ADTRAN INC, 10-Q filed on 8/4/2017
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2017
Jul. 23, 2017
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2017 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
ADTN 
 
Entity Registrant Name
ADTRAN INC 
 
Entity Central Index Key
0000926282 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
47,799,232 
Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Current Assets
 
 
Cash and cash equivalents
$ 88,798 
$ 79,895 
Short-term investments
47,331 
43,188 
Accounts receivable, less allowance for doubtful accounts of $— at June 30, 2017 and December 31, 2016
79,891 
92,346 
Other receivables
14,561 
15,137 
Income tax receivable, net
 
760 
Inventory, net
113,995 
105,117 
Prepaid expenses and other current assets
23,556 
16,459 
Total Current Assets
368,132 
352,902 
Property, plant and equipment, net
84,122 
84,469 
Deferred tax assets, net
40,296 
38,036 
Goodwill
3,492 
3,492 
Other assets
13,305 
12,234 
Long-term investments
159,634 
176,102 
Total Assets
668,981 
667,235 
Current Liabilities
 
 
Accounts payable
66,161 
77,342 
Unearned revenue
15,449 
16,326 
Accrued expenses
13,433 
12,434 
Accrued wages and benefits
16,303 
20,433 
Income tax payable, net
9,594 
 
Total Current Liabilities
120,940 
126,535 
Non-current unearned revenue
5,351 
6,333 
Other non-current liabilities
32,527 
28,050 
Bonds payable
26,800 
26,800 
Total Liabilities
185,618 
187,718 
Commitments and contingencies (see Note 14)
   
   
Stockholders’ Equity
 
 
Common stock, par value $0.01 per share; 200,000 shares authorized; 79,652 shares issued and 47,747 shares outstanding at June 30, 2017 and 79,652 shares issued and 48,472 shares outstanding at December 31, 2016
797 
797 
Additional paid-in capital
256,821 
252,957 
Accumulated other comprehensive loss
(6,816)
(12,188)
Retained earnings
931,044 
921,942 
Less treasury stock at cost: 31,905 and 31,180 shares at June 30, 2017 and December 31, 2016, respectively
(698,483)
(683,991)
Total Stockholders’ Equity
483,363 
479,517 
Total Liabilities and Stockholders’ Equity
$ 668,981 
$ 667,235 
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
Jun. 30, 2017
Dec. 31, 2016
Statement Of Financial Position [Abstract]
 
 
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
47,747,000 
48,472,000 
Treasury stock, shares
31,905,000 
31,180,000 
Consolidated Statements of Income (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Sales
 
 
 
 
Products
$ 155,543 
$ 138,549 
$ 299,140 
$ 262,432 
Services
29,130 
24,152 
55,812 
42,473 
Total Sales
184,673 
162,701 
354,952 
304,905 
Cost of sales
 
 
 
 
Products
79,658 
67,844 
156,317 
131,917 
Services
20,383 
15,902 
40,288 
28,239 
Total Cost of Sales
100,041 
83,746 
196,605 
160,156 
Gross Profit
84,632 
78,955 
158,347 
144,749 
Selling, general and administrative expenses
34,683 
32,866 
69,450 
63,651 
Research and development expenses
33,501 
31,277 
65,417 
60,765 
Operating Income
16,448 
14,812 
23,480 
20,333 
Interest and dividend income
972 
927 
1,905 
1,782 
Interest expense
(137)
(142)
(278)
(287)
Net realized investment gain
1,390 
1,110 
1,860 
2,838 
Other expense, net
(804)
(251)
(753)
(132)
Income before provision for income taxes
17,869 
16,456 
26,214 
24,534 
Provision for income taxes
(5,468)
(6,228)
(7,162)
(9,292)
Net Income
$ 12,401 
$ 10,228 
$ 19,052 
$ 15,242 
Weighted average shares outstanding – basic
48,036 
48,831 
48,232 
49,026 
Weighted average shares outstanding – diluted
48,413 
49,048 
48,675 
49,218 
Earnings per common share – basic
$ 0.26 
$ 0.21 
$ 0.40 
$ 0.31 
Earnings per common share – diluted
$ 0.26 
$ 0.21 
$ 0.39 
$ 0.31 
Dividend per share
$ 0.09 
$ 0.09 
$ 0.18 
$ 0.18 
Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Statement Of Income And Comprehensive Income [Abstract]
 
 
 
 
Net Income
$ 12,401 
$ 10,228 
$ 19,052 
$ 15,242 
Other Comprehensive Income (Loss), net of tax:
 
 
 
 
Net unrealized gains (losses) on available-for-sale securities
373 
(165)
1,708 
(420)
Net unrealized losses on cash flow hedges
(417)
 
(338)
 
Defined benefit plan adjustments
86 
22 
141 
67 
Foreign currency translation
2,619 
(601)
3,861 
627 
Other Comprehensive Income (Loss), net of tax
2,661 
(744)
5,372 
274 
Comprehensive Income, net of tax
$ 15,062 
$ 9,484 
$ 24,424 
$ 15,516 
Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Cash flows from operating activities:
 
 
Net Income
$ 19,052 
$ 15,242 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
8,377 
6,689 
Amortization of net premium on available-for-sale investments
238 
376 
Net realized gain on long-term investments
(1,860)
(2,838)
Net (gain) loss on disposal of property, plant and equipment
(11)
Stock-based compensation expense
3,739 
3,109 
Deferred income taxes
(2,772)
(354)
Changes in operating assets and liabilities:
 
 
Accounts receivable, net
13,911 
(17,192)
Other receivables
571 
7,876 
Inventory
(7,547)
4,938 
Prepaid expenses and other assets
(9,853)
(4,263)
Accounts payable
(10,910)
10,354 
Accrued expenses and other liabilities
(2,629)
1,474 
Income tax payable/receivable, net
10,273 
(4,799)
Net cash provided by operating activities
20,579 
20,617 
Cash flows from investing activities:
 
 
Purchases of property, plant and equipment
(7,509)
(6,679)
Proceeds from disposals of property, plant and equipment
16 
 
Proceeds from sales and maturities of available-for-sale investments
81,891 
109,993 
Purchases of available-for-sale investments
(65,140)
(112,903)
Net cash provided by (used in) investing activities
9,258 
(9,589)
Cash flows from financing activities:
 
 
Proceeds from stock option exercises
1,722 
541 
Purchases of treasury stock
(17,311)
(16,579)
Dividend payments
(8,719)
(8,860)
Net cash used in financing activities
(24,308)
(24,898)
Net increase (decrease) in cash and cash equivalents
5,529 
(13,870)
Effect of exchange rate changes
3,374 
234 
Cash and cash equivalents, beginning of period
79,895 
84,550 
Cash and cash equivalents, end of period
88,798 
70,914 
Supplemental disclosure of non-cash investing activities:
 
 
Purchases of property, plant and equipment included in accounts payable
$ 454 
$ 554 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements of ADTRAN®, Inc. and its subsidiaries (ADTRAN) have been prepared pursuant to the rules and regulations for reporting on Quarterly Reports on Form 10-Q. Accordingly, certain information and notes required by generally accepted accounting principles for complete financial statements are not included herein. The December 31, 2016 Consolidated Balance Sheet is derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

In the opinion of management, all adjustments necessary to fairly state these interim statements have been recorded and are of a normal and recurring nature. The results of operations for an interim period are not necessarily indicative of the results for the full year. The interim statements should be read in conjunction with the financial statements and notes thereto included in ADTRAN’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 24, 2017 with the SEC.

Use of Estimates

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

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (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 using the modified retrospective method. 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 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 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 are currently evaluating whether to early adopt ASU 2017-04, but we do not expect it will have a material impact on our financial position, results of operations or cash flows.

In March 2017, the FASB issued Accounting Standards Update No. 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07). ASU 2017-07 amends ASC 715, Compensation — Retirement Benefits, to require employers that present a measure of operating income in their statements of earnings to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in non-operating expenses. ASU 2017-07 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We do not expect ASU 2017-07 will have a material impact on our financial position, results of operations or cash flows.

During 2017, we adopted the following accounting standards, which had no material effect on our financial position, results of operations or cash flows:

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 2015-11 in the first quarter of 2017, and there was no material impact on our financial position, results of operations or cash flows.

In January 2017, we adopted ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. As a result, beginning in the first quarter of 2017, we began recognizing all excess tax benefits and tax deficiencies as income tax expense or benefit as a discrete event. The treatment of forfeitures has changed as we have elected to discontinue our past practice of estimating forfeitures and now account for forfeitures as they occur. As a result, we recorded an increase in additional paid in capital of $0.1 million, a charge to beginning retained earnings of $0.1 million, and an increase in the deferred tax assets related to non-qualified stock options and RSUs of $10 thousand. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows within operating activities. We elected to retrospectively apply the changes in presentation to the statements of cash flows and no longer classify excess tax benefits as a financing activity, which had no effect on our cash flows for the six months ended June 30, 2016. There was no material impact on our financial position, results of operations or cash flows as a result of these changes.

Business Combinations
Business Combinations

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 during the third quarter of 2016, net of income taxes, subject to customary working capital adjustments between the parties. The bargain purchase gain of $3.5 million 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 forecasted data for future periods and have concluded that our valuation procedures and resulting measures were appropriate.

 

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 following unaudited supplemental pro forma information presents the financial results as if the acquisition had occurred on January 1, 2015. This unaudited supplemental 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.

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Pro forma revenue

 

$

164,332

 

 

$

160,562

 

 

$

307,687

 

 

$

304,542

 

Pro forma net income

 

$

10,022

 

 

$

1,983

 

 

$

14,907

 

 

$

8,405

 

Pro forma earnings per share - basic

 

$

0.21

 

 

$

0.04

 

 

$

0.30

 

 

$

0.16

 

Pro forma earnings per share - diluted

 

$

0.20

 

 

$

0.04

 

 

$

0.30

 

 

$

0.16

 

 

For the three and six months ended June 30, 2017, we incurred acquisition and integration related expenses and amortization of acquired intangibles of $0.6 million and $1.4 million, respectively, related to this acquisition.

Income Taxes
Income Taxes

3. INCOME TAXES

Our effective tax rate decreased from 37.9% in the six months ended June 30, 2016 to 27.3% in the six months ended June 30, 2017. The decrease in the effective tax rate between the two periods is primarily attributable to a 6.3% effective rate reduction due to a greater mix of international revenues and a 3.2% effective rate reduction for a provision-to-return adjustment related to the assignment of research and development expenditures to specific company engineering locations.

Pension Benefit Plan
Pension Benefit Plan

4. PENSION BENEFIT PLAN

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

The following table summarizes the components of net periodic pension cost for the three and six months ended June 30, 2017 and 2016

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Service cost

 

$

306

 

 

$

310

 

 

$

603

 

 

$

607

 

Interest cost

 

 

147

 

 

 

184

 

 

 

290

 

 

 

360

 

Expected return on plan assets

 

 

(307

)

 

 

(271

)

 

 

(606

)

 

 

(530

)

Amortization of actuarial losses

 

 

75

 

 

 

45

 

 

 

148

 

 

 

88

 

Net periodic pension cost

 

$

221

 

 

$

268

 

 

$

435

 

 

$

525

 

 

Stock-Based Compensation
Stock-Based Compensation

5. STOCK-BASED COMPENSATION

The following table summarizes the stock-based compensation expense related to stock options, performance stock units (PSUs), restricted stock units (RSUs) and restricted stock for the three and six months ended June 30, 2017 and 2016, which was recognized as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Stock-based compensation expense included in cost of

   sales

 

$

93

 

 

$

95

 

 

$

184

 

 

$

194

 

Selling, general and administrative expense

 

 

1,008

 

 

 

788

 

 

 

2,024

 

 

 

1,557

 

Research and development expense

 

 

755

 

 

 

668

 

 

 

1,531

 

 

 

1,358

 

Stock-based compensation expense included in operating

   expenses

 

 

1,763

 

 

 

1,456

 

 

 

3,555

 

 

 

2,915

 

Total stock-based compensation expense

 

 

1,856

 

 

 

1,551

 

 

 

3,739

 

 

 

3,109

 

Tax benefit for expense associated with non-qualified

   options, PSUs, RSUs and restricted stock

 

 

(433

)

 

 

(213

)

 

 

(813

)

 

 

(425

)

Total stock-based compensation expense, net of tax

 

$

1,423

 

 

$

1,338

 

 

$

2,926

 

 

$

2,684

 

 

Stock Options

The following table is a summary of our stock options outstanding as of December 31, 2016 and June 30, 2017 and the changes that occurred during the six months ended June 30, 2017:

 

(In thousands, except per share amounts)

 

Number of

Stock Options

 

 

Weighted Avg.

Exercise Price

 

 

Weighted Avg.

Remaining

Contractual

Life In Years

 

 

Aggregate

Intrinsic Value

 

Stock options outstanding, December 31, 2016

 

 

6,338

 

 

$

22.14

 

 

 

5.63

 

 

$

16,972

 

Stock options granted

 

 

 

 

$

 

 

 

 

 

 

 

 

 

Stock options exercised

 

 

(103

)

 

$

16.78

 

 

 

 

 

 

 

 

 

Stock options forfeited

 

 

(32

)

 

$

17.62

 

 

 

 

 

 

 

 

 

Stock options expired

 

 

(55

)

 

$

26.67

 

 

 

 

 

 

 

 

 

Stock options outstanding, June 30, 2017

 

 

6,148

 

 

$

22.21

 

 

 

5.14

 

 

$

11,232

 

Stock options vested and expected to vest, June 30, 2017

 

 

6,148

 

 

$

22.21

 

 

 

5.14

 

 

$

11,232

 

Options exercisable, June 30, 2017

 

 

4,601

 

 

$

23.78

 

 

 

4.23

 

 

$

5,862

 

 

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between the closing price of our stock on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all option holders exercised their options on June 30, 2017. The aggregate intrinsic value will change based on the fair market value of our stock.

The total pre-tax intrinsic value of options exercised during the three and six months ended June 30, 2017 was $0.1 million and $0.5, respectively.

As of June 30, 2017, there was $5.2 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over an average remaining recognition period of 1.8 years.

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

There were no stock options granted during the three or six months ended June 30, 2017. The weighted-average assumptions and value of options granted during the three and six months ended June 30, 2016 were as follows:

 

Three and Six Months Ended

 

 

June 30,

 

 

2016

 

Expected volatility

 

34.74

%

Risk-free interest rate

 

1.33

%

Expected dividend yield

 

1.91

%

Expected life (in years)

 

6.26

 

Weighted-average estimated value

$

5.42

 

 

PSUs, RSUs and restricted stock

 

The following table is a summary of our PSUs, RSUs and restricted stock outstanding as of December 31, 2016 and the changes that occurred during the six months ended June 30, 2017:

 

(In thousands, except per share amounts)

 

Number of

Shares

 

 

Weighted Avg. Grant Date Fair Value

 

Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2016

 

 

519

 

 

$

20.51

 

PSUs, RSUs and restricted stock granted

 

 

520

 

 

$

22.24

 

PSUs, RSUs and restricted stock vested

 

 

(2

)

 

$

18.29

 

PSUs, RSUs and restricted stock forfeited

 

 

(6

)

 

$

20.00

 

Unvested PSUs, RSUs and restricted stock outstanding, June 30, 2017

 

 

1,031

 

 

$

21.39

 

The fair value of our PSUs with market conditions is calculated using a Monte Carlo Simulation valuation method. The fair value of RSUs and restricted stock is equal to the closing price of our stock on the date of grant. During the first quarter of 2017, the Compensation Committee of the Board of Directors approved a PSU grant of 0.5 million shares that contain performance conditions. The fair value of these performance-based PSU awards was equal to the closing price of our stock on the date of grant.

As of June 30, 2017, there was $7.9 million of unrecognized compensation expense related to unvested market-based PSUs, RSUs and restricted stock, which is expected to be recognized over an average remaining recognition period of 3.0 years. In addition, there was $11.5 million of unrecognized compensation expense related to unvested performance-based PSUs, which will be recognized over the requisite service period of three years as achievement of the performance objective becomes probable. For the three and six months ended June 30, 2017, no compensation expense was recognized related to these performance-based PSU awards.

Investments
Investments

 

6. INVESTMENTS

At June 30, 2017, we held the following securities and investments, recorded at either fair value or cost:

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Deferred compensation plan assets

 

$

15,662

 

 

$

2,389

 

 

$

(23

)

 

$

18,028

 

Corporate bonds

 

 

72,954

 

 

 

132

 

 

 

(107

)

 

 

72,979

 

Municipal fixed-rate bonds

 

 

7,596

 

 

 

7

 

 

 

(20

)

 

 

7,583

 

Asset-backed bonds

 

 

13,313

 

 

 

11

 

 

 

(16

)

 

 

13,308

 

Mortgage/Agency-backed bonds

 

 

9,549

 

 

 

14

 

 

 

(36

)

 

 

9,527

 

U.S. government bonds

 

 

21,528

 

 

 

4

 

 

 

(132

)

 

 

21,400

 

Foreign government bonds

 

 

2,700

 

 

 

3

 

 

 

(1

)

 

 

2,702

 

Marketable equity securities

 

 

31,741

 

 

 

2,153

 

 

 

(929

)

 

 

32,965

 

Available-for-sale securities held at fair value

 

$

175,043

 

 

$

4,713

 

 

$

(1,264

)

 

$

178,492

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,800

 

Other investments held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

673

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

206,965

 

 

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

 

 

 

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 held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

767

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

219,290

 

 

As of June 30, 2017, our 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

 

$

33,486

 

 

$

4,101

 

 

$

 

 

$

 

 

$

8,919

 

 

$

825

 

One to two years

 

 

16,124

 

 

 

1,536

 

 

 

850

 

 

 

493

 

 

 

 

 

 

600

 

Two to three years

 

 

21,421

 

 

 

775

 

 

 

5,185

 

 

 

 

 

 

8,367

 

 

 

1,277

 

Three to five years

 

 

1,948

 

 

 

1,171

 

 

 

5,836

 

 

 

415

 

 

 

4,114

 

 

 

 

Five to ten years

 

 

 

 

 

 

 

 

508

 

 

 

1,340

 

 

 

 

 

 

 

More than ten years

 

 

 

 

 

 

 

 

929

 

 

 

7,279

 

 

 

 

 

 

 

Total

 

$

72,979

 

 

$

7,583

 

 

$

13,308

 

 

$

9,527

 

 

$

21,400

 

 

$

2,702

 

 

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

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

At June 30, 2017, we held a $27.8 million restricted certificate of deposit, which is carried at cost. This investment serves as a collateral deposit against the principal amount outstanding under loans made to ADTRAN pursuant to an Alabama State Industrial Development Authority revenue bond (the Bond), which totaled $27.8 million at June 30, 2017 and December 31, 2016. At June 30, 2017, the estimated fair value of the Bond using a level 2 valuation technique was approximately $28.0 million, based on a debt security with a comparable interest rate and maturity and a Standard and Poor’s credit rating of AAA. 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. The Bond matures on January 1, 2020, and bears interest at the rate of 2% per annum. 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 we are required to remit to the state for those employment positions that qualify under this program. We are required to make payments in the amounts necessary to pay the interest on the amounts currently outstanding. It is our intent to make annual principal payments in addition to the interest amounts that are due.

We review our investment portfolio for potential “other-than-temporary” declines in value on an individual investment basis. We assess, on a quarterly basis, significant declines in value which may be considered other-than-temporary and, if necessary, recognize and record the appropriate charge to write-down the carrying value of such investments. In making this assessment, we take into consideration qualitative and quantitative information, including but not limited to the following: the magnitude and duration of historical declines in market prices, credit rating activity, assessments of liquidity, public filings, and statements made by the issuer. We generally begin our identification of potential other-than-temporary impairments by reviewing any security with a fair value that has declined from its original or adjusted cost basis by 25% or more for six or more consecutive months. We then evaluate the individual security based on the previously identified factors to determine the amount of the write-down, if any. For the three and six months ended June 30, 2017 and 2016, other-than-temporary impairment charges were not significant.

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

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Gross realized gains

 

$

1,512

 

 

$

1,517

 

 

$

2,230

 

 

$

3,881

 

Gross realized losses

 

$

(122

)

 

$

(407

)

 

$

(370

)

 

$

(1,043

)

As of June 30, 2017 and 2016, gross unrealized losses related to individual securities in a continuous loss position for 12 months or longer were not significant.

 

 

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

 

 

 

Fair Value Measurements at June 30, 2017 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Market for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,487

 

 

$

6,487

 

 

$

 

 

$

 

Commercial Paper

 

 

5,497

 

 

 

 

 

 

5,497

 

 

 

 

Cash equivalents

 

 

11,984

 

 

 

6,487

 

 

 

5,497

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

18,028

 

 

 

18,028

 

 

 

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

72,979

 

 

 

 

 

 

72,979

 

 

 

 

Municipal fixed-rate bonds

 

 

7,583

 

 

 

 

 

 

7,583

 

 

 

 

Asset-backed bonds

 

 

13,308

 

 

 

 

 

 

13,308

 

 

 

 

Mortgage/Agency-backed bonds

 

 

9,527

 

 

 

 

 

 

9,527

 

 

 

 

U.S. government bonds

 

 

21,400

 

 

 

21,400

 

 

 

 

 

 

 

Foreign government bonds

 

 

2,702

 

 

 

 

 

 

2,702

 

 

 

 

Available-for-sale marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – various industries

 

 

32,965

 

 

 

32,965

 

 

 

 

 

 

 

Available-for-sale securities

 

 

178,492

 

 

 

72,393

 

 

 

106,099

 

 

 

 

Total

 

$

190,476

 

 

$

78,880

 

 

$

111,596

 

 

$

 

 

 

 

Fair Value Measurements at December 31, 2016 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Market for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

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 – various industries

 

 

29,379

 

 

 

29,379

 

 

 

 

 

 

 

Available-for-sale securities

 

 

190,723

 

 

 

73,742

 

 

 

116,981

 

 

 

 

Total

 

$

214,823

 

 

$

80,620

 

 

$

134,203

 

 

$

 


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 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

7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We participate in foreign exchange forward contracts in connection with the management of exposure to fluctuations in foreign exchange rates.

 

Cash Flow Hedges

Our cash flow hedging activities utilize foreign exchange forward contracts to reduce the risk that movements in exchange rates will adversely affect the net cash flows resulting from the planned purchase of products from foreign suppliers. Purchases of U.S. denominated inventory by our European subsidiary represent our primary exposure. Changes in the fair value of derivatives designated as cash flow hedges are not recognized in current operating results, but are recorded in accumulated other comprehensive income.  Amounts related to cash flow hedges are reclassified from accumulated other comprehensive income when the underlying hedged item impacts earnings. This reclassification is recorded in the same line item of the consolidated statements of income as where the effects of the hedged item are recorded, which is cost of sales.

 

Undesignated Hedges

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 outstanding non-functional balances are revalued to the functional currency through profit and loss. When appropriate, we utilize foreign exchange forward contracts to help manage the volatility relating to these valuation exposures. All changes in the fair value of our derivative instruments that do not qualify for or are not designated for hedged accounting transactions are recognized as other income (expense) in the Consolidated Statements of Income.

As of June 30, 2017, we had foreign exchange forward contracts outstanding with notional amounts totaling $20.0 million (€17.5 million), which hedge a portion of projected inventory purchases expected to be settled in the third and fourth quarters of 2017. We have determined that there was no hedge ineffectiveness for the quarter ended June 30, 2017 related to these contracts.

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 are not subject to master netting arrangements and are not offset in the Consolidated Balance Sheets.

The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of June 30, 2017 and December 31, 2016 were as follows:

 

(In thousands)

 

Balance Sheet Location

 

June 30, 2017

 

 

December 31, 2016

 

Derivatives Designated as Hedging Instruments (Level 2):

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts – derivative liabilities

 

Accounts payable

 

$

610

 

 

$

 

Derivatives Not Designated as Hedging Instruments (Level 2):

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts – derivative assets

 

Other receivables

 

 

 

 

 

159

 

Foreign exchange contracts – derivative liabilities

 

Accounts payable

 

 

352

 

 

 

 

Total derivatives

 

 

 

$

962

 

 

$

159

 

The change in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the three and six months ended June 30, 2017 and 2016 were as follows:

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

Income Statement

 

June 30,

 

 

June 30,

 

(In thousands)

 

Location

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Derivatives Not Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other income (expense)

 

$

(451

)

 

$

237

 

 

$

(485

)

 

$

190

 

 

The change in our derivatives designated as hedging instruments recorded in other comprehensive income (OCI) and reclassified to income during the three and six months ended June 30, 2017 and 2016 were as follows:

 

 

 

Amount of Gains (Losses) Recognized in

 

 

 

 

Amount of Gains (Losses) Reclassified

 

 

 

OCI on Derivatives

 

 

 

 

from AOCI into Income

 

 

 

Three Months Ended

 

 

Location of Gains

 

Three Months Ended

 

 

 

June 30,

 

 

(Losses) Reclassified

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

from AOCI into Income

 

2017

 

 

2016

 

Derivatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

(571

)

 

$

 

 

Cost of Sales

 

$

(154

)

 

$

 

 

 

 

Amount of Gains (Losses) Recognized in

 

 

 

 

Amount of Gains (Losses) Reclassified

 

 

 

OCI on Derivatives

 

 

 

 

from AOCI into Income

 

 

 

Six Months Ended

 

 

Location of Gains

 

Six Months Ended

 

 

 

June 30,

 

 

(Losses) Reclassified

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

from AOCI into Income

 

2017

 

 

2016

 

Derivatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

(492

)

 

$

 

 

Cost of Sales

 

$

(154

)

 

$

 

 

Inventory
Inventory

8. INVENTORY

At June 30, 2017 and December 31, 2016, inventory consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

(In thousands)

 

2017

 

 

2016

 

Raw materials

 

$

42,218

 

 

$

40,461

 

Work in process

 

 

2,443

 

 

 

4,003

 

Finished goods

 

 

69,334

 

 

 

60,653

 

Total

 

$

113,995

 

 

$

105,117

 

 

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 June 30, 2017 and December 31, 2016, raw materials reserves totaled $15.2 million and $14.6 million, respectively, and finished goods inventory reserves totaled $12.7 million and $10.6 million, respectively.

 

Goodwill and Intangible Assets
Goodwill and Intangible Assets

9. GOODWILL AND INTANGIBLE ASSETS

Goodwill, all of which relates to our acquisition of Bluesocket, Inc., was $3.5 million at June 30, 2017 and December 31, 2016, of which $3.1 million and $0.4 million is allocated 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 and include intangibles acquired in conjunction with our acquisitions of Bluesocket, Inc. on August 4, 2011, the NSN BBA business on May 4, 2012, and CommScope’s active fiber access business on September 13, 2016.

The following table presents our intangible assets as of June 30, 2017 and December 31, 2016:

 

(In thousands)

 

June 30, 2017

 

 

December 31, 2016

 

 

 

Gross

Value

 

 

Accumulated Amortization

 

 

Net Value

 

 

Gross

Value

 

 

Accumulated Amortization

 

 

Net Value

 

Customer relationships

 

$

7,249

 

 

$

(3,765

)

 

$

3,484

 

 

$

6,899

 

 

$

(3,208

)

 

$

3,691

 

Developed technology

 

 

6,650

 

 

 

(5,609

)

 

 

1,041

 

 

 

6,444

 

 

 

(5,061

)

 

 

1,383

 

Intellectual property

 

 

2,340

 

 

 

(2,196

)

 

 

144

 

 

 

2,340

 

 

 

(2,129

)

 

 

211

 

Supply agreement

 

 

1,400

 

 

 

(1,400

)

 

 

 

 

 

1,400

 

 

 

(544

)

 

 

856

 

License

 

 

500

 

 

 

(306

)

 

 

194

 

 

 

500

 

 

 

(113

)

 

 

387

 

Patent

 

 

500

 

 

 

(54

)

 

 

446

 

 

 

500

 

 

 

(20

)

 

 

480

 

Trade names

 

 

370

 

 

 

(310

)

 

 

60

 

 

 

370

 

 

 

(285

)

 

 

85

 

Non-compete

 

 

200

 

 

 

(70

)

 

 

130

 

 

 

200

 

 

 

(26

)

 

 

174

 

Total

 

$

19,209

 

 

$

(13,710

)

 

$

5,499

 

 

$

18,653

 

 

$

(11,386

)

 

$

7,267

 

 

Amortization expense, all of which relates to business acquisitions, was $1.1 million and $0.4 million for the three months ended June 30, 2017 and 2016 $1.9 million and $0.9 million for the six months ended June 30, 2017 and 2016, respectively.

As of June 30, 2017, the estimated future amortization expense of our intangible assets is as follows:

 

(In thousands)

 

Amount

 

Remainder of 2017

 

$

940

 

2018

 

 

1,195

 

2019

 

 

680

 

2020

 

 

644

 

2021

 

 

590

 

Thereafter

 

 

1,450

 

Total

 

$

5,499

 

 

Stockholders' Equity
Stockholders' Equity

10. STOCKHOLDERS’ EQUITY

A summary of the changes in stockholders’ equity for the six months ended June 30, 2017 is as follows:

 

(In thousands)

 

Stockholders’ Equity

 

Balance, December 31, 2016

 

$

479,517

 

Net income

 

 

19,052

 

Dividend payments

 

 

(8,719

)

Dividends accrued for unvested restricted stock units

 

 

(19

)

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

 

 

1,708

 

Net unrealized losses on cash flow hedges

 

 

(338

)

Defined benefit plan adjustments (net of tax)

 

 

141

 

Foreign currency translation adjustment

 

 

3,861

 

Proceeds from stock option exercises

 

 

1,722

 

Purchase of treasury stock

 

 

(17,311

)

ASU 2016-09 adoption

 

 

10

 

Stock-based compensation expense

 

 

3,739

 

Balance, June 30, 2017

 

$

483,363

 

Stock Repurchase Program

Since 1997, our Board of Directors has approved multiple share repurchase programs that have authorized open market repurchase transactions of up to 50.0 million shares of our common stock, which will be implemented through open market or private purchases from time to time as conditions warrant. During the six months ended June 30, 2017, we repurchased 0.9 million shares of our common stock at an average price of $20.27 per share. As of June 30, 2017, we have the authority to purchase an additional 3.6 million shares of our common stock under the current plans approved by the Board of Directors.

Stock Option Exercises

We issued 0.1 million shares of treasury stock during the six months ended June 30, 2017 to accommodate employee stock option exercises. The stock options had exercise prices ranging from $15.29 to $23.02. We received proceeds totaling $1.7 million from the exercise of these stock options during the six months ended June 30, 2017.

Dividend Payments

During the six months ended June 30, 2017, we paid cash dividends as follows (in thousands except per share amounts):

 

Record Date

 

Payment Date

 

Per Share Amount

 

 

Total Dividend Paid

 

February 2, 2017

 

February 16, 2017

 

$

0.09

 

 

$

4,369

 

May 4, 2017

 

May 18, 2017

 

$

0.09

 

 

$

4,350

 

Other Comprehensive Income

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

The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the three months ended June 30, 2017 and 2016:

 

 

 

Three Months Ended June 30, 2017

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Unrealized Gains (Losses) on Cash Flow Hedges

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

1,739

 

 

$

79

 

 

$

(4,962

)

 

$

(6,333

)

 

$

(9,477

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,222

 

 

 

(571

)

 

 

 

 

 

2,619

 

 

 

3,270

 

Amounts reclassified from accumulated other

   comprehensive income

 

 

(849

)

 

 

154

 

 

 

86

 

 

 

 

 

 

(609

)

Net current period other comprehensive income

   (loss)

 

 

373

 

 

 

(417

)

 

 

86

 

 

 

2,619

 

 

 

2,661

 

Ending balance

 

$

2,112

 

 

$

(338

)

 

$

(4,876

)

 

$

(3,714

)

 

$

(6,816

)

 

 

 

Three Months Ended June 30, 2016

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

1,677

 

 

$

(3,850

)

 

$

(5,778

)

 

$

(7,951

)

Other comprehensive income (loss) before

   reclassifications

 

 

481

 

 

 

 

 

 

(601

)

 

 

(120

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(646

)

 

 

22

 

 

 

 

 

 

(624

)

Net current period other comprehensive income (loss)

 

 

(165

)

 

 

22

 

 

 

(601

)

 

 

(744

)

Ending balance

 

$

1,512

 

 

$

(3,828

)

 

$

(6,379

)

 

$

(8,695

)

 


The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the six months ended June 30, 2017 and 2016:

 

 

 

Six Months Ended June 30, 2017

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Unrealized Gains (Losses) on Cash Flow Hedges

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

404

 

 

$

 

 

$

(5,017

)

 

$

(7,575

)

 

$

(12,188

)

Other comprehensive income (loss) before

   reclassifications

 

 

2,842

 

 

 

(492

)

 

 

 

 

 

3,861

 

 

 

6,211

 

Amounts reclassified from accumulated other

   comprehensive income

 

 

(1,134

)

 

 

154

 

 

 

141

 

 

 

 

 

 

(839

)

Net current period other comprehensive income (loss)

 

 

1,708

 

 

 

(338

)

 

 

141

 

 

 

3,861

 

 

 

5,372

 

Ending balance

 

$

2,112

 

 

$

(338

)

 

$

(4,876

)

 

$

(3,714

)

 

$

(6,816

)

 

 

 

Six Months Ended June 30, 2016

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

1,932

 

 

$

(3,895

)

 

$

(7,006

)

 

$

(8,969

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,239

 

 

 

 

 

 

627

 

 

 

1,866

 

Amounts reclassified from accumulated other

   comprehensive income

 

 

(1,659

)

 

 

67

 

 

 

 

 

 

(1,592

)

Net current period other comprehensive income (loss)

 

 

(420

)

 

 

67

 

 

 

627

 

 

 

274

 

Ending balance

 

$

1,512

 

 

$

(3,828

)

 

$

(6,379

)

 

$

(8,695

)

 

The following tables present the details of reclassifications out of accumulated other comprehensive income for the three months ended June 30, 2017 and 2016:

 

(In thousands)

 

Three Months Ended June 30, 2017

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

 

$

1,393

 

 

Net realized investment gain

Impairment expense

 

 

(2

)

 

Net realized investment gain

Net losses on derivatives designated as hedging

   instruments

 

 

(154

)

 

Cost of sales

Defined benefit plan adjustments – actuarial losses

 

 

(124

)

 

(1)

Total reclassifications for the period, before tax

 

 

1,113

 

 

 

Tax (expense) benefit

 

 

(504

)

 

 

Total reclassifications for the period, net

   of tax

 

$

609

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 4 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

Three Months Ended June 30, 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

 

$

1,354

 

 

Net realized investment gain

Impairment expense

 

 

(295

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial

   losses

 

 

(33

)

 

(1)

Total reclassifications for the period, before

   tax

 

 

1,026

 

 

 

Tax (expense) benefit

 

 

(402

)

 

 

Total reclassifications for the period, net

   of tax

 

$

624

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 4 of Notes to Consolidated Financial Statements.


The following tables present the details of reclassifications out of accumulated other comprehensive income for the six months ended June 30, 2017 and 2016:

 

(In thousands)

 

Six Months Ended June 30, 2017

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

 

$

1,965

 

 

Net realized investment gain

Impairment expense

 

 

(105

)

 

Net realized investment gain

Net losses on derivatives designated as hedging

   instruments

 

 

(154

)

 

Cost of sales

Defined benefit plan adjustments – actuarial

   losses

 

 

(204

)

 

(1)

Total reclassifications for the period, before

   tax

 

 

1,502

 

 

 

Tax (expense) benefit

 

 

(663

)

 

 

Total reclassifications for the period, net

   of tax

 

$

839

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 4 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

Six Months Ended June 30, 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

 

$

3,115

 

 

Net realized investment gain

Impairment expense

 

 

(395

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial

   losses

 

 

(98

)

 

(1)

Total reclassifications for the period, before

   tax

 

 

2,622

 

 

 

Tax (expense) benefit

 

 

(1,030

)

 

 

Total reclassifications for the period, net

   of tax

 

$

1,592

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 4 of Notes to Consolidated Financial Statements.

 

The following table presents the tax effects related to the change in each component of other comprehensive income for the three months ended June 30, 2017 and 2016:

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

June 30, 2017

 

 

June 30, 2016

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

Unrealized gains (losses) on available-for-sale

   securities

 

$

2,003

 

 

$

(781

)

 

$

1,222

 

 

$

789

 

 

$

(308

)

 

$

481

 

Unrealized gains (losses) on cash flow hedges

 

 

(571

)

 

 

 

 

 

(571

)

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   available-for-sale investments included in net

   income

 

 

(1,391

)

 

 

542

 

 

 

(849

)

 

 

(1,059

)

 

 

413

 

 

 

(646

)

Reclassification adjustment for amounts related to

   cash flow hedges included in net income

 

 

154

 

 

 

 

 

 

154

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   defined benefit plan adjustments included in net

   income

 

 

124

 

 

 

(38

)

 

 

86

 

 

 

33

 

 

 

(11

)

 

 

22

 

Foreign currency translation adjustment

 

 

2,619

 

 

 

 

 

 

2,619

 

 

 

(601

)

 

 

 

 

 

(601

)

Total Other Comprehensive Income (Loss)

 

$

2,938

 

 

$

(277

)

 

$

2,661

 

 

$

(838

)

 

$

94

 

 

$

(744

)

The following table presents the tax effects related to the change in each component of other comprehensive income for the six months ended June 30, 2017 and 2016:

 

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2017

 

 

June 30, 2016

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

Unrealized gains (losses) on available-for-sale

   securities

 

$

4,659

 

 

$

(1,817

)

 

$

2,842

 

 

$

2,031

 

 

$

(792

)

 

$

1,239

 

Unrealized gains (losses) on cash flow hedges

 

 

(492

)

 

 

 

 

 

(492

)

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   available-for-sale investments included in net

   income

 

 

(1,860

)

 

 

726

 

 

 

(1,134

)

 

 

(2,720

)

 

 

1,061

 

 

 

(1,659

)

Reclassification adjustment for amounts related to

   cash flow hedges included in net income

 

 

154

 

 

 

 

 

 

154

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   defined benefit plan adjustments included in net

   income

 

 

204

 

 

 

(63

)

 

 

141

 

 

 

98

 

 

 

(31

)

 

 

67

 

Foreign currency translation adjustment

 

 

3,861

 

 

 

 

 

 

3,861

 

 

 

627

 

 

 

 

 

 

627

 

Total Other Comprehensive Income (Loss)

 

$

6,526

 

 

$

(1,154

)

 

$

5,372

 

 

$

36

 

 

$

238

 

 

$

274

 

 

Earnings Per Share
Earnings Per Share

11. EARNINGS PER SHARE

A summary of the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016 is as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands, except per share amounts)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

12,401

 

 

$

10,228

 

 

$

19,052

 

 

$

15,242

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares – basic

 

 

48,036

 

 

 

48,831

 

 

 

48,232

 

 

 

49,026

 

Effect of dilutive securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

279

 

 

 

161

 

 

 

348

 

 

 

138

 

PSUs, RSUs and restricted stock

 

 

98

 

 

 

56

 

 

 

95

 

 

 

54

 

Weighted average number of shares – diluted

 

 

48,413

 

 

 

49,048

 

 

 

48,675

 

 

 

49,218

 

Net income per share – basic

 

$

0.26

 

 

$

0.21

 

 

$

0.40

 

 

$

0.31

 

Net income per share – diluted

 

$

0.26

 

 

$

0.21

 

 

$

0.39

 

 

$

0.31

 

 

Anti-dilutive options to purchase common stock outstanding were excluded from the above calculations. Anti-dilutive options totaled 4.1 million and 5.6 million for the three months ended June 30, 2017 and 2016, respectively, and 4.1 million and 5.8 million for the six months ended June 30, 2017 and 2016, respectively.

Segment Information
Segment Information

12. SEGMENT INFORMATION

We operate in two reportable segments: (1) Network Solutions and (2) 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 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. There are no inter-segment revenues.

The following table presents information about the reported sales and gross profit of our reportable segments for the three and six months ended June 30, 2017 and 2016. We do not produce asset information by reportable segment; therefore, it is not reported.

 

 

 

Three Months Ended

 

 

 

June 30, 2017

 

 

June 30, 2016

 

(In thousands)

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

155,543

 

 

$

75,885

 

 

$

138,549

 

 

$

70,705

 

Services & Support

 

 

29,130

 

 

 

8,747

 

 

 

24,152

 

 

 

8,250

 

Total

 

$

184,673

 

 

$

84,632

 

 

$

162,701

 

 

$

78,955

 

 

 

 

Six Months Ended

 

 

 

June 30, 2017

 

 

June 30, 2016

 

(In thousands)

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

299,140

 

 

$

142,823

 

 

$

262,432

 

 

$

130,515

 

Services & Support

 

 

55,812

 

 

 

15,524

 

 

 

42,473

 

 

 

14,234

 

Total

 

$

354,952

 

 

$

158,347

 

 

$

304,905

 

 

$

144,749

 

 


Sales by Category

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

The table below presents sales information by category for the three and six months ended June 30, 2017 and 2016:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Access & Aggregation

 

$

138,639

 

 

$

102,232

 

 

$

258,782

 

 

$

196,087

 

Customer Devices

 

 

33,833

 

 

 

40,876

 

 

 

70,101

 

 

 

73,229

 

Traditional & Other Products

 

 

12,201

 

 

 

19,593

 

 

 

26,069

 

 

 

35,589

 

Total

 

$

184,673

 

 

$

162,701

 

 

$

354,952

 

 

$

304,905

 

 

Liability for Warranty Returns
Liability for Warranty Returns

13. LIABILITY FOR WARRANTY RETURNS

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. The liability for warranty obligations totaled $9.2 million and $8.5 million at June 30, 2017 and December 31, 2016, respectively. During the three months ended March 31, 2017, we recorded a receivable and a reduction in warranty expense related to a settlement with a third party supplier for a defective component, the impact of which is reflected in the table below. These liabilities are included in accrued expenses in the accompanying Consolidated Balance Sheets.

 

A summary of warranty expense and write-off activity for the three and six months ended June 30, 2017 and 2016 is as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Balance at beginning of period

 

$

8,988

 

 

$

9,042

 

 

$

8,548

 

 

$

8,739

 

Plus: Amounts charged to cost and expenses

 

 

3,055

 

 

 

1,431

 

 

 

2,314

 

 

 

2,329

 

Less: Deductions

 

 

(2,863

)

 

 

(1,538

)

 

 

(1,682

)

 

 

(2,133

)

Balance at end of period

 

$

9,180

 

 

$

8,935

 

 

$

9,180

 

 

$

8,935

 

 

 

Commitments and Contingencies
Commitments and Contingencies

14. COMMITMENTS AND CONTINGENCIES

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

We have committed to invest up to an aggregate of $7.9 million in two private equity funds, and we have contributed $8.4 million as of June 30, 2017, of which $7.7 million has been applied to these commitments.

Subsequent Events
Subsequent Events

15. SUBSEQUENT EVENTS

On July 18, 2017, we announced that our Board of Directors declared a quarterly cash dividend of $0.09 per common share to be paid to stockholders of record at the close of business on August 3, 2017. The payment date will be August 17, 2017. The quarterly dividend payment will be approximately $4.3 million. In July 2003, our Board of Directors elected to begin declaring quarterly dividends on our common stock considering the tax treatment of dividends and adequate levels of Company liquidity.

 

Summary of Significant Accounting Policies (Policies)

Basis of Presentation

The accompanying unaudited consolidated financial statements of ADTRAN®, Inc. and its subsidiaries (ADTRAN) have been prepared pursuant to the rules and regulations for reporting on Quarterly Reports on Form 10-Q. Accordingly, certain information and notes required by generally accepted accounting principles for complete financial statements are not included herein. The December 31, 2016 Consolidated Balance Sheet is derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

In the opinion of management, all adjustments necessary to fairly state these interim statements have been recorded and are of a normal and recurring nature. The results of operations for an interim period are not necessarily indicative of the results for the full year. The interim statements should be read in conjunction with the financial statements and notes thereto included in ADTRAN’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 24, 2017 with the SEC.

Use of Estimates

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

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (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 using the modified retrospective method. 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 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 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 are currently evaluating whether to early adopt ASU 2017-04, but we do not expect it will have a material impact on our financial position, results of operations or cash flows.

In March 2017, the FASB issued Accounting Standards Update No. 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07). ASU 2017-07 amends ASC 715, Compensation — Retirement Benefits, to require employers that present a measure of operating income in their statements of earnings to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in non-operating expenses. ASU 2017-07 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We do not expect ASU 2017-07 will have a material impact on our financial position, results of operations or cash flows.

During 2017, we adopted the following accounting standards, which had no material effect on our financial position, results of operations or cash flows:

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 2015-11 in the first quarter of 2017, and there was no material impact on our financial position, results of operations or cash flows.

In January 2017, we adopted ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. As a result, beginning in the first quarter of 2017, we began recognizing all excess tax benefits and tax deficiencies as income tax expense or benefit as a discrete event. The treatment of forfeitures has changed as we have elected to discontinue our past practice of estimating forfeitures and now account for forfeitures as they occur. As a result, we recorded an increase in additional paid in capital of $0.1 million, a charge to beginning retained earnings of $0.1 million, and an increase in the deferred tax assets related to non-qualified stock options and RSUs of $10 thousand. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows within operating activities. We elected to retrospectively apply the changes in presentation to the statements of cash flows and no longer classify excess tax benefits as a financing activity, which had no effect on our cash flows for the six months ended June 30, 2016. There was no material impact on our financial position, results of operations or cash flows as a result of these changes.

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 following unaudited supplemental pro forma information presents the financial results as if the acquisition had occurred on January 1, 2015. This unaudited supplemental 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.

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Pro forma revenue

 

$

164,332

 

 

$

160,562

 

 

$

307,687

 

 

$

304,542

 

Pro forma net income

 

$

10,022

 

 

$

1,983

 

 

$

14,907

 

 

$

8,405

 

Pro forma earnings per share - basic

 

$

0.21

 

 

$

0.04

 

 

$

0.30

 

 

$

0.16

 

Pro forma earnings per share - diluted

 

$

0.20

 

 

$

0.04

 

 

$

0.30

 

 

$

0.16

 

 

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

The following table summarizes the components of net periodic pension cost for the three and six months ended June 30, 2017 and 2016

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Service cost

 

$

306

 

 

$

310

 

 

$

603

 

 

$

607

 

Interest cost

 

 

147

 

 

 

184

 

 

 

290

 

 

 

360

 

Expected return on plan assets

 

 

(307

)

 

 

(271

)

 

 

(606

)

 

 

(530

)

Amortization of actuarial losses

 

 

75

 

 

 

45

 

 

 

148

 

 

 

88

 

Net periodic pension cost

 

$

221

 

 

$

268

 

 

$

435

 

 

$

525

 

 

Stock-Based Compensation (Tables)

The following table summarizes the stock-based compensation expense related to stock options, performance stock units (PSUs), restricted stock units (RSUs) and restricted stock for the three and six months ended June 30, 2017 and 2016, which was recognized as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Stock-based compensation expense included in cost of

   sales

 

$

93

 

 

$

95

 

 

$

184

 

 

$

194

 

Selling, general and administrative expense

 

 

1,008

 

 

 

788

 

 

 

2,024

 

 

 

1,557

 

Research and development expense

 

 

755

 

 

 

668

 

 

 

1,531

 

 

 

1,358

 

Stock-based compensation expense included in operating

   expenses

 

 

1,763

 

 

 

1,456

 

 

 

3,555

 

 

 

2,915

 

Total stock-based compensation expense

 

 

1,856

 

 

 

1,551

 

 

 

3,739

 

 

 

3,109

 

Tax benefit for expense associated with non-qualified

   options, PSUs, RSUs and restricted stock

 

 

(433

)

 

 

(213

)

 

 

(813

)

 

 

(425

)

Total stock-based compensation expense, net of tax

 

$

1,423

 

 

$

1,338

 

 

$

2,926

 

 

$

2,684

 

 

The following table is a summary of our stock options outstanding as of December 31, 2016 and June 30, 2017 and the changes that occurred during the six months ended June 30, 2017:

 

(In thousands, except per share amounts)

 

Number of

Stock Options

 

 

Weighted Avg.

Exercise Price

 

 

Weighted Avg.

Remaining

Contractual

Life In Years

 

 

Aggregate

Intrinsic Value

 

Stock options outstanding, December 31, 2016

 

 

6,338

 

 

$

22.14

 

 

 

5.63

 

 

$

16,972

 

Stock options granted

 

 

 

 

$

 

 

 

 

 

 

 

 

 

Stock options exercised

 

 

(103

)

 

$

16.78

 

 

 

 

 

 

 

 

 

Stock options forfeited

 

 

(32

)

 

$

17.62

 

 

 

 

 

 

 

 

 

Stock options expired

 

 

(55

)

 

$

26.67

 

 

 

 

 

 

 

 

 

Stock options outstanding, June 30, 2017

 

 

6,148

 

 

$

22.21

 

 

 

5.14

 

 

$

11,232

 

Stock options vested and expected to vest, June 30, 2017

 

 

6,148

 

 

$

22.21

 

 

 

5.14

 

 

$

11,232

 

Options exercisable, June 30, 2017

 

 

4,601

 

 

$

23.78

 

 

 

4.23

 

 

$

5,862

 

 

The weighted-average assumptions and value of options granted during the three and six months ended June 30, 2016 were as follows:

 

Three and Six Months Ended

 

 

June 30,

 

 

2016

 

Expected volatility

 

34.74

%

Risk-free interest rate

 

1.33

%

Expected dividend yield

 

1.91

%

Expected life (in years)

 

6.26

 

Weighted-average estimated value

$

5.42

 

 

The following table is a summary of our PSUs, RSUs and restricted stock outstanding as of December 31, 2016 and the changes that occurred during the six months ended June 30, 2017:

 

(In thousands, except per share amounts)

 

Number of

Shares

 

 

Weighted Avg. Grant Date Fair Value

 

Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2016

 

 

519

 

 

$

20.51

 

PSUs, RSUs and restricted stock granted

 

 

520

 

 

$

22.24

 

PSUs, RSUs and restricted stock vested

 

 

(2

)

 

$

18.29

 

PSUs, RSUs and restricted stock forfeited

 

 

(6

)

 

$

20.00

 

Unvested PSUs, RSUs and restricted stock outstanding, June 30, 2017

 

 

1,031

 

 

$

21.39

 

 

Investments (Tables)

At June 30, 2017, we held the following securities and investments, recorded at either fair value or cost:

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Deferred compensation plan assets

 

$

15,662

 

 

$

2,389

 

 

$

(23

)

 

$

18,028

 

Corporate bonds

 

 

72,954

 

 

 

132

 

 

 

(107

)

 

 

72,979

 

Municipal fixed-rate bonds

 

 

7,596

 

 

 

7

 

 

 

(20

)

 

 

7,583

 

Asset-backed bonds

 

 

13,313

 

 

 

11

 

 

 

(16

)

 

 

13,308

 

Mortgage/Agency-backed bonds

 

 

9,549

 

 

 

14

 

 

 

(36

)

 

 

9,527

 

U.S. government bonds

 

 

21,528

 

 

 

4

 

 

 

(132

)

 

 

21,400

 

Foreign government bonds

 

 

2,700

 

 

 

3

 

 

 

(1

)

 

 

2,702

 

Marketable equity securities

 

 

31,741

 

 

 

2,153

 

 

 

(929

)

 

 

32,965

 

Available-for-sale securities held at fair value

 

$

175,043

 

 

$

4,713

 

 

$

(1,264

)

 

$

178,492

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,800

 

Other investments held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

673

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

206,965

 

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

 

 

 

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 held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

767

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

219,290

 

 

As of June 30, 2017, our 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

 

$

33,486

 

 

$

4,101

 

 

$

 

 

$

 

 

$

8,919

 

 

$

825

 

One to two years

 

 

16,124

 

 

 

1,536

 

 

 

850

 

 

 

493

 

 

 

 

 

 

600

 

Two to three years

 

 

21,421

 

 

 

775

 

 

 

5,185

 

 

 

 

 

 

8,367

 

 

 

1,277

 

Three to five years

 

 

1,948

 

 

 

1,171

 

 

 

5,836

 

 

 

415

 

 

 

4,114

 

 

 

 

Five to ten years

 

 

 

 

 

 

 

 

508

 

 

 

1,340

 

 

 

 

 

 

 

More than ten years

 

 

 

 

 

 

 

 

929

 

 

 

7,279

 

 

 

 

 

 

 

Total

 

$

72,979

 

 

$

7,583

 

 

$

13,308

 

 

$

9,527

 

 

$

21,400

 

 

$

2,702

 

 

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

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Gross realized gains

 

$

1,512

 

 

$

1,517

 

 

$

2,230

 

 

$

3,881

 

Gross realized losses

 

$

(122

)

 

$

(407

)

 

$

(370

)

 

$

(1,043

)

 

 

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

 

 

 

Fair Value Measurements at June 30, 2017 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Market for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,487

 

 

$

6,487

 

 

$

 

 

$

 

Commercial Paper

 

 

5,497

 

 

 

 

 

 

5,497

 

 

 

 

Cash equivalents

 

 

11,984

 

 

 

6,487

 

 

 

5,497

 

 

 

 

Available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

18,028

 

 

 

18,028

 

 

 

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

72,979

 

 

 

 

 

 

72,979

 

 

 

 

Municipal fixed-rate bonds

 

 

7,583

 

 

 

 

 

 

7,583

 

 

 

 

Asset-backed bonds

 

 

13,308

 

 

 

 

 

 

13,308

 

 

 

 

Mortgage/Agency-backed bonds

 

 

9,527

 

 

 

 

 

 

9,527

 

 

 

 

U.S. government bonds

 

 

21,400

 

 

 

21,400

 

 

 

 

 

 

 

Foreign government bonds

 

 

2,702

 

 

 

 

 

 

2,702

 

 

 

 

Available-for-sale marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – various industries

 

 

32,965

 

 

 

32,965

 

 

 

 

 

 

 

Available-for-sale securities

 

 

178,492

 

 

 

72,393

 

 

 

106,099

 

 

 

 

Total

 

$

190,476

 

 

$

78,880

 

 

$

111,596

 

 

$

 

 

 

 

Fair Value Measurements at December 31, 2016 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Market for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

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 – various industries

 

 

29,379

 

 

 

29,379

 

 

 

 

 

 

 

Available-for-sale securities

 

 

190,723

 

 

 

73,742

 

 

 

116,981

 

 

 

 

Total

 

$

214,823

 

 

$

80,620

 

 

$

134,203

 

 

$

 

 

Derivative Instruments and Hedging Activities (Tables)

The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of June 30, 2017 and December 31, 2016 were as follows:

 

(In thousands)

 

Balance Sheet Location

 

June 30, 2017

 

 

December 31, 2016

 

Derivatives Designated as Hedging Instruments (Level 2):

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts – derivative liabilities

 

Accounts payable

 

$

610

 

 

$

 

Derivatives Not Designated as Hedging Instruments (Level 2):

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts – derivative assets

 

Other receivables

 

 

 

 

 

159

 

Foreign exchange contracts – derivative liabilities

 

Accounts payable

 

 

352

 

 

 

 

Total derivatives

 

 

 

$

962

 

 

$

159

 

 

The change in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the three and six months ended June 30, 2017 and 2016 were as follows:

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

Income Statement

 

June 30,

 

 

June 30,

 

(In thousands)

 

Location

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Derivatives Not Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other income (expense)

 

$

(451

)

 

$

237

 

 

$

(485

)

 

$

190

 

 

The change in our derivatives designated as hedging instruments recorded in other comprehensive income (OCI) and reclassified to income during the three and six months ended June 30, 2017 and 2016 were as follows:

 

 

 

Amount of Gains (Losses) Recognized in

 

 

 

 

Amount of Gains (Losses) Reclassified

 

 

 

OCI on Derivatives

 

 

 

 

from AOCI into Income

 

 

 

Three Months Ended

 

 

Location of Gains

 

Three Months Ended

 

 

 

June 30,

 

 

(Losses) Reclassified

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

from AOCI into Income

 

2017

 

 

2016

 

Derivatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

(571

)

 

$

 

 

Cost of Sales

 

$

(154

)

 

$

 

 

 

 

Amount of Gains (Losses) Recognized in

 

 

 

 

Amount of Gains (Losses) Reclassified

 

 

 

OCI on Derivatives

 

 

 

 

from AOCI into Income

 

 

 

Six Months Ended

 

 

Location of Gains

 

Six Months Ended

 

 

 

June 30,

 

 

(Losses) Reclassified

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

from AOCI into Income

 

2017

 

 

2016

 

Derivatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

(492

)

 

$

 

 

Cost of Sales

 

$

(154

)

 

$

 

 

Inventory (Tables)
Components of Inventory

At June 30, 2017 and December 31, 2016, inventory consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

(In thousands)

 

2017

 

 

2016

 

Raw materials

 

$

42,218

 

 

$

40,461

 

Work in process

 

 

2,443

 

 

 

4,003

 

Finished goods

 

 

69,334

 

 

 

60,653

 

Total

 

$

113,995

 

 

$

105,117

 

 

Goodwill and Intangible Assets (Tables)

The following table presents our intangible assets as of June 30, 2017 and December 31, 2016:

 

(In thousands)

 

June 30, 2017

 

 

December 31, 2016

 

 

 

Gross

Value

 

 

Accumulated Amortization

 

 

Net Value

 

 

Gross

Value

 

 

Accumulated Amortization

 

 

Net Value

 

Customer relationships

 

$

7,249

 

 

$

(3,765

)

 

$

3,484

 

 

$

6,899

 

 

$

(3,208

)

 

$

3,691

 

Developed technology

 

 

6,650

 

 

 

(5,609

)

 

 

1,041

 

 

 

6,444

 

 

 

(5,061

)

 

 

1,383

 

Intellectual property

 

 

2,340

 

 

 

(2,196

)

 

 

144

 

 

 

2,340

 

 

 

(2,129

)

 

 

211

 

Supply agreement

 

 

1,400

 

 

 

(1,400

)

 

 

 

 

 

1,400

 

 

 

(544

)

 

 

856

 

License

 

 

500

 

 

 

(306

)

 

 

194

 

 

 

500

 

 

 

(113

)

 

 

387

 

Patent

 

 

500

 

 

 

(54

)

 

 

446

 

 

 

500

 

 

 

(20

)

 

 

480

 

Trade names

 

 

370

 

 

 

(310

)

 

 

60

 

 

 

370

 

 

 

(285

)

 

 

85

 

Non-compete

 

 

200

 

 

 

(70

)

 

 

130

 

 

 

200

 

 

 

(26

)

 

 

174

 

Total

 

$

19,209

 

 

$

(13,710

)

 

$

5,499

 

 

$

18,653

 

 

$

(11,386

)

 

$

7,267

 

 

As of June 30, 2017, the estimated future amortization expense of our intangible assets is as follows:

 

(In thousands)

 

Amount

 

Remainder of 2017

 

$

940

 

2018

 

 

1,195

 

2019

 

 

680

 

2020

 

 

644

 

2021

 

 

590

 

Thereafter

 

 

1,450

 

Total

 

$

5,499

 

 

Stockholders' Equity (Tables)

A summary of the changes in stockholders’ equity for the six months ended June 30, 2017 is as follows:

 

(In thousands)

 

Stockholders’ Equity

 

Balance, December 31, 2016

 

$

479,517

 

Net income

 

 

19,052

 

Dividend payments

 

 

(8,719

)

Dividends accrued for unvested restricted stock units

 

 

(19

)

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

 

 

1,708

 

Net unrealized losses on cash flow hedges

 

 

(338

)

Defined benefit plan adjustments (net of tax)

 

 

141

 

Foreign currency translation adjustment

 

 

3,861

 

Proceeds from stock option exercises

 

 

1,722

 

Purchase of treasury stock

 

 

(17,311

)

ASU 2016-09 adoption

 

 

10

 

Stock-based compensation expense

 

 

3,739

 

Balance, June 30, 2017

 

$

483,363

 

 

During the six months ended June 30, 2017, we paid cash dividends as follows (in thousands except per share amounts):

 

Record Date

 

Payment Date

 

Per Share Amount

 

 

Total Dividend Paid

 

February 2, 2017

 

February 16, 2017

 

$

0.09

 

 

$

4,369

 

May 4, 2017

 

May 18, 2017

 

$

0.09

 

 

$

4,350

 

 

The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the three months ended June 30, 2017 and 2016:

 

 

 

Three Months Ended June 30, 2017

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Unrealized Gains (Losses) on Cash Flow Hedges

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

1,739

 

 

$

79

 

 

$

(4,962

)

 

$

(6,333

)

 

$

(9,477

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,222

 

 

 

(571

)

 

 

 

 

 

2,619

 

 

 

3,270

 

Amounts reclassified from accumulated other

   comprehensive income

 

 

(849

)

 

 

154

 

 

 

86

 

 

 

 

 

 

(609

)

Net current period other comprehensive income

   (loss)

 

 

373

 

 

 

(417

)

 

 

86

 

 

 

2,619

 

 

 

2,661

 

Ending balance

 

$

2,112

 

 

$

(338

)

 

$

(4,876

)

 

$

(3,714

)

 

$

(6,816

)

 

 

 

Three Months Ended June 30, 2016

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

1,677

 

 

$

(3,850

)

 

$

(5,778

)

 

$

(7,951

)

Other comprehensive income (loss) before

   reclassifications

 

 

481

 

 

 

 

 

 

(601

)

 

 

(120

)

Amounts reclassified from accumulated other

   comprehensive income

 

 

(646

)

 

 

22

 

 

 

 

 

 

(624

)

Net current period other comprehensive income (loss)

 

 

(165

)

 

 

22

 

 

 

(601

)

 

 

(744

)

Ending balance

 

$

1,512

 

 

$

(3,828

)

 

$

(6,379

)

 

$

(8,695

)

 


The following tables present the changes in accumulated other comprehensive income, net of tax, by component for the six months ended June 30, 2017 and 2016:

 

 

 

Six Months Ended June 30, 2017

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Unrealized Gains (Losses) on Cash Flow Hedges

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

404

 

 

$

 

 

$

(5,017

)

 

$

(7,575

)

 

$

(12,188

)

Other comprehensive income (loss) before

   reclassifications

 

 

2,842

 

 

 

(492

)

 

 

 

 

 

3,861

 

 

 

6,211

 

Amounts reclassified from accumulated other

   comprehensive income

 

 

(1,134

)

 

 

154

 

 

 

141

 

 

 

 

 

 

(839

)

Net current period other comprehensive income (loss)

 

 

1,708

 

 

 

(338

)

 

 

141

 

 

 

3,861

 

 

 

5,372

 

Ending balance

 

$

2,112

 

 

$

(338

)

 

$

(4,876

)

 

$

(3,714

)

 

$

(6,816

)

 

 

 

Six Months Ended June 30, 2016

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

1,932

 

 

$

(3,895

)

 

$

(7,006

)

 

$

(8,969

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,239

 

 

 

 

 

 

627

 

 

 

1,866

 

Amounts reclassified from accumulated other

   comprehensive income

 

 

(1,659

)

 

 

67

 

 

 

 

 

 

(1,592

)

Net current period other comprehensive income (loss)

 

 

(420

)

 

 

67

 

 

 

627

 

 

 

274

 

Ending balance

 

$

1,512

 

 

$

(3,828

)

 

$

(6,379

)

 

$

(8,695

)

 

The following tables present the details of reclassifications out of accumulated other comprehensive income for the three months ended June 30, 2017 and 2016:

 

(In thousands)

 

Three Months Ended June 30, 2017

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

 

$

1,393

 

 

Net realized investment gain

Impairment expense

 

 

(2

)

 

Net realized investment gain

Net losses on derivatives designated as hedging

   instruments

 

 

(154

)

 

Cost of sales

Defined benefit plan adjustments – actuarial losses

 

 

(124

)

 

(1)

Total reclassifications for the period, before tax

 

 

1,113

 

 

 

Tax (expense) benefit

 

 

(504

)

 

 

Total reclassifications for the period, net

   of tax

 

$

609

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 4 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

Three Months Ended June 30, 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

 

$

1,354

 

 

Net realized investment gain

Impairment expense

 

 

(295

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial

   losses

 

 

(33

)

 

(1)

Total reclassifications for the period, before

   tax

 

 

1,026

 

 

 

Tax (expense) benefit

 

 

(402

)

 

 

Total reclassifications for the period, net

   of tax

 

$

624

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 4 of Notes to Consolidated Financial Statements.


The following tables present the details of reclassifications out of accumulated other comprehensive income for the six months ended June 30, 2017 and 2016:

 

(In thousands)

 

Six Months Ended June 30, 2017

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

 

$

1,965

 

 

Net realized investment gain

Impairment expense

 

 

(105

)

 

Net realized investment gain

Net losses on derivatives designated as hedging

   instruments

 

 

(154

)

 

Cost of sales

Defined benefit plan adjustments – actuarial

   losses

 

 

(204

)

 

(1)

Total reclassifications for the period, before

   tax

 

 

1,502

 

 

 

Tax (expense) benefit

 

 

(663

)

 

 

Total reclassifications for the period, net

   of tax

 

$

839

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 4 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

Six Months Ended June 30, 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

 

$

3,115

 

 

Net realized investment gain

Impairment expense

 

 

(395

)

 

Net realized investment gain

Defined benefit plan adjustments – actuarial

   losses

 

 

(98

)

 

(1)

Total reclassifications for the period, before

   tax

 

 

2,622

 

 

 

Tax (expense) benefit

 

 

(1,030

)

 

 

Total reclassifications for the period, net

   of tax

 

$

1,592

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 4 of Notes to Consolidated Financial Statements.

 

The following table presents the tax effects related to the change in each component of other comprehensive income for the three months ended June 30, 2017 and 2016:

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

June 30, 2017

 

 

June 30, 2016

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

Unrealized gains (losses) on available-for-sale

   securities

 

$

2,003

 

 

$

(781

)

 

$

1,222

 

 

$

789

 

 

$

(308

)

 

$

481

 

Unrealized gains (losses) on cash flow hedges

 

 

(571

)

 

 

 

 

 

(571

)

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   available-for-sale investments included in net

   income

 

 

(1,391

)

 

 

542

 

 

 

(849

)

 

 

(1,059

)

 

 

413

 

 

 

(646

)

Reclassification adjustment for amounts related to

   cash flow hedges included in net income

 

 

154

 

 

 

 

 

 

154

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   defined benefit plan adjustments included in net

   income

 

 

124

 

 

 

(38

)

 

 

86

 

 

 

33

 

 

 

(11

)

 

 

22

 

Foreign currency translation adjustment

 

 

2,619

 

 

 

 

 

 

2,619

 

 

 

(601

)

 

 

 

 

 

(601

)

Total Other Comprehensive Income (Loss)

 

$

2,938

 

 

$

(277

)

 

$

2,661

 

 

$

(838

)

 

$

94

 

 

$

(744

)

The following table presents the tax effects related to the change in each component of other comprehensive income for the six months ended June 30, 2017 and 2016:

 

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2017

 

 

June 30, 2016

 

(In thousands)

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

 

Before-Tax

Amount

 

 

Tax

(Expense)

Benefit

 

 

Net-of-Tax

Amount

 

Unrealized gains (losses) on available-for-sale

   securities

 

$

4,659

 

 

$

(1,817

)

 

$

2,842

 

 

$

2,031

 

 

$

(792

)

 

$

1,239

 

Unrealized gains (losses) on cash flow hedges

 

 

(492

)

 

 

 

 

 

(492

)

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   available-for-sale investments included in net

   income

 

 

(1,860

)

 

 

726

 

 

 

(1,134

)

 

 

(2,720

)

 

 

1,061

 

 

 

(1,659

)

Reclassification adjustment for amounts related to

   cash flow hedges included in net income

 

 

154

 

 

 

 

 

 

154

 

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   defined benefit plan adjustments included in net

   income

 

 

204

 

 

 

(63

)

 

 

141

 

 

 

98

 

 

 

(31

)

 

 

67

 

Foreign currency translation adjustment

 

 

3,861

 

 

 

 

 

 

3,861

 

 

 

627

 

 

 

 

 

 

627

 

Total Other Comprehensive Income (Loss)

 

$

6,526

 

 

$

(1,154

)

 

$

5,372

 

 

$

36

 

 

$

238

 

 

$

274

 

 

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

A summary of the calculation of basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016 is as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands, except per share amounts)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

12,401

 

 

$

10,228

 

 

$

19,052

 

 

$

15,242

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares – basic

 

 

48,036

 

 

 

48,831

 

 

 

48,232

 

 

 

49,026

 

Effect of dilutive securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

279

 

 

 

161

 

 

 

348

 

 

 

138

 

PSUs, RSUs and restricted stock

 

 

98

 

 

 

56

 

 

 

95

 

 

 

54

 

Weighted average number of shares – diluted

 

 

48,413

 

 

 

49,048

 

 

 

48,675

 

 

 

49,218

 

Net income per share – basic

 

$

0.26

 

 

$

0.21

 

 

$

0.40

 

 

$

0.31

 

Net income per share – diluted

 

$

0.26

 

 

$

0.21

 

 

$

0.39

 

 

$

0.31

 

 

Segment Information (Tables)

The following table presents information about the reported sales and gross profit of our reportable segments for the three and six months ended June 30, 2017 and 2016. We do not produce asset information by reportable segment; therefore, it is not reported.

 

 

 

Three Months Ended

 

 

 

June 30, 2017

 

 

June 30, 2016

 

(In thousands)

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

155,543

 

 

$

75,885

 

 

$

138,549

 

 

$

70,705

 

Services & Support

 

 

29,130

 

 

 

8,747

 

 

 

24,152

 

 

 

8,250

 

Total

 

$

184,673

 

 

$

84,632

 

 

$

162,701

 

 

$

78,955

 

 

 

 

Six Months Ended

 

 

 

June 30, 2017

 

 

June 30, 2016

 

(In thousands)

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

299,140

 

 

$

142,823

 

 

$

262,432

 

 

$

130,515

 

Services & Support

 

 

55,812

 

 

 

15,524

 

 

 

42,473

 

 

 

14,234

 

Total

 

$

354,952

 

 

$

158,347

 

 

$

304,905

 

 

$

144,749

 

 

The table below presents sales information by category for the three and six months ended June 30, 2017 and 2016:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Access & Aggregation

 

$

138,639

 

 

$

102,232

 

 

$

258,782

 

 

$

196,087

 

Customer Devices

 

 

33,833

 

 

 

40,876

 

 

 

70,101

 

 

 

73,229

 

Traditional & Other Products

 

 

12,201

 

 

 

19,593

 

 

 

26,069

 

 

 

35,589

 

Total

 

$

184,673

 

 

$

162,701

 

 

$

354,952

 

 

$

304,905

 

 

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

A summary of warranty expense and write-off activity for the three and six months ended June 30, 2017 and 2016 is as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Balance at beginning of period

 

$

8,988

 

 

$

9,042

 

 

$

8,548

 

 

$

8,739

 

Plus: Amounts charged to cost and expenses

 

 

3,055

 

 

 

1,431

 

 

 

2,314

 

 

 

2,329

 

Less: Deductions

 

 

(2,863

)

 

 

(1,538

)

 

 

(1,682

)

 

 

(2,133

)

Balance at end of period

 

$

9,180

 

 

$

8,935

 

 

$

9,180

 

 

$

8,935

 

 

 

Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
Jun. 30, 2017
Dec. 31, 2016
Jan. 31, 2017
ASU 2016-09 [Member]
Jan. 31, 2017
ASU 2016-09 [Member]
Non-qualified Stock Options and RSUs [Member]
Summary of Significant Accounting Policy [Line Items]
 
 
 
 
Increase in additional paid in capital
 
 
$ 100,000 
 
Retained earnings
931,044,000 
921,942,000 
100,000 
 
Increase in deferred tax assets
 
 
 
$ 10,000 
Business Combinations - Additional Information (Detail) (CommScope, Inc. Subsidiaries Fiber Access Products, Technologies and Service Relationships [Member], USD $)
0 Months Ended 3 Months Ended 6 Months Ended
Sep. 13, 2016
Jun. 30, 2017
Sep. 30, 2016
Jun. 30, 2017
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 
 
3,500,000 
 
Acquisition and integration related expenses and amortization of acquired intangibles
 
$ 600,000 
 
$ 1,400,000 
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) (CommScope, Inc. Subsidiaries Fiber Access Products, Technologies and Service Relationships [Member], USD $)
In Thousands, unless otherwise specified
0 Months Ended 3 Months Ended
Sep. 13, 2016
Sep. 30, 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)
(3,500)
Total purchase price
$ 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 Unaudited Supplemental Pro Forma Information (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Business Combinations [Abstract]
 
 
 
 
Pro forma revenue
$ 164,332 
$ 160,562 
$ 307,687 
$ 304,542 
Pro forma net income
$ 10,022 
$ 1,983 
$ 14,907 
$ 8,405 
Pro forma earnings per share - basic
$ 0.21 
$ 0.04 
$ 0.30 
$ 0.16 
Pro forma earnings per share - diluted
$ 0.20 
$ 0.04 
$ 0.30 
$ 0.16 
Income Taxes - Additional Information (Detail)
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Income Tax Disclosure [Abstract]
 
 
Effective tax rate
27.30% 
37.90% 
Effective tax rate reduction for provision to return adjustment
3.20% 
 
Effective tax rate reduction due to international revenues
6.30% 
 
Pension Benefit Plan - Summarization of Components of Net Periodic Pension Cost (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Compensation And Retirement Disclosure [Abstract]
 
 
 
 
Service cost
$ 306 
$ 310 
$ 603 
$ 607 
Interest cost
147 
184 
290 
360 
Expected return on plan assets
(307)
(271)
(606)
(530)
Amortization of actuarial losses
75 
45 
148 
88 
Net periodic pension cost
$ 221 
$ 268 
$ 435 
$ 525 
Stock-Based Compensation - Summary of Stock Options Outstanding (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2017
Jun. 30, 2017
Dec. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
 
 
Number of Stock Options, Stock options outstanding, Beginning Balance
 
6,338,000 
 
Number of Stock Options, Stock options granted
 
Number of Stock Options, Stock options exercised
 
(103,000)
 
Number of Stock Options, Stock options forfeited
 
(32,000)
 
Number of Stock Options, Stock options expired
 
(55,000)
 
Number of Stock Options, Stock options outstanding, Ending Balance
6,148,000 
6,148,000 
6,338,000 
Number of Stock Options, Stock options vested and expected to vest
6,148,000 
6,148,000 
 
Number of Stock Options, Options exercisable
4,601,000 
4,601,000 
 
Weighted Avg. Exercise Price, Stock options outstanding, Beginning Balance
 
$ 22.14 
 
Weighted Avg. Exercise Price, Stock options exercised
 
$ 16.78 
 
Weighted Avg. Exercise Price, Stock options forfeited
 
$ 17.62 
 
Weighted Avg. Exercise Price, Stock options expired
 
$ 26.67 
 
Weighted Avg. Exercise Price, Stock options outstanding, Ending Balance
$ 22.21 
$ 22.21 
$ 22.14 
Weighted Avg. Exercise Price, Stock options vested and expected to vest
$ 22.21 
$ 22.21 
 
Weighted Avg. Exercise Price, Options exercisable
$ 23.78 
$ 23.78 
 
Weighted Avg. Remaining Contractual Life In Years, Stock options outstanding
 
5 years 1 month 20 days 
5 years 7 months 17 days 
Weighted Avg. Remaining Contractual Life In Years, Stock options vested and expected to vest
 
5 years 1 month 20 days 
 
Weighted Avg. Remaining Contractual Life In Years, Options exercisable
 
4 years 2 months 23 days 
 
Aggregate Intrinsic Value, Stock options outstanding
$ 11,232 
$ 11,232 
$ 16,972 
Aggregate Intrinsic Value, Stock options vested and expected to vest
11,232 
11,232 
 
Aggregate Intrinsic Value, Options exercisable
$ 5,862 
$ 5,862 
 
Stock-Based Compensation (Stock Options) - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Total pre-tax intrinsic value of options exercised
$ 0.1 
$ 0.5 
Number of Stock options, granted
Unvested Stock Options [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Unrecognized compensation expense related to stock options
$ 5.2 
$ 5.2 
Recognition period of unvested compensation expense
 
1 year 9 months 18 days 
Stock-Based Compensation - Summary of Weighted-Average Assumptions and Value of Options Granted (Detail) (Stock Options [Member], USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2016
Stock Options [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Expected volatility
34.74% 
34.74% 
Risk-free interest rate
1.33% 
1.33% 
Expected dividend yield
1.91% 
1.91% 
Expected life (in years)
6 years 3 months 4 days 
6 years 3 months 4 days 
Weighted-average estimated value
$ 5.42 
$ 5.42 
Stock-Based Compensation - Summary of PSUs, RSUs and Restricted Stock Outstanding (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
 
Number of Shares, Unvested PSUs, RSUs and restricted stock outstanding, beginning balance
519 
Number of Shares, PSUs, RSUs and restricted stock granted
520 
Number of Shares, PSUs, RSUs and restricted stock vested
(2)
Number of Shares, PSUs, RSUs and restricted stock forfeited
(6)
Number of Shares, Unvested PSUs, RSUs and restricted stock outstanding, ending balance
1,031 
Weighted Avg. Grant Date Fair Value, Unvested PSUs, RSUs and restricted stock outstanding, Beginning Balance
$ 20.51 
Weighted Avg. Grant Date Fair Value, PSUs, RSUs and restricted stock granted
$ 22.24 
Weighted Avg. Grant Date Fair Value, PSUs, RSUs and restricted stock vested
$ 18.29 
Weighted Avg. Grant Date Fair Value, PSUs, RSUs and restricted stock forfeited
$ 20.00 
Weighted Avg. Grant Date Fair Value, Unvested PSUs, RSUs and restricted stock outstanding, Ending Balance
$ 21.39 
Stock-Based Compensation (PSUs, RSUs and Restricted Stock) - Additional Information (Detail) (USD $)
Share data in Thousands, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Mar. 31, 2017
Performance Stock Units (PSUs) [Member]
Jun. 30, 2017
Market-Based PSUs, RSUs and Restricted Stock [Member]
Jun. 30, 2017
Performance-Based PSUs [Member]
Jun. 30, 2017
Performance-Based PSU Awards [Member]
Jun. 30, 2017
Performance-Based PSU Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
PSU shares grant approved by board of directors
 
 
520 
 
500 
 
 
 
 
Unrecognized compensation expense related to other than options
 
 
 
 
 
$ 7,900,000 
$ 11,500,000 
 
 
Recognition period of unvested compensation expense
 
 
 
 
 
3 years 
3 years 
 
 
Compensation expense recognized
$ 1,856,000 
$ 1,551,000 
$ 3,739,000 
$ 3,109,000 
 
 
 
$ 0 
$ 0 
Investments - Securities and Investments, Recorded at Either Fair Value or Cost (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
$ 175,043 
$ 190,146 
Gross Unrealized Gains
4,713 
2,709 
Gross Unrealized Losses
(1,264)
(2,132)
Available-for-sale-securities, Carrying Value
178,492 
190,723 
Restricted investment held at cost
27,800 
27,800 
Other investments held at cost
673 
767 
Total carrying value of available-for-sale investments
206,965 
219,290 
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
15,662 
12,367 
Gross Unrealized Gains
2,389 
2,271 
Gross Unrealized Losses
(23)
(42)
Available-for-sale-securities, Carrying Value
18,028 
14,596 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
72,954 
66,522 
Gross Unrealized Gains
132 
64 
Gross Unrealized Losses
(107)
(174)
Available-for-sale-securities, Carrying Value
72,979 
66,412 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
7,596 
11,799 
Gross Unrealized Gains
12 
Gross Unrealized Losses
(20)
(37)
Available-for-sale-securities, Carrying Value
7,583 
11,774 
Asset-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
13,313 
10,201 
Gross Unrealized Gains
11 
19 
Gross Unrealized Losses
(16)
(14)
Available-for-sale-securities, Carrying Value
13,308 
10,206 
Mortgage/Agency-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
9,549 
13,080 
Gross Unrealized Gains
14 
15 
Gross Unrealized Losses
(36)
(91)
Available-for-sale-securities, Carrying Value
9,527 
13,004 
U.S. Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
21,528 
30,022 
Gross Unrealized Gains
15 
Gross Unrealized Losses
(132)
(270)
Available-for-sale-securities, Carrying Value
21,400 
29,767 
Foreign Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
2,700 
3,729 
Gross Unrealized Gains
Gross Unrealized Losses
(1)
(1)
Available-for-sale-securities, Carrying Value
2,702 
3,730 
Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
 
11,855 
Available-for-sale-securities, Carrying Value
 
11,855 
Marketable Equity Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized Cost
31,741 
30,571 
Gross Unrealized Gains
2,153 
311 
Gross Unrealized Losses
(929)
(1,503)
Available-for-sale-securities, Carrying Value
$ 32,965 
$ 29,379 
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
Jun. 30, 2017
Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale-securities, Fair Value/Carrying Value
$ 178,492 
$ 190,723 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
33,486 
 
One to two years
16,124 
 
Two to three years
21,421 
 
Three to five years
1,948 
 
Available-for-sale-securities, Fair Value/Carrying Value
72,979 
66,412 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
4,101 
 
One to two years
1,536 
 
Two to three years
775 
 
Three to five years
1,171 
 
Available-for-sale-securities, Fair Value/Carrying Value
7,583 
11,774 
Asset-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
One to two years
850 
 
Two to three years
5,185 
 
Three to five years
5,836 
 
Five to ten years
508 
 
More than ten years
929 
 
Available-for-sale-securities, Fair Value/Carrying Value
13,308 
10,206 
Mortgage/Agency-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
One to two years
493 
 
Three to five years
415 
 
Five to ten years
1,340 
 
More than ten years
7,279 
 
Available-for-sale-securities, Fair Value/Carrying Value
9,527 
13,004 
U.S. Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
8,919 
 
Two to three years
8,367 
 
Three to five years
4,114 
 
Available-for-sale-securities, Fair Value/Carrying Value
21,400 
29,767 
Foreign Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Less than one year
825 
 
One to two years
600 
 
Two to three years
1,277 
 
Available-for-sale-securities, Fair Value/Carrying Value
$ 2,702 
$ 3,730 
Investments - Additional Information (Detail) (USD $)
6 Months Ended
Jun. 30, 2017
Dec. 31, 2016
Schedule of Investments [Line Items]
 
 
Restricted certificate of deposit held
$ 27,800,000 
$ 27,800,000 
Identification of potential other-than-temporary impairments
25.00% 
 
Alabama State Industrial Development Authority [Member]
 
 
Schedule of Investments [Line Items]
 
 
Maturity date of bond
Jan. 01, 2020 
 
Percentage of interest on bond
2.00% 
 
Alabama State Industrial Development Authority [Member] |
Taxable Revenue Bond [Member]
 
 
Schedule of Investments [Line Items]
 
 
Collateral deposit against outstanding principal amount
27,800,000 
27,800,000 
Alabama State Industrial Development Authority [Member] |
Taxable Revenue Bond [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Investments [Line Items]
 
 
Estimated fair value of bond
$ 28,000,000 
 
Investment [Member] |
Issuer Concentration [Member] |
Market Value of Total Investment Portfolio [Member]
 
 
Schedule of Investments [Line Items]
 
 
Investment concentration risk percentage
5.00% 
 
Investments - Gross Realized Gains and Losses on Sale of Securities (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Investments Debt And Equity Securities [Abstract]
 
 
 
 
Gross realized gains
$ 1,512 
$ 1,517 
$ 2,230 
$ 3,881 
Gross realized losses
$ (122)
$ (407)
$ (370)
$ (1,043)
Investments - Fair Value Measurements of Cash Equivalents Held in Money Market Funds and Investments (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
$ 178,492 
$ 190,723 
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
11,984 
24,100 
Available-for-sale securities
178,492 
190,723 
Total
190,476 
214,823 
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
6,487 
6,878 
Available-for-sale securities
72,393 
73,742 
Total
78,880 
80,620 
Fair Value, Measurements [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
5,497 
17,222 
Available-for-sale securities
106,099 
116,981 
Total
111,596 
134,203 
Money Market Funds [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
6,487 
6,878 
Money Market Funds [Member] |
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
6,487 
6,878 
Commercial Paper [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
5,497 
17,222 
Commercial Paper [Member] |
Fair Value, Measurements [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Cash equivalents
5,497 
17,222 
Deferred Compensation Plan Assets [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
18,028 
14,596 
Deferred Compensation Plan Assets [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
18,028 
14,596 
Deferred Compensation Plan Assets [Member] |
Fair Value, Measurements [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
18,028 
14,596 
Corporate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
72,979 
66,412 
Corporate Bonds [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
72,979 
66,412 
Corporate Bonds [Member] |
Fair Value, Measurements [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
72,979 
66,412 
Municipal Fixed-Rate Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
7,583 
11,774 
Municipal Fixed-Rate Bonds [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
7,583 
11,774 
Municipal Fixed-Rate Bonds [Member] |
Fair Value, Measurements [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
7,583 
11,774 
Asset-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
13,308 
10,206 
Asset-Backed Bonds [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
13,308 
10,206 
Asset-Backed Bonds [Member] |
Fair Value, Measurements [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
13,308 
10,206 
Mortgage/Agency-Backed Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
9,527 
13,004 
Mortgage/Agency-Backed Bonds [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
9,527 
13,004 
Mortgage/Agency-Backed Bonds [Member] |
Fair Value, Measurements [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
9,527 
13,004 
U.S. Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
21,400 
29,767 
U.S. Government Bonds [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
21,400 
29,767 
U.S. Government Bonds [Member] |
Fair Value, Measurements [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
21,400 
29,767 
Foreign Government Bonds [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
2,702 
3,730 
Foreign Government Bonds [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
2,702 
3,730 
Foreign Government Bonds [Member] |
Fair Value, Measurements [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
2,702 
3,730 
Variable Rate Demand Notes [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
 
11,855 
Variable Rate Demand Notes [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
 
11,855 
Variable Rate Demand Notes [Member] |
Fair Value, Measurements [Member] |
Significant Other Observable Inputs (Level 2) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
 
11,855 
Marketable Equity Securities - Various Industries [Member] |
Fair Value, Measurements [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
32,965 
29,379 
Marketable Equity Securities - Various Industries [Member] |
Fair Value, Measurements [Member] |
Quoted Prices in Active Market for Identical Assets (Level 1) [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale securities
$ 32,965 
$ 29,379 
Derivative Instruments and Hedging Activities - Additional Information (Detail) (Foreign Exchange Forward Contracts [Member])
Jun. 30, 2017
USD ($)
Jun. 30, 2017
EUR (€)
Derivative [Line Items]
 
 
Derivative, notional amount
$ 20,000,000 
€ 17,500,000 
Derivative Instruments and Hedging Activities - Schedule of Fair Values of Hedging Instruments Recorded in Consolidated Balance Sheet (Detail) (Significant Other Observable Inputs (Level 2) [Member], Foreign Exchange Contracts [Member], USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Derivatives Not Designated as Hedging Instruments (Level 2):
 
 
Total derivatives, assets fair value
$ 962 
$ 159 
Accounts Payable [Member]
 
 
Derivatives Designated as Hedging Instruments (Level 2):
 
 
Derivatives liabilities, fair value
610 
 
Derivatives Not Designated as Hedging Instruments (Level 2):
 
 
Derivatives liabilities, fair value
352 
 
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
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Foreign Exchange Contracts [Member] |
Other Income (Expense) [Member]
 
 
 
 
Derivatives Not Designated as Hedging Instruments:
 
 
 
 
Derivative instrument, gain or loss
$ (451)
$ 237 
$ (485)
$ 190 
Derivative Instruments and Hedging Activities - Schedule of Change in Derivatives Designated Hedging Instruments Recorded in Other Comprehensive Income (OCI) and Reclassified to Income (Detail) (Foreign Exchange Contracts [Member], Derivatives Designated as Hedging Instruments [Member], USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2017
Derivative [Line Items]
 
 
Amount of Gains (Losses) Recognized in OCI on Derivatives
$ (571)
$ (492)
Cost of Sales [Member]
 
 
Derivative [Line Items]
 
 
Amount of Gains (Losses) Reclassified from AOCI into Income
$ (154)
$ (154)
Inventory - Components of Inventory (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 42,218 
$ 40,461 
Work in process
2,443 
4,003 
Finished goods
69,334 
60,653 
Total
$ 113,995 
$ 105,117 
Inventory - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Raw Materials [Member]
 
 
Inventory [Line Items]
 
 
Inventory valuation reserves
$ 15.2 
$ 14.6 
Finished Goods [Member]
 
 
Inventory [Line Items]
 
 
Inventory valuation reserves
$ 12.7 
$ 10.6 
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2016
Goodwill [Line Items]
 
 
 
 
 
Goodwill, relates to acquisition
 
 
$ 3,500,000 
 
$ 3,500,000 
Impairment losses
 
 
 
 
Amortization expense
1,100,000 
400,000 
1,900,000 
900,000 
 
Network Solutions [Member]
 
 
 
 
 
Goodwill [Line Items]
 
 
 
 
 
Goodwill, relates to acquisition
 
 
3,100,000 
 
 
Services & Support [Member]
 
 
 
 
 
Goodwill [Line Items]
 
 
 
 
 
Goodwill, relates to acquisition
 
 
$ 400,000 
 
 
Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Goodwill [Line Items]
 
 
Gross Value
$ 19,209 
$ 18,653 
Accumulated Amortization
(13,710)
(11,386)
Net Value
5,499 
7,267 
Customer Relationships [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
7,249 
6,899 
Accumulated Amortization
(3,765)
(3,208)
Net Value
3,484 
3,691 
Developed Technology [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
6,650 
6,444 
Accumulated Amortization
(5,609)
(5,061)
Net Value
1,041 
1,383 
Intellectual Property [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
2,340 
2,340 
Accumulated Amortization
(2,196)
(2,129)
Net Value
144 
211 
Supply Agreement [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
1,400 
1,400 
Accumulated Amortization
(1,400)
(544)
Net Value
 
856 
License [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
500 
500 
Accumulated Amortization
(306)
(113)
Net Value
194 
387 
Trade Names [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
370 
370 
Accumulated Amortization
(310)
(285)
Net Value
60 
85 
Patent [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
500 
500 
Accumulated Amortization
(54)
(20)
Net Value
446 
480 
Non-compete [Member]
 
 
Goodwill [Line Items]
 
 
Gross Value
200 
200 
Accumulated Amortization
(70)
(26)
Net Value
$ 130 
$ 174 
Stockholders' Equity - Summary of Changes in Stockholders' Equity (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Equity [Abstract]
 
 
 
 
Beginning Balance
 
 
$ 479,517 
 
Net Income
12,401 
10,228 
19,052 
15,242 
Dividend payments
 
 
(8,719)
 
Dividends accrued for unvested restricted stock units
 
 
(19)
 
Net unrealized gains on available-for-sale securities (net of tax)
373 
(165)
1,708 
(420)
Net unrealized losses on cash flow hedges
(417)
 
(338)
 
Defined benefit plan adjustments (net of tax)
86 
22 
141 
67 
Foreign currency translation adjustment
2,619 
(601)
3,861 
627 
Proceeds from stock option exercises
 
 
1,722 
541 
Purchase of treasury stock
 
 
(17,311)
 
ASU 2016-09 adoption
 
 
10 
 
Stock-based compensation expense
 
 
3,739 
 
Ending Balance
$ 483,363 
 
$ 483,363 
 
Stockholders' Equity - Additional Information (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Equity [Abstract]
 
 
Maximum shares authorized for repurchase, prior and new announcements and total after new announcement
50,000,000 
 
Stock repurchased, shares
900,000 
 
Shares repurchased, average price per share
$ 20.27 
 
Additional shares authorized for purchase
3,600,000 
 
Number of Options, exercised
103,000 
 
Exercise price of stock options, lower range limit
$ 15.29 
 
Exercise price of stock options, upper range limit
$ 23.02 
 
Proceeds from stock option exercises
$ 1,722 
$ 541 
Stockholders' Equity - Cash Dividends (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Dividends Payable [Line Items]
 
 
 
 
Record Date
 
 
Aug. 03, 2017 
 
Payment Date
 
 
Aug. 17, 2017 
 
Per Share Amount
$ 0.09 
$ 0.09 
$ 0.18 
$ 0.18 
Total Dividend Paid
 
 
$ 8,719 
$ 8,860 
Cash Dividends Paid in February [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Record Date
 
 
Feb. 02, 2017 
 
Payment Date
 
 
Feb. 16, 2017 
 
Per Share Amount
 
 
$ 0.09 
 
Total Dividend Paid
 
 
4,369 
 
Cash Dividends Paid in May [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Record Date
 
 
May 04, 2017 
 
Payment Date
 
 
May 18, 2017 
 
Per Share Amount
 
 
$ 0.09 
 
Total Dividend Paid
 
 
$ 4,350 
 
Stockholders' Equity - Changes in Accumulated Other Comprehensive Income, Net of Tax by Component (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Jun. 30, 2016
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Jun. 30, 2017
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Jun. 30, 2016
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Jun. 30, 2017
Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Jun. 30, 2017
Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Jun. 30, 2017
Defined Benefit Plan Adjustments [Member]
Jun. 30, 2016
Defined Benefit Plan Adjustments [Member]
Jun. 30, 2017
Defined Benefit Plan Adjustments [Member]
Jun. 30, 2016
Defined Benefit Plan Adjustments [Member]
Jun. 30, 2017
Foreign Currency Adjustments [Member]
Jun. 30, 2016
Foreign Currency Adjustments [Member]
Jun. 30, 2017
Foreign Currency Adjustments [Member]
Jun. 30, 2016
Foreign Currency Adjustments [Member]
Jun. 30, 2017
Accumulated Other Comprehensive Income [Member]
Mar. 31, 2017
Accumulated Other Comprehensive Income [Member]
Dec. 31, 2016
Accumulated Other Comprehensive Income [Member]
Jun. 30, 2016
Accumulated Other Comprehensive Income [Member]
Mar. 31, 2016
Accumulated Other Comprehensive Income [Member]
Dec. 31, 2015
Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Balance
 
 
$ 479,517 
 
$ 1,739 
$ 1,677 
$ 404 
$ 1,932 
$ 79 
 
$ (4,962)
$ (3,850)
$ (5,017)
$ (3,895)
$ (6,333)
$ (5,778)
$ (7,575)
$ (7,006)
$ (6,816)
$ (9,477)
$ (12,188)
$ (8,695)
$ (7,951)
$ (8,969)
Other comprehensive income (loss) before reclassifications
3,270 
(120)
6,211 
1,866 
1,222 
481 
2,842 
1,239 
(571)
(492)
 
 
 
 
2,619 
(601)
3,861 
627 
 
 
 
 
 
 
Amounts reclassified from accumulated other comprehensive income
(609)
(624)
(839)
(1,592)
(849)
(646)
(1,134)
(1,659)
154 
154 
86 
22 
141 
67 
 
 
 
 
 
 
 
 
 
 
Other Comprehensive Income (Loss), net of tax
2,661 
(744)
5,372 
274 
373 
(165)
1,708 
(420)
(417)
(338)
86 
22 
141 
67 
2,619 
(601)
3,861 
627 
 
 
 
 
 
 
Ending Balance
$ 483,363 
 
$ 483,363 
 
$ 2,112 
$ 1,512 
$ 2,112 
$ 1,512 
$ (338)
$ (338)
$ (4,876)
$ (3,828)
$ (4,876)
$ (3,828)
$ (3,714)
$ (6,379)
$ (3,714)
$ (6,379)
$ (6,816)
$ (9,477)
$ (12,188)
$ (8,695)
$ (7,951)
$ (8,969)
Stockholders' Equity - Reclassifications Out of Accumulated Other Comprehensive Income (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Cost of sales
$ (79,658)
$ (67,844)
$ (156,317)
$ (131,917)
Income before provision for income taxes
17,869 
16,456 
26,214 
24,534 
Tax (expense) benefit
(5,468)
(6,228)
(7,162)
(9,292)
Total reclassifications for the period, net of tax
12,401 
10,228 
19,052 
15,242 
Reclassification Out of Accumulated Other Comprehensive Income [Member]
 
 
 
 
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Defined benefit plan adjustments – actuarial losses
(124)
(33)
(204)
(98)
Income before provision for income taxes
1,113 
1,026 
1,502 
2,622 
Tax (expense) benefit
(504)
(402)
(663)
(1,030)
Total reclassifications for the period, net of tax
609 
624 
839 
1,592 
Unrealized Gains (Losses) on Available-for-Sale Securities [Member] |
Reclassification Out of Accumulated Other Comprehensive Income [Member]
 
 
 
 
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Net realized investment gain
1,393 
1,354 
1,965 
3,115 
Impairment Expense [Member] |
Reclassification Out of Accumulated Other Comprehensive Income [Member]
 
 
 
 
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Net realized investment gain
(2)
(295)
(105)
(395)
Net Losses on Derivatives Designated as Hedging Instruments [Member] |
Reclassification Out of Accumulated Other Comprehensive Income [Member]
 
 
 
 
Reclassification Adjustment Out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Cost of sales
$ (154)
 
$ (154)
 
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 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Numerator
 
 
 
 
Net Income
$ 12,401 
$ 10,228 
$ 19,052 
$ 15,242 
Denominator
 
 
 
 
Weighted average number of shares – basic
48,036 
48,831 
48,232 
49,026 
Effect of dilutive securities
 
 
 
 
Stock options
279 
161 
348 
138 
PSUs, RSUs and restricted stock
98 
56 
95 
54 
Weighted average number of shares – diluted
48,413 
49,048 
48,675 
49,218 
Net income per share – basic
$ 0.26 
$ 0.21 
$ 0.40 
$ 0.31 
Net income per share – diluted
$ 0.26 
$ 0.21 
$ 0.39 
$ 0.31 
Earnings Per Share - Additional Information (Detail)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Earnings Per Share [Abstract]
 
 
 
 
Anti-dilutive options, Total
4.1 
5.6 
4.1 
5.8 
Segment Information - Additional Information (Detail)
6 Months Ended
Jun. 30, 2016
Category
Segment
Segment Reporting [Abstract]
 
Number of reportable segments
Number of categories
Segment Information - Sales and Gross Profit of Reportable Segments (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Segment Reporting Information [Line Items]
 
 
 
 
Sales
$ 184,673 
$ 162,701 
$ 354,952 
$ 304,905 
Gross Profit
84,632 
78,955 
158,347 
144,749 
Network Solutions [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Sales
155,543 
138,549 
299,140 
262,432 
Gross Profit
75,885 
70,705 
142,823 
130,515 
Services & Support [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Sales
29,130 
24,152 
55,812 
42,473 
Gross Profit
$ 8,747 
$ 8,250 
$ 15,524 
$ 14,234 
Segment Information - Sales Information by Category (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Revenue from External Customer [Line Items]
 
 
 
 
Sales
$ 184,673 
$ 162,701 
$ 354,952 
$ 304,905 
Access & Aggregation [Member]
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
Sales
138,639 
102,232 
258,782 
196,087 
Customer Devices [Member]
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
Sales
33,833 
40,876 
70,101 
73,229 
Traditional & Other Products [Member]
 
 
 
 
Revenue from External Customer [Line Items]
 
 
 
 
Sales
$ 12,201 
$ 19,593 
$ 26,069 
$ 35,589 
Liability for Warranty Returns - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2015
Product Warranties Disclosures [Abstract]
 
 
 
 
 
 
Period of warranty for product defects
90 days to five years 
 
 
 
 
 
Liability for warranty obligations
$ 9,180 
$ 8,988 
$ 8,548 
$ 8,935 
$ 9,042 
$ 8,739 
Liability for Warranty Returns - Summary of Warranty Expense and Write-Off Activity (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Product Warranties Disclosures [Abstract]
 
 
 
 
Balance at beginning of period
$ 8,988 
$ 9,042 
$ 8,548 
$ 8,739 
Plus: Amounts charged to cost and expenses
3,055 
1,431 
2,314 
2,329 
Less: Deductions
(2,863)
(1,538)
(1,682)
(2,133)
Balance at end of period
$ 9,180 
$ 8,935 
$ 9,180 
$ 8,935 
Commitments and Contingencies - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2017
EquityUnit
Contingencies And Commitments [Line Items]
 
Number of private equity funds
Commitments towards private equity funds
$ 7.7 
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 
Subsequent Events - Additional Information (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
6 Months Ended 0 Months Ended
Jun. 30, 2017
Aug. 17, 2017
Scenario Forecast [Member]
Jul. 18, 2017
Subsequent Events [Member]
Subsequent Event [Line Items]
 
 
 
Dividend declaration date
Jul. 18, 2017 
 
 
Common stock dividends per share declared
 
 
$ 0.09 
Dividend record date
Aug. 03, 2017 
 
 
Dividend payment date
Aug. 17, 2017 
 
 
Quarterly dividend payable subsequent to balance sheet date
 
$ 4.3