Ended  
(In thousands)   

Income Statement Location

   March 31, 2014     March 31, 2013  

Derivatives Not Designated as Hedging Instruments:

       

Foreign exchange contracts

   Other income (expense)    $ (110   $ (224
Inventory (Tables)
Components of Inventory

At March 31, 2014 and December 31, 2013, inventory consisted of the following:

 

     March 31,      December 31,  
(In thousands)    2014      2013  

Raw materials

   $ 41,546       $ 44,093   

Work in process

     3,217         3,484   

Finished goods

     42,633         42,534   
  

 

 

    

 

 

 

Total

   $ 87,396       $ 90,111   
  

 

 

    

 

 

 
Goodwill and Intangible Assets (Tables)

The change in the carrying value of goodwill, all of which is included in our Enterprise Networks division, for the three months ended March 31, 2014 is as follows:

 

(In thousands)       

Balance, December 31, 2013

   $  3,492   

Acquisitions

     —     

Impairment losses

     —     
  

 

 

 

Balance, March 31, 2014

   $ 3,492   
  

 

 

 

Balance as of March 31, 2014

  

Goodwill

   $ 3,492   

Accumulated impairment losses

     —     
  

 

 

 

Total goodwill

   $ 3,492   
  

 

 

 

The following table presents our intangible assets as of March 31, 2014 and December 31, 2013:

 

(In thousands)    March 31, 2014      December 31, 2013  
   Gross
Value
     Accumulated
Amortization
    Net Value      Gross
Value
     Accumulated
Amortization
    Net Value  

Customer relationships

   $ 6,963       $ (1,742   $ 5,221       $ 6,996       $ (1,555   $ 5,441   

Developed technology

     6,392         (2,939     3,453         6,537         (2,692     3,845   

Intellectual property

     2,340         (1,269     1,071         2,340         (1,185     1,155   

Trade names

     270         (160     110         270         (145     125   

Other

     14         (9     5         14         (8     6   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 15,979       $ (6,119   $ 9,860       $ 16,157       $ (5,585   $ 10,572   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

As of March 31, 2014, the estimated future amortization expense of our intangible assets is as follows:

 

(In thousands)    Amount  

Remainder of 2014

   $ 1,718   

2015

     2,168   

2016

     1,893   

2017

     1,290   

2018

     782   

Thereafter

     2,009   
  

 

 

 

Total

   $ 9,860   
  

 

 

 
Stockholders' Equity (Tables)

A summary of the changes in stockholders’ equity for the three months ended March 31, 2014 is as follows:

 

     Stockholders’  
(In thousands)    Equity  

Balance, December 31, 2013

   $  604,606   

Net income

     9,607   

Dividend payments

     (5,102

Dividends accrued for unvested restricted stock units

     6   

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

     (921

Foreign currency translation adjustment

     252   

Proceeds from stock option exercises

     1,541   

Purchase of treasury stock

     (9,427

Income tax benefit from exercise of stock options

     57   

Stock-based compensation expense

     2,057   
  

 

 

 

Balance, March 31, 2014

   $ 602,676   
  

 

 

 

During the three months ended March 31, 2014, we paid cash dividends as follows (in thousands except per share amounts):

 

Record Date

   Payment Date      Per Share Amount      Total Dividend Paid  

February 6, 2014

     February 20, 2014       $ 0.09       $ 5,102   

The following tables present changes in accumulated other comprehensive income, net of tax, by component for the three months ended March 31, 2014 and 2013:

 

     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   
  

 

 

   

 

 

   

 

 

    

 

 

 

 

     Three Months Ended March 31, 2013  
(In thousands)    Unrealized
Gains
(Losses) on
Available-
for-Sale
Securities
    Defined
Benefit Plan
Adjustments
    Foreign
Currency
Adjustments
     Total  

Beginning balance

   $  10,108      $ (1,952   $ 3,112       $ 11,268   

Other comprehensive income (loss) before reclassifications

     454        —          323         777   

Amounts reclassified from accumulated other comprehensive income

     (2,098     —          —           (2,098
  

 

 

   

 

 

   

 

 

    

 

 

 

Net current period other comprehensive income (loss)

     (1,644     —          323         (1,321
  

 

 

   

 

 

   

 

 

    

 

 

 

Ending balance

   $ 8,464      $ (1,952   $ 3,435       $ 9,947   
  

 

 

   

 

 

   

 

 

    

 

 

 

The following tables present the details of reclassifications out of accumulated other comprehensive income for the three months ended March 31, 2014 and 2013:

 

(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     
  

 

 

   

 

(In thousands)    Three Months Ended March 31, 2013

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

   $ 3,444      Net realized investment gain

Impairment expense

     (4   Net realized investment gain
  

 

 

   

Total reclassifications for the period, before tax

     3,440     

Tax (expense) benefit

     (1,342  
  

 

 

   

Total reclassifications for the period, net of tax

   $ 2,098     
  

 

 

   

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, 2014 and 2013:

 

     Three Months Ended
March 31, 2014
    Three Months Ended
March 31, 2013
 
(In thousands)    Before-Tax
Amount
    Tax
(Expense)
Benefit
    Net-of-Tax
Amount
    Before-Tax
Amount
    Tax
(Expense)
Benefit
    Net-of-Tax
Amount
 

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

   $ 659      $ (257   $ 402      $ 744      $ (290   $ 454   

Reclassification adjustment for amounts included in net income

     (2,170     847        (1,323     (3,440     1,342        (2,098

Foreign currency translation adjustment

     252        —          252        323        —          323   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Other Comprehensive Income (Loss)

   $ (1,259   $ 590      $ (669   $ (2,373   $ 1,052      $ (1,321
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
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, 2014 and 2013 is as follows:

 

     Three Months Ended
March 31,
 
(In thousands, except per share amounts)    2014      2013  

Numerator

     

Net income

   $ 9,607       $ 7,890   
  

 

 

    

 

 

 

Denominator

     

Weighted average number of shares – basic

     56,751         61,847   

Effect of dilutive securities

     

Stock options

     602         162   

Restricted stock and restricted stock units

     15         21   
  

 

 

    

 

 

 

Weighted average number of shares – diluted

     57,368         62,030   
  

 

 

    

 

 

 

Net income per share – basic

   $ 0.17       $ 0.13   

Net income per share – diluted

   $ 0.17       $ 0.13   
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, 2014 and 2013. Asset information by reportable segment is not reported, since we do not produce such information internally.

 

     Three Months Ended  
     March 31, 2014      March 31, 2013  
(In thousands)    Sales      Gross Profit      Sales      Gross Profit  

Carrier Networks

   $ 118,162       $ 61,353       $ 109,887       $ 51,591   

Enterprise Networks

     28,842         16,437         33,126         18,086   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 147,004       $ 77,790       $ 143,013       $ 69,677   
  

 

 

    

 

 

    

 

 

    

 

 

 

The table below presents sales information by product category for the three months ended March 31, 2014 and 2013:

 

     Three Months Ended
March 31,
 
(In thousands)    2014      2013  

Carrier Systems

   $ 99,553       $ 92,804   

Business Networking

     37,919         38,076   

Loop Access

     9,532         12,133   
  

 

 

    

 

 

 

Total

   $ 147,004       $ 143,013   
  

 

 

    

 

 

 

The table below presents subcategory revenues for the three months ended March 31, 2014 and 2013:

 

     Three Months Ended
March 31,
 
(In thousands)    2014      2013  

Core Products

     

Broadband Access (included in Carrier Systems)

   $ 81,527       $ 72,234   

Optical (included in Carrier Systems)

     12,789         8,874   

Internetworking (included in Business Networking)

     36,946         36,912   
  

 

 

    

 

 

 

Subtotal

     131,262         118,020   

Legacy Products

     

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

     8,877         11,407   

Other products (excluding HDSL)

     6,865         13,586   
  

 

 

    

 

 

 

Subtotal

     15,742         24,993   
  

 

 

    

 

 

 

Total

   $ 147,004       $ 143,013   
  

 

 

    

 

 

 
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, 2014 and 2013 is as follows:

 

     Three Months Ended
March 31,
 
     2014     2013  
(In thousands)             

Balance at beginning of period

   $ 8,977      $ 9,653   

Plus: Amounts charged to cost and expenses

     434        397   

Less: Deductions

     (2,019     (1,258
  

 

 

   

 

 

 

Balance at end of period

   $ 7,392      $ 8,792   
  

 

 

   

 

 

 
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Adjustments to Operating Activities [Member]
Mar. 31, 2014
Adjustments to Investing Activities [Member]
Mar. 31, 2013
Immaterial Corrections [Member]
Summary of Significant Accounting Policy [Line Items]
 
 
 
Prior period reclassification adjustment
$ 0.1 
$ 0.1 
 
Understatement of net income in the first quarter of 2013
 
 
$ 0.3 
Income Taxes - Additional Information (Detail)
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Income Tax Disclosure [Abstract]
 
 
Effective tax rate
34.60% 
18.90% 
Pension Benefit Plan - Summarization of Components of Net Periodic Pension Cost (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Compensation And Retirement Disclosure [Abstract]
 
 
Service cost
$ 305 
$ 300 
Interest cost
215 
187 
Expected return on plan assets
(279)
(253)
Net periodic pension cost
$ 241 
$ 234 
Stock-Based Compensation - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of Options, granted
2,000 
Estimated forfeitures for stock options
2.50% 
 
Forfeiture rate for RSUs and restricted stock
0.00% 
 
Compensation expense related to non-vested stock options, RSUs and restricted stock not yet recognized
$ 16.4 
 
Recognition period of non-vested compensation cost
2 years 6 months 
 
Total pre-tax intrinsic value of options exercised
$ 0.5 
 
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
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
Stock-Based Compensation - Summary of Weighted-Average Assumptions and Value of Options Granted (Detail)
3 Months Ended
Mar. 31, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
Expected volatility
39.57% 
Risk-free interest rate
1.86% 
Expected dividend yield
1.38% 
Expected life (in years)
6 years 3 months 
Weighted-average estimated value
$ 9.28 
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, 2014
Mar. 31, 2013
Dec. 31, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
 
Number of Options, outstanding, Beginning Balance
6,358 
 
 
Number of Options, granted
 
Number of Options, cancelled/forfeited
(61)
 
 
Number of Options, exercised
(78)
 
 
Number of Options, outstanding, Ending Balance
6,221 
 
6,358 
Number of Options, Options exercisable
3,826 
 
 
Weighted Average Exercise Price, outstanding, Beginning Balance
$ 24.43 
 
 
Weighted Average Exercise Price, granted
$ 26.03 
 
 
Weighted Average Exercise Price, cancelled/forfeited
$ 25.16 
 
 
Weighted Average Exercise Price, exercised
$ 19.71 
 
 
Weighted Average Exercise Price, outstanding, Ending Balance
$ 24.48 
 
$ 24.43 
Weighted Average Exercise Price, Options exercisable
$ 24.84 
 
 
Weighted Average Remaining Contractual Life In Years, Options outstanding
6 years 4 months 6 days 
 
6 years 7 months 6 days 
Weighted Average Remaining Contractual Life In Years, Options exercisable
4 years 11 months 5 days 
 
 
Aggregate Intrinsic Value, Options outstanding, Beginning Balance
$ 25,878 
 
 
Aggregate Intrinsic Value, Options outstanding, Ending Balance
14,478 
 
25,878 
Aggregate Intrinsic Value, Options exercisable
$ 8,526 
 
 
Investments - Securities and Investments, Recorded at Either Fair Value or Cost (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
$ 350,817 
$ 347,407 
Gross Unrealized Gains
16,697 
17,939 
Gross Unrealized Losses
(561)
(300)
Available-for-sale-securities, Fair Value/Carrying Value
366,953 
365,046 
Restricted investment held at cost
30,000 
48,250 
Other investments held at cost
1,659 
1,689 
Total carrying value of available-for-sale investments
398,612 
414,985 
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
12,523 
12,300 
Gross Unrealized Gains
2,770 
2,847 
Gross Unrealized Losses
(16)
(24)
Available-for-sale-securities, Fair Value/Carrying Value
15,277 
15,123 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
130,437 
166,370 
Gross Unrealized Gains
456 
534 
Gross Unrealized Losses
(30)
(45)
Available-for-sale-securities, Fair Value/Carrying Value
130,863 
166,859 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
157,851 
135,773 
Gross Unrealized Gains
673 
583 
Gross Unrealized Losses
(137)
(54)
Available-for-sale-securities, Fair Value/Carrying Value
158,387 
136,302 
Municipal Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
24,840 
8,310 
Available-for-sale-securities, Fair Value/Carrying Value
24,840 
8,310 
Marketable Equity Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
25,166 
24,654 
Gross Unrealized Gains
12,798 
13,975 
Gross Unrealized Losses
(378)
(177)
Available-for-sale-securities, Fair Value/Carrying Value
$ 37,586 
$ 38,452 
Investments - Contractual Maturities of Corporate and Municipal Fixed-Rate Bonds (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale-securities, Fair Value/Carrying Value
$ 366,953 
$ 365,046 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
34,248 
 
One to two years
52,222 
 
Two to three years
44,393 
 
Available-for-sale-securities, Fair Value/Carrying Value
130,863 
 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
34,630 
 
One to two years
60,991 
 
Two to three years
47,713 
 
Three to five years
15,053 
 
Available-for-sale-securities, Fair Value/Carrying Value
$ 158,387 
 
Investments - Additional Information (Detail) (USD $)
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Securities
Dec. 31, 2013
Schedule of Investments [Line Items]
 
 
 
Restricted certificate of deposit held
$ 30,000,000 
 
$ 48,250,000 
Principal payment on the Bond
16,500,000 
 
 
Identification of potential other-than-temporary impairments
25.00% 
 
 
Impairment of investments
 
4,000 
 
Number of marketable equity securities impaired
 
 
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
$ 29,600,000 
 
 
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, 2014
Mar. 31, 2013
Investments Debt And Equity Securities [Abstract]
 
 
Gross realized gains
$ 2,228 
$ 3,727 
Gross realized losses
$ (36)
$ (82)
Investments - Fair Value Measurements of Cash Equivalents Held in Money Market Funds and Investments (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
$ 366,953 
$ 365,046 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
130,863 
 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
158,387 
 
Fair Value, Measurements, Recurring [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
366,953 
365,046 
Total
378,695 
368,995 
Fair Value, Measurements, Recurring [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
52,863 
53,575 
Total
64,605 
57,524 
Fair Value, Measurements, Recurring [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
314,090 
311,471 
Total
314,090 
311,471 
Fair Value, Measurements, Recurring [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
   
   
Total
   
   
Fair Value, Measurements, Recurring [Member] |
Money Market Funds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
11,742 
3,949 
Fair Value, Measurements, Recurring [Member] |
Money Market Funds [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
11,742 
3,949 
Fair Value, Measurements, Recurring [Member] |
Money Market Funds [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
   
   
Fair Value, Measurements, Recurring [Member] |
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
15,277 
15,123 
Fair Value, Measurements, Recurring [Member] |
Deferred Compensation Plan Assets [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
15,277 
15,123 
Fair Value, Measurements, Recurring [Member] |
Deferred Compensation Plan Assets [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
   
   
Fair Value, Measurements, Recurring [Member] |
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
130,863 
166,859 
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
130,863 
166,859 
Fair Value, Measurements, Recurring [Member] |
Corporate Bonds [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
   
   
Fair Value, Measurements, Recurring [Member] |
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
158,387 
136,302 
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
158,387 
136,302 
Fair Value, Measurements, Recurring [Member] |
Municipal Fixed-Rate Bonds [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
   
   
Fair Value, Measurements, Recurring [Member] |
Municipal Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
24,840 
8,310 
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
24,840 
8,310 
Fair Value, Measurements, Recurring [Member] |
Municipal Variable Rate Demand Notes [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
   
   
Fair Value, Measurements, Recurring [Member] |
Equity Securities - Technology Industry [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
10,639 
11,398 
Fair Value, Measurements, Recurring [Member] |
Equity Securities - Technology Industry [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
10,639 
11,398 
Fair Value, Measurements, Recurring [Member] |
Equity Securities - Technology Industry [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
   
   
Fair Value, Measurements, Recurring [Member] |
Equity Securities - Other [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
26,947 
27,054 
Fair Value, Measurements, Recurring [Member] |
Equity Securities - Other [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
26,947 
27,054 
Fair Value, Measurements, Recurring [Member] |
Equity Securities - Other [Member] |
Significant Unobservable Inputs (Level 3) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
   
   
Derivative Instruments and Hedging Activities - Additional Information (Detail)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2014
Forward Contracts [Member]
USD ($)
Mar. 31, 2014
Forward Contracts [Member]
EUR (€)
Derivative [Line Items]
 
 
 
Maximum contractual period for derivatives
12 months 
 
 
Derivative, notional amount
 
$ 28.5 
€ 20.7 
Derivative maturity year
 
2014 
2014 
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, 2014
Dec. 31, 2013
Other Receivables [Member]
 
 
Derivatives Not Designated as Hedging Instruments (Level 2):
 
 
Derivatives asset, fair value
$ 1 
$ 18 
Accounts Payable [Member]
 
 
Derivatives Not Designated as Hedging Instruments (Level 2):
 
 
Derivatives liability, fair value
$ (8)
$ (15)
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, 2014
Mar. 31, 2013
Foreign Exchange Contracts [Member] |
Other Income (Expense) [Member]
 
 
Derivatives Not Designated as Hedging Instruments:
 
 
Derivative instrument, gain or loss
$ (110)
$ (224)
Inventory - Components of Inventory (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 41,546 
$ 44,093 
Work in process
3,217 
3,484 
Finished goods
42,633 
42,534 
Total
$ 87,396 
$ 90,111 
Inventory - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Inventory Disclosure [Abstract]
 
 
Raw materials reserves, total
$ 17.0 
$ 16.9 
Finished goods inventory reserves, total
$ 4.9 
$ 6.1 
Goodwill and Intangible Assets - Change in Carrying Value of Goodwill (Detail) (USD $)
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
Goodwill, Beginning balance
$ 3,492,000 
 
Acquisitions
   
 
Impairment losses
Accumulated impairment losses
   
 
Goodwill, Ending balance
$ 3,492,000 
 
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Goodwill And Intangible Assets Disclosure [Abstract]
 
 
Impairment losses
$ 0 
$ 0 
Amortization expense
$ 0.6 
$ 0.6 
Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Goodwill [Line Items]
 
 
Gross Value
$ 15,979 
$ 16,157 
Accumulated Amortization
(6,119)
(5,585)
Net Value
9,860 
10,572 
Customer Relationships [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
6,963 
6,996 
Accumulated Amortization
(1,742)
(1,555)
Net Value
5,221 
5,441 
Developed Technology [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
6,392 
6,537 
Accumulated Amortization
(2,939)
(2,692)
Net Value
3,453 
3,845 
Intellectual Property [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
2,340 
2,340 
Accumulated Amortization
(1,269)
(1,185)
Net Value
1,071 
1,155 
Trade Names [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
270 
270 
Accumulated Amortization
(160)
(145)
Net Value
110 
125 
Other [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
14 
14 
Accumulated Amortization
(9)
(8)
Net Value
$ 5 
$ 6 
Stockholders' Equity - Summary of Changes in Stockholders' Equity (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Equity [Abstract]
 
 
Beginning balance
$ 604,606 
 
Net income
9,607 
7,890 
Dividend payments
(5,102)
 
Dividends accrued for unvested restricted stock units
 
Net unrealized gains (losses) on available-for-sale securities (net of tax)
(921)
(1,644)
Foreign currency translation adjustment
252 
323 
Proceeds from stock option exercises
1,541 
55 
Purchase of treasury stock
(9,427)
 
Income tax benefit from exercise of stock options
57 
 
Stock-based compensation expense
2,057 
2,232 
Ending balance
$ 602,676 
 
Stockholders' Equity - Additional Information (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
May 1, 2013
Equity [Abstract]
 
 
 
Maximum shares authorized for repurchase
40,000,000 
 
 
Stock repurchased, shares
400,000 
 
 
Shares repurchased, average price per share
$ 25.13 
 
 
Additional shares authorized for purchase
 
 
3,100,000 
Number of Options, exercised
78,000 
 
 
Exercise price of stock options, lower range limit
$ 15.29 
 
 
Exercise price of stock options, upper range limit
$ 23.46 
 
 
Proceeds from stock option exercise
$ 1,541 
$ 55 
 
Stockholders' Equity - Cash Dividends (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Equity [Abstract]
 
 
Record Date
Feb. 06, 2014