QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended | ||||||||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | ☒ | Non-accelerated filer | ☐ | |||||||||||||||||||
Smaller reporting company | Emerging growth company |
Item | Page | |||||||
PART I FINANCIAL INFORMATION | ||||||||
1. | ||||||||
PART II OTHER INFORMATION | ||||||||
June 30, 2020 | December 31, 2019 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable, net | |||||||||||
Inventory | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Deferred income taxes | |||||||||||
Operating lease right-of-use assets | |||||||||||
Other assets | |||||||||||
$ | $ | ||||||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities: | |||||||||||
Current portion of term debt | $ | $ | |||||||||
Revolving credit facility | |||||||||||
Accounts payable | |||||||||||
Accrued expenses and other | |||||||||||
Operating lease liabilities | |||||||||||
Deferred revenue | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, net of current | |||||||||||
Operating lease liabilities, net of current | |||||||||||
Deferred revenue, net of current | |||||||||||
Deferred income taxes | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 18) | |||||||||||
Stockholders' equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive (loss) income | ( | ||||||||||
Total stockholders' equity | |||||||||||
$ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Product | $ | $ | $ | $ | |||||||||||||||||||
Service | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||
Product | |||||||||||||||||||||||
Service | |||||||||||||||||||||||
Total cost of revenue | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Acquisition- and integration-related | |||||||||||||||||||||||
Restructuring and related | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Income (loss) from operations | ( | ( | ( | ||||||||||||||||||||
Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
Other (expense) income, net | ( | ( | |||||||||||||||||||||
(Loss) income before income taxes | ( | ( | |||||||||||||||||||||
Income tax provision | ( | ( | ( | ( | |||||||||||||||||||
Net (loss) income | $ | ( | $ | $ | ( | $ | |||||||||||||||||
(Loss) earnings per share: | |||||||||||||||||||||||
Basic | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Diluted | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Weighted average shares used to compute (loss) earnings per share: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Net (loss) income | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||||||||||
Unrealized loss on interest rate swap | ( | ( | |||||||||||||||||||||
Foreign currency translation adjustments | |||||||||||||||||||||||
Unrealized gain on available-for sale marketable securities, net of reclassification adjustments for realized amounts | |||||||||||||||||||||||
Employee retirement benefits | ( | ||||||||||||||||||||||
Other comprehensive (loss) income, net of tax | ( | ( | |||||||||||||||||||||
Comprehensive (loss) income | $ | ( | $ | $ | ( | $ |
Three months ended June 30, 2020 | |||||||||||||||||||||||||||||||||||
Common stock | |||||||||||||||||||||||||||||||||||
Shares | Amount | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive (loss) income | Total stockholders' equity | ||||||||||||||||||||||||||||||
Balance at April 1, 2020 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Exercise of stock options | |||||||||||||||||||||||||||||||||||
Vesting of restricted stock awards and units | |||||||||||||||||||||||||||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations | ( | ( | ( | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||
Other comprehensive loss | ( | ( | |||||||||||||||||||||||||||||||||
Net loss | ( | ( | |||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | ( | $ | ( | $ |
Six months ended June 30, 2020 | |||||||||||||||||||||||||||||||||||
Common stock | |||||||||||||||||||||||||||||||||||
Shares | Amount | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive (loss) income | Total stockholders' equity | ||||||||||||||||||||||||||||||
Balance at January 1, 2020 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
Exercise of stock options | |||||||||||||||||||||||||||||||||||
Vesting of restricted stock awards and units | |||||||||||||||||||||||||||||||||||
Vesting of performance-based stock units | |||||||||||||||||||||||||||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations | ( | ( | ( | ||||||||||||||||||||||||||||||||
Shares issued as consideration in connection with the acquisition of ECI Telecom Group Ltd. | |||||||||||||||||||||||||||||||||||
Shares issued as consideration in connection with the acquisition of Anova Data, Inc. | |||||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||
Other comprehensive loss | ( | ( | |||||||||||||||||||||||||||||||||
Net loss | ( | ( | |||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | ( | $ | ( | $ |
Three months ended June 30, 2019 | |||||||||||||||||||||||||||||||||||
Common stock | |||||||||||||||||||||||||||||||||||
Shares | Amount | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive (loss) income | Total stockholders' equity | ||||||||||||||||||||||||||||||
Balance at April 1, 2019 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock purchase plan | |||||||||||||||||||||||||||||||||||
Exercise of stock options | |||||||||||||||||||||||||||||||||||
Vesting of restricted stock awards and units | |||||||||||||||||||||||||||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations | ( | ( | ( | ||||||||||||||||||||||||||||||||
Repurchase and retirement of common stock | ( | ( | ( | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | ( | $ | $ |
Six months ended June 30, 2019 | |||||||||||||||||||||||||||||||||||
Common stock | |||||||||||||||||||||||||||||||||||
Shares | Amount | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive (loss) income | Total stockholders' equity | ||||||||||||||||||||||||||||||
Balance at January 1, 2019 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
Issuance of common stock in connection with employee stock purchase plan | |||||||||||||||||||||||||||||||||||
Exercise of stock options | |||||||||||||||||||||||||||||||||||
Vesting of restricted stock awards and units | |||||||||||||||||||||||||||||||||||
Vesting of performance-based stock units | |||||||||||||||||||||||||||||||||||
Shares of restricted stock returned to the Company under net share settlements to satisfy tax withholding obligations | ( | ( | ( | ||||||||||||||||||||||||||||||||
Shares issued as consideration in connection with the acquisition of Anova Data, Inc. | |||||||||||||||||||||||||||||||||||
Reclassification of liability to equity for bonuses converted to stock | |||||||||||||||||||||||||||||||||||
Repurchase and retirement of common stock | ( | ( | ( | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||
Other comprehensive income | |||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | ( | $ | $ |
Six months ended | |||||||||||
June 30, 2020 | June 30, 2019 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net (loss) income | $ | ( | $ | ||||||||
Adjustments to reconcile net (loss) income to cash flows provided by operating activities: | |||||||||||
Depreciation and amortization of property and equipment | |||||||||||
Amortization of intangible assets | |||||||||||
Amortization of debt issuance costs | |||||||||||
Stock-based compensation | |||||||||||
Deferred income taxes | |||||||||||
Reduction in deferred purchase consideration | ( | ( | |||||||||
Foreign currency exchange losses | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | |||||||||||
Inventory | |||||||||||
Other operating assets | ( | ||||||||||
Accounts payable | ( | ( | |||||||||
Accrued expenses and other long-term liabilities | ( | ||||||||||
Deferred revenue | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Business acquisitions, net of cash acquired | ( | ||||||||||
Maturities of marketable securities | |||||||||||
Proceeds from the sale of fixed assets | |||||||||||
Net cash (used in) provided by investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Borrowings under revolving line of credit | |||||||||||
Principal payments on revolving line of credit | ( | ( | |||||||||
Proceeds from issuance of term debt | |||||||||||
Principal payment of debt, related party | ( | ||||||||||
Principal payments of long-term debt | ( | ||||||||||
Payment of deferred purchase consideration | ( | ||||||||||
Principal payments of finance leases | ( | ( | |||||||||
Payment of debt issuance costs | ( | ( | |||||||||
Proceeds from the sale of common stock in connection with employee stock purchase plan | |||||||||||
Proceeds from the exercise of stock options | |||||||||||
Payment of tax withholding obligations related to net share settlements of restricted stock awards | ( | ( | |||||||||
Repurchase of common stock | ( | ||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ||||||||||
Net increase in cash, cash equivalents and restricted cash | |||||||||||
Cash and cash equivalents, beginning of year | |||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
Six months ended | |||||||||||
June 30, 2020 | June 30, 2019 | ||||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Interest paid | $ | $ | |||||||||
Income taxes paid | $ | $ | |||||||||
Income tax refunds received | $ | $ | |||||||||
Supplemental disclosure of non-cash investing activities: | |||||||||||
Capital expenditures incurred, but not yet paid | $ | $ | |||||||||
Acquisition purchase consideration - deferred payments | $ | $ | |||||||||
Shares of common stock issued as purchase consideration | $ | $ | |||||||||
Supplemental disclosure of non-cash financing activities: | |||||||||||
Total fair value of restricted stock awards, restricted stock units and performance-based stock units | $ | $ |
Fair value of consideration transferred: | |||||
Cash consideration: | |||||
Repayment of ECI outstanding debt obligations | $ | ||||
Cash paid to selling shareholders | |||||
Payment to selling shareholders from sale of ECI real estate assets | |||||
Less cash and restricted cash acquired | ( | ||||
Net cash consideration | |||||
Fair value of Ribbon stock issued | |||||
Fair value of total consideration | $ | ||||
Fair value of assets acquired and liabilities assumed: | |||||
Current assets, net of cash and restricted cash acquired | $ | ||||
Property and equipment | |||||
Intangible assets: | |||||
In-process research and development | |||||
Developed technology | |||||
Customer relationships | |||||
Trade names | |||||
Goodwill | |||||
Other noncurrent assets | |||||
Deferred revenue | ( | ||||
Other current liabilities | ( | ||||
Deferred revenue, net of current | ( | ||||
Deferred tax liability | ( | ||||
Other long-term liabilities | ( | ||||
$ |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
Net (loss) income | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
(Loss) diluted earnings per share | $ | ( | $ | $ | ( | $ | ( |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Professional and services fees (acquisition-related) | $ | $ | $ | $ | |||||||||||||||||||
Integration-related expenses | |||||||||||||||||||||||
$ | $ | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Weighted average shares outstanding—basic | |||||||||||||||||||||||
Potential dilutive common shares | |||||||||||||||||||||||
Weighted average shares outstanding—diluted |
June 30, 2020 | December 31, 2019 | ||||||||||
On-hand final assemblies and finished goods inventories | $ | $ | |||||||||
Deferred cost of goods sold | |||||||||||
Less noncurrent portion (included in other assets) | ( | ( | |||||||||
Current portion | $ | $ |
June 30, 2020 | Weighted average amortization period (years) | Cost | Accumulated amortization | Net carrying value | |||||||||||||||||||
In-process research and development | * | $ | $ | $ | |||||||||||||||||||
Developed technology | |||||||||||||||||||||||
Customer relationships | |||||||||||||||||||||||
Trade names | |||||||||||||||||||||||
Internal use software | |||||||||||||||||||||||
$ | $ | $ |
December 31, 2019 | Weighted average amortization period (years) | Cost | Accumulated amortization | Net carrying value | |||||||||||||||||||
In-process research and development | * | $ | $ | $ | |||||||||||||||||||
Developed technology | |||||||||||||||||||||||
Customer relationships | |||||||||||||||||||||||
Trade names | |||||||||||||||||||||||
Internal use software | |||||||||||||||||||||||
$ | $ | $ |
Three months ended | Six months ended | Statement of operations classification | |||||||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||||||
Developed technology | $ | $ | $ | $ | Cost of revenue - product | ||||||||||||||||||||||||
Customer relationships | Sales and marketing | ||||||||||||||||||||||||||||
Trade names | Sales and marketing | ||||||||||||||||||||||||||||
$ | $ | $ | $ |
Years ending December 31, | |||||
Remainder of 2020 | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
Thereafter | |||||
$ |
Balance at January 1 | 2020 | 2019 | |||||||||
Goodwill | $ | $ | |||||||||
Accumulated impairment losses | ( | ( | |||||||||
Acquisition of ECI | |||||||||||
Acquisition of Anova | |||||||||||
Balance at June 30 | $ | $ | |||||||||
Balance at June 30 | |||||||||||
Goodwill | $ | $ | |||||||||
Accumulated impairment losses | ( | ( | |||||||||
$ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||
Employee compensation and related costs | $ | $ | |||||||||
Professional fees | |||||||||||
Taxes payable | |||||||||||
Other | |||||||||||
$ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Severance and related costs | $ | $ | $ | $ | |||||||||||||||||||
Variable and other facilities-related costs | $ | ||||||||||||||||||||||
Accelerated amortization of lease assets due to cease-use | $ | ||||||||||||||||||||||
$ | $ | $ | $ |
Balance at January 1, 2020 | Initiatives charged to expense | Cash payments | Balance at June 30, 2020 | ||||||||||||||||||||
Severance | $ | $ | $ | ( | $ | ||||||||||||||||||
Balance at January 1, 2020 | Initiatives charged to expense | Adjustments for changes in estimate | Reclassify accelerated amortization to operating lease liabilities | Cash payments | Balance at June 30, 2020 | ||||||||||||||||||||||||||||||
Severance | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Facilities | ( | ( | ( | ||||||||||||||||||||||||||||||||
$ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Balance at January 1, 2020 | Adjustments for changes in estimate | Cash payments | Balance at June 30, 2020 | ||||||||||||||||||||
Severance | $ | $ | ( | $ | ( | $ | |||||||||||||||||
Balance at January 1, 2020 | $ | ||||
Assumed liability in connection with ECI Merger | |||||
Current period provisions | |||||
Settlements | ( | ||||
Balance at June 30, 2020 | $ |
Three months ended | Six months ended | |||||||||||||
June 30, 2020 | June 30, 2020 | |||||||||||||
Loss recognized in other comprehensive loss on derivative (effective portion) | $ | ( | $ | ( | ||||||||||
Amount reclassified from accumulated other comprehensive loss to interest expense (effective portion) | $ | $ | ||||||||||||
Balance sheet location | |||||||||||
Interest rate derivative - liability derivative | Accrued expenses and other | $ | |||||||||
Interest rate derivative - liability derivative | Other long-term liabilities | $ | |||||||||
Performance Obligation | When Performance Obligation is Typically Satisfied | When Payment is Typically Due | ||||||||||||
Software and Product Revenue | ||||||||||||||
Software licenses (perpetual or term) | Upon transfer of control; typically, when made available for download (point in time) | Generally, within 30 days of invoicing except for term licenses, which may be paid for over time | ||||||||||||
Software licenses (subscription) | Upon activation of hosted site (over time) | Generally, within 30 days of invoicing | ||||||||||||
Appliances | When control of the appliance passes to the customer; typically, upon delivery (point in time) | Generally, within 30 days of invoicing | ||||||||||||
Software upgrades | Upon transfer of control; typically, when made available for download (point in time) | Generally, within 30 days of invoicing | ||||||||||||
Customer Support Revenue | ||||||||||||||
Customer support | Ratably over the course of the support contract (over time) | Generally, within 30 days of invoicing | ||||||||||||
Professional Services | ||||||||||||||
Other professional services (excluding training services) | As work is performed (over time) | Generally, within 30 days of invoicing (upon completion of services) | ||||||||||||
Training | When the class is taught (point in time) | Generally, within 30 days of services being performed |
Three months ended June 30, 2020 | Product revenue | Service revenue (maintenance) | Service revenue (professional services) | Total revenue | |||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Europe, Middle East and Africa | |||||||||||||||||||||||
Asia Pacific | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
$ | $ | $ | $ |
Three months ended June 30, 2019 | Product revenue | Service revenue (maintenance) | Service revenue (professional services) | Total revenue | |||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Europe, Middle East and Africa | |||||||||||||||||||||||
Asia Pacific | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
$ | $ | $ | $ |
Six months ended June 30, 2020 | Product revenue | Service revenue (maintenance) | Service revenue (professional services) | Total revenue | |||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Europe, Middle East and Africa | |||||||||||||||||||||||
Asia Pacific | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
$ | $ | $ | $ |
Six months ended June 30, 2019 | Product revenue | Service revenue (maintenance) | Service revenue (professional services) | Total revenue | |||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Europe, Middle East and Africa | |||||||||||||||||||||||
Asia Pacific | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
$ | $ | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Indirect sales through channel partner program | $ | $ | $ | $ | |||||||||||||||||||
Direct sales | |||||||||||||||||||||||
$ | $ | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Sales to enterprise customers | $ | $ | $ | $ | |||||||||||||||||||
Sales to service provider customers | |||||||||||||||||||||||
$ | $ | $ | $ |
Accounts receivable | Unbilled accounts receivable | Deferred revenue (current) | Deferred revenue (long-term) | ||||||||||||||||||||
Balance at January 1, 2020 | $ | $ | $ | $ | |||||||||||||||||||
Increase (decrease), net | ( | ||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | ||||||||||||||||||||
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
Outstanding at January 1, 2020 | $ | ||||||||||||||||||||||
Granted | $ | ||||||||||||||||||||||
Exercised | ( | $ | |||||||||||||||||||||
Forfeited | ( | $ | |||||||||||||||||||||
Expired | ( | $ | |||||||||||||||||||||
Outstanding at June 30, 2020 | $ | $ | |||||||||||||||||||||
Vested or expected to vest at June 30, 2020 | $ | $ | |||||||||||||||||||||
Exercisable at June 30, 2020 | $ | $ |
Three months ended | Six months ended | ||||||||||
June 30, 2020 | June 30, 2020 | ||||||||||
Weighted average grant date fair value of stock options granted | |||||||||||
Total intrinsic value of stock options exercised | $ | $ | |||||||||
Cash received from the exercise of stock options | $ | $ |
Shares | Weighted Average Grant Date Fair Value | ||||||||||
Unvested balance at January 1, 2020 | $ | ||||||||||
Granted | $ | ||||||||||
Vested | ( | $ | |||||||||
Forfeited | ( | $ | |||||||||
Unvested balance at June 30, 2020 | $ |
Shares | Weighted Average Grant Date Fair Value | ||||||||||
Unvested balance at January 1, 2020 | $ | ||||||||||
Granted | $ | ||||||||||
Vested | ( | $ | |||||||||
Forfeited | ( | $ | |||||||||
Unvested balance at June 30, 2020 | $ |
Shares | Weighted Average Grant Date Fair Value | ||||||||||
Unvested balance at January 1, 2020 | $ | ||||||||||
Granted | $ | ||||||||||
Vested | ( | $ | |||||||||
Forfeited | ( | $ | |||||||||
Unvested balance at June 30, 2020 | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Product cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
Service cost of revenue | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
$ | $ | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | ||||||||||||||||||||
Verizon Communications Inc. | |||||||||||||||||||||||
Classification | June 30, 2020 | December 31, 2019 | |||||||||||||||
Assets | |||||||||||||||||
Operating lease assets | Operating lease right-of-use assets | $ | $ | ||||||||||||||
Finance lease assets* | Property and equipment, net | ||||||||||||||||
Total leased assets | $ | $ | |||||||||||||||
Liabilities | |||||||||||||||||
Current | |||||||||||||||||
Operating | Operating lease liabilities | $ | $ | ||||||||||||||
Finance | Accrued expenses and other | ||||||||||||||||
Noncurrent | |||||||||||||||||
Operating | Operating lease liabilities, net of current | ||||||||||||||||
Finance | Other long-term liabilities | ||||||||||||||||
Total lease liabilities | $ | $ |
Three months ended | Six months ended | |||||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||||||||||||
Operating lease cost* | $ | $ | $ | $ | ||||||||||||||||||||||
Finance lease cost | ||||||||||||||||||||||||||
Amortization of leased assets | ||||||||||||||||||||||||||
Interest on lease liabilities | ||||||||||||||||||||||||||
Short-term lease cost | ||||||||||||||||||||||||||
Variable lease costs (costs excluded from minimum fixed lease payments) | ||||||||||||||||||||||||||
Sublease income | ( | ( | ||||||||||||||||||||||||
Net lease cost | $ | $ | $ | $ | ||||||||||||||||||||||
Six months ended | |||||||||||
June 30, 2020 | June 30, 2019 | ||||||||||
Cash paid for amounts included in the measurement of lease liabilities | |||||||||||
Operating cash flows for operating leases | $ | $ | |||||||||
Operating cash flows for finance leases | $ | $ | |||||||||
Financing cash flows for finance leases | $ | $ | |||||||||
June 30, 2020 | December 31, 2019 | ||||||||||
Weighted average remaining lease term (years) | |||||||||||
Operating leases | |||||||||||
Finance leases | |||||||||||
Weighted average discount rate | |||||||||||
Operating leases | % | % | |||||||||
Finance leases | % | % |
June 30, 2020 | |||||||||||
Operating | Finance | ||||||||||
leases | leases | ||||||||||
Remainder of 2020 | $ | $ | |||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
2024 | |||||||||||
2025 and beyond | |||||||||||
Total lease payments | |||||||||||
Less: interest | ( | ( | |||||||||
Present value of lease liabilities | $ | $ |
December 31, 2019 | |||||||||||
Operating | Finance | ||||||||||
leases | leases | ||||||||||
2020 | $ | $ | |||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
2024 | |||||||||||
2025 and beyond | |||||||||||
Total lease payments | |||||||||||
Less: interest | ( | ( | |||||||||
Present value of lease liabilities | $ | $ |
Three months ended | Increase from prior year | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Product | $ | 120,862 | $ | 72,059 | $ | 48,803 | 67.7 | % | |||||||||||||||
Service | 89,631 | 73,362 | 16,269 | 22.2 | % | ||||||||||||||||||
Total revenue | $ | 210,493 | $ | 145,421 | $ | 65,072 | 44.7 | % |
Six months ended | Increase from prior year | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Product | $ | 196,761 | $ | 119,539 | $ | 77,222 | 64.6 | % | |||||||||||||||
Service | 171,714 | 144,810 | 26,904 | 18.6 | % | ||||||||||||||||||
Total revenue | $ | 368,475 | $ | 264,349 | $ | 104,126 | 39.4 | % |
Three months ended | Increase from prior year | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Maintenance | $ | 68,623 | $ | 57,141 | $ | 11,482 | 20.1 | % | |||||||||||||||
Professional services | 21,008 | 16,221 | 4,787 | 29.5 | % | ||||||||||||||||||
$ | 89,631 | $ | 73,362 | $ | 16,269 | 22.2 | % |
Six months ended | Increase from prior year | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Maintenance | $ | 129,691 | $ | 114,130 | $ | 15,561 | 13.6 | % | |||||||||||||||
Professional services | 42,023 | 30,680 | 11,343 | 37.0 | % | ||||||||||||||||||
$ | 171,714 | $ | 144,810 | $ | 26,904 | 18.6 | % |
Three months ended | Six months ended | ||||||||||||||||||||||
Customer | June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||||||||
Verizon Communications Inc. | 15% | 19% | 14% | 17% | |||||||||||||||||||
Three months ended | Increase from prior year | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Product | $ | 61,529 | $ | 36,433 | $ | 25,096 | 68.9 | % | |||||||||||||||
Service | 36,647 | 28,315 | 8,332 | 29.4 | % | ||||||||||||||||||
Total cost of revenue | $ | 98,176 | $ | 64,748 | $ | 33,428 | 51.6 | % | |||||||||||||||
Gross margin | |||||||||||||||||||||||
Product | 49.1 | % | 49.4 | % | |||||||||||||||||||
Service | 59.1 | % | 61.4 | % | |||||||||||||||||||
Total gross margin | 53.4 | % | 55.5 | % |
Six months ended | Increase from prior year | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Cost of revenue | |||||||||||||||||||||||
Product | $ | 106,462 | $ | 69,580 | $ | 36,882 | 53.0 | % | |||||||||||||||
Service | 68,126 | 57,507 | 10,619 | 18.5 | % | ||||||||||||||||||
Total cost of revenue | $ | 174,588 | $ | 127,087 | $ | 47,501 | 37.4 | % | |||||||||||||||
Gross margin | |||||||||||||||||||||||
Product | 45.9 | % | 41.8 | % | |||||||||||||||||||
Service | 60.3 | % | 60.3 | % | |||||||||||||||||||
Total gross margin | 52.6 | % | 51.9 | % |
Increase from prior year | |||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Three months ended | $ | 51,796 | $ | 35,301 | $ | 16,495 | 46.7 | % | |||||||||||||||
Six months ended | $ | 94,091 | $ | 71,234 | $ | 22,857 | 32.1 | % |
Increase from prior year | |||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Three months ended | $ | 37,617 | $ | 28,893 | $ | 8,724 | 30.2 | % | |||||||||||||||
Six months ended | $ | 73,968 | $ | 58,952 | $ | 15,016 | 25.5 | % |
Increase from prior year | |||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Three months ended | $ | 15,094 | $ | 12,466 | $ | 2,628 | 21.1 | % | |||||||||||||||
Six months ended | $ | 32,299 | $ | 31,160 | $ | 1,139 | 3.7 | % |
Three months ended | Increase from prior year | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Interest income | $ | 98 | $ | 11 | $ | 87 | 790.9 | % | |||||||||||||||
Interest expense | (5,498) | (1,273) | 4,225 | 331.9 | % | ||||||||||||||||||
$ | (5,400) | $ | (1,262) | $ | 4,138 | 327.9 | % |
Six months ended | Increase from prior year | ||||||||||||||||||||||
June 30, 2020 | June 30, 2019 | $ | % | ||||||||||||||||||||
Interest income | $ | 416 | $ | 42 | $ | 374 | 890.5 | % | |||||||||||||||
Interest expense | (9,211) | (2,668) | 6,543 | 245.2 | % | ||||||||||||||||||
$ | (8,795) | $ | (2,626) | $ | 6,169 | 234.9 | % |
Payments due by period | |||||||||||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||||||||||||
Operating lease obligations | $ | 28.0 | $ | 10.4 | $ | 13.5 | $ | 3.6 | $ | 0.5 | |||||||||||||||||||
Purchase obligations | 55.5 | 53.6 | 1.7 | 0.2 | — | ||||||||||||||||||||||||
Debt obligations - principal * | 399.9 | 14.9 | 40.0 | 345.0 | — | ||||||||||||||||||||||||
Debt obligations - interest | 66.4 | 15.6 | 29.1 | 21.7 | — | ||||||||||||||||||||||||
Employee postretirement defined benefit plans | 9.0 | — | — | — | 9.0 | ||||||||||||||||||||||||
Uncertain tax positions ** | 13.1 | 13.1 | — | — | — | ||||||||||||||||||||||||
$ | 571.9 | $ | 107.6 | $ | 84.3 | $ | 370.5 | $ | 9.5 |
Six months ended | |||||||||||||||||
June 30, 2020 | June 30, 2019 | Change | |||||||||||||||
Net (loss) income | $ | (41.4) | $ | 18.6 | $ | (60.0) | |||||||||||
Adjustments to reconcile net (loss) income to cash flows provided by operating activities | 49.5 | 32.9 | 16.6 | ||||||||||||||
Changes in operating assets and liabilities | 28.6 | (22.4) | 51.0 | ||||||||||||||
Net cash provided by operating activities | $ | 36.7 | $ | 29.1 | $ | 7.6 | |||||||||||
Net cash (used in) provided by investing activities | $ | (318.2) | $ | 1.1 | $ | (319.3) | |||||||||||
Net cash provided by (used in) financing activities | $ | 331.1 | $ | (22.9) | $ | 354.0 |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (3) | |||||||||||||||||||
April 1, 2020 to April 30, 2020 | 1,172 | $ | 2.83 | — | $ | 70,463,973 | |||||||||||||||||
May 1, 2020 to May 31, 2020 | 4,126 | $ | 3.36 | — | $ | 70,463,973 | |||||||||||||||||
June 1, 2020 to June 30, 2020 | — | $ | — | — | $ | 70,463,973 | |||||||||||||||||
Total | 5,298 | $ | 3.24 | — | $ | 70,463,973 |
Exhibit No. | Description | ||||||||||
Agreement and Plan of Merger, dated as of November 14, 2019, by and among the Registrant, Ribbon Communications Israel Ltd., Eclipse Communications Ltd., ECI Telecom Group Ltd. and ECI Holding (Hungary) Korlátolt Felelõsségû Társaság (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K, filed November 14, 2019 with the SEC). | |||||||||||
Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K12B, filed October 30, 2017 with the SEC). | |||||||||||
Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed November 28, 2017 with the SEC). | |||||||||||
Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.3 to the Registrant's Annual Report on Form 10-K, filed March 8, 2018 with the SEC). | |||||||||||
Employment Agreement between the Registrant and Miguel Lopez, dated June 22, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed June 23, 2020 with the SEC). | |||||||||||
Severance Agreement between the Registrant and Miguel Lopez, dated June 22, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed June 23, 2020 with the SEC). | |||||||||||
Ribbon Communications, Inc. Amended and Restated 2019 Incentive Award Plan (incorporated by reference to Exhibit 99.1 to the Registrant's Form S-8 Registration Statement, filed June 2, 2020 with the SEC). | |||||||||||
* | Form of Consent to Temporary Wage Reduction entered into with Executive Officers. | ||||||||||
* | Certificate of Ribbon Communications Inc. Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||||
* | Certificate of Ribbon Communications Inc. Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||||||
# | Certificate of Ribbon Communications Inc. Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||
# | Certificate of Ribbon Communications Inc. Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||||||||
101.INS | * | XBRL Instance Document | |||||||||
101.SCH | * | XBRL Taxonomy Extension Schema | |||||||||
101.CAL | * | XBRL Taxonomy Extension Calculation Linkbase | |||||||||
101.DEF | * | XBRL Taxonomy Extension Definition Linkbase | |||||||||
101.LAB | * | XBRL Taxonomy Extension Label Linkbase | |||||||||
101.PRE | * | XBRL Taxonomy Extension Presentation Linkbase | |||||||||
104 | * | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Date: August 6, 2020 | RIBBON COMMUNICATIONS INC. | ||||
By: | /s/ Miguel A. Lopez | ||||
Miguel A. Lopez Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
/s/ Bruce McClelland | |||||
Bruce McClelland President and Chief Executive Officer (Principal Executive Officer) |
/s/ Miguel A. Lopez | |||||
Miguel A. Lopez Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
/s/ Bruce McClelland | |||||
Bruce McClelland
President and Chief Executive Officer
(Principal Executive Officer) |
/s/ Miguel A. Lopez | |||||
Miguel A. Lopez
Executive Vice President and Chief Financial Officer
(Principal Financial Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 240,000,000 | 240,000,000 |
Common stock, shares issued (in shares) | 144,856,764 | 110,471,995 |
Common stock, shares outstanding (in shares) | 144,856,764 | 110,471,995 |
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenue: | ||||
Total revenue | $ 210,493 | $ 145,421 | $ 368,475 | $ 264,349 |
Cost of revenue: | ||||
Total cost of revenue | 98,176 | 64,748 | 174,588 | 127,087 |
Gross profit | 112,317 | 80,673 | 193,887 | 137,262 |
Operating expenses: | ||||
Research and development | 51,796 | 35,301 | 94,091 | 71,234 |
Sales and marketing | 37,617 | 28,893 | 73,968 | 58,952 |
General and administrative | 15,094 | 12,466 | 32,299 | 31,160 |
Acquisition- and integration-related | 857 | 1,965 | 13,241 | 5,164 |
Restructuring and related | 5,361 | 9,144 | 7,436 | 14,076 |
Total operating expenses | 110,725 | 87,769 | 221,035 | 180,586 |
Income (loss) from operations | 1,592 | (7,096) | (27,148) | (43,324) |
Interest expense, net | (5,400) | (1,262) | (8,795) | (2,626) |
Other (expense) income, net | (2,407) | 62,861 | (3,251) | 70,635 |
(Loss) income before income taxes | (6,215) | 54,503 | (39,194) | 24,685 |
Income tax provision | (2,036) | (5,033) | (2,227) | (6,047) |
Net (loss) income | $ (8,251) | $ 49,470 | $ (41,421) | $ 18,638 |
(Loss) earnings per share: | ||||
Basic (in dollars per share) | $ (0.06) | $ 0.45 | $ (0.31) | $ 0.17 |
Diluted (in dollars per share) | $ (0.06) | $ 0.45 | $ (0.31) | $ 0.17 |
Weighted average shares used to compute (loss) earnings per share: | ||||
Basic (in shares) | 144,483 | 110,394 | 132,737 | 109,239 |
Diluted (in shares) | 144,483 | 110,698 | 132,737 | 109,672 |
Product | ||||
Revenue: | ||||
Total revenue | $ 120,862 | $ 72,059 | $ 196,761 | $ 119,539 |
Cost of revenue: | ||||
Total cost of revenue | 61,529 | 36,433 | 106,462 | 69,580 |
Service | ||||
Revenue: | ||||
Total revenue | 89,631 | 73,362 | 171,714 | 144,810 |
Cost of revenue: | ||||
Total cost of revenue | $ 36,647 | $ 28,315 | $ 68,126 | $ 57,507 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (8,251) | $ 49,470 | $ (41,421) | $ 18,638 |
Other comprehensive (loss) income, net of tax: | ||||
Unrealized loss on interest rate swap | (3,970) | 0 | (13,497) | 0 |
Foreign currency translation adjustments | 70 | 64 | 847 | 56 |
Unrealized gain on available-for sale marketable securities, net of reclassification adjustments for realized amounts | 0 | 577 | 0 | 590 |
Employee retirement benefits | 0 | (32) | 0 | 0 |
Other comprehensive (loss) income, net of tax | (3,900) | 609 | (12,650) | 646 |
Comprehensive (loss) income | $ (12,151) | $ 50,079 | $ (54,071) | $ 19,284 |
BASIS OF PRESENTATION |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Business Ribbon is a leading provider of next generation software solutions to telecommunications, wireless and cable service providers and enterprises of all sizes across industry verticals. With the March 3, 2020 completion of the merger with ECI Telecom Group Ltd ("ECI"), Ribbon now also provides optical and packet networking products and software-defined solutions to service providers and critical infrastructure sectors like utilities, government and defense. With over 1,000 customers around the globe, including some of the largest telecommunications service providers, enterprises and utilities in the world, Ribbon enables its customers to evolve and modernize their communications networks and packet optical networking infrastructures through software and hardware. By securing and enabling reliable and scalable Internet Protocol ("IP") and packet optical networks and applications, Ribbon helps its customers adopt the next generation of software-, cloud- and edge-based technologies to drive new, incremental revenue, while protecting their existing revenue streams. Ribbon's software solutions provide a secure way for its customers to connect and leverage multivendor, multiprotocol communications systems and applications across their networks and the cloud in a rapidly changing ecosystem of IP-enabled devices, such as smartphones and tablets. In addition, Ribbon's software solutions secure cloud-based delivery of unified communications ("UC") solutions - both for service providers transforming to a cloud-based network and for enterprises using cloud-based UC - and support the increasing demand on network infrastructure created by ongoing IP traffic growth and the projected demand related to increased traffic from 5G applications and devices. Ribbon sells its products and solutions through both direct sales and indirect channels, leveraging the reach and local presence of resellers, and provides ongoing support to its customers through a global services team with experience in design, deployment and maintenance of some of the world's largest software IP networks. Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation with accounting principles generally accepted in the United States of America ("GAAP") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). On March 3, 2020 (the "ECI Merger Date"), the Company merged with ECI (the "ECI Merger"). The financial results of ECI are included in the Company's condensed consolidated financial statements for the periods subsequent to the ECI Merger Date. On February 28, 2019 (the "Anova Acquisition Date"), the Company acquired the business and technology assets of Anova Data, Inc. ("Anova"). The financial results of Anova are included in the Company's condensed consolidated financial statements for the periods subsequent to the Anova Acquisition Date. Interim results are not necessarily indicative of results for a full year or any future interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (the "Annual Report"), which was filed with the SEC on February 28, 2020. Significant Accounting Policies The Company's significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements included in the Annual Report. There were no material changes to the significant accounting policies during the six months ended June 30, 2020, with the exception of policies on transfers of financial assets, warranty costs, and research and development grants: Transfers of Financial Assets. The Company's ECI subsidiary maintains customer receivables factoring agreements with a number of financial institutions. Under the terms of these agreements, the Company may transfer receivables to the financial institutions, on a non-recourse basis, provided that the financial institutions approve the receivables in advance. The Company maintains credit insurance policies from major insurance providers or obtains letters of credit from the customers for a majority of its factored trade receivables. The Company accounts for the factoring of its financial assets as a sale of the assets and records the factoring fees, when incurred, as a component of interest expense in the condensed consolidated statements of operations and the proceeds from the sales of receivables are included in cash from operating activities in the condensed consolidated statements of cash flows. During the three months ended June 30, 2020, the Company received $30.7 million of cash from the sale of certain accounts receivable and recorded $0.3 million of interest expense in connection with these transactions. During the six months ended June 30, 2020, the Company received $45.8 million of cash from the sale of certain accounts receivable and recorded $0.4 million of interest expense in connection with these transactions. Warranty. The Company records warranty liabilities for estimated costs of fulfilling its obligations under standard limited hardware and software warranties at the time of sale. The liability for standard warranties is included in Accrued expenses and other and Other non-current liabilities in the condensed consolidated balance sheet at June 30, 2020. The specific warranty terms and conditions vary depending upon the country in which the Company does business, but generally includes material costs, technical support, labor and associated overhead over a period ranging from to three years. The Company's liability for product warranties was $15.1 million, of which $6.4 million was current and included in Accrued expenses and other and $8.7 million was long-term and included in Other long-term liabilities in the Company's condensed consolidated balance sheet at June 30, 2020. The Company did not have a warranty accrual at December 31, 2019. Research and Development Grants. The Company records grants received from the Office of the Innovation Authority of the Israeli Ministry of Economics (the "IIA") as a reduction to research and development expense. Royalties payable to the IIA are recognized pursuant to sales of related products and are classified as Cost of revenue. Principles of Consolidation The condensed consolidated financial statements include the accounts of Ribbon and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Use of Estimates and Judgments The preparation of financial statements in conformity with GAAP requires Ribbon to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements include accounting for business combinations, revenue recognition for multiple element arrangements, inventory valuations, assumptions used to determine the fair value of stock-based compensation, intangible asset and goodwill valuations, including impairments, legal contingencies and recoverability of Ribbon's net deferred tax assets and the related valuation allowances. Ribbon regularly assesses these estimates and records changes in estimates in the period in which they become known. Ribbon bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates. Reclassifications Certain reclassifications, not affecting previously reported net loss, have been made to the previously issued financial statements to conform to the current period presentation. Restricted Cash The Company classifies as restricted cash all cash pledged as collateral to secure long-term obligations and all cash whose use is otherwise limited by contractual provisions. At June 30, 2020, the Company had $13.1 million of restricted cash, comprised of $8.4 million restricted in connection with a tax payment on certain fixed assets formerly held by ECI that were sold in connection with the ECI Merger, and $4.7 million restricted short-term bank deposits pledged to secure certain performance and financial bonds as security for the Company's obligations under tenders, contracts and to one of its main subcontractors. Fair Value of Financial Instruments The carrying amounts of the Company's financial instruments approximate their fair values and include cash equivalents, accounts receivable, borrowings under a revolving credit facility, accounts payable and long-term debt. Operating Segments The Company currently operates in a single segment, as the chief operating decision maker makes decisions and assesses performance at the company level. The Company's chief operating decision maker is its President and Chief Executive Officer, who began his employment with the Company effective March 1, 2020. With the acquisition of ECI, the Company's chief operating decision maker is currently assessing the appropriate separate discrete financial information he will utilize for making decisions and assessing performance. Fair Value Hierarchy Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1. Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2. Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets). Level 3. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Recent Accounting Pronouncements The Financial Accounting Standards Board ("FASB") has issued the following accounting pronouncements, all of which became effective for the Company in 2020 and none of which had a material impact on the Company's condensed consolidated financial statements: In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"), which provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria that reference LIBOR or another reference rate expected to be discontinued. In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments ("ASU 2020-03"), which makes narrow-scope amendments related to topics regarding fair value option disclosures, applicability of the portfolio exception in Accounting Standards Codification ("ASC") 820 to nonfinancial items, disclosures for depository and lending institutions, cross reference to guidance in ASC 470-50 on line of credit or revolving debt arrangements, cross reference to net asset value practical expedient in ASC 820-10, interaction between ASC 842 and ASC 326 and between ASC 326 and ASC 860-20. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which provides guidance on implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 amends ASC 350, Intangibles - Goodwill and Other (“ASC 350”) to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply the guidance in ASC 350-40 to determine which implementation costs should be capitalized in such a CCA. In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”), which amends ASC 715, Compensation - Retirement Benefits, to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which changes the fair value measurement requirements of ASC 820, Fair Value Measurement. 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"), which adds an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. In April and May 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ("ASU 2019-04") and ASU 2019-05 Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief ("ASU 2019-05"), respectively. ASU 2019-04 provides transition relief for entities adopting ASU 2016-13 and ASU 2019-05 clarifies certain aspects of the accounting for credit losses, hedging activities and financial instruments in connection with the adoption of ASU 2016-13. The FASB has issued the following accounting pronouncement which becomes effective for the Company in 2021, which the Company does not believe will have a material impact on its condensed consolidated financial statements upon adoption: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which modifies ASC 740 to simplify the accounting for income taxes. ASU 2019-12 addresses the accounting for hybrid tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of legal entities not subject to tax, intraperiod tax allocation exception to incremental approach, ownership changes in investments - changes from a subsidiary to an equity method investment, ownership changes in investments - changes from an equity method investment to a subsidiary, interim period accounting for enacted changes in tax law and year-to-date loss limitation in interim period tax accounting.
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BUSINESS ACQUISITIONS |
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BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS ECI On the ECI Merger Date, Ribbon completed its previously announced merger transaction with ECI in accordance with the terms of the Agreement and Plan of Merger, dated as of November 14, 2019, by and among Ribbon, ECI, an indirect wholly-owned subsidiary of Ribbon ("Merger Sub"), Ribbon Communications Israel Ltd. and ECI Holding (Hungary) kft, pursuant to which Merger Sub merged with and into ECI, with ECI surviving such merger as a wholly-owned subsidiary of Ribbon. Prior to the ECI Merger Date, ECI was a privately-held global provider of end-to-end packet-optical transport and software-defined networking ("SDN") and network function virtualization ("NFV") solutions for service providers, enterprises and data center operators. Ribbon believes the ECI Merger positions the Company for growth and enhances its competitive strengths by expanding its product portfolio beyond solutions primarily supporting voice applications to include data applications and optical networking. As consideration for the ECI Merger, Ribbon issued the ECI shareholders and certain others 32.5 million shares of Ribbon common stock with a fair value of $108.6 million (the "Stock Consideration") and paid $322.5 million of cash, comprised of $183.3 million to repay ECI's outstanding debt, including both principal and interest, and $139.2 million paid to ECI's selling shareholders (the "Cash Consideration"). In addition, ECI shareholders received $33.4 million from the sale of certain of ECI's real estate assets. Cash Consideration was financed through cash on hand and committed debt financing consisting of a new $400 million term loan facility (the "2020 Term Loan") and new $100 million revolving credit facility (together with the 2020 Term Loan, the "2020 Credit Facility"), which was undrawn at the ECI Merger Date. The ECI Merger has been accounted for as a business combination and the financial results of ECI have been included in the Company's condensed consolidated financial statements for the periods subsequent to the ECI Merger. The Company's financial results for the three months ended June 30, 2020 include $63.6 million of revenue and $17.1 million of net loss attributable to ECI. The Company's financial results for the six months ended June 30, 2020 include $93.6 million of revenue and $20.4 million of net loss attributable to ECI for the periods subsequent to the ECI Merger. As of June 30, 2020, the valuation of acquired assets, identifiable intangible assets and certain assumed liabilities was preliminary. The Company is continuing the process of investigating the facts and circumstances existing as of the ECI Merger Date, including certain assets acquired and liabilities assumed, as well as estimated future cash flows, in order to finalize its valuation. During the three months ended June 30, 2020, the Company recorded changes to the initial preliminary purchase price allocation. The primary adjustments recorded in the second quarter of 2020 included reductions of $10.4 million and $7.0 million to current and noncurrent inventory, respectively, and increases to identifiable intangible assets aggregating $11.0 million, comprised of $3.0 million to in-process research and development, $5.0 million to developed technology, $2.0 million to customer relationships and $1.0 million to trade names. These adjustments, as well as other immaterial adjustments to other balance sheet accounts, resulted in a net increase to goodwill of $2.5 million. The preliminary allocation of purchase consideration to the fair value of assets acquired and liabilities assumed includes a noncurrent asset of $5.7 million that represents an indemnification receivable from ECI's selling shareholders for certain liabilities for uncertain tax positions in accordance with the Agreement and Plan of Merger. The Company expects to finalize the valuation of the assets acquired and liabilities assumed by the first quarter of 2021. A summary of the preliminary allocation of the purchase consideration for ECI is as follows (in thousands):
The Company is still evaluating the fair value of acquired assets and assumed liabilities, and such values are subject to change. The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the acquired in-process research and development, developed technology, customer relationships and trade name intangible assets. The Company is still evaluating the forecast, and the value of these intangible assets could change materially as the Company finalizes the forecast and other inputs used to determine their fair values. The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk. The valuation assumptions take into consideration the Company's estimates of customer attrition, technology obsolescence and revenue growth projections. The Company is amortizing the identifiable intangible assets arising from the ECI Merger in relation to the expected cash flows from the individual intangible assets over their respective useful lives, which have a weighted average life of 12.38 years (see Note 5). Goodwill results from assets that are not separately identifiable as part of the transaction and is not deductible for tax purposes. Pro Forma Results The following unaudited pro forma information presents the condensed combined results of operations of Ribbon and ECI for the three and six months ended June 30, 2020 and 2019 as if the ECI Merger had been completed on January 1, 2019, with adjustments to give effect to pro forma events that are directly attributable to the ECI Merger. These pro forma adjustments include an increase in research and development expense related to the conformance of ECI's cost capitalization policy to Ribbon's, additional amortization expense for the acquired identifiable intangible assets, a decrease in historical ECI interest expense reflecting the extinguishment of certain of ECI's debt as a result of the ECI Merger, and an increase in interest expense reflecting the new debt entered into by the Company in connection with the ECI Merger. Pro forma adjustments also include the elimination of acquisition- and integration-related costs directly attributable to the acquisition from the three and six months ended June 30, 2020 and inclusion of such costs in the three and six months ended June 30, 2019, respectively. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings that may result from the consolidation of the operations of Ribbon and ECI. Accordingly, these unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the ECI Merger occurred at January 1, 2019, nor are they intended to represent or be indicative of future results of operations (in thousands, except per share amounts):
Anova Data, Inc. On the Anova Acquisition Date, the Company acquired the business and technology assets of Anova, a private company headquartered in Westford, Massachusetts that provides advanced analytics solutions (the "Anova Acquisition"). The Anova Acquisition was completed in accordance with the terms and conditions of an asset purchase agreement, dated as of January 31, 2019 (the "Anova Asset Purchase Agreement"). As consideration for the Anova Acquisition, Ribbon issued 2.9 million shares of Ribbon common stock with a fair value of $15.2 million to Anova's sellers and equity holders on the Anova Acquisition Date and held back an additional 330,000 shares with a fair value of $1.7 million (the "Anova Deferred Consideration"), of which 316,551 shares were issued after post-closing adjustments on March 4, 2020. The Anova Deferred Consideration was included as a component of Accrued expenses and other in the Company's condensed consolidated balance sheet at December 31, 2019. The Anova Acquisition was accounted for as a business combination and the financial results of Anova have been included in the Company's condensed consolidated financial statements for the periods subsequent to the Anova Acquisition Date. The results for the three and six months ended June 30, 2019 were not significant to the Company's condensed consolidated financial statements and accordingly, the Company has not provided pro forma financial information. The Company finalized the valuation of the assets acquired and liabilities assumed in the fourth quarter of 2019. The purchase consideration aggregating $16.9 million was allocated to $11.2 million of identifiable intangible assets with a weighted average life of 6.25 years (see Note 5) and working capital items aggregating $0.1 million of net assets acquired. The remaining unallocated amount of $5.5 million was recorded as goodwill. The goodwill is deductible for tax purposes. Acquisition- and Integration-Related Expenses Acquisition- and integration-related expenses include those expenses related to acquisitions that would otherwise not have been incurred by the Company, including professional and services fees such as legal, audit, consulting, paying agent and other fees. These amounts include costs related to prior acquisitions, as well as nominal amounts related to acquisitive activities. Integration-related expenses represent incremental costs related to combining the Company and its business acquisitions, such as third-party consulting and other third-party services related to merging previously separate companies' systems and processes. The acquisition-related costs in both the three and six months ended June 30, 2020 primarily related to the ECI Merger; the acquisition-related costs in the three and six months ended June 30, 2019 primarily related to the Anova Acquisition. The Company's acquisition- and integration-related expenses for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):
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EARNINGS (LOSS) PER SHARE |
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EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period. For periods in which the Company reports net income, diluted net earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period unless the effect is antidilutive. The calculations of shares used to compute earnings (loss) per share were as follows (in thousands):
Options to purchase the Company's common stock and unvested shares of restricted and performance-based stock and stock units aggregating 13.7 million shares have not been included in the computation of diluted loss per share for the three and six months ended June 30, 2020 because their effect would have been antidilutive. Options to purchase the Company's common stock aggregating 0.3 million shares and 0.4 million shares have not been included in the computation of diluted earnings per share for the three and six months ended June 30, 2019, respectively, because their effect would have been antidilutive.
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INVENTORY |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY | INVENTORY Inventory at June 30, 2020 and December 31, 2019 consisted of the following (in thousands):
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INTANGIBLE ASSETS AND GOODWILL |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL The Company's intangible assets at June 30, 2020 and December 31, 2019 consisted of the following (in thousands):
* An in-process research and development intangible asset has an indefinite life until the product is generally available, at which time such asset is typically reclassified to developed technology. Amortization expense for intangible assets for the three and six months ended June 30, 2020 and 2019 was as follows (in thousands):
Estimated future amortization expense for the Company's intangible assets at June 30, 2020 was as follows (in thousands):
The changes in the carrying value of the Company's goodwill in the six months ended June 30, 2020 and 2019 were as follows (in thousands):
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ACCRUED EXPENSES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses at June 30, 2020 and December 31, 2019 consisted of the following (in thousands):
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RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES | RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES The Company recorded restructuring and related expense aggregating $5.4 million and $9.1 million in the three months ended June 30, 2020 and 2019, respectively, and $7.4 million and $14.1 million in the six months ended June 30, 2020 and 2019, respectively. Restructuring and related expense includes both restructuring expense (primarily severance and related costs), estimated future variable lease costs for vacated properties with no intent or ability of sublease, and accelerated rent amortization expense. For restructuring events that involve lease assets and liabilities, the Company applies lease reassessment and modification guidance and evaluates the right-of-use assets for potential impairment. If the Company plans to exit all or distinct portions of a facility and does not have the ability or intent to sublease, the Company will accelerate the amortization of each of those lease components through the vacate date. The accelerated amortization is recorded as a component of Restructuring and related expense in the Company's condensed consolidated statements of operations. Related variable lease expenses will continue to be expensed as incurred through the vacate date, at which time the Company will reassess the liability balance to ensure it appropriately reflects the remaining liability associated with the premises and record a liability for the estimated future variable lease costs. The components of Restructuring and related expense for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):
2020 Restructuring Initiative In 2020, the Company implemented a restructuring plan to eliminate certain positions and redundant facilities primarily in connection with the ECI Merger to further streamline the Company's global footprint and improve its operations (the "2020 Restructuring Initiative"). The 2020 Restructuring Initiative includes facility consolidations and a reduction in workforce, including three former executives of ECI for whom severance aggregating $1.1 million was recorded in the three months ended March 31, 2020. In connection with this initiative, the Company expects to eliminate duplicate functions arising from the ECI Merger and support its efforts to integrate the two companies. The Company recorded restructuring and related expense of $4.7 million and $5.8 million in connection with the 2020 Restructuring Initiative in the three and six months ended June 30, 2020, respectively, for severance and related costs for approximately 75 employees, including three former executives of ECI (the "former executives"). The amount recorded in the three months ended March 31, 2020 represents severance and related costs for the former executives. The Company expects these amounts will be fully paid in 2021. The Company expects that it will record additional restructuring and related expense approximating $5 million under the 2020 Restructuring Initiative in the aggregate for severance and planned facility consolidations. A summary of the 2020 Restructuring Initiative accrual activity for severance and related costs for the six months ended June 30, 2020 is as follows (in thousands):
2019 Restructuring and Facilities Consolidation Initiative In June 2019, the Company implemented a restructuring plan to further streamline the Company's global footprint, improve its operations and enhance its customer delivery (the "2019 Restructuring Initiative"). The 2019 Restructuring Initiative includes facility consolidations, refinement of the Company's research and development activities, and a reduction in workforce. In connection with this initiative, the Company expects to reduce its focus on hardware and appliance-based development over time and to increase its development focus on software virtualization, functional simplicity and important customer requirements. The facility consolidations under the 2019 Restructuring Initiative (the "2019 Facilities Initiative") include a consolidation of the Company's North Texas sites into a single campus, housing engineering, customer training and support, and administrative functions, as well as a reduction or elimination of certain excess and duplicative facilities worldwide. In addition, the Company intends to substantially consolidate its global software laboratories and server farms into two lower cost North American sites. The Company continues to evaluate its properties included in the Facilities Initiative for accelerated amortization and/or right-of-use asset impairment. The Company expects that the actions under the 2019 Facilities Initiative will be completed by the end of 2020. In connection with the 2019 Restructuring Initiative, the Company recorded restructuring and related expense of $0.7 million and $1.7 million in the three and six months ended June 30, 2020, respectively, and $5.8 million in both the three and six months ended June 30, 2019. The amount recorded in the three months ended June 30, 2020 was primarily related to facility consolidations. The amount recorded in the six months ended June 30, 2020 was comprised of $0.7 million for severance and related costs for five employees and $1.0 million related to facility consolidations. The amount recorded in the three and six months ended June 30, 2019 was for severance and related costs for approximately 110 employees. The Company expects to record nominal additional restructuring and related expense, if any, related to severance and related costs under the 2019 Restructuring Initiative. A summary of the 2019 Restructuring Initiative accrual activity for severance and related costs for the six months ended June 30, 2020 is as follows (in thousands):
Accelerated Rent Amortization Accelerated rent amortization is recognized from the date that the Company commences the plan to fully or partially vacate a facility, for which there is no intent or ability to enter into a sublease, through the final vacate date. The accelerated rent amortization recorded in connection with the Facilities Initiative reduced the value of the Company's Operating lease right-of-use assets recorded in the Company's condensed consolidated balance sheets at June 30, 2020 and December 31, 2019, respectively. The liability for the total lease payments for each respective facility is included as a component of Operating lease liabilities in the Company's condensed consolidated balance sheets, both current and noncurrent (see Note 17). The Company may incur additional future expense if it is unable to sublease other locations included in its restructuring initiatives. GENBAND Merger Restructuring Initiative In connection with the merger in 2017 between Sonus Networks, Inc. and GENBAND (the "GENBAND Merger"), the Company implemented a restructuring plan in the fourth quarter of 2017 to eliminate certain redundant positions and facilities within the combined companies (the "GENBAND Merger Restructuring Initiative"). The Company recorded a credit to restructuring and related expense of $0.1 million in both the three and six months ended June 30, 2020, representing a change in estimate to the total severance and related costs required to complete the activities under this initiative. In connection with this initiative, the Company recorded restructuring expense of $5.2 million in the six months ended June 30, 2019, comprised of $0.3 million in the three months ended June 30, 2019 and $4.9 million in the three months ended March 31, 2019, virtually all of which was for severance and related costs for approximately 40 employees. As of June 30, 2020, the GENBAND Merger Restructuring Initiative was complete. A summary of the GENBAND Merger Restructuring Initiative accrual activity for the six months ended June 30, 2020 is as follows (in thousands):
Balance Sheet Classification The current portions of accrued restructuring are included as a component of Accrued expenses and the long-term portions of accrued restructuring are included as a component of Other long-term liabilities in the condensed consolidated balance sheets. The long-term portions of accrued restructuring totaled $0.8 million at June 30, 2020 and $0.9 million at December 31, 2019.
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WARRANTY ACCRUALS |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||
Guarantees and Product Warranties [Abstract] | |||||||||||||||||||||||||||||||||||||
WARRANTY ACCRUALS | WARRANTY ACCRUALS The changes in the Company's accrual balance in the six months ended June 30, 2020 were as follows (in thousands):
Of the amount recorded at June 30, 2020, $6.4 million was current and included as a component of Accrued expenses and other and $8.7 million was long-term and included as a component of Other long-term liabilities in the Company's condensed consolidated balance sheet. The Company did not have a warranty accrual during the six months ended June 30, 2019.
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DEBT |
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Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT 2019 Credit Facility On April 29, 2019, the Company entered into a syndicated, amended and restated Credit Facility (the "2019 Credit Facility"). The 2019 Credit Facility provided for a $50 million term loan facility that was advanced in full on April 29, 2019 and a $100 million revolving line of credit. The 2019 Credit Facility also included procedures for additional financial institutions to become syndicate lenders, or for any existing lender to increase its commitment under either the term loan facility or the revolving loan facility, subject to an aggregate increase of $75 million for incremental commitments under the 2019 Credit Facility. The 2019 Credit Facility was scheduled to mature in April 2024. At December 31, 2019, the Company had an outstanding term loan debt balance of $48.8 million and an outstanding revolving line of credit balance of $8 million with a combined average interest rate of 3.30%, and $5.4 million of outstanding letters of credit at an interest rate of 1.50%. The indebtedness and other obligations under the 2019 Credit Facility were unconditionally guaranteed on a senior secured basis by the Company and each other material U.S. domestic subsidiary of the Company (collectively, the “Guarantors”). The 2019 Credit Facility was secured by first-priority liens on substantially all of the assets of the Borrower and the Guarantors, including the Company. The 2019 Credit Facility required periodic interest payments on any outstanding borrowings under the facility. The Borrower could prepay all revolving loans under the 2019 Credit Facility at any time without premium or penalty (other than customary LIBOR breakage costs), subject to certain notice requirements. Revolving loans under the 2019 Credit Facility bore interest at the Borrower’s option at either the Eurodollar (LIBOR) rate plus a margin ranging from 1.50% to 3.00% per year or the base rate (the highest of the Federal Funds rate plus 0.50%, or the prime rate announced from time to time in The Wall Street Journal) plus a margin ranging from 0.50% to 2.00% per year (such margins being referred to as the “Applicable Margin”). The Applicable Margin varied depending on the Company’s consolidated leverage ratio (as defined in the 2019 Credit Facility). The base rate and the LIBOR rate were each subject to a zero percent floor. The 2019 Credit Facility required compliance with certain financial covenants, including a minimum consolidated quick ratio, minimum consolidated fixed charge coverage ratio and maximum consolidated leverage ratio, all of which were defined in the 2019 Credit Facility and tested on a quarterly basis. The Company was in compliance with all covenants of the 2019 Credit Facility at December 31, 2019. In addition, the 2019 Credit Facility contained various covenants that, among other restrictions, limited the Company’s and its subsidiaries’ ability to enter into certain types of transactions, including, but not limited to: incurring or assuming indebtedness; granting or assuming liens; making acquisitions or engaging in mergers; making dividend and certain other restricted payments; making investments; selling or otherwise transferring assets; engaging in transactions with affiliates; entering into sale and leaseback transactions; entering into burdensome agreements; changing the nature of its business; modifying its organizational documents; and amending or making prepayments on certain junior debt. The 2019 Credit Facility contained events of default that are customary for a secured credit facility. If an event of default relating to bankruptcy or other insolvency events with respect to a borrower occurred, all obligations under the 2019 Credit Facility would immediately become due and payable. If any other event of default existed under the 2019 Credit Facility, the lenders could accelerate the maturity of the obligations outstanding under the 2019 Credit Facility and exercise other rights and remedies, including charging a default rate of interest equal to 2.00% per year above the rate that would otherwise be applicable. In addition, if any event of default existed under the New Credit Facility, the lenders could commence foreclosure or other actions against the collateral. If any default existed under the 2019 Credit Facility, or if the Borrower was unable to make any of the representations and warranties as stated in the 2019 Credit Facility at the applicable time, the Borrower would be unable to borrow funds or have letters of credit issued under the 2019 Credit Facility, which, depending on the circumstances prevailing at that time, could have had a material adverse effect on the Borrower’s liquidity and working capital. 2020 Credit Facility On March 3, 2020, the Company entered into a Senior Secured Credit Facilities Credit Agreement (the "2020 Credit Agreement"), by and among the Company, as a guarantor, Ribbon Communications Operating Company, Inc., as the borrower ("Borrower"), Citizens Bank, N.A., as administrative agent, a lender, issuing lender, swingline lender, joint lead arranger and bookrunner, Santander Bank, N.A., as a lender, joint lead arranger and bookrunner, and the other lenders party thereto (each, together with Citizens Bank, N.A. and Santander Bank, N.A., referred to individually as a "Lender", and collectively, the "Lenders"). The proceeds of the Credit Agreement were used, in part, to pay off in full all obligations of the Company under the 2019 Credit Facility. The 2020 Credit Agreement provides for $500 million of commitments from the lenders to the Borrower, comprised of a $400 million term loan (the "2020 Term Loan Facility") and a $100 million facility available for revolving loans (the "2020 Revolving Credit Facility" and together with the 2020 Term Loan Facility, the "2020 Credit Facility"). Under the 2020 Revolving Credit Facility, a $30 million sublimit is available for letters of credit and a $20 million sublimit is available for swingline loans. The 2020 Credit Facility is scheduled to mature in March 2025. Under the 2020 Credit Agreement, the Company is required to make quarterly principal payments aggregating $10 million in the first year, $20 million per year for the following three years, and $30 million in the last year, with a $300 million final payment due on the maturity date. The 2020 Credit Agreement includes procedures for additional financial institutions to become lenders thereunder, or for any existing lender to fund one or more new tranches of term loans, or increase its commitment under the 2020 Term Loan Facility or the 2020 Revolving Credit Facility, subject, in each case, to an aggregate dollar limit equal to 100% of the Company's Consolidated Adjusted EBITDA (as defined in the 2020 Credit Agreement) as of the most recently ended quarter for which financial statements have been delivered to the lenders, plus additional amounts, so long as the Borrower's Consolidated Net Leverage Ratio (as defined in the 2020 Credit Agreement) does not exceed 2.75:1.00. The indebtedness and other obligations under the 2020 Credit Facility are unconditionally guaranteed on a senior secured basis by the Company, Edgewater Networks, Inc., a wholly-owned subsidiary of the Company, and Genband Inc., a wholly-owned subsidiary of the Company (together, the "Guarantors"). The 2020 Credit Facility is secured by first-priority liens on substantially all of the assets of the Borrower and the Guarantors, including substantially all of the assets of the Company. The 2020 Credit Agreement requires periodic interest payments until maturity. The Borrower may prepay all loans under the 2020 Credit Agreement at any time without premium or penalty (other than customary LIBOR breakage costs), subject to certain notice requirements. Loans incurred under the 2020 Credit Facility bear interest at the Borrower's option at either the LIBOR rate plus a margin ranging from 1.50% to 3.50% per year, or the base rate (the highest of the Federal Funds Effective Rate (as defined in the Credit Agreement) plus 0.5%, or the prime rate announced from time to time in The Wall Street Journal) plus a margin ranging from 0.50% to 2.50% per year (the "Applicable Margin"). The Applicable Margin varies depending on the Company's Consolidated Net Leverage Ratio (as defined in the 2020 Credit Agreement). The base rate and the LIBOR rate are each subject to a zero percent floor. The 2020 Credit Agreement requires compliance with certain financial covenants, including a minimum Consolidated Fixed Charge Coverage Ratio and a maximum Consolidated Net Leverage Ratio (each as defined in the 2020 Credit Agreement, and each tested on a quarterly basis). The Company was in compliance with all covenants of the 2020 Credit Agreement at June 30, 2020. In addition, the 2020 Credit Agreement contains various covenants that, among other restrictions, limit the Company’s and its subsidiaries’ ability to incur or assume indebtedness; grant or assume liens; make acquisitions or engage in mergers; sell, transfer, assign or convey assets; repurchase equity and make dividend and certain other restricted payments; make investments; engage in transactions with affiliates; enter into sale and leaseback transactions; enter into burdensome agreements; change the nature of its business; modify their organizational documents; and amend or make prepayments on certain junior debt. The 2020 Credit Agreement contains events of default that are customary for a secured credit facility. If an event of default relating to bankruptcy or other insolvency events with respect to the Company or any of its subsidiaries occurs, all obligations under the 2020 Credit Agreement will immediately become due and payable. If any other event of default exists under the 2020 Credit Agreement, the lenders may accelerate the maturity of the obligations outstanding under the Credit Agreement and exercise other rights and remedies, including charging a default rate of interest equal to 2.00% per year above the rate that would otherwise be applicable. In addition, if any event of default exists under the 2020 Credit Agreement, the lenders may commence foreclosure or other actions against the collateral. At June 30, 2020, the Company had an outstanding 2020 Term Loan Facility balance of $397.5 million at an average interest rate of 3.9%. The 2020 Revolving Credit Facility did not have an outstanding balance but had $5.2 million of letters of credit outstanding with an interest rate of 3.0%. Short-Term Loans The Company had two outstanding uncommitted and unsecured short-term loans aggregating $2.4 million which it uses for financing exports in China, one with China Zheshang Bank and one with Bank of Communications Hangzhou Branch. These short term loans were all entered into in March 2020 and expired in July 2020. At June 30, 2020, these short-term loans had a weighted average interest rate of 4.27%. Both of these loans were repaid in July 2020, and we re-entered into one of them, in the amount of $0.7 million, on July 17, 2020. Letters of Credit and Performance and Bid Bonds The Company uses letters of credit, performance and bid bonds in the course of its business. As of June 30, 2020, the Company had $33.2 million of letters of credit, bank guarantees, performance and bid bonds outstanding (collectively, "Guarantees"), comprised of the $5.2 million of letters of credit under the 2020 Credit Agreement described above, and $28.0 million of Guarantees under various uncommitted facilities. At June 30, 2020, the Company had cash collateral of $4.4 million supporting the Guarantees under its uncommitted facilities, which is included in Restricted cash in the condensed consolidated balance sheet at June 30, 2020.
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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to financial market risk related to foreign currency fluctuations and changes in interest rates. These exposures are actively monitored by management. To manage the volatility related to the exposure to changes in interest rates, the Company has entered into a derivative financial instrument. Management's objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in interest rates. Ribbon's policies and practices are to use derivative financial instruments only to the extent necessary to manage exposures. Ribbon does not hold or issue derivative financial instruments for trading or speculative purposes. The Company records derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a specific risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge, or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk even though hedge accounting does not apply or the Company elects not to apply hedge accounting. Cash Flow Hedge of Interest Rate Risk The 2020 Credit Facility is comprised of the 2020 Term Loan Facility and the 2020 Revolving Credit Facility. The 2020 Term Loan Facility had an outstanding balance of $397.5 million at June 30, 2020. The 2020 Revolving Credit Facility was undrawn at June 30, 2020. The 2020 Credit Facility has variable interest rates based on LIBOR (see Note 9). As a result of exposure to interest rate movements, during March 2020, the Company entered into an interest rate swap arrangement, which effectively converted its $400 million term loan with its variable-rate interest based upon one-month LIBOR to an aggregate fixed rate of 0.904%, plus a leverage-based margin as defined in the 2020 Credit Facility. The notional amount of this swap at June 30, 2020 was $400 million, and the Swap matures on March 3, 2025, the same date the 2020 Credit Facility matures. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company is using an interest rate swap as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of designated derivatives that qualify as cash flow hedges is recorded in accumulated other comprehensive (loss) income in the condensed consolidated balance sheet and is subsequently reclassified into earnings in the period that the hedged forecasted transactions affect earnings. During the three and six months ended June 30, 2020, such a derivative was used to hedge the variable cash flows associated with the 2020 Credit Facility and the Company has accounted for this derivative as an effective hedge. Any ineffective portion of the change in the fair value of the derivative would be recognized directly in earnings. Amounts reported in accumulated other comprehensive (loss) income related to the Company's derivative will be reclassified to interest expense as interest is accrued on the Company’s variable-rate debt. Based upon projected forward rates, the Company estimates as of June 30, 2020 that $3.1 million may be reclassified as an increase to interest expense over the next twelve months. The impact of the Company’s derivative financial instrument on its condensed consolidated statement of comprehensive income (loss) for the three and six months ended June 30, 2020 was as follows (in thousands):
The fair values and locations in the condensed consolidated balance sheet at June 30, 2020 of the Company's derivative liability designated as a hedging instrument were as follows (in thousands):
The Company has classified the interest rate derivative aggregating $13.5 million at June 30, 2020 as a Level 2 within the fair value hierarchy (see Note 1).
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REVENUE RECOGNITION |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION | REVENUE RECOGNITION The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"), which it adopted on January 1, 2018 using the modified retrospective method. The Company derives revenues from two primary sources: products and services. Product revenue includes the Company's hardware and software that function together to deliver the products' essential functionality. Software and hardware are also sold on a standalone basis. Services include customer support (software updates, upgrades and technical support), consulting, design services, installation services and training. Generally, contracts with customers contain multiple performance obligations, consisting of products and services. For these contracts, the Company accounts for individual performance obligations separately if they are considered distinct. When an arrangement contains more than one performance obligation, the Company will generally allocate the transaction price to each performance obligation on a relative standalone selling price basis. The best evidence of a standalone selling price is the observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar customers. If the good or service is not sold separately, an entity must estimate the standalone selling price by using an approach that maximizes the use of observable inputs. Acceptable estimation methods include but are not limited to: (1) adjusted market assessment; (2) expected cost plus a margin; and (3) a residual approach (when the standalone selling price is not directly observable and is either highly variable or uncertain). The Company's software licenses typically provide a perpetual right to use the Company's software. The Company also sells term-based software licenses that expire and Software-as-a-Service ("SaaS")-based software which are referred to as subscription arrangements. The Company does not customize its software nor are installation services required, as the customer has a right to utilize internal resources or a third-party service company. The software and hardware are delivered before related services are provided and are functional without professional services or customer support. The Company has concluded that its software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own. The product revenue is typically recognized upon transfer of control or when the software is made available for download, as this is the point that the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property. The Company does not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the subscription period. Hardware product is generally sold with software to provide the customer solution. Services revenue includes revenue from customer support and other professional services. The Company offers warranties on its products. Certain of the Company's warranties are considered to be assurance-type in nature and do not cover anything beyond ensuring that the product is functioning as intended. Based on the guidance in ASC 606, assurance-type warranties do not represent separate performance obligations. The Company also sells separately-priced maintenance service contracts, which qualify as service-type warranties and represent separate performance obligations. The Company does not typically allow and has no history of accepting material product returns. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. The Company sells its customer support contracts at a percentage of list or net product price related to the support. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year. The Company's professional services include consulting, technical support, resident engineer services, design services and installation services. Because control transfers over time, revenue is recognized based on progress toward completion of the performance obligation. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it believes such method best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. When the measure of progress is based upon expended labor, progress toward completion is measured as the ratio of labor time expended to date versus the total estimated labor time required to complete the performance obligation. Revenue is recorded proportionally as costs are incurred or labor is expended. Costs to fulfill these obligations include internal labor as well as subcontractor costs. Customer training includes courses offered by the Company. The related revenue is typically recognized as the training services are performed. The Company's typical performance obligations include the following:
Significant Judgments The Company's contracts with customers often include promises to transfer multiple products and services to the customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine the standalone selling price ("SSP") for each distinct performance obligation. The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the SSP. Deferred Revenue Deferred revenue is a contract liability representing amounts collected from or invoiced to customers in excess of revenue recognized. This results primarily from the billing of annual customer support agreements where the revenue is recognized over the term of the agreement. The value of deferred revenue will increase or decrease based on the timing of recognition of revenue. Disaggregation of Revenue The Company disaggregates its revenue from contracts with customers based on the nature of the products and services and the geographic regions in which each customer is domiciled. The Company's revenue for the three and six months ended June 30, 2020 and 2019 was disaggregated as follows:
The Company's product revenue from indirect sales through its channel partner program and from its direct sales program for the three and six months ended June 30, 2020 and 2019 was as follows (in thousands):
The Company's product revenue from sales to enterprise customers and from sales to service provider customers for the three and six months ended June 30, 2020 and 2019 was as follows (in thousands):
Revenue Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable; unbilled receivables, which are contract assets; and customer advances and deposits, which are contract liabilities, in the Company's condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Completion of services and billing may occur subsequent to revenue recognition, resulting in contract assets. The Company may receive advances or deposits from its customers before revenue is recognized, resulting in contract liabilities that are classified as deferred revenue. These assets and liabilities are reported in the Company's condensed consolidated balance sheets on a contract-by-contract basis as of the end of each reporting period. Changes in the contract asset and liability balances during the six months ended June 30, 2020 were not materially impacted by any factors other than billing and revenue recognition. Nearly all of the Company's deferred revenue balance is related to services revenue, primarily customer support contracts. Unbilled receivables stem primarily from engagements where services have been performed; however, billing cannot occur until services are completed. In some arrangements, the Company allows customers to pay for term-based software licenses and products over the term of the software license. The Company also sells SaaS-based software under subscription arrangements, with payment terms over the term of the SaaS agreement. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables that are anticipated to be invoiced in the next twelve months are included in Accounts receivable on the Company's condensed consolidated balance sheets. The changes in the Company's accounts receivable, unbilled receivables and deferred revenue balances for the six months ended June 30, 2020 were as follows (in thousands):
The Company recognized approximately $69 million of revenue in the six months ended June 30, 2020 that was recorded as deferred revenue at December 31, 2019 and approximately $63 million of revenue in the six months ended June 30, 2019 that was recorded as deferred revenue at December 31, 2018. Of the Company's deferred revenue reported as long-term in its condensed consolidated balance sheet at June 30, 2020, the Company expects that approximately $8 million will be recognized as revenue in 2021, approximately $9 million will be recognized as revenue in 2022 and approximately $7 million will be recognized as revenue in 2023 and beyond. All freight-related customer invoicing is recorded as revenue, while the shipping and handling costs that occur after control of the promised goods or services transfer to the customer are reported as fulfillment costs, a component of Cost of revenue - product in the Company's condensed consolidated statements of operations. Deferred Commissions Cost Sales commissions earned by the Company's employees are considered incremental and recoverable costs of obtaining a contract with a customer. Expense related to commission payments has been deferred on our condensed consolidated balance sheet and is being amortized over the expected life of the customer contract, which averages five years. The current and long- term portions of deferred commission expense are included as components of Other current assets and Other assets, respectively. At both June 30, 2020 and December 31, 2019, the Company had $3.6 million of deferred sales commissions capitalized.
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COMMON STOCK REPURCHASES |
6 Months Ended |
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Equity [Abstract] | |
COMMON STOCK REPURCHASES | COMMON STOCK REPURCHASESIn the second quarter of 2019, the Board approved a stock repurchase program (the "Repurchase Program") pursuant to which the Company may repurchase up to $75 million of the Company's common stock prior to April 18, 2021. Repurchases under the Repurchase Program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases depending on market conditions and corporate discretion. The Repurchase Program does not obligate the Company to acquire any particular amount of common stock and may be extended, modified, suspended or discontinued at any time at the Board's discretion. The stock repurchases are being funded using the Company's working capital. During the six months ended June 30, 2019, the Company spent $4.5 million, including transaction fees, to repurchase and retire 1.0 million shares of its common stock under the Repurchase Program. The Company did not repurchase any stock during the six months ended June 30, 2020. At June 30, 2020, the Company had $70.5 million remaining under the Repurchase Program for future repurchases. |
STOCK-BASED COMPENSATION PLANS |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION PLANS | STOCK-BASED COMPENSATION PLANS 2019 Stock Incentive Plan The Company's Amended and Restated 2019 Incentive Award Plan (the "2019 Plan") provides for the award of options to purchase the Company's common stock ("stock options"), stock appreciation rights ("SARs"), restricted stock awards ("RSAs"), performance-based stock awards ("PSAs"), restricted stock units ("RSUs"), performance-based stock units ("PSUs") and other stock- or cash-based awards. Awards can be granted under the 2019 Plan to the Company's employees, officers and non-employee directors, as well as consultants and advisors of the Company and its subsidiaries. 2007 Plan The Company's 2007 Plan provided for the award of stock options, SARs, RSAs, PSAs, RSUs, PSUs and other stock-based awards to employees, officers, non-employee directors, consultants and advisors of the Company and its subsidiaries. On and following June 5, 2019, with the exception of shares underlying awards outstanding as of that date, no additional shares may be granted under the 2007 Plan. Assumed Stock Plans In connection with the acquisition of Edgewater Networks, Inc. in August 2018, the Company assumed Edgewater's Amended and Restated 2002 Stock Option Plan (the "Edgewater Plan") to the extent of the shares underlying the options outstanding under the Edgewater Plan as of the Edgewater Acquisition Date (the "Edgewater Options"). The Edgewater Options were converted to Ribbon stock options (the "Ribbon Replacement Options") which are vesting under the same schedules as the respective Edgewater Options. In connection with the Company's acquisitions of Performance Technologies Inc. ("PT") in 2014, and Network Equipment Technologies, Inc. ("NET") in 2012, the Company assumed their stock plans (collectively, the "Assumed Plans"). Any outstanding awards under the Assumed Plans that in the future expire, terminate, are cancelled or surrendered, or are repurchased by the Company will be returned to the 2019 Plan. Accordingly, no additional shares may be granted under the Assumed Plans. Executive Equity Arrangements Inducement Awards In connection with his appointment as President and Chief Executive Office of Ribbon, and as an inducement for Bruce McClelland's ("Mr. McClelland") commencement of employment, the Company awarded Mr. McClelland sign-on equity grants, comprised of an RSU grant and a PSU grant with both market and service conditions (the "Inducement PSUs") on March 16, 2020. Subject to Mr. McClelland's continued employment, 462,963 RSUs are eligible to vest on the earlier of March 16, 2021 or the date of the consummation of a change in control of the Company and, upon vesting, will be settled in shares of Ribbon's common stock. The RSUs had a fair market value of $1.0 million on the date of grant. Subject to Mr. McClelland's continued employment, the PSUs are eligible to vest and be settled in up to 4,750,000 shares of Ribbon common stock upon the achievement of specified share price thresholds on or prior to September 1, 2024. These grants are reported in the applicable tables below. Other Performance-Based Stock Grants In addition to granting RSAs and RSUs to its executives and certain of its employees, the Company also grants PSUs to certain of its executives, including the Inducement PSUs granted to Mr. McClelland as described above. 2020 PSU Grants. In June 2020, the Company granted certain of its executives an aggregate of 623,575 PSUs, of which 374,143 PSUs had both performance and service conditions (the "2020 Performance PSUs") and 249,432 had both market and service conditions (the "2020 Market PSUs"). Each executive's 2020 Performance PSU grant is comprised of three consecutive fiscal year performance periods from 2020 through 2022 (each, a "fiscal year performance period"), with one-third of the 2020 Performance PSUs attributable to each fiscal year performance period. The number of shares that will vest, if any, for each fiscal year performance period will be based on the achievement of certain metrics related to the Company's financial performance for the applicable year on a standalone basis (each, a "fiscal year performance condition"). As of June 30, 2020, the Company determined that the grant date criteria for the 2020 fiscal year performance period had been met, and recorded the applicable stock-based compensation expense. The grant date criteria for the 2021 and 2022 fiscal year performance periods had not been met as of June 30, 2020, and accordingly, no expense has been recorded for the 2020 Performance PSUs underlying these fiscal year performance periods. The number of shares of common stock to be achieved upon vesting of the 2020 Performance PSUs will in no event exceed 200% of the total 2020 Performance PSUs. Shares subject to the 2020 Performance PSUs that fail to be earned will be forfeited. The 2020 Market PSUs have one three-year performance period which will end on December 31, 2022 (the "20-22 Market Performance Period"). The number of shares subject to the 2020 Market PSUs that will vest, if any, on June 15, 2023, will be dependent upon the Company's total shareholder return ("TSR") compared with the TSR of the companies included in the Nasdaq Telecommunications Index for the same 20-22 Market Performance Period, measured by the Compensation Committee after the 20-22 Market Performance Period ends. The shares determined to be earned will vest on June 15, 2023, pending each executive's continued employment with the Company through that date. The number of shares of common stock to be achieved upon vesting of the 2020 Market PSUs will in no event exceed 200% of the 2020 Market PSUs. Shares subject to the 2020 Market PSUs that fail to be earned will be forfeited. 2019 PSU Grants. In March and April 2019, the Company granted certain of its executives an aggregate of 872,073 PSUs, of which 523,244 PSUs had both performance and service conditions (the "2019 Performance PSUs") and 348,829 PSUs had both market and service conditions (the "2019 Market PSUs"). Each executive's 2019 Performance PSU grant is comprised of three consecutive fiscal year performance periods from 2019 through 2021 (each, a "fiscal year performance period"), with one-third of the 2019 Performance PSUs attributable to each fiscal year performance period. The number of shares that will vest, if any, for each fiscal year performance period will be based on the achievement of certain metrics related to the Company's financial performance for the applicable year on a standalone basis (each, a "fiscal year performance condition"). In the third quarter of 2019, the Company adjusted the 2019 Performance PSU fiscal 2019 goals to reflect the changes to the Company's calculation of certain metrics. There was no incremental expense in connection with this modification. In March 2020, the Compensation Committee determined that the 2019 fiscal year performance conditions had been satisfied at the 30.493% level. The Company's achievement of the 2019 fiscal year performance conditions (and the number of shares of Company common stock to vest as a result thereof) was measured on a linear sliding scale in relation to specific threshold, target and stretch performance conditions. As of June 30, 2020, the Company determined that the grant date criteria for the 2020 fiscal year performance period had been met, and recorded the applicable stock-based compensation expense. The grant date criteria for the 2021 fiscal year performance period had not been met as of June 30, 2020, and accordingly, no expense has been recorded for the 2019 Performance PSUs underlying the 2020 fiscal year performance period. The number of shares of common stock to be achieved upon vesting of the 2019 Performance PSUs will in no event exceed 200% of the 2019 Performance PSUs. Shares subject to the 2019 Performance PSUs that fail to be earned will be forfeited. The 2019 Market PSUs have one three-year performance period which will end on December 31, 2021 (the "19-21 Market Performance Period"). The number of shares subject to the Market PSUs that will vest, if any, on March 15, 2022, will be dependent upon the Company's TSR compared with the TSR of the companies included in the Nasdaq Telecommunications Index for the same 19-21 Market Performance Period, measured by the Compensation Committee after the 19-21 Market Performance Period ends. The shares determined to be earned will vest on March 15, 2022, pending each executive's continued employment with the Company through that date. The number of shares of common stock to be achieved upon vesting of the 2019 Market PSUs will in no event exceed 200% of the 2019 Market PSUs. Shares subject to the 2019 Market PSUs that fail to be earned will be forfeited. 2018 PSU Grant. In May 2018, the Company granted Franklin Hobbs, the Company's former President and Chief Executive Officer ("Mr. Hobbs"), 195,000 PSUs with both performance and service conditions (the "2018 PSUs"). Of the 195,000 2018 PSUs, one-half of such PSUs were eligible to vest based on the achievement of two separate metrics related to the Company's 2018 financial performance (the "2018 Performance Conditions"). The Company's achievement of the 2018 Performance Conditions (and the number of shares of Company common stock to be received upon vesting as a result thereof) were measured on a linear sliding scale in relation to specific threshold, target and stretch performance conditions. The number of shares of common stock to be received upon vesting of the 2018 PSUs would in no event exceed 150% of the 2018 PSUs. The Compensation Committee determined that the performance metrics for all of the 2018 PSUs had been achieved at the 150% level, for a total of 292,500 shares eligible to be issued. In connection with Mr. Hobbs' separation from the Company effective December 31, 2019, the vesting schedule for the 2018 Shares earned was accelerated and the shares were released on January 30, 2020. Accounting for Performance PSUs. Once the grant date criteria have been met for a Fiscal Year Performance Period, the Company records stock-based compensation expense for the respective underlying Performance PSUs based on its assessment of the probability that each performance condition will be achieved and the level, if any, of such achievement. The Compensation Committee determines the number of shares earned, if any, after the Company's financial results for each Fiscal Year Performance Period are finalized. Upon the determination by the Compensation Committee of the number of shares that will be received upon vesting of the Performance PSUs, such number of shares becomes fixed and the unamortized expense is recorded through the remainder of the service period, generally three years from the date of grant, at which time the total Performance PSUs earned, if any, will vest, pending each executive's continued employment with the Company through that date. Accounting for Market PSUs. PSUs that include a market condition require the use of a Monte Carlo simulation approach to model future stock price movements based upon the risk-free rate of return, the date of return, the volatility of each entity and the pair-wise covariance between each entity. These results are then used to calculate the grant date fair values of the respective PSUs. The Company is required to record expense for the PSUs with market conditions through their respective final vesting dates, regardless of the number of shares that are ultimately earned. At June 30, 2020, the calculation of the grant date fair value of the 2020 Market PSUs had not been completed. The Company used a grant date fair value of $4.37, the closing stock price on the date of grant, to calculate expense attributable to the three months ended June 30, 2020 for the 2020 Market PSUs. The Company is also using this stock price for 2020 Market PSU activity included in the PSU table below. The Company expects that the Monte Carlo valuation work and finalization of the grant date fair value of the 2020 Market PSUs will occur in the third quarter of 2020. At that time, the Company will record a cumulative adjustment to expense and adjust the grant date fair value of the 2020 Market PSUs for subsequent reporting. The Company does not expect the cumulative adjustment to expense will have a material impact on its consolidated financial statements. At March 31, 2020, the calculation of the grant date fair value of the Inducement PSUs had not been completed. The Company used a grant date fair value of $2.16, the closing stock price on the date of grant, to calculate expense attributable to the three months ended March 31, 2020 for the Inducement PSUs. During the second quarter of 2020, the Monte Carlo valuation of the Inducement PSUs was completed and accordingly, the grant date fair value of the Inducement PSUs was finalized as of June 30, 2020. The Company recorded a cumulative adjustment to expense to account for the change in fair value of the Inducement PSUs, which adjustment did not have a material impact on its consolidated financial statements. Stock Options The activity related to the Company's outstanding stock options for the six months ended June 30, 2020 was as follows:
Additional information regarding the Company's stock options for the six months ended June 30, 2020 was as follows (in thousands):
Restricted Stock Awards and Units The activity related to the Company's RSAs for the six months ended June 30, 2020 was as follows:
The activity related to the Company's RSUs for the six months ended June 30, 2020 was as follows:
The total grant date fair value of shares of restricted stock granted under RSAs and RSUs that vested during the six months ended June 30, 2020 was $7.6 million. Performance-Based Stock Units The activity related to the Company's PSUs for the six months ended June 30, 2020 was as follows:
The total grant date fair value of shares of restricted stock granted under PSUs that vested during the six months ended June 30, 2020 was $1.7 million. Employee Stock Purchase Plan The Company's Amended and Restated 2000 Employee Stock Purchase Plan ("ESPP") was designed to provide eligible employees of the Company and its participating subsidiaries an opportunity to purchase common stock of the Company through accumulated payroll deductions. The ESPP provided for six-month offering periods with the purchase price of the stock equal to 85% of the lesser of the closing market price on the first or last day of the offering period. The maximum number of shares of common stock an employee could purchase during each offering period was 500, subject to certain adjustments pursuant to the ESPP. The last purchase under the ESPP purchase period was made on November 28, 2019, and the ESPP expired on May 20, 2020. Stock-Based Compensation The condensed consolidated statements of operations include stock-based compensation for the three and six months ended June 30, 2020 and 2019 as follows (in thousands):
There was no income tax benefit for employee stock-based compensation expense for the six months ended June 30, 2020 or 2019 due to the valuation allowance recorded. At June 30, 2020, there was $24.1 million, net of expected forfeitures, of unrecognized stock-based compensation expense related to unvested stock options, stock awards and stock units. This expense is expected to be recognized over a weighted average period of approximately three years.
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MAJOR CUSTOMERS |
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Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MAJOR CUSTOMERS | MAJOR CUSTOMERS The following customer contributed 10% or more of the Company's revenue in the three and six months ended June 30, 2020 and 2019:
At June 30, 2020, there were two customers that each accounted for 10% or more of the Company's accounts receivable balance, representing approximately 26% in the aggregate of total accounts receivable. At December 31, 2019, one customer accounted for 10% or more of the Company's accounts receivable balance, representing approximately 22% of total accounts receivable. The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable, although in some instances the Company may require letters of credit to support customer outstanding accounts receivable balances. The Company maintains an allowance for doubtful accounts and such losses have been within management's expectations.
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RELATED PARTY TRANSACTIONS |
6 Months Ended |
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Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONSAs a portion of the consideration for the GENBAND Merger, on October 27, 2017, the Company issued a Promissory Note for $22.5 million to certain of GENBAND's equity holders who, following the GENBAND Merger, owned greater than five percent of the Company's outstanding shares. As described in Note 9, the Promissory Note did not amortize and the principal thereon was payable in full on the third anniversary of its execution. Interest on the Promissory Note was payable quarterly in arrears and accrued at a rate of 7.5% per year for the first six months after issuance, and thereafter at a rate of 10% per year. The failure to make any payment under the Promissory Note when due and, with respect to payment of any interest, the continuation of such failure for a period of thirty days thereafter, constituted an event of default under the Promissory Note. If an event of default occurred under the Promissory Note, the payees could declare the entire balance of the Promissory Note due and payable (including principal and accrued and unpaid interest) within five business days of the payees' notification to the Company of such acceleration. On April 29, 2019, the Company repaid in full all outstanding amounts under the Promissory Note, aggregating $24.7 million. The Company did not incur any early termination penalties in connection with this repayment. |
INCOME TAXES |
6 Months Ended |
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Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company's income tax provisions for the six months ended June 30, 2020 and 2019 reflect the Company's estimates of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded in the period that they occur. These estimates are reevaluated each quarter based on the Company's estimated tax expense for the full year. The estimated effective tax rate includes the impact of valuation allowances in various jurisdictions. The Company continues to evaluate the impact of various COVID-19 relief packages offered by various countries, including the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, which was enacted into law on March 27, 2020. At this time, the Company does not anticipate any material tax impacts.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES The Company has operating and finance leases for corporate offices, research and development facilities, and certain equipment. Operating leases are reported separately in the Company's condensed consolidated balance sheets. Assets acquired under finance leases are included in Property and equipment, net, in the condensed consolidated balance sheets. The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term. Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As the Company's existing leases do not have a readily determinable implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. The Company assessed its right-of-use assets for impairment as of June 30, 2020 and December 31, 2019 and determined no impairment has occurred. Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option. In making this determination, the Company considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions. For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term. The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term. Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract. Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities. The Company expenses all variable lease costs as incurred. In connection with the 2019 Restructuring Initiative, certain lease assets related to facilities will be partially or fully vacated as the Company consolidates its facilities. The Company has no plans to enter into sublease agreements for certain facilities. The Company ceased use of these facilities in the first quarter of 2020 and the third quarter of 2019. Accordingly, the Company accelerated the amortization of the associated lease assets through the planned cease-use date of each facility, resulting in additional amortization expense of $0.1 million in the six months ended June 30, 2020. The Company did not record additional amortization expense in the three months ended June 30, 2020. The Company previously recorded $3.7 million of additional amortization expense in the year ended December 31, 2019, including $2.9 million recorded in both the three and six months ended June 30, 2019. The Company did not record expense for estimated future variable lease costs in the three and six months ended June 30, 2020 and 2019. The Company recorded $0.9 million in the aggregate in the year ended December 31, 2019 for estimated future variable lease costs. All of these amounts were recorded as Restructuring and related expense in the Company's condensed consolidated statements of operations. At June 30, 2020 and December 31, 2019, the Company had accruals of $0.8 million and $0.9 million, respectively, for all future anticipated variable lease costs related to these facilities. The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative. The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2029. The Company's corporate headquarters is located in a leased facility in Westford, Massachusetts under a lease that expires in August 2028. The Company's finance leases primarily consist of equipment. At June 30, 2020, the Company had 107,800 square feet of building space in North Dallas, Texas under construction as part of the Facilities Initiative. The Company's leased Plano, Texas facility will be vacated upon completion of the construction of the North Dallas, Texas site. At that time, employees will relocate to the new site as part of the Facilities Initiative. The construction of the new North Dallas, Texas site is expected to be completed in 2020. The Company's right-of-use lease assets and lease liabilities at June 30, 2020 and December 31, 2019 were as follows (in thousands):
* Finance lease assets were recorded net of accumulated depreciation of $2.6 million and $2.0 million at June 30, 2020 and December 31, 2019, respectively. The components of lease expense for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):
* Operating lease cost for the six months ended June 30, 2020 included $0.1 million of accelerated amortization for certain assets partially or fully vacated in 2020 with no intent or ability to sublease. The Company did not record accelerated amortization in the three months ended June 30, 2020. Operating lease cost for both the three and six months ended June 30, 2019 included $2.9 million of accelerated amortization for certain assets that were partially or fully vacated in 2019 with no possibility of sublease. Cash flow information related to the Company's leases for the six months ended June 30, 2020 and 2019 was as follows (in thousands):
Other information related to the Company's leases as of June 30, 2020 and December 31, 2019 was as follows:
Future minimum fixed lease payments under noncancelable leases at June 30, 2020 and December 31, 2019 were as follows (in thousands):
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LEASES | LEASES The Company has operating and finance leases for corporate offices, research and development facilities, and certain equipment. Operating leases are reported separately in the Company's condensed consolidated balance sheets. Assets acquired under finance leases are included in Property and equipment, net, in the condensed consolidated balance sheets. The Company determines if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides the Company with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, the Company does not separate lease and non-lease components but rather, accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term. Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As the Company's existing leases do not have a readily determinable implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. The Company calculates its incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. The Company assessed its right-of-use assets for impairment as of June 30, 2020 and December 31, 2019 and determined no impairment has occurred. Lease terms may include options to extend or terminate the lease and the Company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that the Company will exercise that option. In making this determination, the Company considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions. For operating leases, lease expense for minimum fixed lease payments is recognized on a straight-line basis over the lease term. The expense for finance leases includes both interest and amortization expense components, with the interest component calculated based on the effective interest method and the amortization component calculated based on straight-line amortization of the right-of-use asset over the lease term. Lease contracts may contain variable lease costs, such as common area maintenance, utilities and tax reimbursements that vary over the term of the contract. Variable lease costs are not included in minimum fixed lease payments and as a result, are excluded from the measurement of the right-of-use assets and lease liabilities. The Company expenses all variable lease costs as incurred. In connection with the 2019 Restructuring Initiative, certain lease assets related to facilities will be partially or fully vacated as the Company consolidates its facilities. The Company has no plans to enter into sublease agreements for certain facilities. The Company ceased use of these facilities in the first quarter of 2020 and the third quarter of 2019. Accordingly, the Company accelerated the amortization of the associated lease assets through the planned cease-use date of each facility, resulting in additional amortization expense of $0.1 million in the six months ended June 30, 2020. The Company did not record additional amortization expense in the three months ended June 30, 2020. The Company previously recorded $3.7 million of additional amortization expense in the year ended December 31, 2019, including $2.9 million recorded in both the three and six months ended June 30, 2019. The Company did not record expense for estimated future variable lease costs in the three and six months ended June 30, 2020 and 2019. The Company recorded $0.9 million in the aggregate in the year ended December 31, 2019 for estimated future variable lease costs. All of these amounts were recorded as Restructuring and related expense in the Company's condensed consolidated statements of operations. At June 30, 2020 and December 31, 2019, the Company had accruals of $0.8 million and $0.9 million, respectively, for all future anticipated variable lease costs related to these facilities. The Company may incur additional future expense if it is unable to sublease other locations included in the Facilities Initiative. The Company leases its corporate offices and other facilities under operating leases, which expire at various times through 2029. The Company's corporate headquarters is located in a leased facility in Westford, Massachusetts under a lease that expires in August 2028. The Company's finance leases primarily consist of equipment. At June 30, 2020, the Company had 107,800 square feet of building space in North Dallas, Texas under construction as part of the Facilities Initiative. The Company's leased Plano, Texas facility will be vacated upon completion of the construction of the North Dallas, Texas site. At that time, employees will relocate to the new site as part of the Facilities Initiative. The construction of the new North Dallas, Texas site is expected to be completed in 2020. The Company's right-of-use lease assets and lease liabilities at June 30, 2020 and December 31, 2019 were as follows (in thousands):
* Finance lease assets were recorded net of accumulated depreciation of $2.6 million and $2.0 million at June 30, 2020 and December 31, 2019, respectively. The components of lease expense for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):
* Operating lease cost for the six months ended June 30, 2020 included $0.1 million of accelerated amortization for certain assets partially or fully vacated in 2020 with no intent or ability to sublease. The Company did not record accelerated amortization in the three months ended June 30, 2020. Operating lease cost for both the three and six months ended June 30, 2019 included $2.9 million of accelerated amortization for certain assets that were partially or fully vacated in 2019 with no possibility of sublease. Cash flow information related to the Company's leases for the six months ended June 30, 2020 and 2019 was as follows (in thousands):
Other information related to the Company's leases as of June 30, 2020 and December 31, 2019 was as follows:
Future minimum fixed lease payments under noncancelable leases at June 30, 2020 and December 31, 2019 were as follows (in thousands):
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COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation Settlement As previously disclosed, the Company was involved in six lawsuits (together, the "Lawsuits") with Metaswitch Networks Ltd., Metaswitch Networks Corp. and Metaswitch Inc. (collectively, "Metaswitch"). In five of the Lawsuits, the Company was the plaintiff and, in three of those five lawsuits, the Company was also a counterclaim defendant. In the sixth case, the Company was the defendant. On April 22, 2019, the Company and Metaswitch agreed to a binding mediator's proposal that resolved the six Lawsuits between the Company and Metaswitch (the "Lawsuits"). The Company and Metaswitch signed a Settlement and Cross-License Agreement on May 29, 2019 (the "Royalty Agreement"). Pursuant to the terms of the Royalty Agreement, Metaswitch agreed to pay the Company an aggregate amount of $63.0 million, which included cash payments of $37.5 million during the second quarter of 2019 and $25.5 million payable in three installments annually, beginning June 26, 2020, with such installment payments accruing interest at a rate of 4% per year. As part of the Royalty Agreement, the Company and Metaswitch (i) have released the other from all claims and liabilities; (ii) have licensed each party's existing patent portfolio to the other party; and (iii) have requested the applicable courts to dismiss the Lawsuits. The Company received $37.5 million of aggregate payments from Metaswitch in the second quarter of 2019 and $9.5 million in the second quarter of 2020. On July 6, 2020, the Company and Metaswitch signed a First Supplemental Agreement to the Settlement and Cross-License Agreement (the "Supplemental Agreement") under which Metaswitch could elect to repay the outstanding amounts under the Royalty Agreement early in exchange for a reduction of $0.25 million to the outstanding principal, from $17.0 million to $16.75 million, and the payment of no further interest by Metaswitch effective June 26, 2020. The Company recorded the reduction to the outstanding principal as a reduction to interest income. At June 30, 2020, the outstanding notes receivable balance of $16.75 million was included as a component of Other current assets in the condensed consolidated balance sheet. At December 31, 2019, the Company had notes receivable for future payments of $25.5 million, comprised of $8.5 million in Other current assets and $17.0 million in Other assets in the condensed consolidated balance sheet. On July 14, 2020, Metaswitch paid the Company the remaining outstanding balance of $16.75 million. Contingencies Liabilities for Royalty Payments to the IIA. Prior to the ECI Merger, ECI had received research and development grants from the IIA. The Company assumed ECI's contract with the IIA, which requires the Company to pay royalties to the IIA on proceeds from the sale of products which the Israeli government has supported by way of research and development grants. The royalties for grants prior to 2017 were calculated at the rates of 1.3% to 5.0% of the aggregated proceeds from the sale of such products developed at certain of the Company's R&D centers, up to an amount not exceeding 100% of such grants plus interest at LIBOR. Effective for grants approved in 2017 and subsequently, interest was calculated at the higher of LIBOR plus 1.5% to 2.75%. At June 30, 2020, the Company's maximum possible future royalties commitment, including $9.3 million of unpaid royalties accrued at June 30, 2020, was $56.2 million, including interest of $2.4 million, based on estimates of future product sales, grants received from the IIA and not yet repaid, and management's estimation of products still to be sold. Litigation. On November 8, 2018, Ron Miller, a purported stockholder of the Company, filed a Class Action Complaint (the "Miller Complaint") in the United States District Court for the District of Massachusetts (the "Massachusetts District Court") against the Company and three of its former officers (collectively, the "Defendants"), claiming to represent a class of purchasers of Sonus common stock during the period from January 8, 2015 through March 24, 2015 and alleging violations of the federal securities laws. Similar to a previous complaint entitled Sousa et al. vs. Sonus Networks, Inc. et al., which was dismissed with prejudice by an order dated June 6, 2017, the Miller Complaint claims that the Defendants made misleading forward-looking statements concerning Sonus' expected fiscal first quarter of 2015 financial performance, which statements were also the subject of an August 7, 2018 Securities and Exchange Commission Cease and Desist Order, whose findings the Company neither admitted nor denied. The Miller plaintiffs are seeking monetary damages. After the Miller Complaint was filed, several parties filed and briefed motions seeking to be selected by the Massachusetts District Court to serve as a Lead Plaintiff in the action. On June 21, 2019, the Massachusetts District Court appointed a group as Lead Plaintiffs and the Lead Plaintiffs filed an amended complaint on July 19, 2019. On August 30, 2019, the Defendants filed a motion to dismiss the Miller Complaint and, on October 4, 2019, the Lead Plaintiffs filed an opposition to the motion to dismiss. There was an oral argument on the motion to dismiss on February 12, 2020. In addition, the Company is often a party to disputes and legal proceedings that it considers routine and incidental to its business. Management does not expect the results of any of these actions to have a material effect on the Company's business or condensed consolidated financial statements.
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SUBSEQUENT EVENT |
6 Months Ended |
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Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENTOn August 5, 2020, the Company announced that it has entered into a definitive agreement (the "Kandy Agreement") with American Virtual Cloud Technologies, Inc. ("AVCTechnologies") to sell the Company's cloud-based enterprise services business (the "Kandy Communications Business"). Under the Kandy Agreement, AVCTechnologies will purchase the assets and assume certain liabilities associated with the Kandy Communications Business, as well as all of the outstanding interests in Kandy Communications LLC, a subsidiary of the Company. The Company will receive 13 million shares of AVCTechnologies common stock, subject to certain adjustments, as consideration for the transaction. The transaction is expected to close in the second half of 2020 and is subject to receipt of the approval of AVCTechnologies' shareholders for the issuance of the shares to the Company, AVCTechnologies' completion of necessary financing, approval of the lenders under the Company's 2020 Credit Facility and other customary closing conditions. |
BASIS OF PRESENTATION (Policies) |
6 Months Ended |
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Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation with accounting principles generally accepted in the United States of America ("GAAP") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). On March 3, 2020 (the "ECI Merger Date"), the Company merged with ECI (the "ECI Merger"). The financial results of ECI are included in the Company's condensed consolidated financial statements for the periods subsequent to the ECI Merger Date. On February 28, 2019 (the "Anova Acquisition Date"), the Company acquired the business and technology assets of Anova Data, Inc. ("Anova"). The financial results of Anova are included in the Company's condensed consolidated financial statements for the periods subsequent to the Anova Acquisition Date. Interim results are not necessarily indicative of results for a full year or any future interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (the "Annual Report"), which was filed with the SEC on February 28, 2020.
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Transfers of Financial Assets | Transfers of Financial Assets. The Company's ECI subsidiary maintains customer receivables factoring agreements with a number of financial institutions. Under the terms of these agreements, the Company may transfer receivables to the financial institutions, on a non-recourse basis, provided that the financial institutions approve the receivables in advance. The Company maintains credit insurance policies from major insurance providers or obtains letters of credit from the customers for a majority of its factored trade receivables. The Company accounts for the factoring of its financial assets as a sale of the assets and records the factoring fees, when incurred, as a component of interest expense in the condensed consolidated statements of operations and the proceeds from the sales of receivables are included in cash from operating activities in the condensed consolidated statements of cash flows. |
Warranty | Warranty. The Company records warranty liabilities for estimated costs of fulfilling its obligations under standard limited hardware and software warranties at the time of sale. The liability for standard warranties is included in Accrued expenses and other and Other non-current liabilities in the condensed consolidated balance sheet at June 30, 2020. The specific warranty terms and conditions vary depending upon the country in which the Company does business, but generally includes material costs, technical support, labor and associated overhead over a period ranging from | to three years.
Research And Development Grants | Research and Development Grants. The Company records grants received from the Office of the Innovation Authority of the Israeli Ministry of Economics (the "IIA") as a reduction to research and development expense. Royalties payable to the IIA are recognized pursuant to sales of related products and are classified as Cost of revenue. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Ribbon and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.
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Use of Estimates and Judgments | Use of Estimates and Judgments The preparation of financial statements in conformity with GAAP requires Ribbon to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements include accounting for business combinations, revenue recognition for multiple element arrangements, inventory valuations, assumptions used to determine the fair value of stock-based compensation, intangible asset and goodwill valuations, including impairments, legal contingencies and recoverability of Ribbon's net deferred tax assets and the related valuation allowances. Ribbon regularly assesses these estimates and records changes in estimates in the period in which they become known. Ribbon bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates.
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Reclassifications | Reclassifications Certain reclassifications, not affecting previously reported net loss, have been made to the previously issued financial statements to conform to the current period presentation.
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Restricted Cash | Restricted CashThe Company classifies as restricted cash all cash pledged as collateral to secure long-term obligations and all cash whose use is otherwise limited by contractual provisions. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company's financial instruments approximate their fair values and include cash equivalents, accounts receivable, borrowings under a revolving credit facility, accounts payable and long-term debt.
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Operating Segments | Operating Segments The Company currently operates in a single segment, as the chief operating decision maker makes decisions and assesses performance at the company level. The Company's chief operating decision maker is its President and Chief Executive Officer, who began his employment with the Company effective March 1, 2020. With the acquisition of ECI, the Company's chief operating decision maker is currently assessing the appropriate separate discrete financial information he will utilize for making decisions and assessing performance.
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Fair Value Hierarchy | Fair Value Hierarchy Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1. Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2. Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets). Level 3. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements The Financial Accounting Standards Board ("FASB") has issued the following accounting pronouncements, all of which became effective for the Company in 2020 and none of which had a material impact on the Company's condensed consolidated financial statements: In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"), which provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria that reference LIBOR or another reference rate expected to be discontinued. In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments ("ASU 2020-03"), which makes narrow-scope amendments related to topics regarding fair value option disclosures, applicability of the portfolio exception in Accounting Standards Codification ("ASC") 820 to nonfinancial items, disclosures for depository and lending institutions, cross reference to guidance in ASC 470-50 on line of credit or revolving debt arrangements, cross reference to net asset value practical expedient in ASC 820-10, interaction between ASC 842 and ASC 326 and between ASC 326 and ASC 860-20. In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which provides guidance on implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 amends ASC 350, Intangibles - Goodwill and Other (“ASC 350”) to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply the guidance in ASC 350-40 to determine which implementation costs should be capitalized in such a CCA. In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”), which amends ASC 715, Compensation - Retirement Benefits, to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which changes the fair value measurement requirements of ASC 820, Fair Value Measurement. 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"), which adds an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. In April and May 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ("ASU 2019-04") and ASU 2019-05 Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief ("ASU 2019-05"), respectively. ASU 2019-04 provides transition relief for entities adopting ASU 2016-13 and ASU 2019-05 clarifies certain aspects of the accounting for credit losses, hedging activities and financial instruments in connection with the adoption of ASU 2016-13. The FASB has issued the following accounting pronouncement which becomes effective for the Company in 2021, which the Company does not believe will have a material impact on its condensed consolidated financial statements upon adoption: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which modifies ASC 740 to simplify the accounting for income taxes. ASU 2019-12 addresses the accounting for hybrid tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of legal entities not subject to tax, intraperiod tax allocation exception to incremental approach, ownership changes in investments - changes from a subsidiary to an equity method investment, ownership changes in investments - changes from an equity method investment to a subsidiary, interim period accounting for enacted changes in tax law and year-to-date loss limitation in interim period tax accounting.
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Revenue Recognition | The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"), which it adopted on January 1, 2018 using the modified retrospective method. The Company derives revenues from two primary sources: products and services. Product revenue includes the Company's hardware and software that function together to deliver the products' essential functionality. Software and hardware are also sold on a standalone basis. Services include customer support (software updates, upgrades and technical support), consulting, design services, installation services and training. Generally, contracts with customers contain multiple performance obligations, consisting of products and services. For these contracts, the Company accounts for individual performance obligations separately if they are considered distinct. When an arrangement contains more than one performance obligation, the Company will generally allocate the transaction price to each performance obligation on a relative standalone selling price basis. The best evidence of a standalone selling price is the observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar customers. If the good or service is not sold separately, an entity must estimate the standalone selling price by using an approach that maximizes the use of observable inputs. Acceptable estimation methods include but are not limited to: (1) adjusted market assessment; (2) expected cost plus a margin; and (3) a residual approach (when the standalone selling price is not directly observable and is either highly variable or uncertain). The Company's software licenses typically provide a perpetual right to use the Company's software. The Company also sells term-based software licenses that expire and Software-as-a-Service ("SaaS")-based software which are referred to as subscription arrangements. The Company does not customize its software nor are installation services required, as the customer has a right to utilize internal resources or a third-party service company. The software and hardware are delivered before related services are provided and are functional without professional services or customer support. The Company has concluded that its software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own. The product revenue is typically recognized upon transfer of control or when the software is made available for download, as this is the point that the user of the software can direct the use of, and obtain substantially all of the remaining benefits from, the functional intellectual property. The Company does not recognize software revenue related to the renewal of subscription software licenses earlier than the beginning of the subscription period. Hardware product is generally sold with software to provide the customer solution. Services revenue includes revenue from customer support and other professional services. The Company offers warranties on its products. Certain of the Company's warranties are considered to be assurance-type in nature and do not cover anything beyond ensuring that the product is functioning as intended. Based on the guidance in ASC 606, assurance-type warranties do not represent separate performance obligations. The Company also sells separately-priced maintenance service contracts, which qualify as service-type warranties and represent separate performance obligations. The Company does not typically allow and has no history of accepting material product returns. Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. The Company sells its customer support contracts at a percentage of list or net product price related to the support. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year. The Company's professional services include consulting, technical support, resident engineer services, design services and installation services. Because control transfers over time, revenue is recognized based on progress toward completion of the performance obligation. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it believes such method best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. When the measure of progress is based upon expended labor, progress toward completion is measured as the ratio of labor time expended to date versus the total estimated labor time required to complete the performance obligation. Revenue is recorded proportionally as costs are incurred or labor is expended. Costs to fulfill these obligations include internal labor as well as subcontractor costs. Customer training includes courses offered by the Company. The related revenue is typically recognized as the training services are performed.
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BUSINESS ACQUISITIONS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of preliminary allocation of purchase consideration | A summary of the preliminary allocation of the purchase consideration for ECI is as follows (in thousands):
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Unaudited pro forma results | The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings that may result from the consolidation of the operations of Ribbon and ECI. Accordingly, these unaudited pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the combined company that would have been achieved had the ECI Merger occurred at January 1, 2019, nor are they intended to represent or be indicative of future results of operations (in thousands, except per share amounts):
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Schedule of components of acquisition related costs | The Company's acquisition- and integration-related expenses for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):
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EARNINGS (LOSS) PER SHARE (Tables) |
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Schedule of calculations of shares used to compute basic and diluted earnings (loss) per share | The calculations of shares used to compute earnings (loss) per share were as follows (in thousands):
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INVENTORY (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory | Inventory at June 30, 2020 and December 31, 2019 consisted of the following (in thousands):
|
INTANGIBLE ASSETS AND GOODWILL (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets | The Company's intangible assets at June 30, 2020 and December 31, 2019 consisted of the following (in thousands):
* An in-process research and development intangible asset has an indefinite life until the product is generally available, at which time such asset is typically reclassified to developed technology.
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Schedule of amortization expense related to intangible assets | Amortization expense for intangible assets for the three and six months ended June 30, 2020 and 2019 was as follows (in thousands):
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Schedule of estimated future amortization expense for intangible assets | Estimated future amortization expense for the Company's intangible assets at June 30, 2020 was as follows (in thousands):
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Schedule of goodwill | The changes in the carrying value of the Company's goodwill in the six months ended June 30, 2020 and 2019 were as follows (in thousands):
|
ACCRUED EXPENSES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued expenses | Accrued expenses at June 30, 2020 and December 31, 2019 consisted of the following (in thousands):
|
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restructuring accrual activity | The components of Restructuring and related expense for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):
A summary of the GENBAND Merger Restructuring Initiative accrual activity for the six months ended June 30, 2020 is as follows (in thousands):
|
WARRANTY ACCRUALS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||
Guarantees and Product Warranties [Abstract] | |||||||||||||||||||||||||||||||||||||
Changes in accrual balance | The changes in the Company's accrual balance in the six months ended June 30, 2020 were as follows (in thousands):
|
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of derivative financial instrument on condensed consolidated statement of operations | The impact of the Company’s derivative financial instrument on its condensed consolidated statement of comprehensive income (loss) for the three and six months ended June 30, 2020 was as follows (in thousands):
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Derivative liability designed as a hedging instrument | The fair values and locations in the condensed consolidated balance sheet at June 30, 2020 of the Company's derivative liability designated as a hedging instrument were as follows (in thousands):
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REVENUE RECOGNITION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Timing of Performance Obligation | The Company's typical performance obligations include the following:
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Disaggregation of Revenue | The Company's revenue for the three and six months ended June 30, 2020 and 2019 was disaggregated as follows:
The Company's product revenue from indirect sales through its channel partner program and from its direct sales program for the three and six months ended June 30, 2020 and 2019 was as follows (in thousands):
The Company's product revenue from sales to enterprise customers and from sales to service provider customers for the three and six months ended June 30, 2020 and 2019 was as follows (in thousands):
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Schedule of Customer Assets and Liabilities | The changes in the Company's accounts receivable, unbilled receivables and deferred revenue balances for the six months ended June 30, 2020 were as follows (in thousands):
|
STOCK-BASED COMPENSATION PLANS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of activity related to outstanding stock options | The activity related to the Company's outstanding stock options for the six months ended June 30, 2020 was as follows:
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Schedule of stock options, additional information | Additional information regarding the Company's stock options for the six months ended June 30, 2020 was as follows (in thousands):
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Schedule of activity related to unvested restricted stock grants | The activity related to the Company's RSAs for the six months ended June 30, 2020 was as follows:
The activity related to the Company's RSUs for the six months ended June 30, 2020 was as follows:
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Schedule of activity related to performance stock awards | The activity related to the Company's PSUs for the six months ended June 30, 2020 was as follows:
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Schedule of stock-based compensation expenses which are included in condensed consolidated statement of operations | The condensed consolidated statements of operations include stock-based compensation for the three and six months ended June 30, 2020 and 2019 as follows (in thousands):
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MAJOR CUSTOMERS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of customer contributing 10% or more of the revenue | The following customer contributed 10% or more of the Company's revenue in the three and six months ended June 30, 2020 and 2019:
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LEASES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Right-of-use lease assets and lease liabilities | The Company's right-of-use lease assets and lease liabilities at June 30, 2020 and December 31, 2019 were as follows (in thousands):
* Finance lease assets were recorded net of accumulated depreciation of $2.6 million and $2.0 million at June 30, 2020 and December 31, 2019, respectively.
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Schedule of Components of lease expense | The components of lease expense for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):
* Operating lease cost for the six months ended June 30, 2020 included $0.1 million of accelerated amortization for certain assets partially or fully vacated in 2020 with no intent or ability to sublease. The Company did not record accelerated amortization in the three months ended June 30, 2020. Operating lease cost for both the three and six months ended June 30, 2019 included $2.9 million of accelerated amortization for certain assets that were partially or fully vacated in 2019 with no possibility of sublease. Cash flow information related to the Company's leases for the six months ended June 30, 2020 and 2019 was as follows (in thousands):
Other information related to the Company's leases as of June 30, 2020 and December 31, 2019 was as follows:
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Schedule of Future minimum fixed lease payments under noncancelable finance leases | Future minimum fixed lease payments under noncancelable leases at June 30, 2020 and December 31, 2019 were as follows (in thousands):
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Schedule of Future minimum fixed lease payments under noncancelable operating leases | Future minimum fixed lease payments under noncancelable leases at June 30, 2020 and December 31, 2019 were as follows (in thousands):
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BASIS OF PRESENTATION (Details) customer in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2020
USD ($)
customer
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Jun. 30, 2020
USD ($)
segment
customer
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Dec. 31, 2019
USD ($)
|
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Product Warranty Liability [Line Items] | |||
Number of customers (more than) | customer | 1 | 1 | |
Cash received from the sale of certain accounts receivable | $ 30,700 | $ 45,800 | |
Interest expense | 300 | 400 | |
Liability for product warranties | 15,091 | 15,091 | $ 0 |
Accrued expenses and other | 6,400 | 6,400 | |
Other long-term liabilities | 8,700 | 8,700 | |
Restricted cash, current | 13,052 | $ 13,052 | $ 0 |
Number of operating segments | segment | 1 | ||
Tax payment on certain fixed assets | |||
Product Warranty Liability [Line Items] | |||
Restricted cash | 8,400 | $ 8,400 | |
Restricted short-term bank deposits | |||
Product Warranty Liability [Line Items] | |||
Restricted cash | $ 4,700 | $ 4,700 | |
Minimum | |||
Product Warranty Liability [Line Items] | |||
Product warranty period | 1 year | ||
Maximum | |||
Product Warranty Liability [Line Items] | |||
Product warranty period | 3 years |
BUSINESS ACQUISITIONS - Unaudited Pro Forma Results (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Business Combinations [Abstract] | ||||
Revenue | $ 210,493 | $ 231,901 | $ 393,682 | $ 440,848 |
Net (loss) income | $ (9,252) | $ 37,471 | $ (48,381) | $ (26,228) |
(Loss) diluted earnings per share (in dollars per share) | $ (0.06) | $ 0.26 | $ (0.33) | $ (0.18) |
BUSINESS ACQUISITIONS - Anova Data Narrative (Details) - USD ($) $ in Thousands |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 04, 2020 |
Jan. 31, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
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Business Acquisition [Line Items] | ||||||
Shares of common stock issued as purchase | $ 110,180 | $ 15,186 | ||||
Goodwill | 416,892 | $ 224,896 | $ 389,196 | $ 383,655 | ||
Anova Data, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Common stock to be issued (in shares) | 2,900,000 | |||||
Shares of common stock issued as purchase | $ 15,200 | |||||
Number of additional shares potentially issued (in number of shares) | 330,000 | |||||
Fair value of additional shares potentially issued | $ 1,700 | |||||
Number of shares issued after post-closing adjustments (in shares) | 316,551 | |||||
Fair value of total consideration | 16,900 | |||||
Finite-lived intangibles | 11,200 | |||||
Weighted average useful life of intangible assets (in years) | 6 years 3 months | |||||
Net assets acquired | 100 | |||||
Goodwill | $ 5,500 |
BUSINESS ACQUISITIONS - Summary of Acquisition Related Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Business Combinations [Abstract] | ||||
Professional and services fees (acquisition-related) | $ 640 | $ 321 | $ 13,014 | $ 1,826 |
Integration-related expenses | 217 | 1,644 | 227 | 3,338 |
Total | $ 857 | $ 1,965 | $ 13,241 | $ 5,164 |
EARNINGS (LOSS) PER SHARE (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Reconciliation of weighted average shares outstanding from basic to diluted | ||||
Weighted average shares outstanding—basic (in shares) | 144,483 | 110,394 | 132,737 | 109,239 |
Potential dilutive common shares (in shares) | 0 | 304 | 0 | 433 |
Weighted average shares outstanding—diluted (in shares) | 144,483 | 110,698 | 132,737 | 109,672 |
Antidilutive securities not included in computation of diluted loss per share (in shares) | 13,700 | 300 | 13,700 | 400 |
INVENTORY (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
On-hand final assemblies and finished goods inventories | $ 57,452 | $ 13,283 |
Deferred cost of goods sold | 4,888 | 2,441 |
Gross inventory | 62,340 | 15,724 |
Less noncurrent portion (included in other assets) | (4,293) | (924) |
Current portion | $ 58,047 | $ 14,800 |
INTANGIBLE ASSETS AND GOODWILL - Schedule of Intangible Assets and Amortization (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
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Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 9 years 1 month 6 days | 7 years 9 months 25 days | |||
Cost | $ 614,250 | $ 614,250 | $ 349,350 | ||
Accumulated amortization | 164,987 | 164,987 | 135,984 | ||
Net carrying value | 449,263 | 449,263 | 213,366 | ||
Amortization expense | 14,669 | $ 12,647 | 29,003 | $ 24,569 | |
Estimated future amortization expense for intangible assets | |||||
Remainder of 2020 | 31,968 | 31,968 | |||
2021 | 66,689 | 66,689 | |||
2022 | 59,700 | 59,700 | |||
2023 | 52,306 | 52,306 | |||
2024 | 44,098 | 44,098 | |||
Thereafter | 194,502 | 194,502 | |||
Total | 449,263 | 449,263 | |||
In-process research and development | |||||
Intangible Assets And Goodwill | |||||
Cost | 39,600 | 39,600 | 5,600 | ||
Accumulated amortization | 0 | 0 | 0 | ||
Net carrying value | 39,600 | $ 39,600 | $ 5,600 | ||
Developed technology | |||||
Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 7 years 11 months 12 days | 6 years 9 months 14 days | |||
Cost | 300,780 | $ 300,780 | $ 188,880 | ||
Accumulated amortization | 120,664 | 120,664 | 100,760 | ||
Net carrying value | 180,116 | 180,116 | $ 88,120 | ||
Amortization expense | 10,950 | 10,092 | $ 19,904 | 19,737 | |
Customer relationships | |||||
Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 11 years 10 months 9 days | 9 years 5 months 15 days | |||
Cost | 268,140 | $ 268,140 | $ 152,140 | ||
Accumulated amortization | 41,918 | 41,918 | 33,350 | ||
Net carrying value | 226,222 | 226,222 | $ 118,790 | ||
Amortization expense | 3,412 | 2,407 | $ 8,568 | 4,537 | |
Trade names | |||||
Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 3 years 10 months 17 days | 5 years 2 months 12 days | |||
Cost | 5,000 | $ 5,000 | $ 2,000 | ||
Accumulated amortization | 1,675 | 1,675 | 1,144 | ||
Net carrying value | 3,325 | 3,325 | $ 856 | ||
Amortization expense | 307 | $ 148 | $ 531 | $ 295 | |
Internal use software | |||||
Intangible Assets And Goodwill | |||||
Weighted average amortization period (years) | 3 years | 3 years | |||
Cost | 730 | $ 730 | $ 730 | ||
Accumulated amortization | 730 | 730 | 730 | ||
Net carrying value | $ 0 | $ 0 | $ 0 |
INTANGIBLE ASSETS AND GOODWILL - Schedule of Changes in Carrying Value of Goodwill (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Goodwill [Roll Forward] | ||
Goodwill, gross, beginning of period | $ 392,302 | $ 386,761 |
Accumulated impairment losses, beginning of period | (167,406) | (3,106) |
Goodwill. beginning of period | 224,896 | 383,655 |
Goodwill, gross, end of period | 584,298 | 392,302 |
Accumulated impairment losses, end of period | (167,406) | (3,106) |
Goodwill, end of period | 416,892 | 389,196 |
ECI | ||
Goodwill [Roll Forward] | ||
Acquisition | 191,996 | 0 |
Goodwill, end of period | 191,996 | |
Anova Data, Inc. | ||
Goodwill [Roll Forward] | ||
Acquisition | 0 | $ 5,541 |
Goodwill, end of period | $ 5,500 |
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Payables and Accruals [Abstract] | ||
Employee compensation and related costs | $ 46,910 | $ 27,166 |
Professional fees | 15,765 | 13,331 |
Taxes payable | 15,781 | 842 |
Other | 52,271 | 15,361 |
Total accrued expenses | $ 130,727 | $ 56,700 |
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Components of Restructuring Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Restructuring and Related Activities [Abstract] | ||||
Severance and related costs | $ 4,716 | $ 5,981 | $ 6,487 | $ 10,900 |
Variable and other facilities-related costs | 645 | 305 | 879 | 318 |
Accelerated amortization of lease assets due to cease-use | 0 | 2,858 | 70 | 2,858 |
Restructuring and related expense | $ 5,361 | $ 9,144 | $ 7,436 | $ 14,076 |
RESTRUCTURING AND FACILITIES CONSOLIDATION INITIATIVES - Assumed Restructuring Initiative Rollforward (Details) - Severance - Merger Restructuring Initiative $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Balance at the beginning of the period | $ 409 |
Adjustments for changes in estimate | (58) |
Cash payments | (351) |
Balance at the end of the period | $ 0 |
WARRANTY ACCRUALS - Changes in Accrual Balance (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Movement in Standard Product Warranty Accrual [Roll Forward] | |
Balance at January 1, 2020 | $ 0 |
Assumed liability in connection with ECI Merger | 15,706 |
Current period provisions | 1,829 |
Settlements | (2,444) |
Balance at June 30, 2020 | $ 15,091 |
WARRANTY ACCRUALS - Narrative (Details) $ in Millions |
Jun. 30, 2020
USD ($)
|
---|---|
Guarantees and Product Warranties [Abstract] | |
Accrued expenses and other | $ 6.4 |
Other long-term liabilities | $ 8.7 |
DEBT - Short-Term Loans (Details) $ in Millions |
Jul. 17, 2020
USD ($)
|
Jun. 30, 2020
USD ($)
loan
|
---|---|---|
Short-term Debt [Line Items] | ||
Number of uncommitted and unsecured short-term loans outstanding | 2 | |
Short-term loans | $ | $ 2.4 | |
Weighted average interest rate | 4.27% | |
Subsequent Event | ||
Short-term Debt [Line Items] | ||
Short-term loans | $ | $ 0.7 | |
China Zheshang Bank | ||
Short-term Debt [Line Items] | ||
Number of uncommitted and unsecured short-term loans outstanding | 1 | |
Bank Of Communications Hangzhou Branch | ||
Short-term Debt [Line Items] | ||
Number of uncommitted and unsecured short-term loans outstanding | 1 |
DEBT - Letters of Credit and Performance and Bid Bonds (Details) $ in Millions |
Jun. 30, 2020
USD ($)
|
---|---|
Line of Credit Facility [Line Items] | |
Letters of credit outstanding | $ 33.2 |
Cash collateral | 4.4 |
Various Uncommitted Facilities | |
Line of Credit Facility [Line Items] | |
Letters of credit outstanding | 28.0 |
2020 Credit Agreement | Letter of Credit | |
Line of Credit Facility [Line Items] | |
Letters of credit outstanding | $ 5.2 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Mar. 31, 2020 |
---|---|---|
Derivative [Line Items] | ||
Reclassified as an increase to interest expense over the next twelve months | $ 3.1 | |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Notional amount | 400.0 | |
Interest Rate Swap | Level Two | ||
Derivative [Line Items] | ||
Interest rate derivative - liability derivative | 13.5 | |
2020 Credit Agreement | Term Loan Facility | ||
Derivative [Line Items] | ||
Outstanding balance | $ 397.5 | $ 400.0 |
Fixed rate | 0.904% |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Impact of Derivative Financial Instrument on Condensed Consolidated Statement of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2020 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Loss recognized in other comprehensive loss on derivative (effective portion) | $ (4,320) | $ (13,657) |
Amount reclassified from accumulated other comprehensive loss to interest expense (effective portion) | $ 350 | $ 160 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Fair Values and Locations in the Condensed Consolidated Balance Sheet (Details) - Interest Rate Swap $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Accrued expenses and other | |
Derivative [Line Items] | |
Interest rate derivative - liability derivative | $ 3,045 |
Other long-term liabilities | |
Derivative [Line Items] | |
Interest rate derivative - liability derivative | $ 10,452 |
REVENUE RECOGNITION - Schedule of Customer Assets & Liabilities (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Accounts receivable | |
Beginning balance | $ 168,502 |
Increase (decrease), net | (5,221) |
Ending balance | 163,281 |
Unbilled accounts receivable | |
Beginning balance | 24,204 |
Increase (decrease), net | 17,116 |
Ending balance | 41,320 |
Deferred revenue (current) | |
Beginning balance | 100,406 |
Increase (decrease), net | 5,288 |
Ending balance | 105,694 |
Deferred revenue (long-term) | |
Beginning balance | 20,482 |
Increase (decrease), net | 3,362 |
Ending balance | $ 23,844 |
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Disaggregation of Revenue [Line Items] | |||
Revenue recognized | $ 69.0 | $ 63.0 | |
Customer contract expected life (in years) | 5 years | ||
Deferred sales commissions capitalized | $ 3.6 | $ 3.6 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue to be recognized | $ 8.0 | ||
Revenue, remaining performance obligation, period | 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue to be recognized | $ 9.0 | ||
Revenue, remaining performance obligation, period | 1 year | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue to be recognized | $ 7.0 | ||
Revenue, remaining performance obligation, period |
COMMON STOCK REPURCHASES (Details) - USD ($) shares in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Class of Stock [Line Items] | ||
Repurchase of common stock | $ 0 | $ 4,536,000 |
Repurchase Program | ||
Class of Stock [Line Items] | ||
Repurchase amount authorized (up to) | 75,000,000 | |
Repurchase of common stock | $ 4,500,000 | |
Stock repurchased and retired (in Shares) | 1.0 | |
Remaining authorized repurchase amount | $ 70,500,000 |
STOCK-BASED COMPENSATION PLANS - Employee Stock Purchase Plan (Details) - ESPP |
6 Months Ended |
---|---|
Jun. 30, 2020
shares
| |
Stock-based compensation | |
Offering period (in months) | 6 months |
Purchase price of common stock (percentage) | 85.00% |
Maximum number of shares purchasable per employee (in shares) | 500 |
MAJOR CUSTOMERS (Details) - Customer |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Revenue | |||||
MAJOR CUSTOMERS | |||||
Concentration risk, percentage | 15.00% | 19.00% | 14.00% | 17.00% | |
Accounts receivable balance | |||||
MAJOR CUSTOMERS | |||||
Concentration risk, percentage | 26.00% | 22.00% |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions |
Apr. 29, 2019 |
Jun. 30, 2020 |
Oct. 27, 2017 |
---|---|---|---|
Promissory Note | Notes payable | |||
Related Party Transaction [Line Items] | |||
Repayment of notes payable | $ 24.7 | ||
GENBAND | |||
Related Party Transaction [Line Items] | |||
Promissory note issued to GENBAND equity holders | $ 22.5 | ||
GENBAND | Minimum | |||
Related Party Transaction [Line Items] | |||
Promissory note interest rate | 7.50% | ||
GENBAND | Maximum | |||
Related Party Transaction [Line Items] | |||
Promissory note interest rate | 10.00% |
LEASES - Narrative (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2020
USD ($)
ft²
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
ft²
|
Jun. 30, 2019
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
Lessee, Lease, Description [Line Items] | |||||
Additional amortization expense | $ 0 | $ 2,858 | $ 70 | $ 2,858 | |
Variable lease costs | $ 635 | 604 | $ 1,272 | 1,206 | $ 900 |
North Dallas, Texas | |||||
Lessee, Lease, Description [Line Items] | |||||
Square feet under lease | ft² | 107,800 | 107,800 | |||
Facilities | |||||
Lessee, Lease, Description [Line Items] | |||||
Accrual for future anticipated variable lease costs | $ 800 | $ 800 | 900 | ||
2019 Restructuring Initiative | |||||
Lessee, Lease, Description [Line Items] | |||||
Accrual for future anticipated variable lease costs | 2,152 | 2,152 | 3,101 | ||
2019 Restructuring Initiative | Facilities | |||||
Lessee, Lease, Description [Line Items] | |||||
Additional amortization expense | $ 2,900 | 100 | $ 2,900 | 3,700 | |
Accrual for future anticipated variable lease costs | $ 1,196 | $ 1,196 | $ 991 |
LEASES - Assets and Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets | ||
Operating lease assets | $ 63,938 | $ 36,654 |
Finance lease assets | 1,775 | 2,420 |
Total leased assets | 65,713 | 39,074 |
Current | ||
Operating | 18,300 | 7,719 |
Finance | 1,333 | 1,005 |
Noncurrent | ||
Operating | 53,122 | 37,202 |
Finance | 1,152 | 2,144 |
Total lease liabilities | 73,907 | 48,070 |
Finance lease, accumulated deprecation | $ 2,600 | $ 2,000 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization | us-gaap:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
LEASES - Components of Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Leases [Abstract] | |||||
Operating lease, cost | $ 5,217 | $ 5,633 | $ 8,561 | $ 8,075 | |
Finance lease cost | |||||
Amortization of leased assets | 319 | 244 | 638 | 488 | |
Interest on lease liabilities | 47 | 57 | 102 | 120 | |
Short-term lease cost | 5,629 | 4,734 | 11,124 | 9,405 | |
Variable lease costs (costs excluded from minimum fixed lease payments) | 635 | 604 | 1,272 | 1,206 | $ 900 |
Sublease income | (320) | 0 | (564) | 0 | |
Net lease cost | $ 11,527 | 11,272 | 21,133 | 19,294 | |
Accelerated amortization | $ 2,900 | $ 100 | $ 2,900 |
LEASES - Other Information (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows for operating leases | $ 7,844 | $ 5,187 | |
Operating cash flows for finance leases | 102 | 120 | |
Financing cash flows for finance leases | $ 668 | $ 500 | |
Weighted average remaining lease term (years) | |||
Operating leases | 5 years 1 month 13 days | 6 years 8 months 23 days | |
Finance leases | 2 years 14 days | 2 years 4 months 6 days | |
Weighted average discount rate | |||
Operating leases | 5.52% | 6.50% | |
Finance leases | 7.22% | 7.54% |
LEASES - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Operating leases | ||
Remainder of 2020 | $ 11,050 | |
Year one | 19,699 | $ 10,290 |
Year two | 16,017 | 9,468 |
Year three | 13,207 | 7,665 |
Year four | 6,737 | 7,067 |
Year five and beyond | 16,380 | |
Year five | 5,303 | |
Year six and beyond | 15,738 | |
Total lease payments | 83,090 | 55,531 |
Less: interest | (11,668) | (10,610) |
Present value of lease liabilities | 71,422 | 44,921 |
Finance leases | ||
Remainder of 2020 | 788 | |
Year one | 1,191 | 1,644 |
Year two | 591 | 1,159 |
Year three | 72 | 581 |
Year four | 0 | 0 |
Year five and beyond | 0 | |
Year five | 0 | |
Year six and beyond | 0 | |
Total lease payments | 2,642 | 3,384 |
Less: interest | (157) | (235) |
Present value of lease liabilities | $ 2,485 | $ 3,149 |
SUBSEQUENT EVENT (Details) shares in Millions |
5 Months Ended |
---|---|
Dec. 31, 2020
shares
| |
Forecast | Kandy Communications Business | |
Subsequent Event [Line Items] | |
Shares to be received from sale (in shares) | 13 |
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