ADTRAN INC, 10-K filed on 2/24/2017
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2016
Feb. 9, 2017
Jun. 30, 2016
Document And Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 31, 2016 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Trading Symbol
ADTN 
 
 
Entity Registrant Name
ADTRAN INC 
 
 
Entity Central Index Key
0000926282 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
48,519,654 
 
Entity Public Float
 
 
$ 903,566,094 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Current Assets
 
 
Cash and cash equivalents
$ 79,895 
$ 84,550 
Short-term investments
43,188 
34,396 
Accounts receivable, less allowance for doubtful accounts of $— and $19 at December 31, 2016 and 2015, respectively
92,346 
71,917 
Other receivables
15,137 
19,321 
Income tax receivable, net
760 
 
Inventory, net
105,117 
91,533 
Prepaid expenses and other current assets
16,459 
10,145 
Total Current Assets
352,902 
311,862 
Property, plant and equipment, net
84,469 
73,233 
Deferred tax assets, net
38,036 
37,015 
Goodwill
3,492 
3,492 
Other assets
12,234 
9,276 
Long-term investments
176,102 
198,026 
Total Assets
667,235 
632,904 
Current Liabilities
 
 
Accounts payable
77,342 
48,668 
Unearned revenue
16,326 
16,615 
Accrued expenses
12,434 
12,108 
Accrued wages and benefits
20,433 
12,857 
Income tax payable, net
 
2,395 
Total Current Liabilities
126,535 
92,643 
Non-current unearned revenue
6,333 
7,965 
Other non-current liabilities
28,050 
24,236 
Bonds payable
26,800 
27,900 
Total Liabilities
187,718 
152,744 
Commitments and contingencies (see Note 13)
   
   
Stockholders' Equity
 
 
Common stock, par value $0.01 per share; 200,000 shares authorized; 79,652 shares issued and 48,472 shares outstanding at December 31, 2016 and 79,652 shares issued and 49,558 shares outstanding at December 31, 2015
797 
797 
Additional paid-in capital
252,957 
246,879 
Accumulated other comprehensive loss
(12,188)
(8,969)
Retained earnings
921,942 
906,772 
Less treasury stock at cost: 31,180 and 30,094 shares at December 31, 2016 and 2015, respectively
(683,991)
(665,319)
Total Stockholders' Equity
479,517 
480,160 
Total Liabilities and Stockholders' Equity
$ 667,235 
$ 632,904 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Statement Of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
 
$ 19 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
200,000,000 
200,000,000 
Common stock, shares issued
79,652,000 
79,652,000 
Common stock, shares outstanding
48,472,000 
49,558,000 
Treasury stock, shares
31,180,000 
30,094,000 
Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Sales
 
 
 
Products
$ 525,502 
$ 527,422 
$ 559,532 
Services
111,279 
72,642 
70,475 
Total Sales
636,781 
600,064 
630,007 
Cost of Sales
 
 
 
Products
270,695 
293,843 
288,015 
Services
74,742 
39,324 
30,665 
Total Cost of Sales
345,437 
333,167 
318,680 
Gross Profit
291,344 
266,897 
311,327 
Selling, general and administrative expenses
131,805 
123,542 
131,958 
Research and development expenses
124,804 
129,876 
132,258 
Operating Income
34,735 
13,479 
47,111 
Interest and dividend income
3,918 
3,953 
5,019 
Interest expense
(572)
(596)
(677)
Net realized investment gain
5,923 
10,337 
7,278 
Other income (expense), net
(651)
(1,465)
1,175 
Gain on bargain purchase of a business
3,542 
 
 
Income before provision for income taxes
46,895 
25,708 
59,906 
Provision for income taxes
(11,666)
(7,062)
(15,286)
Net Income
$ 35,229 
$ 18,646 
$ 44,620 
Weighted average shares outstanding – basic
48,724 
51,145 
55,120 
Weighted average shares outstanding – diluted
48,949 
51,267 
55,482 
Earnings per common share – basic
$ 0.72 
$ 0.36 
$ 0.81 
Earnings per common share – diluted
$ 0.72 
$ 0.36 
$ 0.80 
Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Statement Of Income And Comprehensive Income [Abstract]
 
 
 
Net Income
$ 35,229 
$ 18,646 
$ 44,620 
Other Comprehensive Loss, net of tax:
 
 
 
Net unrealized losses on available-for-sale securities
(1,528)
(7,032)
(1,773)
Defined benefit plan adjustments
(1,122)
1,862 
(4,866)
Foreign currency translation
(569)
(3,724)
(4,189)
Other Comprehensive Loss, net of tax
(3,219)
(8,894)
(10,828)
Comprehensive Income, net of tax
$ 32,010 
$ 9,752 
$ 33,792 
Consolidated Statements of Changes in Stockholders' Equity (USD $)
In Thousands
Total
Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Accumulated Other Comprehensive Income [Member]
Beginning Balance at Dec. 31, 2013
$ 604,606 
$ 797 
$ 233,511 
$ 884,451 
$ (524,906)
$ 10,753 
Beginning Balance, Shares at Dec. 31, 2013
 
79,652 
 
 
 
 
Net Income
44,620 
 
 
44,620 
 
 
Other comprehensive loss, net of tax
(10,828)
 
 
 
 
(10,828)
Dividend payments
(19,947)
 
 
(19,947)
 
 
Dividends accrued for unvested restricted stock units
(19)
 
 
(19)
 
 
Stock options exercised
2,839 
 
 
(558)
3,397 
 
PSUs and restricted stock vested
(326)
 
(326)
(796)
796 
 
Purchase of treasury stock
(80,576)
 
 
 
(80,576)
 
Income tax effect of stock compensation arrangements
81 
 
81 
 
 
 
Stock-based compensation expense
8,563 
 
8,563 
 
 
 
Ending Balance at Dec. 31, 2014
549,013 
797 
241,829 
907,751 
(601,289)
(75)
Ending Balance, Shares at Dec. 31, 2014
 
79,652 
 
 
 
 
Net Income
18,646 
 
 
18,646 
 
 
Other comprehensive loss, net of tax
(8,894)
 
 
 
 
(8,894)
Dividend payments
(18,449)
 
 
(18,449)
 
 
Dividends accrued for unvested restricted stock units
(7)
 
 
(7)
 
 
Stock options exercised
961 
 
 
(402)
1,363 
 
PSUs and restricted stock vested
(69)
 
(69)
(767)
767 
 
Purchase of treasury stock
(66,160)
 
 
 
(66,160)
 
Income tax effect of stock compensation arrangements
(1,593)
 
(1,593)
 
 
 
Stock-based compensation expense
6,712 
 
6,712 
 
 
 
Ending Balance at Dec. 31, 2015
480,160 
797 
246,879 
906,772 
(665,319)
(8,969)
Ending Balance, Shares at Dec. 31, 2015
79,652 
79,652 
 
 
 
 
Net Income
35,229 
 
 
35,229 
 
 
Other comprehensive loss, net of tax
(3,219)
 
 
 
 
(3,219)
Dividend payments
(17,583)
 
 
(17,583)
 
 
Dividends accrued for unvested restricted stock units
(48)
 
 
(48)
 
 
Stock options exercised
4,717 
 
 
(1,499)
6,216 
 
PSUs and restricted stock vested
(142)
 
(142)
(929)
929 
 
Purchase of treasury stock
(25,817)
 
 
 
(25,817)
 
Income tax effect of stock compensation arrangements
(475)
 
(475)
 
 
 
Stock-based compensation expense
6,695 
 
6,695 
 
 
 
Ending Balance at Dec. 31, 2016
$ 479,517 
$ 797 
$ 252,957 
$ 921,942 
$ (683,991)
$ (12,188)
Ending Balance, Shares at Dec. 31, 2016
79,652 
79,652 
 
 
 
 
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Stock options exercised, shares
283 
60 
147 
PSUs and restricted stock vested, shares
42 
34 
35 
Treasury Stock [Member]
 
 
 
Purchase of treasury stock, shares
1,411 
3,967 
3,669 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Cash flows from operating activities
 
 
 
Net income
$ 35,229 
$ 18,646 
$ 44,620 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
14,407 
14,245 
14,845 
Amortization of net premium on available-for-sale investments
643 
2,402 
4,360 
Net realized gain on long-term investments
(5,923)
(10,337)
(7,278)
Net loss on disposal of property, plant and equipment
22 
644 
142 
Gain on bargain purchase of a business
(3,542)
 
 
Stock-based compensation expense
6,695 
6,712 
8,563 
Deferred income taxes
(2,685)
(692)
(5,526)
Tax impact of stock option exercises
 
(40)
81 
Excess tax benefits from stock-based compensation arrangements
(2)
(3)
(63)
Change in operating assets and liabilities:
 
 
 
Accounts receivable, net
(21,302)
14,918 
(3,910)
Other receivables
4,101 
11,704 
(19,298)
Inventory
(10,887)
(6,877)
2,144 
Prepaid expenses and other assets
(7,108)
(5,070)
(3,818)
Accounts payable
26,722 
(5,826)
9,973 
Accrued expenses and other liabilities
8,792 
(10,289)
(166)
Income taxes payable, net
(3,162)
(11,590)
11,168 
Net cash provided by operating activities
42,000 
18,547 
55,837 
Cash flows from investing activities
 
 
 
Purchases of property, plant and equipment
(21,441)
(11,753)
(11,256)
Proceeds from disposals of property, plant and equipment
 
183 
Proceeds from sales and maturities of available-for-sale investments
225,075 
280,435 
230,019 
Purchases of available-for-sale investments
(209,172)
(188,921)
(142,695)
Acquisition of business
(943)
 
 
Net cash provided by (used in) investing activities
(6,481)
79,944 
76,069 
Cash flows from financing activities
 
 
 
Proceeds from stock option exercises
4,717 
961 
2,839 
Purchases of treasury stock
(25,817)
(66,160)
(80,576)
Dividend payments
(17,583)
(18,449)
(19,947)
Payments on long-term debt
(1,100)
(1,100)
(16,500)
Excess tax benefits from stock-based compensation arrangements
63 
Net cash used in financing activities
(39,781)
(84,745)
(114,121)
Net increase (decrease) in cash and cash equivalents
(4,262)
13,746 
17,785 
Effect of exchange rate changes
(393)
(2,635)
(2,644)
Cash and cash equivalents, beginning of year
84,550 
73,439 
58,298 
Cash and cash equivalents, end of year
79,895 
84,550 
73,439 
Supplemental disclosure of cash flow information
 
 
 
Cash paid during the year for interest
575 
598 
758 
Cash paid during the year for income taxes
18,689 
20,139 
9,856 
Supplemental disclosure of non-cash investing activities
 
 
 
Purchases of property, plant and equipment included in accounts payable
$ 2,103 
$ 598 
$ 467 
Nature of Business and Summary of Significant Accounting Policies
Nature of Business and Summary of Significant Accounting Policies

Note 1 – Nature of Business and Summary of Significant Accounting Policies

ADTRAN, Inc. is a leading global provider of networking and communications equipment. Our solutions enable voice, data, video and Internet communications across a variety of network infrastructures. These solutions are deployed by many of the United States’ and the world’s largest CSPs, distributed enterprises and small and medium-sized businesses, public and private enterprises, and millions of individual users worldwide.

Principles of Consolidation

Our consolidated financial statements include ADTRAN and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation.

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 and network installations, estimated income tax provision and income tax contingencies, the fair value of stock- based compensation, impairment of goodwill, valuation and estimated lives of intangible assets, estimated pension liability, fair value of investments, and the evaluation of other-than-temporary declines in the value of investments. Actual amounts could differ significantly from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents represent demand deposits, money market funds, and short-term investments classified as available-for-sale with original maturities of three months or less. We maintain depository investments with certain financial institutions. Although these depository investments may exceed government insured depository limits, we have evaluated the credit worthiness of these applicable financial institutions, and determined the risk of material financial loss due to the exposure of such credit risk to be minimal. As of December 31, 2016, $77.9 million of our cash and cash equivalents, primarily certain domestic money market funds and foreign depository accounts, were in excess of government provided insured depository limits.

Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the immediate or short-term maturity of these financial instruments. The carrying amount reported for bonds payable was $27.8 million, compared to an estimated fair value of $28.1 million, based on a debt security with a comparable interest rate and maturity and a Standard & Poor’s credit rating of AAA.

Investments with contractual maturities beyond one year, such as our variable rate demand notes, may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Despite the long-term nature of their stated contractual maturities, we routinely buy and sell these securities and we believe we have the ability to quickly sell them to the remarketing agent, tender agent, or issuer at par value plus accrued interest in the event we decide to liquidate our investment in a particular variable rate demand note. All income generated from these investments was recorded as interest income. We have not been required to record any losses relating to variable rate demand notes.

Long-term investments represent a restricted certificate of deposit held at cost, deferred compensation plan assets, corporate bonds, municipal fixed-rate bonds, asset-backed bonds, mortgage/agency backed bonds, U.S. and foreign government bonds, variable rate demand notes, marketable equity securities, and other equity investments. Marketable equity securities are reported at fair value as determined by the most recently traded price of the securities at the balance sheet date, although the securities may not be readily marketable due to the size of the available market. Unrealized gains and losses, net of tax, are reported as a separate component of stockholders’ equity. Realized gains and losses on sales of securities are computed under the specific identification method and are included in current income. We review our investment portfolio quarterly for investments considered to have sustained an other-than-temporary decline in value. Impairment charges for other-than-temporary declines in value are recorded as realized losses in the accompanying consolidated statements of income. All of our investments at December 31, 2016 and 2015 are classified as available-for-sale securities. See Note 4 of Notes to Consolidated Financial Statements for additional information.

Accounts Receivable

We record accounts receivable at net realizable value. Prior to establishing payment terms for a new customer, we evaluate the credit risk of the customer. Credit limits and payment terms established for new customers are re-evaluated periodically based on customer collection experience and other financial factors. At December 31, 2016, three customers accounted for 63.3% of our total accounts receivable. At December 31, 2015, three customers accounted for 37.3% of our total accounts receivable.

We maintain an allowance for doubtful accounts for losses resulting from the inability of our customers to make required payments. We regularly review the allowance for doubtful accounts and consider factors such as the age of accounts receivable balances, the current economic conditions that may affect a customer’s ability to pay, significant one-time events and our historical experience. If the financial condition of a customer deteriorates, resulting in an impairment of their ability to make payments, we may be required to record an allowance for doubtful accounts. If circumstances change with regard to individual receivable balances that have previously been determined to be uncollectible (and for which a specific reserve has been established), a reduction in our allowance for doubtful accounts may be required. Our allowance for doubtful accounts was nil and $19 thousand at December 31, 2016 and December 31, 2015, respectively.

Other Receivables

Other receivables are comprised primarily of amounts due from subcontract manufacturers for product component transfers, accrued interest on investments and on a restricted certificate of deposit, amounts due from various jurisdictions for value-added tax, and amounts due from employee stock option exercises.

Inventory

Inventory is carried at the lower of cost or market, with cost being determined using the first-in, first-out method. Standard costs for material, labor and manufacturing overhead are used to value inventory. Standard costs are updated at least quarterly; therefore, inventory costs approximate actual costs at the end of each reporting period. 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, market conditions and age. When we dispose of excess and obsolete inventories, the related disposals are charged against the inventory reserve. See Note 6 of Notes to Consolidated Financial Statements for additional information.

Property, Plant and Equipment

Property, plant and equipment, which is stated at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. We depreciate building and land improvements from five to 39 years, office machinery and equipment from three to seven years, engineering machinery and equipment from three to seven years, and computer software from three to five years. Expenditures for repairs and maintenance are charged to expense as incurred. Betterments that materially prolong the lives of the assets are capitalized. Gains and losses on the disposal of property, plant and equipment are recorded in operating income. See Note 7 of Notes to Consolidated Financial Statements for additional information.

Liability for Warranty

Our products generally include warranties of 90 days to five 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 total systems. 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. During 2016, we incurred an increase in warranty expense related to a product recall caused by a defect in a part provided by a third party supplier. The liability for warranty obligations totaled $8.5 million and $8.7 million at December 31, 2016 and 2015, respectively. These liabilities are included in accrued expenses in the accompanying consolidated balance sheets.

A summary of warranty expense and write-off activity for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

Year Ended December 31,

 

2016

 

 

2015

 

 

2014

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

8,739

 

 

$

8,415

 

 

$

8,977

 

Plus: Amounts charged to cost and expenses

 

 

8,561

 

 

 

2,998

 

 

 

3,103

 

Less: Deductions

 

 

(8,752

)

 

 

(2,674

)

 

 

(3,665

)

Balance at end of period

 

$

8,548

 

 

$

8,739

 

 

$

8,415

 

 

Pension Benefit Plan Obligations

We maintain a defined benefit pension plan covering employees in certain foreign countries. Pension benefit plan obligations are based on various assumptions used by our actuaries in calculating these amounts. These assumptions include discount rates, compensation rate increases, expected return on plan assets, retirement rates and mortality rates. Actual results that differ from the assumptions and changes in assumptions could affect future expenses and obligations.

Stock-Based Compensation

We have two Board and stockholder approved stock incentive plans from which stock options and other awards are available for grant to employees and directors. All employee and director stock options granted under our stock option plans have an exercise price equal to the fair market value of the award, as defined in the plan, of the underlying common stock on the grant date. There are currently no vesting provisions tied to performance or market conditions for any stock awards. Vesting for all outstanding award grants is based only on continued service as an employee or director of ADTRAN. All of our outstanding stock option awards are classified as equity awards.

Under the provisions of our approved plans, we made grants of performance stock units to certain of our executive officers in 2016, 2015, and 2014. The performance stock units are subject to a market condition based on the relative total shareholder return of ADTRAN against all the companies in the NASDAQ Telecommunications Index and vest at the end of a three-year performance period. The performance stock units are converted into shares of common stock upon vesting. Depending on the relative total shareholder return over the performance period, the executive officers may earn from 0% to 150% of the number of restricted stock units granted. The fair value of the award is based on the market price of our common stock on the date of grant, adjusted for the expected outcome of the impact of market conditions using a Monte Carlo Simulation valuation method. The recipients of the performance stock units also earn dividend credits during the performance period, which are paid in cash upon the issuance of common stock for the restricted stock units.

Stock-based compensation expense recognized in 2016, 2015 and 2014 was approximately $6.7 million, $6.7 million and $8.6 million, respectively. As of December 31, 2016, total compensation cost related to non-vested stock options, restricted stock units, performance stock units and restricted stock not yet recognized was approximately $16.4 million, which is expected to be recognized over an average remaining recognition period of 2.9 years. See Note 3 of Notes to Consolidated Financial Statements for additional information.

Impairment of Long-Lived Assets

We review long-lived assets used in operations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by the asset are less than the asset’s carrying value. An impairment loss would be recognized in the amount by which the recorded value of the asset exceeds the fair value of the asset, measured by the quoted market price of an asset or an estimate based on the best information available in the circumstances. There were no impairment losses recognized during 2016, 2015 or 2014.

 


Goodwill and Purchased Intangible Assets

We evaluate the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. We have elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit to which the goodwill is assigned is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step impairment test. If we determine that it is more likely than not that its fair value is less than its carrying amount, then the two-step impairment test will be performed. Based on the results of our qualitative assessment in 2016, we concluded that it was not necessary to perform the two-step impairment test. There have been no impairment losses recognized since the acquisition in 2011. Purchased intangible assets with finite lives are carried at cost, less accumulated amortization. Amortization is recorded over the estimated useful lives of the respective assets, which is 9 months to 14 years.

Research and Development Costs

Research and development costs include compensation for engineers and support personnel, outside contracted services, depreciation and material costs associated with new product development, the enhancement of current products, and product cost reductions. We continually evaluate new product opportunities and engage in intensive research and product development efforts. Research and development costs totaled $124.8 million, $129.9 million and $132.3 million for the years ended December 31, 2016, 2015 and 2014, respectively.

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 table presents changes in accumulated other comprehensive income, net of tax, by component for the years ended December 31, 2014, 2015 and 2016:

 

(In thousands)

 

Unrealized

Gains (Losses)

on Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Balance at December 31, 2013

 

$

10,737

 

 

$

(891

)

 

$

907

 

 

$

10,753

 

Other comprehensive income (loss) before

   reclassifications

 

 

2,363

 

 

 

(4,866

)

 

 

(4,189

)

 

 

(6,692

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(4,136

)

 

 

 

 

 

 

 

 

(4,136

)

Balance at December 31, 2014

 

 

8,964

 

 

 

(5,757

)

 

 

(3,282

)

 

 

(75

)

Other comprehensive income (loss) before

   reclassifications

 

 

(844

)

 

 

1,589

 

 

 

(3,724

)

 

 

(2,979

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(6,188

)

 

 

273

 

 

 

 

 

 

(5,915

)

Balance at December 31, 2015

 

 

1,932

 

 

 

(3,895

)

 

 

(7,006

)

 

 

(8,969

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,515

 

 

 

(1,229

)

 

 

(569

)

 

 

(283

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(3,043

)

 

 

107

 

 

 

 

 

 

(2,936

)

Balance at December 31, 2016

 

$

404

 

 

$

(5,017

)

 

$

(7,575

)

 

$

(12,188

)

 

The following tables present the details of reclassifications out of accumulated other comprehensive income for the years ended December 31, 2016, 2015 and 2014:

 

(In thousands)

 

2016

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

 

$

5,408

 

 

Net realized investment gain

Impairment expense

 

 

(419

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(156

)

 

(1)

Total reclassifications for the period, before tax

 

 

4,833

 

 

 

Tax (expense) benefit

 

 

(1,897

)

 

 

Total reclassifications for the period, net of tax

 

$

2,936

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 11 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

2015

Details about Accumulated Other Comprehensive

Income Components

 

Amount Reclassified

from Accumulated Other

Comprehensive Income

 

 

Affected Line Item in the

Statement Where Net Income

Is Presented

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

 

 

 

 

 

 

Net realized gain on sales of securities

 

$

10,348

 

 

Net realized investment gain

Impairment expense

 

 

(203

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(396

)

 

(1)

Total reclassifications for the period, before tax

 

 

9,749

 

 

 

Tax (expense) benefit

 

 

(3,834

)

 

 

Total reclassifications for the period, net of tax

 

$

5,915

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 11 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

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

 

$

6,895

 

 

Net realized investment gain

Impairment expense

 

 

(115

)

 

Net realized investment gain

Total reclassifications for the period, before tax

 

 

6,780

 

 

 

Tax (expense) benefit

 

 

(2,644

)

 

 

Total reclassifications for the period, net of tax

 

$

4,136

 

 

 

 

The following tables present the tax effects related to the change in each component of other comprehensive income for the years ended December 31, 2016, 2015 and 2014:

 

 

 

2016

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

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

 

$

2,484

 

 

$

(969

)

 

$

1,515

 

Reclassification adjustment for amounts related to available-for-sale investments included in net income

 

 

(4,989

)

 

 

1,946

 

 

 

(3,043

)

Defined benefit plan adjustments

 

 

(1,782

)

 

 

553

 

 

 

(1,229

)

Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income

 

 

156

 

 

 

(49

)

 

 

107

 

Foreign currency translation adjustment

 

 

(569

)

 

 

 

 

 

(569

)

Total Other Comprehensive Income (Loss)

 

$

(4,700

)

 

$

1,481

 

 

$

(3,219

)

 

 

 

2015

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

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

 

$

(1,384

)

 

$

540

 

 

$

(844

)

Reclassification adjustment for amounts related to available-

   for-sale investments included in net income

 

 

(10,145

)

 

 

3,957

 

 

 

(6,188

)

Defined benefit plan adjustments

 

 

2,303

 

 

 

(714

)

 

 

1,589

 

Reclassification adjustment for amounts related to defined

   benefit plan adjustments included in net income

 

 

396

 

 

 

(123

)

 

 

273

 

Foreign currency translation adjustment

 

 

(3,724

)

 

 

 

 

 

(3,724

)

Total Other Comprehensive Income (Loss)

 

$

(12,554

)

 

$

3,660

 

 

$

(8,894

)

 

 

 

2014

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

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

 

$

3,874

 

 

$

(1,511

)

 

$

2,363

 

Reclassification adjustment for amounts related to available-

   for-sale investments included in net income

 

 

(6,780

)

 

 

2,644

 

 

 

(4,136

)

Defined benefit plan adjustments

 

 

(7,052

)

 

 

2,186

 

 

 

(4,866

)

Foreign currency translation adjustment

 

 

(4,189

)

 

 

 

 

 

(4,189

)

Total Other Comprehensive Income (Loss)

 

$

(14,147

)

 

$

3,319

 

 

$

(10,828

)

 

Income Taxes

The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from the difference between financial and tax bases of our assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that the positions become uncertain.  We adjust these reserves, including any impact on the related interest and penalties, as facts and circumstances change.

Foreign Currency

We record transactions denominated in foreign currencies on a monthly basis using exchange rates from throughout the year. Assets and liabilities denominated in foreign currencies are translated at the balance sheet dates using the closing rates of exchange between those foreign currencies and the functional currency with any transaction gains or losses reported in other income (expense). Our primary exposures to foreign currency exchange rate movements are with our German subsidiary, whose functional currency is the Euro, our Australian subsidiary, whose functional currency is the Australian dollar, and our Mexican subsidiary, whose functional currency is the U.S. dollar. Adjustments resulting from translating financial statements of international subsidiaries are recorded as a component of accumulated other comprehensive income (loss).

Revenue Recognition

Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the product price is fixed or determinable, collection of the resulting receivable is reasonably assured, and product returns are reasonably estimable. For product sales, revenue is generally recognized upon shipment of the product to our customer in accordance with the title transfer terms of the sales agreement, generally Ex Works, per International Commercial Terms. In the case of consigned inventory, revenue is recognized when the end customer assumes ownership of the product. Contracts that contain multiple deliverables are evaluated to determine the units of accounting, and the consideration from the arrangement is allocated to each unit of accounting based on the relative selling price and corresponding terms of the contract. We use vendor-specific objective evidence of selling price. When this evidence is not available, we are generally not able to determine third-party evidence of selling price because of the extent of customization among competing products or services from other companies. In these instances, we use best estimates to allocate consideration to each respective unit of accounting. These estimates include analysis of respective bills of material and review and analysis of similar product and service offerings. We record revenue associated with installation services when respective contractual obligations are complete. In instances where customer acceptance is required, revenue is deferred until respective acceptance criteria have been met. Contracts that include both installation services and product sales are evaluated for revenue recognition in accordance with contract terms. As a result, installation services may be considered a separate deliverable or may be considered a combined single unit of accounting with the delivered product. Generally, either the purchaser, ADTRAN, or a third party can perform the installation of our products. Shipping fees are recorded as revenue and the related cost is included in cost of sales. Sales taxes invoiced to customers are included in revenues, and represent less than one percent of total revenues. The corresponding sales taxes paid are included in cost of goods sold. Value added taxes collected from customers in international jurisdictions are recorded in accrued expenses as a liability. Revenue is recorded net of discounts. Sales returns are recorded as a reduction of revenue and accrued based on historical sales return experience, which we believe provides a reasonable estimate of future returns.

A portion of our products are sold to a non-exclusive distribution network of major technology distributors in the United States. These large organizations then distribute or provide fulfillment services to an extensive network of VARs and SIs. VARs and SIs may be affiliated with us as a channel partner, or they may purchase from the distributor in an unaffiliated fashion. Additionally, with certain limitations our distributors may return unused and unopened product for stock-balancing purposes when such returns are accompanied by offsetting orders for products of equal or greater value.

We participate in cooperative advertising and market development programs with certain customers. We use these programs to reimburse customers for certain forms of advertising, and in general, to allow our customers credits up to a specified percentage of their net purchases. Our costs associated with these programs are estimated and included in marketing expenses in our consolidated statements of income. We also participate in rebate programs to provide sales incentives for certain products. Our costs associated with these programs are estimated and accrued at the time of sale, and are recorded as a reduction of sales in our consolidated statements of income.

Unearned Revenue

Unearned revenue primarily represents customer billings on our maintenance service programs and unearned revenues relating to multiple element contracts where we still have contractual obligations to our customers. We currently offer maintenance contracts ranging from one to five years. Revenue attributable to maintenance contracts is recognized on a straight-line basis over the related contract term. In addition, we provide software maintenance and a variety of hardware maintenance services to customers under contracts with terms up to ten years. When we defer revenue related to multiple-element contracts where we still have contractual obligations, we also defer the related costs. Deferred costs are included in prepaid expenses and other assets and totaled $10.7 million and $5.2 million at December 31, 2016 and 2015, respectively.

Other Income (Expense), Net

Other income (expense), net, is comprised primarily of miscellaneous income and expense, gains and losses on foreign currency transactions, and investment account management fees. For the year ended December 31, 2014, other income (expense), net included a $2.4 million gain related to the settlement of working capital items from an acquisition transaction that closed in 2012.

Earnings per Share

Earnings per common share, and earnings per common share assuming dilution, are based on the weighted average number of common shares and, when dilutive, common equivalent shares outstanding during the year. See Note 14 of Notes to Consolidated Financial Statements for additional information.

Dividends

During 2016, 2015 and 2014, we paid shareholder dividends totaling $17.6 million, $18.4 million and $19.9 million, respectively. The Board of Directors presently anticipates that it will declare a regular quarterly dividend so long as the present tax treatment of dividends exists and adequate levels of liquidity are maintained. The following table shows dividends paid to our shareholders in each quarter of 2016, 2015 and 2014.

 

Dividends per Common Share

 

 

 

2016

 

 

2015

 

 

2014

 

First Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

Second Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

Third Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

Fourth Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

 

On January 17, 2017, the Board of Directors declared a quarterly cash dividend of $0.09 per common share to be paid to shareholders of record at the close of business on February 2, 2017. The ex-dividend date was January 31, 2017 and the payment date was February 16, 2017. The quarterly dividend payment was $4.4 million.

Business Combinations

We use the acquisition method to account for business combinations. Under the acquisition method of accounting, we recognize the assets acquired and liabilities assumed at their fair value on the acquisition date. Goodwill is measured as the excess of the consideration transferred over the net assets acquired. Costs incurred to complete the business combination, such as legal, accounting or other professional fees, are charged to general and administrative expenses as they are incurred.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 to fiscal years beginning after December 31, 2017, and interim periods within those fiscal years, with early adoption permitted for reporting periods beginning after December 15, 2016. Subsequently, the FASB issued ASUs in 2016 containing implementation guidance related to ASU 2014-09, including: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which is intended to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance; ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which contains certain provisions and practical expedients in response to identified implementation issues; and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which is intended to clarify the Codification or to correct unintended application of guidance. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. We plan to adopt ASU 2014-09 and the related ASUs on January 1, 2018, and we are currently evaluating the transition method that will be elected. We are continuing to evaluate the potential impact of these ASUs, and we believe the most significant potential impact relates to our accounting for software license and installation services revenues. We do not believe there will be a significant impact to product or maintenance revenues.

In July 2015, the FASB issued Accounting Standards Update No.  2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (ASU 2015-11). Currently, Topic 330, Inventory, requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 does not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. ASU 2015-11 requires an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We adopted ASU 2015-05 in the first quarter of 2017, and there was no material impact on our financial position, results of operations and cash flows.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity's leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. A modified retrospective approach is required. We anticipate the adoption of ASU 2016-02 will have a material impact on our financial position; however, we do not believe adoption will have a material impact on our results of operations. We believe the most significant impact relates to our accounting for operating leases for office space and equipment.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). ASU 2016-09 simplifies several aspects of accounting for share-based compensation arrangements, including income tax effects, the classification of tax-related cash flows on the statement of cash flows, and accounting for forfeitures. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. We adopted ASU 2016-09 in the first quarter of 2017, and there was no material impact on our financial position, results of operations and cash flows.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 simplifies the measurement of goodwill by eliminating step 2 of the goodwill impairment test. Under ASU 2017-04, entities will be required to compare the fair value of a reporting unit to its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 is effective for annual or interim impairment tests performed in fiscal years beginning after December 15, 2019, with early adoption permitted for annual or interim impairment tests performed on testing dates after January 1, 2017. The amendments should be applied prospectively. We do not expect the adoption of ASU 2017-04 will have a material impact on our financial position, results of operations or cash flows.

During 2016, we adopted the following accounting standards, which had no material effect on our financial position, results of operations or cash flows:

In April 2015, the FASB issued Accounting Standards Update No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (ASU 2015-05), which provides guidance on accounting for fees paid by a customer in a cloud computing arrangement. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. The amendments may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. We adopted ASU 2015-05 during the first quarter of 2016 and will apply the new standard prospectively. The adoption of ASU 2015-05 did not have a material impact on our financial position, results of operations and cash flows.

In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes (ASU 2015-17). ASU 2015-17 amends the existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as non-current on the balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted. The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively to all periods presented. We elected to early adopt ASU 2015-17 during the fourth quarter of 2016, and we applied the guidance retrospectively to all periods presented. As a result, $17.3 million and $18.9 million were reclassified from current deferred tax assets to non-current deferred tax assets at December 31, 2016 and 2015, respectively.

Business Combinations
Business Combinations

Note 2 – Business Combinations

On September 13, 2016, we acquired key fiber access products, technologies and service relationships from subsidiaries of CommScope, Inc. for $0.9 million in cash. This acquisition will enhance our solutions for the cable MSO industry and will provide cable operators with the scalable solutions, services and support they require to compete in the multi-gigabit service delivery market. This transaction was accounted for as a business combination. We have included the financial results of this acquisition in our consolidated financial statements since the date of acquisition. These revenues are included in the Network Solutions reportable segment, and in the Access & Aggregation and Customer Devices categories.

We recorded a bargain purchase gain of $3.5 million, net of income taxes, subject to customary working capital adjustments between the parties. The bargain purchase gain represents the excess fair value of the net assets acquired over the consideration exchanged. We have assessed the recognition and measurement of the assets acquired and liabilities assumed based on historical and pro forma data for future periods and have concluded that our valuation procedures and resulting measures were appropriate. The gain is included in the line item “Gain on bargain purchase of a business” in the 2016 Consolidated Statements of Income.

The allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date, subject to working capital adjustments, is as follows:

 

(In Thousands)

 

 

 

 

Assets

 

 

 

 

Inventory

 

$

3,131

 

Property, plant and equipment

 

 

352

 

Intangible assets

 

 

4,700

 

Total assets acquired

 

 

8,183

 

Liabilities

 

 

 

 

Accounts payable

 

 

(1,250

)

Warranty payable

 

 

(61

)

Accrued wages and benefits

 

 

(122

)

Deferred income taxes

 

 

(2,265

)

Total liabilities assumed

 

 

(3,698

)

Total net assets

 

 

4,485

 

Gain on bargain purchase of a business, net of tax

 

 

(3,542

)

Total purchase price

 

$

943

 

 

The details of the acquired intangible assets are as follows:

 

In thousands

 

Value

 

 

Life (years)

 

Supply agreement

 

$

1,400

 

 

 

0.8

 

Customer relationships

 

 

1,200

 

 

 

6.0

 

Developed technology

 

 

800

 

 

 

10.0

 

License

 

 

500

 

 

 

1.3

 

Patent

 

 

500

 

 

 

7.3

 

Non-compete

 

 

200

 

 

 

2.3

 

Trade name

 

 

100

 

 

 

2.0

 

Total

 

$

4,700

 

 

 

 

 

 

The actual revenue and net loss included in our Consolidated Statements of Income for the period September 13, 2016 to December 31, 2016 are as follows:

 

(In thousands)

 

September 13 to

December 31,

2016

 

Revenue

 

$

2,768

 

Net loss

 

$

(805

)

 

The following supplemental unaudited pro forma information presents the financial results as if the acquisition had occurred on January 1, 2015. This supplemental unaudited pro forma information does not purport to be indicative of what would have occurred had the acquisition been completed on January 1, 2015, nor is it indicative of any future results. Aside from revising the 2015 net income for the effect of the bargain purchase gain, there were no material, non-recurring adjustments to this unaudited pro forma information.

 

(In thousands)

 

2016

 

 

2015

 

Pro forma revenue

 

$

641,170

 

 

$

603,923

 

Pro forma net income

 

$

31,212

 

 

$

22,945

 

 

For the year ended December 31, 2016, we incurred acquisition and integration related expenses and amortization of acquired intangibles of $1.0 million related to this acquisition.

Stock-Based Compensation
Stock-Based Compensation

Note 3 – Stock-Based Compensation

Stock Incentive Program Descriptions

On January 23, 2006, the Board of Directors adopted the ADTRAN, Inc. 2006 Employee Stock Incentive Plan (2006 Plan), which authorized 13.0 million shares of common stock for issuance to certain employees and officers through incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock and restricted stock units (RSUs). The 2006 Plan was adopted by stockholder approval at our annual meeting of stockholders held on May 9, 2006. Options granted under the 2006 Plan typically become exercisable beginning after one year of continued employment, normally pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date, and have a ten-year contractual term. The 2006 Plan was replaced on May 13, 2015 by the ADTRAN, Inc. 2015 Employee Stock Incentive Plan (2015 Plan). Expiration dates of options outstanding at December 31, 2016 under the 2006 Plan range from 2017 to 2024.

Our stockholders approved the 2010 Directors Stock Plan (2010 Directors Plan) on May 5, 2010, under which 0.5 million shares of common stock have been reserved. This plan replaces the 2005 Directors Stock Option Plan. Under the 2010 Directors Plan, the Company may issue stock options, restricted stock and RSUs to our non-employee directors. Stock awards issued under the 2010 Directors Plan normally become vested in full on the first anniversary of the grant date. Options issued under the 2010 Directors Plan have a ten-year contractual term. Expiration dates of options outstanding at December 31, 2016 under the 2010 Directors Plan range from 2017 to 2019.

On January 20, 2015, the Board of Directors adopted the ADTRAN, Inc. 2015 Employee Stock Incentive Plan (2015 Plan), which authorizes 7.7 million shares of common stock for issuance to certain employees and officers through incentive stock options and non-qualified stock options, stock appreciation rights, performance stock units (PSUs), restricted stock and RSUs. The 2015 Plan was adopted by stockholder approval at our annual meeting of stockholders held on May 13, 2015. PSUs, restricted stock and RSUs granted under the 2015 Plan reduce the shares authorized for issuance under the 2015 Plan by 2.5 shares of common stock for each share underlying the award. Options granted under the 2015 Plan typically become exercisable beginning after one year of continued employment, normally pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date, and have a ten-year contractual term. Expiration dates of options outstanding at December 31, 2015 under the 2015 Plan range from 2025 to 2026.

The following table summarizes stock-based compensation expense related to stock options, PSUs, restricted stock and RSUs for the years ended December 31, 2016, 2015 and 2014, which was recognized as follows:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Stock-based compensation expense included in cost of

   sales

 

$

389

 

 

$

280

 

 

$

479

 

Selling, general and administrative expense

 

 

3,341

 

 

 

3,261

 

 

 

4,185

 

Research and development expense

 

 

2,965

 

 

 

3,171

 

 

 

3,899

 

Stock-based compensation expense included in operating

   expenses

 

 

6,306

 

 

 

6,432

 

 

 

8,084

 

Total stock-based compensation expense

 

 

6,695

 

 

 

6,712

 

 

 

8,563

 

Tax benefit for expense associated with non-qualified

   options

 

 

(963

)

 

 

(862

)

 

 

(1,157

)

Total stock-based compensation expense, net of tax

 

$

5,732

 

 

$

5,850

 

 

$

7,406

 

Stock-based compensation expense recognized in our Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014 is based on stock options, PSUs, restricted stock and RSUs ultimately expected to vest, and has been reduced for estimated forfeitures. Estimates for forfeiture rates are based upon historical experience and are evaluated quarterly. We expect our forfeiture rate for stock options and RSUs to be approximately 3.7% annually. We estimated a 0% forfeiture rate for our PSUs and restricted stock due to the limited number of recipients and historical experience for these awards.

Stock Options

The following table is a summary of our stock options outstanding as of December 31, 2015 and 2016 and the changes that occurred during 2016:

 

(In thousands, except per share amounts)

 

Number of

Options

 

 

Weighted

Average

Exercise Price

 

 

Weighted Avg.

Remaining

Contractual Life

in Years

 

 

Aggregate

Intrinsic Value

 

Options outstanding, December 31, 2015

 

 

7,108

 

 

$

21.97

 

 

 

6.42

 

 

$

3,284

 

Options granted

 

 

19

 

 

$

18.24

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(283

)

 

$

16.66

 

 

 

 

 

 

 

 

 

Options forfeited

 

 

(93

)

 

$

17.90

 

 

 

 

 

 

 

 

 

Options expired

 

 

(413

)

 

$

23.96

 

 

 

 

 

 

 

 

 

Options outstanding, December 31, 2016

 

 

6,338

 

 

$

22.14

 

 

 

5.63

 

 

$

16,972

 

Options vested and expected to vest, December 31, 2016

 

 

6,276

 

 

$

22.20

 

 

 

5.60

 

 

$

16,606

 

Options exercisable, December 31, 2016

 

 

4,757

 

 

$

23.67

 

 

 

4.73

 

 

$

9,137

 

 

At December 31, 2016, total compensation cost related to non-vested stock options not yet recognized was approximately $7.5 million, which is expected to be recognized over an average remaining recognition period of 2.1 years.

 

All of the options above were issued at exercise prices that approximated fair market value at the date of grant. At December 31, 2016, 5.6 million options were available for grant under the shareholder approved plans.

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between ADTRAN’s closing stock price on the last trading day of 2016 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 December 31, 2016. The amount of aggregate intrinsic value will change based on the fair market value of ADTRAN’s stock.

The total pre-tax intrinsic value of options exercised during 2016, 2015 and 2014 was $1.1 million, $0.1 million and $0.7 million, respectively. The fair value of options fully vesting during 2016, 2015 and 2014 was $5.7 million, $6.6 million and $7.7 million, respectively.

The following table further describes our stock options outstanding as of December 31, 2016:

 

 

 

Options Outstanding

 

 

Options Exercisable

 

Range of

Exercise Prices

 

Options

Outstanding at

12/31/16

(In thousands)

 

 

Weighted Avg.

Remaining

Contractual Life

in Years

 

 

Weighted

Average

Exercise

Price

 

 

Options

Exercisable at

12/31/16

(In thousands)

 

 

Weighted

Average

Exercise

Price

 

$14.88 – 18.96

 

 

2,101

 

 

 

6.78

 

 

$

15.82

 

 

 

1,217

 

 

$

16.14

 

$18.97 – 23.45

 

 

1,380

 

 

 

5.79

 

 

$

20.17

 

 

 

881

 

 

$

20.84

 

$23.46 – 30.35

 

 

1,491

 

 

 

5.08

 

 

$

23.89

 

 

 

1,293

 

 

$

23.92

 

$30.36 – 41.92

 

 

1,366

 

 

 

4.29

 

 

$

31.94

 

 

 

1,366

 

 

$

31.94

 

 

 

 

6,338

 

 

 

 

 

 

 

 

 

 

 

4,757

 

 

 

 

 

 


PSUs, restricted stock and RSUs

Under the 2015 Plan, awards other than stock options, including PSUs, restricted stock and RSUs, may be granted to certain employees and officers. Under our PSU program, the number of shares of common stock earned by a recipient pursuant to the PSUs is subject to a market condition based on ADTRAN’s relative total shareholder return against all companies in the NASDAQ Telecommunications Index at the end of a three-year performance period. Depending on the relative total shareholder return over the performance period, the recipient may earn from 0% to 150% of the shares underlying the PSUs, with the shares earned distributed upon the vesting of the PSUs at the end of the three-year performance period. The fair value of the award is based on the market price of our common stock on the date of grant, adjusted for the expected outcome of the impact of market conditions using a Monte Carlo Simulation valuation method. A portion of the granted PSUs also vest and the underlying shares become deliverable upon the death or disability of the recipient or upon a change of control of ADTRAN, as defined by the 2015 Plan. The recipients of the PSUs receive dividend credits based on the shares of common stock underlying the PSUs. The dividend credits are vested and earned in the same manner as the PSUs and are paid in cash upon the issuance of common stock for the PSUs. The fair value of restricted stock and RSUs is equal to the closing price of our stock on the business day immediately preceding the grant date. Restricted stock and RSUs vest ratably over one year and four year periods, respectively.

The following table is a summary of our PSUs, restricted stock and RSUs outstanding as of December 31, 2015 and 2016 and the changes that occurred during 2016:

 

(In thousands, except per share amounts)

 

Number of

shares

 

 

Weighted

Average Grant

Date Fair Value

 

Unvested PSUs, restricted stock and RSUs outstanding,

   December 31, 2015

 

 

106

 

 

$

21.09

 

PSUs, restricted stock and RSUs granted

 

 

460

 

 

$

20.63

 

PSUs, restricted stock and RSUs vested

 

 

(46

)

 

$

22.50

 

PSUs, restricted stock and RSUs forfeited

 

 

(1

)

 

$

20.00

 

Unvested RSUs and restricted stock outstanding,

   December 31, 2016

 

 

519

 

 

$

20.51

 

 

At December 31, 2016, total compensation cost related to the non-vested portion of PSUs, restricted stock and RSUs not yet recognized was approximately $8.9 million, which is expected to be recognized over an average remaining recognition period of 3.6 years.

Valuation and Expense Information

We use the Black-Scholes option pricing model (Black-Scholes Model) for the purpose of determining the estimated fair value of stock option awards on the date of grant. The Black-Scholes Model requires the input of certain assumptions that involve judgment. Because our stock options have characteristics significantly different from those of traded options, and because changes in the input assumptions can materially affect the fair value estimate, existing models may not provide reliable measures of fair value of our stock options. We use a Monte Carlo Simulation valuation method to value our performance-based PSUs. The fair value of RSUs and restricted stock issued is equal to the closing price of our stock on the date of grant. We will continue to assess the assumptions and methodologies used to calculate the estimated fair value of stock-based compensation. If circumstances change, and additional data becomes available over time, we may change our assumptions and methodologies, which may materially impact our fair value determination.

The stock option pricing model requires the use of several assumptions that impact the fair value estimate. These variables include, but are not limited to, the volatility of our stock price and employee exercise behaviors. There were no changes made during 2016 to the methodology used to determine our assumptions.

The weighted-average estimated fair value of stock options granted to employees during the years ended December 31, 2016, 2015 and 2014 was $5.22 per share, $4.28 per share and $6.31 per share, respectively, with the following weighted-average assumptions:

 

 

 

2016

 

 

2015

 

 

2014

 

Expected volatility

 

 

34.79

%

 

 

34.57

%

 

 

39.05

%

Risk-free interest rate

 

 

1.36

%

 

 

1.81

%

 

 

1.79

%

Expected dividend yield

 

 

1.98

%

 

 

2.35

%

 

 

1.90

%

Expected life (in years)

 

 

6.25

 

 

 

6.23

 

 

 

6.33

 

 

We based our estimate of expected volatility for the years ended December 31, 2016, 2015 and 2014 on the sequential historical daily trading data of our common stock for a period equal to the expected life of the options granted. The selection of the historical volatility method was based on available data indicating our historical volatility is as equally representative of our future stock price trends as is our implied volatility. We have no reason to believe the future volatility of our stock price is likely to differ from its past volatility. The risk-free interest rate assumption is based upon implied yields of U.S. Treasury zero-coupon bonds on the date of grant having a remaining term equal to the expected life of the options granted. The dividend yield is based on our historical and expected dividend payouts. The expected life of our stock options is based upon historical exercise and forfeiture activity of our previous stock-based grants with a ten-year contractual term.

The PSU pricing model also requires the use of several significant assumptions that impact the fair value estimate. The estimated fair value of the PSUs granted to employees during the years ended December 31, 2016, 2015 and 2014 was $23.50 per share, $17.64 per share and $22.11 per share, respectively, with the following assumptions:

 

 

 

2016

 

 

2015

 

 

2014

 

Expected volatility

 

 

29.79

%

 

 

31.34

%

 

 

36.40

%

Risk-free interest rate

 

 

1.17

%

 

 

1.20

%

 

 

0.96

%

Expected dividend yield

 

 

1.80

%

 

 

2.35

%

 

 

1.89

%

 

Investments
Investments

Note 4 – Investments

At December 31, 2016, we held the following securities and investments, recorded at either fair value or cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value /

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Deferred compensation plan assets

 

$

12,367

 

 

$

2,271

 

 

$

(42

)

 

$

14,596

 

Corporate bonds

 

 

66,522

 

 

 

64

 

 

 

(174

)

 

 

66,412

 

Municipal fixed-rate bonds

 

 

11,799

 

 

 

12

 

 

 

(37

)

 

 

11,774

 

Asset-backed bonds

 

 

10,201

 

 

 

19

 

 

 

(14

)

 

 

10,206

 

Mortgage/Agency-backed bonds

 

 

13,080

 

 

 

15

 

 

 

(91

)

 

 

13,004

 

U.S. government bonds

 

 

30,022

 

 

 

15

 

 

 

(270

)

 

 

29,767

 

Foreign government bonds

 

 

3,729

 

 

 

2

 

 

 

(1

)

 

 

3,730

 

Variable rate demand notes

 

 

11,855

 

 

 

 

 

 

 

 

 

11,855

 

Marketable equity securities

 

 

30,571

 

 

 

311

 

 

 

(1,503

)

 

 

29,379

 

Available-for-sale securities held at fair value

 

$

190,146

 

 

$

2,709

 

 

$

(2,132

)

 

$

190,723

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,800

 

Other investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

767

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

219,290

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value /

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Deferred compensation plan assets

 

$

11,325

 

 

$

1,575

 

 

$

(66

)

 

$

12,834

 

Corporate bonds

 

 

58,328

 

 

 

20

 

 

 

(734

)

 

 

57,614

 

Municipal fixed-rate bonds

 

 

26,414

 

 

 

28

 

 

 

(18

)

 

 

26,424

 

Asset-backed bonds

 

 

19,281

 

 

 

2

 

 

 

(44

)

 

 

19,239

 

Mortgage/Agency-backed bonds

 

 

15,463

 

 

 

1

 

 

 

(91

)

 

 

15,373

 

Government bonds

 

 

35,646

 

 

 

 

 

 

(248

)

 

 

35,398

 

Marketable equity securities

 

 

31,643

 

 

 

4,301

 

 

 

(1,693

)

 

 

34,251

 

Available-for-sale securities held at fair value

 

$

198,100

 

 

$

5,927

 

 

$

(2,894

)

 

$

201,133

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,000

 

Other investments held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,289

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

232,422

 

 

As of December 31, 2016, corporate bonds, municipal fixed-rate bonds, asset-backed bonds, mortgage/agency-backed bonds, U.S. government bonds, and foreign government bonds had the following contractual maturities:

 

(In thousands)

 

Corporate

bonds

 

 

Municipal

fixed-rate

bonds

 

 

Asset-backed

bonds

 

 

Mortgage /

Agency-backed

bonds

 

 

U.S.

government

bonds

 

 

Foreign

government

bonds

 

Less than one year

 

$

18,912

 

 

$

8,321

 

 

$

 

 

$

 

 

$

1,701

 

 

$

2,400

 

One to two years

 

 

32,497

 

 

 

1,703

 

 

 

635

 

 

 

976

 

 

 

4,903

 

 

 

1,330

 

Two to three years

 

 

11,486

 

 

 

351

 

 

 

2,415

 

 

 

980

 

 

 

13,072

 

 

 

 

Three to five years

 

 

3,517

 

 

 

1,399

 

 

 

5,402

 

 

 

 

 

 

10,091

 

 

 

 

Five to ten years

 

 

 

 

 

 

 

 

1,600

 

 

 

2,060

 

 

 

 

 

 

 

More than ten years

 

 

 

 

 

 

 

 

154

 

 

 

8,988

 

 

 

 

 

 

 

Total

 

$

66,412

 

 

$

11,774

 

 

$

10,206

 

 

$

13,004

 

 

$

29,767

 

 

$

3,730

 

 

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.

We review our investment portfolio for potential “other-than-temporary” declines in value on an individual investment basis. We assess, on a quarterly basis, significant declines in value which may be considered other-than-temporary and, if necessary, recognize and record the appropriate charge to write-down the carrying value of such investments. In making this assessment, we take into consideration qualitative and quantitative information, including but not limited to the following: the magnitude and duration of historical declines in market prices, credit rating activity, assessments of liquidity, public filings, and statements made by the issuer. We generally begin our identification of potential other-than-temporary impairments by reviewing any security with a fair value that has declined from its original or adjusted cost basis by 25% or more for six or more consecutive months. We then evaluate the individual security based on the previously identified factors to determine the amount of the write-down, if any. For each of the years ended December 31, 2016, 2015 and 2014, we recorded a charge of $0.8 million, $0.2 million and $0.1 million, respectively, related to the other-than-temporary impairment of certain marketable equity securities and our deferred compensation plan assets.

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 for the years ended December 31, 2016, 2015 and 2014:

 

Year Ended December 31,

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Gross realized gains

 

$

7,530

 

 

$

10,906

 

 

$

7,586

 

Gross realized losses

 

$

(1,607

)

 

$

(569

)

 

$

(308

)

 

The following table presents the breakdown of investments with unrealized losses at December 31, 2016:

 

(In thousands)

 

Continuous Unrealized

Loss Position for Less

than 12 Months

 

 

Continuous Unrealized

Loss Position for 12

Months or Greater

 

 

Total

 

 

 

Fair Value

 

 

Unrealized

Losses

 

 

Fair Value

 

 

Unrealized

Losses

 

 

Fair Value

 

 

Unrealized

Losses

 

Deferred compensation plan assets

 

$

294

 

 

$

(12

)

 

$

245

 

 

$

(30

)

 

$

539

 

 

$

(42

)

Corporate bonds

 

 

32,562

 

 

 

(166

)

 

 

2,722

 

 

 

(8

)

 

 

35,284

 

 

 

(174

)

Municipal fixed-rate bonds

 

 

8,936

 

 

 

(37

)

 

 

 

 

 

 

 

 

8,936

 

 

 

(37

)

Asset-backed bonds

 

 

2,986

 

 

 

(14

)

 

 

 

 

 

 

 

 

2,986

 

 

 

(14

)

Mortgage/Agency-backed bonds

 

 

7,842

 

 

 

(81

)

 

 

1,239

 

 

 

(10

)

 

 

9,081

 

 

 

(91

)

U.S. government bonds

 

 

26,449

 

 

 

(270

)

 

 

 

 

 

 

 

 

26,449

 

 

 

(270

)

Foreign government bonds

 

 

924

 

 

 

(1

)

 

 

 

 

 

 

 

 

924

 

 

 

(1

)

Marketable equity securities

 

 

21,607

 

 

 

(1,200

)

 

 

1,495

 

 

 

(303

)

 

 

23,102

 

 

 

(1,503

)

Total

 

$

101,600

 

 

$

(1,781

)

 

$

5,701

 

 

$

(351

)

 

$

107,301

 

 

$

(2,132

)

 

The following table presents the breakdown of investments with unrealized losses at December 31, 2015:

 

(In thousands)

 

Continuous Unrealized

Loss Position for Less

than 12 Months

 

 

Continuous Unrealized

Loss Position for 12

Months or Greater

 

 

Total

 

 

 

Fair Value

 

 

Unrealized

Losses

 

 

Fair Value

 

 

Unrealized

Losses

 

 

Fair Value

 

 

Unrealized

Losses

 

Deferred compensation plan assets

 

$

1,243

 

 

$

(53

)

 

$

92

 

 

$

(13

)

 

$

1,335

 

 

$

(66

)

Corporate bonds

 

 

35,952

 

 

 

(566

)

 

 

3,042

 

 

 

(168

)

 

 

38,994

 

 

 

(734

)

Municipal fixed-rate bonds

 

 

9,160

 

 

 

(18

)

 

 

 

 

 

 

 

 

9,160

 

 

 

(18

)

Asset-backed bonds

 

 

16,857

 

 

 

(44

)

 

 

 

 

 

 

 

 

16,857

 

 

 

(44

)

Mortgage/Agency-backed bonds

 

 

15,216

 

 

 

(91

)

 

 

 

 

 

 

 

 

15,216

 

 

 

(91

)

Government bonds

 

 

35,397

 

 

 

(248

)

 

 

 

 

 

 

 

 

35,397

 

 

 

(248

)

Marketable equity securities

 

 

14,364

 

 

 

(1,564

)

 

 

374

 

 

 

(129

)

 

 

14,738

 

 

 

(1,693

)

Total

 

$

128,189

 

 

$

(2,584

)

 

$

3,508

 

 

$

(310

)

 

$

131,697

 

 

$

(2,894

)

 

The decrease in unrealized losses during 2016, as reflected in the table above, results from changes in market positions associated with our fixed income and equity investment portfolio. At December 31, 2016, a total of 293 of our marketable equity securities were in an unrealized loss position.

We have categorized our cash equivalents 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 could include information supplied by investees.

 

 

 

Fair Value Measurements at December 31, 2016 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,878

 

 

$

6,878

 

 

$

 

 

$

 

Commercial paper

 

 

17,222

 

 

 

 

 

 

17,222

 

 

 

 

Cash equivalents

 

 

24,100

 

 

 

6,878

 

 

 

17,222

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

14,596

 

 

 

14,596

 

 

 

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

66,412

 

 

 

 

 

 

66,412

 

 

 

 

Municipal fixed-rate bonds

 

 

11,774

 

 

 

 

 

 

11,774

 

 

 

 

Asset-backed bonds

 

 

10,206

 

 

 

 

 

 

10,206

 

 

 

 

Mortgage/Agency-backed bonds

 

 

13,004

 

 

 

 

 

 

13,004

 

 

 

 

U.S. government bonds

 

 

29,767

 

 

 

29,767

 

 

 

 

 

 

 

Foreign government bonds

 

 

3,730

 

 

 

 

 

 

3,730

 

 

 

 

Variable rate demand notes

 

 

11,855

 

 

 

 

 

 

11,855

 

 

 

 

Available-for-sale marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – technology industry

 

 

3,374

 

 

 

3,374

 

 

 

 

 

 

 

Marketable equity securities – other

 

 

26,005

 

 

 

26,005

 

 

 

 

 

 

 

Available-for-sale securities

 

 

190,723

 

 

 

73,742

 

 

 

116,981

 

 

 

 

Total

 

$

214,823

 

 

$

80,620

 

 

$

134,203

 

 

$

 

 

 

Fair Value Measurements at December 31, 2015 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

1,271

 

 

$

1,271

 

 

$

 

 

$

 

Commercial paper

 

 

11,696

 

 

 

 

 

 

11,696

 

 

 

 

Cash equivalents

 

 

12,967

 

 

 

1,271

 

 

 

11,696

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

12,834

 

 

 

12,834

 

 

 

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

57,614

 

 

 

 

 

 

57,614

 

 

 

 

Municipal fixed-rate bonds

 

 

26,424

 

 

 

 

 

 

26,424

 

 

 

 

Asset-backed bonds

 

 

19,239

 

 

 

 

 

 

19,239

 

 

 

 

Mortgage/Agency-backed bonds

 

 

15,373

 

 

 

 

 

 

15,373

 

 

 

 

Government bonds

 

 

35,398

 

 

 

35,398

 

 

 

 

 

 

 

Available-for-sale marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – technology industry

 

 

5,384

 

 

 

5,384

 

 

 

 

 

 

 

Marketable equity securities – other

 

 

28,867

 

 

 

28,867

 

 

 

 

 

 

 

Available-for-sale securities

 

 

201,133

 

 

 

82,483

 

 

 

118,650

 

 

 

 

Total

 

$

214,100

 

 

$

83,754

 

 

$

130,346

 

 

$

 

 

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

Note 5 – Derivative Instruments and Hedging Activities

We have certain customers and suppliers who are invoiced or pay in a non-functional currency. Changes in the monetary exchange rates may adversely affect our results of operations and financial condition, as these are remeasured to the functional currency through profit and loss. 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. Our derivative instruments are not subject to master netting arrangements and are not offset in the Consolidated Balance Sheets.

As of December 31, 2016, we had forward contracts outstanding with notional amounts totaling €5.5 million ($5.8 million), which mature in the first quarter of in 2017.

The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of December 31, 2016 and 2015 were as follows:

 

(In thousands)

 

Balance Sheet

Location

 

2016

 

 

2015

 

Derivatives Not Designated as Hedging Instruments (Level 2):

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts – asset derivatives

 

Other receivables

 

$

159

 

 

$

 

 

The change in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the years ended December 31, 2016, 2015 and 2014 were as follows:

 

(In thousands)

 

Income Statement

Location

 

2016

 

 

2015

 

 

2014

 

Derivatives Not Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other income (expense)

 

$

724

 

 

$

511

 

 

$

1,852

 

 

Inventory
Inventory

Note 6 – Inventory

At December 31, 2016 and 2015, inventory was comprised of the following:

 

(In thousands)

 

2016

 

 

2015

 

Raw materials

 

$

40,461

 

 

$

34,223

 

Work in process

 

 

4,003

 

 

 

2,893

 

Finished goods

 

 

60,653

 

 

 

54,417

 

Total Inventory, net

 

$

105,117

 

 

$

91,533

 

 

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 December 31, 2016 and 2015, raw materials reserves totaled $14.6 million and $17.5 million, respectively, and finished goods inventory reserves totaled $10.6 million and $9.2 million, respectively.

Property, Plant and Equipment
Property, Plant and Equipment

Note 7 – Property, Plant and Equipment

At December 31, 2016 and 2015, property, plant and equipment were comprised of the following:

 

(In thousands)

 

2016

 

 

2015

 

Land

 

$

4,575

 

 

$

4,575

 

Building and land improvements

 

 

29,229

 

 

 

25,667

 

Building

 

 

68,301

 

 

 

68,301

 

Furniture and fixtures

 

 

18,477

 

 

 

17,347

 

Computer hardware and software

 

 

87,655

 

 

 

76,389

 

Engineering and other equipment

 

 

118,746

 

 

 

112,132

 

Total Property, Plant and Equipment

 

 

326,983

 

 

 

304,411

 

Less accumulated depreciation

 

 

(242,514

)

 

 

(231,178

)

Total Property, Plant and Equipment, net

 

$

84,469

 

 

$

73,233

 

 

Depreciation expense was $12.0 million, $12.3 million and $12.5 million in 2016, 2015, and 2014, respectively.

Goodwill and Intangible Assets
Goodwill and Intangible Assets

Note 8 – Goodwill and Intangible Assets

Goodwill was $3.5 million at December 31, 2016 and 2015, and was previously recorded in our Enterprise Networks reportable segment. As a result of our new reporting structure adopted in the first quarter of 2016, which is discussed further in Note 12, we reallocated goodwill from our Enterprise Networks reportable segment to our two, new reportable segments – Network Solutions and Services & Support. As a result, goodwill of $3.1 million and $0.4 million was reallocated to our Network Solutions and Services & Support reportable segments, respectively.

We evaluate the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. We have elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit to which the goodwill is assigned is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step impairment test. If we determine that it is more likely than not that its fair value is less than its carrying amount, then the two-step impairment test will be performed. Based on the results of our qualitative assessment in 2016, we concluded that it was not necessary to perform the two-step impairment test. There have been no impairment losses recognized since the acquisition in 2011.

Intangible assets are included in other assets in the accompanying Consolidated Balance Sheets. The following table presents our intangible assets as of December 31, 2016 and 2015:

 

(In thousands)

 

2016

 

 

2015

 

 

 

Gross Value

 

 

Accumulated

Amortization

 

 

Net Value

 

 

Gross Value

 

 

Accumulated

Amortization

 

 

Net Value

 

Customer relationships

 

$

6,899

 

 

$

(3,208

)

 

$

3,691

 

 

$

5,828

 

 

$

(2,627

)

 

$

3,201

 

Developed technology

 

 

6,444

 

 

 

(5,061

)

 

 

1,383

 

 

 

5,720

 

 

 

(4,329

)

 

 

1,391

 

Intellectual property

 

 

2,340

 

 

 

(2,129

)

 

 

211

 

 

 

2,340

 

 

 

(1,854

)

 

 

486

 

Supply agreement

 

 

1,400

 

 

 

(544

)

 

 

856

 

 

 

 

 

 

 

 

 

 

License

 

 

500

 

 

 

(113

)

 

 

387

 

 

 

 

 

 

 

 

 

 

Patent

 

 

500

 

 

 

(20

)

 

 

480

 

 

 

 

 

 

 

 

 

 

Trade names

 

 

370

 

 

 

(285

)

 

 

85

 

 

 

270

 

 

 

(265

)

 

 

5

 

Non-compete

 

 

200

 

 

 

(26

)

 

 

174

 

 

 

11

 

 

 

(11

)

 

 

 

Total

 

$

18,653

 

 

$

(11,386

)

 

$

7,267

 

 

$

14,169

 

 

$

(9,086

)

 

$

5,083

 

 

Amortization expense was $2.5 million, $1.9 million and $2.3 million for the years ended December 31, 2016, 2015 and 2014, respectively.

As of December 31, 2016, the estimated future amortization expense of intangible assets is as follows:

 

(In thousands)

 

Amount

 

2017

 

$

2,867

 

2018

 

 

1,168

 

2019

 

 

655

 

2020

 

 

621

 

2021

 

 

568

 

Thereafter

 

 

1,388

 

Total

 

$

7,267

 

 

Alabama State Industrial Development Authority Financing and Economic Incentives
Alabama State Industrial Development Authority Financing and Economic Incentives

Note 9 – Alabama State Industrial Development Authority Financing and Economic Incentives

In conjunction with an expansion of our Huntsville, Alabama, facility, we were approved for participation in an incentive program offered by the State of Alabama Industrial Development Authority (the “Authority”). Pursuant to the program, on January 13, 1995, the Authority issued $20.0 million of its taxable revenue bonds and loaned the proceeds from the sale of the bonds to ADTRAN. The bonds were originally purchased by AmSouth Bank of Alabama, Birmingham, Alabama (the “Bank”). Wachovia Bank, N.A., Nashville, Tennessee (formerly First Union National Bank of Tennessee) (the “Bondholder”), which was acquired by Wells Fargo & Company on December 31, 2008, purchased the original bonds from the Bank and made further advances to the Authority, bringing the total amount outstanding to $50.0 million. An Amended and Restated Taxable Revenue Bond (“Amended and Restated Bond”) was issued and the original financing agreement was amended. The Amended and Restated Bond bears interest, payable monthly. The interest rate is 2% per annum. The Amended and Restated Bond matures on January 1, 2020, and is currently outstanding in the aggregate principal amount of $27.8 million. The estimated fair value of the bond using a level 2 valuation technique at December 31, 2016 was approximately $28.1 million, based on a debt security with a comparable interest rate and maturity and a Standard & Poor’s credit rating of AAA. We are required to make payments to the Authority in amounts necessary to pay the interest on the Amended and Restated Bond. Included in long-term investments at December 31, 2016 is $27.8 million which is invested in a restricted certificate of deposit. These funds serve as a collateral deposit against the principal of this bond, and we have the right to set-off the balance of the Bond with the collateral deposit in order to reduce the balance of the indebtedness.

In conjunction with this program, we are eligible to receive certain economic incentives from the state of Alabama that reduce the amount of payroll withholdings that we are required to remit to the state for those employment positions that qualify under the program. We realized economic incentives related to payroll withholdings totaling $1.3 million for each of the years ended December 31, 2016, 2015 and 2014.

We made principal payments of $1.1 million for the years ended December 31, 2016 and 2015, respectively, and anticipate making a principal payment in 2017.  At December 31, 2016, $1.0 million of the bond debt was classified as a current liability in accounts payable in the Consolidated Balance Sheets.

Income Taxes
Income Taxes

Note 10 – Income Taxes

A summary of the components of the provision for income taxes for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

12,733

 

 

$

7,504

 

 

$

7,626

 

State

 

 

1,141

 

 

 

279

 

 

 

599

 

International

 

 

477

 

 

 

(29

)

 

 

12,587

 

Total Current

 

 

14,351

 

 

 

7,754

 

 

 

20,812

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

647

 

 

 

(585

)

 

 

(1,083

)

State

 

 

73

 

 

 

(66

)

 

 

(123

)

International

 

 

(3,405

)

 

 

(41

)

 

 

(4,320

)

Total Deferred

 

 

(2,685

)

 

 

(692

)

 

 

(5,526

)

Total Provision for Income Taxes

 

$

11,666

 

 

$

7,062

 

 

$

15,286

 

 

Our effective income tax rate differs from the federal statutory rate due to the following:

 

 

 

2016

 

 

2015

 

 

2014

 

Tax provision computed at the federal statutory rate

 

 

35.00

%

 

 

35.00

%

 

 

35.00

%

State income tax provision, net of federal benefit

 

 

3.93

 

 

 

4.86

 

 

 

2.69

 

Federal research credits

 

 

(8.15

)

 

 

(12.55

)

 

 

(4.05

)

Foreign taxes

 

 

(0.34

)

 

 

2.10

 

 

 

(7.26

)

Tax-exempt income

 

 

(0.53

)

 

 

(1.94

)

 

 

(1.25

)

State tax incentives

 

 

(2.77

)

 

 

(5.04

)

 

 

(2.21

)

Stock-based compensation

 

 

2.53

 

 

 

6.91

 

 

 

3.06

 

Domestic production activity deduction

 

 

(2.23

)

 

 

(3.17

)

 

 

(1.15

)

Bargain purchase

 

 

(2.64

)

 

 

 

 

 

 

Other, net

 

 

0.08

 

 

 

1.30

 

 

 

0.69

 

Effective Tax Rate

 

 

24.88

%

 

 

27.47

%

 

 

25.52

%

 

Income before provision for income taxes for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

U.S. entities

 

$

54,077

 

 

$

27,400

 

 

$

23,812

 

International entities

 

 

(7,182

)

 

 

(1,692

)

 

 

36,094

 

Total

 

$

46,895

 

 

$

25,708

 

 

$

59,906

 

 

Income before provision for income taxes for international entities reflects income based on statutory transfer pricing agreements. This amount does not correlate to consolidated international revenues, many of which occur from our U.S. entity.

Deferred income taxes on the balance sheet result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The principal components of our current and non-current deferred taxes are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Deferred tax assets

 

 

 

 

 

 

 

 

Accounts receivable

 

$

 

 

$

7

 

Inventory

 

 

12,020

 

 

 

12,558

 

Accrued expenses

 

 

5,551

 

 

 

6,359

 

Investments

 

 

1,062

 

 

 

 

Deferred compensation

 

 

5,751

 

 

 

5,072

 

Stock-based compensation

 

 

4,724

 

 

 

4,704

 

Uncertain tax positions related to state taxes and related interest

 

 

762

 

 

 

1,026

 

Pensions

 

 

4,273

 

 

 

5,729

 

Foreign losses

 

 

6,486

 

 

 

5,389

 

State losses and credit carry-forwards

 

 

4,021

 

 

 

4,187

 

Federal loss and research carry-forwards

 

 

5,886

 

 

 

5,886

 

Valuation allowance

 

 

(6,149

)

 

 

(7,250

)

Total Deferred Tax Assets

 

 

44,387

 

 

 

43,667

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

(4,433

)

 

 

(3,315

)

Accrued expenses

 

 

 

 

 

(2,791

)

Intellectual property

 

 

(1,918

)

 

 

(476

)

Investments

 

 

 

 

 

(70

)

Total Deferred Tax Liabilities

 

 

(6,351

)

 

 

(6,652

)

Net Deferred Tax Assets

 

$

38,036

 

 

$

37,015

 

 

At December 31, 2016 and 2015, non-current deferred taxes related to our investments and our defined benefit pension plan, reflect deferred taxes on the net unrealized gains on available-for-sale investments and deferred taxes on unrealized losses in our pension plan. The net change in non-current deferred taxes associated with these items, a deferred tax benefit of $1.5 million and $3.7 million in 2016 and 2015, respectively, is recorded as an adjustment to other comprehensive income, presented in the Consolidated Statements of Comprehensive Income.

Based upon our results of operations in 2016 and expected profitability in future years in a certain international jurisdiction, we concluded that it is more likely than not certain foreign deferred tax assets will be realized. As of December 31, 2016, the remaining valuation allowance primarily relates to deferred tax assets related to state credit carry-forwards from tax credits in excess of our annual tax liability to an individual state where we do not generate sufficient state income to offset the credit and net operating losses in foreign jurisdictions. We believe it is more likely than not that we will not realize the full benefits of the deferred tax assets arising from these losses and credits, and accordingly, we have provided a valuation allowance against these deferred tax assets. The deferred tax assets for foreign and domestic carry-forwards, unamortized research and development costs, and state credit carry-forwards of $16.4 million will expire between 2017 and 2030. The loss carry-forwards were acquired through acquisitions in 2009 and 2011. We will continue to assess the realization of our deferred tax assets and related valuations allowances. We do not provide for U.S. income tax on undistributed earnings of our foreign operations, whose earnings are intended to be permanently reinvested. These earnings are not required to service debt or fund our U.S. operations. It is impracticable to determine the amount of any unrecognized deferred tax liability for temporary differences related to investments in foreign subsidiaries. The net change in our valuation allowance from December 31, 2015 to December 31, 2016 was $1.1 million.

 

As of December 31, 2016 and 2015, respectively, our cash and cash equivalents were $79.9 million and $84.6 million and short-term investments were $43.2 million and $34.4 million, which provided an available short-term liquidity of $123.1 million and $118.9 million.  Of these amounts, our foreign subsidiaries held cash of $42.1 million and $38.9 million, respectively, representing approximately 34.2% and 32.7% of available short-term liquidity, which is used to fund on-going liquidity needs of these subsidiaries.  We intend to permanently reinvest these funds outside the U.S. and our current business plans do not indicate a need to repatriate to fund domestic operations.  However, if these funds were repatriated to the U.S. or used for U.S. operations, certain amounts related to the earnings and profits of foreign subsidiaries could be subject to U.S. tax for the incremental amount in excess of the foreign tax paid.  Due to the timing and circumstances of repatriation of such earnings, if any, it is not practical to determine the amount of funds subject to repatriation or the associated unrecognized deferred tax liability related to the amount.

During 2016, 2015 and 2014, we recorded an income tax benefit (expense) of nil, $(40) thousand and $0.1 million, respectively, as an adjustment to equity. This is calculated on the difference between the exercise price of stock option exercises and the market price of the underlying common stock upon exercise.

The change in the unrecognized income tax benefits for the years ended December 31, 2016, 2015 and 2014 is reconciled below:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Balance at beginning of period

 

$

2,537

 

 

$

3,334

 

 

$

3,240

 

Increases for tax position related to:

 

 

 

 

 

 

 

 

 

 

 

 

Prior years

 

 

95

 

 

 

 

 

 

 

Current year

 

 

428

 

 

 

280

 

 

 

522

 

Decreases for tax positions related to:

 

 

 

 

 

 

 

 

 

 

 

 

Prior years

 

 

 

 

 

(29

)

 

 

 

Settlements with taxing authorities

 

 

 

 

 

(103

)

 

 

 

Expiration of applicable statute of limitations

 

 

(834

)

 

 

(945

)

 

 

(428

)

Balance at end of period

 

$

2,226

 

 

$

2,537

 

 

$

3,334

 

 

As of December 31, 2016, 2015, and 2014, our total liability for unrecognized tax benefits was $2.2 million, $2.5 million, and $3.3 million, respectively, of which $1.7 million, $1.8 million, and $2.6 million, respectively, would reduce our effective tax rate if we were successful in upholding all of the uncertain positions and recognized the amounts recorded. We classify interest and penalties recognized on the liability for unrecognized tax benefits as income tax expense. As of December 31, 2016, 2015 and 2014, the balances of accrued interest and penalties were $0.8 million, $0.9 million and $1.0 million, respectively.

We do not anticipate a single tax position generating a significant increase or decrease in our liability for unrecognized tax benefits within 12 months of this reporting date. We file income tax returns in the U.S. federal and various state jurisdictions and several foreign jurisdictions. We are not currently under audit by the Internal Revenue Service. Generally, we are not subject to changes in income taxes by any taxing jurisdiction for the years prior to 2013.

Employee Benefit Plans
Employee Benefit Plans

Note 11 – Employee Benefit Plans

Pension Benefit Plan

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

The pension benefit plan obligations and funded status at December 31, 2016 and 2015, are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Change in projected benefit obligation:

 

 

 

 

 

 

 

 

Projected benefit obligation at beginning of period

 

$

(26,851

)

 

$

(30,507

)

Service cost

 

 

(1,211

)

 

 

(1,314

)

Interest cost

 

 

(720

)

 

 

(615

)

Actuarial gain (loss) - experience

 

 

431

 

 

 

247

 

Actuarial gain (loss) - assumptions

 

 

(2,628

)

 

 

2,078

 

Benefit payments

 

 

52

 

 

 

81

 

Effects of foreign currency exchange rate changes

 

 

916

 

 

 

3,179

 

Projected benefit obligation at end of period

 

 

(30,011

)

 

 

(26,851

)

Change in plan assets:

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of period

 

 

19,213

 

 

 

20,338

 

Actual return on plan assets

 

 

1,494

 

 

 

988

 

Effects of foreign currency exchange rate changes

 

 

(662

)

 

 

(2,113

)

Fair value of plan assets at end of period

 

 

20,045

 

 

 

19,213

 

Funded (unfunded) status at end of period

 

$

(9,966

)

 

$

(7,638

)

 

The accumulated benefit obligation was $28.7 million and $25.1 million at December 31, 2016 and 2015, respectively. The increase in the accumulated benefit obligation and the change in actuarial gain (loss) is primarily attributable to a decrease in the discount rate used in 2016 to determine the accumulated benefit obligation.

The net amounts recognized in the balance sheet for the unfunded pension liability as of December 31, 2016 and 2015 are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Current liability

 

$

 

 

$

 

Non-current liability

 

 

(9,966

)

 

 

(7,638

)

Total

 

$

(9,966

)

 

$

(7,638

)

 

The components of net periodic pension cost and amounts recognized in other comprehensive income for the years ended December 31, 2016, 2015 and 2014 are as follows:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Net periodic benefit cost:

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

1,211

 

 

$

1,314

 

 

$

1,189

 

Interest cost

 

 

720

 

 

 

615

 

 

 

836

 

Expected return on plan assets

 

 

(1,057

)

 

 

(1,011

)

 

 

(1,086

)

Amortization of actuarial losses

 

 

175

 

 

 

407

 

 

 

 

Net periodic benefit cost

 

 

1,049

 

 

 

1,325

 

 

 

939

 

Other changes in plan assets and benefit obligations

   recognized in other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial (gain) loss

 

 

1,782

 

 

 

(2,303

)

 

 

7,052

 

Amortization of actuarial losses

 

 

(156

)

 

 

(396

)

 

 

 

Amount recognized in other comprehensive income

 

 

1,626

 

 

 

(2,699

)

 

 

7,052

 

Total recognized in net periodic benefit cost and other

   comprehensive income

 

$

2,675

 

 

$

(1,374

)

 

$

7,991

 

 

The amounts recognized in accumulated other comprehensive income as of December 31, 2016 and 2015 are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Net actuarial loss

 

$

6,871

 

 

$

5,245

 

 

The defined benefit pension plan is accounted for on an actuarial basis, which requires the selection of various assumptions, including an expected rate of return on plan assets and a discount rate. The expected return on our German plan assets that is utilized in determining the benefit obligation and net periodic benefit cost is derived from periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks using standard deviations and correlations of returns among the asset classes that comprise the plans' asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return.

Another key assumption in determining net pension expense is the assumed discount rate to be used to discount plan obligations. The discount rate has been derived from the returns of high-quality, corporate bonds denominated in Euro currency with durations close to the duration of our pension obligations.

The weighted-average assumptions that were used to determine the net periodic benefit cost for the years ended December 31, 2016, 2015 and 2014 are as follows:

 

 

 

2016

 

 

2015

 

 

2014

 

Discount rates

 

 

2.64

%

 

 

2.20

%

 

 

3.70

%

Rate of compensation increase

 

 

2.00

%

 

 

2.25

%

 

 

2.25

%

Expected long-term rates of return

 

 

5.40

%

 

 

5.40

%

 

 

5.40

%

 

The weighted-average assumptions that were used to determine the benefit obligation at December 31, 2016 and 2015:

 

 

 

2016

 

 

2015

 

Discount rates

 

 

1.90

%

 

 

2.64

%

Rate of compensation increase

 

 

2.00

%

 

 

2.25

%

 

Actuarial gains and losses are recorded in accumulated other comprehensive income. To the extent unamortized gains and losses exceed 10% of the higher of the market-related value of assets or the projected benefit obligation, the excess is amortized as a component of net periodic pension cost over the remaining service period of active participants. We estimate that $0.3 million will be amortized from accumulated other comprehensive income into net periodic pension cost in 2017 for the net actuarial loss.

We do not anticipate making a contribution to this pension plan in 2017. The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid to participants:

 

(In thousands)

 

 

 

 

2017

 

$

348

 

2018

 

 

515

 

2019

 

 

699

 

2020

 

 

964

 

2021

 

 

1,079

 

2022 – 2026

 

 

5,156

 

Total

 

$

8,761

 

 

We have categorized our cash equivalents 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 December 31, 2016 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Cash and cash equivalents

 

$

6

 

 

$

6

 

 

$

 

 

$

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

12,546

 

 

 

12,546

 

 

 

 

 

 

 

Government bonds

 

 

2,037

 

 

 

2,037

 

 

 

 

 

 

 

Equity funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large cap blend

 

 

4,462

 

 

 

4,462

 

 

 

 

 

 

 

Large cap value

 

 

249

 

 

 

249

 

 

 

 

 

 

 

Balanced fund

 

 

745

 

 

 

745

 

 

 

 

 

 

 

Available-for-sale securities

 

 

20,039

 

 

 

20,039

 

 

 

 

 

 

 

Total

 

$

20,045

 

 

$

20,045

 

 

$

 

 

$

 

 

 

 

Fair Value Measurements at December 31, 2015 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable

Inputs

(Level 3)

 

Cash and cash equivalents

 

$

3

 

 

$

3

 

 

$

 

 

$

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

11,633

 

 

 

11,633

 

 

 

 

 

 

 

Government bonds

 

 

1,960

 

 

 

1,960

 

 

 

 

 

 

 

Equity funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large cap blend

 

 

4,604

 

 

 

4,604

 

 

 

 

 

 

 

Large cap value

 

 

258

 

 

 

258

 

 

 

 

 

 

 

Balanced fund

 

 

755

 

 

 

755

 

 

 

 

 

 

 

Available-for-sale securities

 

 

19,210

 

 

 

19,210

 

 

 

 

 

 

 

Total

 

$

19,213

 

 

$

19,213

 

 

$

 

 

$

 

 

Our investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner necessary to meet expected future benefits earned by participants, and consider a broad range of economic conditions. Central to the policy are target allocation ranges by asset class, which is currently 75% for bond funds and 25% for equity funds.

The objectives of the target allocations are to maintain investment portfolios that diversify risk through prudent asset allocation parameters, achieve asset returns that meet or exceed the plans’ actuarial assumptions, and achieve asset returns that are competitive with like institutions employing similar investment strategies.

The investment policy is periodically reviewed by us and a designated third-party fiduciary for investment matters. The policy is established and administered in a manner that is compliant at all times with applicable government regulations.

401(k) Savings Plan

We maintain the ADTRAN, Inc. 401(k) Retirement Plan (Savings Plan) for the benefit of our eligible employees. The Savings Plan is intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (Code), and is intended to be a “safe harbor” 401(k) plan under Code Section 401(k)(12). The Savings Plan allows employees to save for retirement by contributing part of their compensation to the plan on a tax-deferred basis. The Savings Plan also requires us to contribute a “safe harbor” amount each year. We match up to 4% of employee contributions (100% of an employee’s first 3% of contributions and 50% of their next 2% of contributions), beginning on the employee’s one year anniversary date. In calculating our matching contribution, we only use compensation up to the statutory maximum under the Code ($265 thousand for 2016). All contributions under the Savings Plan are 100% vested. Expenses recorded for employer contributions and plan administration costs for the Savings Plan amounted to approximately $4.1 million, $4.7 million and $4.5 million in 2016, 2015 and 2014, respectively.

Deferred Compensation Plans

We maintain four deferred compensation programs for certain executive management employees and our Board of Directors.

For our executive management employees, the ADTRAN, Inc. Deferred Compensation Program for Employees is offered as a supplement to our tax-qualified 401(k) plan and is available to certain executive management employees who have been designated by our Board of Directors. This deferred compensation plan allows participants to defer all or a portion of certain specified bonuses and up to 25% of remaining cash compensation, and permits us to make matching contributions on a discretionary basis, without the limitations that apply to the 401(k) plan. To date, we have not made any matching contributions under this plan. We also maintain the ADTRAN, Inc. Equity Deferral Program for Employees. Under this plan, participants may elect to defer all or a portion of their vested PSUs to the Plan. Such deferrals shall continue to be held and deemed to be invested in shares of ADTRAN stock unless and until the amounts are distributed or such deferrals are moved to another deemed investment pursuant to an election made by the Participant.

For our Board of Directors, we maintain the ADTRAN, Inc. Deferred Compensation Program for Directors. This program allows our Board of Directors to defer all or a portion of monetary remuneration paid to the Director, including, but not limited to, meeting fees and annual retainers. We also maintain the ADTRAN, Inc. Equity Deferral Program for Directors. Under this plan, participants may elect to defer all or a portion of their vested restricted stock awards. Such deferrals shall continue to be held and deemed to be invested in shares of ADTRAN stock unless and until the amounts are distributed or such deferrals are moved to another deemed investment pursuant to an election made by the Director.

We have set aside the plan assets for all plans in a rabbi trust (Trust) and all contributions are credited to bookkeeping accounts for the participants. The Trust assets are subject to the claims of our creditors in the event of bankruptcy or insolvency. The assets of the Trust are deemed to be invested in pre-approved mutual funds as directed by each participant, and the participant’s bookkeeping account is credited with the earnings and losses attributable to those investments. Benefits are scheduled to be distributed six months after termination of employment in a single lump sum payment or annual installments paid over a three or ten year term. Distributions will be made on a pro rata basis from each of the hypothetical investments of the Participant’s account in cash. Any whole shares of ADTRAN, Inc. common stock that are distributed will be distributed in-kind.

Assets of the Trust are deemed invested in mutual funds that cover an investment spectrum ranging from equities to money market instruments. These mutual funds are publicly quoted and reported at fair value. The fair value of the assets held by the Trust and the amounts payable to the plan participants at December 31, 2016 and 2015 are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Fair Value of Plan Assets

 

 

 

 

 

 

 

 

Long-term Investments

 

$

14,596

 

 

$

12,834

 

Total Fair Value of Plan Assets

 

$

14,596

 

 

$

12,834

 

Amounts Payable to Plan Participants

 

 

 

 

 

 

 

 

Non-current Liabilities

 

$

14,596

 

 

$

12,834

 

Total Amounts Payable to Plan Participants

 

$

14,596

 

 

$

12,834

 

 

Interest and dividend income of the Trust have been included in interest and dividend income in the accompanying 2016, 2015 and 2014 Consolidated Statements of Income. Changes in the fair value of the plan assets held by the Trust have been included in accumulated other comprehensive income in the accompanying 2016 and 2015 Consolidated Balance Sheets. Changes in the fair value of the deferred compensation liability are included as selling, general and administrative expense in the accompanying 2016, 2015 and 2014 Consolidated Statements of Income. Based on the changes in the total fair value of the Trust’s assets, we recorded deferred compensation income (expense) in 2016, 2015 and 2014 of $(1.3) million, $0.3 million and $(0.7) million, respectively.

Retiree Medical Coverage

We provide medical, dental and prescription drug coverage to one retired former officer and his spouse, for his life, on the same terms as provided to our active officers, and to the spouse of a former deceased officer for up to 30 years. At December 31, 2016 and 2015, this liability totaled $0.2 million.

Segment Information and Major Customers
Segment Information and Major Customers

Note 12 – Segment Information and Major Customers

In 2015, we realigned our organizational structure to better match our market opportunities, technological development initiatives, and improve efficiencies. During the first quarter of 2016, our chief operating decision maker requested changes in the information that he regularly reviews for purposes of allocating resources and assessing performance. As a result, beginning with the quarter ended March 31, 2016, we began reporting our financial performance based on two, new reportable segments – Network Solutions and Services & Support. Network Solutions includes hardware products and next-generation virtualized solutions used in service provider or business networks, as well as prior-generation products. Services & Support includes our suite of ProCloud managed services, network installation, engineering and maintenance services, and fee-based technical support and equipment repair/replacement plans.

We evaluate the performance of our new segments based on gross profit; therefore, selling, general and administrative expenses, research and development expenses, interest and dividend income, interest expense, net realized investment gain/loss, other income/expense and provision for taxes are reported on a company-wide, functional basis only. Historical financial information by reportable segment and category, as discussed below, has been recast to conform to our new reporting structure. There are no inter-segment revenues.

The following table presents information about the reported sales and gross profit of our reportable segments for each of the years ended December 31, 2016, 2015 and 2014. Asset information by reportable segment is not reported, since we do not produce such information internally.

 

Sales and Gross Profit by Market Segment

 

 

 

 

 

 

 

 

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

 

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

525,502

 

 

$

254,807

 

 

$

527,422

 

 

$

233,579

 

 

$

559,532

 

 

$

271,517

 

Services & Support

 

 

111,279

 

 

 

36,537

 

 

 

72,642

 

 

 

33,318

 

 

 

70,475

 

 

 

39,810

 

Total

 

$

636,781

 

 

$

291,344

 

 

$

600,064

 

 

$

266,897

 

 

$

630,007

 

 

$

311,327

 

 

Sales by Category

In addition to our new reporting segments, we will also report revenue for the following three categories – Access & Aggregation, Customer Devices, and Traditional & Other Products.

The table below presents sales information by product category for the years ended December 31, 2016, 2015 and 2014:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Access & Aggregation

 

$

436,372

 

 

$

405,698

 

 

$

401,769

 

Customer Devices

 

 

137,608

 

 

 

125,565

 

 

 

138,051

 

Traditional & Other Products

 

 

62,801

 

 

 

68,801

 

 

 

90,187

 

Total

 

$

636,781

 

 

$

600,064

 

 

$

630,007

 

 

The following table presents sales information by geographic area for the years ended December 31, 2016, 2015 and 2014. International sales correlate to shipments with a non-U.S. destination.

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

United States

 

$

501,337

 

 

$

419,366

 

 

$

381,382

 

Germany

 

 

85,780

 

 

 

111,666

 

 

 

150,987

 

Other international

 

 

49,664

 

 

 

69,032

 

 

 

97,638

 

Total

 

$

636,781

 

 

$

600,064

 

 

$

630,007

 

 

Customers comprising more than 10% of revenue can change from year to year. Single customers comprising more than 10% of our revenue in 2016 included three customers at 24%, 19% and 12%. Single customers comprising more than 10% of our revenue in 2015 included three customers at 20%, 17% and 14%. Single customers comprising more than 10% of our revenue in 2014 included two customers at 21% and 14%. No other customer accounted for 10% or more of our sales in 2016, 2015 or 2014. Our five largest customers, other than those with more than 10 percent of revenues disclosed above, can change from year to year.  These customers represented 13%, 14%, and 22% of total revenue in 2016, 2015 and 2014, respectively. Revenues in this disclosure do not include distributor agents, who predominately provide fulfillment services to end users. In such cases where known, that revenue is associated with the end user.

 

Additional Segment Information

 

As of December 31, 2016, long-lived assets, net totaled $84.5 million, which includes $79.9 million held in the United States and $4.6 million held outside the United States. As of December 31, 2015, long-lived assets, net totaled $73.2 million, which includes $68.8 million held in the United States and $4.4 million held outside the United States.

Commitments and Contingencies
Commitments and Contingencies

Note 13 – 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 December 31, 2016, of which $7.7 million has been applied to these commitments.

 

We lease office space and equipment under operating leases which expire at various dates through 2025. As of December 31, 2016, future minimum rental payments under non-cancelable operating leases with original maturities of greater than 12 months are as follows:

 

(In thousands)

 

 

 

 

2017

 

$

3,788

 

2018

 

 

2,043

 

2019

 

 

847

 

2020

 

 

741

 

Thereafter

 

 

3,243

 

Total

 

$

10,662

 

 

Rental expense was $4.2 million, $4.9 million and $4.7 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Earnings per Share
Earnings per Share

Note 14 – Earnings per Share

A summary of the calculation of basic and diluted earnings per share (EPS) for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

(In thousands, except for per share amounts)

 

2016

 

 

2015

 

 

2014

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

35,229

 

 

$

18,646

 

 

$

44,620

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares – basic

 

 

48,724

 

 

 

51,145

 

 

 

55,120

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

170

 

 

 

81

 

 

 

304

 

Restricted stock and restricted stock units

 

 

55

 

 

 

41

 

 

 

58

 

Weighted average number of shares – diluted

 

$

48,949

 

 

$

51,267

 

 

$

55,482

 

Net income per share – basic

 

$

0.72

 

 

$

0.36

 

 

$

0.81

 

Net income per share – diluted

 

$

0.72

 

 

$

0.36

 

 

$

0.80

 

 

For each of the years ended December 31, 2016, 2015 and 2014, 4.6 million, 6.1 million and 4.4 million stock options were outstanding but were not included in the computation of that year’s diluted EPS because the options’ exercise prices were greater than the average market price of the common shares, therefore making them anti-dilutive under the treasury stock method.

Summarized Quarterly Financial Data (Unaudited)
Summarized Quarterly Financial Data (Unaudited)

 


Note 15 – Summarized Quarterly Financial Data (Unaudited)

The following table presents unaudited quarterly operating results for each of our last eight fiscal quarters. This information has been prepared on a basis consistent with our audited financial statements and includes all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the data.

Unaudited Quarterly Operating Results

(In thousands, except for per share amounts)

 

Three Months Ended

 

March 31, 2016

 

 

June 30, 2016

 

 

September 30, 2016

 

 

December 31, 2016

 

Net sales

 

$

142,204

 

 

$

162,701

 

 

$

168,890

 

 

$

162,986

 

Gross profit

 

$

65,794

 

 

$

78,955

 

 

$

75,808

 

 

$

70,787

 

Operating income

 

$

5,521

 

 

$

14,812

 

 

$

10,130

 

 

$

4,272

 

Net income

 

$

5,014

 

 

$

10,228

 

 

$

12,415

 

 

$

7,572

 

Earnings per common share

 

$

0.10

 

 

$

0.21

 

 

$

0.26

 

 

$

0.16

 

Earnings per common share assuming dilution (1)

 

$

0.10

 

 

$

0.21

 

 

$

0.26

 

 

$

0.16

 

 

Three Months Ended

 

March 31, 2015

 

 

June 30, 2015

 

 

September 30, 2015

 

 

December 31, 2015

 

Net sales

 

$

142,835

 

 

$

160,138

 

 

$

158,078

 

 

$

139,013

 

Gross profit

 

$

65,563

 

 

$

68,246

 

 

$

70,649

 

 

$

62,439

 

Operating income

 

$

1,963

 

 

$

644

 

 

$

8,072

 

 

$

2,800

 

Net income

 

$

3,317

 

 

$

2,544

 

 

$

7,067

 

 

$

5,718

 

Earnings per common share

 

$

0.06

 

 

$

0.05

 

 

$

0.14

 

 

$

0.12

 

Earnings per common share assuming dilution (1)

 

$

0.06

 

 

$

0.05

 

 

$

0.14

 

 

$

0.12

 

 

(1)

Assumes exercise of dilutive stock options calculated under the treasury stock method.

Related Party Transactions
Related Party Transactions

Note 16 – Related Party Transactions

We employed the law firm of our director emeritus for legal services. All bills for services rendered by this firm were reviewed and approved by our Chief Financial Officer. We believe that the fees for such services are comparable to those charged by other firms for services rendered to us. The services of our director emeritus ended with his death on September 7, 2014. For the year ended 2014, we incurred fees of $0.1 million for these legal services.

Subsequent Events
Subsequent Events

Note 17 – Subsequent Events

On January 17, 2017, the Board declared a quarterly cash dividend of $0.09 per common share to be paid to shareholders of record at the close of business on February 2, 2017. The quarterly dividend payment was $4.4 million and was paid on February 16, 2017. 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 first quarter and as of February 24, 2017, we have repurchased 0.2 million shares of our common stock through open market purchases at an average cost of $21.46 per share. We currently have the authority to purchase an additional 4.2 million shares of our common stock under the current plan approved by the Board of Directors.

Schedule II - Valuation and Qualifying Accounts
Schedule II - Valuation and Qualifying Accounts

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

 

Column A

 

Column B

 

 

Column C

 

 

Column D

 

 

Column E

 

(In thousands)

 

Balance at

Beginning

of Period

 

 

Charged to

Costs &

Expenses

 

 

Deductions

 

 

Balance at

End of

Period

 

Year ended December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Doubtful Accounts

 

$

19

 

 

 

 

 

 

19

 

 

$

 

Inventory Reserve

 

$

26,675

 

 

 

3,303

 

 

 

4,729

 

 

$

25,249

 

Warranty Liability

 

$

8,739

 

 

 

8,561

 

 

 

8,752

 

 

$

8,548

 

Deferred Tax Asset Valuation Allowance

 

$

7,250

 

 

 

69

 

 

 

1,170

 

 

$

6,149

 

Year ended December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Doubtful Accounts

 

$

136

 

 

 

19

 

 

 

136

 

 

$

19

 

Inventory Reserve

 

$

24,682

 

 

 

2,225

 

 

 

232

 

 

$

26,675

 

Warranty Liability

 

$

8,415

 

 

 

2,998

 

 

 

2,674

 

 

$

8,739

 

Deferred Tax Asset Valuation Allowance

 

$

7,463

 

 

 

81

 

 

 

294

 

 

$

7,250

 

Year ended December 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Doubtful Accounts

 

$

130

 

 

 

23

 

 

 

17

 

 

$

136

 

Inventory Reserve

 

$

22,993

 

 

 

2,549

 

 

 

860

 

 

$

24,682

 

Warranty Liability

 

$

8,977

 

 

 

3,103

 

 

 

3,665

 

 

$

8,415

 

Deferred Tax Asset Valuation Allowance

 

$

8,842

 

 

 

283

 

 

 

1,662

 

 

$

7,463

 

 

Nature of Business and Summary of Significant Accounting Policies (Policies)

Principles of Consolidation

Our consolidated financial statements include ADTRAN and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation.

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 and network installations, estimated income tax provision and income tax contingencies, the fair value of stock- based compensation, impairment of goodwill, valuation and estimated lives of intangible assets, estimated pension liability, fair value of investments, and the evaluation of other-than-temporary declines in the value of investments. Actual amounts could differ significantly from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents represent demand deposits, money market funds, and short-term investments classified as available-for-sale with original maturities of three months or less. We maintain depository investments with certain financial institutions. Although these depository investments may exceed government insured depository limits, we have evaluated the credit worthiness of these applicable financial institutions, and determined the risk of material financial loss due to the exposure of such credit risk to be minimal. As of December 31, 2016, $77.9 million of our cash and cash equivalents, primarily certain domestic money market funds and foreign depository accounts, were in excess of government provided insured depository limits.

Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the immediate or short-term maturity of these financial instruments. The carrying amount reported for bonds payable was $27.8 million, compared to an estimated fair value of $28.1 million, based on a debt security with a comparable interest rate and maturity and a Standard & Poor’s credit rating of AAA.

Investments with contractual maturities beyond one year, such as our variable rate demand notes, may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Despite the long-term nature of their stated contractual maturities, we routinely buy and sell these securities and we believe we have the ability to quickly sell them to the remarketing agent, tender agent, or issuer at par value plus accrued interest in the event we decide to liquidate our investment in a particular variable rate demand note. All income generated from these investments was recorded as interest income. We have not been required to record any losses relating to variable rate demand notes.

Long-term investments represent a restricted certificate of deposit held at cost, deferred compensation plan assets, corporate bonds, municipal fixed-rate bonds, asset-backed bonds, mortgage/agency backed bonds, U.S. and foreign government bonds, variable rate demand notes, marketable equity securities, and other equity investments. Marketable equity securities are reported at fair value as determined by the most recently traded price of the securities at the balance sheet date, although the securities may not be readily marketable due to the size of the available market. Unrealized gains and losses, net of tax, are reported as a separate component of stockholders’ equity. Realized gains and losses on sales of securities are computed under the specific identification method and are included in current income. We review our investment portfolio quarterly for investments considered to have sustained an other-than-temporary decline in value. Impairment charges for other-than-temporary declines in value are recorded as realized losses in the accompanying consolidated statements of income. All of our investments at December 31, 2016 and 2015 are classified as available-for-sale securities. See Note 4 of Notes to Consolidated Financial Statements for additional information.

Accounts Receivable

We record accounts receivable at net realizable value. Prior to establishing payment terms for a new customer, we evaluate the credit risk of the customer. Credit limits and payment terms established for new customers are re-evaluated periodically based on customer collection experience and other financial factors. At December 31, 2016, three customers accounted for 63.3% of our total accounts receivable. At December 31, 2015, three customers accounted for 37.3% of our total accounts receivable.

We maintain an allowance for doubtful accounts for losses resulting from the inability of our customers to make required payments. We regularly review the allowance for doubtful accounts and consider factors such as the age of accounts receivable balances, the current economic conditions that may affect a customer’s ability to pay, significant one-time events and our historical experience. If the financial condition of a customer deteriorates, resulting in an impairment of their ability to make payments, we may be required to record an allowance for doubtful accounts. If circumstances change with regard to individual receivable balances that have previously been determined to be uncollectible (and for which a specific reserve has been established), a reduction in our allowance for doubtful accounts may be required. Our allowance for doubtful accounts was nil and $19 thousand at December 31, 2016 and December 31, 2015, respectively.

Other Receivables

Other receivables are comprised primarily of amounts due from subcontract manufacturers for product component transfers, accrued interest on investments and on a restricted certificate of deposit, amounts due from various jurisdictions for value-added tax, and amounts due from employee stock option exercises.

Inventory

Inventory is carried at the lower of cost or market, with cost being determined using the first-in, first-out method. Standard costs for material, labor and manufacturing overhead are used to value inventory. Standard costs are updated at least quarterly; therefore, inventory costs approximate actual costs at the end of each reporting period. 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, market conditions and age. When we dispose of excess and obsolete inventories, the related disposals are charged against the inventory reserve. See Note 6 of Notes to Consolidated Financial Statements for additional information.

Property, Plant and Equipment

Property, plant and equipment, which is stated at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. We depreciate building and land improvements from five to 39 years, office machinery and equipment from three to seven years, engineering machinery and equipment from three to seven years, and computer software from three to five years. Expenditures for repairs and maintenance are charged to expense as incurred. Betterments that materially prolong the lives of the assets are capitalized. Gains and losses on the disposal of property, plant and equipment are recorded in operating income. See Note 7 of Notes to Consolidated Financial Statements for additional information.

Liability for Warranty

Our products generally include warranties of 90 days to five 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 total systems. 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. During 2016, we incurred an increase in warranty expense related to a product recall caused by a defect in a part provided by a third party supplier. The liability for warranty obligations totaled $8.5 million and $8.7 million at December 31, 2016 and 2015, respectively. These liabilities are included in accrued expenses in the accompanying consolidated balance sheets.

A summary of warranty expense and write-off activity for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

Year Ended December 31,

 

2016

 

 

2015

 

 

2014

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

8,739

 

 

$

8,415

 

 

$

8,977

 

Plus: Amounts charged to cost and expenses

 

 

8,561

 

 

 

2,998

 

 

 

3,103

 

Less: Deductions

 

 

(8,752

)

 

 

(2,674

)

 

 

(3,665

)

Balance at end of period

 

$

8,548

 

 

$

8,739

 

 

$

8,415

 

 

Pension Benefit Plan Obligations

We maintain a defined benefit pension plan covering employees in certain foreign countries. Pension benefit plan obligations are based on various assumptions used by our actuaries in calculating these amounts. These assumptions include discount rates, compensation rate increases, expected return on plan assets, retirement rates and mortality rates. Actual results that differ from the assumptions and changes in assumptions could affect future expenses and obligations.

Stock-Based Compensation

We have two Board and stockholder approved stock incentive plans from which stock options and other awards are available for grant to employees and directors. All employee and director stock options granted under our stock option plans have an exercise price equal to the fair market value of the award, as defined in the plan, of the underlying common stock on the grant date. There are currently no vesting provisions tied to performance or market conditions for any stock awards. Vesting for all outstanding award grants is based only on continued service as an employee or director of ADTRAN. All of our outstanding stock option awards are classified as equity awards.

Under the provisions of our approved plans, we made grants of performance stock units to certain of our executive officers in 2016, 2015, and 2014. The performance stock units are subject to a market condition based on the relative total shareholder return of ADTRAN against all the companies in the NASDAQ Telecommunications Index and vest at the end of a three-year performance period. The performance stock units are converted into shares of common stock upon vesting. Depending on the relative total shareholder return over the performance period, the executive officers may earn from 0% to 150% of the number of restricted stock units granted. The fair value of the award is based on the market price of our common stock on the date of grant, adjusted for the expected outcome of the impact of market conditions using a Monte Carlo Simulation valuation method. The recipients of the performance stock units also earn dividend credits during the performance period, which are paid in cash upon the issuance of common stock for the restricted stock units.

Stock-based compensation expense recognized in 2016, 2015 and 2014 was approximately $6.7 million, $6.7 million and $8.6 million, respectively. As of December 31, 2016, total compensation cost related to non-vested stock options, restricted stock units, performance stock units and restricted stock not yet recognized was approximately $16.4 million, which is expected to be recognized over an average remaining recognition period of 2.9 years. See Note 3 of Notes to Consolidated Financial Statements for additional information.

Impairment of Long-Lived Assets

We review long-lived assets used in operations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by the asset are less than the asset’s carrying value. An impairment loss would be recognized in the amount by which the recorded value of the asset exceeds the fair value of the asset, measured by the quoted market price of an asset or an estimate based on the best information available in the circumstances. There were no impairment losses recognized during 2016, 2015 or 2014.

 


Goodwill and Purchased Intangible Assets

We evaluate the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. We have elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit to which the goodwill is assigned is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step impairment test. If we determine that it is more likely than not that its fair value is less than its carrying amount, then the two-step impairment test will be performed. Based on the results of our qualitative assessment in 2016, we concluded that it was not necessary to perform the two-step impairment test. There have been no impairment losses recognized since the acquisition in 2011. Purchased intangible assets with finite lives are carried at cost, less accumulated amortization. Amortization is recorded over the estimated useful lives of the respective assets, which is 9 months to 14 years.

Research and Development Costs

Research and development costs include compensation for engineers and support personnel, outside contracted services, depreciation and material costs associated with new product development, the enhancement of current products, and product cost reductions. We continually evaluate new product opportunities and engage in intensive research and product development efforts. Research and development costs totaled $124.8 million, $129.9 million and $132.3 million for the years ended December 31, 2016, 2015 and 2014, respectively.

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 table presents changes in accumulated other comprehensive income, net of tax, by component for the years ended December 31, 2014, 2015 and 2016:

 

(In thousands)

 

Unrealized

Gains (Losses)

on Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Balance at December 31, 2013

 

$

10,737

 

 

$

(891

)

 

$

907

 

 

$

10,753

 

Other comprehensive income (loss) before

   reclassifications

 

 

2,363

 

 

 

(4,866

)

 

 

(4,189

)

 

 

(6,692

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(4,136

)

 

 

 

 

 

 

 

 

(4,136

)

Balance at December 31, 2014

 

 

8,964

 

 

 

(5,757

)

 

 

(3,282

)

 

 

(75

)

Other comprehensive income (loss) before

   reclassifications

 

 

(844

)

 

 

1,589

 

 

 

(3,724

)

 

 

(2,979

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(6,188

)

 

 

273

 

 

 

 

 

 

(5,915

)

Balance at December 31, 2015

 

 

1,932

 

 

 

(3,895

)

 

 

(7,006

)

 

 

(8,969

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,515

 

 

 

(1,229

)

 

 

(569

)

 

 

(283

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(3,043

)

 

 

107

 

 

 

 

 

 

(2,936

)

Balance at December 31, 2016

 

$

404

 

 

$

(5,017

)

 

$

(7,575

)

 

$

(12,188

)

 

The following tables present the details of reclassifications out of accumulated other comprehensive income for the years ended December 31, 2016, 2015 and 2014:

 

(In thousands)

 

2016

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

 

$

5,408

 

 

Net realized investment gain

Impairment expense

 

 

(419

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(156

)

 

(1)

Total reclassifications for the period, before tax

 

 

4,833

 

 

 

Tax (expense) benefit

 

 

(1,897

)

 

 

Total reclassifications for the period, net of tax

 

$

2,936

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 11 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

2015

Details about Accumulated Other Comprehensive

Income Components

 

Amount Reclassified

from Accumulated Other

Comprehensive Income

 

 

Affected Line Item in the

Statement Where Net Income

Is Presented

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

 

 

 

 

 

 

Net realized gain on sales of securities

 

$

10,348

 

 

Net realized investment gain

Impairment expense

 

 

(203

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(396

)

 

(1)

Total reclassifications for the period, before tax

 

 

9,749

 

 

 

Tax (expense) benefit

 

 

(3,834

)

 

 

Total reclassifications for the period, net of tax

 

$

5,915

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 11 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

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

 

$

6,895

 

 

Net realized investment gain

Impairment expense

 

 

(115

)

 

Net realized investment gain

Total reclassifications for the period, before tax

 

 

6,780

 

 

 

Tax (expense) benefit

 

 

(2,644

)

 

 

Total reclassifications for the period, net of tax

 

$

4,136

 

 

 

 

The following tables present the tax effects related to the change in each component of other comprehensive income for the years ended December 31, 2016, 2015 and 2014:

 

 

 

2016

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

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

 

$

2,484

 

 

$

(969

)

 

$

1,515

 

Reclassification adjustment for amounts related to available-for-sale investments included in net income

 

 

(4,989

)

 

 

1,946

 

 

 

(3,043

)

Defined benefit plan adjustments

 

 

(1,782

)

 

 

553

 

 

 

(1,229

)

Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income

 

 

156

 

 

 

(49

)

 

 

107

 

Foreign currency translation adjustment

 

 

(569

)

 

 

 

 

 

(569

)

Total Other Comprehensive Income (Loss)

 

$

(4,700

)

 

$

1,481

 

 

$

(3,219

)

 

 

 

2015

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

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

 

$

(1,384

)

 

$

540

 

 

$

(844

)

Reclassification adjustment for amounts related to available-

   for-sale investments included in net income

 

 

(10,145

)

 

 

3,957

 

 

 

(6,188

)

Defined benefit plan adjustments

 

 

2,303

 

 

 

(714

)

 

 

1,589

 

Reclassification adjustment for amounts related to defined

   benefit plan adjustments included in net income

 

 

396

 

 

 

(123

)

 

 

273

 

Foreign currency translation adjustment

 

 

(3,724

)

 

 

 

 

 

(3,724

)

Total Other Comprehensive Income (Loss)

 

$

(12,554

)

 

$

3,660

 

 

$

(8,894

)

 

 

 

2014

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

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

 

$

3,874

 

 

$

(1,511

)

 

$

2,363

 

Reclassification adjustment for amounts related to available-

   for-sale investments included in net income

 

 

(6,780

)

 

 

2,644

 

 

 

(4,136

)

Defined benefit plan adjustments

 

 

(7,052

)

 

 

2,186

 

 

 

(4,866

)

Foreign currency translation adjustment

 

 

(4,189

)

 

 

 

 

 

(4,189

)

Total Other Comprehensive Income (Loss)

 

$

(14,147

)

 

$

3,319

 

 

$

(10,828

)

 

Income Taxes

The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from the difference between financial and tax bases of our assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that the positions become uncertain.  We adjust these reserves, including any impact on the related interest and penalties, as facts and circumstances change.

Foreign Currency

We record transactions denominated in foreign currencies on a monthly basis using exchange rates from throughout the year. Assets and liabilities denominated in foreign currencies are translated at the balance sheet dates using the closing rates of exchange between those foreign currencies and the functional currency with any transaction gains or losses reported in other income (expense). Our primary exposures to foreign currency exchange rate movements are with our German subsidiary, whose functional currency is the Euro, our Australian subsidiary, whose functional currency is the Australian dollar, and our Mexican subsidiary, whose functional currency is the U.S. dollar. Adjustments resulting from translating financial statements of international subsidiaries are recorded as a component of accumulated other comprehensive income (loss).

Revenue Recognition

Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the product price is fixed or determinable, collection of the resulting receivable is reasonably assured, and product returns are reasonably estimable. For product sales, revenue is generally recognized upon shipment of the product to our customer in accordance with the title transfer terms of the sales agreement, generally Ex Works, per International Commercial Terms. In the case of consigned inventory, revenue is recognized when the end customer assumes ownership of the product. Contracts that contain multiple deliverables are evaluated to determine the units of accounting, and the consideration from the arrangement is allocated to each unit of accounting based on the relative selling price and corresponding terms of the contract. We use vendor-specific objective evidence of selling price. When this evidence is not available, we are generally not able to determine third-party evidence of selling price because of the extent of customization among competing products or services from other companies. In these instances, we use best estimates to allocate consideration to each respective unit of accounting. These estimates include analysis of respective bills of material and review and analysis of similar product and service offerings. We record revenue associated with installation services when respective contractual obligations are complete. In instances where customer acceptance is required, revenue is deferred until respective acceptance criteria have been met. Contracts that include both installation services and product sales are evaluated for revenue recognition in accordance with contract terms. As a result, installation services may be considered a separate deliverable or may be considered a combined single unit of accounting with the delivered product. Generally, either the purchaser, ADTRAN, or a third party can perform the installation of our products. Shipping fees are recorded as revenue and the related cost is included in cost of sales. Sales taxes invoiced to customers are included in revenues, and represent less than one percent of total revenues. The corresponding sales taxes paid are included in cost of goods sold. Value added taxes collected from customers in international jurisdictions are recorded in accrued expenses as a liability. Revenue is recorded net of discounts. Sales returns are recorded as a reduction of revenue and accrued based on historical sales return experience, which we believe provides a reasonable estimate of future returns.

A portion of our products are sold to a non-exclusive distribution network of major technology distributors in the United States. These large organizations then distribute or provide fulfillment services to an extensive network of VARs and SIs. VARs and SIs may be affiliated with us as a channel partner, or they may purchase from the distributor in an unaffiliated fashion. Additionally, with certain limitations our distributors may return unused and unopened product for stock-balancing purposes when such returns are accompanied by offsetting orders for products of equal or greater value.

We participate in cooperative advertising and market development programs with certain customers. We use these programs to reimburse customers for certain forms of advertising, and in general, to allow our customers credits up to a specified percentage of their net purchases. Our costs associated with these programs are estimated and included in marketing expenses in our consolidated statements of income. We also participate in rebate programs to provide sales incentives for certain products. Our costs associated with these programs are estimated and accrued at the time of sale, and are recorded as a reduction of sales in our consolidated statements of income.

Unearned Revenue

Unearned revenue primarily represents customer billings on our maintenance service programs and unearned revenues relating to multiple element contracts where we still have contractual obligations to our customers. We currently offer maintenance contracts ranging from one to five years. Revenue attributable to maintenance contracts is recognized on a straight-line basis over the related contract term. In addition, we provide software maintenance and a variety of hardware maintenance services to customers under contracts with terms up to ten years. When we defer revenue related to multiple-element contracts where we still have contractual obligations, we also defer the related costs. Deferred costs are included in prepaid expenses and other assets and totaled $10.7 million and $5.2 million at December 31, 2016 and 2015, respectively.

Other Income (Expense), Net

Other income (expense), net, is comprised primarily of miscellaneous income and expense, gains and losses on foreign currency transactions, and investment account management fees. For the year ended December 31, 2014, other income (expense), net included a $2.4 million gain related to the settlement of working capital items from an acquisition transaction that closed in 2012.

Earnings per Share

Earnings per common share, and earnings per common share assuming dilution, are based on the weighted average number of common shares and, when dilutive, common equivalent shares outstanding during the year. See Note 14 of Notes to Consolidated Financial Statements for additional information.

Dividends

During 2016, 2015 and 2014, we paid shareholder dividends totaling $17.6 million, $18.4 million and $19.9 million, respectively. The Board of Directors presently anticipates that it will declare a regular quarterly dividend so long as the present tax treatment of dividends exists and adequate levels of liquidity are maintained. The following table shows dividends paid to our shareholders in each quarter of 2016, 2015 and 2014.

 

Dividends per Common Share

 

 

 

2016

 

 

2015

 

 

2014

 

First Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

Second Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

Third Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

Fourth Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

 

On January 17, 2017, the Board of Directors declared a quarterly cash dividend of $0.09 per common share to be paid to shareholders of record at the close of business on February 2, 2017. The ex-dividend date was January 31, 2017 and the payment date was February 16, 2017. The quarterly dividend payment was $4.4 million.

Business Combinations

We use the acquisition method to account for business combinations. Under the acquisition method of accounting, we recognize the assets acquired and liabilities assumed at their fair value on the acquisition date. Goodwill is measured as the excess of the consideration transferred over the net assets acquired. Costs incurred to complete the business combination, such as legal, accounting or other professional fees, are charged to general and administrative expenses as they are incurred.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 to fiscal years beginning after December 31, 2017, and interim periods within those fiscal years, with early adoption permitted for reporting periods beginning after December 15, 2016. Subsequently, the FASB issued ASUs in 2016 containing implementation guidance related to ASU 2014-09, including: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which is intended to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance; ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which contains certain provisions and practical expedients in response to identified implementation issues; and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which is intended to clarify the Codification or to correct unintended application of guidance. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. We plan to adopt ASU 2014-09 and the related ASUs on January 1, 2018, and we are currently evaluating the transition method that will be elected. We are continuing to evaluate the potential impact of these ASUs, and we believe the most significant potential impact relates to our accounting for software license and installation services revenues. We do not believe there will be a significant impact to product or maintenance revenues.

In July 2015, the FASB issued Accounting Standards Update No.  2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (ASU 2015-11). Currently, Topic 330, Inventory, requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 does not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. ASU 2015-11 requires an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We adopted ASU 2015-05 in the first quarter of 2017, and there was no material impact on our financial position, results of operations and cash flows.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity's leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. A modified retrospective approach is required. We anticipate the adoption of ASU 2016-02 will have a material impact on our financial position; however, we do not believe adoption will have a material impact on our results of operations. We believe the most significant impact relates to our accounting for operating leases for office space and equipment.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). ASU 2016-09 simplifies several aspects of accounting for share-based compensation arrangements, including income tax effects, the classification of tax-related cash flows on the statement of cash flows, and accounting for forfeitures. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. We adopted ASU 2016-09 in the first quarter of 2017, and there was no material impact on our financial position, results of operations and cash flows.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04). ASU 2017-04 simplifies the measurement of goodwill by eliminating step 2 of the goodwill impairment test. Under ASU 2017-04, entities will be required to compare the fair value of a reporting unit to its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 is effective for annual or interim impairment tests performed in fiscal years beginning after December 15, 2019, with early adoption permitted for annual or interim impairment tests performed on testing dates after January 1, 2017. The amendments should be applied prospectively. We do not expect the adoption of ASU 2017-04 will have a material impact on our financial position, results of operations or cash flows.

During 2016, we adopted the following accounting standards, which had no material effect on our financial position, results of operations or cash flows:

In April 2015, the FASB issued Accounting Standards Update No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (ASU 2015-05), which provides guidance on accounting for fees paid by a customer in a cloud computing arrangement. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. The amendments may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. We adopted ASU 2015-05 during the first quarter of 2016 and will apply the new standard prospectively. The adoption of ASU 2015-05 did not have a material impact on our financial position, results of operations and cash flows.

In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes (ASU 2015-17). ASU 2015-17 amends the existing guidance on income taxes to require the classification of all deferred tax assets and liabilities as non-current on the balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted. The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively to all periods presented. We elected to early adopt ASU 2015-17 during the fourth quarter of 2016, and we applied the guidance retrospectively to all periods presented. As a result, $17.3 million and $18.9 million were reclassified from current deferred tax assets to non-current deferred tax assets at December 31, 2016 and 2015, respectively.

Nature of Business and Summary of Significant Accounting Policies (Tables)

A summary of warranty expense and write-off activity for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

Year Ended December 31,

 

2016

 

 

2015

 

 

2014

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

8,739

 

 

$

8,415

 

 

$

8,977

 

Plus: Amounts charged to cost and expenses

 

 

8,561

 

 

 

2,998

 

 

 

3,103

 

Less: Deductions

 

 

(8,752

)

 

 

(2,674

)

 

 

(3,665

)

Balance at end of period

 

$

8,548

 

 

$

8,739

 

 

$

8,415

 

 

The following table presents changes in accumulated other comprehensive income, net of tax, by component for the years ended December 31, 2014, 2015 and 2016:

 

(In thousands)

 

Unrealized

Gains (Losses)

on Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Balance at December 31, 2013

 

$

10,737

 

 

$

(891

)

 

$

907

 

 

$

10,753

 

Other comprehensive income (loss) before

   reclassifications

 

 

2,363

 

 

 

(4,866

)

 

 

(4,189

)

 

 

(6,692

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(4,136

)

 

 

 

 

 

 

 

 

(4,136

)

Balance at December 31, 2014

 

 

8,964

 

 

 

(5,757

)

 

 

(3,282

)

 

 

(75

)

Other comprehensive income (loss) before

   reclassifications

 

 

(844

)

 

 

1,589

 

 

 

(3,724

)

 

 

(2,979

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(6,188

)

 

 

273

 

 

 

 

 

 

(5,915

)

Balance at December 31, 2015

 

 

1,932

 

 

 

(3,895

)

 

 

(7,006

)

 

 

(8,969

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,515

 

 

 

(1,229

)

 

 

(569

)

 

 

(283

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(3,043

)

 

 

107

 

 

 

 

 

 

(2,936

)

Balance at December 31, 2016

 

$

404

 

 

$

(5,017

)

 

$

(7,575

)

 

$

(12,188

)

 

The following tables present the details of reclassifications out of accumulated other comprehensive income for the years ended December 31, 2016, 2015 and 2014:

 

(In thousands)

 

2016

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

 

$

5,408

 

 

Net realized investment gain

Impairment expense

 

 

(419

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(156

)

 

(1)

Total reclassifications for the period, before tax

 

 

4,833

 

 

 

Tax (expense) benefit

 

 

(1,897

)

 

 

Total reclassifications for the period, net of tax

 

$

2,936

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 11 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

2015

Details about Accumulated Other Comprehensive

Income Components

 

Amount Reclassified

from Accumulated Other

Comprehensive Income

 

 

Affected Line Item in the

Statement Where Net Income

Is Presented

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

 

 

 

 

 

 

Net realized gain on sales of securities

 

$

10,348

 

 

Net realized investment gain

Impairment expense

 

 

(203

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(396

)

 

(1)

Total reclassifications for the period, before tax

 

 

9,749

 

 

 

Tax (expense) benefit

 

 

(3,834

)

 

 

Total reclassifications for the period, net of tax

 

$

5,915

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 11 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

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

 

$

6,895

 

 

Net realized investment gain

Impairment expense

 

 

(115

)

 

Net realized investment gain

Total reclassifications for the period, before tax

 

 

6,780

 

 

 

Tax (expense) benefit

 

 

(2,644

)

 

 

Total reclassifications for the period, net of tax

 

$

4,136

 

 

 

 

The following tables present the tax effects related to the change in each component of other comprehensive income for the years ended December 31, 2016, 2015 and 2014:

 

 

 

2016

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

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

 

$

2,484

 

 

$

(969

)

 

$

1,515

 

Reclassification adjustment for amounts related to available-for-sale investments included in net income

 

 

(4,989

)

 

 

1,946

 

 

 

(3,043

)

Defined benefit plan adjustments

 

 

(1,782

)

 

 

553

 

 

 

(1,229

)

Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income

 

 

156

 

 

 

(49

)

 

 

107

 

Foreign currency translation adjustment

 

 

(569

)

 

 

 

 

 

(569

)

Total Other Comprehensive Income (Loss)

 

$

(4,700

)

 

$

1,481

 

 

$

(3,219

)

 

 

 

2015

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

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

 

$

(1,384

)

 

$

540

 

 

$

(844

)

Reclassification adjustment for amounts related to available-

   for-sale investments included in net income

 

 

(10,145

)

 

 

3,957

 

 

 

(6,188

)

Defined benefit plan adjustments

 

 

2,303

 

 

 

(714

)

 

 

1,589

 

Reclassification adjustment for amounts related to defined

   benefit plan adjustments included in net income

 

 

396

 

 

 

(123

)

 

 

273

 

Foreign currency translation adjustment

 

 

(3,724

)

 

 

 

 

 

(3,724

)

Total Other Comprehensive Income (Loss)

 

$

(12,554

)

 

$

3,660

 

 

$

(8,894

)

 

 

 

2014

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

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

 

$

3,874

 

 

$

(1,511

)

 

$

2,363

 

Reclassification adjustment for amounts related to available-

   for-sale investments included in net income

 

 

(6,780

)

 

 

2,644

 

 

 

(4,136

)

Defined benefit plan adjustments

 

 

(7,052

)

 

 

2,186

 

 

 

(4,866

)

Foreign currency translation adjustment

 

 

(4,189

)

 

 

 

 

 

(4,189

)

Total Other Comprehensive Income (Loss)

 

$

(14,147

)

 

$

3,319

 

 

$

(10,828

)

 

The following table shows dividends paid to our shareholders in each quarter of 2016, 2015 and 2014.

 

Dividends per Common Share

 

 

 

2016

 

 

2015

 

 

2014

 

First Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

Second Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

Third Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

Fourth Quarter

 

$

0.09

 

 

$

0.09

 

 

$

0.09

 

 

Business Combinations (Tables)

The allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date, subject to working capital adjustments, is as follows:

 

(In Thousands)

 

 

 

 

Assets

 

 

 

 

Inventory

 

$

3,131

 

Property, plant and equipment

 

 

352

 

Intangible assets

 

 

4,700

 

Total assets acquired

 

 

8,183

 

Liabilities

 

 

 

 

Accounts payable

 

 

(1,250

)

Warranty payable

 

 

(61

)

Accrued wages and benefits

 

 

(122

)

Deferred income taxes

 

 

(2,265

)

Total liabilities assumed

 

 

(3,698

)

Total net assets

 

 

4,485

 

Gain on bargain purchase of a business, net of tax

 

 

(3,542

)

Total purchase price

 

$

943

 

 

The details of the acquired intangible assets are as follows:

 

In thousands

 

Value

 

 

Life (years)

 

Supply agreement

 

$

1,400

 

 

 

0.8

 

Customer relationships

 

 

1,200

 

 

 

6.0

 

Developed technology

 

 

800

 

 

 

10.0

 

License

 

 

500

 

 

 

1.3

 

Patent

 

 

500

 

 

 

7.3

 

Non-compete

 

 

200

 

 

 

2.3

 

Trade name

 

 

100

 

 

 

2.0

 

Total

 

$

4,700

 

 

 

 

 

 

The actual revenue and net loss included in our Consolidated Statements of Income for the period September 13, 2016 to December 31, 2016 are as follows:

 

(In thousands)

 

September 13 to

December 31,

2016

 

Revenue

 

$

2,768

 

Net loss

 

$

(805

)

 

The following supplemental unaudited pro forma information presents the financial results as if the acquisition had occurred on January 1, 2015. This supplemental unaudited pro forma information does not purport to be indicative of what would have occurred had the acquisition been completed on January 1, 2015, nor is it indicative of any future results. Aside from revising the 2015 net income for the effect of the bargain purchase gain, there were no material, non-recurring adjustments to this unaudited pro forma information.

 

(In thousands)

 

2016

 

 

2015

 

Pro forma revenue

 

$

641,170

 

 

$

603,923

 

Pro forma net income

 

$

31,212

 

 

$

22,945

 

 

Stock-Based Compensation (Tables)

The following table summarizes stock-based compensation expense related to stock options, PSUs, restricted stock and RSUs for the years ended December 31, 2016, 2015 and 2014, which was recognized as follows:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Stock-based compensation expense included in cost of

   sales

 

$

389

 

 

$

280

 

 

$

479

 

Selling, general and administrative expense

 

 

3,341

 

 

 

3,261

 

 

 

4,185

 

Research and development expense

 

 

2,965

 

 

 

3,171

 

 

 

3,899

 

Stock-based compensation expense included in operating

   expenses

 

 

6,306

 

 

 

6,432

 

 

 

8,084

 

Total stock-based compensation expense

 

 

6,695

 

 

 

6,712

 

 

 

8,563

 

Tax benefit for expense associated with non-qualified

   options

 

 

(963

)

 

 

(862

)

 

 

(1,157

)

Total stock-based compensation expense, net of tax

 

$

5,732

 

 

$

5,850

 

 

$

7,406

 

 

The following table is a summary of our stock options outstanding as of December 31, 2015 and 2016 and the changes that occurred during 2016:

 

(In thousands, except per share amounts)

 

Number of

Options

 

 

Weighted

Average

Exercise Price

 

 

Weighted Avg.

Remaining

Contractual Life

in Years

 

 

Aggregate

Intrinsic Value

 

Options outstanding, December 31, 2015

 

 

7,108

 

 

$

21.97

 

 

 

6.42

 

 

$

3,284

 

Options granted

 

 

19

 

 

$

18.24

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(283

)

 

$

16.66

 

 

 

 

 

 

 

 

 

Options forfeited

 

 

(93

)

 

$

17.90

 

 

 

 

 

 

 

 

 

Options expired

 

 

(413

)

 

$

23.96

 

 

 

 

 

 

 

 

 

Options outstanding, December 31, 2016

 

 

6,338

 

 

$

22.14

 

 

 

5.63

 

 

$

16,972

 

Options vested and expected to vest, December 31, 2016

 

 

6,276

 

 

$

22.20

 

 

 

5.60

 

 

$

16,606

 

Options exercisable, December 31, 2016

 

 

4,757

 

 

$

23.67

 

 

 

4.73

 

 

$

9,137

 

 

The following table further describes our stock options outstanding as of December 31, 2016:

 

 

 

Options Outstanding

 

 

Options Exercisable

 

Range of

Exercise Prices

 

Options

Outstanding at

12/31/16

(In thousands)

 

 

Weighted Avg.

Remaining

Contractual Life

in Years

 

 

Weighted

Average

Exercise

Price

 

 

Options

Exercisable at

12/31/16

(In thousands)

 

 

Weighted

Average

Exercise

Price

 

$14.88 – 18.96

 

 

2,101

 

 

 

6.78

 

 

$

15.82

 

 

 

1,217

 

 

$

16.14

 

$18.97 – 23.45

 

 

1,380

 

 

 

5.79

 

 

$

20.17

 

 

 

881

 

 

$

20.84

 

$23.46 – 30.35

 

 

1,491

 

 

 

5.08

 

 

$

23.89

 

 

 

1,293

 

 

$

23.92

 

$30.36 – 41.92

 

 

1,366

 

 

 

4.29

 

 

$

31.94

 

 

 

1,366

 

 

$

31.94

 

 

 

 

6,338

 

 

 

 

 

 

 

 

 

 

 

4,757

 

 

 

 

 

 

The following table is a summary of our PSUs, restricted stock and RSUs outstanding as of December 31, 2015 and 2016 and the changes that occurred during 2016:

 

(In thousands, except per share amounts)

 

Number of

shares

 

 

Weighted

Average Grant

Date Fair Value

 

Unvested PSUs, restricted stock and RSUs outstanding,

   December 31, 2015

 

 

106

 

 

$

21.09

 

PSUs, restricted stock and RSUs granted

 

 

460

 

 

$

20.63

 

PSUs, restricted stock and RSUs vested

 

 

(46

)

 

$

22.50

 

PSUs, restricted stock and RSUs forfeited

 

 

(1

)

 

$

20.00

 

Unvested RSUs and restricted stock outstanding,

   December 31, 2016

 

 

519

 

 

$

20.51

 

 

The weighted-average estimated fair value of stock options granted to employees during the years ended December 31, 2016, 2015 and 2014 was $5.22 per share, $4.28 per share and $6.31 per share, respectively, with the following weighted-average assumptions:

 

 

 

2016

 

 

2015

 

 

2014

 

Expected volatility

 

 

34.79

%

 

 

34.57

%

 

 

39.05

%

Risk-free interest rate

 

 

1.36

%

 

 

1.81

%

 

 

1.79

%

Expected dividend yield

 

 

1.98

%

 

 

2.35

%

 

 

1.90

%

Expected life (in years)

 

 

6.25

 

 

 

6.23

 

 

 

6.33

 

 

The PSU pricing model also requires the use of several significant assumptions that impact the fair value estimate. The estimated fair value of the PSUs granted to employees during the years ended December 31, 2016, 2015 and 2014 was $23.50 per share, $17.64 per share and $22.11 per share, respectively, with the following assumptions:

 

 

 

2016

 

 

2015

 

 

2014

 

Expected volatility

 

 

29.79

%

 

 

31.34

%

 

 

36.40

%

Risk-free interest rate

 

 

1.17

%

 

 

1.20

%

 

 

0.96

%

Expected dividend yield

 

 

1.80

%

 

 

2.35

%

 

 

1.89

%

 

Investments (Tables)

At December 31, 2016, we held the following securities and investments, recorded at either fair value or cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value /

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Deferred compensation plan assets

 

$

12,367

 

 

$

2,271

 

 

$

(42

)

 

$

14,596

 

Corporate bonds

 

 

66,522

 

 

 

64

 

 

 

(174

)

 

 

66,412

 

Municipal fixed-rate bonds

 

 

11,799

 

 

 

12

 

 

 

(37

)

 

 

11,774

 

Asset-backed bonds

 

 

10,201

 

 

 

19

 

 

 

(14

)

 

 

10,206

 

Mortgage/Agency-backed bonds

 

 

13,080

 

 

 

15

 

 

 

(91

)

 

 

13,004

 

U.S. government bonds

 

 

30,022

 

 

 

15

 

 

 

(270

)

 

 

29,767

 

Foreign government bonds

 

 

3,729

 

 

 

2

 

 

 

(1

)

 

 

3,730

 

Variable rate demand notes

 

 

11,855

 

 

 

 

 

 

 

 

 

11,855

 

Marketable equity securities

 

 

30,571

 

 

 

311

 

 

 

(1,503

)

 

 

29,379

 

Available-for-sale securities held at fair value

 

$

190,146

 

 

$

2,709

 

 

$

(2,132

)

 

$

190,723

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,800

 

Other investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

767

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

219,290

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value /

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Deferred compensation plan assets

 

$

11,325

 

 

$

1,575

 

 

$

(66

)

 

$

12,834

 

Corporate bonds

 

 

58,328

 

 

 

20

 

 

 

(734

)

 

 

57,614

 

Municipal fixed-rate bonds

 

 

26,414

 

 

 

28

 

 

 

(18

)

 

 

26,424

 

Asset-backed bonds

 

 

19,281

 

 

 

2

 

 

 

(44

)

 

 

19,239

 

Mortgage/Agency-backed bonds

 

 

15,463

 

 

 

1

 

 

 

(91

)

 

 

15,373

 

Government bonds

 

 

35,646

 

 

 

 

 

 

(248

)

 

 

35,398

 

Marketable equity securities

 

 

31,643

 

 

 

4,301

 

 

 

(1,693

)

 

 

34,251

 

Available-for-sale securities held at fair value

 

$

198,100

 

 

$

5,927

 

 

$

(2,894

)

 

$

201,133

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,000

 

Other investments held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,289

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

232,422

 

 

As of December 31, 2016, corporate bonds, municipal fixed-rate bonds, asset-backed bonds, mortgage/agency-backed bonds, U.S. government bonds, and foreign government bonds had the following contractual maturities:

 

(In thousands)

 

Corporate

bonds

 

 

Municipal

fixed-rate

bonds

 

 

Asset-backed

bonds

 

 

Mortgage /

Agency-backed

bonds

 

 

U.S.

government

bonds

 

 

Foreign

government

bonds

 

Less than one year

 

$

18,912

 

 

$

8,321

 

 

$

 

 

$

 

 

$

1,701

 

 

$

2,400

 

One to two years

 

 

32,497

 

 

 

1,703

 

 

 

635

 

 

 

976

 

 

 

4,903

 

 

 

1,330

 

Two to three years

 

 

11,486

 

 

 

351

 

 

 

2,415

 

 

 

980

 

 

 

13,072

 

 

 

 

Three to five years

 

 

3,517

 

 

 

1,399

 

 

 

5,402

 

 

 

 

 

 

10,091

 

 

 

 

Five to ten years

 

 

 

 

 

 

 

 

1,600

 

 

 

2,060

 

 

 

 

 

 

 

More than ten years

 

 

 

 

 

 

 

 

154

 

 

 

8,988

 

 

 

 

 

 

 

Total

 

$

66,412

 

 

$

11,774

 

 

$

10,206

 

 

$

13,004

 

 

$

29,767

 

 

$

3,730

 

 

The following table presents gross realized gains and losses related to our investments for the years ended December 31, 2016, 2015 and 2014:

 

Year Ended December 31,

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Gross realized gains

 

$

7,530

 

 

$

10,906

 

 

$

7,586

 

Gross realized losses

 

$

(1,607

)

 

$

(569

)

 

$

(308

)

 

The following table presents the breakdown of investments with unrealized losses at December 31, 2016:

 

(In thousands)

 

Continuous Unrealized

Loss Position for Less

than 12 Months

 

 

Continuous Unrealized

Loss Position for 12

Months or Greater

 

 

Total

 

 

 

Fair Value

 

 

Unrealized

Losses

 

 

Fair Value

 

 

Unrealized

Losses

 

 

Fair Value

 

 

Unrealized

Losses

 

Deferred compensation plan assets

 

$

294

 

 

$

(12

)

 

$

245

 

 

$

(30

)

 

$

539

 

 

$

(42

)

Corporate bonds

 

 

32,562

 

 

 

(166

)

 

 

2,722

 

 

 

(8

)

 

 

35,284

 

 

 

(174

)

Municipal fixed-rate bonds

 

 

8,936

 

 

 

(37

)

 

 

 

 

 

 

 

 

8,936

 

 

 

(37

)

Asset-backed bonds

 

 

2,986

 

 

 

(14

)

 

 

 

 

 

 

 

 

2,986

 

 

 

(14

)

Mortgage/Agency-backed bonds

 

 

7,842

 

 

 

(81

)

 

 

1,239

 

 

 

(10

)

 

 

9,081

 

 

 

(91

)

U.S. government bonds

 

 

26,449

 

 

 

(270

)

 

 

 

 

 

 

 

 

26,449

 

 

 

(270

)

Foreign government bonds

 

 

924

 

 

 

(1

)

 

 

 

 

 

 

 

 

924

 

 

 

(1

)

Marketable equity securities

 

 

21,607

 

 

 

(1,200

)

 

 

1,495

 

 

 

(303

)

 

 

23,102

 

 

 

(1,503

)

Total

 

$

101,600

 

 

$

(1,781

)

 

$

5,701

 

 

$

(351

)

 

$

107,301

 

 

$

(2,132

)

 

The following table presents the breakdown of investments with unrealized losses at December 31, 2015:

 

(In thousands)

 

Continuous Unrealized

Loss Position for Less

than 12 Months

 

 

Continuous Unrealized

Loss Position for 12

Months or Greater

 

 

Total

 

 

 

Fair Value

 

 

Unrealized

Losses

 

 

Fair Value

 

 

Unrealized

Losses

 

 

Fair Value

 

 

Unrealized

Losses

 

Deferred compensation plan assets

 

$

1,243

 

 

$

(53

)

 

$

92

 

 

$

(13

)

 

$

1,335

 

 

$

(66

)

Corporate bonds

 

 

35,952

 

 

 

(566

)

 

 

3,042

 

 

 

(168

)

 

 

38,994

 

 

 

(734

)

Municipal fixed-rate bonds

 

 

9,160

 

 

 

(18

)

 

 

 

 

 

 

 

 

9,160

 

 

 

(18

)

Asset-backed bonds

 

 

16,857

 

 

 

(44

)

 

 

 

 

 

 

 

 

16,857

 

 

 

(44

)

Mortgage/Agency-backed bonds

 

 

15,216

 

 

 

(91

)

 

 

 

 

 

 

 

 

15,216

 

 

 

(91

)

Government bonds

 

 

35,397

 

 

 

(248

)

 

 

 

 

 

 

 

 

35,397

 

 

 

(248

)

Marketable equity securities

 

 

14,364

 

 

 

(1,564

)

 

 

374

 

 

 

(129

)

 

 

14,738

 

 

 

(1,693

)

Total

 

$

128,189

 

 

$

(2,584

)

 

$

3,508

 

 

$

(310

)

 

$

131,697

 

 

$

(2,894

)

 

We have categorized our cash equivalents 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 could include information supplied by investees.

 

 

 

Fair Value Measurements at December 31, 2016 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,878

 

 

$

6,878

 

 

$

 

 

$

 

Commercial paper

 

 

17,222

 

 

 

 

 

 

17,222

 

 

 

 

Cash equivalents

 

 

24,100

 

 

 

6,878

 

 

 

17,222

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

14,596

 

 

 

14,596

 

 

 

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

66,412

 

 

 

 

 

 

66,412

 

 

 

 

Municipal fixed-rate bonds

 

 

11,774

 

 

 

 

 

 

11,774

 

 

 

 

Asset-backed bonds

 

 

10,206

 

 

 

 

 

 

10,206

 

 

 

 

Mortgage/Agency-backed bonds

 

 

13,004

 

 

 

 

 

 

13,004

 

 

 

 

U.S. government bonds

 

 

29,767

 

 

 

29,767

 

 

 

 

 

 

 

Foreign government bonds

 

 

3,730

 

 

 

 

 

 

3,730

 

 

 

 

Variable rate demand notes

 

 

11,855

 

 

 

 

 

 

11,855

 

 

 

 

Available-for-sale marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – technology industry

 

 

3,374

 

 

 

3,374

 

 

 

 

 

 

 

Marketable equity securities – other

 

 

26,005

 

 

 

26,005

 

 

 

 

 

 

 

Available-for-sale securities

 

 

190,723

 

 

 

73,742

 

 

 

116,981

 

 

 

 

Total

 

$

214,823

 

 

$

80,620

 

 

$

134,203

 

 

$

 

 

 

Fair Value Measurements at December 31, 2015 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

1,271

 

 

$

1,271

 

 

$

 

 

$

 

Commercial paper

 

 

11,696

 

 

 

 

 

 

11,696

 

 

 

 

Cash equivalents

 

 

12,967

 

 

 

1,271

 

 

 

11,696

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

12,834

 

 

 

12,834

 

 

 

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

57,614

 

 

 

 

 

 

57,614

 

 

 

 

Municipal fixed-rate bonds

 

 

26,424

 

 

 

 

 

 

26,424

 

 

 

 

Asset-backed bonds

 

 

19,239

 

 

 

 

 

 

19,239

 

 

 

 

Mortgage/Agency-backed bonds

 

 

15,373

 

 

 

 

 

 

15,373

 

 

 

 

Government bonds

 

 

35,398

 

 

 

35,398

 

 

 

 

 

 

 

Available-for-sale marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – technology industry

 

 

5,384

 

 

 

5,384

 

 

 

 

 

 

 

Marketable equity securities – other

 

 

28,867

 

 

 

28,867

 

 

 

 

 

 

 

Available-for-sale securities

 

 

201,133

 

 

 

82,483

 

 

 

118,650

 

 

 

 

Total

 

$

214,100

 

 

$

83,754

 

 

$

130,346

 

 

$

 

 

Derivative Instruments and Hedging Activities (Tables)

The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of December 31, 2016 and 2015 were as follows:

 

(In thousands)

 

Balance Sheet

Location

 

2016

 

 

2015

 

Derivatives Not Designated as Hedging Instruments (Level 2):

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts – asset derivatives

 

Other receivables

 

$

159

 

 

$

 

 

The change in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the years ended December 31, 2016, 2015 and 2014 were as follows:

 

(In thousands)

 

Income Statement

Location

 

2016

 

 

2015

 

 

2014

 

Derivatives Not Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other income (expense)

 

$

724

 

 

$

511

 

 

$

1,852

 

 

Inventory (Tables)
Components of Inventory

At December 31, 2016 and 2015, inventory was comprised of the following:

 

(In thousands)

 

2016

 

 

2015

 

Raw materials

 

$

40,461

 

 

$

34,223

 

Work in process

 

 

4,003

 

 

 

2,893

 

Finished goods

 

 

60,653

 

 

 

54,417

 

Total Inventory, net

 

$

105,117

 

 

$

91,533

 

 

Property, Plant and Equipment (Tables)
Property, Plant and Equipment

At December 31, 2016 and 2015, property, plant and equipment were comprised of the following:

 

(In thousands)

 

2016

 

 

2015

 

Land

 

$

4,575

 

 

$

4,575

 

Building and land improvements

 

 

29,229

 

 

 

25,667

 

Building

 

 

68,301

 

 

 

68,301

 

Furniture and fixtures

 

 

18,477

 

 

 

17,347

 

Computer hardware and software

 

 

87,655

 

 

 

76,389

 

Engineering and other equipment

 

 

118,746

 

 

 

112,132

 

Total Property, Plant and Equipment

 

 

326,983

 

 

 

304,411

 

Less accumulated depreciation

 

 

(242,514

)

 

 

(231,178

)

Total Property, Plant and Equipment, net

 

$

84,469

 

 

$

73,233

 

 

Goodwill and Intangible Assets (Tables)

The following table presents our intangible assets as of December 31, 2016 and 2015:

 

(In thousands)

 

2016

 

 

2015

 

 

 

Gross Value

 

 

Accumulated

Amortization

 

 

Net Value

 

 

Gross Value

 

 

Accumulated

Amortization

 

 

Net Value

 

Customer relationships

 

$

6,899

 

 

$

(3,208

)

 

$

3,691

 

 

$

5,828

 

 

$

(2,627

)

 

$

3,201

 

Developed technology

 

 

6,444

 

 

 

(5,061

)

 

 

1,383

 

 

 

5,720

 

 

 

(4,329

)

 

 

1,391

 

Intellectual property

 

 

2,340

 

 

 

(2,129

)

 

 

211

 

 

 

2,340

 

 

 

(1,854

)

 

 

486

 

Supply agreement

 

 

1,400

 

 

 

(544

)

 

 

856

 

 

 

 

 

 

 

 

 

 

License

 

 

500

 

 

 

(113

)

 

 

387

 

 

 

 

 

 

 

 

 

 

Patent

 

 

500

 

 

 

(20

)

 

 

480

 

 

 

 

 

 

 

 

 

 

Trade names

 

 

370

 

 

 

(285

)

 

 

85

 

 

 

270

 

 

 

(265

)

 

 

5

 

Non-compete

 

 

200

 

 

 

(26

)

 

 

174

 

 

 

11

 

 

 

(11

)

 

 

 

Total

 

$

18,653

 

 

$

(11,386

)

 

$

7,267

 

 

$

14,169

 

 

$

(9,086

)

 

$

5,083

 

 

As of December 31, 2016, the estimated future amortization expense of intangible assets is as follows:

 

(In thousands)

 

Amount

 

2017

 

$

2,867

 

2018

 

 

1,168

 

2019

 

 

655

 

2020

 

 

621

 

2021

 

 

568

 

Thereafter

 

 

1,388

 

Total

 

$

7,267

 

 

Income Taxes (Tables)

A summary of the components of the provision for income taxes for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

12,733

 

 

$

7,504

 

 

$

7,626

 

State

 

 

1,141

 

 

 

279

 

 

 

599

 

International

 

 

477

 

 

 

(29

)

 

 

12,587

 

Total Current

 

 

14,351

 

 

 

7,754

 

 

 

20,812

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

647

 

 

 

(585

)

 

 

(1,083

)

State

 

 

73

 

 

 

(66

)

 

 

(123

)

International

 

 

(3,405

)

 

 

(41

)

 

 

(4,320

)

Total Deferred

 

 

(2,685

)

 

 

(692

)

 

 

(5,526

)

Total Provision for Income Taxes

 

$

11,666

 

 

$

7,062

 

 

$

15,286

 

 

Our effective income tax rate differs from the federal statutory rate due to the following:

 

 

 

2016

 

 

2015

 

 

2014

 

Tax provision computed at the federal statutory rate

 

 

35.00

%

 

 

35.00

%

 

 

35.00

%

State income tax provision, net of federal benefit

 

 

3.93

 

 

 

4.86

 

 

 

2.69

 

Federal research credits

 

 

(8.15

)

 

 

(12.55

)

 

 

(4.05

)

Foreign taxes

 

 

(0.34

)

 

 

2.10

 

 

 

(7.26

)

Tax-exempt income

 

 

(0.53

)

 

 

(1.94

)

 

 

(1.25

)

State tax incentives

 

 

(2.77

)

 

 

(5.04

)

 

 

(2.21

)

Stock-based compensation

 

 

2.53

 

 

 

6.91

 

 

 

3.06

 

Domestic production activity deduction

 

 

(2.23

)

 

 

(3.17

)

 

 

(1.15

)

Bargain purchase

 

 

(2.64

)

 

 

 

 

 

 

Other, net

 

 

0.08

 

 

 

1.30

 

 

 

0.69

 

Effective Tax Rate

 

 

24.88

%

 

 

27.47

%

 

 

25.52

%

 

Income before provision for income taxes for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

U.S. entities

 

$

54,077

 

 

$

27,400

 

 

$

23,812

 

International entities

 

 

(7,182

)

 

 

(1,692

)

 

 

36,094

 

Total

 

$

46,895

 

 

$

25,708

 

 

$

59,906

 

 

Deferred income taxes on the balance sheet result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The principal components of our current and non-current deferred taxes are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Deferred tax assets

 

 

 

 

 

 

 

 

Accounts receivable

 

$

 

 

$

7

 

Inventory

 

 

12,020

 

 

 

12,558

 

Accrued expenses

 

 

5,551

 

 

 

6,359

 

Investments

 

 

1,062

 

 

 

 

Deferred compensation

 

 

5,751

 

 

 

5,072

 

Stock-based compensation

 

 

4,724

 

 

 

4,704

 

Uncertain tax positions related to state taxes and related interest

 

 

762

 

 

 

1,026

 

Pensions

 

 

4,273

 

 

 

5,729

 

Foreign losses

 

 

6,486

 

 

 

5,389

 

State losses and credit carry-forwards

 

 

4,021

 

 

 

4,187

 

Federal loss and research carry-forwards

 

 

5,886

 

 

 

5,886

 

Valuation allowance

 

 

(6,149

)

 

 

(7,250

)

Total Deferred Tax Assets

 

 

44,387

 

 

 

43,667

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

(4,433

)

 

 

(3,315

)

Accrued expenses

 

 

 

 

 

(2,791

)

Intellectual property

 

 

(1,918

)

 

 

(476

)

Investments

 

 

 

 

 

(70

)

Total Deferred Tax Liabilities

 

 

(6,351

)

 

 

(6,652

)

Net Deferred Tax Assets

 

$

38,036

 

 

$

37,015

 

 

The change in the unrecognized income tax benefits for the years ended December 31, 2016, 2015 and 2014 is reconciled below:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Balance at beginning of period

 

$

2,537

 

 

$

3,334

 

 

$

3,240

 

Increases for tax position related to:

 

 

 

 

 

 

 

 

 

 

 

 

Prior years

 

 

95

 

 

 

 

 

 

 

Current year

 

 

428

 

 

 

280

 

 

 

522

 

Decreases for tax positions related to:

 

 

 

 

 

 

 

 

 

 

 

 

Prior years

 

 

 

 

 

(29

)

 

 

 

Settlements with taxing authorities

 

 

 

 

 

(103

)

 

 

 

Expiration of applicable statute of limitations

 

 

(834

)

 

 

(945

)

 

 

(428

)

Balance at end of period

 

$

2,226

 

 

$

2,537

 

 

$

3,334

 

 

Employee Benefit Plans (Tables)

The pension benefit plan obligations and funded status at December 31, 2016 and 2015, are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Change in projected benefit obligation:

 

 

 

 

 

 

 

 

Projected benefit obligation at beginning of period

 

$

(26,851

)

 

$

(30,507

)

Service cost

 

 

(1,211

)

 

 

(1,314

)

Interest cost

 

 

(720

)

 

 

(615

)

Actuarial gain (loss) - experience

 

 

431

 

 

 

247

 

Actuarial gain (loss) - assumptions

 

 

(2,628

)

 

 

2,078

 

Benefit payments

 

 

52

 

 

 

81

 

Effects of foreign currency exchange rate changes

 

 

916

 

 

 

3,179

 

Projected benefit obligation at end of period

 

 

(30,011

)

 

 

(26,851

)

Change in plan assets:

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of period

 

 

19,213

 

 

 

20,338

 

Actual return on plan assets

 

 

1,494

 

 

 

988

 

Effects of foreign currency exchange rate changes

 

 

(662

)

 

 

(2,113

)

Fair value of plan assets at end of period

 

 

20,045

 

 

 

19,213

 

Funded (unfunded) status at end of period

 

$

(9,966

)

 

$

(7,638

)

 

The net amounts recognized in the balance sheet for the unfunded pension liability as of December 31, 2016 and 2015 are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Current liability

 

$

 

 

$

 

Non-current liability

 

 

(9,966

)

 

 

(7,638

)

Total

 

$

(9,966

)

 

$

(7,638

)

 

The components of net periodic pension cost and amounts recognized in other comprehensive income for the years ended December 31, 2016, 2015 and 2014 are as follows:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Net periodic benefit cost:

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

1,211

 

 

$

1,314

 

 

$

1,189

 

Interest cost

 

 

720

 

 

 

615

 

 

 

836

 

Expected return on plan assets

 

 

(1,057

)

 

 

(1,011

)

 

 

(1,086

)

Amortization of actuarial losses

 

 

175

 

 

 

407

 

 

 

 

Net periodic benefit cost

 

 

1,049

 

 

 

1,325

 

 

 

939

 

Other changes in plan assets and benefit obligations

   recognized in other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial (gain) loss

 

 

1,782

 

 

 

(2,303

)

 

 

7,052

 

Amortization of actuarial losses

 

 

(156

)

 

 

(396

)

 

 

 

Amount recognized in other comprehensive income

 

 

1,626

 

 

 

(2,699

)

 

 

7,052

 

Total recognized in net periodic benefit cost and other

   comprehensive income

 

$

2,675

 

 

$

(1,374

)

 

$

7,991

 

 

The amounts recognized in accumulated other comprehensive income as of December 31, 2016 and 2015 are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Net actuarial loss

 

$

6,871

 

 

$

5,245

 

 

The weighted-average assumptions that were used to determine the net periodic benefit cost for the years ended December 31, 2016, 2015 and 2014 are as follows:

 

 

 

2016

 

 

2015

 

 

2014

 

Discount rates

 

 

2.64

%

 

 

2.20

%

 

 

3.70

%

Rate of compensation increase

 

 

2.00

%

 

 

2.25

%

 

 

2.25

%

Expected long-term rates of return

 

 

5.40

%

 

 

5.40

%

 

 

5.40

%

 

The weighted-average assumptions that were used to determine the benefit obligation at December 31, 2016 and 2015:

 

 

 

2016

 

 

2015

 

Discount rates

 

 

1.90

%

 

 

2.64

%

Rate of compensation increase

 

 

2.00

%

 

 

2.25

%

 

The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid to participants:

 

(In thousands)

 

 

 

 

2017

 

$

348

 

2018

 

 

515

 

2019

 

 

699

 

2020

 

 

964

 

2021

 

 

1,079

 

2022 – 2026

 

 

5,156

 

Total

 

$

8,761

 

 

We have categorized our cash equivalents 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 December 31, 2016 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Cash and cash equivalents

 

$

6

 

 

$

6

 

 

$

 

 

$

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

12,546

 

 

 

12,546

 

 

 

 

 

 

 

Government bonds

 

 

2,037

 

 

 

2,037

 

 

 

 

 

 

 

Equity funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large cap blend

 

 

4,462

 

 

 

4,462

 

 

 

 

 

 

 

Large cap value

 

 

249

 

 

 

249

 

 

 

 

 

 

 

Balanced fund

 

 

745

 

 

 

745

 

 

 

 

 

 

 

Available-for-sale securities

 

 

20,039

 

 

 

20,039

 

 

 

 

 

 

 

Total

 

$

20,045

 

 

$

20,045

 

 

$

 

 

$

 

 

 

 

Fair Value Measurements at December 31, 2015 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable

Inputs

(Level 3)

 

Cash and cash equivalents

 

$

3

 

 

$

3

 

 

$

 

 

$

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

11,633

 

 

 

11,633

 

 

 

 

 

 

 

Government bonds

 

 

1,960

 

 

 

1,960

 

 

 

 

 

 

 

Equity funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Large cap blend

 

 

4,604

 

 

 

4,604

 

 

 

 

 

 

 

Large cap value

 

 

258

 

 

 

258

 

 

 

 

 

 

 

Balanced fund

 

 

755

 

 

 

755

 

 

 

 

 

 

 

Available-for-sale securities

 

 

19,210

 

 

 

19,210

 

 

 

 

 

 

 

Total

 

$

19,213

 

 

$

19,213

 

 

$

 

 

$

 

 

The fair value of the assets held by the Trust and the amounts payable to the plan participants at December 31, 2016 and 2015 are as follows:

 

(In thousands)

 

2016

 

 

2015

 

Fair Value of Plan Assets

 

 

 

 

 

 

 

 

Long-term Investments

 

$

14,596

 

 

$

12,834

 

Total Fair Value of Plan Assets

 

$

14,596

 

 

$

12,834

 

Amounts Payable to Plan Participants

 

 

 

 

 

 

 

 

Non-current Liabilities

 

$

14,596

 

 

$

12,834

 

Total Amounts Payable to Plan Participants

 

$

14,596

 

 

$

12,834

 

 

Segment Information and Major Customers (Tables)

The following table presents information about the reported sales and gross profit of our reportable segments for each of the years ended December 31, 2016, 2015 and 2014. Asset information by reportable segment is not reported, since we do not produce such information internally.

 

Sales and Gross Profit by Market Segment

 

 

 

 

 

 

 

 

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

 

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

525,502

 

 

$

254,807

 

 

$

527,422

 

 

$

233,579

 

 

$

559,532

 

 

$

271,517

 

Services & Support

 

 

111,279

 

 

 

36,537

 

 

 

72,642

 

 

 

33,318

 

 

 

70,475

 

 

 

39,810

 

Total

 

$

636,781

 

 

$

291,344

 

 

$

600,064

 

 

$

266,897

 

 

$

630,007

 

 

$

311,327

 

 

The table below presents sales information by product category for the years ended December 31, 2016, 2015 and 2014:

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

Access & Aggregation

 

$

436,372

 

 

$

405,698

 

 

$

401,769

 

Customer Devices

 

 

137,608

 

 

 

125,565

 

 

 

138,051

 

Traditional & Other Products

 

 

62,801

 

 

 

68,801

 

 

 

90,187

 

Total

 

$

636,781

 

 

$

600,064

 

 

$

630,007

 

 

The following table presents sales information by geographic area for the years ended December 31, 2016, 2015 and 2014. International sales correlate to shipments with a non-U.S. destination.

 

(In thousands)

 

2016

 

 

2015

 

 

2014

 

United States

 

$

501,337

 

 

$

419,366

 

 

$

381,382

 

Germany

 

 

85,780

 

 

 

111,666

 

 

 

150,987

 

Other international

 

 

49,664

 

 

 

69,032

 

 

 

97,638

 

Total

 

$

636,781

 

 

$

600,064

 

 

$

630,007

 

 

Commitments and Contingencies (Tables)
Future Minimum Rental Payments under Non-Cancelable Operating Leases with Original Maturities of Greater than 12 Months

As of December 31, 2016, future minimum rental payments under non-cancelable operating leases with original maturities of greater than 12 months are as follows:

 

(In thousands)

 

 

 

 

2017

 

$

3,788

 

2018

 

 

2,043

 

2019

 

 

847

 

2020

 

 

741

 

Thereafter

 

 

3,243

 

Total

 

$

10,662

 

 

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 (EPS) for the years ended December 31, 2016, 2015 and 2014 is as follows:

 

(In thousands, except for per share amounts)

 

2016

 

 

2015

 

 

2014

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

35,229

 

 

$

18,646

 

 

$

44,620

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares – basic

 

 

48,724

 

 

 

51,145

 

 

 

55,120

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

170

 

 

 

81

 

 

 

304

 

Restricted stock and restricted stock units

 

 

55

 

 

 

41

 

 

 

58

 

Weighted average number of shares – diluted

 

$

48,949

 

 

$

51,267

 

 

$

55,482

 

Net income per share – basic

 

$

0.72

 

 

$

0.36

 

 

$

0.81

 

Net income per share – diluted

 

$

0.72

 

 

$

0.36

 

 

$

0.80

 

 

Summarized Quarterly Financial Data (Unaudited) (Tables)
Quarterly Operating Results

The following table presents unaudited quarterly operating results for each of our last eight fiscal quarters. This information has been prepared on a basis consistent with our audited financial statements and includes all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the data.

Unaudited Quarterly Operating Results

(In thousands, except for per share amounts)

 

Three Months Ended

 

March 31, 2016

 

 

June 30, 2016

 

 

September 30, 2016

 

 

December 31, 2016

 

Net sales

 

$

142,204

 

 

$

162,701

 

 

$

168,890

 

 

$

162,986

 

Gross profit

 

$

65,794

 

 

$

78,955

 

 

$

75,808

 

 

$

70,787

 

Operating income

 

$

5,521

 

 

$

14,812

 

 

$

10,130

 

 

$

4,272

 

Net income

 

$

5,014

 

 

$

10,228

 

 

$

12,415

 

 

$

7,572

 

Earnings per common share

 

$

0.10

 

 

$

0.21

 

 

$

0.26

 

 

$

0.16

 

Earnings per common share assuming dilution (1)

 

$

0.10

 

 

$

0.21

 

 

$

0.26

 

 

$

0.16

 

 

Three Months Ended

 

March 31, 2015

 

 

June 30, 2015

 

 

September 30, 2015

 

 

December 31, 2015

 

Net sales

 

$

142,835

 

 

$

160,138

 

 

$

158,078

 

 

$

139,013

 

Gross profit

 

$

65,563

 

 

$

68,246

 

 

$

70,649

 

 

$

62,439

 

Operating income

 

$

1,963

 

 

$

644

 

 

$

8,072

 

 

$

2,800

 

Net income

 

$

3,317

 

 

$

2,544

 

 

$

7,067

 

 

$

5,718

 

Earnings per common share

 

$

0.06

 

 

$

0.05

 

 

$

0.14

 

 

$

0.12

 

Earnings per common share assuming dilution (1)

 

$

0.06

 

 

$

0.05

 

 

$

0.14

 

 

$

0.12

 

 

(1)

Assumes exercise of dilutive stock options calculated under the treasury stock method.

Nature of Business and Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
12 Months Ended 65 Months Ended 0 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2016
Customer
IncentivePlan
Dec. 31, 2015
Customer
Dec. 31, 2014
Dec. 31, 2016
IncentivePlan
Dec. 31, 2013
Dec. 31, 2008
Jan. 13, 1995
Dec. 31, 2016
Accounting Standards Update No. 2015-17 [Member]
Dec. 31, 2015
Accounting Standards Update No. 2015-17 [Member]
Jan. 17, 2017
Subsequent Events [Member]
Feb. 16, 2017
Subsequent Events [Member]
Dec. 31, 2014
Nokia Siemens Networks [Member]
Dec. 31, 2016
Prepaid Expenses and Other Current Assets [Member]
Dec. 31, 2015
Prepaid Expenses and Other Current Assets [Member]
Dec. 31, 2016
Minimum [Member]
Dec. 31, 2016
Minimum [Member]
Performance Stock Units (PSUs) [Member]
Dec. 31, 2016
Maximum [Member]
Dec. 31, 2016
Maximum [Member]
Performance Stock Units (PSUs) [Member]
Dec. 31, 2016
Building and Land Improvements [Member]
Minimum [Member]
Dec. 31, 2016
Building and Land Improvements [Member]
Maximum [Member]
Dec. 31, 2016
Office Machinery and Equipment [Member]
Minimum [Member]
Dec. 31, 2016
Office Machinery and Equipment [Member]
Maximum [Member]
Dec. 31, 2016
Engineering Machinery and Equipment [Member]
Minimum [Member]
Dec. 31, 2016
Engineering Machinery and Equipment [Member]
Maximum [Member]
Dec. 31, 2016
Computer Software [Member]
Minimum [Member]
Dec. 31, 2016
Computer Software [Member]
Maximum [Member]
Dec. 31, 2016
Credit Concentration Risk [Member]
Dec. 31, 2015
Credit Concentration Risk [Member]
Summary of Significant Accounting Policy [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash, uninsured amount
$ 77,900,000 
 
 
$ 77,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bonds payable, carrying amount
27,800,000 
 
 
27,800,000 
 
50,000,000 
20,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bonds payable, fair value
28,100,000 
 
 
28,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of customers accounting for 63.3 and 37.3 percent of accounts receivable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of accounts receivable accounted by each customers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
63.30% 
37.30% 
Allowance for doubtful accounts
 
19,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, estimated useful lives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 years 
39 years 
3 years 
7 years 
3 years 
7 years 
3 years 
5 years 
 
 
Period of warranty for product defects
90 days to five years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liability for warranty obligations
8,548,000 
8,739,000 
8,415,000 
8,548,000 
8,977,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of stock incentive plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance period
3 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of performance stock units granted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.00% 
 
150.00% 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense
6,695,000 
6,712,000 
8,563,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total compensation cost related to non-vested stock options, restricted stock units, performance stock units and restricted stock not yet recognized
16,400,000 
 
 
16,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recognition period of non-vested compensation cost
2 years 10 months 24 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment losses recognized on long-lived assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment losses recognized on goodwill and other intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization, estimated useful lives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9 months 
 
14 years 
 
 
 
 
 
 
 
 
 
 
 
Research and development costs
124,804,000 
129,876,000 
132,258,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of sales taxes collected from customers
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maintenance contract period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 year 
 
5 years 
 
 
 
 
 
 
 
 
 
 
 
Deferred costs related to prepaid and other assets
 
 
 
 
 
 
 
 
 
 
 
 
10,700,000 
5,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense) - Gain on previous acquisition of working capital
(651,000)
(1,465,000)
1,175,000 
 
 
 
 
 
 
 
 
2,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend payments
17,600,000 
18,400,000 
19,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock dividends per share declared
 
 
 
 
 
 
 
 
 
$ 0.09 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend declaration date
Jan. 17, 2017 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend record date
Feb. 02, 2017 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend payment date
Feb. 16, 2017 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ex-dividend date
Jan. 31, 2017 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarterly dividend payable subsequent to balance sheet date
 
 
 
 
 
 
 
 
 
 
4,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current deferred tax assets
 
 
 
 
 
 
 
$ 17,300,000 
$ 18,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nature of Business and Summary of Significant Accounting Policies - Summary of Warranty Expense and Write-Off Activity (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Accounting Policies [Abstract]
 
 
 
Balance at beginning of period
$ 8,739 
$ 8,415 
$ 8,977 
Plus: Amounts charged to cost and expenses
8,561 
2,998 
3,103 
Less: Deductions
(8,752)
(2,674)
(3,665)
Balance at end of period
$ 8,548 
$ 8,739 
$ 8,415 
Nature of Business and Summary of Significant Accounting Policies (Other Comprehensive Income) - Changes in Accumulated Other Comprehensive Income, Net of Tax by Component (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
Beginning balance
$ (8,969)
$ (75)
$ 10,753 
Other comprehensive income (loss) before reclassifications
(283)
(2,979)
(6,692)
Amounts reclassified from accumulated other comprehensive income
(2,936)
(5,915)
(4,136)
Ending balance
(12,188)
(8,969)
(75)
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
 
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
Beginning balance
1,932 
8,964 
10,737 
Other comprehensive income (loss) before reclassifications
1,515 
(844)
2,363 
Amounts reclassified from accumulated other comprehensive income
(3,043)
(6,188)
(4,136)
Ending balance
404 
1,932 
8,964 
Defined Benefit Plan Adjustments [Member]
 
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
Beginning balance
(3,895)
(5,757)
(891)
Other comprehensive income (loss) before reclassifications
(1,229)
1,589 
(4,866)
Amounts reclassified from accumulated other comprehensive income
107 
273 
 
Ending balance
(5,017)
(3,895)
(5,757)
Foreign Currency Adjustments [Member]
 
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
Beginning balance
(7,006)
(3,282)
907 
Other comprehensive income (loss) before reclassifications
(569)
(3,724)
(4,189)
Ending balance
$ (7,575)
$ (7,006)
$ (3,282)
Nature of Business and Summary of Significant Accounting Policies (Other Comprehensive Income) - Reclassifications Out of Accumulated Other Comprehensive Income (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Defined benefit plan adjustments – actuarial losses
 
 
 
 
 
 
 
 
$ (2,628)
$ 2,078 
 
Income before provision for income taxes
 
 
 
 
 
 
 
 
46,895 
25,708 
59,906 
Tax (expense) benefit
 
 
 
 
 
 
 
 
(11,666)
(7,062)
(15,286)
Total reclassifications for the period, net of tax
7,572 
12,415 
10,228 
5,014 
5,718 
7,067 
2,544 
3,317 
35,229 
18,646 
44,620 
Reclassification Out of Accumulated Other Comprehensive Income [Member]
 
 
 
 
 
 
 
 
 
 
 
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Defined benefit plan adjustments – actuarial losses
 
 
 
 
 
 
 
 
(156)
(396)
 
Income before provision for income taxes
 
 
 
 
 
 
 
 
4,833 
9,749 
6,780 
Tax (expense) benefit
 
 
 
 
 
 
 
 
(1,897)
(3,834)
(2,644)
Total reclassifications for the period, net of tax
 
 
 
 
 
 
 
 
2,936 
5,915 
4,136 
Reclassification Out of Accumulated Other Comprehensive Income [Member] |
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
 
 
 
 
 
 
 
 
 
 
 
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net realized investment gain
 
 
 
 
 
 
 
 
5,408 
10,348 
6,895 
Reclassification Out of Accumulated Other Comprehensive Income [Member] |
Impairment Expense [Member]
 
 
 
 
 
 
 
 
 
 
 
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net realized investment gain
 
 
 
 
 
 
 
 
$ (419)
$ (203)
$ (115)
Business Combinations - Additional Information (Detail) (USD $)
0 Months Ended 12 Months Ended
Sep. 13, 2016
Dec. 31, 2016
Business Acquisition [Line Items]
 
 
Cash consideration
 
$ 943,000 
Bargain purchase gain net of income taxes
 
3,542,000 
CommScope, Inc. Subsidiaries Fiber Access Products, Technologies and Service Relationships [Member]
 
 
Business Acquisition [Line Items]
 
 
Date of acquisition
 
Sep. 13, 2016 
Business acquisition, description
 
On September 13, 2016, we acquired key fiber access products, technologies and service relationships from subsidiaries of CommScope, Inc. for $0.9 million in cash. This acquisition will enhance our solutions for the cable MSO industry and will provide cable operators with the scalable solutions, services and support they require to compete in the multi-gigabit service delivery market. 
Cash consideration
943,000 
 
Bargain purchase gain net of income taxes
3,542,000 
 
Acquisition and integration related expenses and amortization of acquired intangibles
 
$ 1,000,000 
Business Combinations - Allocation of the Purchase Price to the Estimated Fair Value of the Assets Acquired and Liabilities Assumed Subject to Working Capital Adjustments (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended 0 Months Ended
Dec. 31, 2016
Sep. 13, 2016
CommScope, Inc. Subsidiaries Fiber Access Products, Technologies and Service Relationships [Member]
Assets
 
 
Inventory
 
$ 3,131 
Property, plant and equipment
 
352 
Intangible assets
 
4,700 
Total assets acquired
 
8,183 
Liabilities
 
 
Accounts payable
 
(1,250)
Warranty payable
 
(61)
Accrued wages and benefits
 
(122)
Deferred income taxes
 
(2,265)
Total liabilities assumed
 
(3,698)
Total net assets
 
4,485 
Gain on bargain purchase of a business, net of tax
(3,542)
(3,542)
Total purchase price
$ 943 
$ 943 
Business Combinations - Details of the Acquired Intangible Assets (Detail) (CommScope, Inc. Subsidiaries Fiber Access Products, Technologies and Service Relationships [Member], USD $)
In Thousands, unless otherwise specified
0 Months Ended
Sep. 13, 2016
Business Acquisition [Line Items]
 
Total, Value
$ 4,700 
Supply Agreement [Member]
 
Business Acquisition [Line Items]
 
Total, Value
1,400 
Life (years)
9 months 18 days 
Customer Relationships [Member]
 
Business Acquisition [Line Items]
 
Total, Value
1,200 
Life (years)
6 years 
Developed Technology [Member]
 
Business Acquisition [Line Items]
 
Total, Value
800 
Life (years)
10 years 
License [Member]
 
Business Acquisition [Line Items]
 
Total, Value
500 
Life (years)
1 year 3 months 18 days 
Patent [Member]
 
Business Acquisition [Line Items]
 
Total, Value
500 
Life (years)
7 years 3 months 18 days 
Non-compete [Member]
 
Business Acquisition [Line Items]
 
Total, Value
200 
Life (years)
2 years 3 months 18 days 
Trade Name [Member]
 
Business Acquisition [Line Items]
 
Total, Value
$ 100 
Life (years)
2 years 
Business Combinations - Summary of Actual Revenue and Net Loss Included in Consolidated Statements of Income (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2016
CommScope, Inc. Subsidiaries Fiber Access Products, Technologies and Service Relationships [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 162,986 
$ 168,890 
$ 162,701 
$ 142,204 
$ 139,013 
$ 158,078 
$ 160,138 
$ 142,835 
$ 636,781 
$ 600,064 
$ 630,007 
$ 2,768 
Net loss
$ 7,572 
$ 12,415 
$ 10,228 
$ 5,014 
$ 5,718 
$ 7,067 
$ 2,544 
$ 3,317 
$ 35,229 
$ 18,646 
$ 44,620 
$ (805)
Business Combinations - Summary of Supplemental Unaudited Pro Forma Information (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Business Combinations [Abstract]
 
 
Pro forma revenue
$ 641,170 
$ 603,923 
Pro forma net income
$ 31,212 
$ 22,945 
Stock-Based Compensation (Stock Incentive Program Descriptions) - Additional Information (Detail)
12 Months Ended
Dec. 31, 2016
Jan. 20, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Contractual term
10 years 
 
Estimated forfeitures for stock options and RSUs
3.70% 
 
PSUs and Restricted Stock [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Forfeiture rate for PSUs and restricted stock
0.00% 
 
2006 Employee Stock Incentive Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of shares of common stock authorized
13,000,000 
 
Vesting period
4 years 
 
Contractual term
10 years 
 
2010 Directors Stock Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of shares of common stock authorized
500,000 
 
Contractual term
10 years 
 
2015 Employee Stock Incentive Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of shares of common stock authorized
 
7,700,000 
Vesting period
4 years 
 
Contractual term
10 years 
 
Multiplier used when issuing PSUs, restricted stock and RSUs
 
2.5 
Minimum [Member] |
2006 Employee Stock Incentive Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expiration date of options
2017 
 
Minimum [Member] |
2010 Directors Stock Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expiration date of options
2017 
 
Minimum [Member] |
2015 Employee Stock Incentive Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expiration date of options
2025 
 
Maximum [Member] |
2006 Employee Stock Incentive Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expiration date of options
2024 
 
Maximum [Member] |
2010 Directors Stock Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expiration date of options
2019 
 
Maximum [Member] |
2015 Employee Stock Incentive Plan [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expiration date of options
2026 
 
Stock-Based Compensation - Summary of Stock Options Outstanding (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
 
Number of Options, Options outstanding, Beginning Balance
7,108 
 
 
Number of Options, Options granted
19 
 
 
Number of Options, Options exercised
(283)
(60)
(147)
Number of Options, Options forfeited
(93)
 
 
Number of Options, Options expired
(413)
 
 
Number of Options, Options outstanding, Ending Balance
6,338 
7,108 
 
Number of Options, Options vested and expected to vest
6,276 
 
 
Number of Options, Options exercisable
4,757 
 
 
Weighted Average Exercise Price, Options outstanding, Beginning Balance
$ 21.97 
 
 
Weighted Average Exercise Price, Options granted
$ 18.24 
 
 
Weighted Average Exercise Price, Options exercised
$ 16.66 
 
 
Weighted Average Exercise Price, Options forfeited
$ 17.90 
 
 
Weighted Average Exercise Price, Options expired
$ 23.96 
 
 
Weighted Average Exercise Price, Options outstanding, Ending Balance
$ 22.14 
$ 21.97 
 
Weighted Average Exercise Price, Options vested and expected to vest
$ 22.20 
 
 
Weighted Average Exercise Price, Options exercisable
$ 23.67 
 
 
Weighted Average Remaining Contractual Life In Years, Options outstanding
5 years 7 months 17 days 
6 years 5 months 1 day 
 
Weighted Average Remaining Contractual Life In Years, Options vested and expected to vest
5 years 7 months 6 days 
 
 
Weighted Average Remaining Contractual Life In Years, Options exercisable
4 years 8 months 23 days 
 
 
Aggregate Intrinsic Value, Options outstanding, Beginning Balance
$ 3,284 
 
 
Aggregate Intrinsic Value, Options outstanding, Ending Balance
16,972 
3,284 
 
Aggregate Intrinsic Value, Options vested and expected to vest
16,606 
 
 
Aggregate Intrinsic Value, Options exercisable
$ 9,137 
 
 
Stock-Based Compensation (Stock Options) - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Compensation cost related to non-vested stock options not yet recognized
$ 16.4 
 
 
Recognition period of non-vested compensation cost
2 years 10 months 24 days 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options Outstanding, Weighted Average Exercise Price, and Additional Disclosures [Abstract]
 
 
 
Number of shares available for grant
5.6 
 
 
Total pre-tax intrinsic value of options exercised
1.1 
0.1 
0.7 
Fair value of options fully vested
5.7 
6.6 
7.7 
Non Vested Stock Options [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Compensation cost related to non-vested stock options not yet recognized
$ 7.5 
 
 
Recognition period of non-vested compensation cost
2 years 1 month 6 days 
 
 
Stock-Based Compensation - Stock Options Outstanding (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
$14.88 - 18.96 [Member]
Dec. 31, 2016
$18.97 - 23.45 [Member]
Dec. 31, 2016
$23.46 - 30.35 [Member]
Dec. 31, 2016
$30.36 - 41.92 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
 
 
 
 
 
Lower Range Limit
 
 
$ 14.88 
$ 18.97 
$ 23.46 
$ 30.36 
Upper Range Limit
 
 
$ 18.96 
$ 23.45 
$ 30.35 
$ 41.92 
Options Outstanding at 12/31/16
6,338 
7,108 
2,101 
1,380 
1,491 
1,366 
Weighted Avg. Remaining Contractual Life In Years, Options Outstanding
 
 
6 years 9 months 11 days 
5 years 9 months 15 days 
5 years 29 days 
4 years 3 months 15 days 
Weighted Average Exercise Price, Options Outstanding
 
 
$ 15.82 
$ 20.17 
$ 23.89 
$ 31.94 
Options Exercisable at 12/31/16
4,757 
 
1,217 
881 
1,293 
1,366 
Weighted Average Exercise Price, Options exercisable
$ 23.67 
 
$ 16.14 
$ 20.84 
$ 23.92 
$ 31.94 
Stock-Based Compensation (PSUs, Restricted Stock and RSUs) - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Compensation cost related to non-vested stock options not yet recognized
$ 16.4 
Recognition period of non-vested compensation cost
2 years 10 months 24 days 
Performance Stock Units (PSUs) [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Vesting period
3 years 
Performance Stock Units (PSUs) [Member] |
Minimum [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Percentage of performance stock units granted
0.00% 
Performance Stock Units (PSUs) [Member] |
Maximum [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Percentage of performance stock units granted
150.00% 
Restricted Stock [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Vesting period
1 year 
Restricted Stock Units (RSUs) [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Vesting period
4 years 
PSUs, Restricted Stock and RSUs [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Compensation cost related to non-vested stock options not yet recognized
$ 8.9 
Recognition period of non-vested compensation cost
3 years 7 months 6 days 
Stock-Based Compensation - Summary of PSUs, Restricted Stock and RSUs Outstanding (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
Number of Unvested PSUs, restricted stock and RSUs outstanding, beginning balance
106 
Number of PSUs, restricted stock and RSUs granted
460 
Number of PSUs, restricted stock and RSUs vested
(46)
Number of PSUs, restricted stock and RSUs forfeited
(1)
Number of Unvested RSUs and restricted stock outstanding, ending balance
519 
Weighted Average Grant Date Fair Value, Unvested PSUs, restricted stock and RSUs outstanding, Beginning balance
$ 21.09 
Weighted Average Grant Date Fair Value, PSUs, restricted stock and RSUs granted
$ 20.63 
Weighted Average Grant Date Fair Value, PSUs, restricted stock and RSUs vested
$ 22.50 
Weighted Average Grant Date Fair Value, PSUs, restricted stock and RSUs forfeited
$ 20.00 
Weighted Average Grant Date Fair Value, Unvested RSUs and restricted stock outstanding, Ending balance
$ 20.51 
Stock-Based Compensation (Valuation and Expense Information) - Additional Information (Detail)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Weighted-average estimated value
$ 5.22 
$ 4.28 
$ 6.31 
Contractual term
10 years 
 
 
Weighted average grant date fair value, PSUs granted
$ 20.63 
 
 
Performance Stock Units (PSUs) [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Weighted average grant date fair value, PSUs granted
$ 23.50 
$ 17.64 
$ 22.11 
Stock-Based Compensation - Summary of Weighted-Average Assumptions and Value of Options Granted (Detail)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Stock Options [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected volatility
34.79% 
34.57% 
39.05% 
Risk-free interest rate
1.36% 
1.81% 
1.79% 
Expected dividend yield
1.98% 
2.35% 
1.90% 
Expected life (in years)
6 years 3 months 
6 years 2 months 23 days 
6 years 3 months 29 days 
Performance Stock Units (PSUs) [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected volatility
29.79% 
31.34% 
36.40% 
Risk-free interest rate
1.17% 
1.20% 
0.96% 
Expected dividend yield
1.80% 
2.35% 
1.89% 
Investments - Securities and Investments, Recorded at Either Fair Value or Cost (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
$ 190,146 
$ 198,100 
Gross Unrealized Gains
2,709 
5,927 
Gross Unrealized Losses
(2,132)
(2,894)
Available-for-sale-securities, Fair Value/Carrying Value
190,723 
201,133 
Restricted investment held at cost
27,800 
30,000 
Other investments held at cost
767 
1,289 
Total carrying value of available-for-sale investments
219,290 
232,422 
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
12,367 
11,325 
Gross Unrealized Gains
2,271 
1,575 
Gross Unrealized Losses
(42)
(66)
Available-for-sale-securities, Fair Value/Carrying Value
14,596 
12,834 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
66,522 
58,328 
Gross Unrealized Gains
64 
20 
Gross Unrealized Losses
(174)
(734)
Available-for-sale-securities, Fair Value/Carrying Value
66,412 
57,614 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
11,799 
26,414 
Gross Unrealized Gains
12 
28 
Gross Unrealized Losses
(37)
(18)
Available-for-sale-securities, Fair Value/Carrying Value
11,774 
26,424 
Asset-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
10,201 
19,281 
Gross Unrealized Gains
19 
Gross Unrealized Losses
(14)
(44)
Available-for-sale-securities, Fair Value/Carrying Value
10,206 
19,239 
Mortgage/Agency-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
13,080 
15,463 
Gross Unrealized Gains
15 
Gross Unrealized Losses
(91)
(91)
Available-for-sale-securities, Fair Value/Carrying Value
13,004 
15,373 
U.S. Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
30,022 
35,646 
Gross Unrealized Gains
15 
 
Gross Unrealized Losses
(270)
(248)
Available-for-sale-securities, Fair Value/Carrying Value
29,767 
35,398 
Foreign Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
3,729 
 
Gross Unrealized Gains
 
Gross Unrealized Losses
(1)
 
Available-for-sale-securities, Fair Value/Carrying Value
3,730 
 
Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
11,855 
 
Available-for-sale-securities, Fair Value/Carrying Value
11,855 
 
Marketable Equity Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
30,571 
31,643 
Gross Unrealized Gains
311 
4,301 
Gross Unrealized Losses
(1,503)
(1,693)
Available-for-sale-securities, Fair Value/Carrying Value
$ 29,379 
$ 34,251 
Investments - Contractual Maturities of Corporate Bonds, Municipal Fixed-Rate Bonds, Asset-Backed Bonds, Mortgage/Agency-Backed Bonds, U.S. Government Bonds and Foreign Government Bonds (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale-securities, Fair Value/Carrying Value
$ 190,723 
$ 201,133 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
18,912 
 
One to two years
32,497 
 
Two to three years
11,486 
 
Three to five years
3,517 
 
Available-for-sale-securities, Fair Value/Carrying Value
66,412 
57,614 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
8,321 
 
One to two years
1,703 
 
Two to three years
351 
 
Three to five years
1,399 
 
Available-for-sale-securities, Fair Value/Carrying Value
11,774 
26,424 
Asset-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
One to two years
635 
 
Two to three years
2,415 
 
Three to five years
5,402 
 
Five to ten years
1,600 
 
More than ten years
154 
 
Available-for-sale-securities, Fair Value/Carrying Value
10,206 
19,239 
Mortgage/Agency-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
One to two years
976 
 
Two to three years
980 
 
Five to ten years
2,060 
 
More than ten years
8,988 
 
Available-for-sale-securities, Fair Value/Carrying Value
13,004 
15,373 
U.S. Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
1,701 
 
One to two years
4,903 
 
Two to three years
13,072 
 
Three to five years
10,091 
 
Available-for-sale-securities, Fair Value/Carrying Value
29,767 
35,398 
Foreign Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
2,400 
 
One to two years
1,330 
 
Available-for-sale-securities, Fair Value/Carrying Value
$ 3,730 
 
Investments - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Security
Dec. 31, 2015
Dec. 31, 2014
Schedule of Investments [Line Items]
 
 
 
Identification of potential other-than-temporary impairments
25.00% 
 
 
Impairment of investments
$ 0.8 
$ 0.2 
$ 0.1 
Number of marketable equity securities in an unrealized loss position
293 
 
 
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
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Investments Debt And Equity Securities [Abstract]
 
 
 
Gross realized gains
$ 7,530 
$ 10,906 
$ 7,586 
Gross realized losses
$ (1,607)
$ (569)
$ (308)
Investments - Breakdown of Investments with Unrealized Losses (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
 
 
Continuous Unrealized Loss Position for Less than 12 Months, Fair Value
$ 101,600 
$ 128,189 
Continuous Unrealized Loss Position for Less than 12 Months, Unrealized Losses
(1,781)
(2,584)
Continuous Unrealized Loss Position for 12 Months or Greater, Fair Value
5,701 
3,508 
Continuous Unrealized Loss Position for 12 Months or Greater, Unrealized Losses
(351)
(310)
Total Fair Value
107,301 
131,697 
Total Unrealized Losses
(2,132)
(2,894)
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Continuous Unrealized Loss Position for Less than 12 Months, Fair Value
294 
1,243 
Continuous Unrealized Loss Position for Less than 12 Months, Unrealized Losses
(12)
(53)
Continuous Unrealized Loss Position for 12 Months or Greater, Fair Value
245 
92 
Continuous Unrealized Loss Position for 12 Months or Greater, Unrealized Losses
(30)
(13)
Total Fair Value
539 
1,335 
Total Unrealized Losses
(42)
(66)
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Continuous Unrealized Loss Position for Less than 12 Months, Fair Value
32,562 
35,952 
Continuous Unrealized Loss Position for Less than 12 Months, Unrealized Losses
(166)
(566)
Continuous Unrealized Loss Position for 12 Months or Greater, Fair Value
2,722 
3,042 
Continuous Unrealized Loss Position for 12 Months or Greater, Unrealized Losses
(8)
(168)
Total Fair Value
35,284 
38,994 
Total Unrealized Losses
(174)
(734)
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Continuous Unrealized Loss Position for Less than 12 Months, Fair Value
8,936 
9,160 
Continuous Unrealized Loss Position for Less than 12 Months, Unrealized Losses
(37)
(18)
Total Fair Value
8,936 
9,160 
Total Unrealized Losses
(37)
(18)
Asset-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Continuous Unrealized Loss Position for Less than 12 Months, Fair Value
2,986 
16,857 
Continuous Unrealized Loss Position for Less than 12 Months, Unrealized Losses
(14)
(44)
Total Fair Value
2,986 
16,857 
Total Unrealized Losses
(14)
(44)
Mortgage/Agency-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Continuous Unrealized Loss Position for Less than 12 Months, Fair Value
7,842 
15,216 
Continuous Unrealized Loss Position for Less than 12 Months, Unrealized Losses
(81)
(91)
Continuous Unrealized Loss Position for 12 Months or Greater, Fair Value
1,239 
 
Continuous Unrealized Loss Position for 12 Months or Greater, Unrealized Losses
(10)
 
Total Fair Value
9,081 
15,216 
Total Unrealized Losses
(91)
(91)
U.S. Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Continuous Unrealized Loss Position for Less than 12 Months, Fair Value
26,449 
35,397 
Continuous Unrealized Loss Position for Less than 12 Months, Unrealized Losses
(270)
(248)
Total Fair Value
26,449 
35,397 
Total Unrealized Losses
(270)
(248)
Foreign Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Continuous Unrealized Loss Position for Less than 12 Months, Fair Value
924 
 
Continuous Unrealized Loss Position for Less than 12 Months, Unrealized Losses
(1)
 
Total Fair Value
924 
 
Total Unrealized Losses
(1)
 
Marketable Equity Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Continuous Unrealized Loss Position for Less than 12 Months, Fair Value
21,607 
14,364 
Continuous Unrealized Loss Position for Less than 12 Months, Unrealized Losses
(1,200)
(1,564)
Continuous Unrealized Loss Position for 12 Months or Greater, Fair Value
1,495 
374 
Continuous Unrealized Loss Position for 12 Months or Greater, Unrealized Losses
(303)
(129)
Total Fair Value
23,102 
14,738 
Total Unrealized Losses
$ (1,503)
$ (1,693)
Investments - Fair Value Measurements of Cash Equivalents Held in Money Market Funds and Investments (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
$ 190,723 
$ 201,133 
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
14,596 
12,834 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
66,412 
57,614 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
11,774 
26,424 
Asset-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
10,206 
19,239 
Mortgage/Agency-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
13,004 
15,373 
U.S. Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
29,767 
35,398 
Foreign Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
3,730 
 
Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
11,855 
 
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
24,100 
12,967 
Available-for-sale securities
190,723 
201,133 
Total
214,823 
214,100 
Fair Value, Measurements [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
6,878 
1,271 
Available-for-sale securities
73,742 
82,483 
Total
80,620 
83,754 
Fair Value, Measurements [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
17,222 
11,696 
Available-for-sale securities
116,981 
118,650 
Total
134,203 
130,346 
Fair Value, Measurements [Member] |
Money Market Funds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
6,878 
1,271 
Fair Value, Measurements [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
6,878 
1,271 
Fair Value, Measurements [Member] |
Commercial Paper [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
17,222 
11,696 
Fair Value, Measurements [Member] |
Commercial Paper [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
17,222 
11,696 
Fair Value, Measurements [Member] |
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
14,596 
12,834 
Fair Value, Measurements [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
14,596 
12,834 
Fair Value, Measurements [Member] |
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
66,412 
57,614 
Fair Value, Measurements [Member] |
Corporate Bonds [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
66,412 
57,614 
Fair Value, Measurements [Member] |
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
11,774 
26,424 
Fair Value, Measurements [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
11,774 
26,424 
Fair Value, Measurements [Member] |
Asset-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
10,206 
19,239 
Fair Value, Measurements [Member] |
Asset-Backed Bonds [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
10,206 
19,239 
Fair Value, Measurements [Member] |
Mortgage/Agency-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
13,004 
15,373 
Fair Value, Measurements [Member] |
Mortgage/Agency-Backed Bonds [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
13,004 
15,373 
Fair Value, Measurements [Member] |
U.S. Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
29,767 
35,398 
Fair Value, Measurements [Member] |
U.S. Government Bonds [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
29,767 
35,398 
Fair Value, Measurements [Member] |
Foreign Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
3,730 
 
Fair Value, Measurements [Member] |
Foreign Government Bonds [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
3,730 
 
Fair Value, Measurements [Member] |
Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
11,855 
 
Fair Value, Measurements [Member] |
Variable Rate Demand Notes [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
11,855 
 
Fair Value, Measurements [Member] |
Marketable Equity Securities - Technology Industry [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
3,374 
5,384 
Fair Value, Measurements [Member] |
Marketable 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
3,374 
5,384 
Fair Value, Measurements [Member] |
Marketable Equity Securities - Other [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
26,005 
28,867 
Fair Value, Measurements [Member] |
Marketable 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
$ 26,005 
$ 28,867 
Derivative Instruments and Hedging Activities - Additional Information (Detail) (Forward Contracts [Member])
12 Months Ended
Dec. 31, 2016
USD ($)
Dec. 31, 2016
EUR (€)
Derivative [Line Items]
 
 
Derivative, notional amount
$ 5,800,000 
€ 5,500,000 
Derivative maturity year
2017 
2017 
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], Other Receivables [Member], USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Significant Other Observable Inputs (Level 2) [Member] |
Foreign Exchange Contracts [Member] |
Other Receivables [Member]
 
Derivatives Not Designated as Hedging Instruments (Level 2):
 
Derivatives asset, fair value
$ 159 
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
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Foreign Exchange Contracts [Member] |
Other Income (Expense) [Member]
 
 
 
Derivatives Not Designated as Hedging Instruments:
 
 
 
Derivative instrument, gain or loss
$ 724 
$ 511 
$ 1,852 
Inventory - Components of Inventory (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 40,461 
$ 34,223 
Work in process
4,003 
2,893 
Finished goods
60,653 
54,417 
Total Inventory, net
$ 105,117 
$ 91,533 
Inventory - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Raw Materials [Member]
 
 
Inventory [Line Items]
 
 
Inventory valuation reserves
$ 14.6 
$ 17.5 
Finished Goods [Member]
 
 
Inventory [Line Items]
 
 
Inventory valuation reserves
$ 10.6 
$ 9.2 
Property, Plant and Equipment - Property, Plant and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Property Plant And Equipment [Abstract]
 
 
Land
$ 4,575 
$ 4,575 
Building and land improvements
29,229 
25,667 
Building
68,301 
68,301 
Furniture and fixtures
18,477 
17,347 
Computer hardware and software
87,655 
76,389 
Engineering and other equipment
118,746 
112,132 
Total Property, Plant and Equipment
326,983 
304,411 
Less accumulated depreciation
(242,514)
(231,178)
Total Property, Plant and Equipment, net
$ 84,469 
$ 73,233 
Property, Plant and Equipment - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Property Plant And Equipment [Abstract]
 
 
 
Depreciation
$ 12.0 
$ 12.3 
$ 12.5 
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Segment
Dec. 31, 2015
Dec. 31, 2014
Goodwill [Line Items]
 
 
 
Goodwill
$ 3,492,000 
$ 3,492,000 
 
Number of reportable segments
 
 
Impairment losses
 
 
Amortization expense
2,500,000 
1,900,000 
2,300,000 
Network Solutions [Member]
 
 
 
Goodwill [Line Items]
 
 
 
Goodwill
3,100,000 
 
 
Services & Support [Member]
 
 
 
Goodwill [Line Items]
 
 
 
Goodwill
$ 400,000 
 
 
Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Goodwill [Line Items]
 
 
Gross Value
$ 18,653 
$ 14,169 
Accumulated Amortization
(11,386)
(9,086)
Net Value
7,267 
5,083 
Customer Relationships [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
6,899 
5,828 
Accumulated Amortization
(3,208)
(2,627)
Net Value
3,691 
3,201 
Developed Technology [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
6,444 
5,720 
Accumulated Amortization
(5,061)
(4,329)
Net Value
1,383 
1,391 
Intellectual Property [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
2,340 
2,340 
Accumulated Amortization
(2,129)
(1,854)
Net Value
211 
486 
Supply Agreement [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
1,400 
 
Accumulated Amortization
(544)
 
Net Value
856 
 
License [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
500 
 
Accumulated Amortization
(113)
 
Net Value
387 
 
Patent [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
500 
 
Accumulated Amortization
(20)
 
Net Value
480 
 
Trade Names [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
370 
270 
Accumulated Amortization
(285)
(265)
Net Value
85 
Non-compete [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
200 
11 
Accumulated Amortization
(26)
(11)
Net Value
$ 174 
 
Alabama State Industrial Development Authority Financing and Economic Incentives - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2008
Jan. 13, 1995
Debt Instrument [Line Items]
 
 
 
 
 
Proceeds from state industrial development authority issued taxable bonds loaned to ADTRAN
$ 27,800,000 
 
 
$ 50,000,000 
$ 20,000,000 
Percentage of interest on amended and restated bond
2.00% 
 
 
 
 
Maturity date of amended and restated bond
Jan. 01, 2020 
 
 
 
 
Estimated fair value of bond
28,100,000 
 
 
 
 
Restricted certificate of deposit held
27,800,000 
30,000,000 
 
 
 
Total realized economic incentives
1,300,000 
1,300,000 
1,300,000 
 
 
Payments on long-term debt
1,100,000 
1,100,000 
16,500,000 
 
 
Bond debt outstanding classified as current liability
1,000,000 
 
 
 
 
Significant Other Observable Inputs (Level 2) [Member]
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Estimated fair value of bond
$ 28,100,000 
 
 
 
 
Income Taxes - Summary of Components of Provision for Income Taxes (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Current
 
 
 
Federal
$ 12,733 
$ 7,504 
$ 7,626 
State
1,141 
279 
599 
International
477 
(29)
12,587 
Total Current
14,351 
7,754 
20,812 
Deferred
 
 
 
Federal
647 
(585)
(1,083)
State
73 
(66)
(123)
International
(3,405)
(41)
(4,320)
Total Deferred
(2,685)
(692)
(5,526)
Total Provision for Income Taxes
$ 11,666 
$ 7,062 
$ 15,286 
Income Taxes - Effective Income Tax Rate Differs from Federal Statutory Rate (Detail)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
 
Tax provision computed at the federal statutory rate
35.00% 
35.00% 
35.00% 
State income tax provision, net of federal benefit
3.93% 
4.86% 
2.69% 
Federal research credits
(8.15%)
(12.55%)
(4.05%)
Foreign taxes
(0.34%)
2.10% 
(7.26%)
Tax-exempt income
(0.53%)
(1.94%)
(1.25%)
State tax incentives
(2.77%)
(5.04%)
(2.21%)
Stock-based compensation
2.53% 
6.91% 
3.06% 
Domestic production activity deduction
(2.23%)
(3.17%)
(1.15%)
Bargain purchase
(2.64%)
 
 
Other, net
0.08% 
1.30% 
0.69% 
Effective Tax Rate
24.88% 
27.47% 
25.52% 
Income Taxes - Income Before Provision for Income Taxes (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
 
U.S. entities
$ 54,077 
$ 27,400 
$ 23,812 
International entities
(7,182)
(1,692)
36,094 
Income before provision for income taxes
$ 46,895 
$ 25,708 
$ 59,906 
Income Taxes - Principal Components of Current and Non-current Deferred Taxes (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Income Tax Disclosure [Abstract]
 
 
Accounts receivable
 
$ 7 
Inventory
12,020 
12,558 
Accrued expenses
5,551 
6,359 
Investments
1,062 
 
Deferred compensation
5,751 
5,072 
Stock-based compensation
4,724 
4,704 
Uncertain tax positions related to state taxes and related interest
762 
1,026 
Pensions
4,273 
5,729 
Foreign losses
6,486 
5,389 
State losses and credit carry-forwards
4,021 
4,187 
Federal loss and research carry-forwards
5,886 
5,886 
Valuation allowance
(6,149)
(7,250)
Total Deferred Tax Assets
44,387 
43,667 
Property, plant and equipment
(4,433)
(3,315)
Accrued expenses
 
(2,791)
Intellectual property
(1,918)
(476)
Investments
 
(70)
Total Deferred Tax Liabilities
(6,351)
(6,652)
Net Deferred Tax Assets
$ 38,036 
$ 37,015 
Income Taxes - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Income Tax Disclosure [Line Items]
 
 
 
 
Deferred tax benefit recorded as an adjustment to other comprehensive income
$ 1,500,000 
$ 3,700,000 
 
 
Foreign and domestic carry-forwards, unamortized research and development cost and state credit carry-forwards
16,400,000 
 
 
 
Net change in valuation allowance
1,100,000 
 
 
 
Cash and cash equivalents
79,895,000 
84,550,000 
73,439,000 
58,298,000 
Short-term investments
43,188,000 
34,396,000 
 
 
Short-term liquidity amount
123,100,000 
118,900,000 
 
 
Income tax benefit (expense) from exercise of stock options adjustment to equity
 
(40,000)
100,000 
 
Unrecognized tax benefits
2,226,000 
2,537,000 
3,334,000 
3,240,000 
Unrecognized tax benefits, effective tax rate
1,700,000 
1,800,000 
2,600,000 
 
Accrued interest and penalties
800,000 
900,000 
1,000,000 
 
Foreign Subsidiaries [Member]
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
Short-term liquidity amount
$ 42,100,000 
$ 38,900,000 
 
 
Short-term liquidity, in percentage
34.20% 
32.70% 
 
 
Minimum [Member]
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
Operating loss carry forwards expiration year
2017 
 
 
 
Maximum [Member]
 
 
 
 
Income Tax Disclosure [Line Items]
 
 
 
 
Operating loss carry forwards expiration year
2030 
 
 
 
Income Taxes - Change in Unrecognized Income Tax Benefits (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
 
Balance at beginning of period
$ 2,537 
$ 3,334 
$ 3,240 
Increases for tax position related to, Prior years
95 
 
 
Increases for tax position related to, Current year
428 
280 
522 
Decreases for tax positions related to, Prior years
 
(29)
 
Settlements with taxing authorities
 
(103)
 
Expiration of applicable statute of limitations
(834)
(945)
(428)
Balance at end of period
$ 2,226 
$ 2,537 
$ 3,334 
Employee Benefit Plans (Pension Benefit Plan) - Schedule of Pension Benefit Plan Obligations and Funded Status (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Change in projected benefit obligation:
 
 
 
Projected benefit obligation at beginning of period
$ (26,851)
$ (30,507)
 
Service cost
(1,211)
(1,314)
(1,189)
Interest cost
(720)
(615)
(836)
Actuarial gain (loss) - experience
431 
247 
 
Actuarial gain (loss) - assumptions
(2,628)
2,078 
 
Benefit payments
52 
81 
 
Effects of foreign currency exchange rate changes
916 
3,179 
 
Projected benefit obligation at end of period
(30,011)
(26,851)
(30,507)
Change in plan assets:
 
 
 
Fair value of plan assets at beginning of period
19,213 
20,338 
 
Actual return on plan assets
1,494 
988 
 
Effects of foreign currency exchange rate changes
(662)
(2,113)
 
Fair value of plan assets at end of period
20,045 
19,213 
20,338 
Funded (unfunded) status at end of period
$ (9,966)
$ (7,638)
 
Employee Benefit Plans (Pension Benefit Plan) - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
 
 
Accumulated benefit obligation
$ 28.7 
$ 25.1 
Estimated amortization from accumulated other comprehensive income into net periodic pension cost in 2017
$ 0.3 
 
Bond Funds [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Percentage of target allocation ranges by asset class
75.00% 
 
Equity Funds [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Percentage of target allocation ranges by asset class
25.00% 
 
Minimum [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Threshold for unamortized gain losses
10.00% 
 
Employee Benefit Plans (Pension Benefit Plan) - Summary of Net Amounts Recognized Balance Sheet for the Unfunded Pension Liability (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Compensation And Retirement Disclosure [Abstract]
 
 
Current liability
$ 0 
$ 0 
Non-current liability
(9,966)
(7,638)
Total
$ (9,966)
$ (7,638)
Employee Benefit Plans (Pension Benefit Plan) - Components of Net Periodic Pension Cost and Amounts Recognized Other Comprehensive Income (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Net periodic benefit cost:
 
 
 
Service cost
$ 1,211 
$ 1,314 
$ 1,189 
Interest cost
720 
615 
836 
Expected return on plan assets
(1,057)
(1,011)
(1,086)
Amortization of actuarial losses
175 
407 
 
Net periodic benefit cost
1,049 
1,325 
939 
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
 
 
 
Net actuarial (gain) loss
1,782 
(2,303)
7,052 
Amortization of actuarial losses
(156)
(396)
 
Amount recognized in other comprehensive income
1,626 
(2,699)
7,052 
Total recognized in net periodic benefit cost and other comprehensive income
$ 2,675 
$ (1,374)
$ 7,991 
Employee Benefit Plans (Pension Benefit Plan) - Accumulated Other Comprehensive Income (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Compensation And Retirement Disclosure [Abstract]
 
 
Net actuarial loss
$ 6,871 
$ 5,245 
Employee Benefit Plans (Pension Benefit Plan) - Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost (Detail)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Compensation And Retirement Disclosure [Abstract]
 
 
 
Discount rates
2.64% 
2.20% 
3.70% 
Rate of compensation increase
2.00% 
2.25% 
2.25% 
Expected long-term rates of return
5.40% 
5.40% 
5.40% 
Employee Benefit Plans (Pension Benefit Plan) - Weighted-Average Assumptions Used to Determine Benefit Obligation (Detail)
Dec. 31, 2016
Dec. 31, 2015
Compensation And Retirement Disclosure [Abstract]
 
 
Discount rates
1.90% 
2.64% 
Rate of compensation increase
2.00% 
2.25% 
Employee Benefit Plans (Pension Benefit Plan) - Schedule of Pension Benefit Payments Expected Future Service (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Compensation And Retirement Disclosure [Abstract]
 
2017
$ 348 
2018
515 
2019
699 
2020
964 
2021
1,079 
2022 – 2026
5,156 
Total
$ 8,761 
Employee Benefit Plans (Pension Benefit Plan) - Schedule of Cash Equivalents and Investments Held at Fair Value (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
$ 190,723 
$ 201,133 
 
Total
20,045 
19,213 
20,338 
Corporate Bonds [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
66,412 
57,614 
 
Pension Benefit Plan [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Cash and cash equivalents
 
Available-for-sale securities
20,039 
19,210 
 
Total
20,045 
19,213 
 
Pension Benefit Plan [Member] |
Corporate Bonds [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
12,546 
11,633 
 
Pension Benefit Plan [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Cash and cash equivalents
 
Available-for-sale securities
20,039 
19,210 
 
Total
20,045 
19,213 
 
Pension Benefit Plan [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member] |
Corporate Bonds [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
12,546 
11,633 
 
Pension Benefit Plan [Member] |
Government Bonds [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
2,037 
1,960 
 
Pension Benefit Plan [Member] |
Government Bonds [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
2,037 
1,960 
 
Pension Benefit Plan [Member] |
Large Cap Blend [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
4,462 
4,604 
 
Pension Benefit Plan [Member] |
Large Cap Blend [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
4,462 
4,604 
 
Pension Benefit Plan [Member] |
Large Cap Value [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
249 
258 
 
Pension Benefit Plan [Member] |
Large Cap Value [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
249 
258 
 
Pension Benefit Plan [Member] |
Balanced Fund [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
745 
755 
 
Pension Benefit Plan [Member] |
Balanced Fund [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Available-for-sale securities
$ 745 
$ 755 
 
Employee Benefit Plans (401(k) Savings Plan) - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Compensation And Retirement Disclosure [Abstract]
 
 
 
Criteria of employer to contribute in employee saving plan
100% of an employee’s first 3% of contributions and 50% of their next 2% of contributions 
 
 
Percentage of employer match to employee's contribution
100.00% 
 
 
Percentage of employer match to employee's contribution
50.00% 
 
 
Upper limit of employer match
4.00% 
 
 
Maximum statutory compensation under code
$ 265,000 
 
 
Percentage contributions under the savings plan, vested
100.00% 
 
 
Contributions and plan administration costs for savings plan
$ 4,100,000 
$ 4,700,000 
$ 4,500,000 
Employee Benefit Plans (Deferred Compensation Plans) - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Compensation_Program
Dec. 31, 2015
Dec. 31, 2014
Compensation And Retirement Disclosure [Abstract]
 
 
 
Number of deferred compensation programs
 
 
Maximum percentage of cash compensation allowed to be deferred under the deferred compensation plan
25.00% 
 
 
Criteria for benefit distribution
Six months after termination of employment in a single lump sum payment or annual installments paid over a three or ten year term. 
 
 
Deferred compensation income (expense) adjustments due to fair value of the trust assets
$ (1.3)
$ 0.3 
$ (0.7)
Employee Benefit Plans (Deferred Compensation Plans) - Fair Value of Assets Held by Trust and Amounts Payable to Plan Participants (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
 
 
Long-term Investments
$ 190,723 
$ 201,133 
Long-term Investments
14,596 
12,834 
Amounts Payable to Plan Participants Non-current Liabilities
14,596 
12,834 
Deferred Compensation Plan Assets [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Long-term Investments
14,596 
12,834 
Non-Current Liabilities [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Amounts Payable to Plan Participants Non-current Liabilities
$ 14,596 
$ 12,834 
Employee Benefit Plans (Retiree Medical Coverage) - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Compensation And Retirement Disclosure [Abstract]
 
 
Maximum number of years medical, dental and prescription drug coverage to spouse of deceased officer
30 years 
 
Total liability recorded to provide medical, dental and prescription drug coverage
$ 0.2 
$ 0.2 
Segment Information and Major Customers - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Customer
Category
Segment
Dec. 31, 2015
Customer
Dec. 31, 2014
Customer
Segment Reporting Information [Line Items]
 
 
 
Number of reportable segments
 
 
Number of categories
 
 
Number of single customer comprising more than 10% of revenue
Long-lived assets
$ 84.5 
$ 73.2 
 
United States [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Long-lived assets
79.9 
68.8 
 
Outside United States [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Long-lived assets
$ 4.6 
$ 4.4 
 
Sales Revenue, Net [Member] |
Customer Concentration Risk [Member] |
Customer 1 [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Concentration risk, percentage
24.00% 
20.00% 
21.00% 
Sales Revenue, Net [Member] |
Customer Concentration Risk [Member] |
Customer 2 [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Concentration risk, percentage
19.00% 
17.00% 
14.00% 
Sales Revenue, Net [Member] |
Customer Concentration Risk [Member] |
Customer 3 [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Concentration risk, percentage
12.00% 
14.00% 
 
Sales Revenue, Net [Member] |
Customer Concentration Risk [Member] |
The Five Largest Customers Other Than Those With More Than 10% Of Revenues [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Concentration risk, percentage
13.00% 
14.00% 
22.00% 
Segment Information and Major Customers - Sales and Gross Profit of Market Segment (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
$ 162,986 
$ 168,890 
$ 162,701 
$ 142,204 
$ 139,013 
$ 158,078 
$ 160,138 
$ 142,835 
$ 636,781 
$ 600,064 
$ 630,007 
Gross Profit
70,787 
75,808 
78,955 
65,794 
62,439 
70,649 
68,246 
65,563 
291,344 
266,897 
311,327 
Network Solutions [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
 
 
 
 
 
 
 
 
525,502 
527,422 
559,532 
Gross Profit
 
 
 
 
 
 
 
 
254,807 
233,579 
271,517 
Services & Support [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
 
 
 
 
 
 
 
 
111,279 
72,642 
70,475 
Gross Profit
 
 
 
 
 
 
 
 
$ 36,537 
$ 33,318 
$ 39,810 
Segment Information and Major Customers - Sales Information by Product Category (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
$ 162,986 
$ 168,890 
$ 162,701 
$ 142,204 
$ 139,013 
$ 158,078 
$ 160,138 
$ 142,835 
$ 636,781 
$ 600,064 
$ 630,007 
Access & Aggregation [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
 
 
 
 
 
 
 
 
436,372 
405,698 
401,769 
Customer Devices [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
 
 
 
 
 
 
 
 
137,608 
125,565 
138,051 
Traditional & Other Products [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
 
 
 
 
 
 
 
 
$ 62,801 
$ 68,801 
$ 90,187 
Segment Information and Major Customers - Sales Information by Geographic Area (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
$ 162,986 
$ 168,890 
$ 162,701 
$ 142,204 
$ 139,013 
$ 158,078 
$ 160,138 
$ 142,835 
$ 636,781 
$ 600,064 
$ 630,007 
United States [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
 
 
 
 
 
 
 
 
501,337 
419,366 
381,382 
Germany [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
 
 
 
 
 
 
 
 
85,780 
111,666 
150,987 
Other International [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Sales
 
 
 
 
 
 
 
 
$ 49,664 
$ 69,032 
$ 97,638 
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
EquityUnit
Dec. 31, 2015
Dec. 31, 2014
Contingencies And Commitments [Line Items]
 
 
 
Number of private equity funds
 
 
Commitments towards private equity funds
$ 7.7 
 
 
Operating leases expiration year
2025 
 
 
Rental expense
4.2 
4.9 
4.7 
Investment Commitments [Member]
 
 
 
Contingencies And Commitments [Line Items]
 
 
 
Aggregate investment committed in private equity funds
7.9 
 
 
Private Equity Funds [Member]
 
 
 
Contingencies And Commitments [Line Items]
 
 
 
Contribution to private equity funds
$ 8.4 
 
 
Commitments and Contingencies - Future Minimum Rental Payments under Non-Cancelable Operating Leases with Original Maturities of Greater than 12 Months (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Commitments And Contingencies Disclosure [Abstract]
 
2017
$ 3,788 
2018
2,043 
2019
847 
2020
741 
Thereafter
3,243 
Total
$ 10,662 
Earnings Per Share - Summary of Calculation of Basic and Diluted Earnings Per Share (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Numerator
 
 
 
 
 
 
 
 
 
 
 
Net Income
$ 7,572 
$ 12,415 
$ 10,228 
$ 5,014 
$ 5,718 
$ 7,067 
$ 2,544 
$ 3,317 
$ 35,229 
$ 18,646 
$ 44,620 
Denominator
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares – basic
 
 
 
 
 
 
 
 
48,724 
51,145 
55,120 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Stock options
 
 
 
 
 
 
 
 
170 
81 
304 
Restricted stock and restricted stock units
 
 
 
 
 
 
 
 
55 
41 
58 
Weighted average number of shares – diluted
 
 
 
 
 
 
 
 
48,949 
51,267 
55,482 
Net income per share – basic
$ 0.16 
$ 0.26 
$ 0.21 
$ 0.10 
$ 0.12 
$ 0.14 
$ 0.05 
$ 0.06 
$ 0.72 
$ 0.36 
$ 0.81 
Net income per share – diluted
$ 0.16 
$ 0.26 
$ 0.21 
$ 0.10 
$ 0.12 
$ 0.14 
$ 0.05 
$ 0.06 
$ 0.72 
$ 0.36 
$ 0.80 
Earnings Per Share - Additional Information (Detail)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Earnings Per Share [Abstract]
 
 
 
Anti-dilutive options, Total
4.6 
6.1 
4.4 
Summarized Quarterly Financial Data (Unaudited) - Quarterly Operating Results (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Sales
$ 162,986 
$ 168,890 
$ 162,701 
$ 142,204 
$ 139,013 
$ 158,078 
$ 160,138 
$ 142,835 
$ 636,781 
$ 600,064 
$ 630,007 
Gross profit
70,787 
75,808 
78,955 
65,794 
62,439 
70,649 
68,246 
65,563 
291,344 
266,897 
311,327 
Operating income
4,272 
10,130 
14,812 
5,521 
2,800 
8,072 
644 
1,963 
34,735 
13,479 
47,111 
Net Income
$ 7,572 
$ 12,415 
$ 10,228 
$ 5,014 
$ 5,718 
$ 7,067 
$ 2,544 
$ 3,317 
$ 35,229 
$ 18,646 
$ 44,620 
Earnings per common share – basic
$ 0.16 
$ 0.26 
$ 0.21 
$ 0.10 
$ 0.12 
$ 0.14 
$ 0.05 
$ 0.06 
$ 0.72 
$ 0.36 
$ 0.81 
Earnings per common share – diluted
$ 0.16 
$ 0.26 
$ 0.21 
$ 0.10 
$ 0.12 
$ 0.14 
$ 0.05 
$ 0.06 
$ 0.72 
$ 0.36 
$ 0.80 
Related Party Transactions - Additional Information (Detail) (Director Emeritus [Member], USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Director Emeritus [Member]
 
Related Party Transaction
 
Related party legal fees
$ 0.1 
Subsequent Events - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 0 Months Ended
Dec. 31, 2016
Feb. 24, 2017
Scenario Forecast [Member]
Jan. 17, 2017
Subsequent Events [Member]
Feb. 16, 2017
Subsequent Events [Member]
Subsequent Event [Line Items]
 
 
 
 
Dividend declaration date
Jan. 17, 2017 
 
 
 
Common stock dividends per share declared
 
 
$ 0.09 
 
Dividend record date
Feb. 02, 2017 
 
 
 
Dividend payment date
Feb. 16, 2017 
 
 
 
Quarterly dividend payable subsequent to balance sheet date
 
 
 
$ 4.4 
Stock repurchased, shares
 
200,000 
 
 
Shares repurchased, average price per share
 
$ 21.46 
 
 
Additional shares authorized for purchase
 
4,200,000 
 
 
Schedule II - Valuation and Qualifying Accounts (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Allowance for Doubtful Accounts [Member]
 
 
 
Valuation and Qualifying Accounts Disclosure [Line Items]
 
 
 
Balance at beginning of period
$ 19 
$ 136 
$ 130 
Charged to costs & expenses
 
19 
23 
Deductions
19 
136 
17 
Balance at end of period
 
19 
136 
Inventory Reserve [Member]
 
 
 
Valuation and Qualifying Accounts Disclosure [Line Items]
 
 
 
Balance at beginning of period
26,675 
24,682 
22,993 
Charged to costs & expenses
3,303 
2,225 
2,549 
Deductions
4,729 
232 
860 
Balance at end of period
25,249 
26,675 
24,682 
Warranty Liability [Member]
 
 
 
Valuation and Qualifying Accounts Disclosure [Line Items]
 
 
 
Balance at beginning of period
8,739 
8,415 
8,977 
Charged to costs & expenses
8,561 
2,998 
3,103 
Deductions
8,752 
2,674 
3,665 
Balance at end of period
8,548 
8,739 
8,415 
Deferred Tax Asset Valuation Allowance [Member]
 
 
 
Valuation and Qualifying Accounts Disclosure [Line Items]
 
 
 
Balance at beginning of period
7,250 
7,463 
8,842 
Charged to costs & expenses
69 
81 
283 
Deductions
1,170 
294 
1,662 
Balance at end of period
$ 6,149 
$ 7,250 
$ 7,463