10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 000-24612

ADTRAN, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	63-0918200
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
901 Explorer Boulevard Huntsville, Alabama	35806-2807
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (256) 963-8000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a small reporting company)	Small reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 20, 2018, the registrant had 47,739,170 shares of common stock, $0.01 par value per share, outstanding.

ADTRAN, Inc.

Quarterly Report on Form 10-Q

For the Three and Six Months Ended June 30, 2018

Table of Contents

Item Number		Page Number
	PART I. FINANCIAL INFORMATION
1	Financial Statements:
	Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017 – (Unaudited)	3
	Consolidated Statements of Income for the three and six months ended June 30, 2018 and 2017 – (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2018 and 2017 – (Unaudited)	5
	Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017 – (Unaudited)	6
	Notes to Consolidated Financial Statements – (Unaudited)	7
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
3	Quantitative and Qualitative Disclosures About Market Risk	37
4	Controls and Procedures	38
	PART II. OTHER INFORMATION
1A	Risk Factors	39
2	Unregistered Sales of Equity Securities and Use of Proceeds	39
6	Exhibits	40
	SIGNATURE	41

FORWARD LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of ADTRAN. ADTRAN and its representatives may from time to time make written or oral forward-looking statements, including statements contained in this report, our other filings with the Securities and Exchange Commission (SEC) and other communications with our stockholders. Generally, the words, “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could” and similar expressions identify forward-looking statements. We caution you that any forward-looking statements made by us or on our behalf are subject to uncertainties and other factors that could cause such statements to be wrong. A list of factors that could materially affect our business, financial condition or operating results is included under “Factors that Could Affect Our Future Results” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Item 2 of Part I of this report. They have also been discussed in Item 1A of Part I in our most recent Annual Report on Form 10-K for the year ended December 31, 2017, filed on February 23, 2018 with the SEC. Though we have attempted to list comprehensively these important factors, we caution investors that other factors may prove to be important in the future in affecting our operating results. New factors emerge from time to time, and it is not possible for us to predict all of these factors, nor can we assess the impact each factor or a combination of factors may have on our business.

You are further cautioned not to place undue reliance on these forward-looking statements because they speak only of our views as of the date that the statements were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ADTRAN, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

	June 30,			December 31,
	2018			2017
ASSETS
Current Assets
Cash and cash equivalents	$	100,319		$	86,433
Short-term investments		6,069			16,129
Accounts receivable, less allowance for doubtful accounts of $— at June 30, 2018 and December 31, 2017		76,135			144,150
Other receivables		28,163			26,578
Inventory, net		120,537			122,542
Prepaid expenses and other current assets		9,464			17,282
Total Current Assets		340,687			413,114
Property, plant and equipment, net		82,910			85,079
Deferred tax assets, net		35,615			23,428
Goodwill		3,492			3,492
Other assets		32,429			13,725
Long-term investments		144,437			130,256
Total Assets	$	639,570		$	669,094
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	60,150		$	60,632
Unearned revenue		14,307			13,070
Accrued expenses		14,785			13,232
Accrued wages and benefits		14,913			15,948
Income tax payable		11,948			3,936
Total Current Liabilities		116,103			106,818
Non-current unearned revenue		3,639			4,556
Other non-current liabilities		34,601			34,209
Bonds payable		25,600			25,600
Total Liabilities		179,943			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 47,733 shares outstanding at June 30, 2018 and 79,652 shares    issued and 48,485 shares outstanding at December 31, 2017		797			797
Additional paid-in capital		264,118			260,515
Accumulated other comprehensive loss		(9,118	)		(3,295	)
Retained earnings		897,586			922,178
Less treasury stock at cost: 31,919 and 31,167 shares at June 30, 2018 and    December 31, 2017, respectively		(693,756	)		(682,284	)
Total Stockholders’ Equity		459,627			497,911
Total Liabilities and Stockholders’ Equity	$	639,570		$	669,094

See notes to consolidated financial statements

3

ADTRAN, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Sales
Products	$	115,063		$	155,543		$	220,316		$	299,140
Services		12,985			29,130			28,538			55,812
Total Sales		128,048			184,673			248,854			354,952
Cost of Sales
Products		69,629			79,663			138,241			156,327
Services		8,423			20,384			20,884			40,290
Total Cost of Sales		78,052			100,047			159,125			196,617
Gross Profit		49,996			84,626			89,729			158,335
Selling, general and administrative expenses		32,080			34,706			65,611			69,495
Research and development expenses		30,729			33,557			63,578			65,528
Operating Income (Loss)		(12,813	)		16,363			(39,460	)		23,312
Interest and dividend income		913			972			1,779			1,905
Interest expense		(132	)		(137	)		(264	)		(278	)
Net realized investment gain		990			1,390			893			1,860
Other expense, net		(217	)		(719	)		(274	)		(585	)
Gain on bargain purchase of a business		—			—			11,322			—
Income (Loss) Before Provision for Income Taxes		(11,259	)		17,869			(26,004	)		26,214
(Provision) benefit for income taxes		3,589			(5,468	)		7,520			(7,162	)
Net Income (Loss)	$	(7,670	)	$	12,401		$	(18,484	)	$	19,052
Weighted average shares outstanding – basic		47,856			48,036			48,043			48,232
Weighted average shares outstanding – diluted		47,902			48,413			48,091			48,675
Earnings (loss) per common share – basic	$	(0.16	)	$	0.26		$	(0.38	)	$	0.40
Earnings (loss) per common share – diluted	$	(0.16	)	$	0.26		$	(0.38	)	$	0.39
Dividend per share	$	0.09		$	0.09		$	0.18		$	0.18

See notes to consolidated financial statements

4

ADTRAN, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Net Income (Loss)	$	(7,670	)	$	12,401		$	(18,484	)	$	19,052
Other Comprehensive Income (Loss), net of tax
Net unrealized gains (losses) on available-for-sale securities		104			373			(3,308	)		1,708
Net unrealized losses on cash flow hedges		—			(417	)		—			(338	)
Defined benefit plan adjustments		5			86			67			141
Foreign currency translation		(3,424	)		2,619			(2,582	)		3,861
Other Comprehensive Income (Loss), net of tax		(3,315	)		2,661			(5,823	)		5,372
Comprehensive Income (Loss), net of tax	$	(10,985	)	$	15,062		$	(24,307	)	$	24,424

See notes to consolidated financial statements

5

ADTRAN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended
	June 30,
	2018			2017
Cash flows from operating activities:
Net income (loss)	$	(18,484	)	$	19,052
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		7,526			8,377
Amortization of net premium on available-for-sale investments		20			238
Net realized gain on long-term investments		(893	)		(1,860	)
Net (gain) loss on disposal of property, plant and equipment		68			(11	)
Gain on bargain purchase of a business		(11,322	)		—
Stock-based compensation expense		3,603			3,739
Deferred income taxes		(16,384	)		(2,772	)
Changes in operating assets and liabilities:
Accounts receivable, net		66,931			13,911
Other receivables		9			571
Inventory		2,063			(7,547	)
Prepaid expenses and other assets		10,157			(9,853	)
Accounts payable		683			(10,910	)
Accrued expenses and other liabilities		2,008			(2,629	)
Income tax payable		6,945			10,273
Net cash provided by operating activities		52,930			20,579
Cash flows from investing activities:
Purchases of property, plant and equipment		(4,183	)		(7,509	)
Proceeds from disposals of property, plant and equipment		—			16
Proceeds from sales and maturities of available-for-sale investments		86,436			81,891
Purchases of available-for-sale investments		(89,801	)		(65,140	)
Acquisition of business		(7,806	)		—
Net cash provided by (used in) investing activities		(15,354	)		9,258
Cash flows from financing activities:
Proceeds from stock option exercises		369			1,722
Purchases of treasury stock		(12,774	)		(17,311	)
Dividend payments		(8,679	)		(8,719	)
Net cash used in financing activities		(21,084	)		(24,308	)
Net increase in cash and cash equivalents		16,492			5,529
Effect of exchange rate changes		(2,606	)		3,374
Cash and cash equivalents, beginning of period		86,433			79,895
Cash and cash equivalents, end of period	$	100,319		$	88,798
Supplemental disclosure of non-cash investing activities:
Purchases of property, plant and equipment included in accounts payable	$	209		$	454

See notes to consolidated financial statements

6

ADTRAN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands, except per share amounts)

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. Subsequently, in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, which clarified certain aspects of ASU 2016-02. ASU 2016-02 and ASU 2018-10 are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. A modified retrospective approach is required. We anticipate the adoption of 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 and equipment.

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.

7

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.

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 isintended 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

8

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 June 30, 2018
(In thousands)	As Reported			Balances Without Adoption of ASC 606			Effect of Adoption of ASC 606
Sales
Products	$	115,063			115,437		$	(374	)
Services	$	12,985			13,430		$	(445	)
Cost of Sales
Products	$	69,629			70,003		$	(374	)
Services	$	8,423			8,772		$	(349	)
Loss before benefit for income taxes	$	(11,259	)		(11,163	)	$	(96	)
Benefit for income taxes	$	3,589			3,558		$	31
Net loss	$	(7,670	)		(7,605	)	$	(65	)

	For the six months ended June 30, 2018
(In thousands)	As Reported			Balances Without Adoption of ASC 606			Effect of Adoption of ASC 606
Sales
Products	$	220,316			220,876		$	(560	)
Services	$	28,538			28,130		$	408
Cost of Sales
Products	$	138,241			138,726		$	(485	)
Services	$	20,884			20,697		$	187
Loss before benefit for income taxes	$	(26,004	)		(26,150	)	$	146
Benefit for income taxes	$	7,520			7,556		$	(36	)
Net loss	$	(18,484	)		(18,594	)	$	110

	As of  June 30, 2018
(In thousands)	As Reported		Balances Without Adoption of ASC 606		Effect of Adoption of ASC 606
Assets
Other receivables	$	28,163		28,164	$	(1	)
Inventory	$	120,537		120,426	$	111
Equity
Retained earnings	$	897,586		897,476	$	110

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. We are currently evaluating the effect ASU 2018-03 will have on our consolidated financial statements.

9

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 $0.2 million have been reclassified from cost of sales, selling, general and administrative expenses, and research and development expense to other expense, net for the three and six months ended June 30, 2017, respectively.

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 June 30, 2018 and the period March 19, 2018 to June 30, 2018 are as follows:

	Three Months Ended			March 19, 2018 to
(In thousands)	June 30, 2018			June 30, 2018
Revenue	$	1,197		$	1,197
Net loss	$	(809	)	$	(886	)

10

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		Six Months Ended
	June 30,		June 30,
(In thousands)	2017		2018			2017
Pro forma revenue	$	187,987	$	250,114		$	358,679
Pro forma net income (loss)	$	11,628	$	(31,020	)	$	28,829
Pro forma earnings per share - basic	$	0.24	$	(0.65	)	$	0.60
Pro forma earnings per share - diluted	$	0.24	$	(0.65	)	$	0.59

For the three and six months ended June 30, 2018, we incurred acquisition and integration related expenses and amortization of acquired intangibles of $0.8 million and $1.0 million, respectively, related to this acquisition.

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.

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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 the most likely amount. 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 June 30, 2018 and 2017, we recognized revenue of $4.0 million and $5.2 million, respectively, and during the six months ended June 30, 2018 and 2017 we recognized revenue of $6.3 million and $7.0 million, respectively.

Services & Support Segment

To complement our Network Solutions segment, we offer a complete portfolio of maintenance, network implementation, 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. Payments received are recorded in current or non-current unearned revenue depending on the length of the service 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.

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 June 30, 2018, we did not have any remaining 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)	June 30, 2018		January 1, 2018
Accounts receivable	$	76,135	$	144,150
Contract assets		1,672		374
Unearned revenue		14,307		13,070
Non-current unearned revenue		3,639		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 six months ended June 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 June 30, 2018 is primarily attributable to cash payments received or due in advance of satisfying our performance obligations, offset by $7.1 million of revenues recognized that were included in the unearned revenue balance as of December 31, 2017.

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

(In thousands)	Network Solutions		Services & Support		Total
Access & Aggregation	$	75,222	$	9,520	$	84,742
Customer Devices		33,306		1,254		34,560
Traditional & Other Products		6,535		2,211		8,746
Total	$	115,063	$	12,985	$	128,048

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

(In thousands)	Network Solutions		Services & Support		Total
Access & Aggregation	$	144,607	$	21,815	$	166,422
Customer Devices		62,083		2,578		64,661
Traditional & Other Products		13,626		4,145		17,771
Total	$	220,316	$	28,538	$	248,854

4. INCOME TAXES

Our effective tax rate decreased from an expense of 27.3% in the six months ended June 30, 2017, to a benefit of 20.1%, excluding the tax effect of the bargain purchase gain, in the six months ended June 30, 2018. The decrease in the effective tax rate between the two periods is primarily attributable to the change in income and the effect of the U.S. Tax Cuts and Jobs Act, which was signed into law on December 22, 2017.

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 six months ended June 30, 2018 and 2017:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Service cost	$	303		$	306		$	611		$	603
Interest cost		185			147			372			290
Expected return on plan assets		(394	)		(307	)		(793	)		(606	)
Amortization of actuarial losses		63			75			127			148
Net periodic pension cost	$	157		$	221		$	317		$	435

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

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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 six months ended June 30, 2018 and 2017, which was recognized as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Stock-based compensation expense included in cost of sales	$	102		$	93		$	197		$	184
Selling, general and administrative expense		995			1,008			2,030			2,024
Research and development expense		687			755			1,376			1,531
Stock-based compensation expense included in operating expenses		1,682			1,763			3,406			3,555
Total stock-based compensation expense		1,784			1,856			3,603			3,739
Tax benefit for expense associated with non-qualified options, PSUs, RSUs and    restricted stock		(340	)		(433	)		(724	)		(813	)
Total stock-based compensation expense, net of tax	$	1,444		$	1,423		$	2,879		$	2,926

Stock Options

The following table is a summary of our stock options outstanding as of December 31, 2017 and June 30, 2018 and the changes that occurred during the six months ended June 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		(24	)	$	15.48
Stock options forfeited		(42	)	$	16.54
Stock options expired		(282	)	$	25.63
Stock options outstanding, June 30, 2018		4,800		$	22.56		4.39	$	—
Stock options vested and expected to vest, June 30, 2018		4,800		$	22.56		4.39	$	—
Stock options exercisable, June 30, 2018		4,063		$	23.67		3.90	$	—

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between the closing price of our stock on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all option holders exercised their options on June 30, 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 six months ended June 30, 2018 was $33 thousand. There were no options exercised during the three months ended June 30, 2018.

As of June 30, 2018, there was $1.9 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over an average remaining recognition period of 1.1 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 six months ended June 30, 2018 or 2017.

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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 six months ended June 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		8		$	20.68
PSUs, RSUs and restricted stock vested		(7	)	$	19.99
PSUs, RSUs and restricted stock forfeited		(105	)	$	21.59
Unvested PSUs, RSUs and restricted stock outstanding, June 30, 2018		1,188		$	21.31

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

As of June 30, 2018, there was $11.4 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 2.7 years. In addition, there was $10.1 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 six months ended June 30, 2018, no compensation expense was recognized related to these performance-based PSU awards.

7. INVESTMENTS

Debt Securities and Other Investments

At June 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	$	35,896	$	27	$	(250	)	$	35,673
Municipal fixed-rate bonds		2,259		—		(38	)		2,221
Asset-backed bonds		10,355		1		(37	)		10,319
Mortgage/Agency-backed bonds		7,292		—		(85	)		7,207
U.S. government bonds		8,953		—		(104	)		8,849
Foreign government bonds		1,036		2		—			1,038
Available-for-sale debt securities held at fair value	$	65,791	$	30	$	(514	)	$	65,307
Restricted investment held at cost									26,700
Other investments held at cost									520
Total carrying value of available-for-sale investments								$	92,527

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

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As of June 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	$	1,500	$	490	$	4,079	$	—	$	—	$	—
One to two years		16,694		603		2,270		—		1,519		729
Two to three years		12,264		1,128		556		—		3,845		309
Three to five years		5,215		—		1,939		1,970		3,485		—
Five to ten years		—		—		—		588		—		—
More than ten years		—		—		1,475		4,649		—		—
Total	$	35,673	$	2,221	$	10,319	$	7,207	$	8,849	$	1,038

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						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Gross realized gains	$	25		$	33		$	25		$	57
Gross realized losses	$	(241	)	$	(113	)	$	(315	)	$	(152	)

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

At June 30, 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 June 30, 2018 and December 31, 2017. At June 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 realized 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 realized 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.

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

	Three Months Ended			Six Months Ended
	June 30,			June 30,
(In thousands)	2018			2018
Realized gains (losses) on equity securities sold	$	(52	)	$	347
Unrealized gains (losses) on equity securities held		1,258			836
Total gain (loss) recognized, net	$	1,206		$	1,183

As of June 30, 2018 and 2017, gross unrealized losses related to individual investments in a continuous loss position for 12 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 June 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	$	2,008	$	2,008	$	—	$	—
Foreign government securities		350		—		350		—
Cash equivalents		2,358		2,008		350		—
Available-for-sale debt securities
Corporate bonds		35,673		—		35,673		—
Municipal fixed-rate bonds		2,221		—		2,221		—
Asset-backed bonds		10,319		—		10,319		—
Mortgage/Agency-backed bonds		7,207		—		7,207		—
U.S. government bonds		8,849		8,849		—		—
Foreign government bonds		1,038		—		1,038		—
Marketable equity securities
Marketable equity securities – various industries		37,600		37,600		—		—
Deferred compensation plan assets		20,379		20,379		—		—
Available-for-sale securities		123,286		66,828		56,458		—
Total	$	125,644	$	68,836	$	56,808	$	—

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	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.

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 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 June 30, 2018, we had no foreign exchange forward contracts.

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

		Three Months Ended					Six Months Ended
	Income Statement	June 30,					June 30,
(In thousands)	Location	2018		2017			2018		2017
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	Other expense, net	$	—	$	(451	)	$	13	$	(485	)

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 six months ended June 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
	Three Months Ended					Location of Gains	Three Months Ended
	June 30,					(Losses) Reclassified	June 30,
(In thousands)	2018		2017			from AOCI into Income	2018		2017
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts	$	—	$	(571	)	Cost of Sales	$	—	$	(154	)

	Amount of Gains (Losses) Recognized in						Amount of Gains (Losses) Reclassified
	OCI on Derivatives						from AOCI into Income
	Six Months Ended					Location of Gains	Six Months Ended
	June 30,					(Losses) Reclassified	June 30,
(In thousands)	2018		2017			from AOCI into Income	2018		2017
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts	$	—	$	(492	)	Cost of Sales	$	—	$	(154	)

9. INVENTORY

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

	June 30,		December 31,
(In thousands)	2018		2017
Raw materials	$	50,844	$	44,185
Work in process		1,985		1,939
Finished goods		67,708		76,418
Total	$	120,537	$	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 June 30, 2018 and December 31, 2017, raw materials reserves totaled $17.5 million and $15.0 million, respectively, and finished goods inventory reserves totaled $9.7 million and $8.3 million, respectively.

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10. GOODWILL AND INTANGIBLE ASSETS

Goodwill, all of which relates to our acquisition of Bluesocket, Inc., was $3.5 million at June 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 June 30, 2018 and December 31, 2017. Fully amortized intangible assets have been removed from prior year balances for comparability.

(In thousands)	June 30, 2018							December 31, 2017
	Gross Value		Accumulated Amortization			Net Value		Gross Value		Accumulated Amortization			Net Value
Customer relationships	$	20,752	$	(4,781	)	$	15,971	$	7,474	$	(4,283	)	$	3,191
Licensed technology		5,900		(191	)		5,709		—		—			—
Developed technology		5,452		(4,772	)		680		5,524		(4,663	)		861
Supplier relationship		2,800		(408	)		2,392		—		—			—
Intellectual property		930		(919	)		11		930		(852	)		78
Patent		500		(123	)		377		500		(89	)		411
Non-compete		200		(159	)		41		200		(115	)		85
Trade names		100		(90	)		10		100		(65	)		35
Total	$	36,634	$	(11,443	)	$	25,191	$	14,728	$	(10,067	)	$	4,661

Amortization expense, all of which relates to business acquisitions, was $1.0 million and $1.1 million for the three months ended June 30, 2018 and 2017, respectively, and $1.5 million and $1.9 million for the six months ended June 30, 2018 and 2017, respectively.

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

(In thousands)	Amount
Remainder of 2018	$	1,785
2019		3,542
2020		2,659
2021		2,365
2022		2,352
Thereafter		12,488
Total	$	25,191

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11. STOCKHOLDERS’ EQUITY

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

(In thousands)	Stockholders’ Equity
Balance, December 31, 2017	$	497,911
Net income (loss)		(18,484	)
Dividend payments		(8,679	)
Dividends accrued for unvested restricted stock units		5
Net unrealized gains (losses) on available-for-sale securities (net of tax)		(3,308	)
Defined benefit plan adjustments (net of tax)		67
Foreign currency translation adjustment		(2,582	)
Proceeds from stock option exercises		369
Purchase of treasury stock		(12,774	)
Adoption of new accounting standards (see Note 1)		3,499
Stock-based compensation expense		3,603
Balance, June 30, 2018	$	459,627

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 six months ended June 30, 2018, we repurchased 0.8 million shares of our common stock at an average price of $15.72 per share. As of June 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 24 thousand shares of treasury stock during the six months ended June 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 $0.4 million from the exercise of these stock options during the six months ended June 30, 2018.

Dividend Payments

During the six months ended June 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

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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 June 30, 2018 and 2017:

	Three Months Ended June 30, 2018
(In thousands)	Unrealized Gains (Losses) on Available- for-Sale Securities			Defined Benefit Plan Adjustments			Foreign Currency Adjustments			Total
Beginning balance	$	(845	)	$	(4,224	)	$	(734	)	$	(5,803	)
Other comprehensive income (loss) before    reclassifications		(82	)		—			(3,424	)		(3,506	)
Amounts reclassified from accumulated other    comprehensive income (loss)		186			5			—			191
Net current period other comprehensive income (loss)		104			5			(3,424	)		(3,315	)
Ending balance	$	(741	)	$	(4,219	)	$	(4,158	)	$	(9,118	)

	Three Months Ended June 30, 2017
(In thousands)	Unrealized Gains (Losses) on Available- for-Sale Securities			Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Plan Adjustments			Foreign Currency Adjustments			Total
Beginning balance	$	1,739		$	79		$	(4,962	)	$	(6,333	)	$	(9,477	)
Other comprehensive income (loss) before    reclassifications		1,222			(571	)		—			2,619			3,270
Amounts reclassified from accumulated other    comprehensive income (loss)		(849	)		154			86			—			(609	)
Net current period other comprehensive income (loss)		373			(417	)		86			2,619			2,661
Ending balance	$	2,112		$	(338	)	$	(4,876	)	$	(3,714	)	$	(6,816	)

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

	Six Months Ended June 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		(339	)		—			(2,582	)		(2,921	)
Amounts reclassified from accumulated other    comprehensive income (loss)		251			67			—			318
Amounts reclassified to retained earnings (1)		(3,220	)		—			—			(3,220	)
Net current period other comprehensive income (loss)		(3,308	)		67			(2,582	)		(5,823	)
Ending balance	$	(741	)	$	(4,219	)	$	(4,158	)	$	(9,118	)

⁽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.

	Six Months Ended June 30, 2017
(In thousands)	Unrealized Gains (Losses) on Available- for-Sale Securities			Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Plan Adjustments			Foreign Currency Adjustments			Total
Beginning balance	$	404		$	—		$	(5,017	)	$	(7,575	)	$	(12,188	)
Other comprehensive income (loss) before    reclassifications		2,842			(492	)		—			3,861			6,211
Amounts reclassified from accumulated other    comprehensive income (loss)		(1,134	)		154			141			—			(839	)
Net current period other comprehensive income (loss)		1,708			(338	)		141			3,861			5,372
Ending balance	$	2,112		$	(338	)	$	(4,876	)	$	(3,714	)	$	(6,816	)

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

(In thousands)	Three Months Ended June 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	$	(251	)	Net realized investment gain
Defined benefit plan adjustments – actuarial losses		(7	)	(1)
Total reclassifications for the period, before tax		(258	)
Tax (expense) benefit		67
Total reclassifications for the period, net of tax	$	(191	)

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

(In thousands)	Three Months Ended June 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	$	1,393		Net realized investment gain
Impairment expense		(2	)	Net realized investment gain
Net losses on derivatives designated as hedging instruments		(154	)	Cost of sales
Defined benefit plan adjustments – actuarial losses		(124	)	(1)
Total reclassifications for the period, before tax		1,113
Tax (expense) benefit		(504	)
Total reclassifications for the period, net of tax	$	609

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

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

(In thousands)	Six Months Ended June 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	$	(324	)	Net realized investment gain
Defined benefit plan adjustments – actuarial losses		(97	)	(1)
Total reclassifications for the period, before tax		(421	)
Tax (expense) benefit		103
Total reclassifications for the period, net of tax	$	(318	)

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

(In thousands)	Six Months Ended June 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	$	1,965		Net realized investment gain
Impairment expense		(105	)	Net realized investment gain
Net losses on derivatives designated as hedging instruments		(154	)	Cost of sales
Defined benefit plan adjustments – actuarial    losses		(204	)	(1)
Total reclassifications for the period, before    tax		1,502
Tax (expense) benefit		(663	)
Total reclassifications for the period, net    of tax	$	839

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

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

	Three Months Ended									Three Months Ended
	June 30, 2018									June 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	$	(111	)	$	29		$	(82	)	$	2,003		$	(781	)	$	1,222
Unrealized gains (losses) on cash flow hedges		—			—			—			(571	)		—			(571	)
Reclassification adjustment for amounts related to    available-for-sale investments included in net    income		251			(65	)		186			(1,391	)		542			(849	)
Reclassification adjustment for amounts related to    cash flow hedges included in net income		—			—			—			154			—			154
Reclassification adjustment for amounts related to    defined benefit plan adjustments included in net    income		7			(2	)		5			124			(38	)		86
Foreign currency translation adjustment		(3,424	)		—			(3,424	)		2,619			—			2,619
Total Other Comprehensive Income (Loss)	$	(3,277	)	$	(38	)	$	(3,315	)	$	2,938		$	(277	)	$	2,661

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

	Six Months Ended									Six Months Ended
	June 30, 2018									June 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	$	(458	)	$	119		$	(339	)	$	4,659		$	(1,817	)	$	2,842
Unrealized gains (losses) on cash flow hedges		—			—			—			(492	)		—			(492	)
Reclassification adjustment for amounts related to    available-for-sale investments included in net    income		324			(73	)		251			(1,860	)		726			(1,134	)
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		—			—			—			154			—			154
Reclassification adjustment for amounts related to    defined benefit plan adjustments included in net    income		97			(30	)		67			204			(63	)		141
Foreign currency translation adjustment		(2,582	)		—			(2,582	)		3,861			—			3,861
Total Other Comprehensive Income (Loss)	$	(5,839	)	$	16		$	(5,823	)	$	6,526		$	(1,154	)	$	5,372

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12. EARNINGS PER SHARE

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

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In thousands, except per share amounts)	2018			2017		2018			2017
Numerator
Net income (loss)	$	(7,670	)	$	12,401	$	(18,484	)	$	19,052
Denominator
Weighted average number of shares – basic		47,856			48,036		48,043			48,232
Effect of dilutive securities
Stock options		—			279		8			348
PSUs, RSUs and restricted stock		46			98		40			95
Weighted average number of shares – diluted		47,902			48,413		48,091			48,675
Net income (loss) per share – basic	$	(0.16	)	$	0.26	$	(0.38	)	$	0.40
Net income (loss) per share – diluted	$	(0.16	)	$	0.26	$	(0.38	)	$	0.39

Anti-dilutive options to purchase common stock outstanding were excluded from the above calculations. Anti-dilutive options totaled 5.0 million and 4.1 million for the three months ended June 30, 2018 and 2017, respectively, and 4.8 million and 4.1 million for the six months ended June 30, 2018 and 2017.

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 realized investment gain/loss, other income/expense and provision for taxes are reported on a company-wide, functional basis only. There are no inter-segment revenues.

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

	Three Months Ended
	June 30, 2018				June 30, 2017
(In thousands)	Sales		Gross Profit		Sales		Gross Profit
Network Solutions	$	115,063	$	45,434	$	155,543	$	75,880
Services & Support		12,985		4,562		29,130		8,746
Total	$	128,048	$	49,996	$	184,673	$	84,626

	Six Months Ended
	June 30, 2018				June 30, 2017
(In thousands)	Sales		Gross Profit		Sales		Gross Profit
Network Solutions	$	220,316	$	82,075	$	299,140	$	142,813
Services & Support		28,538		7,654		55,812		15,522
Total	$	248,854	$	89,729	$	354,952	$	158,335

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Sales by Category

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

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2018		2017		2018		2017
Access & Aggregation	$	84,742	$	138,639	$	166,422	$	258,782
Customer Devices		34,560		33,833		64,661		70,101
Traditional & Other Products		8,746		12,201		17,771		26,069
Total	$	128,048	$	184,673	$	248,854	$	354,952

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 $10.1 million and $9.7 million at June 30, 2018 and December 31, 2017, respectively. During the three months ended March 31, 2017, we recorded a receivable and a reduction in warranty expense related to a settlement with a third party supplier for a defective component, the impact of which is reflected in the table below. These liabilities are included in accrued expenses in the accompanying Consolidated Balance Sheets.

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Balance at beginning of period	$	9,687		$	8,988		$	9,724		$	8,548
Plus: Amounts charged to cost and expenses		4,860			3,055			6,683			2,314
Less: Deductions		(4,436	)		(2,863	)		(6,296	)		(1,682	)
Balance at end of period	$	10,111		$	9,180		$	10,111		$	9,180

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

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16. SUBSEQUENT EVENTS

On July 17, 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 August 1, 2018. The payment date will be August 15, 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.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes that appear elsewhere in this document.

OVERVIEW

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

Our success depends upon our ability to increase unit volume and market share through the introduction of new products and succeeding generations of products having lower selling prices and increased functionality as compared to both the prior generation of a product and to the products of competitors. An important part of our strategy is to reduce the cost of each succeeding product generation and then lower the product’s selling price based on the cost savings achieved in order to gain market share and/or improve gross margins. As a part of this strategy, we seek in most instances to be a high-quality, low-cost provider of products in our markets. Our success to date is attributable in large measure to our ability to design our products initially with a view to their subsequent redesign, allowing both increased functionality and reduced manufacturing costs in each succeeding product generation. This strategy enables us to sell succeeding generations of products to existing customers, while increasing our market share by selling these enhanced products to new customers.

We report revenue for the following three categories – Access & Aggregation, Customer Devices, and Traditional & Other Products.

Access & Aggregationsolutions are used by CSPs to connect their network infrastructure to their subscribers. This category includes software and hardware-based products and services that aggregate and/or originate access technologies. The portfolio of ADTRAN solutions within this category includes a wide array of modular or fixed physical form factors designed to deliver the best technology and economic fit based on the target subscriber density and environmental conditions.

Customer Devicesincludes our products and services that provide end users access to CSP networks. Our Customer Devices portfolio includes a comprehensive array of service provider and enterprise hardware and software products and services.

Traditional & Other Products generally includes a mix of prior generation technologies’ products and services, as well as other products and services that do not fit within the Access & Aggregation or Customer Devices categories.

See Note 13 of Notes to Consolidated Financial Statements in this report for further information regarding these product categories.

Sales were $128.0 million and $248.9 million for the three and six months ended June 30, 2018, compared to $184.7 million and $355.0 million for the three and six months ended June 30, 2017. Our gross margin decreased to 39.0% and 36.1% in the three and six months ended June 30, 2018, from 45.8% and 44.6% in the three and six months ended June 30, 2017. Our operating income margin decreased to (10.0)% and (15.9)% for the three and six months ended June 30, 2018, from 8.9% and 6.6% for the three and six months ended June 30, 2017. Net income (loss) was $(7.7) million and $(18.5) million for the three and six months ended June 30, 2018, compared to $12.4 million and $19.1 million for the three and six months ended June 30, 2017. Our effective tax rate, excluding the effect of the bargain purchase gain in 2018, increased to 31.9% for the three months ended June 30, 2018 from 30.6% for the three months ended June 30, 2017, and decreased to 20.1% for the six months ended June 30, 2018 from 27.3% for the six months ended June 30, 2017. Earnings (loss) per share, assuming dilution, were $(0.16) and $(0.38) for the three and six months ended June 30, 2018, compared to $0.26 and $0.39 for the three and six months ended June 30, 2017.

Our operating results have fluctuated on a quarterly basis in the past, and may vary significantly in future periods due to a number of factors, including customer order activity and backlog. Backlog levels vary because of seasonal trends, the timing of customer projects and other factors that affect customer order lead times. Many of our customers require prompt delivery of products. This requires us to maintain sufficient inventory levels to satisfy anticipated customer demand. If near-term demand for our products declines, or if potential sales in any quarter do not occur as anticipated, our financial results could be adversely affected. Operating expenses are relatively fixed in the short term; therefore, a shortfall in quarterly revenues could significantly impact our financial results in a given quarter.

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Our operating results may also fluctuate as a result of a number of other factors, including a decline in general economic and market conditions, foreign currency exchange rate movements, increased competition, customer order patterns, changes in product and services mix, timing differences between price decreases and product cost reductions, product warranty returns, expediting costs and announcements of new products by us or our competitors. Additionally, maintaining sufficient inventory levels to assure prompt delivery of our products increases the amount of inventory that may become obsolete and increases the risk that the obsolescence of this inventory may have an adverse effect on our business and operating results. Also, not maintaining sufficient inventory levels to assure prompt delivery of our products may cause us to incur expediting costs to meet customer delivery requirements, which may negatively impact our operating results in a given quarter.

Accordingly, our historical financial performance is not necessarily a meaningful indicator of future results, and in general, management expects that our financial results may vary from period to period. Factors that could materially affect our business, financial condition or operating results are included in Item 1A of Part I in our most recent Annual Report on Form 10-K for the year ended December 31, 2017, filed on February 23, 2018 with the SEC.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our critical accounting policies and estimates have not changed significantly from those detailed in our most recent Annual Report on Form 10-K for the year ended December 31, 2017, filed on February 23, 2018 with the SEC.

EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 of Notes to Consolidated Financial Statements in Item 1 of this Form 10-Q for a full description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on results of operations and financial condition, which is incorporated herein by reference.

RESULTS OF OPERATIONS – THREE AND SIX MONTHS ENDED JUNE 30, 2018 COMPARED TO THREE AND SIX MONTHS ENDED JUNE 30, 2017

SALES

Our sales decreased 30.7% from $184.7 million in the three months ended June 30, 2017 to $128.0 million in the three months ended June 30, 2018, and decreased 29.9% from $355.0 million in the six months ended June 30, 2017 to $248.9 million in the six months ended June 30, 2018. The decrease in sales for the three and six months ended June 30, 2018 is primarily attributable to a merger-related review and slowdown in spending at a domestic Tier 1 customer that particularly affected our Access & Aggregation products, which decreased $53.9 million and $92.4 million over the same three and six month periods last year. The decline in sales to the previously mentioned domestic Tier 1 customer was partially offset by an increase in sales to an international Tier 1 customer. Compared to the same three and six month periods last year, our Customer Devices products increased $0.7 million and decreased $5.4 million, respectively, and our Traditional & Other Products decreased $3.5 million and $8.3 million, respectively.  

Network Solutions sales decreased 26.0% from $155.5 million in the three months ended June 30, 2017 to $115.1 million in the three months ended June 30, 2018, and decreased 26.4% from $299.1 million in the six months ended June 30, 2017 to $220.3 million in the six months ended June 30, 2018. The decrease in sales of our Access & Aggregation products for the three and six months ended June 30, 2018 is primarily attributable to a merger-related review and slowdown in spending at a domestic Tier 1 customer, partially offset by an increase in sales to an international Tier 1 customer as discussed further below. The changes for the three and six months ended June 30, 2018 in sales of our Customer Devices products are primarily attributable to the changes in sales of fiber CPE products. While we expect that revenues from Traditional & Other Products will continue to decline over time, these revenues may fluctuate and continue for years because of the time required for our customers to transition to newer technologies.

Services & Support sales decreased 55.4% from $29.1 million in the three months ended June 30, 2017 to $13.0 million in the three months ended June 30, 2018, and decreased 48.9% from $55.8 million in the six months ended June 30, 2017 to $28.5 million in the six months ended June 30, 2018. The decrease in sales for the three and six months ended June 30, 2018 is primarily attributable to a decrease in network installation services for Access & Aggregation products related to the above mentioned merger-related review and slowdown in spending at a domestic Tier 1 customer.

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International sales, which are included in the Network Solutions and Services & Support amounts discussed above, increased 57.6% from $38.0 million in the three months ended June 30, 2017 to $59.8 million in the three months ended June 30, 2018, and increased 33.2% from $89.0 million in the six months ended June 30, 2017 to $118.5 million in the six months ended June 30, 2018. International sales, as a percentage of total sales, increased from 20.6% for the three months ended June 30, 2017 to 46.7% for the three months ended June 30, 2018, and increased from 25.1% for the six months ended June 30, 2017 to 47.6% in the six months ended June 30, 2018. The increase in sales for the three months ended June 30, 2018 is primarily attributable to an increase in sales in EMEA, partially offset by a decrease in sales in Americas International. The increase in sales for the six months ended June 30, 2018 is primarily attributable to an increase in sales in EMEA, partially offset by a decrease in sales in APAC and Americas International. The increase in sales in EMEA for the three and six months ended June 30, 2018 is primarily attributable to a network expansion program and a Services award by a large European Tier-1 customer.

Our international revenues are largely focused on broadband infrastructure and are impacted by the decisions of our customers as to timing for installation of new technologies, expansion of their networks and/or network upgrades. Our international customers must make these decisions in the regulatory and political environment in which they operate – both nationally and in some instances, regionally – whether of a multi-country region or a more local region within a country. For example, the European Commission launched a Gigabit Society initiative, and before that, the Digital Agenda, which has provided a favorable market environment for the deployment of ultra-broadband and Gigabit network solutions. Although the overall environment and market demand for broadband service deployment in the European Union have improved, some new broadband technologies are still being reviewed for regulatory and standards compliance, which may affect the timing of those technologies. In Mexico, regulatory changes have created uncertainty for customers resulting in slowdowns in their network buying patterns. The competitive landscape in certain international markets is also impacted by the increased presence of Asian manufacturers that seek to compete aggressively on price. A strengthening U.S. dollar can also negatively impact our revenues in regions such as Latin America, where our products are traditionally priced in U.S. dollars, while in regions where our products are sold in local currency, such as Europe, a stronger U.S. dollar can negatively impact operating income. Consequently, while we expect the global trend towards deployment of more robust broadband speeds and access to continue creating additional market opportunities for us, the factors described above may result in pressure on revenues and operating income. However, we do not presently foresee a significant negative impact to our financial condition based on our strong liquidity and the generally positive environment described above.

We recognized a positive revenue impact in the first half of 2017 due to our being awarded a network expansion program by a large European Tier-1 customer. During the first and second quarters of 2018, this European Tier 1 customer undertook an additional network expansion project. We anticipate that as our Latin American customers resume their network upgrade projects, we may experience further enhancement to our revenues. We have recently announced receipt of a new nation-wide award in the APAC region, as well as additional awards based on new ADTRAN technologies in the EMEA region that we believe will likely result in a positive impact to our revenues. However, a resolution of the regulatory changes affecting a major customer in Mexico has been slower than anticipated, and business with one of our customers in that region has not yet returned to normal levels. We are continuing to pursue opportunities with new customers in this region.

COST OF SALES

As a percentage of sales, cost of sales increased from 54.2% in the three months ended June 30, 2017 to 61.0% in the three months ended June 30, 2018, and increased from 55.4% in the six months ended June 30, 2017 to 63.9% in the six months ended June 30, 2018. The increase in cost of sales as a percentage of sales for the three months ended June 30, 2018 is primarily attributable to a regional revenue shift, customer and product mix, services and support mix and an increase in warranty expense. The increase in cost of sales as a percentage of sales for the six months ended June 30, 2018 is primarily attributable to a regional revenue shift, customer and product mix, services and support mix, an increase in labor expense due to a restructuring program and an increase in warranty expense.

Network Solutions cost of sales, as a percent of that segment’s sales, increased from 51.2% in the three months ended June 30, 2017 to 60.5% in the three months ended June 30, 2018, and increased from 52.3% in the six months ended June 30, 2017 to 62.7% in the six months ended June 30, 2018. The increase in cost of sales as a percentage of sales for the three months ended June 30, 2018 is primarily attributable to a regional revenue shift, customer and product mix and an increase in warranty expense. The increase in cost of sales as a percentage of sales for the six months ended June 30, 2018 is primarily attributable to a regional revenue shift, customer and product mix, an increase in labor expense due to a restructuring program, an increase in warranty expense due to a settlement in first quarter of 2017 with a third party supplier for a defective component and purchase discounts received from a contract manufacturer in the first quarter of 2017.

An important part of our strategy is to reduce the product cost of each succeeding product generation and then to lower the product’s price based on the cost savings achieved. This may cause variations in our gross profit percentage due to timing differences between the recognition of cost reductions and the lowering of product selling prices.

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Services & Support cost of sales, as a percent of that segment’s sales, decreased from 70.0% in the three months ended June 30, 2017 to 64.9% in the three months ended June 30, 2018, and increased from 72.2% in the six months ended June 30, 2017 to 73.2% in the six months ended June 30, 2018. The decrease in cost of sales as a percentage of sales for the three months ended June 30, 2018 is primarily attributable to services and support mix. The increase in cost of sales as a percentage of sales for the six months ended June 30, 2018 is primarily attributable to services and support mix and an increase in labor expense due to a restructuring program.

Our Services business has experienced significant growth since 2015 as competitive pressures to expand broadband access and speeds have strained carriers’ ability to respond to customer demand. Our Services & Support revenues are comprised of network planning and implementation, maintenance, support and cloud-based management services, with network planning and implementation being the largest and fastest growing component. Compared to our other services, such as maintenance, support and cloud-based management services, our network planning and implementation services typically utilize a higher percentage of internal and subcontracted engineers, professionals and contractors to perform the work for customers. The additional costs incurred to perform these infrastructure and labor-intensive services inherently result in lower average gross margins as compared to maintenance and support services.

As our network planning and implementation revenues grew and are now the largest component of our Services & Support business, our Services & Support segment gross margins decreased versus those reported when maintenance and support comprised the majority of the business. Further, because the growth in our network planning and implementation services has resulted in our Services & Support revenues comprising a larger percentage of our overall revenues, and because our Services & Support gross margins are below those of the Network Solutions segment, our overall corporate gross margins have declined as that business has continued to grow. Within the Services & Support segment, we do expect variability in gross margins from quarter-to-quarter based on the mix of the services recognized.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses decreased 7.6% from $34.7 million in the three months ended June 30, 2017 to $32.1 million in the three months ended June 30, 2018, and decreased 5.6% from $69.5 million in the six months ended June 30, 2017 to $65.6 million in the six months ended June 30, 2018. The decrease in selling, general and administrative expenses for the three months ended June 30, 2018 is primarily attributable to decreases in performance-based compensation expense, travel expense, deferred compensation expense, and independent contractor expense, partially offset by an increase in labor expense due to a restructuring program. The decrease in selling, general and administrative expenses for the six months ended June 30, 2018 is primarily attributable to a decrease in deferred compensation expense, performance-based compensation expense, travel expense, and independent contractor expense, partially offset by an increase in labor expense due to a restructuring program.

As a percentage of sales, selling, general and administrative expenses increased from 18.8% in the three months ended June 30, 2017 to 25.1% in the three months ended June 30, 2018, and increased from 19.6% in the six months ended June 30, 2017 to 26.4% in the six months ended June 30, 2018. Selling, general and administrative expenses as a percentage of sales may fluctuate whenever there is a significant fluctuation in revenues for the periods being compared.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses decreased 8.4% from $33.6 million in the three months ended June 30, 2017 to $30.7 million in the three months ended June 30, 2018, and decreased 3.0% from $65.5 million in the six months ended June 30, 2017 to $63.6 million in the six months ended June 30, 2018. The decrease in research and development expenses for the three months ended June 30, 2018 is primarily attributable to decreases in engineering materials, independent contractor expense, amortization of intangibles acquired in the third quarter of 2016 that were fully amortized in 2017, and performance-based compensation expense. The decrease in research and development expenses for the six months ended June 30, 2018 is primarily attributable to decreases in engineering materials and amortization of intangibles acquired in the third quarter of 2016 that were fully amortized in 2017, partially offset by an increase in labor expense due to a restructuring program.

As a percentage of sales, research and development expenses increased from 18.2% in the three months ended June 30, 2017 to 24.0% in the three months ended June 30, 2018, and increased from 18.5% in the six months ended June 30, 2017 to 25.5% in the six months ended June 30, 2018. Research and development expenses as a percentage of sales will fluctuate whenever there are incremental product development activities or significant fluctuations in revenues for the periods being compared.

We expect to continue to incur research and development expenses in connection with our new and existing products and our expansion into international markets. We continually evaluate new product opportunities and engage in intensive research and product development efforts, which provides for new product development, enhancement of existing products and product cost reductions. We may incur significant research and development expenses prior to the receipt of revenues from a major new product group.

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INTEREST AND DIVIDEND INCOME

Interest and dividend income decreased 6.1% from $1.0 million in the three months ended June 30, 2017 to $0.9 million in the three months ended June 30, 2018, and decreased 6.6% from $1.9 million in the six months ended June 30, 2017 to $1.8 million in the six months ended June 30, 2018. The decrease in interest and dividend income for the three and six months ended June 30, 2018 is primarily attributable to a decrease in investment balances and a decrease in the rate of return on those investments.

INTEREST EXPENSE

Interest expense, which is primarily related to our taxable revenue bond, remained constant at $0.1 million in the three months ended June 30, 2017 and 2018, and $0.3 million in the six months ended June 30, 2017 and 2018, as we had no substantial change in our fixed-rate borrowing. See “Liquidity and Capital Resources” below for additional information on our revenue bond.

NET REALIZED INVESTMENT GAIN

Net realized investment gains decreased 28.8% from $1.4 million in the three months ended June 30, 2017 to $1.0 million in the three months ended June 30, 2018, and decreased 52.0% from $1.9 million in the six months ended June 30, 2017 to $0.9 million in the six months ended June 30, 2018. The decrease in net realized investment gains for the three and six months ended June 30, 2018 is primarily attributable to changes in fair value on equity securities recognized during the period under ASC 2016-01. Prior to January 1, 2018, changes in fair value were recognized in accumulated other comprehensive income, net of deferred taxes, on the balance sheet. See Note 1, Note 7 and “Investing Activities” in “Liquidity and Capital Resources” below for additional information.

OTHER EXPENSE, NET

Other expense, net, comprised primarily of miscellaneous income, gains and losses on foreign currency transactions, gains and losses on foreign exchange forward contracts, investment account management fees, and scrap raw material sales, decreased 69.8% from $0.7 million of expense in the three months ended June 30, 2017 to $0.2 million of expense in the three months ended June 30, 2018, and decreased 53.2% from $0.6 million of expense in the six months ended June 30, 2017 to $0.3 million of expense in the six months ended June 30, 2018. The change in other expense, net for the three and six months ended June 30, 2018 is primarily attributable to higher losses on foreign exchange contracts in 2017.

GAIN ON BARGAIN PURCHASE OF A BUSINESS

Gain on bargain purchase of a business is related to our acquisition of Sumitomo Electric Lightwave Corp.’s North American EPON business and entry into a technology license and supply agreement with Sumitomo Electric Industries, Ltd. on March 19, 2018. See Note 2 of Notes to Consolidated Financial Statements for additional information.

INCOME TAXES

Our effective tax rate decreased from an expense of 27.3% in the six months ended June 30, 2017 to a benefit of 20.1%, excluding the tax effect of the bargain purchase gain, in the six months ended June 30, 2018. The decrease in the effective tax rate between the two periods is primarily attributable to the change in income and the effect of the U.S. Tax Cuts and Jobs Act, which was signed into law on December 22, 2017.

NET INCOME (LOSS)

As a result of the above factors, net income (loss) decreased $20.1 million from $12.4 million in the three months ended June 30, 2017 to $(7.7) million in the three months ended June 30, 2018, and decreased $37.5 million from $19.1 million in the six months ended June 30, 2017 to $(18.5) million in the six months ended June 30, 2018.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

We intend to finance our operations with cash flow from operations. We have used, and expect to continue to use, the cash generated from operations for working capital, purchases of treasury stock, shareholder dividends, and other general corporate purposes, including (i) product development activities to enhance our existing products and develop new products and (ii) expansion of sales and marketing activities. We believe our cash and cash equivalents, investments and cash generated from operations to be adequate to meet our operating and capital needs for at least the next 12 months.

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At June 30, 2018, cash on hand was $100.3 million and short-term investments were $6.1 million, which resulted in available short-term liquidity of $106.4 million, of which $83.0 million was held by our foreign subsidiaries. At December 31, 2017, cash on hand was $86.4 million and short-term investments were $16.1 million, which resulted in available short-term liquidity of $102.6 million, of which $56.8 million was held by our foreign subsidiaries. We intend to permanently reinvest the funds held by our foreign subsidiaries outside the U.S. and our current business plans do not indicate a need to repatriate these funds to finance domestic operations. The increase in short-term liquidity from December 31, 2017 to June 30, 2018 is primarily attributable to shifts among available investment option tenures to provide funds for our short-term cash needs.

Operating Activities

Our working capital, which consists of current assets less current liabilities, decreased 26.7% from $306.3 million as of December 31, 2017 to $224.6 million as of June 30, 2018, and our current ratio, defined as current assets divided by current liabilities, decreased from 3.87 as of December 31, 2017 to 2.93 as of June 30, 2018. The decreases in our working capital and current ratio are primarily attributable to decreases in accounts receivable and prepaid expenses and other current assets, and an increase in income tax payable. The quick ratio, defined as cash, cash equivalents, short-term investments, and net accounts receivable, divided by current liabilities, decreased from 2.31 as of December 31, 2017 to 1.57 as of June 30, 2018. The decrease in the quick ratio is primarily attributable to a decrease in accounts receivable and an increase in income tax payable.

Accounts receivable decreased 47.2% from $144.2 million at December 31, 2017 to $76.1 million at June 30, 2018. We had no allowance for doubtful accounts at December 31, 2017 or June 30, 2018. Quarterly accounts receivable days sales outstanding (DSO) decreased from 105 days as of December 31, 2017 to 54 days as of June 30, 2018. The decrease in net accounts receivable is due to the collection of customer-specific payment terms that became due in the first quarter of 2018 and the timing of sales and collections during the quarter. Additionally, certain international customers may have longer payment terms than U.S. customers.

Quarterly inventory turnover decreased from 3.09 turns as of December 31, 2017 to 2.60 turns at June 30, 2018. Inventory decreased 1.6% from $122.5 million at December 31, 2017 to $120.5 million at June 30, 2018. We expect inventory levels to fluctuate as we attempt to maintain sufficient inventory in response to services activity and seasonal cycles of our business, ensuring competitive lead times while managing the risk of inventory obsolescence that may occur due to rapidly changing technology and customer demand.

Prepaid expense and other current assets decreased 45.2% from $17.3 million at December 31, 2017 to $9.5 million at June 30, 2018. The decrease in prepaid expenses and other current assets is primarily attributable to the recognition of deferred costs related to network installation services that were completed during the first quarter.

Income tax payable increased 203.6% from $3.9 million at December 31, 2017 to $11.9 million at June 30, 2018. The increase in income tax payable is primarily attributable to income taxes accrued for foreign jurisdictions.

Investing Activities

Capital expenditures totaled approximately $4.2 million and $7.5 million for the six months ended June 30, 2018 and 2017, respectively. These expenditures were primarily used to purchase computer hardware, software, manufacturing and test equipment, and building improvements.

Our combined short-term and long-term investments increased $4.1 million from $146.4 million at December 31, 2017 to $150.5 million at June 30, 2018. This increase reflects funds available for investment provided by our operating activities, as well as net realized and unrealized gains and losses and amortization of net premiums on our combined investments, partially offset by our cash needs for capital expenditures, purchases of treasury stock, and shareholder dividends.

We invest all available cash not required for immediate use in operations primarily in securities that we believe bear minimal risk of loss. At June 30, 2018 these investments included corporate bonds of $35.7 million, municipal fixed-rate bonds of $2.2 million, asset-backed bonds of $10.3 million, mortgage/agency-backed bonds of $7.2 million, U.S. government bonds of $8.8 million, and foreign government bonds of $1.4 million. At December 31, 2017, these investments included corporate bonds of $32.5 million, municipal fixed-rate bonds of $2.9 million, asset-backed bonds of $6.5 million, mortgage/agency-backed bonds of $5.5 million, U.S. government bonds of $14.3 million, and foreign government bonds of $0.7 million. As of June 30, 2018, our corporate bonds, municipal fixed-rate bonds, asset-backed bonds, mortgage/agency-backed bonds, U.S. government bonds, and foreign government bonds were classified as available-for-sale and had a combined duration of 1.3 years with an average Standard & Poor’s credit rating of AA-. Because our bond portfolio has a high-quality rating and contractual maturities of short duration, we are able to obtain prices for these bonds derived from observable market inputs, or for similar securities traded in an active market, on a daily basis.

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Our long-term investments increased 10.9% from $130.3 million at December 31, 2017 to $144.4 million at June 30, 2018. Long-term investments at June 30, 2018 and December 31, 2017 included an investment in a certificate of deposit of $26.7 million and $27.8 million, respectively, which serves as collateral for our revenue bond. See “Debt” below for additional information. We have various equity investments included in long-term investments with a fair value of $37.6 million and $35.7 million, at June 30, 2018 and December 31, 2017, respectively.

Long-term investments at June 30, 2018 and December 31, 2017 also included $20.4 million and $19.9 million, respectively, related to our deferred compensation plans, and $0.5 million of other investments carried at cost, consisting of interests in two private equity funds and an investment in a privately held telecommunications equipment manufacturer.

Financing Activities

Dividends

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 six months ended June 30, 2018, we paid dividends totaling $8.7 million.

Debt

We have amounts outstanding under loans made pursuant to an Alabama State Industrial Development Authority revenue bond (the Bond) which totaled $26.7 million at June 30, 2018 and December 31, 2017. At June 30, 2018, the estimated fair value of the Bond was approximately $26.5 million, based on a debt security with a comparable interest rate and maturity and a Standard & Poor’s credit rating of AAA. Included in long-term investments are restricted funds in the amount of $26.7 million and $27.8 million at June 30, 2018 and December 31, 2017, respectively, which is a collateral deposit against the principal amount of the Bond. 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. In connection with this decision, $1.1 million of the Bond has been classified as a current liability in accounts payable in the Consolidated Balance Sheet at June 30, 2018.

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 six months ended June 30, 2018, we repurchased 0.8 million shares of our common stock at an average price of $15.72 per share. As of June 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 24 thousand shares of treasury stock during the six months ended June 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 $0.4 million from the exercise of these stock options during the six months ended June 30, 2018.

Off-Balance Sheet Arrangements and Contractual Obligations

We do not have off-balance sheet financing arrangements and have not engaged in any related party transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity or the availability of or requirements for capital resources. During the six months ended June 30, 2018, there have been no material changes in contractual obligations and commercial commitments from those discussed in our most recent Annual Report on Form 10-K for the year ended December 31, 2017 filed on February 23, 2018 with the SEC.

We have committed to invest up to an aggregate of $7.9 million in two private equity funds, and we have contributed $8.4 million as of June 30, 2018, of which $7.7 million has been applied to these commitments.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, including changes in interest rates, foreign currency rates and prices of marketable equity and fixed-income securities. The primary objective of the large majority of our investment activities is to preserve principal while at the same time achieving appropriate yields without significantly increasing risk. To achieve this objective, a majority of our marketable securities are investment grade corporate bonds, municipal fixed-rate bonds, asset-backed bonds, mortgage/agency-backed bonds, U.S. and foreign government bonds and municipal money market instruments denominated in U.S. dollars. Our investment policy provides limitations for issuer concentration, which limits, at the time of purchase, the concentration in any one issuer to 5% of the market value of our total investment portfolio.

We maintain depository investments with certain financial institutions. Although these depository investments may exceed government insured depository limits, we have evaluated the credit-worthiness of these financial institutions, and determined the risk of material financial loss due to exposure of such credit risk to be minimal. As of June 30, 2018, $98.3 million of our cash and cash equivalents, primarily certain domestic money market funds, commercial paper and foreign depository accounts, were in excess of government provided insured depository limits.

As of June 30, 2018, approximately $67.7 million of our cash and investments may be directly affected by changes in interest rates. We have performed a hypothetical sensitivity analysis assuming market interest rates increase or decrease by 50 basis points (bps) for an entire year, while all other variables remain constant. At June 30, 2018, we held $23.0 million of cash and variable-rate investments where a change in interest rates would impact our interest income. A hypothetical 50 bps decline in interest rates as of June 30, 2018 would reduce annualized interest income on our cash and investments by approximately $0.1 million. In addition, we held $44.7 million of fixed-rate bonds whose fair values may be directly affected by a change in interest rates. A hypothetical 50 bps increase in interest rates as of June 30, 2018 would reduce the fair value of our fixed-rate bonds by approximately $0.3 million.

As of June 30, 2017, approximately $148.2 million of our cash and investments was subject to being directly affected by changes in interest rates. We have performed a hypothetical sensitivity analysis assuming market interest rates increase or decrease by 50 bps for the entire year, while all other variables remain constant. A hypothetical 50 bps decline in interest rates as of June 30, 2017 would have reduced annualized interest income on our cash, money market instruments and variable rate demand notes by approximately $0.3 million. In addition, a hypothetical 50 bps increase in interest rates as of June 30, 2017 would have reduced the fair value of our fixed-rate bonds by approximately $0.4 million.

We are exposed to changes in foreign currency exchange rates to the extent that such changes affect our revenue and gross margin on revenue derived from some international customers, expenses, and assets and liabilities held in non-functional currencies related to our foreign subsidiaries. Our primary exposures to foreign currency exchange rates are with our German subsidiary, whose functional currency is the Euro, our Australian subsidiary, whose functional currency is the Australian dollar, and our Mexican subsidiary, whose functional currency is the United States dollar. We are exposed to changes in foreign currency exchange rates to the extent of our German subsidiary’s use of contract manufacturers and raw material suppliers whom we predominately pay in U.S. dollars. We may establish cash flow hedges utilizing 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. As a result, changes in currency exchange rates could cause variations in gross margin in the products that we sell in the EMEA region.

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 expense, net in the Consolidated Statements of Income. We do not hold or issue derivative instruments for trading or other speculative purposes. All non-functional currencies billed would result in a combined hypothetical gain or loss of $0.1 million if the U.S. dollar weakened or strengthened 10% against the billing currencies. Any gain or loss would be partially mitigated by these derivative instruments.

As of June 30, 2018, we had no material contracts, other than accounts receivable and accounts payable, denominated in foreign currencies. As of June 30, 2018, we did not have any forward contracts outstanding.

For further information about the fair value of our investments and our derivative and hedging activities as of June 30, 2018, see Notes 7 and 8 of Notes to Consolidated Financial Statements.

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ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) for ADTRAN. Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report, have concluded that our disclosure controls and procedures are effective.

(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

A list of factors that could materially affect our business, financial condition or operating results is described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017. There have been no material changes to our risk factors since our Annual Report on Form 10-K for the year ended December 31, 2017, other than the following risk factor:

Increased tariffs caused by changes in trade policies of the United States or other countries in which we do business, which could trigger retaliatory actions by affected countries resulting in “trade wars”, may increase costs for material imported into the United States and other countries. This in turn may increase our cost of goods and result in reduced profit margins or customer demand for some of our products or in trading partners limiting their trade with the United States.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth repurchases of our common stock for the months indicated:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2018 – April 30, 2018		—	$	—		—		2,930,655
May 1, 2018 – May 31, 2018		92,000	$	14.09		92,000		2,838,655
June 1, 2018 – June 30, 2018		92,000	$	14.21		92,000		2,746,655
Total		184,000				184,000

On July 14, 2015, our Board of Directors authorized the repurchase of an additional 5.0 million shares of our common stock (bringing the total shares authorized for repurchase to 50.0 million). This authorization will be implemented through open market or private purchases from time to time as conditions warrant.

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ITEM 6. EXHIBITS

Exhibits.

Exhibit No.	Description
31	Rule 13a-14(a)/15d-14(a) Certifications
32	Section 1350 Certifications
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ADTRAN, Inc. (Registrant)
Date:  August 3, 2018	/s/ Roger D. Shannon
	Roger D. Shannon
	Senior Vice President of Finance,
	Chief Financial Officer,
	Corporate Treasurer and Secretary
	(Principal Financial Officer)

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EX-31

Exhibit 31

CERTIFICATIONS

I, Thomas R. Stanton, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ADTRAN, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2018

/s/ Thomas R. Stanton

Thomas R. Stanton

Chief Executive Officer and Chairman of the Board

CERTIFICATIONS

I, Roger D. Shannon, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ADTRAN, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 3, 2018

/s/ Roger D. Shannon

Roger D. Shannon

Senior Vice President of Finance,

Chief Financial Officer,

Corporate Treasurer and Secretary

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ADTRAN, Inc. (the "Company") on Form 10-Q for the quarter ending June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas R. Stanton, Chief Executive Officer and Chairman of the Board of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Thomas R. Stanton

Thomas R. Stanton

Chief Executive Officer and Chairman of the Board

August 3, 2018

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ADTRAN, Inc. (the "Company") on Form 10-Q for the quarter ending June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Roger D. Shannon, Senior Vice President of Finance, Chief Financial Officer, Corporate Secretary and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Roger D. Shannon

Roger D. Shannon

Senior Vice President of Finance,

Chief Financial Officer,

Corporate Secretary and Treasurer

August 3, 2018

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 20, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Trading Symbol	ADTN
Entity Registrant Name	ADTRAN INC
Entity Central Index Key	0000926282
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		47,739,170

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current Assets
Cash and cash equivalents	$ 100,319	$ 86,433
Short-term investments	6,069	16,129
Accounts receivable, less allowance for doubtful accounts of $— at June 30, 2018 and December 31, 2017	76,135	144,150
Other receivables	28,163	26,578
Inventory, net	120,537	122,542
Prepaid expenses and other current assets	9,464	17,282
Total Current Assets	340,687	413,114
Property, plant and equipment, net	82,910	85,079
Deferred tax assets, net	35,615	23,428
Goodwill	3,492	3,492
Other assets	32,429	13,725
Long-term investments	144,437	130,256
Total Assets	639,570	669,094
Current Liabilities
Accounts payable	60,150	60,632
Unearned revenue	14,307	13,070
Accrued expenses	14,785	13,232
Accrued wages and benefits	14,913	15,948
Income tax payable	11,948	3,936
Total Current Liabilities	116,103	106,818
Non-current unearned revenue	3,639	4,556
Other non-current liabilities	34,601	34,209
Bonds payable	25,600	25,600
Total Liabilities	179,943	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 47,733 shares outstanding at June 30, 2018 and 79,652 shares issued and 48,485 shares outstanding at December 31, 2017	797	797
Additional paid-in capital	264,118	260,515
Accumulated other comprehensive loss	(9,118)	(3,295)
Retained earnings	897,586	922,178
Less treasury stock at cost: 31,919 and 31,167 shares at June 30, 2018 and December 31, 2017, respectively	(693,756)	(682,284)
Total Stockholders’ Equity	459,627	497,911
Total Liabilities and Stockholders’ Equity	$ 639,570	$ 669,094

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 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	47,733,000	48,485,000
Treasury stock, shares	31,919,000	31,167,000

XML

Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Sales
Total Sales	$ 128,048	$ 184,673	$ 248,854	$ 354,952
Cost of Sales
Total Cost of Sales	78,052	100,047	159,125	196,617
Gross Profit	49,996	84,626	89,729	158,335
Selling, general and administrative expenses	32,080	34,706	65,611	69,495
Research and development expenses	30,729	33,557	63,578	65,528
Operating Income (Loss)	(12,813)	16,363	(39,460)	23,312
Interest and dividend income	913	972	1,779	1,905
Interest expense	(132)	(137)	(264)	(278)
Net realized investment gain	990	1,390	893	1,860
Other expense, net	(217)	(719)	(274)	(585)
Gain on bargain purchase of a business			11,322
Income (Loss) Before Provision for Income Taxes	(11,259)	17,869	(26,004)	26,214
(Provision) benefit for income taxes	3,589	(5,468)	7,520	(7,162)
Net Income (Loss)	$ (7,670)	$ 12,401	$ (18,484)	$ 19,052
Weighted average shares outstanding – basic	47,856	48,036	48,043	48,232
Weighted average shares outstanding – diluted	47,902	48,413	48,091	48,675
Earnings (loss) per common share – basic	$ (0.16)	$ 0.26	$ (0.38)	$ 0.40
Earnings (loss) per common share – diluted	(0.16)	0.26	(0.38)	0.39
Dividend per share	$ 0.09	$ 0.09	$ 0.18	$ 0.18
Product [Member]
Sales
Total Sales	$ 115,063	$ 155,543	$ 220,316	$ 299,140
Cost of Sales
Total Cost of Sales	69,629	79,663	138,241	156,327
Service [Member]
Sales
Total Sales	12,985	29,130	28,538	55,812
Cost of Sales
Total Cost of Sales	$ 8,423	$ 20,384	$ 20,884	$ 40,290

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net Income (Loss)	$ (7,670)	$ 12,401	$ (18,484)	$ 19,052
Other Comprehensive Income (Loss), net of tax
Net unrealized gains (losses) on available-for-sale securities	104	373	(3,308)	1,708
Net unrealized losses on cash flow hedges		(417)		(338)
Defined benefit plan adjustments	5	86	67	141
Foreign currency translation	(3,424)	2,619	(2,582)	3,861
Other Comprehensive Income (Loss), net of tax	(3,315)	2,661	(5,823)	5,372
Comprehensive Income (Loss), net of tax	$ (10,985)	$ 15,062	$ (24,307)	$ 24,424

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net Income (Loss)	$ (18,484)	$ 19,052
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	7,526	8,377
Amortization of net premium on available-for-sale investments	20	238
Net realized gain on long-term investments	(893)	(1,860)
Net (gain) loss on disposal of property, plant and equipment	68	(11)
Gain on bargain purchase of a business	(11,322)
Stock-based compensation expense	3,603	3,739
Deferred income taxes	(16,384)	(2,772)
Changes in operating assets and liabilities:
Accounts receivable, net	66,931	13,911
Other receivables	9	571
Inventory	2,063	(7,547)
Prepaid expenses and other assets	10,157	(9,853)
Accounts payable	683	(10,910)
Accrued expenses and other liabilities	2,008	(2,629)
Income tax payable	6,945	10,273
Net cash provided by operating activities	52,930	20,579
Cash flows from investing activities:
Purchases of property, plant and equipment	(4,183)	(7,509)
Proceeds from disposals of property, plant and equipment		16
Proceeds from sales and maturities of available-for-sale investments	86,436	81,891
Purchases of available-for-sale investments	(89,801)	(65,140)
Acquisition of business	(7,806)
Net cash provided by (used in) investing activities	(15,354)	9,258
Cash flows from financing activities:
Proceeds from stock option exercises	369	1,722
Purchases of treasury stock	(12,774)	(17,311)
Dividend payments	(8,679)	(8,719)
Net cash used in financing activities	(21,084)	(24,308)
Net increase in cash and cash equivalents	16,492	5,529
Effect of exchange rate changes	(2,606)	3,374
Cash and cash equivalents, beginning of period	86,433	79,895
Cash and cash equivalents, end of period	100,319	88,798
Supplemental disclosure of non-cash investing activities:
Purchases of property, plant and equipment included in accounts payable	$ 209	$ 454

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 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. Subsequently, in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, which clarified certain aspects of ASU 2016-02. ASU 2016-02 and ASU 2018-10 are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. A modified retrospective approach is required. We anticipate the adoption of 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 and equipment.

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 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.

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 isintended 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 June 30, 2018
(In thousands)	As Reported			Balances Without Adoption of ASC 606			Effect of Adoption of ASC 606
Sales
Products	$	115,063			115,437		$	(374	)
Services	$	12,985			13,430		$	(445	)
Cost of Sales
Products	$	69,629			70,003		$	(374	)
Services	$	8,423			8,772		$	(349	)
Loss before benefit for income taxes	$	(11,259	)		(11,163	)	$	(96	)
Benefit for income taxes	$	3,589			3,558		$	31
Net loss	$	(7,670	)		(7,605	)	$	(65	)

	For the six months ended June 30, 2018
(In thousands)	As Reported			Balances Without Adoption of ASC 606			Effect of Adoption of ASC 606
Sales
Products	$	220,316			220,876		$	(560	)
Services	$	28,538			28,130		$	408
Cost of Sales
Products	$	138,241			138,726		$	(485	)
Services	$	20,884			20,697		$	187
Loss before benefit for income taxes	$	(26,004	)		(26,150	)	$	146
Benefit for income taxes	$	7,520			7,556		$	(36	)
Net loss	$	(18,484	)		(18,594	)	$	110

	As of  June 30, 2018
(In thousands)	As Reported		Balances Without Adoption of ASC 606		Effect of Adoption of ASC 606
Assets
Other receivables	$	28,163		28,164	$	(1	)
Inventory	$	120,537		120,426	$	111
Equity
Retained earnings	$	897,586		897,476	$	110

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. We are currently evaluating the effect ASU 2018-03 will have on our consolidated financial statements.

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 $0.2 million have been reclassified from cost of sales, selling, general and administrative expenses, and research and development expense to other expense, net for the three and six months ended June 30, 2017, respectively.

XML

Business Combinations

6 Months Ended

Jun. 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 June 30, 2018 and the period March 19, 2018 to June 30, 2018 are as follows:

	Three Months Ended			March 19, 2018 to
(In thousands)	June 30, 2018			June 30, 2018
Revenue	$	1,197		$	1,197
Net loss	$	(809	)	$	(886	)

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		Six Months Ended
	June 30,		June 30,
(In thousands)	2017		2018			2017
Pro forma revenue	$	187,987	$	250,114		$	358,679
Pro forma net income (loss)	$	11,628	$	(31,020	)	$	28,829
Pro forma earnings per share - basic	$	0.24	$	(0.65	)	$	0.60
Pro forma earnings per share - diluted	$	0.24	$	(0.65	)	$	0.59

For the three and six months ended June 30, 2018, we incurred acquisition and integration related expenses and amortization of acquired intangibles of $0.8 million and $1.0 million, respectively, related to this acquisition.

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Revenue

6 Months Ended

Jun. 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 the most likely amount. 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 June 30, 2018 and 2017, we recognized revenue of $4.0 million and $5.2 million, respectively, and during the six months ended June 30, 2018 and 2017 we recognized revenue of $6.3 million and $7.0 million, respectively.

Services & Support Segment

To complement our Network Solutions segment, we offer a complete portfolio of maintenance, network implementation, 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. Payments received are recorded in current or non-current unearned revenue depending on the length of the service 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.

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 June 30, 2018, we did not have any remaining 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)	June 30, 2018		January 1, 2018
Accounts receivable	$	76,135	$	144,150
Contract assets		1,672		374
Unearned revenue		14,307		13,070
Non-current unearned revenue		3,639		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 six months ended June 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 June 30, 2018 is primarily attributable to cash payments received or due in advance of satisfying our performance obligations, offset by $7.1 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 June 30, 2018:

(In thousands)	Network Solutions		Services & Support		Total
Access & Aggregation	$	75,222	$	9,520	$	84,742
Customer Devices		33,306		1,254		34,560
Traditional & Other Products		6,535		2,211		8,746
Total	$	115,063	$	12,985	$	128,048

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

(In thousands)	Network Solutions		Services & Support		Total
Access & Aggregation	$	144,607	$	21,815	$	166,422
Customer Devices		62,083		2,578		64,661
Traditional & Other Products		13,626		4,145		17,771
Total	$	220,316	$	28,538	$	248,854

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

4. INCOME TAXES

Our effective tax rate decreased from an expense of 27.3% in the six months ended June 30, 2017, to a benefit of 20.1%, excluding the tax effect of the bargain purchase gain, in the six months ended June 30, 2018. The decrease in the effective tax rate between the two periods is primarily attributable to the change in income and the effect of the U.S. Tax Cuts and Jobs Act, which was signed into law on December 22, 2017.

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Pension Benefit Plan

6 Months Ended

Jun. 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 six months ended June 30, 2018 and 2017:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Service cost	$	303		$	306		$	611		$	603
Interest cost		185			147			372			290
Expected return on plan assets		(394	)		(307	)		(793	)		(606	)
Amortization of actuarial losses		63			75			127			148
Net periodic pension cost	$	157		$	221		$	317		$	435

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

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Stock-Based Compensation

6 Months Ended

Jun. 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 six months ended June 30, 2018 and 2017, which was recognized as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Stock-based compensation expense included in cost of sales	$	102		$	93		$	197		$	184
Selling, general and administrative expense		995			1,008			2,030			2,024
Research and development expense		687			755			1,376			1,531
Stock-based compensation expense included in operating expenses		1,682			1,763			3,406			3,555
Total stock-based compensation expense		1,784			1,856			3,603			3,739
Tax benefit for expense associated with non-qualified options, PSUs, RSUs and    restricted stock		(340	)		(433	)		(724	)		(813	)
Total stock-based compensation expense, net of tax	$	1,444		$	1,423		$	2,879		$	2,926

Stock Options

The following table is a summary of our stock options outstanding as of December 31, 2017 and June 30, 2018 and the changes that occurred during the six months ended June 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		(24	)	$	15.48
Stock options forfeited		(42	)	$	16.54
Stock options expired		(282	)	$	25.63
Stock options outstanding, June 30, 2018		4,800		$	22.56		4.39	$	—
Stock options vested and expected to vest, June 30, 2018		4,800		$	22.56		4.39	$	—
Stock options exercisable, June 30, 2018		4,063		$	23.67		3.90	$	—

The aggregate intrinsic values in the table above represent the total pre-tax intrinsic value (the difference between the closing price of our stock on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all option holders exercised their options on June 30, 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 six months ended June 30, 2018 was $33 thousand. There were no options exercised during the three months ended June 30, 2018.

As of June 30, 2018, there was $1.9 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over an average remaining recognition period of 1.1 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 six months ended June 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 six months ended June 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		8		$	20.68
PSUs, RSUs and restricted stock vested		(7	)	$	19.99
PSUs, RSUs and restricted stock forfeited		(105	)	$	21.59
Unvested PSUs, RSUs and restricted stock outstanding, June 30, 2018		1,188		$	21.31

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

As of June 30, 2018, there was $11.4 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 2.7 years. In addition, there was $10.1 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 six months ended June 30, 2018, no compensation expense was recognized related to these performance-based PSU awards.

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Investments

6 Months Ended

Jun. 30, 2018

Investments Debt And Equity Securities [Abstract]

Investments

7. INVESTMENTS

Debt Securities and Other Investments

At June 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	$	35,896	$	27	$	(250	)	$	35,673
Municipal fixed-rate bonds		2,259		—		(38	)		2,221
Asset-backed bonds		10,355		1		(37	)		10,319
Mortgage/Agency-backed bonds		7,292		—		(85	)		7,207
U.S. government bonds		8,953		—		(104	)		8,849
Foreign government bonds		1,036		2		—			1,038
Available-for-sale debt securities held at fair value	$	65,791	$	30	$	(514	)	$	65,307
Restricted investment held at cost									26,700
Other investments held at cost									520
Total carrying value of available-for-sale investments								$	92,527

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 June 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	$	1,500	$	490	$	4,079	$	—	$	—	$	—
One to two years		16,694		603		2,270		—		1,519		729
Two to three years		12,264		1,128		556		—		3,845		309
Three to five years		5,215		—		1,939		1,970		3,485		—
Five to ten years		—		—		—		588		—		—
More than ten years		—		—		1,475		4,649		—		—
Total	$	35,673	$	2,221	$	10,319	$	7,207	$	8,849	$	1,038

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						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Gross realized gains	$	25		$	33		$	25		$	57
Gross realized losses	$	(241	)	$	(113	)	$	(315	)	$	(152	)

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

At June 30, 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 June 30, 2018 and December 31, 2017. At June 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 realized 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 realized 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 six months ended June 30, 2018 were as follows:

	Three Months Ended			Six Months Ended
	June 30,			June 30,
(In thousands)	2018			2018
Realized gains (losses) on equity securities sold	$	(52	)	$	347
Unrealized gains (losses) on equity securities held		1,258			836
Total gain (loss) recognized, net	$	1,206		$	1,183

As of June 30, 2018 and 2017, gross unrealized losses related to individual investments in a continuous loss position for 12 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 June 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	$	2,008	$	2,008	$	—	$	—
Foreign government securities		350		—		350		—
Cash equivalents		2,358		2,008		350		—
Available-for-sale debt securities
Corporate bonds		35,673		—		35,673		—
Municipal fixed-rate bonds		2,221		—		2,221		—
Asset-backed bonds		10,319		—		10,319		—
Mortgage/Agency-backed bonds		7,207		—		7,207		—
U.S. government bonds		8,849		8,849		—		—
Foreign government bonds		1,038		—		1,038		—
Marketable equity securities
Marketable equity securities – various industries		37,600		37,600		—		—
Deferred compensation plan assets		20,379		20,379		—		—
Available-for-sale securities		123,286		66,828		56,458		—
Total	$	125,644	$	68,836	$	56,808	$	—

	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.

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Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 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 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 June 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 six months ended June 30, 2018 and 2017 were as follows:

		Three Months Ended					Six Months Ended
	Income Statement	June 30,					June 30,
(In thousands)	Location	2018		2017			2018		2017
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	Other expense, net	$	—	$	(451	)	$	13	$	(485	)

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 six months ended June 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
	Three Months Ended					Location of Gains	Three Months Ended
	June 30,					(Losses) Reclassified	June 30,
(In thousands)	2018		2017			from AOCI into Income	2018		2017
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts	$	—	$	(571	)	Cost of Sales	$	—	$	(154	)

	Amount of Gains (Losses) Recognized in						Amount of Gains (Losses) Reclassified
	OCI on Derivatives						from AOCI into Income
	Six Months Ended					Location of Gains	Six Months Ended
	June 30,					(Losses) Reclassified	June 30,
(In thousands)	2018		2017			from AOCI into Income	2018		2017
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts	$	—	$	(492	)	Cost of Sales	$	—	$	(154	)

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Inventory

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Inventory

9. INVENTORY

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

	June 30,		December 31,
(In thousands)	2018		2017
Raw materials	$	50,844	$	44,185
Work in process		1,985		1,939
Finished goods		67,708		76,418
Total	$	120,537	$	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 June 30, 2018 and December 31, 2017, raw materials reserves totaled $17.5 million and $15.0 million, respectively, and finished goods inventory reserves totaled $9.7 million and $8.3 million, respectively.

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Goodwill and Intangible Assets

6 Months Ended

Jun. 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 June 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 June 30, 2018 and December 31, 2017. Fully amortized intangible assets have been removed from prior year balances for comparability.

(In thousands)	June 30, 2018							December 31, 2017
	Gross Value		Accumulated Amortization			Net Value		Gross Value		Accumulated Amortization			Net Value
Customer relationships	$	20,752	$	(4,781	)	$	15,971	$	7,474	$	(4,283	)	$	3,191
Licensed technology		5,900		(191	)		5,709		—		—			—
Developed technology		5,452		(4,772	)		680		5,524		(4,663	)		861
Supplier relationship		2,800		(408	)		2,392		—		—			—
Intellectual property		930		(919	)		11		930		(852	)		78
Patent		500		(123	)		377		500		(89	)		411
Non-compete		200		(159	)		41		200		(115	)		85
Trade names		100		(90	)		10		100		(65	)		35
Total	$	36,634	$	(11,443	)	$	25,191	$	14,728	$	(10,067	)	$	4,661

Amortization expense, all of which relates to business acquisitions, was $1.0 million and $1.1 million for the three months ended June 30, 2018 and 2017, respectively, and $1.5 million and $1.9 million for the six months ended June 30, 2018 and 2017, respectively.

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

(In thousands)	Amount
Remainder of 2018	$	1,785
2019		3,542
2020		2,659
2021		2,365
2022		2,352
Thereafter		12,488
Total	$	25,191

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Stockholders' Equity

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Stockholders' Equity

11. STOCKHOLDERS’ EQUITY

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

(In thousands)	Stockholders’ Equity
Balance, December 31, 2017	$	497,911
Net income (loss)		(18,484	)
Dividend payments		(8,679	)
Dividends accrued for unvested restricted stock units		5
Net unrealized gains (losses) on available-for-sale securities (net of tax)		(3,308	)
Defined benefit plan adjustments (net of tax)		67
Foreign currency translation adjustment		(2,582	)
Proceeds from stock option exercises		369
Purchase of treasury stock		(12,774	)
Adoption of new accounting standards (see Note 1)		3,499
Stock-based compensation expense		3,603
Balance, June 30, 2018	$	459,627

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 six months ended June 30, 2018, we repurchased 0.8 million shares of our common stock at an average price of $15.72 per share. As of June 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 24 thousand shares of treasury stock during the six months ended June 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 $0.4 million from the exercise of these stock options during the six months ended June 30, 2018.

Dividend Payments

During the six months ended June 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

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 June 30, 2018 and 2017:

	Three Months Ended June 30, 2018
(In thousands)	Unrealized Gains (Losses) on Available- for-Sale Securities			Defined Benefit Plan Adjustments			Foreign Currency Adjustments			Total
Beginning balance	$	(845	)	$	(4,224	)	$	(734	)	$	(5,803	)
Other comprehensive income (loss) before    reclassifications		(82	)		—			(3,424	)		(3,506	)
Amounts reclassified from accumulated other    comprehensive income (loss)		186			5			—			191
Net current period other comprehensive income (loss)		104			5			(3,424	)		(3,315	)
Ending balance	$	(741	)	$	(4,219	)	$	(4,158	)	$	(9,118	)

	Three Months Ended June 30, 2017
(In thousands)	Unrealized Gains (Losses) on Available- for-Sale Securities			Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Plan Adjustments			Foreign Currency Adjustments			Total
Beginning balance	$	1,739		$	79		$	(4,962	)	$	(6,333	)	$	(9,477	)
Other comprehensive income (loss) before    reclassifications		1,222			(571	)		—			2,619			3,270
Amounts reclassified from accumulated other    comprehensive income (loss)		(849	)		154			86			—			(609	)
Net current period other comprehensive income (loss)		373			(417	)		86			2,619			2,661
Ending balance	$	2,112		$	(338	)	$	(4,876	)	$	(3,714	)	$	(6,816	)

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

	Six Months Ended June 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		(339	)		—			(2,582	)		(2,921	)
Amounts reclassified from accumulated other    comprehensive income (loss)		251			67			—			318
Amounts reclassified to retained earnings (1)		(3,220	)		—			—			(3,220	)
Net current period other comprehensive income (loss)		(3,308	)		67			(2,582	)		(5,823	)
Ending balance	$	(741	)	$	(4,219	)	$	(4,158	)	$	(9,118	)

(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.

	Six Months Ended June 30, 2017
(In thousands)	Unrealized Gains (Losses) on Available- for-Sale Securities			Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Plan Adjustments			Foreign Currency Adjustments			Total
Beginning balance	$	404		$	—		$	(5,017	)	$	(7,575	)	$	(12,188	)
Other comprehensive income (loss) before    reclassifications		2,842			(492	)		—			3,861			6,211
Amounts reclassified from accumulated other    comprehensive income (loss)		(1,134	)		154			141			—			(839	)
Net current period other comprehensive income (loss)		1,708			(338	)		141			3,861			5,372
Ending balance	$	2,112		$	(338	)	$	(4,876	)	$	(3,714	)	$	(6,816	)

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

(In thousands)	Three Months Ended June 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	$	(251	)	Net realized investment gain
Defined benefit plan adjustments – actuarial losses		(7	)	(1)
Total reclassifications for the period, before tax		(258	)
Tax (expense) benefit		67
Total reclassifications for the period, net of tax	$	(191	)

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

(In thousands)	Three Months Ended June 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	$	1,393		Net realized investment gain
Impairment expense		(2	)	Net realized investment gain
Net losses on derivatives designated as hedging instruments		(154	)	Cost of sales
Defined benefit plan adjustments – actuarial losses		(124	)	(1)
Total reclassifications for the period, before tax		1,113
Tax (expense) benefit		(504	)
Total reclassifications for the period, net of tax	$	609

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

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

(In thousands)	Six Months Ended June 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	$	(324	)	Net realized investment gain
Defined benefit plan adjustments – actuarial losses		(97	)	(1)
Total reclassifications for the period, before tax		(421	)
Tax (expense) benefit		103
Total reclassifications for the period, net of tax	$	(318	)

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

(In thousands)	Six Months Ended June 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	$	1,965		Net realized investment gain
Impairment expense		(105	)	Net realized investment gain
Net losses on derivatives designated as hedging instruments		(154	)	Cost of sales
Defined benefit plan adjustments – actuarial    losses		(204	)	(1)
Total reclassifications for the period, before    tax		1,502
Tax (expense) benefit		(663	)
Total reclassifications for the period, net    of tax	$	839

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 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 June 30, 2018 and 2017: 

	Three Months Ended									Three Months Ended
	June 30, 2018									June 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	$	(111	)	$	29		$	(82	)	$	2,003		$	(781	)	$	1,222
Unrealized gains (losses) on cash flow hedges		—			—			—			(571	)		—			(571	)
Reclassification adjustment for amounts related to    available-for-sale investments included in net    income		251			(65	)		186			(1,391	)		542			(849	)
Reclassification adjustment for amounts related to    cash flow hedges included in net income		—			—			—			154			—			154
Reclassification adjustment for amounts related to    defined benefit plan adjustments included in net    income		7			(2	)		5			124			(38	)		86
Foreign currency translation adjustment		(3,424	)		—			(3,424	)		2,619			—			2,619
Total Other Comprehensive Income (Loss)	$	(3,277	)	$	(38	)	$	(3,315	)	$	2,938		$	(277	)	$	2,661

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

	Six Months Ended									Six Months Ended
	June 30, 2018									June 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	$	(458	)	$	119		$	(339	)	$	4,659		$	(1,817	)	$	2,842
Unrealized gains (losses) on cash flow hedges		—			—			—			(492	)		—			(492	)
Reclassification adjustment for amounts related to    available-for-sale investments included in net    income		324			(73	)		251			(1,860	)		726			(1,134	)
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		—			—			—			154			—			154
Reclassification adjustment for amounts related to    defined benefit plan adjustments included in net    income		97			(30	)		67			204			(63	)		141
Foreign currency translation adjustment		(2,582	)		—			(2,582	)		3,861			—			3,861
Total Other Comprehensive Income (Loss)	$	(5,839	)	$	16		$	(5,823	)	$	6,526		$	(1,154	)	$	5,372

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Earnings Per Share

6 Months Ended

Jun. 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 six months ended June 30, 2018 and 2017 is as follows:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In thousands, except per share amounts)	2018			2017		2018			2017
Numerator
Net income (loss)	$	(7,670	)	$	12,401	$	(18,484	)	$	19,052
Denominator
Weighted average number of shares – basic		47,856			48,036		48,043			48,232
Effect of dilutive securities
Stock options		—			279		8			348
PSUs, RSUs and restricted stock		46			98		40			95
Weighted average number of shares – diluted		47,902			48,413		48,091			48,675
Net income (loss) per share – basic	$	(0.16	)	$	0.26	$	(0.38	)	$	0.40
Net income (loss) per share – diluted	$	(0.16	)	$	0.26	$	(0.38	)	$	0.39

Anti-dilutive options to purchase common stock outstanding were excluded from the above calculations. Anti-dilutive options totaled 5.0 million and 4.1 million for the three months ended June 30, 2018 and 2017, respectively, and 4.8 million and 4.1 million for the six months ended June 30, 2018 and 2017.

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Segment Information

6 Months Ended

Jun. 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 realized investment gain/loss, other income/expense and provision for taxes are reported on a company-wide, functional basis only. There are no inter-segment revenues.

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

	Three Months Ended
	June 30, 2018				June 30, 2017
(In thousands)	Sales		Gross Profit		Sales		Gross Profit
Network Solutions	$	115,063	$	45,434	$	155,543	$	75,880
Services & Support		12,985		4,562		29,130		8,746
Total	$	128,048	$	49,996	$	184,673	$	84,626

	Six Months Ended
	June 30, 2018				June 30, 2017
(In thousands)	Sales		Gross Profit		Sales		Gross Profit
Network Solutions	$	220,316	$	82,075	$	299,140	$	142,813
Services & Support		28,538		7,654		55,812		15,522
Total	$	248,854	$	89,729	$	354,952	$	158,335

Sales by Category

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

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2018		2017		2018		2017
Access & Aggregation	$	84,742	$	138,639	$	166,422	$	258,782
Customer Devices		34,560		33,833		64,661		70,101
Traditional & Other Products		8,746		12,201		17,771		26,069
Total	$	128,048	$	184,673	$	248,854	$	354,952

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Liability for Warranty Returns

6 Months Ended

Jun. 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 $10.1 million and $9.7 million at June 30, 2018 and December 31, 2017, respectively. During the three months ended March 31, 2017, we recorded a receivable and a reduction in warranty expense related to a settlement with a third party supplier for a defective component, the impact of which is reflected in the table below. These liabilities are included in accrued expenses in the accompanying Consolidated Balance Sheets.

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Balance at beginning of period	$	9,687		$	8,988		$	9,724		$	8,548
Plus: Amounts charged to cost and expenses		4,860			3,055			6,683			2,314
Less: Deductions		(4,436	)		(2,863	)		(6,296	)		(1,682	)
Balance at end of period	$	10,111		$	9,180		$	10,111		$	9,180

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Commitments and Contingencies

6 Months Ended

Jun. 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 June 30, 2018, of which $7.7 million has been applied to these commitments.

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Subsequent Events

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

16. SUBSEQUENT EVENTS

On July 17, 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 August 1, 2018. The payment date will be August 15, 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.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 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. Subsequently, in July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, which clarified certain aspects of ASU 2016-02. ASU 2016-02 and ASU 2018-10 are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. A modified retrospective approach is required. We anticipate the adoption of 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 and equipment.

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 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.

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 isintended 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 June 30, 2018
(In thousands)	As Reported			Balances Without Adoption of ASC 606			Effect of Adoption of ASC 606
Sales
Products	$	115,063			115,437		$	(374	)
Services	$	12,985			13,430		$	(445	)
Cost of Sales
Products	$	69,629			70,003		$	(374	)
Services	$	8,423			8,772		$	(349	)
Loss before benefit for income taxes	$	(11,259	)		(11,163	)	$	(96	)
Benefit for income taxes	$	3,589			3,558		$	31
Net loss	$	(7,670	)		(7,605	)	$	(65	)

	For the six months ended June 30, 2018
(In thousands)	As Reported			Balances Without Adoption of ASC 606			Effect of Adoption of ASC 606
Sales
Products	$	220,316			220,876		$	(560	)
Services	$	28,538			28,130		$	408
Cost of Sales
Products	$	138,241			138,726		$	(485	)
Services	$	20,884			20,697		$	187
Loss before benefit for income taxes	$	(26,004	)		(26,150	)	$	146
Benefit for income taxes	$	7,520			7,556		$	(36	)
Net loss	$	(18,484	)		(18,594	)	$	110

	As of  June 30, 2018
(In thousands)	As Reported		Balances Without Adoption of ASC 606		Effect of Adoption of ASC 606
Assets
Other receivables	$	28,163		28,164	$	(1	)
Inventory	$	120,537		120,426	$	111
Equity
Retained earnings	$	897,586		897,476	$	110

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. We are currently evaluating the effect ASU 2018-03 will have on our consolidated financial statements.

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 $0.2 million have been reclassified from cost of sales, selling, general and administrative expenses, and research and development expense to other expense, net for the three and six months ended June 30, 2017, respectively.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 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 June 30, 2018
(In thousands)	As Reported			Balances Without Adoption of ASC 606			Effect of Adoption of ASC 606
Sales
Products	$	115,063			115,437		$	(374	)
Services	$	12,985			13,430		$	(445	)
Cost of Sales
Products	$	69,629			70,003		$	(374	)
Services	$	8,423			8,772		$	(349	)
Loss before benefit for income taxes	$	(11,259	)		(11,163	)	$	(96	)
Benefit for income taxes	$	3,589			3,558		$	31
Net loss	$	(7,670	)		(7,605	)	$	(65	)

	For the six months ended June 30, 2018
(In thousands)	As Reported			Balances Without Adoption of ASC 606			Effect of Adoption of ASC 606
Sales
Products	$	220,316			220,876		$	(560	)
Services	$	28,538			28,130		$	408
Cost of Sales
Products	$	138,241			138,726		$	(485	)
Services	$	20,884			20,697		$	187
Loss before benefit for income taxes	$	(26,004	)		(26,150	)	$	146
Benefit for income taxes	$	7,520			7,556		$	(36	)
Net loss	$	(18,484	)		(18,594	)	$	110

	As of  June 30, 2018
(In thousands)	As Reported		Balances Without Adoption of ASC 606		Effect of Adoption of ASC 606
Assets
Other receivables	$	28,163		28,164	$	(1	)
Inventory	$	120,537		120,426	$	111
Equity
Retained earnings	$	897,586		897,476	$	110

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Business Combinations (Tables)

6 Months Ended

Jun. 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 June 30, 2018 and the period March 19, 2018 to June 30, 2018 are as follows:

	Three Months Ended			March 19, 2018 to
(In thousands)	June 30, 2018			June 30, 2018
Revenue	$	1,197		$	1,197
Net loss	$	(809	)	$	(886	)

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		Six Months Ended
	June 30,		June 30,
(In thousands)	2017		2018			2017
Pro forma revenue	$	187,987	$	250,114		$	358,679
Pro forma net income (loss)	$	11,628	$	(31,020	)	$	28,829
Pro forma earnings per share - basic	$	0.24	$	(0.65	)	$	0.60
Pro forma earnings per share - diluted	$	0.24	$	(0.65	)	$	0.59

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Revenue (Tables)

6 Months Ended

Jun. 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)	June 30, 2018		January 1, 2018
Accounts receivable	$	76,135	$	144,150
Contract assets		1,672		374
Unearned revenue		14,307		13,070
Non-current unearned revenue		3,639		4,556

Disaggregate of Revenue by Major Source

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

(In thousands)	Network Solutions		Services & Support		Total
Access & Aggregation	$	75,222	$	9,520	$	84,742
Customer Devices		33,306		1,254		34,560
Traditional & Other Products		6,535		2,211		8,746
Total	$	115,063	$	12,985	$	128,048

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

(In thousands)	Network Solutions		Services & Support		Total
Access & Aggregation	$	144,607	$	21,815	$	166,422
Customer Devices		62,083		2,578		64,661
Traditional & Other Products		13,626		4,145		17,771
Total	$	220,316	$	28,538	$	248,854

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Pension Benefit Plan (Tables)

6 Months Ended

Jun. 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 six months ended June 30, 2018 and 2017:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Service cost	$	303		$	306		$	611		$	603
Interest cost		185			147			372			290
Expected return on plan assets		(394	)		(307	)		(793	)		(606	)
Amortization of actuarial losses		63			75			127			148
Net periodic pension cost	$	157		$	221		$	317		$	435

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

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 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 six months ended June 30, 2018 and 2017, which was recognized as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Stock-based compensation expense included in cost of sales	$	102		$	93		$	197		$	184
Selling, general and administrative expense		995			1,008			2,030			2,024
Research and development expense		687			755			1,376			1,531
Stock-based compensation expense included in operating expenses		1,682			1,763			3,406			3,555
Total stock-based compensation expense		1,784			1,856			3,603			3,739
Tax benefit for expense associated with non-qualified options, PSUs, RSUs and    restricted stock		(340	)		(433	)		(724	)		(813	)
Total stock-based compensation expense, net of tax	$	1,444		$	1,423		$	2,879		$	2,926

Summary of Stock Options Outstanding

The following table is a summary of our stock options outstanding as of December 31, 2017 and June 30, 2018 and the changes that occurred during the six months ended June 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		(24	)	$	15.48
Stock options forfeited		(42	)	$	16.54
Stock options expired		(282	)	$	25.63
Stock options outstanding, June 30, 2018		4,800		$	22.56		4.39	$	—
Stock options vested and expected to vest, June 30, 2018		4,800		$	22.56		4.39	$	—
Stock options exercisable, June 30, 2018		4,063		$	23.67		3.90	$	—

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 six months ended June 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		8		$	20.68
PSUs, RSUs and restricted stock vested		(7	)	$	19.99
PSUs, RSUs and restricted stock forfeited		(105	)	$	21.59
Unvested PSUs, RSUs and restricted stock outstanding, June 30, 2018		1,188		$	21.31

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Investments (Tables)

6 Months Ended

Jun. 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 June 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	$	35,896	$	27	$	(250	)	$	35,673
Municipal fixed-rate bonds		2,259		—		(38	)		2,221
Asset-backed bonds		10,355		1		(37	)		10,319
Mortgage/Agency-backed bonds		7,292		—		(85	)		7,207
U.S. government bonds		8,953		—		(104	)		8,849
Foreign government bonds		1,036		2		—			1,038
Available-for-sale debt securities held at fair value	$	65,791	$	30	$	(514	)	$	65,307
Restricted investment held at cost									26,700
Other investments held at cost									520
Total carrying value of available-for-sale investments								$	92,527

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 June 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	$	1,500	$	490	$	4,079	$	—	$	—	$	—
One to two years		16,694		603		2,270		—		1,519		729
Two to three years		12,264		1,128		556		—		3,845		309
Three to five years		5,215		—		1,939		1,970		3,485		—
Five to ten years		—		—		—		588		—		—
More than ten years		—		—		1,475		4,649		—		—
Total	$	35,673	$	2,221	$	10,319	$	7,207	$	8,849	$	1,038

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						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Gross realized gains	$	25		$	33		$	25		$	57
Gross realized losses	$	(241	)	$	(113	)	$	(315	)	$	(152	)

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 six months ended June 30, 2018 were as follows:

	Three Months Ended			Six Months Ended
	June 30,			June 30,
(In thousands)	2018			2018
Realized gains (losses) on equity securities sold	$	(52	)	$	347
Unrealized gains (losses) on equity securities held		1,258			836
Total gain (loss) recognized, net	$	1,206		$	1,183

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 June 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	$	2,008	$	2,008	$	—	$	—
Foreign government securities		350		—		350		—
Cash equivalents		2,358		2,008		350		—
Available-for-sale debt securities
Corporate bonds		35,673		—		35,673		—
Municipal fixed-rate bonds		2,221		—		2,221		—
Asset-backed bonds		10,319		—		10,319		—
Mortgage/Agency-backed bonds		7,207		—		7,207		—
U.S. government bonds		8,849		8,849		—		—
Foreign government bonds		1,038		—		1,038		—
Marketable equity securities
Marketable equity securities – various industries		37,600		37,600		—		—
Deferred compensation plan assets		20,379		20,379		—		—
Available-for-sale securities		123,286		66,828		56,458		—
Total	$	125,644	$	68,836	$	56,808	$	—

	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	$	—

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Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 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 six months ended June 30, 2018 and 2017 were as follows:

		Three Months Ended					Six Months Ended
	Income Statement	June 30,					June 30,
(In thousands)	Location	2018		2017			2018		2017
Derivatives Not Designated as Hedging Instruments:
Foreign exchange contracts	Other expense, net	$	—	$	(451	)	$	13	$	(485	)

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 six months ended June 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
	Three Months Ended					Location of Gains	Three Months Ended
	June 30,					(Losses) Reclassified	June 30,
(In thousands)	2018		2017			from AOCI into Income	2018		2017
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts	$	—	$	(571	)	Cost of Sales	$	—	$	(154	)

	Amount of Gains (Losses) Recognized in						Amount of Gains (Losses) Reclassified
	OCI on Derivatives						from AOCI into Income
	Six Months Ended					Location of Gains	Six Months Ended
	June 30,					(Losses) Reclassified	June 30,
(In thousands)	2018		2017			from AOCI into Income	2018		2017
Derivatives Designated as Hedging Instruments:
Foreign exchange contracts	$	—	$	(492	)	Cost of Sales	$	—	$	(154	)

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Inventory (Tables)

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Components of Inventory

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

	June 30,		December 31,
(In thousands)	2018		2017
Raw materials	$	50,844	$	44,185
Work in process		1,985		1,939
Finished goods		67,708		76,418
Total	$	120,537	$	122,542

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

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

(In thousands)	June 30, 2018							December 31, 2017
	Gross Value		Accumulated Amortization			Net Value		Gross Value		Accumulated Amortization			Net Value
Customer relationships	$	20,752	$	(4,781	)	$	15,971	$	7,474	$	(4,283	)	$	3,191
Licensed technology		5,900		(191	)		5,709		—		—			—
Developed technology		5,452		(4,772	)		680		5,524		(4,663	)		861
Supplier relationship		2,800		(408	)		2,392		—		—			—
Intellectual property		930		(919	)		11		930		(852	)		78
Patent		500		(123	)		377		500		(89	)		411
Non-compete		200		(159	)		41		200		(115	)		85
Trade names		100		(90	)		10		100		(65	)		35
Total	$	36,634	$	(11,443	)	$	25,191	$	14,728	$	(10,067	)	$	4,661

Estimated Future Amortization Expense Related to Intangible Assets

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

(In thousands)	Amount
Remainder of 2018	$	1,785
2019		3,542
2020		2,659
2021		2,365
2022		2,352
Thereafter		12,488
Total	$	25,191

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Summary of Changes in Stockholders' Equity

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

(In thousands)	Stockholders’ Equity
Balance, December 31, 2017	$	497,911
Net income (loss)		(18,484	)
Dividend payments		(8,679	)
Dividends accrued for unvested restricted stock units		5
Net unrealized gains (losses) on available-for-sale securities (net of tax)		(3,308	)
Defined benefit plan adjustments (net of tax)		67
Foreign currency translation adjustment		(2,582	)
Proceeds from stock option exercises		369
Purchase of treasury stock		(12,774	)
Adoption of new accounting standards (see Note 1)		3,499
Stock-based compensation expense		3,603
Balance, June 30, 2018	$	459,627

Cash Dividends

During the six months ended June 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

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 June 30, 2018 and 2017:

	Three Months Ended June 30, 2018
(In thousands)	Unrealized Gains (Losses) on Available- for-Sale Securities			Defined Benefit Plan Adjustments			Foreign Currency Adjustments			Total
Beginning balance	$	(845	)	$	(4,224	)	$	(734	)	$	(5,803	)
Other comprehensive income (loss) before    reclassifications		(82	)		—			(3,424	)		(3,506	)
Amounts reclassified from accumulated other    comprehensive income (loss)		186			5			—			191
Net current period other comprehensive income (loss)		104			5			(3,424	)		(3,315	)
Ending balance	$	(741	)	$	(4,219	)	$	(4,158	)	$	(9,118	)

	Three Months Ended June 30, 2017
(In thousands)	Unrealized Gains (Losses) on Available- for-Sale Securities			Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Plan Adjustments			Foreign Currency Adjustments			Total
Beginning balance	$	1,739		$	79		$	(4,962	)	$	(6,333	)	$	(9,477	)
Other comprehensive income (loss) before    reclassifications		1,222			(571	)		—			2,619			3,270
Amounts reclassified from accumulated other    comprehensive income (loss)		(849	)		154			86			—			(609	)
Net current period other comprehensive income (loss)		373			(417	)		86			2,619			2,661
Ending balance	$	2,112		$	(338	)	$	(4,876	)	$	(3,714	)	$	(6,816	)

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

	Six Months Ended June 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		(339	)		—			(2,582	)		(2,921	)
Amounts reclassified from accumulated other    comprehensive income (loss)		251			67			—			318
Amounts reclassified to retained earnings (1)		(3,220	)		—			—			(3,220	)
Net current period other comprehensive income (loss)		(3,308	)		67			(2,582	)		(5,823	)
Ending balance	$	(741	)	$	(4,219	)	$	(4,158	)	$	(9,118	)

(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.

	Six Months Ended June 30, 2017
(In thousands)	Unrealized Gains (Losses) on Available- for-Sale Securities			Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Plan Adjustments			Foreign Currency Adjustments			Total
Beginning balance	$	404		$	—		$	(5,017	)	$	(7,575	)	$	(12,188	)
Other comprehensive income (loss) before    reclassifications		2,842			(492	)		—			3,861			6,211
Amounts reclassified from accumulated other    comprehensive income (loss)		(1,134	)		154			141			—			(839	)
Net current period other comprehensive income (loss)		1,708			(338	)		141			3,861			5,372
Ending balance	$	2,112		$	(338	)	$	(4,876	)	$	(3,714	)	$	(6,816	)

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 June 30, 2018 and 2017:

(In thousands)	Three Months Ended June 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	$	(251	)	Net realized investment gain
Defined benefit plan adjustments – actuarial losses		(7	)	(1)
Total reclassifications for the period, before tax		(258	)
Tax (expense) benefit		67
Total reclassifications for the period, net of tax	$	(191	)

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

(In thousands)	Three Months Ended June 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	$	1,393		Net realized investment gain
Impairment expense		(2	)	Net realized investment gain
Net losses on derivatives designated as hedging instruments		(154	)	Cost of sales
Defined benefit plan adjustments – actuarial losses		(124	)	(1)
Total reclassifications for the period, before tax		1,113
Tax (expense) benefit		(504	)
Total reclassifications for the period, net of tax	$	609

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

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

(In thousands)	Six Months Ended June 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	$	(324	)	Net realized investment gain
Defined benefit plan adjustments – actuarial losses		(97	)	(1)
Total reclassifications for the period, before tax		(421	)
Tax (expense) benefit		103
Total reclassifications for the period, net of tax	$	(318	)

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 5 of Notes to Consolidated Financial Statements.

(In thousands)	Six Months Ended June 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	$	1,965		Net realized investment gain
Impairment expense		(105	)	Net realized investment gain
Net losses on derivatives designated as hedging instruments		(154	)	Cost of sales
Defined benefit plan adjustments – actuarial    losses		(204	)	(1)
Total reclassifications for the period, before    tax		1,502
Tax (expense) benefit		(663	)
Total reclassifications for the period, net    of tax	$	839

⁽¹⁾ Included in the computation of net periodic pension cost. See Note 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 June 30, 2018 and 2017: 

	Three Months Ended									Three Months Ended
	June 30, 2018									June 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	$	(111	)	$	29		$	(82	)	$	2,003		$	(781	)	$	1,222
Unrealized gains (losses) on cash flow hedges		—			—			—			(571	)		—			(571	)
Reclassification adjustment for amounts related to    available-for-sale investments included in net    income		251			(65	)		186			(1,391	)		542			(849	)
Reclassification adjustment for amounts related to    cash flow hedges included in net income		—			—			—			154			—			154
Reclassification adjustment for amounts related to    defined benefit plan adjustments included in net    income		7			(2	)		5			124			(38	)		86
Foreign currency translation adjustment		(3,424	)		—			(3,424	)		2,619			—			2,619
Total Other Comprehensive Income (Loss)	$	(3,277	)	$	(38	)	$	(3,315	)	$	2,938		$	(277	)	$	2,661

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

	Six Months Ended									Six Months Ended
	June 30, 2018									June 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	$	(458	)	$	119		$	(339	)	$	4,659		$	(1,817	)	$	2,842
Unrealized gains (losses) on cash flow hedges		—			—			—			(492	)		—			(492	)
Reclassification adjustment for amounts related to    available-for-sale investments included in net    income		324			(73	)		251			(1,860	)		726			(1,134	)
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		—			—			—			154			—			154
Reclassification adjustment for amounts related to    defined benefit plan adjustments included in net    income		97			(30	)		67			204			(63	)		141
Foreign currency translation adjustment		(2,582	)		—			(2,582	)		3,861			—			3,861
Total Other Comprehensive Income (Loss)	$	(5,839	)	$	16		$	(5,823	)	$	6,526		$	(1,154	)	$	5,372

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Earnings Per Share (Tables)

6 Months Ended

Jun. 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 six months ended June 30, 2018 and 2017 is as follows:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In thousands, except per share amounts)	2018			2017		2018			2017
Numerator
Net income (loss)	$	(7,670	)	$	12,401	$	(18,484	)	$	19,052
Denominator
Weighted average number of shares – basic		47,856			48,036		48,043			48,232
Effect of dilutive securities
Stock options		—			279		8			348
PSUs, RSUs and restricted stock		46			98		40			95
Weighted average number of shares – diluted		47,902			48,413		48,091			48,675
Net income (loss) per share – basic	$	(0.16	)	$	0.26	$	(0.38	)	$	0.40
Net income (loss) per share – diluted	$	(0.16	)	$	0.26	$	(0.38	)	$	0.39

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Segment Information (Tables)

6 Months Ended

Jun. 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 six months ended June 30, 2018 and 2017. We do not produce asset information by reportable segment; therefore, it is not reported.

	Three Months Ended
	June 30, 2018				June 30, 2017
(In thousands)	Sales		Gross Profit		Sales		Gross Profit
Network Solutions	$	115,063	$	45,434	$	155,543	$	75,880
Services & Support		12,985		4,562		29,130		8,746
Total	$	128,048	$	49,996	$	184,673	$	84,626

	Six Months Ended
	June 30, 2018				June 30, 2017
(In thousands)	Sales		Gross Profit		Sales		Gross Profit
Network Solutions	$	220,316	$	82,075	$	299,140	$	142,813
Services & Support		28,538		7,654		55,812		15,522
Total	$	248,854	$	89,729	$	354,952	$	158,335

Sales Information by Category

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2018		2017		2018		2017
Access & Aggregation	$	84,742	$	138,639	$	166,422	$	258,782
Customer Devices		34,560		33,833		64,661		70,101
Traditional & Other Products		8,746		12,201		17,771		26,069
Total	$	128,048	$	184,673	$	248,854	$	354,952

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Liability for Warranty Returns (Tables)

6 Months Ended

Jun. 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 six months ended June 30, 2018 and 2017 is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2018			2017			2018			2017
Balance at beginning of period	$	9,687		$	8,988		$	9,724		$	8,548
Plus: Amounts charged to cost and expenses		4,860			3,055			6,683			2,314
Less: Deductions		(4,436	)		(2,863	)		(6,296	)		(1,682	)
Balance at end of period	$	10,111		$	9,180		$	10,111		$	9,180

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Summary of Significant Accounting Policies - Schedule of Cumulative Effect of Changes made to Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Other receivables	$ 28,163		$ 26,578
Deferred tax assets, net	35,615		23,428
Retained earnings	897,586		$ 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	(1)	374
Deferred tax assets, net		(96)
Retained earnings	$ 110	$ 278

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Summary of Significant Accounting Policies - Summary of Effect of Adoption of ASU 2014-09 and Related ASUs (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jan. 01, 2018	Dec. 31, 2017
Sales
Sales	$ 128,048	$ 184,673	$ 248,854	$ 354,952
Cost of Sales
Cost of Sales	78,052	100,047	159,125	196,617
Loss before benefit for income taxes	(11,259)	17,869	(26,004)	26,214
(Provision) benefit for income taxes	3,589	(5,468)	7,520	(7,162)
Net Income (Loss)	(7,670)	12,401	(18,484)	19,052
ASSETS
Other receivables	28,163		28,163			$ 26,578
Inventory	120,537		120,537			122,542
Equity
Retained earnings	897,586		897,586			$ 922,178
Product [Member]
Sales
Sales	115,063	155,543	220,316	299,140
Cost of Sales
Cost of Sales	69,629	79,663	138,241	156,327
Service [Member]
Sales
Sales	12,985	29,130	28,538	55,812
Cost of Sales
Cost of Sales	8,423	$ 20,384	20,884	$ 40,290
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
Loss before benefit for income taxes	(11,163)		(26,150)
(Provision) benefit for income taxes	3,558		7,556
Net Income (Loss)	(7,605)		(18,594)
ASSETS
Other receivables	28,164		28,164
Inventory	120,426		120,426
Equity
Retained earnings	897,476		897,476
ASU 2014-09 [member] | Effect of Adoption of ASC 606
Cost of Sales
Loss before benefit for income taxes	(96)		146
(Provision) benefit for income taxes	31		(36)
Net Income (Loss)	(65)		110
ASSETS
Other receivables	(1)		(1)		374
Inventory	111		111
Equity
Retained earnings	110		110		$ 278
ASU 2014-09 [member] | Product [Member] | Balances Without Adoption of ASC 606 [Member]
Sales
Sales	115,437		220,876
Cost of Sales
Cost of Sales	70,003		138,726
ASU 2014-09 [member] | Product [Member] | Effect of Adoption of ASC 606
Sales
Sales	(374)		(560)
Cost of Sales
Cost of Sales	(374)		(485)
ASU 2014-09 [member] | Service [Member] | Balances Without Adoption of ASC 606 [Member]
Sales
Sales	13,430		28,130
Cost of Sales
Cost of Sales	8,772		20,697
ASU 2014-09 [member] | Service [Member] | Effect of Adoption of ASC 606
Sales
Sales	(445)		408
Cost of Sales
Cost of Sales	$ (349)		$ 187

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 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 expense, net	$ 0.1	$ 0.2

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Business Combinations - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Mar. 19, 2018	Jun. 30, 2018	Mar. 31, 2018	Jun. 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		$ 800		$ 1,000

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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	6 Months Ended
	Mar. 19, 2018	Mar. 31, 2018	Jun. 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

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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
	Jun. 30, 2018	Jun. 30, 2018
Business Acquisition [Line Items]
Revenue	$ 1,197	$ 1,197
Net loss	$ (886)	$ (809)

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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

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Business Combinations - Summary of Unaudited Supplemental Pro Forma Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Business Combinations [Abstract]
Pro forma revenue	$ 187,987	$ 250,114	$ 358,679
Pro forma net income (loss)	$ 11,628	$ (31,020)	$ 28,829
Pro forma earnings per share - basic	$ 0.24	$ (0.65)	$ 0.60
Pro forma earnings per share - diluted	$ 0.24	$ (0.65)	$ 0.59

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Revenue - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 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					$ 7,100,000
Lease Agreements [Member]
Revenue [Line Items]
Recognized revenue	$ 4,000,000	$ 5,200,000	$ 6,300,000	$ 7,000,000
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

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Revenue - Information about Receivables, Contract Assets, and Unearned Revenue from Contracts with Customers (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Jan. 01, 2018	Dec. 31, 2017
Revenue From Contract With Customer [Abstract]
Accounts receivable	$ 76,135	$ 144,150	$ 144,150
Contract assets	1,672	374
Unearned revenue	14,307	13,070
Non-current unearned revenue	$ 3,639	$ 4,556

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Revenue - Disaggregate of Revenue by Major Source (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation Of Revenue [Line Items]
Revenue	$ 128,048	$ 184,673	$ 248,854	$ 354,952
Access & Aggregation [Member]
Disaggregation Of Revenue [Line Items]
Revenue	84,742		166,422
Customer Devices [Member]
Disaggregation Of Revenue [Line Items]
Revenue	34,560	33,833	64,661	70,101
Traditional & Other Products [Member]
Disaggregation Of Revenue [Line Items]
Revenue	8,746	12,201	17,771	26,069
Network Solutions [Member]
Disaggregation Of Revenue [Line Items]
Revenue	115,063	155,543	220,316	299,140
Network Solutions [Member] | Access & Aggregation [Member]
Disaggregation Of Revenue [Line Items]
Revenue	75,222		144,607
Network Solutions [Member] | Customer Devices [Member]
Disaggregation Of Revenue [Line Items]
Revenue	33,306		62,083
Network Solutions [Member] | Traditional & Other Products [Member]
Disaggregation Of Revenue [Line Items]
Revenue	6,535		13,626
Services & Support [Member]
Disaggregation Of Revenue [Line Items]
Revenue	12,985	$ 29,130	28,538	$ 55,812
Services & Support [Member] | Access & Aggregation [Member]
Disaggregation Of Revenue [Line Items]
Revenue	9,520		21,815
Services & Support [Member] | Customer Devices [Member]
Disaggregation Of Revenue [Line Items]
Revenue	1,254		2,578
Services & Support [Member] | Traditional & Other Products [Member]
Disaggregation Of Revenue [Line Items]
Revenue	$ 2,211		$ 4,145

XML

Income Taxes - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Effective tax rate expense (benefit)	(20.10%)	27.30%

XML

Pension Benefit Plan - Summarization of Components of Net Periodic Pension Cost (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Compensation And Retirement Disclosure [Abstract]
Service cost	$ 303	$ 306	$ 611	$ 603
Interest cost	185	147	372	290
Expected return on plan assets	(394)	(307)	(793)	(606)
Amortization of actuarial losses	63	75	127	148
Net periodic pension cost	$ 157	$ 221	$ 317	$ 435

XML

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		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	$ 1,784	$ 1,856	$ 3,603	$ 3,739
Tax benefit for expense associated with non-qualified options, PSUs, RSUs and restricted stock	(340)	(433)	(724)	(813)
Total stock-based compensation expense, net of tax	1,444	1,423	2,879	2,926
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	102	93	197	184
Selling, General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	995	1,008	2,030	2,024
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	687	755	1,376	1,531
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	$ 1,682	$ 1,763	$ 3,406	$ 3,555

XML

Stock-Based Compensation - Summary of Stock Options Outstanding (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 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	0		(24,000)
Number of Stock Options, Stock options forfeited			(42,000)
Number of Stock Options, Stock options expired			(282,000)
Number of Stock Options, Stock options outstanding, Ending Balance	4,800,000		4,800,000		5,148,000
Number of Stock Options, Stock options vested and expected to vest	4,800,000		4,800,000
Number of Stock Options, Stock options exercisable	4,063,000		4,063,000
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			16.54
Weighted Avg. Exercise Price, Stock options expired			25.63
Weighted Avg. Exercise Price, Stock options outstanding, Ending Balance	$ 22.56		22.56		$ 22.65
Weighted Avg. Exercise Price, Stock options vested and expected to vest	22.56		22.56
Weighted Avg. Exercise Price, Stock options exercisable	$ 23.67		$ 23.67
Weighted Avg. Remaining Contractual Life In Years, Stock options outstanding			4 years 4 months 20 days		4 years 10 months 13 days
Weighted Avg. Remaining Contractual Life In Years, Stock options vested and expected to vest			4 years 4 months 20 days
Weighted Avg. Remaining Contractual Life In Years, Stock options exercisable			3 years 10 months 24 days
Aggregate Intrinsic Value, Stock options outstanding					$ 6,109

XML

Stock-Based Compensation (Stock Options) - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total pre-tax intrinsic value of options exercised			$ 33
Number of Options, exercised	0		24,000
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	$ 1,900		$ 1,900
Recognition period of unvested compensation expense			1 year 1 month 6 days

XML

Stock-Based Compensation - Summary of PSUs, RSUs and Restricted Stock Outstanding (Detail) shares in Thousands	6 Months Ended
	Jun. 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	8
Number of Shares, PSUs, RSUs and restricted stock vested | shares	(7)
Number of Shares, PSUs, RSUs and restricted stock forfeited | shares	(105)
Number of Shares, Unvested PSUs, RSUs and restricted stock outstanding, ending balance | shares	1,188
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	20.68
Weighted Avg. Grant Date Fair Value, PSUs, RSUs and restricted stock vested | $ / shares	19.99
Weighted Avg. Grant Date Fair Value, PSUs, RSUs and restricted stock forfeited | $ / shares	21.59
Weighted Avg. Grant Date Fair Value, Unvested PSUs, RSUs and restricted stock outstanding, Ending Balance | $ / shares	$ 21.31

XML

Stock-Based Compensation (PSUs, RSUs and Restricted Stock) - Additional Information (Detail) - USD ($) shares in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
PSU shares grant approved by board of directors				8
Stock-based compensation expense	$ 1,784,000	$ 1,856,000		$ 3,603,000	$ 3,739,000
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	11,400,000			$ 11,400,000
Recognition period of unvested compensation expense				2 years 8 months 12 days
Performance-Based PSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense related to other than options	10,100,000			$ 10,100,000
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

XML

Investments - Debt Securities and Other Investments, Recorded at Either Fair Value or Cost (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 65,791	$ 62,857
Gross Unrealized Gains	30	53
Gross Unrealized Losses	(514)	(417)
Available-for-sale debt securities, Carrying Value	65,307	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	92,527	90,840
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	35,896	32,654
Gross Unrealized Gains	27	44
Gross Unrealized Losses	(250)	(155)
Available-for-sale debt securities, Carrying Value	35,673	32,543
Municipal Fixed-Rate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,259	2,902
Gross Unrealized Gains		2
Gross Unrealized Losses	(38)	(22)
Available-for-sale debt securities, Carrying Value	2,221	2,882
Asset-Backed Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	10,355	6,545
Gross Unrealized Gains	1	1
Gross Unrealized Losses	(37)	(20)
Available-for-sale debt securities, Carrying Value	10,319	6,526
Mortgage/Agency-Backed Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	7,292	5,554
Gross Unrealized Gains		1
Gross Unrealized Losses	(85)	(46)
Available-for-sale debt securities, Carrying Value	7,207	5,509
U.S. Government Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	8,953	14,477
Gross Unrealized Losses	(104)	(174)
Available-for-sale debt securities, Carrying Value	8,849	14,303
Foreign Government Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,036	725
Gross Unrealized Gains	2	5
Available-for-sale debt securities, Carrying Value	$ 1,038	$ 730

XML

Investments - Contractual Maturities of Debt Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale debt securities, Fair Value/Carrying Value	$ 65,307	$ 62,493
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than one year	1,500
One to two years	16,694
Two to three years	12,264
Three to five years	5,215
Available-for-sale debt securities, Fair Value/Carrying Value	35,673	32,543
Municipal Fixed-Rate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than one year	490
One to two years	603
Two to three years	1,128
Available-for-sale debt securities, Fair Value/Carrying Value	2,221	2,882
Asset-Backed Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than one year	4,079
One to two years	2,270
Two to three years	556
Three to five years	1,939
More than ten years	1,475
Available-for-sale debt securities, Fair Value/Carrying Value	10,319	6,526
Mortgage/Agency-Backed Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Three to five years	1,970
Five to ten years	588
More than ten years	4,649
Available-for-sale debt securities, Fair Value/Carrying Value	7,207	5,509
U.S. Government Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
One to two years	1,519
Two to three years	3,845
Three to five years	3,485
Available-for-sale debt securities, Fair Value/Carrying Value	8,849	14,303
Foreign Government Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
One to two years	729
Two to three years	309
Available-for-sale debt securities, Fair Value/Carrying Value	$ 1,038	$ 730

XML

Investments - Gross Realized Gains and Losses on Sale of Debt Securities (Detail) - Debt Securities [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Schedule of Available-for-sale Securities [Line Items]
Gross realized gains	$ 25	$ 33	$ 25	$ 57
Gross realized losses	$ (241)	$ (113)	$ (315)	$ (152)

XML

Investments - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 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%

XML

Investments - Realized and Unrealized Gains and Losses for Marketable Equity Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Schedule of Available-for-sale Securities [Line Items]
Net realized investment gain	$ 990	$ 1,390	$ 893	$ 1,860
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Net realized investment gain	(52)		347
Unrealized gains (losses) on equity securities held	1,258		836
Total gain (loss) recognized, net	$ 1,206		$ 1,183

XML

Investments - Fair Value Measurements of Cash Equivalents and Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	$ 65,307	$ 62,493
Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Cash equivalents	2,358	9,850
Available-for-sale securities	123,286	118,038
Total	125,644	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	2,008	5,851
Available-for-sale securities	66,828	69,848
Total	68,836	75,699
Fair Value, Measurements [Member] | Significant Other Observable Inputs (Level 2) [Member]
Schedule of Available-for-sale Securities [Line Items]
Cash equivalents	350	3,999
Available-for-sale securities	56,458	48,190
Total	56,808	52,189
Money Market Funds [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Cash equivalents	2,008	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	2,008	5,851
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	35,673	32,543
Corporate Bonds [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	35,673	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	35,673	32,543
Foreign Government Securities [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Cash equivalents	350
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	350
Municipal Fixed-Rate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	2,221	2,882
Municipal Fixed-Rate Bonds [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	2,221	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	2,221	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	10,319	6,526
Asset-Backed Bonds [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	10,319	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	10,319	6,526
Mortgage/Agency-Backed Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	7,207	5,509
Mortgage/Agency-Backed Bonds [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	7,207	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	7,207	5,509
U.S. Government Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	8,849	14,303
U.S. Government Bonds [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	8,849	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	8,849	14,303
Foreign Government Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	1,038	730
Foreign Government Bonds [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	1,038	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	1,038	730
Marketable Equity Securities - Various Industries [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	37,600	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]
Available-for-sale securities	37,600	35,662
Deferred Compensation Plan Assets [Member] | Fair Value, Measurements [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities	20,379	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]
Available-for-sale securities	$ 20,379	$ 19,883

XML

Derivative Instruments and Hedging Activities - Additional Information (Detail)	Jun. 30, 2018 USD ($)
Foreign Exchange Forward Contracts [Member]
Derivative [Line Items]
Derivative instruments, amount	$ 0

XML

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	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Foreign Exchange Contracts [Member] | Other Expense, Net [Member]
Derivatives Not Designated as Hedging Instruments:
Derivative instrument, gain or loss	$ (451)	$ 13	$ (485)

XML

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	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017
Derivative [Line Items]
Amount of Gains (Losses) Recognized in OCI on Derivatives	$ (571)	$ (492)
Foreign Exchange Contracts [Member] | Derivatives Designated as Hedging Instruments [Member]
Derivative [Line Items]
Amount of Gains (Losses) Recognized in OCI on Derivatives	(571)	(492)
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	$ (154)	$ (154)

XML

Inventory - Components of Inventory (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 50,844	$ 44,185
Work in process	1,985	1,939
Finished goods	67,708	76,418
Total	$ 120,537	$ 122,542

XML

Inventory - Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017
Raw Materials [Member]
Inventory [Line Items]
Inventory valuation reserves	$ 17.5	$ 15.0
Finished Goods [Member]
Inventory [Line Items]
Inventory valuation reserves	$ 9.7	$ 8.3

XML

Goodwill and Intangible Assets - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Goodwill [Line Items]
Goodwill, relates to acquisition			$ 3,500,000		$ 3,500,000
Impairment losses			0
Amortization expense	$ 1,000,000	$ 1,100,000	1,500,000	$ 1,900,000
Network Solutions [Member]
Goodwill [Line Items]
Goodwill, relates to acquisition			3,100,000
Services & Support [Member]
Goodwill [Line Items]
Goodwill, relates to acquisition			$ 400,000

XML

Goodwill and Intangible Assets - Summary of Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Goodwill [Line Items]
Gross Value	$ 36,634	$ 14,728
Accumulated Amortization	(11,443)	(10,067)
Net Value	25,191	4,661
Customer Relationships [Member]
Goodwill [Line Items]
Gross Value	20,752	7,474
Accumulated Amortization	(4,781)	(4,283)
Net Value	15,971	3,191
Licensed Technology [Member]
Goodwill [Line Items]
Gross Value	5,900
Accumulated Amortization	(191)
Net Value	5,709
Developed Technology [Member]
Goodwill [Line Items]
Gross Value	5,452	5,524
Accumulated Amortization	(4,772)	(4,663)
Net Value	680	861
Intellectual Property [Member]
Goodwill [Line Items]
Gross Value	930	930
Accumulated Amortization	(919)	(852)
Net Value	11	78
Supplier Relationship [Member]
Goodwill [Line Items]
Gross Value	2,800
Accumulated Amortization	(408)
Net Value	2,392
Trade Names [Member]
Goodwill [Line Items]
Gross Value	100	100
Accumulated Amortization	(90)	(65)
Net Value	10	35
Patent [Member]
Goodwill [Line Items]
Gross Value	500	500
Accumulated Amortization	(123)	(89)
Net Value	377	411
Non-compete [Member]
Goodwill [Line Items]
Gross Value	200	200
Accumulated Amortization	(159)	(115)
Net Value	$ 41	$ 85

XML

Goodwill and Intangible Assets - Estimated Future Amortization Expense Related to Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Goodwill And Intangible Assets Disclosure [Abstract]
Remainder of 2018	$ 1,785
2019	3,542
2020	2,659
2021	2,365
2022	2,352
Thereafter	12,488
Net Value	$ 25,191	$ 4,661

XML

Stockholders' Equity - Summary of Changes in Stockholders' Equity (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Equity [Abstract]
Beginning Balance			$ 497,911
Net Income (Loss)	$ (7,670)	$ 12,401	(18,484)	$ 19,052
Dividend payments			(8,679)
Dividends accrued for unvested restricted stock units			5
Net unrealized gains (losses) on available-for-sale securities	104	373	(3,308)	1,708
Defined benefit plan adjustments (net of tax)	5	86	67	141
Foreign currency translation adjustment	(3,424)	$ 2,619	(2,582)	3,861
Proceeds from stock option exercises			369	$ 1,722
Purchase of treasury stock			(12,774)
Adoption of new accounting standards (see Note 1)			3,499
Stock-based compensation expense			3,603
Ending Balance	$ 459,627		$ 459,627

XML

Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017
Equity [Abstract]
Maximum shares authorized for repurchase, prior and new announcements and total after new announcement	50,000,000	50,000,000
Stock repurchased, shares		800,000
Shares repurchased, average price per share		$ 15.72
Additional shares authorized for purchase	2,700,000	2,700,000
Number of Options, exercised	0	24,000
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		$ 369	$ 1,722

XML

Stockholders' Equity - Cash Dividends (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Dividends Payable [Line Items]
Per Share Amount	$ 0.09	$ 0.09	$ 0.18	$ 0.18
Total Dividend Paid			$ 8,679	$ 8,719
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

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Stockholders' Equity - Changes in Accumulated Other Comprehensive Income (Loss), Net of Tax by Component (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			$ 497,911
Other comprehensive income (loss) before reclassifications	$ (3,506)	$ 3,270	(2,921)	$ 6,211
Amounts reclassified from accumulated other comprehensive income (loss)	191	(609)	318	(839)
Amounts reclassified to retained earnings			(3,220)
Other Comprehensive Income (Loss), net of tax	(3,315)	2,661	(5,823)	5,372
Ending Balance	459,627		459,627
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(845)	1,739	2,567	404
Other comprehensive income (loss) before reclassifications	(82)	1,222	(339)	2,842
Amounts reclassified from accumulated other comprehensive income (loss)	186	(849)	251	(1,134)
Amounts reclassified to retained earnings			(3,220)
Other Comprehensive Income (Loss), net of tax	104	373	(3,308)	1,708
Ending Balance	(741)	2,112	(741)	2,112
Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance		79
Other comprehensive income (loss) before reclassifications		(571)		(492)
Amounts reclassified from accumulated other comprehensive income (loss)		154		154
Other Comprehensive Income (Loss), net of tax		(417)		(338)
Ending Balance		(338)		(338)
Defined Benefit Plan Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(4,224)	(4,962)	(4,286)	(5,017)
Amounts reclassified from accumulated other comprehensive income (loss)	5	86	67	141
Other Comprehensive Income (Loss), net of tax	5	86	67	141
Ending Balance	(4,219)	(4,876)	(4,219)	(4,876)
Foreign Currency Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(734)	(6,333)	(1,576)	(7,575)
Other comprehensive income (loss) before reclassifications	(3,424)	2,619	(2,582)	3,861
Other Comprehensive Income (Loss), net of tax	(3,424)	2,619	(2,582)	3,861
Ending Balance	(4,158)	(3,714)	(4,158)	(3,714)
Accumulated Other Comprehensive Income [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(5,803)	(9,477)	(3,295)	(12,188)
Ending Balance	$ (9,118)	$ (6,816)	$ (9,118)	$ (6,816)

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Stockholders' Equity - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss) [Line Items]
Cost of sales	$ (78,052)	$ (100,047)	$ (159,125)	$ (196,617)
Income (Loss) Before Provision for Income Taxes	(11,259)	17,869	(26,004)	26,214
Tax (expense) benefit	3,589	(5,468)	7,520	(7,162)
Total reclassifications for the period, net of tax	(7,670)	12,401	(18,484)	19,052
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	(7)	(124)	(97)	(204)
Income (Loss) Before Provision for Income Taxes	(258)	1,113	(421)	1,502
Tax (expense) benefit	67	(504)	103	(663)
Total reclassifications for the period, net of tax	(191)	609	(318)	839
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 realized investment gain	$ (251)	1,393	$ (324)	1,965
Impairment Expense [Member] | Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment Out of Accumulated Other Comprehensive Income (Loss) [Line Items]
Net realized investment gain		(2)		(105)
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		$ (154)		$ (154)

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Stockholders' Equity - Tax Effects Related to the Change in Each Component of Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Equity [Abstract]
Unrealized gains (losses) on available-for-sale securities, Before-Tax Amount	$ (111)	$ 2,003	$ (458)	$ 4,659
Unrealized gains (losses) on available-for-sale securities, Tax (Expense) Benefit	29	(781)	119	(1,817)
Unrealized gains (losses) on available-for-sale securities, Net-of-Tax Amount	(82)	1,222	(339)	2,842
Unrealized gains (losses) on cash flow hedges, Before-Tax Amount		(571)		(492)
Unrealized gains (losses) on cash flow hedges, Net-of-Tax Amount		(571)		(492)
Reclassification adjustment for amounts related to available-for-sale investments included in net income, Before-Tax Amount	251	(1,391)	324	(1,860)
Reclassification adjustment for amounts related to available-for-sale investments included in net income, Tax (Expense) Benefit	(65)	542	(73)	726
Reclassification adjustment for amounts related to available-for-sale investments included in net income, Net-of-Tax Amount	186	(849)	251	(1,134)
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		154		154
Reclassification adjustment for amounts related to cash flow hedges included in net income, Net-of-Tax Amount		154		154
Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income, Before-Tax Amount	7	124	97	204
Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income, Tax (Expense) Benefit	(2)	(38)	(30)	(63)
Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income, Net-of-Tax Amount	5	86	67	141
Foreign currency translation adjustment, Before-Tax Amount	(3,424)	2,619	(2,582)	3,861
Foreign currency translation adjustment, Net-of-Tax Amount	(3,424)	2,619	(2,582)	3,861
Total Other Comprehensive Income (Loss), Before-Tax Amount	(3,277)	2,938	(5,839)	6,526
Total Other Comprehensive Income (Loss), Tax (Expense) Benefit	(38)	(277)	16	(1,154)
Other Comprehensive Income (Loss), net of tax	$ (3,315)	$ 2,661	$ (5,823)	$ 5,372

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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		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator
Net Income (Loss)	$ (7,670)	$ 12,401	$ (18,484)	$ 19,052
Denominator
Weighted average number of shares – basic	47,856	48,036	48,043	48,232
Effect of dilutive securities
Stock options		279	8	348
PSUs, RSUs and restricted stock	46	98	40	95
Weighted average number of shares – diluted	47,902	48,413	48,091	48,675
Net income (loss) per share – basic	$ (0.16)	$ 0.26	$ (0.38)	$ 0.40
Net income (loss) per share – diluted	$ (0.16)	$ 0.26	$ (0.38)	$ 0.39

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Earnings Per Share - Additional Information (Detail) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Earnings Per Share [Abstract]
Anti-dilutive options, Total	5.0	4.1	4.8	4.1

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Segment Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2018 Segment Category
Segment Reporting [Abstract]
Number of reportable segments | Segment	2
Number of categories | Category	3

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Segment Information - Sales and Gross Profit of Reportable Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting Information [Line Items]
Sales	$ 128,048	$ 184,673	$ 248,854	$ 354,952
Gross Profit	49,996	84,626	89,729	158,335
Network Solutions [Member]
Segment Reporting Information [Line Items]
Sales	115,063	155,543	220,316	299,140
Gross Profit	45,434	75,880	82,075	142,813
Services & Support [Member]
Segment Reporting Information [Line Items]
Sales	12,985	29,130	28,538	55,812
Gross Profit	$ 4,562	$ 8,746	$ 7,654	$ 15,522

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Segment Information - Sales Information by Category (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue from External Customer [Line Items]
Sales	$ 128,048	$ 184,673	$ 248,854	$ 354,952
Access & Aggregation [Member]
Revenue from External Customer [Line Items]
Sales	84,742	138,639	166,422	258,782
Customer Devices [Member]
Revenue from External Customer [Line Items]
Sales	34,560	33,833	64,661	70,101
Traditional & Other Products [Member]
Revenue from External Customer [Line Items]
Sales	$ 8,746	$ 12,201	$ 17,771	$ 26,069

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Liability for Warranty Returns - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Jun. 30, 2017	Mar. 31, 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	$ 10,111	$ 9,687	$ 9,724	$ 9,180	$ 8,988	$ 8,548

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Liability for Warranty Returns - Summary of Warranty Expense and Write-Off Activity (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Product Warranties Disclosures [Abstract]
Balance at beginning of period	$ 9,687	$ 8,988	$ 9,724	$ 8,548
Plus: Amounts charged to cost and expenses	4,860	3,055	6,683	2,314
Less: Deductions	(4,436)	(2,863)	(6,296)	(1,682)
Balance at end of period	$ 10,111	$ 9,180	$ 10,111	$ 9,180

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Commitments and Contingencies - Additional Information (Detail) $ in Millions	Jun. 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

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Subsequent Events - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	Jul. 17, 2018	Aug. 15, 2018
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	Jul. 17, 2018
Common stock dividends per share declared	$ 0.09
Dividend record date	Aug. 01, 2018
Dividend payment date	Aug. 15, 2018