ADTRAN INC, 10-Q filed on 11/6/2018
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2018
Oct. 26, 2018
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q3  
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 Small Business false  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   47,650,245
v3.10.0.1
Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Current Assets    
Cash and cash equivalents $ 94,173 $ 86,433
Short-term investments 5,912 16,129
Accounts receivable, less allowance for doubtful accounts of $— at September 30, 2018 and December 31, 2017 101,865 144,150
Other receivables 30,084 26,578
Inventory, net 106,060 122,542
Prepaid expenses and other current assets 10,428 17,282
Total Current Assets 348,522 413,114
Property, plant and equipment, net 81,457 85,079
Deferred tax assets, net 39,595 23,428
Goodwill 3,492 3,492
Other assets 31,523 13,725
Long-term investments 144,241 130,256
Total Assets 648,830 669,094
Current Liabilities    
Accounts payable 65,032 60,632
Unearned revenue 17,004 13,070
Accrued expenses 14,548 13,232
Accrued wages and benefits 12,604 15,948
Income tax payable 14,340 3,936
Total Current Liabilities 123,528 106,818
Non-current unearned revenue 3,846 4,556
Other non-current liabilities 32,255 34,209
Bonds payable 25,600 25,600
Total Liabilities 185,229 171,183
Commitments and contingencies (see Note 15)
Stockholders’ Equity    
Common stock, par value $0.01 per share; 200,000 shares authorized; 79,652 shares issued and 47,711 shares outstanding at September 30, 2018 and 79,652 shares issued and 48,485 shares outstanding at December 31, 2017 797 797
Additional paid-in capital 265,757 260,515
Accumulated other comprehensive loss (9,564) (3,295)
Retained earnings 900,324 922,178
Less treasury stock at cost: 31,941 and 31,167 shares at September 30, 2018 and December 31, 2017, respectively (693,713) (682,284)
Total Stockholders’ Equity 463,601 497,911
Total Liabilities and Stockholders’ Equity $ 648,830 $ 669,094
v3.10.0.1
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2018
Dec. 31, 2017
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 47,711,000 48,485,000
Treasury stock, shares 31,941,000 31,167,000
v3.10.0.1
Consolidated Statements of Income (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Sales        
Total Sales $ 140,335 $ 185,112 $ 389,189 $ 540,064
Cost of Sales        
Total Cost of Sales 81,887 98,621 241,012 295,238
Gross Profit 58,448 86,491 148,177 244,826
Selling, general and administrative expenses 30,750 34,676 96,361 104,171
Research and development expenses 29,877 33,588 93,455 99,116
Operating Income (Loss) (2,179) 18,227 (41,639) 41,539
Interest and dividend income 825 952 2,604 2,857
Interest expense (134) (139) (398) (417)
Net investment gain 4,507 1,009 5,400 2,869
Other income (expense), net 201 (842) (73) (1,427)
Gain on bargain purchase of a business     11,322  
Income (Loss) Before Provision for Income Taxes 3,220 19,207 (22,784) 45,421
(Provision) benefit for income taxes 4,369 (3,309) 11,889 (10,471)
Net Income (Loss) $ 7,589 $ 15,898 $ (10,895) $ 34,950
Weighted average shares outstanding – basic 47,710 47,870 47,927 48,110
Weighted average shares outstanding – diluted 47,834 48,531 47,927 48,618
Earnings (loss) per common share – basic $ 0.16 $ 0.33 $ (0.23) $ 0.73
Earnings (loss) per common share – diluted 0.16 0.33 (0.23) 0.72
Dividend per share $ 0.09 $ 0.09 $ 0.27 $ 0.27
Product [Member]        
Sales        
Total Sales $ 121,043 $ 145,467 $ 341,359 $ 444,607
Cost of Sales        
Total Cost of Sales 69,943 73,534 208,184 229,861
Service [Member]        
Sales        
Total Sales 19,292 39,645 47,830 95,457
Cost of Sales        
Total Cost of Sales $ 11,944 $ 25,087 $ 32,828 $ 65,377
v3.10.0.1
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]        
Net Income (Loss) $ 7,589 $ 15,898 $ (10,895) $ 34,950
Other Comprehensive Income (Loss), net of tax        
Net unrealized gains (losses) on available-for-sale securities (32) 804 (3,340) 2,512
Net unrealized gains (losses) on cash flow hedges   142   (196)
Defined benefit plan adjustments 37 73 104 214
Foreign currency translation (451) 1,541 (3,033) 5,402
Other Comprehensive Income (Loss), net of tax (446) 2,560 (6,269) 7,932
Comprehensive Income (Loss), net of tax $ 7,143 $ 18,458 $ (17,164) $ 42,882
v3.10.0.1
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Cash flows from operating activities:    
Net income (loss) $ (10,895) $ 34,950
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization 11,952 12,034
Amortization of net premium on available-for-sale investments (14) 352
Net gain on long-term investments (5,400) (2,869)
Net (gain) loss on disposal of property, plant and equipment 68 (10)
Gain on bargain purchase of a business (11,322)  
Stock-based compensation expense 5,243 5,573
Deferred income taxes (20,368)  
Changes in operating assets and liabilities:    
Accounts receivable, net 41,166 (6,975)
Other receivables (1,842) (2,924)
Inventory 16,543 (9,483)
Prepaid expenses and other assets 8,722 (9,647)
Accounts payable 5,223 (4,727)
Accrued expenses and other liabilities 156 (2,820)
Income tax payable 9,461 8,571
Net cash provided by operating activities 48,693 22,025
Cash flows from investing activities:    
Purchases of property, plant and equipment (5,695) (12,304)
Proceeds from disposals of property, plant and equipment   16
Proceeds from sales and maturities of available-for-sale investments 116,757 137,272
Purchases of available-for-sale investments (115,271) (79,713)
Acquisition of business (7,806)  
Net cash provided by (used in) investing activities (12,015) 45,271
Cash flows from financing activities:    
Proceeds from stock option exercises 1,321 6,606
Purchases of treasury stock (14,185) (17,348)
Dividend payments (12,976) (13,031)
Net cash used in financing activities (25,840) (23,773)
Net increase in cash and cash equivalents 10,838 43,523
Effect of exchange rate changes (3,098) 4,835
Cash and cash equivalents, beginning of period 86,433 79,895
Cash and cash equivalents, end of period 94,173 128,253
Supplemental disclosure of non-cash investing activities:    
Purchases of property, plant and equipment included in accounts payable $ 355 $ 272
v3.10.0.1
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
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, 2017 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, 2017, filed on February 23, 2018 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 February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). 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. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, which clarified certain aspects of ASU 2016-02, as well as, ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provides for an optional transition method that allows for the application of current legacy guidance, including its disclosure requirements, in the comparative periods presented in the year of adoption.  Otherwise, Topic 842 must be adopted by a modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented.   The Company plans to use the optional transition method when adopting the new standard.  ASU 2016-02, ASU 2018-10 and ASU 2018-11 are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We anticipate the adoption of these ASUs will have a material increase in the assets and liabilities of our consolidated balance sheets; however, we do not believe adoption will have a material effect on our results of operations. We believe the most significant effect relates to our accounting for operating leases for office space.  

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires the measurement and recognition of expected credit losses for financial instruments held at amortized cost. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the effect ASU 2016-13 will have on our consolidated financial statements.

 

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. 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 effect on our consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date.  ASU 2017-08 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 with early adoption permitted.  The amendments should be applied through a modified-retrospective transition approach that requires a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.  We are currently evaluating the effect of ASU 2017-08, but we do not expect it will have a material effect on our consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. ASU 2017-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect ASU 2017-12 will have on our consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Comprehensive Income. ASU 2018-02 allows for an optional reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. ASU 2018-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating whether to reclassify stranded tax effects related to the Tax Cuts and Jobs Act of 2017, but we do not expect ASU 2018-02 will have a material effect on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which changes the fair value measurement disclosure requirements of ASC 820, Fair Value Measurement. The amendments in this ASU are the result of a broader disclosure project called, Concepts Statement No. 8 - Conceptual Framework for Financial Reporting — Chapter 8, Notes to Financial Statements, which the FASB finalized on August 28, 2018. The FASB used the guidance in the Concepts Statement to improve the effectiveness of ASC 820’s disclosure requirements.  ASU 2018-13 provides users of financial statements with information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to the financial statements.  More specifically ASU 2018-13 requires disclosures about the valuation techniques and inputs that are used to arrive at measures of fair value, including judgments and assumptions that are made in determining fair value.  In addition, ASU 2018-13 requires disclosures regarding the uncertainty in the fair value measurements as of the reporting date and how changes in fair value measurements affect performance and cash flows.  ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the effect of ASU 2018-13, but we do not expect it will have a material effect on our financial statement disclosures.

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans, which makes changes to and clarifies the disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 requires additional disclosures related to the reasons for significant gains and losses affecting the benefit obligation and an explanation of any other significant changes in the benefit obligation or plan assets that are not otherwise apparent in other disclosures required by ASC 715.  ASU 2018-14 also clarifies the guidance in ASC 715 to require disclosure of the projected benefit obligation (PBO) and fair value of plan assets for pension plans with PBOs in excess of plan assets and the accumulated benefit obligation (ABO) and fair value of plan assets for pension plans with ABOs in excess of plan assets. ASU 2018-14 is effective for public business entities for fiscal years ending after December 15, 2020. We are currently evaluating the effect of ASU 2018-14, but we do not expect it will have a material effect on our financial statement disclosures.

 

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.  ASU 2018-15 clarifies certain aspects of ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.  Specifically, ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementations costs incurred to develop or obtain internal use software.  ASU 2018-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.  We are currently evaluating whether to early adopt, but we do not expect it will have a material effect on our consolidated financial statements.

During 2018, we adopted the following accounting standards, which had the following effects on our consolidated financial statements:

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), 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 and/or to correct unintended application of guidance. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. We adopted ASU 2014-09 and the related ASUs on January 1, 2018 using the modified retrospective method, which was applied to all contracts on the date of initial adoption.

These ASUs primarily affected our network implementation service revenue performance obligations and contract costs. We are using the “output method” to measure network implementation services progress, which 1) accelerates revenue recognition for certain performance obligations related to service revenue arrangements that were previously deferred until customer acceptance and 2) requires capitalization and amortization of the incremental costs of obtaining a contract as described below. 

 

In connection with the adoption of the new revenue standard, effective January 1, 2018, we adopted ASC 340-40, Other Assets and Deferred Costs – Contracts with Customers, with respect to capitalization and amortization of incremental costs of obtaining a contract. As a result, certain costs of obtaining a contract, including sales commissions, will be capitalized, as the guidance requires the capitalization of all incremental costs incurred to obtain a contract with a customer that it would not have incurred if the contract had not been obtained, provided the costs are recoverable. The primary effect was the capitalization of certain sales commissions for our extended maintenance and support contracts in excess of one year and amortization of those costs over the period that the related revenue is recognized.

The cumulative effect of the changes made to our Consolidated Balance Sheet on January 1, 2018 for the adoption of ASU 2014-09 and the related ASUs was as follows:

 

(In thousands)

 

Balance at December 31, 2017

 

 

Adjustments due to ASU 2014-09

 

 

Balance at January 1, 2018

 

Other receivables

 

$

26,578

 

 

$

374

 

 

$

26,952

 

Deferred tax assets, net

 

$

23,428

 

 

$

(96

)

 

$

23,332

 

Retained earnings

 

$

922,178

 

 

$

278

 

 

$

922,456

 

 

 

The effect of the adoption of ASU 2014-09 and the related ASUs on our financial statements was as follows:

 

 

 

For the three months ended September 30, 2018

 

(In thousands)

 

As Reported

 

 

Balances Without Adoption of ASC 606

 

 

Effect of Adoption of ASC 606

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

121,043

 

 

$

120,588

 

 

$

455

 

Services

 

$

19,292

 

 

$

17,932

 

 

$

1,360

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

69,943

 

 

$

69,754

 

 

$

189

 

Services

 

$

11,944

 

 

$

11,046

 

 

$

898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before benefit for income taxes

 

$

3,220

 

 

$

2,492

 

 

$

728

 

Benefit for income taxes

 

$

4,369

 

 

$

3,382

 

 

$

987

 

Net income

 

$

7,589

 

 

$

5,874

 

 

$

1,715

 

 

 

 

 

For the nine months ended September 30, 2018

 

(In thousands)

 

As Reported

 

 

Balances Without Adoption of ASC 606

 

 

Effect of Adoption of ASC 606

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

341,359

 

 

$

341,464

 

 

$

(105

)

Services

 

$

47,830

 

 

$

46,062

 

 

$

1,768

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

208,184

 

 

$

208,480

 

 

$

(296

)

Services

 

$

32,828

 

 

$

31,743

 

 

$

1,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before benefit for income taxes

 

$

(22,784

)

 

$

(23,658

)

 

$

874

 

Benefit for income taxes

 

$

11,889

 

 

$

10,938

 

 

$

951

 

Net loss

 

$

(10,895

)

 

$

(12,720

)

 

$

1,825

 

 

 

 

 

As of  September 30, 2018

 

(In thousands)

 

As Reported

 

 

Balances Without Adoption of ASC 606

 

 

Effect of Adoption of ASC 606

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Other receivables

 

$

30,084

 

 

$

27,917

 

 

$

2,167

 

Inventory

 

$

106,060

 

 

$

106,402

 

 

$

(342

)

Equity

 

 

 

 

 

 

 

 

 

 

 

 

Retained earnings

 

$

900,324

 

 

$

898,499

 

 

$

1,825

 

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. Subsequently, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which issued technical corrections and improvements intended to clarify certain aspects of ASU 2016-01. ASU 2016-01 was effective beginning January 1, 2018 and we now recognize any changes in the fair value of certain equity investments in net income as prescribed by the new standard rather than in other comprehensive income. We adopted ASU 2016-01 on January 1, 2018 using the modified retrospective method, which resulted in a $3.2 million reclassification of net unrealized gains from accumulated other comprehensive income to opening retained earnings. ASU 2018-03 is effective for us with the interim period beginning after June 15, 2018. See Note 7 of Notes to Consolidated Financial Statements for additional information.

 

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. 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. We adopted ASU 2017-07 on January 1, 2018. We retrospectively adopted the presentation of service cost separate from other components of net periodic pension costs. As a result, $0.1 million and $0.3 million have been reclassified from cost of sales, selling, general and administrative expenses, and research and development expense to other income (expense), net for the three and nine months ended September 30, 2017, respectively.  

v3.10.0.1
Business Combinations
9 Months Ended
Sep. 30, 2018
Business Combinations [Abstract]  
Business Combinations

2.  BUSINESS COMBINATIONS

 

On March 19, 2018, we acquired Sumitomo Electric Lightwave Corp.’s (SEL) North American EPON business and entered into a technology license and OEM supply agreement with Sumitomo Electric Industries, Ltd. (SEI). This acquisition establishes ADTRAN as the North American market leader for EPON solutions for the cable MSO industry and it will accelerate the MSO market’s adoption of our open, programmable and scalable architectures. 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 Access & Aggregation and Customer Devices categories within the Network Solutions reportable segment.

 

We recorded a bargain purchase gain of $11.3 million during the first quarter of 2018, net of income taxes, which is subject to customary working capital adjustments between the parties. The bargain purchase gain of $11.3 million represents the difference between the fair value of the net assets acquired over the cash paid. SEI, an OEM supplier based in Japan, is the global market leader in EPON. SEI’s Broadband Networks Division, through its SEL subsidiary, operated a North American EPON business that included sales, marketing, support, and region-specific engineering development. The North American EPON market is primarily driven by the Tier 1 cable MSO operators and has developed more slowly than anticipated. Through the transaction, SEI divested its North American EPON assets and established a relationship with ADTRAN. The transfer of these assets to ADTRAN, which included key customer relationships and a required assumption by ADTRAN of relatively low incremental expenses, along with the value of the technology license and OEM supply agreement, resulted in the bargain purchase gain. We have assessed the recognition and measurement of the assets acquired and liabilities assumed based on historical and forecasted data for future periods and we have concluded that our valuation procedures and resulting measures were appropriate.

 

The preliminary allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows:

 

(In thousands)

 

 

 

Assets

 

 

 

  Other receivables

$

104

 

  Inventory

 

510

 

  Property, plant and equipment

 

392

 

  Intangible assets

 

22,100

 

Total assets acquired

 

23,106

 

 

 

 

 

Liabilities

 

 

 

  Deferred income taxes

 

(3,978

)

Total liabilities assumed

 

(3,978

)

 

 

 

 

Total net assets

 

19,128

 

  Gain on bargain purchase of a business, net of tax

 

(11,322

)

Total purchase price

$

7,806

 

 

The actual revenue and net loss included in our Consolidated Statements of Income for the three months ended September 30, 2018 and the period March 19, 2018 to September 30, 2018 are as follows:

 

 

Three Months Ended

 

 

March 19, 2018 to

 

(In thousands)

September 30, 2018

 

 

September 30, 2018

 

Revenue

$

1,021

 

 

$

2,218

 

Net income (loss)

$

564

 

 

$

(322

)

 

The details of the acquired intangible assets are as follows:

 

(In thousands)

Value

 

 

Life (years)

 

Customer relationships

$

13,400

 

 

 

12.0

 

Licensed technology

 

5,900

 

 

 

9.0

 

Supplier relationship

 

2,800

 

 

 

2.0

 

Total

$

22,100

 

 

 

 

 

 

The following unaudited supplemental pro forma information presents the financial results as if the acquisition had occurred on January 1, 2017. 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, 2017, nor is it indicative of any future results. Aside from revising the 2017 and 2018 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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2017

 

 

2018

 

 

2017

 

Pro forma revenue

 

$

187,027

 

 

$

390,449

 

 

$

545,706

 

Pro forma net income (loss)

 

$

14,997

 

 

$

(23,431

)

 

$

43,826

 

Pro forma earnings per share - basic

 

$

0.31

 

 

$

(0.49

)

 

$

0.91

 

Pro forma earnings per share - diluted

 

$

0.31

 

 

$

(0.49

)

 

$

0.90

 

 

For the three and nine months ended September 30, 2018, we incurred acquisition and integration related expenses and amortization of acquired intangibles of $0.7 million and $1.6 million, respectively, related to this acquisition.

v3.10.0.1
Revenue
9 Months Ended
Sep. 30, 2018
Revenue From Contract With Customer [Abstract]  
Revenue

3. REVENUE

Revenue is measured based on the consideration we expect to receive in exchange for transferring goods or providing services to a customer and as performance obligations under the terms of the contract are satisfied. Generally, this occurs with the transfer of control of a product or service to the customer. For transactions where there are multiple performance obligations, we account for individual products and services separately if they are distinct (if a product or service is separately identifiable from other items and if a customer can benefit from it on its own or with other resources that are readily available to the customer). The consideration, including any discounts, is allocated between separate products and services based on their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which we sell the separate products and services and are allocated based on each item’s relative value to the total value of the products and services in the arrangement. For items that are not sold separately, we estimate stand-alone selling prices primarily using the “expected cost plus a margin” approach. Payment terms are typically 30 days. Shipping fees are recorded as revenue and the related cost is included in cost of sales. Sales, value-added, and other taxes collected concurrently with revenue-producing activities are excluded from revenue. Costs of obtaining a contract are capitalized and amortized over the period that the related revenue is recognized if greater than one year. We have elected to apply the practical expedient related to the incremental costs of obtaining contracts and recognize those costs as an expense when incurred if the amortization period of the assets is one year or less. These costs are included in selling, general and administrative expenses. Capitalized costs with an amortization period greater than one year were immaterial.

The following is a description of the principal activities from which we generate our revenue by reportable segment.

Network Solutions Segment

Network Solutions includes hardware products and next-generation virtualized solutions used in service provider or business networks, as well as prior generation products.

 

Hardware

The majority of the revenue from this segment is from hardware sales and is recognized when control is transferred to our customers, which is generally when we ship the products. Shipping terms are generally FOB shipping point. Revenue is recorded net of estimated discounts and rebates using historical trends. Customers are typically invoiced when control is transferred and revenue is recognized. Our products generally include assurance-based warranties of 90 days to five years for product defects, which are accrued at the time revenue is recognized.

In certain transactions, we are also the lessor in sales-type lease arrangements for network equipment that have terms of 18 months to five years. These arrangements typically include network equipment, network implementation services and maintenance services. Product revenue for these leases is generally recorded when we transfer control of the product to our customers. Revenue for network implementation and maintenance services is recognized as described below. Customers are typically invoiced and pay in equal installments over the lease term. In relation to these lease agreements, during the three months ended September 30, 2018 and 2017, we recognized revenue of $4.2 million and $8.4 million, respectively, and during the nine months ended September 30, 2018 and 2017 we recognized revenue of $10.5 million and $15.4 million, respectively.

Services & Support Segment

To complement our Network Solutions segment, we offer a complete portfolio of maintenance, network implementation, and solutions integration and managed services, which include hosted cloud services and subscription services.

Maintenance

Our maintenance service periods range from one month to five years. Customers are typically invoiced and pay for maintenance services at the beginning of the maintenance period. We recognize revenue for maintenance services on a straight-line basis over the maintenance period in services revenue as our customers benefit evenly throughout the contract term and deferred revenues are recorded in current and non-current unearned revenue.

Network Implementation

We recognize revenue for network implementation, which primarily consists of engineering, execution and enablement services, at a point in time when each performance obligation is complete. If we have recognized revenue, but have not billed the customer, the right to consideration is recognized as a contract asset that is included in other receivables in the Consolidated Balance Sheet. The contract asset is transferred to accounts receivable when the completed performance obligation is invoiced to the customer.

 

As of September 30, 2018, we did not have any significant performance obligations related to customer contracts that had an original expected duration of one year or more, other than maintenance services, which are satisfied over time.

 

The following table provides information about receivables, contract assets, and unearned revenue from contracts with customers:

 

(In thousands)

 

September 30, 2018

 

 

January 1, 2018

 

Accounts receivable

 

$

101,865

 

 

$

144,150

 

Contract assets

 

$

4,564

 

 

$

374

 

Unearned revenue

 

$

17,004

 

 

$

13,070

 

Non-current unearned revenue

 

$

3,846

 

 

$

4,556

 

 

The decrease in accounts receivable is due to the collection of customer specific payment terms that became due in the first quarter of 2018. The increase in the contract asset balance for the nine months ended September 30, 2018 is primarily attributable to revenue recognized that has not yet been billed to the customer during the period. The increase in the unearned revenue balance as of nine months ended September 30, 2018 is primarily attributable to cash payments received or due in advance of satisfying our performance obligations, offset by $8.9 million of revenues recognized that were included in the unearned revenue balance as of December 31, 2017.

 

 

The following table disaggregates our revenue by major source for the three months ended September 30, 2018:

 

(In thousands)

 

Network Solutions

 

 

Services & Support

 

 

Total

 

Access & Aggregation

 

$

76,046

 

 

$

15,855

 

 

$

91,901

 

Customer Devices

 

 

37,313

 

 

 

1,239

 

 

 

38,552

 

Traditional & Other Products

 

 

7,684

 

 

 

2,198

 

 

 

9,882

 

Total

 

$

121,043

 

 

$

19,292

 

 

$

140,335

 

 

The following table disaggregates our revenue by major source for the nine months ended September 30, 2018:

 

(In thousands)

 

Network Solutions

 

 

Services & Support

 

 

Total

 

Access & Aggregation

 

$

220,653

 

 

$

37,670

 

 

$

258,323

 

Customer Devices

 

 

99,396

 

 

 

3,817

 

 

 

103,213

 

Traditional & Other Products

 

 

21,310

 

 

 

6,343

 

 

 

27,653

 

Total

 

$

341,359

 

 

$

47,830

 

 

$

389,189

 

 

v3.10.0.1
Income Taxes
9 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

4. INCOME TAXES

Our effective tax rate decreased from an expense of 23.1% in the nine months ended September 30, 2017, to a benefit of 34.9%, excluding the tax effect of the bargain purchase gain, in the nine months ended September 30, 2018. The decrease in the effective tax rate between the two periods is primarily driven by the completion of other tax projects, current year net losses in our domestic business and the effect of the U.S. Tax Cuts and Jobs Act, which was signed into law on December 22, 2017.

v3.10.0.1
Pension Benefit Plan
9 Months Ended
Sep. 30, 2018
Compensation And Retirement Disclosure [Abstract]  
Pension Benefit Plan

 

5. 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 nine months ended September 30, 2018 and 2017:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Service cost

 

$

294

 

 

$

327

 

 

$

905

 

 

$

930

 

Interest cost

 

 

179

 

 

 

158

 

 

 

551

 

 

 

448

 

Expected return on plan assets

 

 

(381

)

 

 

(329

)

 

 

(1,174

)

 

 

(935

)

Amortization of actuarial losses

 

 

61

 

 

 

80

 

 

 

188

 

 

 

228

 

Net periodic pension cost

 

$

153

 

 

$

236

 

 

$

470

 

 

$

671

 

 

The components of net periodic pension cost other than the service cost component are included in the line item “Other income (expense), net” in the Consolidated Statements of Income.

 

v3.10.0.1
Stock-Based Compensation
9 Months Ended
Sep. 30, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

6. 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 nine months ended September 30, 2018 and 2017, which was recognized as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Stock-based compensation expense included in cost of sales

 

$

101

 

 

$

97

 

 

$

298

 

 

$

281

 

Selling, general and administrative expense

 

 

894

 

 

 

994

 

 

 

2,924

 

 

 

3,018

 

Research and development expense

 

 

645

 

 

 

743

 

 

 

2,021

 

 

 

2,274

 

Stock-based compensation expense included in operating expenses

 

 

1,539

 

 

 

1,737

 

 

 

4,945

 

 

 

5,292

 

Total stock-based compensation expense

 

 

1,640

 

 

 

1,834

 

 

 

5,243

 

 

 

5,573

 

Tax benefit for expense associated with non-qualified options, PSUs, RSUs and restricted stock

 

 

(292

)

 

 

(402

)

 

 

(1,016

)

 

 

(1,215

)

Total stock-based compensation expense, net of tax

 

$

1,348

 

 

$

1,432

 

 

$

4,227

 

 

$

4,358

 

 

Stock Options

The following table is a summary of our stock options outstanding as of December 31, 2017 and September 30, 2018 and the changes that occurred during the nine months ended September 30, 2018:

 

(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, 2017

 

 

5,148

 

 

$

22.65

 

 

 

4.87

 

 

$

6,109

 

Stock options granted

 

 

 

 

$

 

 

 

 

 

 

 

 

 

Stock options exercised

 

 

(85

)

 

$

15.48

 

 

 

 

 

 

 

 

 

Stock options forfeited

 

 

(71

)

 

$

16.50

 

 

 

 

 

 

 

 

 

Stock options expired

 

 

(331

)

 

$

25.87

 

 

 

 

 

 

 

 

 

Stock options outstanding, September 30, 2018

 

 

4,661

 

 

$

22.64

 

 

 

4.12

 

 

$

2,730

 

Stock options vested and expected to vest, September 30, 2018

 

 

4,661

 

 

$

22.64

 

 

 

4.12

 

 

$

2,730

 

Stock options exercisable, September 30, 2018

 

 

3,952

 

 

$

23.75

 

 

 

3.63

 

 

$

1,600

 

 

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 September 30, 2018. 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 nine months ended September 30, 2018 was $0.1 million and $0.2 million, respectively.  

As of September 30, 2018, there was $1.2 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over an average remaining recognition period of 1.0 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 and nine months ended September 30, 2018 or 2017.

 

 PSUs, RSUs and restricted stock

 

The following table is a summary of our PSUs, RSUs and restricted stock outstanding as of December 31, 2017 and the changes that occurred during the nine months ended September 30, 2018:

 

(In thousands, except per share amounts)

 

Number of

Shares

 

 

Weighted Avg. Grant Date Fair Value

 

Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2017

 

 

1,292

 

 

$

21.33

 

PSUs, RSUs and restricted stock granted

 

 

22

 

 

$

17.84

 

PSUs, RSUs and restricted stock vested

 

 

(14

)

 

$

20.19

 

PSUs, RSUs and restricted stock forfeited

 

 

(165

)

 

$

21.66

 

Unvested PSUs, RSUs and restricted stock outstanding, September 30, 2018

 

 

1,135

 

 

$

21.23

 

 

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 September 30, 2018, there was $9.8 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 2.6 years. In addition, there was $9.4 million of unrecognized compensation expense related to unvested performance-based PSUs, which will be recognized over the requisite service period of three years as the achievement of the performance objective becomes probable. For the three and nine months ended September 30, 2018, no compensation expense was recognized related to these performance-based PSU awards.

v3.10.0.1
Investments
9 Months Ended
Sep. 30, 2018
Investments Debt And Equity Securities [Abstract]  
Investments

 

7. INVESTMENTS

Debt Securities and Other Investments

At September 30, 2018, we held the following debt securities and other investments, recorded at either fair value or cost:

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Corporate bonds

 

$

25,758

 

 

$

13

 

 

$

(209

)

 

$

25,562

 

Municipal fixed-rate bonds

 

 

1,451

 

 

 

 

 

 

(36

)

 

 

1,415

 

Asset-backed bonds

 

 

8,384

 

 

 

 

 

 

(29

)

 

 

8,355

 

Mortgage/Agency-backed bonds

 

 

5,450

 

 

 

 

 

 

(87

)

 

 

5,363

 

U.S. government bonds

 

 

19,957

 

 

 

 

 

 

(184

)

 

 

19,773

 

Foreign government bonds

 

 

593

 

 

 

2

 

 

 

 

 

 

595

 

Available-for-sale debt securities held at fair value

 

$

61,593

 

 

$

15

 

 

$

(545

)

 

$

61,063

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,700

 

Other investments held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

520

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

88,283

 

 

At December 31, 2017, we held the following debt securities and other investments, recorded at either fair value or cost:

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Corporate bonds

 

$

32,654

 

 

$

44

 

 

$

(155

)

 

$

32,543

 

Municipal fixed-rate bonds

 

 

2,902

 

 

 

2

 

 

 

(22

)

 

 

2,882

 

Asset-backed bonds

 

 

6,545

 

 

 

1

 

 

 

(20

)

 

 

6,526

 

Mortgage/Agency-backed bonds

 

 

5,554

 

 

 

1

 

 

 

(46

)

 

 

5,509

 

U.S. government bonds

 

 

14,477

 

 

 

 

 

 

(174

)

 

 

14,303

 

Foreign government bonds

 

 

725

 

 

 

5

 

 

 

 

 

 

730

 

Available-for-sale debt securities held at fair value

 

$

62,857

 

 

$

53

 

 

$

(417

)

 

$

62,493

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,800

 

Other investments held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

547

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

90,840

 

 

As of September 30, 2018 our debt securities 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

 

$

2,800

 

 

$

 

 

$

3,112

 

 

$

 

 

$

 

 

$

 

One to two years

 

 

10,122

 

 

 

287

 

 

 

657

 

 

 

 

 

 

11,716

 

 

 

285

 

Two to three years

 

 

9,898

 

 

 

1,128

 

 

 

714

 

 

 

425

 

 

 

5,565

 

 

 

310

 

Three to five years

 

 

2,742

 

 

 

 

 

 

2,244

 

 

 

1,561

 

 

 

2,492

 

 

 

 

Five to ten years

 

 

 

 

 

 

 

 

445

 

 

 

525

 

 

 

 

 

 

 

More than ten years

 

 

 

 

 

 

 

 

1,183

 

 

 

2,852

 

 

 

 

 

 

 

Total

 

$

25,562

 

 

$

1,415

 

 

$

8,355

 

 

$

5,363

 

 

$

19,773

 

 

$

595

 

 

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.

 

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

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Gross realized gains on debt securities

 

$

24

 

 

$

91

 

 

$

49

 

 

$

148

 

Gross realized losses on debt securities

 

 

(50

)

 

 

(28

)

 

 

(365

)

 

 

(179

)

Total gain (loss) recognized, net

 

$

(26

)

 

$

63

 

 

$

(316

)

 

$

(31

)

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 September 30, 2018, we held a $26.7 million restricted certificate of deposit that 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 $26.7 million at September 30, 2018 and December 31, 2017. At September 30, 2018 and December 31, 2017, the estimated fair value of the Bond using a level 2 valuation technique was approximately $26.5 million and $26.7 million, respectively, 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.

 

Marketable Equity Securities

 

Our marketable equity securities consist of publicly traded stocks or funds measured at fair value.

 

Prior to January 1, 2018, our marketable equity securities were classified as available-for-sale. Realized gains and losses on marketable equity securities were included in net investment gain (loss). Unrealized gains and losses were recognized in accumulated other comprehensive income, net of deferred taxes, on the balance sheet.

 

On January 1, 2018, we adopted ASU 2016-01, which requires us to measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value, with any changes in fair value recognized in net investment gain (loss). Upon adoption, we reclassified $3.2 million of net unrealized gains related to marketable equity securities from accumulated other comprehensive income (loss) to opening retained earnings.

 

Realized and unrealized gains and losses for our marketable equity securities for the three and nine months ended September 30, 2018 were as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2018

 

Realized gains (losses) on equity securities sold

 

$

1,240

 

 

$

1,587

 

Unrealized gains (losses) on equity securities held

 

 

3,293

 

 

 

4,129

 

Total gain (loss) recognized, net

 

$

4,533

 

 

$

5,716

 

 

As of September 30, 2018 and 2017, gross unrealized losses related to individual investments in a continuous loss position for twelve months or longer were not significant.

 

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

 

 

 

Fair Value Measurements at September 30, 2018 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Market for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

1,423

 

 

$

1,423

 

 

$

 

 

$

 

Foreign government securities

 

 

600

 

 

 

 

 

 

600

 

 

 

 

Cash equivalents

 

 

2,023

 

 

 

1,423

 

 

 

600

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

25,562

 

 

 

 

 

 

25,562

 

 

 

 

Municipal fixed-rate bonds

 

 

1,415

 

 

 

 

 

 

1,415

 

 

 

 

Asset-backed bonds

 

 

8,355

 

 

 

 

 

 

8,355

 

 

 

 

Mortgage/Agency-backed bonds

 

 

5,363

 

 

 

 

 

 

5,363

 

 

 

 

U.S. government bonds

 

 

19,773

 

 

 

19,773

 

 

 

 

 

 

 

Foreign government bonds

 

 

595

 

 

 

 

 

 

595

 

 

 

 

Marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – various industries

 

 

40,645

 

 

 

40,645

 

 

 

 

 

 

 

Equity in escrow

 

 

277

 

 

 

277

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

20,948

 

 

 

20,948

 

 

 

 

 

 

 

Available-for-sale securities

 

 

122,933

 

 

 

81,643

 

 

 

41,290

 

 

 

 

Total

 

$

124,956

 

 

$

83,066

 

 

$

41,890

 

 

$

 

 

 

 

 

Fair Value Measurements at December 31, 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

 

$

5,851

 

 

$

5,851

 

 

$

 

 

$

 

Commercial paper

 

 

3,999

 

 

 

 

 

 

3,999

 

 

 

 

Cash equivalents

 

 

9,850

 

 

 

5,851

 

 

 

3,999

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

32,543

 

 

 

 

 

 

32,543

 

 

 

 

Municipal fixed-rate bonds

 

 

2,882

 

 

 

 

 

 

2,882

 

 

 

 

Asset-backed bonds

 

 

6,526

 

 

 

 

 

 

6,526

 

 

 

 

Mortgage/Agency-backed bonds

 

 

5,509

 

 

 

 

 

 

5,509

 

 

 

 

U.S. government bonds

 

 

14,303

 

 

 

14,303

 

 

 

 

 

 

 

Foreign government bonds

 

 

730

 

 

 

 

 

 

730

 

 

 

 

Marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – various industries

 

 

35,662

 

 

 

35,662

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

19,883

 

 

 

19,883

 

 

 

 

 

 

 

Available-for-sale securities

 

 

118,038

 

 

 

69,848

 

 

 

48,190

 

 

 

 

Total

 

$

127,888

 

 

$

75,699

 

 

$

52,189

 

 

$

 

 

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.

v3.10.0.1
Derivative Instruments and Hedging Activities
9 Months Ended
Sep. 30, 2018
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities

8. 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 cost of sales, the same line item of the Consolidated Statements of Income at which the effects of the hedged item are recorded.

 

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), net in the Consolidated Statements of Income.

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.

As of September 30, 2018, we had no foreign exchange forward contracts.

 

The changes in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the three and nine months ended September 30, 2018 and 2017 were as follows:

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

Income Statement

 

September 30,

 

 

September 30,

 

(In thousands)

 

Location

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Derivatives Not Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other income (expense), net

 

$

 

 

$

(334

)

 

$

13

 

 

$

(819

)

 

The changes in our derivatives designated as hedging instruments recorded in other comprehensive income (OCI) and reclassified to income, net of tax, during the three and nine months ended September 30, 2018 and 2017, were as follows:

 

 

 

Amount of Gains (Losses) Recognized in

 

 

 

 

Amount of Gains (Losses) Reclassified

 

 

 

OCI on Derivatives

 

 

 

 

from AOCI into Income

 

 

 

 

 

 

Location of Gains

 

 

 

 

 

Three Months Ended September 30,

 

 

(Losses) Reclassified

 

Three Months Ended September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

from AOCI into Income

 

2018

 

 

2017

 

Derivatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

 

 

$

(127

)

 

Cost of Sales

 

$

 

 

$

(269

)

 

 

 

 

Amount of Gains (Losses) Recognized in

 

 

 

 

Amount of Gains (Losses) Reclassified

 

 

 

OCI on Derivatives

 

 

 

 

from AOCI into Income

 

 

 

 

 

 

Location of Gains

 

 

 

 

 

Nine Months Ended September 30,

 

 

(Losses) Reclassified

 

Nine Months Ended September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

from AOCI into Income

 

2018

 

 

2017

 

Derivatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

 

 

$

(619

)

 

Cost of Sales

 

$

 

 

$

(423

)

 

v3.10.0.1
Inventory
9 Months Ended
Sep. 30, 2018
Inventory Disclosure [Abstract]  
Inventory

9. INVENTORY

At September 30, 2018 and December 31, 2017, inventory consisted of the following:

 

 

 

September 30,

 

 

December 31,

 

(In thousands)

 

2018

 

 

2017

 

Raw materials

 

$

47,664

 

 

$

44,185

 

Work in process

 

 

1,289

 

 

 

1,939

 

Finished goods

 

 

57,107

 

 

 

76,418

 

Total

 

$

106,060

 

 

$

122,542

 

 

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 September 30, 2018 and December 31, 2017, raw materials reserves totaled $17.2 million and $15.0 million, respectively, and finished goods inventory reserves totaled $10.6 million and $8.3 million, respectively.

 

v3.10.0.1
Goodwill and Intangible Assets
9 Months Ended
Sep. 30, 2018
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets

10. GOODWILL AND INTANGIBLE ASSETS

Goodwill, all of which relates to our acquisition of Bluesocket, Inc., was $3.5 million at September 30, 2018 and December 31, 2017, 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 2017, 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, CommScope’s active fiber access business on September 13, 2016 and Sumitomo Electric Lightwave Corp.’s North American EPON business and technology license and OEM supply agreement with Sumitomo Electric Industries, Ltd. on March 19, 2018.

The following table presents our intangible assets as of September 30, 2018 and December 31, 2017. Fully amortized intangible assets have been removed from prior year balances for comparability.

 

(In thousands)

 

September 30, 2018

 

 

December 31, 2017

 

 

 

Gross

Value

 

 

Accumulated Amortization

 

 

Net Value

 

 

Gross

Value

 

 

Accumulated Amortization

 

 

Net Value

 

Customer relationships

 

$

20,724

 

 

$

(5,072

)

 

$

15,652

 

 

$

7,474

 

 

$

(4,283

)

 

$

3,191

 

Licensed technology

 

 

5,900

 

 

 

(355

)

 

 

5,545

 

 

 

 

 

 

 

 

 

 

Developed technology

 

 

5,435

 

 

 

(4,799

)

 

 

636

 

 

 

5,524

 

 

 

(4,663

)

 

 

861

 

Supplier relationship

 

 

2,800

 

 

 

(758

)

 

 

2,042

 

 

 

 

 

 

 

 

 

 

Intellectual property

 

 

930

 

 

 

(930

)

 

 

 

 

 

930

 

 

 

(852

)

 

 

78

 

Patent

 

 

500

 

 

 

(140

)

 

 

360

 

 

 

500

 

 

 

(89

)

 

 

411

 

Non-compete

 

 

200

 

 

 

(181

)

 

 

19

 

 

 

200

 

 

 

(115

)

 

 

85

 

Trade names

 

 

100

 

 

 

(100

)

 

 

 

 

 

100

 

 

 

(65

)

 

 

35

 

Total

 

$

36,589

 

 

$

(12,335

)

 

$

24,254

 

 

$

14,728

 

 

$

(10,067

)

 

$

4,661

 

 

Amortization expense, all of which relates to business acquisitions, was $0.9 million and $0.5 million for the three months ended September 30, 2018 and 2017, respectively, and $2.4 million for the nine months ended September 30, 2018 and 2017.

As of September 30, 2018, the estimated future amortization expense of our intangible assets is as follows:

 

(In thousands)

 

Amount

 

Remainder of 2018

 

$

859

 

2019

 

 

3,540

 

2020

 

 

2,657

 

2021

 

 

2,364

 

2022

 

 

2,350

 

Thereafter

 

 

12,484

 

Total

 

$

24,254

 

 

v3.10.0.1
Stockholders' Equity
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
Stockholders' Equity

11. STOCKHOLDERS’ EQUITY

A summary of the changes in stockholders’ equity for the nine months ended September 30, 2018 is as follows:

 

(In thousands)

 

Stockholders’ Equity

 

Balance, December 31, 2017

 

$

497,911

 

Net income (loss)

 

 

(10,895

)

Dividend payments

 

 

(12,976

)

Dividends accrued for unvested restricted stock units

 

 

(15

)

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

 

 

(3,340

)

Defined benefit plan adjustments (net of tax)

 

 

104

 

Foreign currency translation adjustment

 

 

(3,033

)

Proceeds from stock option exercises

 

 

1,321

 

Purchase of treasury stock

 

 

(14,185

)

Adoption of new accounting standards (see Note 1)

 

 

3,499

 

Stock-based compensation expense

 

 

5,243

 

RSU's and restricted stock vested

 

 

(33

)

Balance, September 30, 2018

 

$

463,601

 

 

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 that are implemented through open market or private purchases from time to time as conditions warrant. During the nine months ended September 30, 2018, we repurchased 0.9 million shares of our common stock at an average price of $15.75 per share. As of September 30, 2018, we have the authority to purchase an additional 2.7 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 nine months ended September 30, 2018 to accommodate employee stock option exercises. The stock options had exercise prices ranging from $15.29 to $18.97. We received proceeds totaling $1.3 million from the exercise of these stock options during the nine months ended September 30, 2018.

Dividend Payments

During the nine months ended September 30, 2018, we paid cash dividends as follows (in thousands except per share amounts):

 

Record Date

 

Payment Date

 

Per Share Amount

 

 

Total Dividend Paid

 

January 31, 2018

 

February 14, 2018

 

$

0.09

 

 

$

4,367

 

May 2, 2018

 

May 16, 2018

 

$

0.09

 

 

$

4,312

 

August 1, 2018

 

August 15, 2018

 

$

0.09

 

 

$

4,297

 

 

 

Other Comprehensive Income

Other comprehensive income consists of unrealized gains (losses) on available-for-sale debt securities; unrealized gains (losses) on cash flow hedges; reclassification adjustments for amounts included in net income related to impairments of available-for-sale debt securities, realized gains (losses) on available-for-sale debt 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 (loss), net of tax, by component for the three months ended September 30, 2018 and 2017:

 

 

 

Three Months Ended September 30, 2018

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

(741

)

 

$

(4,219

)

 

$

(4,158

)

 

$

(9,118

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,208

 

 

 

 

 

 

(451

)

 

 

757

 

Amounts reclassified from accumulated other

   comprehensive income (loss)

 

 

(1,240

)

 

 

37

 

 

 

 

 

 

(1,203

)

Net current period other comprehensive income (loss)

 

 

(32

)

 

 

37

 

 

 

(451

)

 

 

(446

)

Ending balance

 

$

(773

)

 

$

(4,182

)

 

$

(4,609

)

 

$

(9,564

)

 

 

 

Three Months Ended September 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

 

$

2,112

 

 

$

(338

)

 

$

(4,876

)

 

$

(3,714

)

 

$

(6,816

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,420

 

 

 

(127

)

 

 

 

 

 

1,541

 

 

 

2,834

 

Amounts reclassified from accumulated other

   comprehensive income (loss)

 

 

(616

)

 

 

269

 

 

 

73

 

 

 

 

 

 

(274

)

Net current period other comprehensive income (loss)

 

 

804

 

 

 

142

 

 

 

73

 

 

 

1,541

 

 

 

2,560

 

Ending balance

 

$

2,916

 

 

$

(196

)

 

$

(4,803

)

 

$

(2,173

)

 

$

(4,256

)

 

 

The following tables present the changes in accumulated other comprehensive income (loss), net of tax, by component for the nine months ended September 30, 2018 and 2017:

 

 

 

Nine Months Ended September 30, 2018

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

2,567

 

 

$

(4,286

)

 

$

(1,576

)

 

$

(3,295

)

Other comprehensive income (loss) before

   reclassifications

 

 

869

 

 

 

 

 

 

(3,033

)

 

 

(2,164

)

Amounts reclassified from accumulated other

   comprehensive income (loss)

 

 

(989

)

 

 

104

 

 

 

 

 

 

(885

)

Amounts reclassified to retained earnings (1)

 

 

(3,220

)

 

 

 

 

 

 

 

 

(3,220

)

Net current period other comprehensive income (loss)

 

 

(3,340

)

 

 

104

 

 

 

(3,033

)

 

 

(6,269

)

Ending balance

 

$

(773

)

 

$

(4,182

)

 

$

(4,609

)

 

$

(9,564

)

 

 

(1)

With the adoption of ASU 2016-01, the unrealized gains on our equity investments were reclassified to retained earnings. See Note 1 for more information.

 

 

 

Nine Months Ended September 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

 

 

4,262

 

 

 

(619

)

 

 

 

 

 

5,402

 

 

 

9,045

 

Amounts reclassified from accumulated other

   comprehensive income (loss)

 

 

(1,750

)

 

 

423

 

 

 

214

 

 

 

 

 

 

(1,113

)

Net current period other comprehensive income (loss)

 

 

2,512

 

 

 

(196

)

 

 

214

 

 

 

5,402

 

 

 

7,932

 

Ending balance

 

$

2,916

 

 

$

(196

)

 

$

(4,803

)

 

$

(2,173

)

 

$

(4,256

)

 

 

The following tables present the details of reclassifications out of accumulated other comprehensive income (loss) for the three months ended September 30, 2018 and 2017:

 

(In thousands)

 

Three Months Ended September 30, 2018

Details about Accumulated Other Comprehensive Income (Loss) Components

 

Amount

Reclassified

from

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Affected Line Item in the

Statement Where Net

Income Is Presented

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

 

 

 

 

 

 

Net realized gain (loss) on sales of securities

 

$

1,676

 

 

Net investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(54

)

 

(1)

Total reclassifications for the period, before tax

 

 

1,622

 

 

 

Tax (expense) benefit

 

 

(419

)

 

 

Total reclassifications for the period, net of tax

 

$

1,203

 

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

Three Months Ended September 30, 2017

Details about Accumulated Other Comprehensive Income (Loss) Components

 

Amount

Reclassified

from

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Affected Line Item in the

Statement Where Net

Income Is Presented

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

 

 

 

 

 

 

Net realized gain (loss) on sales of securities

 

$

1,066

 

 

Net investment gain

Impairment expense

 

 

(57

)

 

Net investment gain

Net losses on derivatives designated as hedging instruments

 

 

(385

)

 

Cost of sales

Defined benefit plan adjustments – actuarial losses

 

 

(106

)

 

(1)

Total reclassifications for the period, before tax

 

 

518

 

 

 

Tax (expense) benefit

 

 

(244

)

 

 

Total reclassifications for the period, net of tax

 

$

274

 

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

 


 

The following tables present the details of reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2018 and 2017:

 

(In thousands)

 

Nine Months Ended September 30, 2018

Details about Accumulated Other Comprehensive Income (Loss) Components

 

Amount

Reclassified

from

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Affected Line Item in the

Statement Where Net

Income Is Presented

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

 

 

 

 

 

 

Net realized gain (loss) on sales of securities

 

$

1,352

 

 

Net investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(151

)

 

(1)

Total reclassifications for the period, before tax

 

 

1,201

 

 

 

Tax (expense) benefit

 

 

(316

)

 

 

Total reclassifications for the period, net of tax

 

$

885

 

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

Nine Months Ended September 30, 2017

Details about Accumulated Other Comprehensive Income (Loss) Components

 

Amount

Reclassified

from

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Affected Line Item in the

Statement Where Net

Income Is Presented

Unrealized gains (losses) on available-for-

   sale securities:

 

 

 

 

 

 

Net realized gain (loss) on sales of securities

 

$

3,031

 

 

Net investment gain

Impairment expense

 

 

(162

)

 

Net investment gain

Net losses on derivatives designated as hedging instruments

 

 

(539

)

 

Cost of sales

Defined benefit plan adjustments – actuarial losses

 

 

(310

)

 

(1)

Total reclassifications for the period, before tax

 

 

2,020

 

 

 

Tax (expense) benefit

 

 

(907

)

 

 

Total reclassifications for the period, net

   of tax

 

$

1,113

 

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

 

 

The following table presents the tax effects related to the change in each component of other comprehensive income (loss) for the three months ended September 30, 2018 and 2017: 

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

(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

 

$

1,632

 

 

$

(424

)

 

$

1,208

 

 

$

2,328

 

 

$

(908

)

 

$

1,420

 

Unrealized gains (losses) on cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

(184

)

 

 

57

 

 

 

(127

)

Reclassification adjustment for amounts related to

   available-for-sale investments included in net

   income

 

 

(1,676

)

 

 

436

 

 

 

(1,240

)

 

 

(1,009

)

 

 

393

 

 

 

(616

)

Reclassification adjustment for amounts related to

   cash flow hedges included in net income

 

 

 

 

 

 

 

 

 

 

 

385

 

 

 

(116

)

 

 

269

 

Reclassification adjustment for amounts related to

   defined benefit plan adjustments included in net

   income

 

 

54

 

 

 

(17

)

 

 

37

 

 

 

106

 

 

 

(33

)

 

 

73

 

Foreign currency translation adjustment

 

 

(451

)

 

 

 

 

 

(451

)

 

 

1,541

 

 

 

 

 

 

1,541

 

Total Other Comprehensive Income (Loss)

 

$

(441

)

 

$

(5

)

 

$

(446

)

 

$

3,167

 

 

$

(607

)

 

$

2,560

 

 

The following table presents the tax effects related to the change in each component of other comprehensive income for the nine months ended September 30, 2018 and 2017:

 

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

(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

 

$

1,174

 

 

$

(305

)

 

$

869

 

 

$

6,987

 

 

$

(2,725

)

 

$

4,262

 

Unrealized gains (losses) on cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

(897

)

 

 

278

 

 

 

(619

)

Reclassification adjustment for amounts related to

   available-for-sale investments included in net

   income

 

 

(1,352

)

 

 

363

 

 

 

(989

)

 

 

(2,869

)

 

 

1,119

 

 

 

(1,750

)

Reclassification adjustment for amounts reclassed

   to retained earnings related to the adoption of

   ASU 2016-01

 

 

(3,220

)

 

 

 

 

 

(3,220

)

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   cash flow hedges included in net income

 

 

 

 

 

 

 

 

 

 

 

539

 

 

 

(116

)

 

 

423

 

Reclassification adjustment for amounts related to

   defined benefit plan adjustments included in net

   income

 

 

151

 

 

 

(47

)

 

 

104

 

 

 

310

 

 

 

(96

)

 

 

214

 

Foreign currency translation adjustment

 

 

(3,033

)

 

 

 

 

 

(3,033

)

 

 

5,402

 

 

 

 

 

 

5,402

 

Total Other Comprehensive Income (Loss)

 

$

(6,280

)

 

$

11

 

 

$

(6,269

)

 

$

9,472

 

 

$

(1,540

)

 

$

7,932

 

v3.10.0.1
Earnings Per Share
9 Months Ended
Sep. 30, 2018
Earnings Per Share [Abstract]  
Earnings Per Share

12. EARNINGS PER SHARE

A summary of the calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 is as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands, except per share amounts)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

7,589

 

 

$

15,898

 

 

$

(10,895

)

 

$

34,950

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares – basic

 

 

47,710

 

 

 

47,870

 

 

 

47,927

 

 

 

48,110

 

Effect of dilutive securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

27

 

 

 

487

 

 

 

 

 

 

385

 

PSUs, RSUs and restricted stock

 

 

97

 

 

 

174

 

 

 

 

 

 

123

 

Weighted average number of shares – diluted

 

 

47,834

 

 

 

48,531

 

 

 

47,927

 

 

 

48,618

 

Net income (loss) per share – basic

 

$

0.16

 

 

$

0.33

 

 

$

(0.23

)

 

$

0.73

 

Net income (loss) per share – diluted

 

$

0.16

 

 

$

0.33

 

 

$

(0.23

)

 

$

0.72

 

 

Anti-dilutive options to purchase common stock outstanding were excluded from the above calculations. Anti-dilutive options totaled 3.9 million and 3.2 million for the three months ended September 30, 2018 and 2017, respectively, and 4.8 million and 3.9 million for the nine months ended September 30, 2018 and 2017.  As a result of the net loss for the nine months ended September 30, 2018, we excluded 0.1 million of unvested stock options, PSUs, RSUs and restricted stock from the calculation of diluted EPS due to their anti-dilutive effect.

v3.10.0.1
Segment Information
9 Months Ended
Sep. 30, 2018
Segment Reporting [Abstract]  
Segment Information

13. 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 investment gain, 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 nine months ended September 30, 2018 and 2017. We do not produce asset information by reportable segment; therefore, it is not reported.

 

 

 

Three Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

(In thousands)

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

121,043

 

 

$

51,100

 

 

$

145,467

 

 

$

71,933

 

Services & Support

 

 

19,292

 

 

 

7,348

 

 

 

39,645

 

 

 

14,558

 

Total

 

$

140,335

 

 

$

58,448

 

 

$

185,112

 

 

$

86,491

 

 

 

 

Nine Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

(In thousands)

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

341,359

 

 

$

133,175

 

 

$

444,607

 

 

$

214,746

 

Services & Support

 

 

47,830

 

 

 

15,002

 

 

 

95,457

 

 

 

30,080

 

Total

 

$

389,189

 

 

$

148,177

 

 

$

540,064

 

 

$

244,826

 

 

 

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 nine months ended September 30, 2018 and 2017:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Access & Aggregation

 

$

91,901

 

 

$

135,959

 

 

$

258,323

 

 

$

394,741

 

Customer Devices

 

 

38,552

 

 

 

35,582

 

 

 

103,213

 

 

 

105,683

 

Traditional & Other Products

 

 

9,882

 

 

 

13,571

 

 

 

27,653

 

 

 

39,640

 

Total

 

$

140,335

 

 

$

185,112

 

 

$

389,189

 

 

$

540,064

 

 

v3.10.0.1
Liability for Warranty Returns
9 Months Ended
Sep. 30, 2018
Product Warranties Disclosures [Abstract]  
Liability for Warranty Returns

14. 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 $9.0 million and $9.7 million at September 30, 2018 and December 31, 2017. 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.  During the three months ended September 30, 2018, we had a reversal of prior provisions, 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 nine months ended September 30, 2018 and 2017 is as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Balance at beginning of period

 

$

10,111

 

 

$

9,180

 

 

$

9,724

 

 

$

8,548

 

Plus: Amounts charged to cost and expenses

 

 

(34

)

 

 

4,087

 

 

 

6,649

 

 

 

6,401

 

Less: Deductions

 

 

(1,053

)

 

 

(2,328

)

 

 

(7,349

)

 

 

(4,010

)

Balance at end of period

 

$

9,024

 

 

$

10,939

 

 

$

9,024

 

 

$

10,939

 

 

v3.10.0.1
Commitments and Contingencies
9 Months Ended
Sep. 30, 2018
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

15. 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 September 30, 2018, of which $7.7 million has been applied to these commitments.

v3.10.0.1
Subsequent Events
9 Months Ended
Sep. 30, 2018
Subsequent Events [Abstract]  
Subsequent Events

16. SUBSEQUENT EVENTS

On October 16, 2018, 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 October 31, 2018. The payment date will be November 14, 2018. 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.

During the 4th quarter and as of November 6, 2018, we have repurchased 0.1 million shares of our common stock through open market purchases at an average cost of $13.60 per share.  We currently have the authority to purchase an additional 2.6 million shares of our common stock under the current plan approved by the Board of Directors.

 

 

v3.10.0.1
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Basis of Presentation

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, 2017 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, 2017, filed on February 23, 2018 with the SEC.

Use of Estimates

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

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). 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. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, which clarified certain aspects of ASU 2016-02, as well as, ASU 2018-11, Leases (Topic 842), Targeted Improvements, which provides for an optional transition method that allows for the application of current legacy guidance, including its disclosure requirements, in the comparative periods presented in the year of adoption.  Otherwise, Topic 842 must be adopted by a modified retrospective method, with elective reliefs, which requires application of the new guidance for all periods presented.   The Company plans to use the optional transition method when adopting the new standard.  ASU 2016-02, ASU 2018-10 and ASU 2018-11 are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We anticipate the adoption of these ASUs will have a material increase in the assets and liabilities of our consolidated balance sheets; however, we do not believe adoption will have a material effect on our results of operations. We believe the most significant effect relates to our accounting for operating leases for office space.  

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires the measurement and recognition of expected credit losses for financial instruments held at amortized cost. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the effect ASU 2016-13 will have on our consolidated financial statements.

 

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. 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 effect on our consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date.  ASU 2017-08 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018 with early adoption permitted.  The amendments should be applied through a modified-retrospective transition approach that requires a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption.  We are currently evaluating the effect of ASU 2017-08, but we do not expect it will have a material effect on our consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. ASU 2017-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect ASU 2017-12 will have on our consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Comprehensive Income. ASU 2018-02 allows for an optional reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. ASU 2018-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating whether to reclassify stranded tax effects related to the Tax Cuts and Jobs Act of 2017, but we do not expect ASU 2018-02 will have a material effect on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which changes the fair value measurement disclosure requirements of ASC 820, Fair Value Measurement. The amendments in this ASU are the result of a broader disclosure project called, Concepts Statement No. 8 - Conceptual Framework for Financial Reporting — Chapter 8, Notes to Financial Statements, which the FASB finalized on August 28, 2018. The FASB used the guidance in the Concepts Statement to improve the effectiveness of ASC 820’s disclosure requirements.  ASU 2018-13 provides users of financial statements with information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to the financial statements.  More specifically ASU 2018-13 requires disclosures about the valuation techniques and inputs that are used to arrive at measures of fair value, including judgments and assumptions that are made in determining fair value.  In addition, ASU 2018-13 requires disclosures regarding the uncertainty in the fair value measurements as of the reporting date and how changes in fair value measurements affect performance and cash flows.  ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the effect of ASU 2018-13, but we do not expect it will have a material effect on our financial statement disclosures.

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans, which makes changes to and clarifies the disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 requires additional disclosures related to the reasons for significant gains and losses affecting the benefit obligation and an explanation of any other significant changes in the benefit obligation or plan assets that are not otherwise apparent in other disclosures required by ASC 715.  ASU 2018-14 also clarifies the guidance in ASC 715 to require disclosure of the projected benefit obligation (PBO) and fair value of plan assets for pension plans with PBOs in excess of plan assets and the accumulated benefit obligation (ABO) and fair value of plan assets for pension plans with ABOs in excess of plan assets. ASU 2018-14 is effective for public business entities for fiscal years ending after December 15, 2020. We are currently evaluating the effect of ASU 2018-14, but we do not expect it will have a material effect on our financial statement disclosures.

 

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.  ASU 2018-15 clarifies certain aspects of ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.  Specifically, ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementations costs incurred to develop or obtain internal use software.  ASU 2018-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.  We are currently evaluating whether to early adopt, but we do not expect it will have a material effect on our consolidated financial statements.

During 2018, we adopted the following accounting standards, which had the following effects on our consolidated financial statements:

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), 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 and/or to correct unintended application of guidance. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. We adopted ASU 2014-09 and the related ASUs on January 1, 2018 using the modified retrospective method, which was applied to all contracts on the date of initial adoption.

These ASUs primarily affected our network implementation service revenue performance obligations and contract costs. We are using the “output method” to measure network implementation services progress, which 1) accelerates revenue recognition for certain performance obligations related to service revenue arrangements that were previously deferred until customer acceptance and 2) requires capitalization and amortization of the incremental costs of obtaining a contract as described below. 

 

In connection with the adoption of the new revenue standard, effective January 1, 2018, we adopted ASC 340-40, Other Assets and Deferred Costs – Contracts with Customers, with respect to capitalization and amortization of incremental costs of obtaining a contract. As a result, certain costs of obtaining a contract, including sales commissions, will be capitalized, as the guidance requires the capitalization of all incremental costs incurred to obtain a contract with a customer that it would not have incurred if the contract had not been obtained, provided the costs are recoverable. The primary effect was the capitalization of certain sales commissions for our extended maintenance and support contracts in excess of one year and amortization of those costs over the period that the related revenue is recognized.

The cumulative effect of the changes made to our Consolidated Balance Sheet on January 1, 2018 for the adoption of ASU 2014-09 and the related ASUs was as follows:

 

(In thousands)

 

Balance at December 31, 2017

 

 

Adjustments due to ASU 2014-09

 

 

Balance at January 1, 2018

 

Other receivables

 

$

26,578

 

 

$

374

 

 

$

26,952

 

Deferred tax assets, net

 

$

23,428

 

 

$

(96

)

 

$

23,332

 

Retained earnings

 

$

922,178

 

 

$

278

 

 

$

922,456

 

 

 

The effect of the adoption of ASU 2014-09 and the related ASUs on our financial statements was as follows:

 

 

 

For the three months ended September 30, 2018

 

(In thousands)

 

As Reported

 

 

Balances Without Adoption of ASC 606

 

 

Effect of Adoption of ASC 606

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

121,043

 

 

$

120,588

 

 

$

455

 

Services

 

$

19,292

 

 

$

17,932

 

 

$

1,360

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

69,943

 

 

$

69,754

 

 

$

189

 

Services

 

$

11,944

 

 

$

11,046

 

 

$

898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before benefit for income taxes

 

$

3,220

 

 

$

2,492

 

 

$

728

 

Benefit for income taxes

 

$

4,369

 

 

$

3,382

 

 

$

987

 

Net income

 

$

7,589

 

 

$

5,874

 

 

$

1,715

 

 

 

 

 

For the nine months ended September 30, 2018

 

(In thousands)

 

As Reported

 

 

Balances Without Adoption of ASC 606

 

 

Effect of Adoption of ASC 606

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

341,359

 

 

$

341,464

 

 

$

(105

)

Services

 

$

47,830

 

 

$

46,062

 

 

$

1,768

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

208,184

 

 

$

208,480

 

 

$

(296

)

Services

 

$

32,828

 

 

$

31,743

 

 

$

1,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before benefit for income taxes

 

$

(22,784

)

 

$

(23,658

)

 

$

874

 

Benefit for income taxes

 

$

11,889

 

 

$

10,938

 

 

$

951

 

Net loss

 

$

(10,895

)

 

$

(12,720

)

 

$

1,825

 

 

 

 

 

As of  September 30, 2018

 

(In thousands)

 

As Reported

 

 

Balances Without Adoption of ASC 606

 

 

Effect of Adoption of ASC 606

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Other receivables

 

$

30,084

 

 

$

27,917

 

 

$

2,167

 

Inventory

 

$

106,060

 

 

$

106,402

 

 

$

(342

)

Equity

 

 

 

 

 

 

 

 

 

 

 

 

Retained earnings

 

$

900,324

 

 

$

898,499

 

 

$

1,825

 

 

In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. Subsequently, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which issued technical corrections and improvements intended to clarify certain aspects of ASU 2016-01. ASU 2016-01 was effective beginning January 1, 2018 and we now recognize any changes in the fair value of certain equity investments in net income as prescribed by the new standard rather than in other comprehensive income. We adopted ASU 2016-01 on January 1, 2018 using the modified retrospective method, which resulted in a $3.2 million reclassification of net unrealized gains from accumulated other comprehensive income to opening retained earnings. ASU 2018-03 is effective for us with the interim period beginning after June 15, 2018. See Note 7 of Notes to Consolidated Financial Statements for additional information.

 

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. 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. We adopted ASU 2017-07 on January 1, 2018. We retrospectively adopted the presentation of service cost separate from other components of net periodic pension costs. As a result, $0.1 million and $0.3 million have been reclassified from cost of sales, selling, general and administrative expenses, and research and development expense to other income (expense), net for the three and nine months ended September 30, 2017, respectively.  

v3.10.0.1
Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Schedule of Cumulative Effect of Changes made to Consolidated Balance Sheet

The cumulative effect of the changes made to our Consolidated Balance Sheet on January 1, 2018 for the adoption of ASU 2014-09 and the related ASUs was as follows:

 

(In thousands)

 

Balance at December 31, 2017

 

 

Adjustments due to ASU 2014-09

 

 

Balance at January 1, 2018

 

Other receivables

 

$

26,578

 

 

$

374

 

 

$

26,952

 

Deferred tax assets, net

 

$

23,428

 

 

$

(96

)

 

$

23,332

 

Retained earnings

 

$

922,178

 

 

$

278

 

 

$

922,456

 

 

Summary of Effect of Adoption of ASU 2014-09 and Related ASUs

The effect of the adoption of ASU 2014-09 and the related ASUs on our financial statements was as follows:

 

 

 

For the three months ended September 30, 2018

 

(In thousands)

 

As Reported

 

 

Balances Without Adoption of ASC 606

 

 

Effect of Adoption of ASC 606

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

121,043

 

 

$

120,588

 

 

$

455

 

Services

 

$

19,292

 

 

$

17,932

 

 

$

1,360

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

69,943

 

 

$

69,754

 

 

$

189

 

Services

 

$

11,944

 

 

$

11,046

 

 

$

898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before benefit for income taxes

 

$

3,220

 

 

$

2,492

 

 

$

728

 

Benefit for income taxes

 

$

4,369

 

 

$

3,382

 

 

$

987

 

Net income

 

$

7,589

 

 

$

5,874

 

 

$

1,715

 

 

 

 

 

For the nine months ended September 30, 2018

 

(In thousands)

 

As Reported

 

 

Balances Without Adoption of ASC 606

 

 

Effect of Adoption of ASC 606

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

341,359

 

 

$

341,464

 

 

$

(105

)

Services

 

$

47,830

 

 

$

46,062

 

 

$

1,768

 

Cost of Sales

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

208,184

 

 

$

208,480

 

 

$

(296

)

Services

 

$

32,828

 

 

$

31,743

 

 

$

1,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before benefit for income taxes

 

$

(22,784

)

 

$

(23,658

)

 

$

874

 

Benefit for income taxes

 

$

11,889

 

 

$

10,938

 

 

$

951

 

Net loss

 

$

(10,895

)

 

$

(12,720

)

 

$

1,825

 

 

 

 

 

As of  September 30, 2018

 

(In thousands)

 

As Reported

 

 

Balances Without Adoption of ASC 606

 

 

Effect of Adoption of ASC 606

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Other receivables

 

$

30,084

 

 

$

27,917

 

 

$

2,167

 

Inventory

 

$

106,060

 

 

$

106,402

 

 

$

(342

)

Equity

 

 

 

 

 

 

 

 

 

 

 

 

Retained earnings

 

$

900,324

 

 

$

898,499

 

 

$

1,825

 

 

v3.10.0.1
Business Combinations (Tables)
9 Months Ended
Sep. 30, 2018
Business Combinations [Abstract]  
Preliminary Allocation of the Purchase Price to the Estimated Fair Value of the Assets Acquired and Liabilities Assumed The preliminary allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows:

 

(In thousands)

 

 

 

Assets

 

 

 

  Other receivables

$

104

 

  Inventory

 

510

 

  Property, plant and equipment

 

392

 

  Intangible assets

 

22,100

 

Total assets acquired

 

23,106

 

 

 

 

 

Liabilities

 

 

 

  Deferred income taxes

 

(3,978

)

Total liabilities assumed

 

(3,978

)

 

 

 

 

Total net assets

 

19,128

 

  Gain on bargain purchase of a business, net of tax

 

(11,322

)

Total purchase price

$

7,806

 

 

Summary of Actual Revenue and Net Loss Included in Consolidated Statements of Income

The actual revenue and net loss included in our Consolidated Statements of Income for the three months ended September 30, 2018 and the period March 19, 2018 to September 30, 2018 are as follows:

 

 

Three Months Ended

 

 

March 19, 2018 to

 

(In thousands)

September 30, 2018

 

 

September 30, 2018

 

Revenue

$

1,021

 

 

$

2,218

 

Net income (loss)

$

564

 

 

$

(322

)

Details of the Acquired Intangible Assets

The details of the acquired intangible assets are as follows:

 

(In thousands)

Value

 

 

Life (years)

 

Customer relationships

$

13,400

 

 

 

12.0

 

Licensed technology

 

5,900

 

 

 

9.0

 

Supplier relationship

 

2,800

 

 

 

2.0

 

Total

$

22,100

 

 

 

 

 

Summary of Unaudited Supplemental Pro Forma Information

The following unaudited supplemental pro forma information presents the financial results as if the acquisition had occurred on January 1, 2017. 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, 2017, nor is it indicative of any future results. Aside from revising the 2017 and 2018 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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2017

 

 

2018

 

 

2017

 

Pro forma revenue

 

$

187,027

 

 

$

390,449

 

 

$

545,706

 

Pro forma net income (loss)

 

$

14,997

 

 

$

(23,431

)

 

$

43,826

 

Pro forma earnings per share - basic

 

$

0.31

 

 

$

(0.49

)

 

$

0.91

 

Pro forma earnings per share - diluted

 

$

0.31

 

 

$

(0.49

)

 

$

0.90

 

v3.10.0.1
Revenue (Tables)
9 Months Ended
Sep. 30, 2018
Revenue From Contract With Customer [Abstract]  
Information about Receivables, Contract Assets, and Unearned Revenue from Contracts with Customers

The following table provides information about receivables, contract assets, and unearned revenue from contracts with customers:

 

(In thousands)

 

September 30, 2018

 

 

January 1, 2018

 

Accounts receivable

 

$

101,865

 

 

$

144,150

 

Contract assets

 

$

4,564

 

 

$

374

 

Unearned revenue

 

$

17,004

 

 

$

13,070

 

Non-current unearned revenue

 

$

3,846

 

 

$

4,556

 

Disaggregate of Revenue by Major Source

The following table disaggregates our revenue by major source for the three months ended September 30, 2018:

 

(In thousands)

 

Network Solutions

 

 

Services & Support

 

 

Total

 

Access & Aggregation

 

$

76,046

 

 

$

15,855

 

 

$

91,901

 

Customer Devices

 

 

37,313

 

 

 

1,239

 

 

 

38,552

 

Traditional & Other Products

 

 

7,684

 

 

 

2,198

 

 

 

9,882

 

Total

 

$

121,043

 

 

$

19,292

 

 

$

140,335

 

The following table disaggregates our revenue by major source for the nine months ended September 30, 2018:

 

(In thousands)

 

Network Solutions

 

 

Services & Support

 

 

Total

 

Access & Aggregation

 

$

220,653

 

 

$

37,670

 

 

$

258,323

 

Customer Devices

 

 

99,396

 

 

 

3,817

 

 

 

103,213

 

Traditional & Other Products

 

 

21,310

 

 

 

6,343

 

 

 

27,653

 

Total

 

$

341,359

 

 

$

47,830

 

 

$

389,189

 

v3.10.0.1
Pension Benefit Plan (Tables)
9 Months Ended
Sep. 30, 2018
Compensation And Retirement Disclosure [Abstract]  
Summarization of Components of Net Periodic Pension Cost

The following table summarizes the components of net periodic pension cost for the three and nine months ended September 30, 2018 and 2017:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Service cost

 

$

294

 

 

$

327

 

 

$

905

 

 

$

930

 

Interest cost

 

 

179

 

 

 

158

 

 

 

551

 

 

 

448

 

Expected return on plan assets

 

 

(381

)

 

 

(329

)

 

 

(1,174

)

 

 

(935

)

Amortization of actuarial losses

 

 

61

 

 

 

80

 

 

 

188

 

 

 

228

 

Net periodic pension cost

 

$

153

 

 

$

236

 

 

$

470

 

 

$

671

 

 

The components of net periodic pension cost other than the service cost component are included in the line item “Other income (expense), net” in the Consolidated Statements of Income.

 

v3.10.0.1
Stock-Based Compensation (Tables)
9 Months Ended
Sep. 30, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation Expense Related to Stock Options, Performance Stock Units (PSUs), Restricted Stock Units (RSUs) and Restricted Stock

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 nine months ended September 30, 2018 and 2017, which was recognized as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Stock-based compensation expense included in cost of sales

 

$

101

 

 

$

97

 

 

$

298

 

 

$

281

 

Selling, general and administrative expense

 

 

894

 

 

 

994

 

 

 

2,924

 

 

 

3,018

 

Research and development expense

 

 

645

 

 

 

743

 

 

 

2,021

 

 

 

2,274

 

Stock-based compensation expense included in operating expenses

 

 

1,539

 

 

 

1,737

 

 

 

4,945

 

 

 

5,292

 

Total stock-based compensation expense

 

 

1,640

 

 

 

1,834

 

 

 

5,243

 

 

 

5,573

 

Tax benefit for expense associated with non-qualified options, PSUs, RSUs and restricted stock

 

 

(292

)

 

 

(402

)

 

 

(1,016

)

 

 

(1,215

)

Total stock-based compensation expense, net of tax

 

$

1,348

 

 

$

1,432

 

 

$

4,227

 

 

$

4,358

 

Summary of Stock Options Outstanding

The following table is a summary of our stock options outstanding as of December 31, 2017 and September 30, 2018 and the changes that occurred during the nine months ended September 30, 2018:

 

(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, 2017

 

 

5,148

 

 

$

22.65

 

 

 

4.87

 

 

$

6,109

 

Stock options granted

 

 

 

 

$

 

 

 

 

 

 

 

 

 

Stock options exercised

 

 

(85

)

 

$

15.48

 

 

 

 

 

 

 

 

 

Stock options forfeited

 

 

(71

)

 

$

16.50

 

 

 

 

 

 

 

 

 

Stock options expired

 

 

(331

)

 

$

25.87

 

 

 

 

 

 

 

 

 

Stock options outstanding, September 30, 2018

 

 

4,661

 

 

$

22.64

 

 

 

4.12

 

 

$

2,730

 

Stock options vested and expected to vest, September 30, 2018

 

 

4,661

 

 

$

22.64

 

 

 

4.12

 

 

$

2,730

 

Stock options exercisable, September 30, 2018

 

 

3,952

 

 

$

23.75

 

 

 

3.63

 

 

$

1,600

 

Summary of PSUs, RSUs and Restricted Stock Outstanding

The following table is a summary of our PSUs, RSUs and restricted stock outstanding as of December 31, 2017 and the changes that occurred during the nine months ended September 30, 2018:

 

(In thousands, except per share amounts)

 

Number of

Shares

 

 

Weighted Avg. Grant Date Fair Value

 

Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2017

 

 

1,292

 

 

$

21.33

 

PSUs, RSUs and restricted stock granted

 

 

22

 

 

$

17.84

 

PSUs, RSUs and restricted stock vested

 

 

(14

)

 

$

20.19

 

PSUs, RSUs and restricted stock forfeited

 

 

(165

)

 

$

21.66

 

Unvested PSUs, RSUs and restricted stock outstanding, September 30, 2018

 

 

1,135

 

 

$

21.23

 

 

v3.10.0.1
Investments (Tables)
9 Months Ended
Sep. 30, 2018
Investments Debt And Equity Securities [Abstract]  
Debt Securities and Other Investments, Recorded at Either Fair Value or Cost

Debt Securities and Other Investments

At September 30, 2018, we held the following debt securities and other investments, recorded at either fair value or cost:

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Corporate bonds

 

$

25,758

 

 

$

13

 

 

$

(209

)

 

$

25,562

 

Municipal fixed-rate bonds

 

 

1,451

 

 

 

 

 

 

(36

)

 

 

1,415

 

Asset-backed bonds

 

 

8,384

 

 

 

 

 

 

(29

)

 

 

8,355

 

Mortgage/Agency-backed bonds

 

 

5,450

 

 

 

 

 

 

(87

)

 

 

5,363

 

U.S. government bonds

 

 

19,957

 

 

 

 

 

 

(184

)

 

 

19,773

 

Foreign government bonds

 

 

593

 

 

 

2

 

 

 

 

 

 

595

 

Available-for-sale debt securities held at fair value

 

$

61,593

 

 

$

15

 

 

$

(545

)

 

$

61,063

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,700

 

Other investments held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

520

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

88,283

 

 

At December 31, 2017, we held the following debt securities and other investments, recorded at either fair value or cost:

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Carrying

 

(In thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Corporate bonds

 

$

32,654

 

 

$

44

 

 

$

(155

)

 

$

32,543

 

Municipal fixed-rate bonds

 

 

2,902

 

 

 

2

 

 

 

(22

)

 

 

2,882

 

Asset-backed bonds

 

 

6,545

 

 

 

1

 

 

 

(20

)

 

 

6,526

 

Mortgage/Agency-backed bonds

 

 

5,554

 

 

 

1

 

 

 

(46

)

 

 

5,509

 

U.S. government bonds

 

 

14,477

 

 

 

 

 

 

(174

)

 

 

14,303

 

Foreign government bonds

 

 

725

 

 

 

5

 

 

 

 

 

 

730

 

Available-for-sale debt securities held at fair value

 

$

62,857

 

 

$

53

 

 

$

(417

)

 

$

62,493

 

Restricted investment held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,800

 

Other investments held at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

547

 

Total carrying value of available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

90,840

 

Contractual Maturities of Debt Securities

As of September 30, 2018 our debt securities 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

 

$

2,800

 

 

$

 

 

$

3,112

 

 

$

 

 

$

 

 

$

 

One to two years

 

 

10,122

 

 

 

287

 

 

 

657

 

 

 

 

 

 

11,716

 

 

 

285

 

Two to three years

 

 

9,898

 

 

 

1,128

 

 

 

714

 

 

 

425

 

 

 

5,565

 

 

 

310

 

Three to five years

 

 

2,742

 

 

 

 

 

 

2,244

 

 

 

1,561

 

 

 

2,492

 

 

 

 

Five to ten years

 

 

 

 

 

 

 

 

445

 

 

 

525

 

 

 

 

 

 

 

More than ten years

 

 

 

 

 

 

 

 

1,183

 

 

 

2,852

 

 

 

 

 

 

 

Total

 

$

25,562

 

 

$

1,415

 

 

$

8,355

 

 

$

5,363

 

 

$

19,773

 

 

$

595

 

Gross Realized Gains and Losses on Sale of Debt Securities The following table presents gross realized gains and losses related to our debt securities:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Gross realized gains on debt securities

 

$

24

 

 

$

91

 

 

$

49

 

 

$

148

 

Gross realized losses on debt securities

 

 

(50

)

 

 

(28

)

 

 

(365

)

 

 

(179

)

Total gain (loss) recognized, net

 

$

(26

)

 

$

63

 

 

$

(316

)

 

$

(31

)

Realized and Unrealized Gains and Losses for Marketable Equity Securities

Realized and unrealized gains and losses for our marketable equity securities for the three and nine months ended September 30, 2018 were as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2018

 

Realized gains (losses) on equity securities sold

 

$

1,240

 

 

$

1,587

 

Unrealized gains (losses) on equity securities held

 

 

3,293

 

 

 

4,129

 

Total gain (loss) recognized, net

 

$

4,533

 

 

$

5,716

 

Fair Value Measurements of Cash Equivalents and Investments

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

 

 

 

Fair Value Measurements at September 30, 2018 Using

 

(In thousands)

 

Fair Value

 

 

Quoted Prices

in Active

Market for

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant Unobservable Inputs

(Level 3)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

1,423

 

 

$

1,423

 

 

$

 

 

$

 

Foreign government securities

 

 

600

 

 

 

 

 

 

600

 

 

 

 

Cash equivalents

 

 

2,023

 

 

 

1,423

 

 

 

600

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

25,562

 

 

 

 

 

 

25,562

 

 

 

 

Municipal fixed-rate bonds

 

 

1,415

 

 

 

 

 

 

1,415

 

 

 

 

Asset-backed bonds

 

 

8,355

 

 

 

 

 

 

8,355

 

 

 

 

Mortgage/Agency-backed bonds

 

 

5,363

 

 

 

 

 

 

5,363

 

 

 

 

U.S. government bonds

 

 

19,773

 

 

 

19,773

 

 

 

 

 

 

 

Foreign government bonds

 

 

595

 

 

 

 

 

 

595

 

 

 

 

Marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – various industries

 

 

40,645

 

 

 

40,645

 

 

 

 

 

 

 

Equity in escrow

 

 

277

 

 

 

277

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

20,948

 

 

 

20,948

 

 

 

 

 

 

 

Available-for-sale securities

 

 

122,933

 

 

 

81,643

 

 

 

41,290

 

 

 

 

Total

 

$

124,956

 

 

$

83,066

 

 

$

41,890

 

 

$

 

 

 

 

 

Fair Value Measurements at December 31, 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

 

$

5,851

 

 

$

5,851

 

 

$

 

 

$

 

Commercial paper

 

 

3,999

 

 

 

 

 

 

3,999

 

 

 

 

Cash equivalents

 

 

9,850

 

 

 

5,851

 

 

 

3,999

 

 

 

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

32,543

 

 

 

 

 

 

32,543

 

 

 

 

Municipal fixed-rate bonds

 

 

2,882

 

 

 

 

 

 

2,882

 

 

 

 

Asset-backed bonds

 

 

6,526

 

 

 

 

 

 

6,526

 

 

 

 

Mortgage/Agency-backed bonds

 

 

5,509

 

 

 

 

 

 

5,509

 

 

 

 

U.S. government bonds

 

 

14,303

 

 

 

14,303

 

 

 

 

 

 

 

Foreign government bonds

 

 

730

 

 

 

 

 

 

730

 

 

 

 

Marketable equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities – various industries

 

 

35,662

 

 

 

35,662

 

 

 

 

 

 

 

Deferred compensation plan assets

 

 

19,883

 

 

 

19,883

 

 

 

 

 

 

 

Available-for-sale securities

 

 

118,038

 

 

 

69,848

 

 

 

48,190

 

 

 

 

Total

 

$

127,888

 

 

$

75,699

 

 

$

52,189

 

 

$

 

 

v3.10.0.1
Derivative Instruments and Hedging Activities (Tables)
9 Months Ended
Sep. 30, 2018
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Schedule of Changes in Fair Values of Derivative Instruments Recorded in Consolidated Statements of Income

The changes in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the three and nine months ended September 30, 2018 and 2017 were as follows:

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

Income Statement

 

September 30,

 

 

September 30,

 

(In thousands)

 

Location

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Derivatives Not Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other income (expense), net

 

$

 

 

$

(334

)

 

$

13

 

 

$

(819

)

 

Schedule of Changes in Derivatives Designated Hedging Instruments Recorded in Other Comprehensive Income (OCI) and Reclassified to Income, Net of Tax

The changes in our derivatives designated as hedging instruments recorded in other comprehensive income (OCI) and reclassified to income, net of tax, during the three and nine months ended September 30, 2018 and 2017, were as follows:

 

 

 

Amount of Gains (Losses) Recognized in

 

 

 

 

Amount of Gains (Losses) Reclassified

 

 

 

OCI on Derivatives

 

 

 

 

from AOCI into Income

 

 

 

 

 

 

Location of Gains

 

 

 

 

 

Three Months Ended September 30,

 

 

(Losses) Reclassified

 

Three Months Ended September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

from AOCI into Income

 

2018

 

 

2017

 

Derivatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

 

 

$

(127

)

 

Cost of Sales

 

$

 

 

$

(269

)

 

 

 

 

Amount of Gains (Losses) Recognized in

 

 

 

 

Amount of Gains (Losses) Reclassified

 

 

 

OCI on Derivatives

 

 

 

 

from AOCI into Income

 

 

 

 

 

 

Location of Gains

 

 

 

 

 

Nine Months Ended September 30,

 

 

(Losses) Reclassified

 

Nine Months Ended September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

from AOCI into Income

 

2018

 

 

2017

 

Derivatives Designated as Hedging Instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

 

 

$

(619

)

 

Cost of Sales

 

$

 

 

$

(423

)

 

v3.10.0.1
Inventory (Tables)
9 Months Ended
Sep. 30, 2018
Inventory Disclosure [Abstract]  
Components of Inventory

At September 30, 2018 and December 31, 2017, inventory consisted of the following:

 

 

 

September 30,

 

 

December 31,

 

(In thousands)

 

2018

 

 

2017

 

Raw materials

 

$

47,664

 

 

$

44,185

 

Work in process

 

 

1,289

 

 

 

1,939

 

Finished goods

 

 

57,107

 

 

 

76,418

 

Total

 

$

106,060

 

 

$

122,542

 

 

v3.10.0.1
Goodwill and Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2018
Goodwill And Intangible Assets Disclosure [Abstract]  
Summary of Intangible Assets

The following table presents our intangible assets as of September 30, 2018 and December 31, 2017. Fully amortized intangible assets have been removed from prior year balances for comparability.

 

(In thousands)

 

September 30, 2018

 

 

December 31, 2017

 

 

 

Gross

Value

 

 

Accumulated Amortization

 

 

Net Value

 

 

Gross

Value

 

 

Accumulated Amortization

 

 

Net Value

 

Customer relationships

 

$

20,724

 

 

$

(5,072

)

 

$

15,652

 

 

$

7,474

 

 

$

(4,283

)

 

$

3,191

 

Licensed technology

 

 

5,900

 

 

 

(355

)

 

 

5,545

 

 

 

 

 

 

 

 

 

 

Developed technology

 

 

5,435

 

 

 

(4,799

)

 

 

636

 

 

 

5,524

 

 

 

(4,663

)

 

 

861

 

Supplier relationship

 

 

2,800

 

 

 

(758

)

 

 

2,042

 

 

 

 

 

 

 

 

 

 

Intellectual property

 

 

930

 

 

 

(930

)

 

 

 

 

 

930

 

 

 

(852

)

 

 

78

 

Patent

 

 

500

 

 

 

(140

)

 

 

360

 

 

 

500

 

 

 

(89

)

 

 

411

 

Non-compete

 

 

200

 

 

 

(181

)

 

 

19

 

 

 

200

 

 

 

(115

)

 

 

85

 

Trade names

 

 

100

 

 

 

(100

)

 

 

 

 

 

100

 

 

 

(65

)

 

 

35

 

Total

 

$

36,589

 

 

$

(12,335

)

 

$

24,254

 

 

$

14,728

 

 

$

(10,067

)

 

$

4,661

 

 

Estimated Future Amortization Expense Related to Intangible Assets

As of September 30, 2018, the estimated future amortization expense of our intangible assets is as follows:

 

(In thousands)

 

Amount

 

Remainder of 2018

 

$

859

 

2019

 

 

3,540

 

2020

 

 

2,657

 

2021

 

 

2,364

 

2022

 

 

2,350

 

Thereafter

 

 

12,484

 

Total

 

$

24,254

 

 

v3.10.0.1
Stockholders' Equity (Tables)
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
Summary of Changes in Stockholders' Equity

A summary of the changes in stockholders’ equity for the nine months ended September 30, 2018 is as follows:

 

(In thousands)

 

Stockholders’ Equity

 

Balance, December 31, 2017

 

$

497,911

 

Net income (loss)

 

 

(10,895

)

Dividend payments

 

 

(12,976

)

Dividends accrued for unvested restricted stock units

 

 

(15

)

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

 

 

(3,340

)

Defined benefit plan adjustments (net of tax)

 

 

104

 

Foreign currency translation adjustment

 

 

(3,033

)

Proceeds from stock option exercises

 

 

1,321

 

Purchase of treasury stock

 

 

(14,185

)

Adoption of new accounting standards (see Note 1)

 

 

3,499

 

Stock-based compensation expense

 

 

5,243

 

RSU's and restricted stock vested

 

 

(33

)

Balance, September 30, 2018

 

$

463,601

 

 

Cash Dividends

During the nine months ended September 30, 2018, we paid cash dividends as follows (in thousands except per share amounts):

 

Record Date

 

Payment Date

 

Per Share Amount

 

 

Total Dividend Paid

 

January 31, 2018

 

February 14, 2018

 

$

0.09

 

 

$

4,367

 

May 2, 2018

 

May 16, 2018

 

$

0.09

 

 

$

4,312

 

August 1, 2018

 

August 15, 2018

 

$

0.09

 

 

$

4,297

 

 

Changes in Accumulated Other Comprehensive Income (Loss), Net of Tax by Component

The following tables present the changes in accumulated other comprehensive income (loss), net of tax, by component for the three months ended September 30, 2018 and 2017:

 

 

 

Three Months Ended September 30, 2018

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

(741

)

 

$

(4,219

)

 

$

(4,158

)

 

$

(9,118

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,208

 

 

 

 

 

 

(451

)

 

 

757

 

Amounts reclassified from accumulated other

   comprehensive income (loss)

 

 

(1,240

)

 

 

37

 

 

 

 

 

 

(1,203

)

Net current period other comprehensive income (loss)

 

 

(32

)

 

 

37

 

 

 

(451

)

 

 

(446

)

Ending balance

 

$

(773

)

 

$

(4,182

)

 

$

(4,609

)

 

$

(9,564

)

 

 

 

Three Months Ended September 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

 

$

2,112

 

 

$

(338

)

 

$

(4,876

)

 

$

(3,714

)

 

$

(6,816

)

Other comprehensive income (loss) before

   reclassifications

 

 

1,420

 

 

 

(127

)

 

 

 

 

 

1,541

 

 

 

2,834

 

Amounts reclassified from accumulated other

   comprehensive income (loss)

 

 

(616

)

 

 

269

 

 

 

73

 

 

 

 

 

 

(274

)

Net current period other comprehensive income (loss)

 

 

804

 

 

 

142

 

 

 

73

 

 

 

1,541

 

 

 

2,560

 

Ending balance

 

$

2,916

 

 

$

(196

)

 

$

(4,803

)

 

$

(2,173

)

 

$

(4,256

)

 

 

The following tables present the changes in accumulated other comprehensive income (loss), net of tax, by component for the nine months ended September 30, 2018 and 2017:

 

 

 

Nine Months Ended September 30, 2018

 

(In thousands)

 

Unrealized

Gains

(Losses)

on

Available-

for-Sale

Securities

 

 

Defined

Benefit Plan

Adjustments

 

 

Foreign

Currency

Adjustments

 

 

Total

 

Beginning balance

 

$

2,567

 

 

$

(4,286

)

 

$

(1,576

)

 

$

(3,295

)

Other comprehensive income (loss) before

   reclassifications

 

 

869

 

 

 

 

 

 

(3,033

)

 

 

(2,164

)

Amounts reclassified from accumulated other

   comprehensive income (loss)

 

 

(989

)

 

 

104

 

 

 

 

 

 

(885

)

Amounts reclassified to retained earnings (1)

 

 

(3,220

)

 

 

 

 

 

 

 

 

(3,220

)

Net current period other comprehensive income (loss)

 

 

(3,340

)

 

 

104

 

 

 

(3,033

)

 

 

(6,269

)

Ending balance

 

$

(773

)

 

$

(4,182

)

 

$

(4,609

)

 

$

(9,564

)

 

 

(1)

With the adoption of ASU 2016-01, the unrealized gains on our equity investments were reclassified to retained earnings. See Note 1 for more information.

 

 

 

Nine Months Ended September 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

 

 

4,262

 

 

 

(619

)

 

 

 

 

 

5,402

 

 

 

9,045

 

Amounts reclassified from accumulated other

   comprehensive income (loss)

 

 

(1,750

)

 

 

423

 

 

 

214

 

 

 

 

 

 

(1,113

)

Net current period other comprehensive income (loss)

 

 

2,512

 

 

 

(196

)

 

 

214

 

 

 

5,402

 

 

 

7,932

 

Ending balance

 

$

2,916

 

 

$

(196

)

 

$

(4,803

)

 

$

(2,173

)

 

$

(4,256

)

 

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

The following tables present the details of reclassifications out of accumulated other comprehensive income (loss) for the three months ended September 30, 2018 and 2017:

 

(In thousands)

 

Three Months Ended September 30, 2018

Details about Accumulated Other Comprehensive Income (Loss) Components

 

Amount

Reclassified

from

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Affected Line Item in the

Statement Where Net

Income Is Presented

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

 

 

 

 

 

 

Net realized gain (loss) on sales of securities

 

$

1,676

 

 

Net investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(54

)

 

(1)

Total reclassifications for the period, before tax

 

 

1,622

 

 

 

Tax (expense) benefit

 

 

(419

)

 

 

Total reclassifications for the period, net of tax

 

$

1,203

 

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

Three Months Ended September 30, 2017

Details about Accumulated Other Comprehensive Income (Loss) Components

 

Amount

Reclassified

from

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Affected Line Item in the

Statement Where Net

Income Is Presented

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

 

 

 

 

 

 

Net realized gain (loss) on sales of securities

 

$

1,066

 

 

Net investment gain

Impairment expense

 

 

(57

)

 

Net investment gain

Net losses on derivatives designated as hedging instruments

 

 

(385

)

 

Cost of sales

Defined benefit plan adjustments – actuarial losses

 

 

(106

)

 

(1)

Total reclassifications for the period, before tax

 

 

518

 

 

 

Tax (expense) benefit

 

 

(244

)

 

 

Total reclassifications for the period, net of tax

 

$

274

 

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

 


 

The following tables present the details of reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2018 and 2017:

 

(In thousands)

 

Nine Months Ended September 30, 2018

Details about Accumulated Other Comprehensive Income (Loss) Components

 

Amount

Reclassified

from

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Affected Line Item in the

Statement Where Net

Income Is Presented

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

 

 

 

 

 

 

Net realized gain (loss) on sales of securities

 

$

1,352

 

 

Net investment gain

Defined benefit plan adjustments – actuarial losses

 

 

(151

)

 

(1)

Total reclassifications for the period, before tax

 

 

1,201

 

 

 

Tax (expense) benefit

 

 

(316

)

 

 

Total reclassifications for the period, net of tax

 

$

885

 

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

 

(In thousands)

 

Nine Months Ended September 30, 2017

Details about Accumulated Other Comprehensive Income (Loss) Components

 

Amount

Reclassified

from

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Affected Line Item in the

Statement Where Net

Income Is Presented

Unrealized gains (losses) on available-for-

   sale securities:

 

 

 

 

 

 

Net realized gain (loss) on sales of securities

 

$

3,031

 

 

Net investment gain

Impairment expense

 

 

(162

)

 

Net investment gain

Net losses on derivatives designated as hedging instruments

 

 

(539

)

 

Cost of sales

Defined benefit plan adjustments – actuarial losses

 

 

(310

)

 

(1)

Total reclassifications for the period, before tax

 

 

2,020

 

 

 

Tax (expense) benefit

 

 

(907

)

 

 

Total reclassifications for the period, net

   of tax

 

$

1,113

 

 

 

 

 

(1)

Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

 

Other Comprehensive Income (Loss)

The following table presents the tax effects related to the change in each component of other comprehensive income (loss) for the three months ended September 30, 2018 and 2017: 

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

(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

 

$

1,632

 

 

$

(424

)

 

$

1,208

 

 

$

2,328

 

 

$

(908

)

 

$

1,420

 

Unrealized gains (losses) on cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

(184

)

 

 

57

 

 

 

(127

)

Reclassification adjustment for amounts related to

   available-for-sale investments included in net

   income

 

 

(1,676

)

 

 

436

 

 

 

(1,240

)

 

 

(1,009

)

 

 

393

 

 

 

(616

)

Reclassification adjustment for amounts related to

   cash flow hedges included in net income

 

 

 

 

 

 

 

 

 

 

 

385

 

 

 

(116

)

 

 

269

 

Reclassification adjustment for amounts related to

   defined benefit plan adjustments included in net

   income

 

 

54

 

 

 

(17

)

 

 

37

 

 

 

106

 

 

 

(33

)

 

 

73

 

Foreign currency translation adjustment

 

 

(451

)

 

 

 

 

 

(451

)

 

 

1,541

 

 

 

 

 

 

1,541

 

Total Other Comprehensive Income (Loss)

 

$

(441

)

 

$

(5

)

 

$

(446

)

 

$

3,167

 

 

$

(607

)

 

$

2,560

 

 

The following table presents the tax effects related to the change in each component of other comprehensive income for the nine months ended September 30, 2018 and 2017:

 

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

(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

 

$

1,174

 

 

$

(305

)

 

$

869

 

 

$

6,987

 

 

$

(2,725

)

 

$

4,262

 

Unrealized gains (losses) on cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

(897

)

 

 

278

 

 

 

(619

)

Reclassification adjustment for amounts related to

   available-for-sale investments included in net

   income

 

 

(1,352

)

 

 

363

 

 

 

(989

)

 

 

(2,869

)

 

 

1,119

 

 

 

(1,750

)

Reclassification adjustment for amounts reclassed

   to retained earnings related to the adoption of

   ASU 2016-01

 

 

(3,220

)

 

 

 

 

 

(3,220

)

 

 

 

 

 

 

 

 

 

Reclassification adjustment for amounts related to

   cash flow hedges included in net income

 

 

 

 

 

 

 

 

 

 

 

539

 

 

 

(116

)

 

 

423

 

Reclassification adjustment for amounts related to

   defined benefit plan adjustments included in net

   income

 

 

151

 

 

 

(47

)

 

 

104

 

 

 

310

 

 

 

(96

)

 

 

214

 

Foreign currency translation adjustment

 

 

(3,033

)

 

 

 

 

 

(3,033

)

 

 

5,402

 

 

 

 

 

 

5,402

 

Total Other Comprehensive Income (Loss)

 

$

(6,280

)

 

$

11

 

 

$

(6,269

)

 

$

9,472

 

 

$

(1,540

)

 

$

7,932

 

v3.10.0.1
Earnings Per Share (Tables)
9 Months Ended
Sep. 30, 2018
Earnings Per Share [Abstract]  
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 nine months ended September 30, 2018 and 2017 is as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands, except per share amounts)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

7,589

 

 

$

15,898

 

 

$

(10,895

)

 

$

34,950

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares – basic

 

 

47,710

 

 

 

47,870

 

 

 

47,927

 

 

 

48,110

 

Effect of dilutive securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

27

 

 

 

487

 

 

 

 

 

 

385

 

PSUs, RSUs and restricted stock

 

 

97

 

 

 

174

 

 

 

 

 

 

123

 

Weighted average number of shares – diluted

 

 

47,834

 

 

 

48,531

 

 

 

47,927

 

 

 

48,618

 

Net income (loss) per share – basic

 

$

0.16

 

 

$

0.33

 

 

$

(0.23

)

 

$

0.73

 

Net income (loss) per share – diluted

 

$

0.16

 

 

$

0.33

 

 

$

(0.23

)

 

$

0.72

 

v3.10.0.1
Segment Information (Tables)
9 Months Ended
Sep. 30, 2018
Segment Reporting [Abstract]  
Sales and Gross Profit of Reportable Segments

The following table presents information about the reported sales and gross profit of our reportable segments for the three and nine months ended September 30, 2018 and 2017. We do not produce asset information by reportable segment; therefore, it is not reported.

 

 

 

Three Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

(In thousands)

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

121,043

 

 

$

51,100

 

 

$

145,467

 

 

$

71,933

 

Services & Support

 

 

19,292

 

 

 

7,348

 

 

 

39,645

 

 

 

14,558

 

Total

 

$

140,335

 

 

$

58,448

 

 

$

185,112

 

 

$

86,491

 

 

 

 

Nine Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

(In thousands)

 

Sales

 

 

Gross Profit

 

 

Sales

 

 

Gross Profit

 

Network Solutions

 

$

341,359

 

 

$

133,175

 

 

$

444,607

 

 

$

214,746

 

Services & Support

 

 

47,830

 

 

 

15,002

 

 

 

95,457

 

 

 

30,080

 

Total

 

$

389,189

 

 

$

148,177

 

 

$

540,064

 

 

$

244,826

 

 

Sales Information by Category

The table below presents sales information by category for the three and nine months ended September 30, 2018 and 2017:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Access & Aggregation

 

$

91,901

 

 

$

135,959

 

 

$

258,323

 

 

$

394,741

 

Customer Devices

 

 

38,552

 

 

 

35,582

 

 

 

103,213

 

 

 

105,683

 

Traditional & Other Products

 

 

9,882

 

 

 

13,571

 

 

 

27,653

 

 

 

39,640

 

Total

 

$

140,335

 

 

$

185,112

 

 

$

389,189

 

 

$

540,064

 

v3.10.0.1
Liability for Warranty Returns (Tables)
9 Months Ended
Sep. 30, 2018
Product Warranties Disclosures [Abstract]  
Summary of Warranty Expense and Write-Off Activity

A summary of warranty expense and write-off activity for the three and nine months ended September 30, 2018 and 2017 is as follows:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Balance at beginning of period

 

$

10,111

 

 

$

9,180

 

 

$

9,724

 

 

$

8,548

 

Plus: Amounts charged to cost and expenses

 

 

(34

)

 

 

4,087

 

 

 

6,649

 

 

 

6,401

 

Less: Deductions

 

 

(1,053

)

 

 

(2,328

)

 

 

(7,349

)

 

 

(4,010

)

Balance at end of period

 

$

9,024

 

 

$

10,939

 

 

$

9,024

 

 

$

10,939

 

 

v3.10.0.1
Summary of Significant Accounting Policies - Schedule of Cumulative Effect of Changes made to Consolidated Balance Sheet (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Jan. 01, 2018
Dec. 31, 2017
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]      
Other receivables $ 30,084   $ 26,578
Deferred tax assets, net 39,595   23,428
Retained earnings 900,324   $ 922,178
ASU 2014-09 [member]      
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]      
Other receivables   $ 26,952  
Deferred tax assets, net   23,332  
Retained earnings   922,456  
ASU 2014-09 [member] | Adjustments Due to ASU 2014-09 [Member]      
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]      
Other receivables 2,167 374  
Deferred tax assets, net   (96)  
Retained earnings $ 1,825 $ 278  
v3.10.0.1
Summary of Significant Accounting Policies - Summary of Effect of Adoption of ASU 2014-09 and Related ASUs (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Jan. 01, 2018
Dec. 31, 2017
Sales            
Sales $ 140,335 $ 185,112 $ 389,189 $ 540,064    
Cost of Sales            
Cost of Sales 81,887 98,621 241,012 295,238    
Income before benefit for income taxes 3,220 19,207 (22,784) 45,421    
(Provision) benefit for income taxes 4,369 (3,309) 11,889 (10,471)    
Net income 7,589 15,898 (10,895) 34,950    
Net Income (Loss) 7,589 15,898 (10,895) 34,950    
ASSETS            
Other receivables 30,084   30,084     $ 26,578
Inventory 106,060   106,060     122,542
Equity            
Retained earnings 900,324   900,324     $ 922,178
Product [Member]            
Sales            
Sales 121,043 145,467 341,359 444,607    
Cost of Sales            
Cost of Sales 69,943 73,534 208,184 229,861    
Service [Member]            
Sales            
Sales 19,292 39,645 47,830 95,457    
Cost of Sales            
Cost of Sales 11,944 $ 25,087 32,828 $ 65,377    
ASU 2014-09 [member]            
ASSETS            
Other receivables         $ 26,952  
Equity            
Retained earnings         922,456  
ASU 2014-09 [member] | Balances Without Adoption of ASC 606 [Member]            
Cost of Sales            
Income before benefit for income taxes 2,492   (23,658)      
(Provision) benefit for income taxes 3,382   10,938      
Net income 5,874   (12,720)      
Net Income (Loss) 5,874   (12,720)      
ASSETS            
Other receivables 27,917   27,917      
Inventory 106,402   106,402      
Equity            
Retained earnings 898,499   898,499      
ASU 2014-09 [member] | Adjustments Due to ASU 2014-09 [Member]            
Cost of Sales            
Income before benefit for income taxes 728   874      
(Provision) benefit for income taxes 987   951      
Net income 1,715   1,825      
Net Income (Loss) 1,715   1,825      
ASSETS            
Other receivables 2,167   2,167   374  
Inventory (342)   (342)      
Equity            
Retained earnings 1,825   1,825   $ 278  
ASU 2014-09 [member] | Product [Member] | Balances Without Adoption of ASC 606 [Member]            
Sales            
Sales 120,588   341,464      
Cost of Sales            
Cost of Sales 69,754   208,480      
ASU 2014-09 [member] | Product [Member] | Adjustments Due to ASU 2014-09 [Member]            
Sales            
Sales 455   (105)      
Cost of Sales            
Cost of Sales 189   (296)      
ASU 2014-09 [member] | Service [Member] | Balances Without Adoption of ASC 606 [Member]            
Sales            
Sales 17,932   46,062      
Cost of Sales            
Cost of Sales 11,046   31,743      
ASU 2014-09 [member] | Service [Member] | Adjustments Due to ASU 2014-09 [Member]            
Sales            
Sales 1,360   1,768      
Cost of Sales            
Cost of Sales $ 898   $ 1,085      
v3.10.0.1
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2017
Jan. 01, 2018
ASU 2016-01 [Member]      
Summary Of Significant Accounting Policy [Line Items]      
Reclassification of net unrealized gains from accumulated other comprehensive income to opening retained earnings     $ 3.2
ASU 2017-07 [Member]      
Summary Of Significant Accounting Policy [Line Items]      
Reclassified from cost of sales, selling, general and administrative expenses, and research and development expense to other income (expense), net $ 0.1 $ 0.3  
v3.10.0.1
Business Combinations - Additional Information (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 19, 2018
Sep. 30, 2018
Mar. 31, 2018
Sep. 30, 2018
Business Acquisition [Line Items]        
Bargain purchase gain net of income taxes       $ 11,322
Sumitomo Electric Lightwave Corp.'s North American EPON Business [Member]        
Business Acquisition [Line Items]        
Date of acquisition       Mar. 19, 2018
Business acquisition, description       On March 19, 2018, we acquired Sumitomo Electric Lightwave Corp.’s (SEL) North American EPON business and entered into a technology license and OEM supply agreement with Sumitomo Electric Industries, Ltd. (SEI). This acquisition establishes ADTRAN as the North American market leader for EPON solutions for the cable MSO industry and it will accelerate the MSO market’s adoption of our open, programmable and scalable architectures.
Bargain purchase gain net of income taxes $ 11,322   $ 11,300  
Acquisition and integration related expenses and amortization of acquired intangibles   $ 700   $ 1,600
v3.10.0.1
Business Combinations - Preliminary Allocation of the Purchase Price to the Estimated Fair Value of the Assets Acquired and Liabilities Assumed (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 19, 2018
Mar. 31, 2018
Sep. 30, 2018
Liabilities      
Gain on bargain purchase of a business, net of tax     $ (11,322)
Total purchase price     $ 7,806
Sumitomo Electric Lightwave Corp.'s North American EPON Business [Member]      
Assets      
Other receivables $ 104    
Inventory 510    
Property, plant and equipment 392    
Intangible assets 22,100    
Total assets acquired 23,106    
Liabilities      
Deferred income taxes (3,978)    
Total liabilities assumed (3,978)    
Total net assets 19,128    
Gain on bargain purchase of a business, net of tax (11,322) $ (11,300)  
Total purchase price $ 7,806    
v3.10.0.1
Business Combinations - Summary of Actual Revenue and Net Loss Included in Consolidated Statements of Income (Detail) - Sumitomo Electric Lightwave Corp.'s North American EPON Business [Member] - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Sep. 30, 2018
Sep. 30, 2018
Business Acquisition [Line Items]    
Revenue $ 1,021 $ 2,218
Net income (loss) $ 564 $ (322)
v3.10.0.1
Business Combinations - Details of the Acquired Intangible Assets (Detail) - Sumitomo Electric Lightwave Corp.'s North American EPON Business [Member]
$ in Thousands
Mar. 19, 2018
USD ($)
Business Acquisition [Line Items]  
Total, Value $ 22,100
Customer Relationships [Member]  
Business Acquisition [Line Items]  
Total, Value $ 13,400
Life (years) 12 years
Licensed Technology [Member]  
Business Acquisition [Line Items]  
Total, Value $ 5,900
Life (years) 9 years
Supplier Relationship [Member]  
Business Acquisition [Line Items]  
Total, Value $ 2,800
Life (years) 2 years
v3.10.0.1
Business Combinations - Summary of Unaudited Supplemental Pro Forma Information (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Business Combinations [Abstract]      
Pro forma revenue $ 187,027 $ 390,449 $ 545,706
Pro forma net income (loss) $ 14,997 $ (23,431) $ 43,826
Pro forma earnings per share - basic $ 0.31 $ (0.49) $ 0.91
Pro forma earnings per share - diluted $ 0.31 $ (0.49) $ 0.90
v3.10.0.1
Revenue - Additional Information (Detail) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Revenue [Line Items]          
Period of assurance-based warranty for product defects     90 days to five years    
Remaining performance obligations $ 0   $ 0    
Revenue recognized that was included in unearned revenue         $ 8,900,000
Lease Agreements [Member]          
Revenue [Line Items]          
Recognized revenue $ 4,200,000 $ 8,400,000 $ 10,500,000 $ 15,400,000  
Minimum [Member]          
Revenue [Line Items]          
Lessor sales type lease arrangement terms for network equipments     18 months    
Maintenance service periods     1 month    
Maximum [Member]          
Revenue [Line Items]          
Lessor sales type lease arrangement terms for network equipments     5 years    
Maintenance service periods     5 years    
v3.10.0.1
Revenue - Information about Receivables, Contract Assets, and Unearned Revenue from Contracts with Customers (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Jan. 01, 2018
Dec. 31, 2017
Revenue From Contract With Customer [Abstract]      
Accounts receivable $ 101,865 $ 144,150 $ 144,150
Contract assets 4,564 374  
Unearned revenue 17,004 13,070 13,070
Non-current unearned revenue $ 3,846 $ 4,556 $ 4,556
v3.10.0.1
Revenue - Disaggregate of Revenue by Major Source (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Disaggregation Of Revenue [Line Items]        
Revenue $ 140,335 $ 185,112 $ 389,189 $ 540,064
Access & Aggregation [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 91,901   258,323  
Customer Devices [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 38,552 35,582 103,213 105,683
Traditional & Other Products [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 9,882 13,571 27,653 39,640
Network Solutions [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 121,043 145,467 341,359 444,607
Network Solutions [Member] | Access & Aggregation [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 76,046   220,653  
Network Solutions [Member] | Customer Devices [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 37,313   99,396  
Network Solutions [Member] | Traditional & Other Products [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 7,684   21,310  
Services & Support [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 19,292 $ 39,645 47,830 $ 95,457
Services & Support [Member] | Access & Aggregation [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 15,855   37,670  
Services & Support [Member] | Customer Devices [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue 1,239   3,817  
Services & Support [Member] | Traditional & Other Products [Member]        
Disaggregation Of Revenue [Line Items]        
Revenue $ 2,198   $ 6,343  
v3.10.0.1
Income Taxes - Additional Information (Detail)
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Income Tax Disclosure [Abstract]    
Effective tax rate expense (benefit) (34.90%) 23.10%
v3.10.0.1
Pension Benefit Plan - Summarization of Components of Net Periodic Pension Cost (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Compensation And Retirement Disclosure [Abstract]        
Service cost $ 294 $ 327 $ 905 $ 930
Interest cost 179 158 551 448
Expected return on plan assets (381) (329) (1,174) (935)
Amortization of actuarial losses 61 80 188 228
Net periodic pension cost $ 153 $ 236 $ 470 $ 671
v3.10.0.1
Stock-Based Compensation - Stock-Based Compensation Expense Related to Stock Options, Performance Stock Units (PSUs), Restricted Stock Units (RSUs) and Restricted Stock (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Total stock-based compensation expense $ 1,640 $ 1,834 $ 5,243 $ 5,573
Tax benefit for expense associated with non-qualified options, PSUs, RSUs and restricted stock (292) (402) (1,016) (1,215)
Total stock-based compensation expense, net of tax 1,348 1,432 4,227 4,358
Stock-based Compensation Expense Included in Cost of Sales [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Total stock-based compensation expense 101 97 298 281
Selling, General and Administrative Expense [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Total stock-based compensation expense 894 994 2,924 3,018
Research and Development Expense [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Total stock-based compensation expense 645 743 2,021 2,274
Stock-based Compensation Expense Included in Operating Expenses [Member]        
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]        
Total stock-based compensation expense $ 1,539 $ 1,737 $ 4,945 $ 5,292
v3.10.0.1
Stock-Based Compensation - Summary of Stock Options Outstanding (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]          
Number of Stock Options, Stock options outstanding, Beginning Balance     5,148,000    
Number of Stock Options, Stock options granted 0 0 0 0  
Number of Stock Options, Stock options exercised     (85,000)    
Number of Stock Options, Stock options forfeited     (71,000)    
Number of Stock Options, Stock options expired     (331,000)    
Number of Stock Options, Stock options outstanding, Ending Balance 4,661,000   4,661,000   5,148,000
Number of Stock Options, Stock options vested and expected to vest 4,661,000   4,661,000    
Number of Stock Options, Stock options exercisable 3,952,000   3,952,000    
Weighted Avg. Exercise Price, Stock options outstanding, Beginning Balance     $ 22.65    
Weighted Avg. Exercise Price, Stock options exercised     15.48    
Weighted Avg. Exercise Price, Stock options forfeited     16.50    
Weighted Avg. Exercise Price, Stock options expired     25.87    
Weighted Avg. Exercise Price, Stock options outstanding, Ending Balance $ 22.64   22.64   $ 22.65
Weighted Avg. Exercise Price, Stock options vested and expected to vest 22.64   22.64    
Weighted Avg. Exercise Price, Stock options exercisable $ 23.75   $ 23.75    
Weighted Avg. Remaining Contractual Life In Years, Stock options outstanding     4 years 1 month 13 days   4 years 10 months 13 days
Weighted Avg. Remaining Contractual Life In Years, Stock options vested and expected to vest     4 years 1 month 13 days    
Weighted Avg. Remaining Contractual Life In Years, Stock options exercisable     3 years 7 months 17 days    
Aggregate Intrinsic Value, Stock options outstanding $ 2,730   $ 2,730   $ 6,109
Aggregate Intrinsic Value, Stock options vested and expected to vest 2,730   2,730    
Aggregate Intrinsic Value, Stock options exercisable $ 1,600   $ 1,600    
v3.10.0.1
Stock-Based Compensation (Stock Options) - Additional Information (Detail) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total pre-tax intrinsic value of options exercised $ 0.1   $ 0.2  
Number of Stock options, granted 0 0 0 0
Unvested Stock Options [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Unrecognized compensation expense related to stock options $ 1.2   $ 1.2  
Recognition period of unvested compensation expense     1 year  
v3.10.0.1
Stock-Based Compensation - Summary of PSUs, RSUs and Restricted Stock Outstanding (Detail)
shares in Thousands
9 Months Ended
Sep. 30, 2018
$ / shares
shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Number of Shares, Unvested PSUs, RSUs and restricted stock outstanding, beginning balance | shares 1,292
Number of Shares, PSUs, RSUs and restricted stock granted | shares 22
Number of Shares, PSUs, RSUs and restricted stock vested | shares (14)
Number of Shares, PSUs, RSUs and restricted stock forfeited | shares (165)
Number of Shares, Unvested PSUs, RSUs and restricted stock outstanding, ending balance | shares 1,135
Weighted Avg. Grant Date Fair Value, Unvested PSUs, RSUs and restricted stock outstanding, Beginning Balance | $ / shares $ 21.33
Weighted Avg. Grant Date Fair Value, PSUs, RSUs and restricted stock granted | $ / shares 17.84
Weighted Avg. Grant Date Fair Value, PSUs, RSUs and restricted stock vested | $ / shares 20.19
Weighted Avg. Grant Date Fair Value, PSUs, RSUs and restricted stock forfeited | $ / shares 21.66
Weighted Avg. Grant Date Fair Value, Unvested PSUs, RSUs and restricted stock outstanding, Ending Balance | $ / shares $ 21.23
v3.10.0.1
Stock-Based Compensation (PSUs, RSUs and Restricted Stock) - Additional Information (Detail) - USD ($)
shares in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Mar. 31, 2017
Sep. 30, 2018
Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
PSU shares grant approved by board of directors       22  
Stock-based compensation expense $ 1,640,000 $ 1,834,000   $ 5,243,000 $ 5,573,000
Performance Stock Units (PSUs) [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
PSU shares grant approved by board of directors     500    
Market-Based PSUs, RSUs and Restricted Stock [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Unrecognized compensation expense related to other than options 9,800,000     $ 9,800,000  
Recognition period of unvested compensation expense       2 years 7 months 6 days  
Performance-Based PSUs [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Unrecognized compensation expense related to other than options 9,400,000     $ 9,400,000  
Recognition period of unvested compensation expense       3 years  
Performance-Based PSU Awards [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Stock-based compensation expense $ 0     $ 0  
v3.10.0.1
Investments - Debt Securities and Other Investments, Recorded at Either Fair Value or Cost (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]    
Amortized Cost $ 61,593 $ 62,857
Gross Unrealized Gains 15 53
Gross Unrealized Losses (545) (417)
Available-for-sale debt securities, Carrying Value 61,063 62,493
Restricted investment held at cost 26,700 27,800
Other investments held at cost 520 547
Total carrying value of available-for-sale investments 88,283 90,840
Corporate Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized Cost 25,758 32,654
Gross Unrealized Gains 13 44
Gross Unrealized Losses (209) (155)
Available-for-sale debt securities, Carrying Value 25,562 32,543
Municipal Fixed-Rate Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized Cost 1,451 2,902
Gross Unrealized Gains   2
Gross Unrealized Losses (36) (22)
Available-for-sale debt securities, Carrying Value 1,415 2,882
Asset-Backed Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized Cost 8,384 6,545
Gross Unrealized Gains   1
Gross Unrealized Losses (29) (20)
Available-for-sale debt securities, Carrying Value 8,355 6,526
Mortgage/Agency-Backed Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized Cost 5,450 5,554
Gross Unrealized Gains   1
Gross Unrealized Losses (87) (46)
Available-for-sale debt securities, Carrying Value 5,363 5,509
U.S. Government Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized Cost 19,957 14,477
Gross Unrealized Losses (184) (174)
Available-for-sale debt securities, Carrying Value 19,773 14,303
Foreign Government Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Amortized Cost 593 725
Gross Unrealized Gains 2 5
Available-for-sale debt securities, Carrying Value $ 595 $ 730
v3.10.0.1
Investments - Contractual Maturities of Debt Securities (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale debt securities, Fair Value/Carrying Value $ 61,063 $ 62,493
Corporate Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Less than one year 2,800  
One to two years 10,122  
Two to three years 9,898  
Three to five years 2,742  
Available-for-sale debt securities, Fair Value/Carrying Value 25,562 32,543
Municipal Fixed-Rate Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
One to two years 287  
Two to three years 1,128  
Available-for-sale debt securities, Fair Value/Carrying Value 1,415 2,882
Asset-Backed Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Less than one year 3,112  
One to two years 657  
Two to three years 714  
Three to five years 2,244  
Five to ten years 445  
More than ten years 1,183  
Available-for-sale debt securities, Fair Value/Carrying Value 8,355 6,526
Mortgage/Agency-Backed Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Two to three years 425  
Three to five years 1,561  
Five to ten years 525  
More than ten years 2,852  
Available-for-sale debt securities, Fair Value/Carrying Value 5,363 5,509
U.S. Government Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
One to two years 11,716  
Two to three years 5,565  
Three to five years 2,492  
Available-for-sale debt securities, Fair Value/Carrying Value 19,773 14,303
Foreign Government Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
One to two years 285  
Two to three years 310  
Available-for-sale debt securities, Fair Value/Carrying Value $ 595 $ 730
v3.10.0.1
Investments - Gross Realized Gains and Losses on Sale of Debt Securities (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Investments Debt And Equity Securities [Abstract]        
Gross realized gains on debt securities $ 24 $ 91 $ 49 $ 148
Gross realized losses on debt securities (50) (28) (365) (179)
Total gain (loss) recognized, net $ (26) $ 63 $ (316) $ (31)
v3.10.0.1
Investments - Additional Information (Detail) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2018
Jan. 01, 2018
Dec. 31, 2017
Schedule of Investments [Line Items]      
Restricted certificate of deposit held $ 26,700   $ 27,800
ASU 2016-01 [Member]      
Schedule of Investments [Line Items]      
Reclassification of net unrealized gains of marketable equity securities from AOCI to retained earnings   $ 3,200  
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 $ 26,700   26,700
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 $ 26,500   $ 26,700
Investment [Member] | Issuer Concentration [Member] | Market Value of Total Investment Portfolio [Member]      
Schedule of Investments [Line Items]      
Investment concentration risk percentage 5.00%    
v3.10.0.1
Investments - Realized and Unrealized Gains and Losses for Marketable Equity Securities (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2018
Investments Debt And Equity Securities [Abstract]    
Realized gains (losses) on equity securities sold $ 1,240 $ 1,587
Unrealized gains (losses) on equity securities held 3,293 4,129
Total gain (loss) recognized, net $ 4,533 $ 5,716
v3.10.0.1
Investments - Fair Value Measurements of Cash Equivalents and Investments (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities $ 61,063 $ 62,493
Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash equivalents 2,023 9,850
Available-for-sale securities 122,933 118,038
Total 124,956 127,888
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 1,423 5,851
Available-for-sale securities 81,643 69,848
Total 83,066 75,699
Fair Value, Measurements [Member] | Significant Other Observable Inputs (Level 2) [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash equivalents 600 3,999
Available-for-sale securities 41,290 48,190
Total 41,890 52,189
Money Market Funds [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash equivalents 1,423 5,851
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 1,423 5,851
Corporate Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 25,562 32,543
Corporate Bonds [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 25,562 32,543
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 25,562 32,543
Foreign Government Securities [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash equivalents 600  
Foreign Government Securities [Member] | Fair Value, Measurements [Member] | Significant Other Observable Inputs (Level 2) [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash equivalents 600  
Municipal Fixed-Rate Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 1,415 2,882
Municipal Fixed-Rate Bonds [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 1,415 2,882
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 1,415 2,882
Commercial Paper [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash equivalents   3,999
Commercial Paper [Member] | Fair Value, Measurements [Member] | Significant Other Observable Inputs (Level 2) [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Cash equivalents   3,999
Asset-Backed Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 8,355 6,526
Asset-Backed Bonds [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 8,355 6,526
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 8,355 6,526
Mortgage/Agency-Backed Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 5,363 5,509
Mortgage/Agency-Backed Bonds [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 5,363 5,509
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 5,363 5,509
U.S. Government Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 19,773 14,303
U.S. Government Bonds [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 19,773 14,303
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 19,773 14,303
Foreign Government Bonds [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 595 730
Foreign Government Bonds [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Available-for-sale securities 595 730
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 595 730
Marketable Equity Securities - Various Industries [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Marketable equity securities 40,645 35,662
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]    
Marketable equity securities 40,645 35,662
Deferred Compensation Plan Assets [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Marketable equity securities 20,948 19,883
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]    
Marketable equity securities 20,948 $ 19,883
Equity in Escrow [Member] | Fair Value, Measurements [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Marketable equity securities 277  
Equity in Escrow [Member] | Fair Value, Measurements [Member] | Quoted Prices in Active Market for Identical Assets (Level 1) [Member]    
Schedule of Available-for-sale Securities [Line Items]    
Marketable equity securities $ 277  
v3.10.0.1
Derivative Instruments and Hedging Activities - Additional Information (Detail)
Sep. 30, 2018
USD ($)
Foreign Exchange Forward Contracts [Member]  
Derivative [Line Items]  
Derivative instruments, amount $ 0
v3.10.0.1
Derivative Instruments and Hedging Activities - Schedule of Changes in Fair Values of Derivative Instruments Recorded in Consolidated Statements of Income (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Foreign Exchange Contracts [Member] | Other Income (Expense), Net [Member]      
Derivatives Not Designated as Hedging Instruments:      
Derivative instrument, gain or loss $ (334) $ 13 $ (819)
v3.10.0.1
Derivative Instruments and Hedging Activities - Schedule of Changes in Derivatives Designated Hedging Instruments Recorded in Other Comprehensive Income (OCI) and Reclassified to Income, Net of Tax (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2017
Derivative [Line Items]    
Amount of Gains (Losses) Recognized in OCI on Derivatives $ (127) $ (619)
Foreign Exchange Contracts [Member] | Derivatives Designated as Hedging Instruments [Member]    
Derivative [Line Items]    
Amount of Gains (Losses) Recognized in OCI on Derivatives (127) (619)
Foreign Exchange Contracts [Member] | Derivatives Designated as Hedging Instruments [Member] | Cost of Sales [Member]    
Derivative [Line Items]    
Amount of Gains (Losses) Reclassified from AOCI into Income $ (269) $ (423)
v3.10.0.1
Inventory - Components of Inventory (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Inventory Disclosure [Abstract]    
Raw materials $ 47,664 $ 44,185
Work in process 1,289 1,939
Finished goods 57,107 76,418
Total $ 106,060 $ 122,542
v3.10.0.1
Inventory - Additional Information (Detail) - USD ($)
$ in Millions
Sep. 30, 2018
Dec. 31, 2017
Raw Materials [Member]    
Inventory [Line Items]    
Inventory valuation reserves $ 17.2 $ 15.0
Finished Goods [Member]    
Inventory [Line Items]    
Inventory valuation reserves $ 10.6 $ 8.3
v3.10.0.1
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Goodwill [Line Items]          
Goodwill, relates to acquisition     $ 3,500,000   $ 3,500,000
Impairment losses     0    
Amortization expense $ 900,000 $ 500,000 2,400,000 $ 2,400,000  
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    
v3.10.0.1
Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Goodwill [Line Items]    
Gross Value $ 36,589 $ 14,728
Accumulated Amortization (12,335) (10,067)
Net Value 24,254 4,661
Customer Relationships [Member]    
Goodwill [Line Items]    
Gross Value 20,724 7,474
Accumulated Amortization (5,072) (4,283)
Net Value 15,652 3,191
Licensed Technology [Member]    
Goodwill [Line Items]    
Gross Value 5,900  
Accumulated Amortization (355)  
Net Value 5,545  
Developed Technology [Member]    
Goodwill [Line Items]    
Gross Value 5,435 5,524
Accumulated Amortization (4,799) (4,663)
Net Value 636 861
Intellectual Property [Member]    
Goodwill [Line Items]    
Gross Value 930 930
Accumulated Amortization (930) (852)
Net Value   78
Supplier Relationship [Member]    
Goodwill [Line Items]    
Gross Value 2,800  
Accumulated Amortization (758)  
Net Value 2,042  
Trade Names [Member]    
Goodwill [Line Items]    
Gross Value 100 100
Accumulated Amortization (100) (65)
Net Value   35
Patent [Member]    
Goodwill [Line Items]    
Gross Value 500 500
Accumulated Amortization (140) (89)
Net Value 360 411
Non-compete [Member]    
Goodwill [Line Items]    
Gross Value 200 200
Accumulated Amortization (181) (115)
Net Value $ 19 $ 85
v3.10.0.1
Goodwill and Intangible Assets - Estimated Future Amortization Expense Related to Intangible Assets (Detail) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Goodwill And Intangible Assets Disclosure [Abstract]    
Remainder of 2018 $ 859  
2019 3,540  
2020 2,657  
2021 2,364  
2022 2,350  
Thereafter 12,484  
Net Value $ 24,254 $ 4,661
v3.10.0.1
Stockholders' Equity - Summary of Changes in Stockholders' Equity (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Equity [Abstract]        
Beginning Balance     $ 497,911  
Net Income (Loss) $ 7,589 $ 15,898 (10,895) $ 34,950
Dividend payments     (12,976)  
Dividends accrued for unvested restricted stock units     (15)  
Net unrealized gains (losses) on available-for-sale securities (32) 804 (3,340) 2,512
Defined benefit plan adjustments (net of tax) 37 73 104 214
Foreign currency translation adjustment (451) $ 1,541 (3,033) 5,402
Proceeds from stock option exercises     1,321 $ 6,606
Purchase of treasury stock     (14,185)  
Adoption of new accounting standards (see Note 1)     3,499  
Stock-based compensation expense     5,243  
RSU's and restricted stock vested     (33)  
Ending Balance $ 463,601   $ 463,601  
v3.10.0.1
Stockholders' Equity - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Thousands
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Equity [Abstract]    
Maximum shares authorized for repurchase, prior and new announcements and total after new announcement 50,000,000.0  
Stock repurchased, shares 900,000  
Shares repurchased, average price per share $ 15.75  
Additional shares authorized for purchase 2,700,000  
Treasury stock shares issued to accommodate employee stock option exercises 100,000  
Exercise price of stock options, lower range limit $ 15.29  
Exercise price of stock options, upper range limit $ 18.97  
Proceeds from stock option exercises $ 1,321 $ 6,606
v3.10.0.1
Stockholders' Equity - Cash Dividends (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dividends Payable [Line Items]        
Per Share Amount $ 0.09 $ 0.09 $ 0.27 $ 0.27
Total Dividend Paid     $ 12,976 $ 13,031
Cash Dividends Paid in February [Member]        
Dividends Payable [Line Items]        
Record Date     Jan. 31, 2018  
Payment Date     Feb. 14, 2018  
Per Share Amount     $ 0.09  
Total Dividend Paid     $ 4,367  
Cash Dividends Paid in May [Member]        
Dividends Payable [Line Items]        
Record Date     May 02, 2018  
Payment Date     May 16, 2018  
Per Share Amount     $ 0.09  
Total Dividend Paid     $ 4,312  
Cash Dividends Paid in August [Member]        
Dividends Payable [Line Items]        
Record Date     Aug. 01, 2018  
Payment Date     Aug. 15, 2018  
Per Share Amount     $ 0.09  
Total Dividend Paid     $ 4,297  
v3.10.0.1
Stockholders' Equity - Changes in Accumulated Other Comprehensive Income (Loss), Net of Tax by Component (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance     $ 497,911  
Other comprehensive income (loss) before reclassifications $ 757 $ 2,834 (2,164) $ 9,045
Amounts reclassified from accumulated other comprehensive income (loss) (1,203) (274) (885) (1,113)
Amounts reclassified to retained earnings     (3,220)  
Other Comprehensive Income (Loss), net of tax (446) 2,560 (6,269) 7,932
Ending Balance 463,601   463,601  
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance (741) 2,112 2,567 404
Other comprehensive income (loss) before reclassifications 1,208 1,420 869 4,262
Amounts reclassified from accumulated other comprehensive income (loss) (1,240) (616) (989) (1,750)
Amounts reclassified to retained earnings     (3,220)  
Other Comprehensive Income (Loss), net of tax (32) 804 (3,340) 2,512
Ending Balance (773) 2,916 (773) 2,916
Unrealized Gains (Losses) on Cash Flow Hedges [Member]        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance   (338)    
Other comprehensive income (loss) before reclassifications   (127)   (619)
Amounts reclassified from accumulated other comprehensive income (loss)   269   423
Other Comprehensive Income (Loss), net of tax   142   (196)
Ending Balance   (196)   (196)
Defined Benefit Plan Adjustments [Member]        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance (4,219) (4,876) (4,286) (5,017)
Amounts reclassified from accumulated other comprehensive income (loss) 37 73 104 214
Other Comprehensive Income (Loss), net of tax 37 73 104 214
Ending Balance (4,182) (4,803) (4,182) (4,803)
Foreign Currency Adjustments [Member]        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance (4,158) (3,714) (1,576) (7,575)
Other comprehensive income (loss) before reclassifications (451) 1,541 (3,033) 5,402
Other Comprehensive Income (Loss), net of tax (451) 1,541 (3,033) 5,402
Ending Balance (4,609) (2,173) (4,609) (2,173)
Accumulated Other Comprehensive Income [Member]        
Accumulated Other Comprehensive Income (Loss) [Line Items]        
Beginning Balance (9,118) (6,816) (3,295) (12,188)
Ending Balance $ (9,564) $ (4,256) $ (9,564) $ (4,256)
v3.10.0.1
Stockholders' Equity - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss) [Line Items]        
Cost of sales $ (81,887) $ (98,621) $ (241,012) $ (295,238)
Income (Loss) Before Provision for Income Taxes 3,220 19,207 (22,784) 45,421
Tax (expense) benefit 4,369 (3,309) 11,889 (10,471)
Total reclassifications for the period, net of tax 7,589 15,898 (10,895) 34,950
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member]        
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss) [Line Items]        
Defined benefit plan adjustments – actuarial losses (54) (106) (151) (310)
Income (Loss) Before Provision for Income Taxes 1,622 518 1,201 2,020
Tax (expense) benefit (419) (244) (316) (907)
Total reclassifications for the period, net of tax 1,203 274 885 1,113
Unrealized Gains (Losses) on Available-for-Sale Securities [Member] | Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member]        
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss) [Line Items]        
Net investment gain $ 1,676 1,066 $ 1,352 3,031
Impairment Expense [Member] | Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member]        
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss) [Line Items]        
Net investment gain   (57)   (162)
Net Losses on Derivatives Designated as Hedging Instruments [Member] | Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member]        
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss) [Line Items]        
Cost of sales   $ (385)   $ (539)
v3.10.0.1
Stockholders' Equity - Tax Effects Related to the Change in Each Component of Other Comprehensive Income (Loss) (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Equity [Abstract]        
Unrealized gains (losses) on available-for-sale securities, Before-Tax Amount $ 1,632 $ 2,328 $ 1,174 $ 6,987
Unrealized gains (losses) on available-for-sale securities, Tax (Expense) Benefit (424) (908) (305) (2,725)
Unrealized gains (losses) on available-for-sale securities, Net-of-Tax Amount 1,208 1,420 869 4,262
Unrealized gains (losses) on cash flow hedges, Before-Tax Amount   (184)   (897)
Unrealized gains (losses) on cash flow hedges, Tax (Expense) Benefit   57   278
Unrealized gains (losses) on cash flow hedges, Net-of-Tax Amount   (127)   (619)
Reclassification adjustment for amounts related to available-for-sale investments included in net income, Before-Tax Amount (1,676) (1,009) (1,352) (2,869)
Reclassification adjustment for amounts related to available-for-sale investments included in net income, Tax (Expense) Benefit 436 393 363 1,119
Reclassification adjustment for amounts related to available-for-sale investments included in net income, Net-of-Tax Amount (1,240) (616) (989) (1,750)
Reclassification adjustment for amounts reclassed to retained earnings related to the adoption of ASU 2016-01, Before-Tax Amount     (3,220)  
Reclassification adjustment for amounts reclassed to retained earnings related to the adoption of ASU 2016-01, Net-of-Tax Amount     (3,220)  
Reclassification adjustment for amounts related to cash flow hedges included in net income, Before-Tax Amount   385   539
Reclassification adjustment for amounts related to cash flow hedges included in net income, Tax (Expense) Benefit   (116)   (116)
Reclassification adjustment for amounts related to cash flow hedges included in net income, Net-of-Tax Amount   269   423
Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income, Before-Tax Amount 54 106 151 310
Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income, Tax (Expense) Benefit (17) (33) (47) (96)
Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income, Net-of-Tax Amount 37 73 104 214
Foreign currency translation adjustment, Before-Tax Amount (451) 1,541 (3,033) 5,402
Foreign currency translation adjustment, Net-of-Tax Amount (451) 1,541 (3,033) 5,402
Total Other Comprehensive Income (Loss), Before-Tax Amount (441) 3,167 (6,280) 9,472
Total Other Comprehensive Income (Loss), Tax (Expense) Benefit (5) (607) 11 (1,540)
Other Comprehensive Income (Loss), net of tax $ (446) $ 2,560 $ (6,269) $ 7,932
v3.10.0.1
Earnings Per Share - Summary of Calculation of Basic and Diluted Earnings Per Share (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Numerator        
Net Income (Loss) $ 7,589 $ 15,898 $ (10,895) $ 34,950
Denominator        
Weighted average number of shares – basic 47,710 47,870 47,927 48,110
Effect of dilutive securities        
Stock options 27 487   385
PSUs, RSUs and restricted stock 97 174   123
Weighted average number of shares – diluted 47,834 48,531 47,927 48,618
Net income (loss) per share – basic $ 0.16 $ 0.33 $ (0.23) $ 0.73
Net income (loss) per share – diluted $ 0.16 $ 0.33 $ (0.23) $ 0.72
v3.10.0.1
Earnings Per Share - Additional Information (Detail) - shares
shares in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]        
Anti-dilutive effect excluded calculation of diluted EPS 3.9 3.2 4.8 3.9
Unvested Stock Options, PSUs, RSUs and Restricted Stock [Member]        
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]        
Anti-dilutive effect excluded calculation of diluted EPS     0.1  
v3.10.0.1
Segment Information - Additional Information (Detail)
9 Months Ended
Sep. 30, 2018
Segment
Category
Segment Reporting [Abstract]  
Number of reportable segments | Segment 2
Number of categories | Category 3
v3.10.0.1
Segment Information - Sales and Gross Profit of Reportable Segments (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Segment Reporting Information [Line Items]        
Sales $ 140,335 $ 185,112 $ 389,189 $ 540,064
Gross Profit 58,448 86,491 148,177 244,826
Network Solutions [Member]        
Segment Reporting Information [Line Items]        
Sales 121,043 145,467 341,359 444,607
Gross Profit 51,100 71,933 133,175 214,746
Services & Support [Member]        
Segment Reporting Information [Line Items]        
Sales 19,292 39,645 47,830 95,457
Gross Profit $ 7,348 $ 14,558 $ 15,002 $ 30,080
v3.10.0.1
Segment Information - Sales Information by Category (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Revenue from External Customer [Line Items]        
Sales $ 140,335 $ 185,112 $ 389,189 $ 540,064
Access & Aggregation [Member]        
Revenue from External Customer [Line Items]        
Sales 91,901 135,959 258,323 394,741
Customer Devices [Member]        
Revenue from External Customer [Line Items]        
Sales 38,552 35,582 103,213 105,683
Traditional & Other Products [Member]        
Revenue from External Customer [Line Items]        
Sales $ 9,882 $ 13,571 $ 27,653 $ 39,640
v3.10.0.1
Liability for Warranty Returns - Additional Information (Detail) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2018
Jun. 30, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Dec. 31, 2016
Product Warranties Disclosures [Abstract]            
Period of assurance-based warranty for product defects 90 days to five years          
Liability for warranty obligations $ 9,024 $ 10,111 $ 9,724 $ 10,939 $ 9,180 $ 8,548
v3.10.0.1
Liability for Warranty Returns - Summary of Warranty Expense and Write-Off Activity (Detail) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Product Warranties Disclosures [Abstract]        
Balance at beginning of period $ 10,111 $ 9,180 $ 9,724 $ 8,548
Plus: Amounts charged to cost and expenses (34) 4,087 6,649 6,401
Less: Deductions (1,053) (2,328) (7,349) (4,010)
Balance at end of period $ 9,024 $ 10,939 $ 9,024 $ 10,939
v3.10.0.1
Commitments and Contingencies - Additional Information (Detail)
$ in Millions
Sep. 30, 2018
USD ($)
EquityUnit
Contingencies And Commitments [Line Items]  
Number of private equity funds | EquityUnit 2
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
v3.10.0.1
Subsequent Events - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Millions
9 Months Ended
Nov. 06, 2018
Oct. 16, 2018
Sep. 30, 2018
Nov. 14, 2018
Subsequent Event [Line Items]        
Stock repurchased, shares     900,000  
Shares repurchased, average price per share     $ 15.75  
Additional shares authorized for purchase     2,700,000  
Scenario Forecast [Member]        
Subsequent Event [Line Items]        
Quarterly dividend payable subsequent to balance sheet date       $ 4.3
Subsequent Events [Member]        
Subsequent Event [Line Items]        
Dividend declaration date   Oct. 16, 2018    
Common stock dividends per share declared   $ 0.09    
Dividend record date   Oct. 31, 2018    
Dividend payment date   Nov. 14, 2018    
Stock repurchased, shares 100,000      
Shares repurchased, average price per share $ 13.60      
Additional shares authorized for purchase 2,600,000