Delaware (State or other jurisdiction of incorporation or organization) | 74-1871327 (I.R.S. Employer Identification Number) | |
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11500 North MoPac Expressway Austin, Texas | 78759 | |
(address of principal executive offices) | (zip code) |
Class | Outstanding at October 24, 2017 |
Common Stock - $0.01 par value | 130,745,022 |
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| September 30, 2017 (unaudited) and December 31, 2016 | |
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| (unaudited) for the three and nine month periods ended September 30, 2017 and 2016 | |
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| (unaudited) for the three and nine month periods ended September 30, 2017 and 2016 | |
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| (unaudited) for the three and nine month periods ended September 30, 2017 and 2016 | |
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| September 30, | December 31, | |||||
| 2017 | 2016 | |||||
Assets | (unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 294,194 | $ | 285,283 | |||
Short-term investments | 91,223 | 73,117 | |||||
Accounts receivable, net | 235,177 | 228,686 | |||||
Inventories, net | 184,641 | 193,608 | |||||
Prepaid expenses and other current assets | 50,325 | 53,953 | |||||
Total current assets | 855,560 | 834,647 | |||||
Property and equipment, net | 254,918 | 260,456 | |||||
Goodwill | 265,091 | 253,197 | |||||
Intangible assets, net | 122,681 | 108,663 | |||||
Other long-term assets | 32,878 | 39,601 | |||||
Total assets | $ | 1,531,128 | $ | 1,496,564 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 51,274 | $ | 48,800 | |||
Accrued compensation | 45,231 | 27,743 | |||||
Deferred revenue - current | 120,271 | 115,577 | |||||
Other current liabilities | 17,802 | 32,997 | |||||
Other taxes payable | 30,832 | 34,958 | |||||
Total current liabilities | 265,410 | 260,075 | |||||
Long-term debt | 15,000 | 25,000 | |||||
Deferred income taxes | 37,074 | 45,386 | |||||
Liability for uncertain tax positions | 9,284 | 11,719 | |||||
Deferred revenue - long-term | 31,405 | 29,752 | |||||
Other long-term liabilities | 9,156 | 10,413 | |||||
Total liabilities | 367,329 | 382,345 | |||||
Commitments and contingencies | |||||||
Stockholders' equity: | |||||||
Preferred stock: par value $0.01; 5,000,000 shares authorized; none issued and outstanding | — | — | |||||
Common stock: par value $0.01; 360,000,000 shares authorized; 130,745,022 shares and 129,202,979 shares issued and outstanding, respectively | 1,307 | 1,292 | |||||
Additional paid-in capital | 816,152 | 771,346 | |||||
Retained earnings | 365,021 | 376,202 | |||||
Accumulated other comprehensive loss | (18,681 | ) | (34,621 | ) | |||
Total stockholders’ equity | 1,163,799 | 1,114,219 | |||||
Total liabilities and stockholders’ equity | $ | 1,531,128 | $ | 1,496,564 |
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
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Net sales: | ||||||||||||||||
Product | $ | 291,891 | $ | 278,521 | $ | 853,219 | $ | 816,486 | ||||||||
Software maintenance | 29,030 | 27,843 | 86,416 | 83,161 | ||||||||||||
Total net sales | 320,921 | 306,364 | 939,635 | 899,647 | ||||||||||||
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Cost of sales: | ||||||||||||||||
Product | 81,641 | 74,734 | 235,989 | 225,261 | ||||||||||||
Software maintenance | 2,110 | 1,998 | 6,744 | 5,126 | ||||||||||||
Total cost of sales | 83,751 | 76,732 | 242,733 | 230,387 | ||||||||||||
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Gross profit | 237,170 | 229,632 | 696,902 | 669,260 | ||||||||||||
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Operating expenses: | ||||||||||||||||
Sales and marketing | 116,661 | 116,662 | 358,335 | 346,230 | ||||||||||||
Research and development | 56,526 | 59,066 | 171,701 | 178,244 | ||||||||||||
General and administrative | 26,468 | 24,537 | 78,400 | 74,308 | ||||||||||||
Total operating expenses | 199,655 | 200,265 | 608,436 | 598,782 | ||||||||||||
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Operating income | 37,515 | 29,367 | 88,466 | 70,478 | ||||||||||||
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Other income: | ||||||||||||||||
Interest income | 657 | 276 | 1,509 | 787 | ||||||||||||
Net foreign exchange gain (loss) | 1,096 | (760 | ) | 1,624 | (1,471 | ) | ||||||||||
Other (loss) gain, net | (1,153 | ) | 301 | (957 | ) | (2,052 | ) | |||||||||
Income before income taxes | 38,115 | 29,184 | 90,642 | 67,742 | ||||||||||||
Provision for income taxes | 4,726 | 4,695 | 13,949 | 14,155 | ||||||||||||
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Net income | $ | 33,389 | $ | 24,489 | $ | 76,693 | $ | 53,587 | ||||||||
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Basic earnings per share | $ | 0.26 | 0.19 | 0.59 | 0.42 | |||||||||||
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Weighted average shares outstanding - basic | 130,660 | 128,815 | 130,103 | 128,233 | ||||||||||||
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Diluted earnings per share | $ | 0.25 | $ | 0.19 | $ | 0.59 | 0.42 | |||||||||
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Weighted average shares outstanding - diluted | 131,617 | 129,047 | 131,050 | 128,738 | ||||||||||||
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Dividends declared per share | $ | 0.21 | $ | 0.20 | $ | 0.63 | $ | 0.60 |
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
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Net income | $ | 33,389 | $ | 24,489 | $ | 76,693 | $ | 53,587 | ||||||||
Other comprehensive income, before tax and net of reclassification adjustments: | ||||||||||||||||
Foreign currency translation adjustment | 6,226 | 3,964 | 21,890 | 12,130 | ||||||||||||
Unrealized gain (loss) on securities available-for-sale | 162 | (70 | ) | 187 | 479 | |||||||||||
Unrealized (loss) gain on derivative instruments | (3,136 | ) | 976 | (9,470 | ) | 4,541 | ||||||||||
Other comprehensive gain, before tax | 3,252 | 4,870 | 12,607 | 17,150 | ||||||||||||
Tax (benefit) expense related to items of other comprehensive income | (1,186 | ) | 967 | (3,333 | ) | 4,242 | ||||||||||
Other comprehensive gain, net of tax | 4,438 | 3,903 | 15,940 | 12,908 | ||||||||||||
Comprehensive income | $ | 37,827 | $ | 28,392 | $ | 92,633 | $ | 66,495 |
| Nine Months Ended | |||||||
| September 30, | |||||||
| 2017 | 2016 | ||||||
Cash flow from operating activities: | ||||||||
Net income | $ | 76,693 | $ | 53,587 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 54,794 | 55,164 | ||||||
Stock-based compensation | 21,272 | 19,635 | ||||||
Tax expense from deferred income taxes | (4,290 | ) | (7,321 | ) | ||||
Changes in operating assets and liabilities | (1,013 | ) | 28,951 | |||||
Net cash provided by operating activities | 147,456 | 150,016 | ||||||
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Cash flow from investing activities: | ||||||||
Capital expenditures | (24,084 | ) | (34,408 | ) | ||||
Capitalization of internally developed software | (34,406 | ) | (24,048 | ) | ||||
Additions to other intangibles | (1,379 | ) | (1,969 | ) | ||||
Acquisitions, net of cash received | — | (549 | ) | |||||
Purchases of short-term investments | (62,845 | ) | (9,054 | ) | ||||
Sales and maturities of short-term investments | 45,582 | 38,566 | ||||||
Net cash used in investing activities | (77,132 | ) | (31,462 | ) | ||||
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Cash flow from financing activities: | ||||||||
Proceeds from revolving line of credit | — | 15,000 | ||||||
Principal payments on revolving line of credit | (10,000 | ) | (27,000 | ) | ||||
Proceeds from issuance of common stock | 22,870 | 22,157 | ||||||
Repurchase of common stock | — | (5,635 | ) | |||||
Dividends paid | (82,051 | ) | (77,056 | ) | ||||
Net cash used in financing activities | (69,181 | ) | (72,534 | ) | ||||
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Effect of exchange rate changes on cash | 7,768 | 3,503 | ||||||
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Net change in cash and cash equivalents | 8,911 | 49,523 | ||||||
Cash and cash equivalents at beginning of period | 285,283 | 251,129 | ||||||
Cash and cash equivalents at end of period | $ | 294,194 | $ | 300,652 |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| (In thousands) | (In thousands) | ||||||||||
| (Unaudited) | (Unaudited) | ||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||
Weighted average shares outstanding-basic | 130,660 | 128,815 | 130,103 | 128,233 | ||||||||
Plus: Common share equivalents | ||||||||||||
RSUs | 957 | 232 | 947 | 505 | ||||||||
Weighted average shares outstanding-diluted | 131,617 | 129,047 | 131,050 | 128,738 |
| As of September 30, 2017 | |||||||||||||||||||
(In thousands) | (Unaudited) | |||||||||||||||||||
| Gross | Gross | Cumulative | |||||||||||||||||
| Adjusted Cost | Unrealized Gain | Unrealized Loss | Translation Adjustment | Fair Value | |||||||||||||||
Corporate bonds | $ | 90,817 | $ | 170 | $ | (76 | ) | $ | (1,448 | ) | $ | 89,463 | ||||||||
Time deposits | 1,760 | — | — | — | 1,760 | |||||||||||||||
Short-term investments | $ | 92,577 | $ | 170 | $ | (76 | ) | $ | (1,448 | ) | $ | 91,223 |
(In thousands) | As of December 31, 2016 | |||||||||||||||||||
| Gross | Gross | Cumulative | |||||||||||||||||
| Adjusted Cost | Unrealized Gain | Unrealized Loss | Translation Adjustment | Fair Value | |||||||||||||||
Corporate bonds | $ | 72,986 | $ | 89 | $ | (182 | ) | $ | (1,536 | ) | $ | 71,357 | ||||||||
Time deposits | 1,760 | — | — | — | 1,760 | |||||||||||||||
Short-term investments | $ | 74,746 | $ | 89 | $ | (182 | ) | $ | (1,536 | ) | $ | 73,117 |
| As of September 30, 2017 | |||||||
(In thousands) | (Unaudited) | |||||||
| Adjusted Cost | Fair Value | ||||||
Due in less than 1 year | $ | 15,838 | $ | 15,833 | ||||
Due in 1 to 5 years | 76,739 | 75,390 | ||||||
Total available-for-sale debt securities | $ | 92,577 | $ | 91,223 | ||||
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Due in less than 1 year | Adjusted Cost | Fair Value | ||||||
Corporate bonds | $ | 14,078 | $ | 14,073 | ||||
U.S. treasuries and agencies | — | — | ||||||
Time deposits | 1,760 | 1,760 | ||||||
Total available-for-sale debt securities | $ | 15,838 | $ | 15,833 | ||||
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Due in 1 to 5 years | Adjusted Cost | Fair Value | ||||||
Corporate bonds | $ | 76,739 | $ | 75,390 | ||||
Total available-for-sale debt securities | $ | 76,739 | $ | 75,390 |
| Fair Value Measurements at Reporting Date Using | |||||||||||||||
(In thousands) | (Unaudited) | |||||||||||||||
Description | September 30, 2017 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents available for sale: | ||||||||||||||||
Money Market Funds | $ | 43,982 | $ | 43,982 | $ | — | $ | — | ||||||||
U.S. treasuries and agencies | 64,064 | — | 64,064 | — | ||||||||||||
Short-term investments available for sale: | ||||||||||||||||
Corporate bonds | 89,463 | — | 89,463 | — | ||||||||||||
Time deposits | 1,760 | 1,760 | — | — | ||||||||||||
Derivatives | 6,574 | — | 6,574 | — | ||||||||||||
Total Assets | $ | 205,843 | $ | 45,742 | $ | 160,101 | $ | — | ||||||||
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Liabilities | ||||||||||||||||
Derivatives | $ | (11,700 | ) | $ | — | $ | (11,700 | ) | ||||||||
Total Liabilities | $ | (11,700 | ) | $ | — | $ | (11,700 | ) | $ | — |
(In thousands) | Fair Value Measurements at Reporting Date Using | |||||||||||||||
Description | December 31, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents available for sale: | ||||||||||||||||
Money Market Funds | $ | 68,577 | $ | 68,577 | $ | — | $ | — | ||||||||
Short-term investments available for sale: | ||||||||||||||||
Corporate bonds | 71,357 | — | 71,357 | — | ||||||||||||
Time deposits | 1,760 | 1,760 | — | — | ||||||||||||
Derivatives | 15,113 | — | 15,113 | — | ||||||||||||
Total Assets | $ | 156,807 | $ | 70,337 | $ | 86,470 | $ | — | ||||||||
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Liabilities | ||||||||||||||||
Derivatives | $ | (8,199 | ) | $ | — | $ | (8,199 | ) | $ | — | ||||||
Total Liabilities | $ | (8,199 | ) | $ | — | $ | (8,199 | ) | $ | — |
(In thousands) | US Dollar Equivalent | |||||||
| As of September 30, 2017 | As of December 31, | ||||||
| (Unaudited) | 2016 | ||||||
Chinese yuan | $ | 27,760 | $ | 27,414 | ||||
Euro | 158,490 | 123,522 | ||||||
Japanese yen | 23,726 | 44,982 | ||||||
Hungarian forint | 48,722 | 57,077 | ||||||
Malaysian ringgit | 32,438 | 42,510 | ||||||
Total forward contracts notional amount | $ | 291,136 | $ | 295,505 |
| Asset Derivatives | |||||||||||
| September 30, 2017 | December 31, 2016 | ||||||||||
(In thousands) | (Unaudited) | |||||||||||
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| Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Derivatives designated as hedging instruments | ||||||||||||
Foreign exchange contracts - ST forwards | Prepaid expenses and other current assets | $ | 3,695 | Prepaid expenses and other current assets | $ | 9,378 | ||||||
Foreign exchange contracts - LT forwards | Other long-term assets | 2,702 | Other long-term assets | 3,866 | ||||||||
Total derivatives designated as hedging instruments | $ | 6,397 | $ | 13,244 | ||||||||
Derivatives not designated as hedging instruments | ||||||||||||
Foreign exchange contracts - ST forwards | Prepaid expenses and other current assets | $ | 177 | Prepaid expenses and other current assets | $ | 1,869 | ||||||
Total derivatives not designated as hedging instruments | $ | 177 | $ | 1,869 | ||||||||
Total derivatives | $ | 6,574 | $ | 15,113 |
| Liability Derivatives | |||||||||||
| September 30, 2017 | December 31, 2016 | ||||||||||
(In thousands) | (Unaudited) | |||||||||||
| Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||
Derivatives designated as hedging instruments | ||||||||||||
Foreign exchange contracts - ST forwards | Other current liabilities | $ | (6,695 | ) | Other current liabilities | $ | (4,672 | ) | ||||
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Foreign exchange contracts - LT forwards | Other long-term liabilities | (4,082 | ) | Other long-term liabilities | (3,352 | ) | ||||||
Total derivatives designated as hedging instruments | $ | (10,777 | ) | $ | (8,024 | ) | ||||||
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Derivatives not designated as hedging instruments | ||||||||||||
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Foreign exchange contracts - ST forwards | Other current liabilities | $ | (923 | ) | Other current liabilities | $ | (175 | ) | ||||
Total derivatives not designated as hedging instruments | $ | (923 | ) | $ | (175 | ) | ||||||
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Total derivatives | $ | (11,700 | ) | $ | (8,199 | ) |
September 30, 2017 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Derivatives in Cash Flow Hedging Relationship | Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | |||||||||||
Foreign exchange contracts - forwards and options | $ | (5,804 | ) | Net sales | $ | (1,401 | ) | Net foreign exchange gain/(loss) | $ | — | ||||||
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Foreign exchange contracts - forwards and options | 1,421 | Cost of sales | (105 | ) | Net foreign exchange gain/(loss) | — | ||||||||||
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Foreign exchange contracts - forwards and options | 1,247 | Operating expenses | (148 | ) | Net foreign exchange gain/(loss) | — | ||||||||||
Total | $ | (3,136 | ) | $ | (1,654 | ) | $ | — |
September 30, 2016 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Derivatives in Cash Flow Hedging Relationship | Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | |||||||||||
Foreign exchange contracts - forwards and options | $ | (1,156 | ) | Net sales | $ | (160 | ) | Net foreign exchange gain/(loss) | $ | — | ||||||
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Foreign exchange contracts - forwards and options | 1,412 | Cost of sales | (414 | ) | Net foreign exchange gain/(loss) | — | ||||||||||
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Foreign exchange contracts - forwards and options | 720 | Operating expenses | (389 | ) | Net foreign exchange gain/(loss) | — | ||||||||||
Total | $ | 976 | $ | (963 | ) | $ | — |
(In thousands) | ||||||||||
Derivatives not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income | Amount of Gain (Loss) Recognized in Income | Amount of Gain (Loss) Recognized in Income | |||||||
| September 30, 2017 | September 30, 2016 | ||||||||
| (Unaudited) | (Unaudited) | ||||||||
Foreign exchange contracts - forwards | Net foreign exchange gain/(loss) | $ | (887 | ) | (814 | ) | ||||
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Total | $ | (887 | ) | $ | (814 | ) |
September 30, 2017 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Derivatives in Cash Flow Hedging Relationship | Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | |||||||||||
Foreign exchange contracts - forwards and options | $ | (20,601 | ) | Net sales | $ | 1,348 | Net foreign exchange gain/(loss) | $ | — | |||||||
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Foreign exchange contracts - forwards and options | 5,901 | Cost of sales | (1,083 | ) | Net foreign exchange gain/(loss) | — | ||||||||||
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Foreign exchange contracts - forwards and options | 5,230 | Operating expenses | (1,127 | ) | Net foreign exchange gain/(loss) | — | ||||||||||
Total | (9,470 | ) | $ | (862 | ) | $ | — |
September 30, 2016 | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Derivatives in Cash Flow Hedging Relationship | Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | |||||||||||
Foreign exchange contracts - forwards and options | $ | (1,432 | ) | Net sales | $ | (1,301 | ) | Net foreign exchange gain/(loss) | $ | — | ||||||
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Foreign exchange contracts - forwards and options | 3,009 | Cost of sales | (1,367 | ) | Net foreign exchange gain/(loss) | — | ||||||||||
| ||||||||||||||||
Foreign exchange contracts - forwards and options | 2,964 | Operating expenses | (1,278 | ) | Net foreign exchange gain/(loss) | — | ||||||||||
Total | $ | 4,541 | $ | (3,946 | ) | $ | — |
(In thousands) | ||||||||||
Derivatives not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in Income | Amount of Gain (Loss) Recognized in Income | Amount of Gain (Loss) Recognized in Income | |||||||
| September 30, 2017 | September 30, 2016 | ||||||||
| (Unaudited) | (Unaudited) | ||||||||
Foreign exchange contracts - forwards | Net foreign exchange gain/(loss) | $ | (4,065 | ) | (1,005 | ) | ||||
Total | $ | (4,065 | ) | $ | (1,005 | ) |
| September 30, 2017 | December 31, | ||||||
(In thousands) | (Unaudited) | 2016 | ||||||
| ||||||||
Raw materials | $ | 93,023 | $ | 92,906 | ||||
Work-in-process | 9,095 | 9,125 | ||||||
Finished goods | 82,523 | 91,577 | ||||||
| $ | 184,641 | $ | 193,608 |
| September 30, 2017 | |||||||||||||||||||||||
(In thousands) | (Unaudited) | December 31, 2016 | ||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Capitalized software development costs | $ | 116,760 | $ | (32,701 | ) | $ | 84,059 | $ | 103,887 | $ | (39,180 | ) | $ | 64,707 | ||||||||||
Acquired technology | 95,963 | (85,573 | ) | 10,390 | 94,124 | (79,485 | ) | 14,639 | ||||||||||||||||
Patents | 32,678 | (19,424 | ) | 13,254 | 31,513 | (17,573 | ) | 13,940 | ||||||||||||||||
Other | 45,212 | (30,234 | ) | 14,978 | 42,848 | (27,471 | ) | 15,377 | ||||||||||||||||
| $ | 290,613 | $ | (167,932 | ) | $ | 122,681 | $ | 272,372 | $ | (163,709 | ) | $ | 108,663 |
| Amount | ||
| (In thousands) | ||
Balance as of December 31, 2016 | $ | 253,197 | |
Acquisitions | — | ||
Foreign currency translation impact | 11,894 | ||
Balance as of September 30, 2017 (unaudited) | $ | 265,091 |
| September 30, 2017 | |||||||||||||||
| (Unaudited) | |||||||||||||||
(In thousands) | Currency translation adjustment | Investments | Derivative instruments | Accumulated other comprehensive income/(loss) | ||||||||||||
Balance as of December 31, 2016 | $ | (37,174 | ) | $ | (669 | ) | 3,222 | $ | (34,621 | ) | ||||||
Current-period other comprehensive income (loss) | 21,890 | 187 | (10,332 | ) | 11,745 | |||||||||||
Reclassified from accumulated OCI into income | — | — | 862 | 862 | ||||||||||||
Income tax (benefit) expense | 13 | 14 | (3,360 | ) | (3,333 | ) | ||||||||||
Balance as of September 30, 2017 | $ | (15,297 | ) | $ | (496 | ) | $ | (2,888 | ) | $ | (18,681 | ) |
| September 30, 2016 | |||||||||||||||
| (Unaudited) | |||||||||||||||
(In thousands) | Currency translation adjustment | Investments | Derivative instruments | Accumulated other comprehensive income/(loss) | ||||||||||||
Balance as of December 31, 2015 | $ | (31,871 | ) | $ | (857 | ) | (5,362 | ) | $ | (38,090 | ) | |||||
Current-period other comprehensive income | 12,130 | 479 | 595 | 13,204 | ||||||||||||
Reclassified from accumulated OCI into income | — | — | 3,946 | 3,946 | ||||||||||||
Income tax expense | 2,582 | 123 | 1,537 | 4,242 | ||||||||||||
Balance as of September 30, 2016 | $ | (22,323 | ) | $ | (501 | ) | $ | (2,358 | ) | $ | (25,182 | ) |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | (Unaudited) | (Unaudited) | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales: | ||||||||||||||||
Americas | $ | 133,191 | $ | 129,710 | $ | 373,277 | $ | 354,806 | ||||||||
EMEIA | 93,277 | 92,232 | 288,565 | 278,616 | ||||||||||||
APAC | 94,453 | 84,422 | 277,793 | 266,225 | ||||||||||||
| $ | 320,921 | $ | 306,364 | $ | 939,635 | $ | 899,647 |
| Nine Months Ended September 30, | |||||||
(In thousands) | (Unaudited) | |||||||
| 2017 | 2016 | ||||||
Balance at the beginning of the period | $ | 2,686 | $ | 1,755 | ||||
Accruals for warranties issued during the period | 1,929 | 1,764 | ||||||
Accruals related to pre-existing warranties | 193 | 690 | ||||||
Settlements made (in cash or in kind) during the period | (1,983 | ) | (2,088 | ) | ||||
Balance at the end of the period | $ | 2,825 | $ | 2,121 |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
(In thousands) | (Unaudited) | (Unaudited) | ||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||
Cost of sales | $ | 79 | — | $ | 986 | — | ||||||||
Research and development | 86 | — | 1,382 | — | ||||||||||
Sales and marketing | 1,618 | — | 7,997 | — | ||||||||||
General and Administration | 207 | — | 801 | — | ||||||||||
Total restructuring and other related costs | $ | 1,990 | — | $ | 11,166 | — |
| Restructuring Liability | ||
| (in thousands) | ||
Balance as of December 31, 2016 | $ | — | |
Income statement expense | 11,166 | ||
Cash payments | (7,714 | ) | |
Balance as of September 30, 2017 | $ | 3,452 |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| (Unaudited) | (Unaudited) | ||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||
Net sales: | ||||||||||||
Americas | 41.5 | % | 42.3 | % | 39.7 | % | 39.4 | % | ||||
EMEIA | 29.1 | 30.1 | 30.7 | 31.0 | ||||||||
APAC | 29.4 | 27.6 | 29.6 | 29.6 | ||||||||
Total net sales | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||
Cost of sales | 26.1 | 25.0 | 25.8 | 25.6 | ||||||||
Gross profit | 73.9 | 75.0 | 74.2 | 74.4 | ||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 36.4 | 38.1 | 38.1 | 38.5 | ||||||||
Research and development | 17.6 | 19.3 | 18.3 | 19.8 | ||||||||
General and administrative | 8.2 | 8.0 | 8.3 | 8.3 | ||||||||
Total operating expenses | 62.2 | 65.4 | 64.7 | 66.6 | ||||||||
Operating income | 11.7 | 9.6 | 9.4 | 7.8 | ||||||||
Other income (expense): | ||||||||||||
Interest income | 0.2 | 0.1 | 0.2 | 0.1 | ||||||||
Net foreign exchange loss | 0.3 | (0.2 | ) | 0.2 | (0.2 | ) | ||||||
Other income, net | (0.4 | ) | 0.1 | (0.1 | ) | (0.2 | ) | |||||
Income before income taxes | 11.8 | 9.6 | 9.7 | 7.5 | ||||||||
Provision for income taxes | 1.5 | 1.5 | 1.5 | 1.5 | ||||||||
Net income | 10.4 | % | 8.0 | % | 8.2 | % | 6.0 | % |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||
(In millions) | 2017 | 2016 | Dollars | Percentage | 2017 | 2016 | Dollars | Percentage | ||||||||||||||||
| ||||||||||||||||||||||||
Product sales | $ | 291.9 | $ | 278.5 | 13.4 | 5% | $ | 853.2 | $ | 816.5 | 36.7 | 4% | ||||||||||||
Software maintenance sales | 29.0 | 27.8 | 1.2 | 4% | 86.4 | 83.2 | 3.2 | 4% | ||||||||||||||||
Total net sales | $ | 320.9 | $ | 306.4 | 14.5 | 5% | $ | 939.6 | $ | 899.6 | 40.0 | 4% |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Change | Change | ||||||||||||||||||||||
(In millions) | 2017 | 2016 | Dollars | Percentage | 2017 | 2016 | Dollars | Percentage | ||||||||||||||||
| ||||||||||||||||||||||||
Americas | $ | 133.2 | $ | 129.7 | 3.5 | 3% | $ | 373.3 | $ | 354.8 | 18.5 | 5% | ||||||||||||
Percentage of total net sales | 41.5 | % | 42.3 | % | 39.7 | % | 39.4 | % | ||||||||||||||||
| ||||||||||||||||||||||||
EMEIA | 93.3 | $ | 92.2 | 1.1 | 1% | 288.6 | 278.6 | 10.0 | 4% | |||||||||||||||
Percentage of total net sales | 29.1 | % | 30.1 | % | 30.7 | % | 31.0 | % | ||||||||||||||||
| ||||||||||||||||||||||||
APAC | $ | 94.5 | $ | 84.4 | 10.1 | 12% | 277.8 | 266.2 | 11.6 | 4% | ||||||||||||||
Percentage of total net sales | 29.4 | % | 27.6 | % | 29.6 | % | 29.6 | % |
| Three Months ended September 30, 2016 | Change in Constant Dollars | Impact of changes in foreign currency exchange rates on net sales | Three Months ended September 30, 2017 | |||||||||||||
(In millions) | GAAP Net Sales | Dollars | Percentage | Dollars | Percentage | GAAP Net Sales | |||||||||||
| |||||||||||||||||
Americas | $ | 129.7 | 3.2 | 2.5% | 0.3 | 0.2% | 133.2 | ||||||||||
EMEIA | $ | 92.2 | 1.3 | 1.4% | (0.2 | ) | (0.2)% | 93.3 | |||||||||
APAC | $ | 84.4 | 10.2 | 12.1% | (0.2 | ) | (0.2)% | 94.5 | |||||||||
Total net sales | $ | 306.3 | 14.7 | 4.8% | (0.1 | ) | (0.1)% | 320.9 | |||||||||
| |||||||||||||||||
| |||||||||||||||||
| Nine Months ended September 30, 2016 | Change in Constant Dollars | Impact of changes in foreign currency exchange rates on net sales | Nine Months ended September 30, 2017 | |||||||||||||
(In millions) | GAAP Net Sales | Dollars | Percentage | Dollars | Percentage | GAAP Net Sales | |||||||||||
| |||||||||||||||||
Americas | $ | 354.8 | 18.0 | 5.1% | 0.4 | —% | 373.3 | ||||||||||
EMEIA | $ | 278.6 | 14.9 | 5.3% | (5.0 | ) | (1.8)% | 288.6 | |||||||||
APAC | $ | 266.2 | 12.8 | 4.8% | (1.2 | ) | (0.5)% | 277.8 | |||||||||
Total net sales | $ | 899.6 | 45.7 | 5.1% | (5.8 | ) | (0.6)% | 939.6 |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
| (Unaudited) | (Unaudited) | ||||||
| ||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | ||||
| ||||||||
Gross Profit | $237.2 | $229.6 | $696.9 | $669.3 | ||||
% change compared with prior period | 3.3% | 4.1% | ||||||
Gross Profit as a percentage of net sales | 73.9% | 75.0% | 74.2% | 74.4% |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||
(In thousands) | 2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||
| ||||||||||||||||||||
Sales and marketing | $ | 116,661 | $ | 116,662 | —% | $ | 358,335 | $ | 346,230 | 3% | ||||||||||
Percentage of total net sales | 36 | % | 38 | % | 38 | % | 38 | % | ||||||||||||
| ||||||||||||||||||||
Research and development | $ | 56,526 | 59,066 | (4)% | 171,701 | 178,244 | (4)% | |||||||||||||
Percentage of total net sales | 18 | % | 19 | % | 18 | % | 20 | % | ||||||||||||
| ||||||||||||||||||||
General and Administrative | $ | 26,468 | 24,537 | 8% | 78,400 | 74,308 | 6% | |||||||||||||
Percentage of total net sales | 8 | % | 8 | % | 8 | % | 8 | % | ||||||||||||
| ||||||||||||||||||||
Total operating expenses | $ | 199,655 | 200,265 | (0.3)% | 608,436 | 598,782 | 2% | |||||||||||||
Percentage of total net sales | 62 | % | 65 | % | 65 | % | 67 | % |
| Three Months Ended | Nine months Ended | ||||
| September 30, 2017 | September 30, 2017 | ||||
| (Unaudited) | (Unaudited) | ||||
Effective tax rate at September 30, 2016 | 16 | % | 21 | % | ||
Change in profit in foreign jurisdictions with reduced tax rates | (6 | )% | (5 | )% | ||
Change in enhanced deduction for certain research and development expenses | 5 | % | 5 | % | ||
Change in intercompany prepaid tax asset | (4 | )% | (4 | )% | ||
Change in unrecognized tax benefits | 1 | % | — | % | ||
Change in tax benefit from equity awards | — | % | (2 | )% | ||
Effective tax rate at September 30, 2017 | 12 | % | 15 | % |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | (Unaudited) | (Unaudited) | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
Stock-based compensation | ||||||||||||||||
Cost of sales | $ | 689 | $ | 556 | $ | 1,914 | $ | 1,643 | ||||||||
Sales and marketing | 3,014 | 2,635 | 8,523 | 8,422 | ||||||||||||
Research and development | 2,328 | 2,027 | 6,552 | 6,745 | ||||||||||||
General and administrative | 1,514 | 921 | 4,358 | 2,764 | ||||||||||||
Provision for income taxes | (2,369 | ) | (2,092 | ) | (7,388 | ) | (6,202 | ) | ||||||||
Total | $ | 5,176 | $ | 4,047 | $ | 13,959 | $ | 13,372 |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | (Unaudited) | (Unaudited) | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
Amortization of acquired intangibles | ||||||||||||||||
Cost of sales | $ | 1,502 | $ | 1,599 | $ | 4,648 | $ | 7,621 | ||||||||
Sales and marketing | 515 | 502 | 1,479 | 2,141 | ||||||||||||
Research and development | 283 | 276 | 813 | 815 | ||||||||||||
Provision for income taxes | (546 | ) | 854 | (1,656 | ) | 1,312 | ||||||||||
Total | $ | 1,754 | $ | 3,231 | $ | 5,284 | $ | 11,889 |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(In thousands) | (Unaudited) | (Unaudited) | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
Acquisition transaction costs, restructuring charges, and other | ||||||||||||||||
Cost of sales | $ | 79 | $ | 74 | $ | 988 | $ | 253 | ||||||||
Sales and marketing | 1,618 | 42 | 8,018 | 141 | ||||||||||||
Research and development | 235 | 236 | 1,816 | 648 | ||||||||||||
General and administrative | 207 | 97 | 803 | 317 | ||||||||||||
Foreign exchange gain (loss)1 | — | — | — | 94 | ||||||||||||
Other income (loss), net2 | — | — | — | 2,475 | ||||||||||||
Provision for income taxes | (720 | ) | (156 | ) | (3,655 | ) | (1,358 | ) | ||||||||
Total | $ | 1,419 | $ | 293 | $ | 7,970 | $ | 2,570 | ||||||||
(1) Foreign exchange losses on acquisitions were $0 and $94 for the nine month periods ended September 30, 2017 and 2016, respectively | ||||||||||||||||
(2) Taxes levied on the transfer of acquired intellectual property were $0 and $2,475 for the nine months ended September 30, 2017 and 2016, respectively |
Domestic | International | Total | |
Cash and Cash Equivalents | $61 | $233 | $294 |
21% | 79% | ||
Short-term Investments | $— | $91 | $91 |
— | 100% | ||
Cash, Cash Equivalents and Short-term Investments | $61 | $324 | $385 |
16% | 84% |
| September 30, 2017 | December 31, | Increase/ | |||||||||
(In thousands) | (unaudited) | 2016 | (Decrease) | |||||||||
| ||||||||||||
Working capital | $ | 590,150 | $ | 574,572 | $ | 15,578 | ||||||
Cash and cash equivalents (1) | 294,194 | 285,283 | 8,911 | |||||||||
Short-term investments (1) | 91,223 | 73,117 | 18,106 | |||||||||
Total cash, cash equivalents and short-term investments | $ | 385,417 | $ | 358,400 | $ | 27,017 | ||||||
| ||||||||||||
(1) Included in working capital |
| ||||||||
| Nine Months Ended September 30, | |||||||
(In thousands) | (unaudited) | |||||||
| 2017 | 2016 | ||||||
Cash provided by operating activities | $ | 147,456 | $ | 150,016 | ||||
Cash used in investing activities | (77,132 | ) | (31,462 | ) | ||||
Cash used in financing activities | (69,181 | ) | (72,534 | ) | ||||
Effect of exchange rate changes on cash | 7,768 | 3,503 | ||||||
Net change in cash and cash equivalents | 8,911 | 49,523 | ||||||
Cash and cash equivalents at beginning of year | 285,283 | 251,129 | ||||||
Cash and cash equivalents at end of period | $ | 294,194 | $ | 300,652 |
• | payment of dividends to our stockholders; |
• | difficulties and the high tax costs associated with the repatriation of earnings; |
• | required levels of research and development and other operating costs; |
• | our business, product, capital expenditure and research and development plans, and product and technology roadmaps; |
• | acquisitions of other businesses, assets, products or technologies; |
• | the overall levels of sales of our products and gross profit margins; |
• | the levels of inventory and accounts receivable that we maintain; |
• | general economic and political uncertainty and specific conditions in the markets we address, including any volatility in the industrial economy in the various geographic regions in which we do business; |
• | the inability of certain of our customers who depend on credit to have access to their traditional sources of credit to finance the purchase of products from us, which may lead them to reduce their level of purchases or to seek credit or other accommodations from us; |
• | capital improvements for facilities; |
• | repurchases of our common stock; |
• | our relationships with suppliers and customers; and |
• | the level of stock purchases under our employee stock purchase plan. |
• | continued foreign currency fluctuations; |
• | less than expected capacity utilization of our manufacturing facility in Penang, Malaysia; |
• | increased manufacturing costs resulting from component supply shortages or component price fluctuations; |
• | additional marketing costs for new product introductions or for conferences and tradeshows; |
• | the timing, cost or outcome of any future intellectual property litigation or commercial disputes; |
• | additional unanticipated costs related to our acquisitions; or |
• | increased component costs resulting from vendors increasing their sales price. |
• | fluctuations in foreign currencies relative to the U.S. dollar; |
• | unexpected changes to currency policy or currency restrictions in foreign jurisdictions; |
• | delays in collecting trade receivable balances from customers in developing economies; |
• | unexpected changes in regulatory requirements; |
• | difficulties and the high tax costs associated with the repatriation of earnings; |
• | fluctuations in local economies; |
• | disparate and changing employment laws in foreign jurisdictions; |
• | difficulties in staffing and managing foreign operations; |
• | costs and risks of localizing products for foreign countries; |
• | unexpected changes in regulatory requirements; |
• | government actions throughout the world; |
• | tariffs and other trade barriers; and, |
• | the burdens of complying with a wide variety of foreign laws. |
• | general market and economic conditions; |
• | our ability to maintain and grow our business with our current largest customer; |
• | our ability to meet the volume and service requirements of our large customers; |
• | success in developing and selling new products; |
• | industry consolidation, including acquisitions by us or our competitors; |
• | capacity utilization and the efficiency of manufacturing operations; |
• | timing of our new product introductions; |
• | new product introductions by competitors; |
• | the ability of competitors to more fully leverage low cost geographies for manufacturing or distribution; |
• | product pricing, including the impact of currency exchange rates; |
• | effectiveness of sales and marketing resources and strategies; |
• | adequate manufacturing capacity and supply of components and materials; |
• | strategic relationships with our suppliers; |
• | product quality and performance; |
• | protection of our products by effective use of intellectual property laws; |
• | the financial strength of our competitors; |
• | the outcome of any future litigation or commercial dispute; |
• | barriers to entry imposed by competitors with significant market power in new markets; and, |
• | government actions throughout the world. |
• | fluctuations in foreign currency exchange rates; |
• | changes in global economic conditions; |
• | changes in the amount of revenue derived from very large orders (including orders from our largest customer) and the pricing, margins, and other terms of such orders; |
• | changes in the capacity utilization including at our facility in Malaysia; |
• | changes in the mix of products sold; |
• | the availability and pricing of components from third parties (especially limited sources); |
• | the difficulty in maintaining margins, including the higher margins traditionally achieved in international sales; |
• | changes in pricing policies by us, our competitors or suppliers; |
• | the timing, cost or outcome of any future intellectual property litigation or commercial disputes; |
• | delays in product shipments caused by human error or other factors; or, |
• | disruptions in transportation channels. |
• | the volatility of the Hungarian forint and the Malaysian ringgit relative to the U.S. dollar; |
• | changing and potentially unstable political environments; |
• | significant and frequent changes in corporate tax laws; |
• | difficulty in managing manufacturing operations in foreign countries; |
• | challenges in expanding capacity to meet increased demand; |
• | difficulty in achieving or maintaining product quality; |
• | interruption to transportation flows for delivery of components to us and finished goods to our customers; |
• | restrictive labor codes; and, |
• | increasing labor costs. |
• | burdens of complying with additional or more complex VAT and customs regulations; and, |
• | concentration of inventory increasing the risks associated with fire, natural disasters and logistics disruptions to customer order fulfillment. |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs | |||||||||
| |||||||||||||
July 1, 2017 to July 31, 2017 | — | — | — | 1,134,247 | |||||||||
| |||||||||||||
August 1, 2017 to August 31, 2017 | — | — | — | 1,134,247 | |||||||||
| |||||||||||||
September 1, 2017 to September 30, 2017 | — | — | — | 1,134,247 | |||||||||
Total | — | $ | — | — | 1,134,247 |
ITEM 6 | EXHIBITS |
4.1(4) | Specimen of Common Stock certificate of the Company. |
10.1(4) | Form of Indemnification Agreement. |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
(1) | Incorporated by reference to the same-numbered exhibit filed with the Company’s Form 10-K for the fiscal year ended December 31, 2013. |
(2) | Incorporated by reference to the same-numbered exhibit filed with the Company’s Form 10-K for the fiscal year ended December 31, 2007 (File No. 000-25426). |
(3) | Incorporated by reference to the same-numbered exhibit filed with the Company’s Form 8-A on April 27, 2004 (File No. 000-25426). |
(4) | Incorporated by reference to the Company’s Form S-1 (Reg. No. 33-88386) declared effective March 13, 1995. |
(5) | Incorporated by reference to exhibit B of the Company’s Proxy Statement filed on March 30, 2017. |
(6) | Incorporated by reference to the same-numbered exhibit filed with the Company’s Form 10-K for the fiscal year ended December 31, 2016. |
(7) | Incorporated by reference to exhibit A of the Company’s Proxy Statement filed on April 4, 2005 (File No. 000-25426). |
(8) | Incorporated by reference to exhibit 10.8 filed with the Company’s Form 10-Q on August 2, 2006 (File No. 000-25426). |
(9) | Incorporated by reference to exhibit 10.9 filed with the Company’s Form 10-Q on August 2, 2006 (File No. 000-25426). |
(10) | Incorporated by reference to exhibit 10.10 filed with the Company’s Form 10-Q on August 2, 2006 (File No. 000-25426). |
(11) | Incorporated by reference to exhibit 10.11 filed with the Company’s Form 10-Q on August 2, 2006 (File No. 000-25426). |
(12) | Incorporated by reference to exhibit 10.1 filed with the Company’s Form 8-K filed on May 17, 2010 (File No. 000-25426). |
(13) | Incorporated by reference to exhibit 10.2 filed with the Company’s Form 8-K filed on June 24, 2010 (File No. 000-25426). |
(14) | Incorporated by reference to exhibit 10.3 filed with the Company’s Form 8-K filed on June 24, 2010 (File No. 000-25426). |
(15) | Incorporated by reference to exhibit 10.4 filed with the Company’s Form 8-K filed on June 24, 2010 (File No. 000-25426). |
(16) | Incorporated by reference to exhibit 10.5 filed with the Company’s Form 8-K filed on June 24, 2010 (File No. 000-25426). |
(17) | Incorporated by reference to exhibit 10.1 filed with the Company’s Form 8-K filed on April 25, 2014. |
(18) | Incorporated by reference to exhibit 10.16 filed with the Company’s Form 10-K for the fiscal year ended December 31, 2014. |
(19) | Incorporated by reference to exhibit 10.1 filed with the Company’s Form 8-K filed on May 13, 2013. |
(20) | Incorporated by reference to exhibit B of the Company’s Proxy Statement filed on April 1, 2015. |
(21) | Incorporated by reference to exhibit 10.18 filed with the Company’s Form 10-Q filed on July 31, 2015. |
(22) | Incorporated by reference to exhibit 10.19 filed with the Company’s Form 10-Q filed on July 31, 2015. |
(23) | Incorporated by reference to exhibit 10.20 filed with the Company’s Form 10-Q filed on July 31, 2015. |
(24) | Incorporated by reference to exhibit 10.21 filed with the Company’s Form 10-Q filed on July 31, 2015. |
(25) | Incorporated by reference to exhibit 10.22 filed with the Company’s Form 10-Q filed on July 31, 2015. |
(26) | Incorporated by reference to exhibit 10.1 filed with the Company’s Form 8-K filed on December 16, 2016. |
(27) | Incorporated by reference to exhibit C of the Company’s Proxy Statement filed on April 1, 2015. |
(28) | Incorporated by reference to exhibit 10.1 filed with the Company’s Form 8-K filed on October 30, 2015. |
(29) | Incorporated by reference to exhibit 10.25 filed with the Company’s Form 10-Q filed on May 2, 2016. |
(30) | Incorporated by reference to exhibit 10.26 filed with the Company’s Form 10-Q filed on May 2, 2016. |
(31) | Incorporated by reference to exhibit 10.27 filed with the Company’s Form 10-Q filed on October 31, 2016. |
(32) | Incorporated by reference to exhibit 10.29 filed with the Company’s Form 10-Q filed on May 1, 2017. |
* | Management Contract or Compensatory Plan or Arrangement |
† | Confidential treatment has been granted for portions of this exhibit. These portions have been omitted and submitted separately with the Securities and Exchange Commission. |
NATIONAL INSTRUMENTS CORPORATION |
By: /s/ Karen Rapp |
Karen Rapp |
EVP, Chief Financial Officer |
(Principal Financial Officer) |
1. | I have reviewed this report on Form 10-Q of National Instruments Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ Alex M. Davern |
| Alex M. Davern |
| Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of National Instruments Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ Karen Rapp |
| Karen Rapp |
| Chief Financial Officer |
By: /s/ Alex M. Davern |
Alex M. Davern |
Chief Executive Officer |
Date: October 31, 2017 |
By: /s/ Karen Rapp |
Karen Rapp |
Chief Financial Officer |
Date: October 31, 2017 |
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Document And Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 24, 2017 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NATIONAL INSTRUMENTS CORP /DE/ | |
Entity Central Index Key | 0000935494 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 130,745,022 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value per share (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value per share (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 360,000,000 | 360,000,000 |
Common stock, issued (in shares) | 130,745,022 | 129,202,979 |
Common stock, outstanding (in shares) | 130,745,022 | 129,202,979 |
Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Net sales: | ||||
Product | $ 291,891 | $ 278,521 | $ 853,219 | $ 816,486 |
Software maintenance | 29,030 | 27,843 | 86,416 | 83,161 |
Total net sales | 320,921 | 306,364 | 939,635 | 899,647 |
Cost of sales: | ||||
Product | 81,641 | 74,734 | 235,989 | 225,261 |
Software maintenance | 2,110 | 1,998 | 6,744 | 5,126 |
Total cost of sales | 83,751 | 76,732 | 242,733 | 230,387 |
Gross profit | 237,170 | 229,632 | 696,902 | 669,260 |
Operating expenses: | ||||
Sales and marketing | 116,661 | 116,662 | 358,335 | 346,230 |
Research and development | 56,526 | 59,066 | 171,701 | 178,244 |
General and administrative | 26,468 | 24,537 | 78,400 | 74,308 |
Total operating expenses | 199,655 | 200,265 | 608,436 | 598,782 |
Operating income | 37,515 | 29,367 | 88,466 | 70,478 |
Other income: | ||||
Interest income | 657 | 276 | 1,509 | 787 |
Net foreign exchange gain (loss) | 1,096 | (760) | 1,624 | (1,471) |
Other (loss) gain, net | (1,153) | 301 | (957) | (2,052) |
Income before income taxes | 38,115 | 29,184 | 90,642 | 67,742 |
Provision for income taxes | 4,726 | 4,695 | 13,949 | 14,155 |
Net income | $ 33,389 | $ 24,489 | $ 76,693 | $ 53,587 |
Basic earnings per share (in dollars per share) | $ 0.26 | $ 0.19 | $ 0.59 | $ 0.42 |
Weighted average shares outstanding - basic | 130,660 | 128,815 | 130,103 | 128,233 |
Diluted earnings per share (in dollars per share) | $ 0.25 | $ 0.19 | $ 0.59 | $ 0.42 |
Weighted average shares outstanding - diluted | 131,617 | 129,047 | 131,050 | 128,738 |
Dividends declared per share (in dollars per share) | $ 0.21 | $ 0.20 | $ 0.63 | $ 0.60 |
Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 33,389 | $ 24,489 | $ 76,693 | $ 53,587 |
Other comprehensive income, before tax and net of reclassification adjustments: | ||||
Foreign currency translation adjustment | 6,226 | 3,964 | 21,890 | 12,130 |
Unrealized gain (loss) on securities available-for-sale | 162 | (70) | 187 | 479 |
Unrealized (loss) gain on derivative instruments | (3,136) | 976 | (9,470) | 4,541 |
Other comprehensive gain, before tax | 3,252 | 4,870 | 12,607 | 17,150 |
Tax (benefit) expense related to items of other comprehensive income | (1,186) | 967 | (3,333) | 4,242 |
Other comprehensive gain, net of tax | 4,438 | 3,903 | 15,940 | 12,908 |
Comprehensive income | $ 37,827 | $ 28,392 | $ 92,633 | $ 66,495 |
Basis of presentation |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Basis of presentation The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2016, included in our annual report on Form 10-K, filed with the Securities and Exchange Commission. In our opinion, the accompanying consolidated financial statements reflect all adjustments (consisting only of normal recurring items) considered necessary to present fairly our financial position at September 30, 2017 and December 31, 2016, the results of our operations and comprehensive income for the three and nine months ended September 30, 2017 and 2016, and the cash flows for the nine months ended September 30, 2017 and 2016. Our operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States. Starting January 1, 2017, we began separately presenting the effect of exchange rate changes on cash and cash equivalents in our condensed consolidated statements of cash flows due to growing operations in foreign currency environments. Amounts in the comparable prior period have been reclassified to conform to the current period presentation. The reclassifications resulted in the disaggregation of the amount attributable to the “Effect of exchange rate changes on cash” of $3.5 million, with a corresponding decrease to “Net cash provided by operating activities” for the nine months ended September 30, 2016. We believe the reclassification is immaterial to the consolidated financial statements. Recently Adopted Accounting Pronouncements In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16, Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory. The standard is intended to address diversity in practice and complexity in financial reporting, particularly for intra-entity transfers of intellectual property. We early adopted ASU 2016-16 effective January 1, 2017. Using the modified retrospective method, the impact of the adoption of the standard was to increase deferred tax assets by $0.4 million, decrease other assets, net by $6.2 million and decrease retained earnings by $5.8 million. The adoption of the amendments had the effect of increasing our diluted earnings per share by $0.01 and $0.03 for the three and nine months ended September 30, 2017, respectively. Recently Issued Accounting Pronouncements In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The ASU simplifies certain aspects of hedge accounting and improves disclosures of hedging arrangements through the elimination of the requirement to separately measure and report hedge ineffectiveness. The ASU generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item in order to align financial reporting of hedge relationships with economic results. Entities must apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements must be applied prospectively. Our effective date for adoption of this guidance is our fiscal year beginning January 1, 2019. We are currently evaluating the effect that this guidance will have on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases. The guidance requires lessees to recognize most lease liabilities on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The update is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. Based on our initial assessment, we expect that the adoption of this standard will have a material impact on our balance sheet but that it will not have a material impact on our ongoing results of operations. We do not expect to adopt the new standard prior to the required effective date. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The update is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. We intend to adopt this standard as of January 1, 2018 by applying the modified retrospective transition method. Consequently, the cumulative effect of applying the new standard to existing contracts as of January 1, 2018 will be recognized as an adjustment to the opening balance of equity in the first quarter of 2018. We have reached initial conclusions on our key accounting matters related to the new standard and believe adoption of the new standard will generally result in revenue recognition earlier or at the same time as existing US GAAP. The most significant impact of the standard relates to our accounting for certain software arrangements. We primarily license software on a perpetual basis. However, we also license software under enterprise agreements which includes an unlimited quantity of certain software licenses for a fixed-term bundled with software maintenance, technical support, and a specified amount of training and service credits. Currently, we defer revenue for software licensed under our enterprise agreements and certain perpetual arrangements due to a lack of vendor specific objective evidence (“VSOE”) for certain elements in the contract. Under the new standard, we are no longer required to establish VSOE to recognize software license revenue separately from the other elements, and we will be able to recognize software license revenue once the customer obtains control of the license, which will generally occur at the start of each license term. Due to the complexity of our enterprise agreement contracts, the actual revenue recognition treatment required under the new standard will be dependent on contract-specific terms, and may vary in some instances from recognition at the time of billing. Additionally, we expect the new standard will impact the way we allocate the transaction price for arrangements with separately-priced extended warranty offerings. ASU 2014-09, as amended, could have a material impact on our consolidated financial statements and disclosures. While we are still evaluating the matter we believe the impact of the change to the timing of revenue recognition for our limited offerings mentioned above may have a material impact on our deferred revenue balance on the adoption date under the application of the modified retrospective transition method. However, it is not expected to have a material impact to our results of operations in subsequent annual periods. |
Earnings per share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | Earnings per share Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted EPS is computed by dividing net income by the weighted average number of common shares and common share equivalents outstanding (if dilutive) during each period. The number of common share equivalents, which includes restricted stock units (“RSUs”), is computed using the treasury stock method. The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three and nine months ended September 30, 2017 and 2016, are as follows:
Stock awards to acquire 40,700 shares and 1,068,800 shares for the three months ended September 30, 2017 and 2016, respectively, and 22,300 shares and 58,000 shares for the nine months ended September 30, 2017 and 2016, respectively, were excluded in the computations of diluted EPS because the effect of including the stock awards would have been anti-dilutive. |
Short-term investments |
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Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments | Short-term investments The following tables summarize unrealized gains and losses related to our short-term investments designated as available-for-sale:
The following tables summarize the contractual maturities of our short-term investments designated as available-for-sale:
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Fair value measurements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Fair value measurements We define fair value to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market that market participants may use when pricing the asset or liability. We follow a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value measurement is determined based on the lowest level input that is significant to the fair value measurement. The three values of the fair value hierarchy are the following: Level 1 – Quoted prices in active markets for identical assets or liabilities Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 – Inputs that are not based on observable market data Assets and liabilities measured at fair value on a recurring basis are summarized below:
We value our available-for-sale short-term investments based on pricing from third party pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. We classify all of our fixed income available-for-sale securities as having Level 2 inputs. The valuation techniques used to measure the fair value of our financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques. We believe all of these sources reflect the credit risk associated with each of our available-for-sale short-term investments. Short-term investments available-for-sale consists of debt securities issued by states of the U.S. and political subdivisions of the U.S., corporate debt securities and debt securities issued by U.S. government organizations and agencies. All of our short-term investments available-for-sale have contractual maturities of less than 60 months. Derivatives include foreign currency forward and option contracts. Our foreign currency forward contracts are valued using an income approach (Level 2) based on the spot rate less the contract rate multiplied by the notional amount. Our foreign currency option contracts are valued using a market approach based on the quoted market prices which are derived from observable inputs including current and future spot rates, interest rate spreads as well as quoted market prices of similar instruments. We consider counterparty credit risk in the valuation of our derivatives. However, counterparty credit risk did not impact the valuation of our derivatives during the nine months ended September 30, 2017. There were no transfers in or out of Level 1 or Level 2 during the nine months ended September 30, 2017. As of September 30, 2017, our short-term investments did not include sovereign debt from any country other than the United States. We did not have any items that were measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016. The carrying value of net accounts receivable, accounts payable, and long-term debt contained in the consolidated balance sheets approximates fair value. |
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 We recognize all of our derivative instruments as either assets or liabilities in our statement of financial position at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, we designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. We have operations in over 50 countries. Sales outside of the Americas accounted for approximately 58% and 58% of our net sales during the three months ended September 30, 2017 and 2016, respectively, and approximately 60% and 61% of our net sales during the nine months ended September 30, 2017 and 2016, respectively. Our activities expose us to a variety of market risks, including the effects of changes in foreign currency exchange rates. These financial risks are monitored and managed by us as an integral part of our overall risk management program. We maintain a foreign currency risk management strategy that uses derivative instruments (foreign currency forward and purchased option contracts) to help protect our earnings and cash flows from fluctuations caused by the volatility in currency exchange rates. Movements in foreign currency exchange rates pose a risk to our operations and competitive position, in that exchange rate changes may affect our profitability and cash flow, and the business or pricing strategies of our non-U.S. based competitors. The vast majority of our foreign sales are denominated in the customers’ local currency. We purchase foreign currency forward and option contracts as hedges of forecasted sales that are denominated in foreign currencies and as hedges of foreign currency denominated financial assets or liabilities. These contracts are entered into to help protect against the risk that the eventual dollar-net-cash inflows resulting from such sales or firm commitments will be adversely affected by changes in exchange rates. We also purchase foreign currency forward contracts as hedges of forecasted expenses that are denominated in foreign currencies. These contracts are entered into to help protect against the risk that the eventual dollar-net-cash outflows resulting from foreign currency operating and cost of sales expenses will be adversely affected by changes in exchange rates. We designate foreign currency forward and purchased option contracts as cash flow hedges of forecasted net sales or forecasted expenses. In addition, we hedge our foreign currency denominated balance sheet exposures using foreign currency forward contracts that are not designated as hedging instruments. None of our derivative instruments contain a credit-risk-related contingent feature. Cash flow hedges To help protect against the reduction in value caused by a fluctuation in foreign currency exchange rates of forecasted foreign currency cash flows resulting from international sales over the next one to three years, we have instituted a foreign currency cash flow hedging program. We hedge portions of our forecasted net sales and forecasted expenses denominated in foreign currencies with forward and purchased option contracts. For forward contracts, when the dollar strengthens significantly against the foreign currencies, the change in the present value of future foreign currency cash flows may be offset by the change in the fair value of the forward contracts designated as hedges. For option contracts, when the dollar strengthens significantly against the foreign currencies, the change in the present value of future foreign currency cash flows may be offset by the change in the fair value of the option contracts net of the premium paid designated as hedges. Our foreign currency purchased option contracts are purchased “at-the-money” or “out-of-the-money.” We purchase foreign currency forward and option contracts for up to 100% of our forecasted exposures in selected currencies (primarily in Euro, Japanese yen, Hungarian forint, British pound, Malaysian ringgit and Chinese yuan) and limit the duration of these contracts to 36 months or less. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (“OCI”) and reclassified into earnings in the same line item (net sales, operating expenses, or cost of sales) associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings or expenses during the current period and are classified as a component of “net foreign exchange gain (loss).” Hedge effectiveness of foreign currency forwards and purchased option contracts designated as cash flow hedges are measured by comparing the hedging instrument’s cumulative change in fair value from inception to maturity to the forecasted transaction’s terminal value. We held forward contracts designated as cash flow hedges with the following notional amounts:
The contracts in the foregoing table had contractual maturities of 36 months or less at September 30, 2017 and December 31, 2016. At September 30, 2017, we expect to reclassify $4.1 million of losses on derivative instruments from accumulated OCI to net sales during the next twelve months when the hedged international sales occur, $0.6 million of gains on derivative instruments from accumulated OCI to cost of sales during the next twelve months when the cost of sales are incurred and $0.5 million of gains on derivative instruments from accumulated OCI to operating expenses during the next twelve months when the hedged operating expenses occur. Expected amounts are based on derivative valuations at September 30, 2017. Actual results may vary materially as a result of changes in the corresponding exchange rates subsequent to this date. The gains and losses recognized in earnings due to hedge ineffectiveness were not material for each of the nine months ended September 30, 2017 and 2016 and are included as a component of net income under the line item “net foreign exchange gain (loss).” Other Derivatives Other derivatives not designated as hedging instruments consist primarily of foreign currency forward contracts that we use to hedge our foreign denominated net receivable or net payable positions to help protect against the change in value caused by a fluctuation in foreign currency exchange rates. We typically attempt to hedge up to 90% of our outstanding foreign denominated net receivables or net payables and typically limit the duration of these foreign currency forward contracts to approximately 90 days or less. The gain or loss on the derivatives as well as the offsetting gain or loss on the hedge item attributable to the hedged risk is recognized in current earnings under the line item “net foreign exchange gain (loss).” As of September 30, 2017 and December 31, 2016, we held foreign currency forward contracts that were not designated as hedging instruments with a notional amount of $59 million and $60 million, respectively. The following tables present the fair value of derivative instruments on our Consolidated Balance Sheets at September 30, 2017 and December 31, 2016, respectively.
The following tables present the effect of derivative instruments on our Consolidated Statements of Income for three month periods ended September 30, 2017 and 2016, respectively:
The following tables present the effect of derivative instruments on our Consolidated Statements of Income for the nine months ended September 30, 2017 and 2016, respectively:
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Inventories, net |
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories, net | Inventories, net Inventories, net consist of the following:
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Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets, net | Intangible assets, net Intangible assets at September 30, 2017 and December 31, 2016 are as follows:
Software development costs capitalized for the three month periods ended September 30, 2017 and 2016 were $10.1 million and $9.1 million, respectively, and related amortization expense was $5.7 million and $4.9 million, respectively. For the nine months ended September 30, 2017 and 2016, capitalized software development costs were $35.8 million and $25.0 million, respectively, and related amortization expense was $16.5 million and $14.0 million, respectively. Capitalized software development costs for the three month periods ended September 30, 2017 and 2016 included costs related to stock based compensation of $487,000 and $445,000, respectively. For the nine months ended September 30, 2017 and 2016, capitalized software development costs included costs related to stock based compensation of $1.4 million and $1.0 million, respectively. The related amounts in the table above are net of fully amortized assets. Amortization of capitalized software development costs is computed on an individual product basis for those products available for market and is recognized based on the product’s estimated economic life, generally three to six years. Acquired technology and other intangible assets are amortized over their useful lives, which range from three to eight years. Patents are amortized using the straight-line method over their estimated period of benefit, generally 10 to 17 years. Total intangible assets amortization expenses were $8.7 million and $8 million for the three month periods ended September 30, 2017 and 2016, respectively, and $25.7 million and $27 million for the nine months ended September 30, 2017 and 2016, respectively. |
Goodwill |
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Goodwill [Abstract] | |||||||||||||||||||||||||||||||||
Goodwill | Goodwill The carrying amount of goodwill as of September 30, 2017, was as follows:
The excess purchase price over the fair value of assets acquired is recorded as goodwill. As we have one operating segment comprised of components with similar economic characteristics, we allocate goodwill to one reporting unit for goodwill impairment testing. Goodwill is tested for impairment on an annual basis, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach based on the market capitalization of the reporting unit. Our annual impairment test was performed as of February 28, 2017. No impairment of goodwill was identified during 2017 or 2016. |
Income taxes |
9 Months Ended |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are established when necessary to reduce deferred tax assets to amounts which are more likely than not to be realized. We had a valuation allowance of $62 million at September 30, 2017 and December 31, 2016, and $102 million at December 31, 2015. A majority of the valuation allowance is related to the deferred tax assets of National Instruments Hungary Kft. (“NI Hungary”). The decrease in the valuation allowance from 2015 to 2016 was primarily due to the revaluation of NI Hungary’s gross deferred tax assets following the reduction in the Hungarian corporate income tax rate from 19% to 9%. We account for uncertainty in income taxes recognized in our financial statements using prescribed recognition thresholds and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on our tax returns. We had $9.3 million and $11.7 million of unrecognized tax benefits at September 30, 2017 and December 31, 2016, respectively, all of which would affect our effective income tax rate if recognized. We recorded a gross increase in unrecognized tax benefits of $0.5 million and $1 million for the three and nine month periods ended September 30, 2017, respectively, as a result of the tax positions taken during these periods. We recorded a gross decrease in unrecognized tax benefits of $3.7 million for each of the three and nine month periods ended September 30, 2017 as a result of closing open tax years. As of September 30, 2017, it is reasonably possible that we will recognize tax benefits in the amount of $1.5 million in the next twelve months due to the closing of open tax years. The nature of the uncertainty is related to deductions taken on returns that have not been examined by the applicable tax authority. Our continuing policy is to recognize interest and penalties related to income tax matters in income tax expense. As of September 30, 2017, we had approximately $1 million accrued for interest related to uncertain tax positions. The tax years 2008 through 2017 remain open to examination by the major taxing jurisdictions to which we are subject. Our provision for income taxes reflected an effective tax rate of 12% and 16% for the three month periods ended September 30, 2017 and 2016, respectively, and 15% and 21% for the nine months ended September 30, 2017 and 2016, respectively. For the three and nine month periods ended September 30, 2017, our effective tax rate was lower than the U.S. federal statutory rate of 35% as a result of an enhanced deduction for certain research and development expenses, profits in foreign jurisdictions with reduced income tax rates, the research and development tax credit, a tax benefit from disqualifying dispositions of equity awards that do not ordinarily result in a tax benefit, and excess tax benefits from share-based compensation. For the three and nine month periods ended September 30, 2016, our effective tax rate was lower than the U.S. federal statutory rate of 35% as a result of an enhanced deduction for certain research and development expenses, profits in foreign jurisdictions with reduced income tax rates, the research and development tax credit, and a tax benefit from disqualifying dispositions of equity awards that do not ordinarily result in a tax benefit. Our earnings in Hungary are subject to a statutory tax rate of 9%. In addition, our research and development activities in Hungary benefit from a tax law in Hungary that provides for an enhanced deduction for qualified research and development expenses. The tax position of our Hungarian operations resulted in income tax benefits of $4.3 million and $4.5 million for the three month periods ended September 30, 2017 and 2016, respectively, and $11.6 million and $10.3 million for the nine months ended September 30, 2017 and 2016, respectively. Earnings from our operations in Malaysia are free of tax under a tax holiday effective January 1, 2013. This tax holiday expires in 2027. If we fail to satisfy the conditions of the tax holiday, this tax benefit may be terminated early. The income tax benefits of the tax holiday for the three and nine months ended September 30, 2017 were approximately $0.8 million and $1.9 million, respectively. The impact of the tax holiday on a per share basis for each of the three and nine months ended September 30, 2017 was a benefit of $0.01 per share. The income tax benefits of the tax holiday for the three and nine months ended September 30, 2016 were approximately $0.8 million and $1.9 million, respectively. The impact of the tax holiday on a per share basis for each of the three and nine months ended September 30, 2016 was a benefit of $0.01 per share. No other taxing jurisdictions had a significant impact on our effective tax rate. We have not entered into any advanced pricing or other agreements with the IRS with regard to any foreign jurisdictions. |
Comprehensive Income |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | Comprehensive income Our comprehensive income is comprised of net income, foreign currency translation, unrealized gains and losses on forward and option contracts and securities classified as available-for-sale. The accumulated OCI, net of tax, for the nine months ended September 30, 2017 and 2016, consisted of the following:
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Authorized shares of common and preferred stock and stock-based compensation plans |
9 Months Ended |
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Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Authorized shares of common and preferred stock and stock-based compensation plans | Authorized shares of common and preferred stock and stock-based compensation plans Authorized shares of common and preferred stock Following approval by the Company’s Board of Directors and stockholders, on May 14, 2013, the Company’s certificate of incorporation was amended to increase the authorized shares of common stock by 180,000,000 shares to a total of 360,000,000 shares. As a result of this amendment, the total number of shares which the Company is authorized to issue is 365,000,000 shares, consisting of (i) 5,000,000 shares of preferred stock, par value $.01 per share, and (ii) 360,000,000 shares of common stock, par value $.01 per share. Restricted stock plan Our stockholders approved our 2005 Incentive Plan (the “2005 Plan”) in May 2005. At the time of approval, 4,050,000 shares of our common stock were reserved for issuance under this plan, as well as the number of shares which had been reserved but not issued under our 1994 Incentive Plan which terminated in May 2005 (the “1994 Plan”), and any shares that returned to the 1994 Plan as a result of termination of options or repurchase of shares issued under such plan. The 2005 Plan, administered by the Compensation Committee of the Board of Directors, provided for granting of incentive awards in the form of restricted stock and RSUs to directors, executive officers and employees of the Company and its subsidiaries. Awards vest over a three, five or ten-year period, beginning on the date of grant. Vesting of ten year awards may accelerate based on the Company’s previous year’s earnings and growth but ten year awards cannot accelerate to vest over a period of less than five years. The 2005 Plan terminated on May 11, 2010, except with respect to outstanding awards previously granted thereunder. There were 3,362,304 shares of common stock that were reserved but not issued under the 2005 Plan as of May 11, 2010. Our stockholders approved our 2010 Incentive Plan (the “2010 Plan”) on May 11, 2010. At the time of approval, 3,000,000 shares of our common stock were reserved for issuance under this plan, as well as the 3,362,304 shares of common stock that were reserved but not issued under the 1994 Plan and the 2005 Plan as of May 11, 2010, and any shares that are returned to the 1994 Plan and the 2005 Plan as a result of the forfeiture or termination of options or RSUs or repurchase of shares issued under these plans. The 2010 Plan, administered by the Compensation Committee of the Board of Directors, provides for granting of incentive awards in the form of restricted stock and RSUs to employees, directors and consultants of the Company and employees and consultants of any parent or subsidiary of the Company. Awards vest over a three, five or ten-year period, beginning on the date of grant. Vesting of ten year awards may accelerate based on the Company’s previous year’s earnings and growth but ten year awards cannot accelerate to vest over a period of less than five years. The 2010 Plan terminated on May 12, 2015, except with respect to the outstanding awards previously granted thereunder. There were 2,518,416 shares of common stock that were reserved but not issued under the 2010 Plan as of May 12, 2015. Our stockholders approved our 2015 Equity Incentive Plan (the “2015 Plan”) on May 12, 2015. At the time of approval, 3,000,000 shares of our common stock were reserved for issuance under this plan, as well as the 2,518,416 shares of common stock that were reserved but not issued under the 2010 Plan as of May 12, 2015, and any shares that were returned to the 1994, 2005, and the 2010 Plans as a result of the forfeiture or termination of options or RSUs or repurchase of shares issued under these plans. The 2015 Plan, administered by the Compensation Committee of the Board of Directors, provides for the granting of incentive awards in the form of restricted stock and RSUs to employees, directors and consultants of the Company and employees and consultants of any parent or subsidiary of the Company. Awards vest over a three, four, five or ten-year period, beginning on the date of grant. Vesting of ten year awards may accelerate based on the Company’s previous year’s earnings and growth but ten year awards cannot accelerate to vest over a period of less than five years. There were 3,848,515 shares available for grant under the 2015 Plan at September 30, 2017. During the three month period ended September 30, 2017, we did not make any changes in accounting principles or methods of estimates related to the 2005, 2010 and 2015 Plans. Employee stock purchase plan Our employee stock purchase plan permits substantially all domestic employees and employees of designated subsidiaries to acquire our common stock at a purchase price of 85% of the lower of the market price at the beginning or the end of the purchase period. The plan has quarterly purchase periods generally beginning on February 1, May 1, August 1 and November 1 of each year. Employees may designate up to 15% of their compensation for the purchase of common stock under this plan. On May 9, 2017, our stockholders approved an additional 3,000,000 shares for issuance under our employee stock purchase plan. At September 30, 2017, we had 3,069,958 shares of common stock reserved for future issuance under this plan. We issued 863,093 shares under this plan in the nine months ended September 30, 2017 and the weighted average purchase price of the employees’ purchase rights was $26.5 per share. During the nine months ended September 30, 2017, we did not make any changes in accounting principles or methods of estimates with respect to such plan. Authorized Preferred Stock and Preferred Stock Purchase Rights Plan We have 5,000,000 authorized shares of preferred stock. On January 21, 2004, our Board of Directors designated 750,000 of these shares as Series A Participating Preferred Stock in conjunction with the adoption of a Preferred Stock Rights Agreement which expired on May 10, 2014. There were no shares of preferred stock issued and outstanding at September 30, 2017. Stock repurchases and retirements From time to time, our Board of Directors has authorized various programs for our repurchase of shares of our common stock depending on market conditions and other factors. Under the current program, we did not make any share repurchases during the nine months ended September 30, 2017 or the three months ended September 30, 2016. We repurchased a total of 206,780 shares of our common stock at a weighted average price per share of $27.25 during the nine months ended September 30, 2016. At September 30, 2017, there were 1,134,247 shares remaining available for repurchase under this program. This repurchase program does not have an expiration date. |
Segment and geographic information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and geographic information | Segment and geographic information We operate as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, who is our chief executive officer, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker evaluates our financial information and resources and assesses the performance of these resources on a consolidated basis. Since we operate in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements and the notes thereto. We sell our product in three geographic regions which consist of Americas; Europe, Middle East, India, and Africa (EMEIA); and Asia-Pacific (APAC). Our sales to these regions share similar economic characteristics, similar product mix, similar customers, and similar distribution methods. Revenue from the sale of our products, which are similar in nature, and software maintenance is reflected as total net sales in our Consolidated Statements of Income. Total net sales by the major geographic areas in which we operate, are as follows:
Based on the billing location of the customer, total sales outside the U.S. for the three months ended September 30, 2017 and 2016 were $195 million and $184 million, respectively, and $588 million and $564 million for the nine months ended September 30, 2017 and 2016, respectively. Total property and equipment, net, outside the U.S. was $133 million as of September 30, 2017 and December 31, 2016. |
Debt |
9 Months Ended |
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Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt On May 9, 2013, we entered into a Loan Agreement (the “Loan Agreement”) with Wells Fargo Bank (the “Lender”). The Loan Agreement provided for a $50 million unsecured revolving line of credit with a scheduled maturity date of May 9, 2018 (the “Maturity Date”). On October 29, 2015, we entered into a First Amendment to Loan Agreement (the “Amendment”) with the Lender, which amended our Loan Agreement to among other things, (i) increase the unsecured revolving line of credit from $50 million to $125 million, (ii) extend the Maturity Date of the line of credit from May 9, 2018 to October 29, 2020, and (iii) provide us with an option to request increases to the line of credit of up to an additional $25 million in the aggregate, subject to consent of the Lender and terms and conditions to be mutually agreed between us and the Lender. The loans bear interest, at our option, at a base rate determined in accordance with the Loan Agreement, plus a spread of 0.0% to 0.50%, or a LIBOR rate plus a spread of 1.13% to 2.00%, in each case with such spread determined based on a ratio of consolidated indebtedness to EBITDA, determined in accordance with the Loan Agreement. Principal, together with all accrued and unpaid interest, is due and payable on the Maturity Date. We are also obligated to pay a quarterly commitment fee, payable in arrears, based on the available commitments at a rate of 0.18% to 0.30%, with such rate determined based on the ratio described above. The Loan Agreement contains customary affirmative and negative covenants. The affirmative covenants include, among other things, delivery of financial statements, compliance certificates and notices; payment of taxes and other obligations; maintenance of existence; maintenance of properties and insurance; and compliance with applicable laws and regulations. The negative covenants include, among other things, limitations on indebtedness, liens, mergers, consolidations, acquisitions and sales of assets, investments, changes in the nature of the business, affiliate transactions and certain restricted payments. The Loan Agreement also requires us to maintain a ratio of consolidated indebtedness to EBITDA equal to or less than 3.25 to 1.00, and a ratio of consolidated EBITDA to interest expense greater than or equal to 3.00 to 1.00, in each case determined in accordance with the Loan Agreement. As of September 30, 2017, we were in compliance with all covenants in the Loan Agreement. The Loan Agreement contains customary events of default including, among other things, payment defaults, breaches of covenants or representations and warranties, cross-defaults with certain other indebtedness, bankruptcy and insolvency events, judgment defaults and change in control events, subject to grace periods in certain instances. Upon an event of default, the lender may declare all or a portion of the outstanding obligations payable by us to be immediately due and payable and exercise other rights and remedies provided for under the Loan Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Loan Agreement at a per annum rate of interest equal to 2.00% above the otherwise applicable interest rate. Proceeds of loans made under the Loan Agreement may be used for working capital and other general corporate purposes. We may prepay the loans under the Loan Agreement in whole or in part at any time without premium or penalty. Certain of our existing and future material domestic subsidiaries are required to guaranty our obligations under the Loan Agreement. As of September 30, 2017, we had outstanding $15 million in borrowings under this line of credit. During the three month periods ended September 30, 2017 and September 30, 2016, we incurred interest expense related to our outstanding borrowings of $176,000 and $167,000, respectively. During the nine months ended September 30, 2017 and September 30, 2016, we incurred interest expense related to our outstanding borrowings of $519,000 and $377,000, respectively. As of September 30, 2017 and September 30, 2016, the weighted-average interest rate on the revolving line of credit was 2.4% and 1.6%, respectively. These charges are included in “Other income (loss), net” in our Consolidated Statements of Income. |
Commitments and contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and contingencies | Commitments and contingencies We offer a one-year limited warranty on most hardware products which is included in the terms of sale of such products. We also offer optional extended warranties on our hardware products for which the related revenue is recognized ratably over the warranty period. Provision is made for estimated future warranty costs at the time of the sale for the estimated costs that may be incurred under the standard warranty. Our estimate is based on historical experience and product sales during the period. The warranty reserve for the nine months ended September 30, 2017 and 2016 was as follows:
As of September 30, 2017, we had non-cancelable purchase commitments with various suppliers of customized inventory and inventory components totaling approximately $7.8 million over the next twelve months. As of September 30, 2017, we had outstanding guarantees for payment of customs and foreign grants totaling approximately $3.1 million, which are generally payable over the next twelve months. |
Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring Since the first quarter of 2017, we have been taking steps to reduce our overall employee headcount by approximately 2% by the end of 2017 in an effort to minimize job duplication or evaluate where we should shift and centralize activities, improve efficiencies, and rebalance our resources on higher return activities. The timing and scope of our headcount reductions will vary. A summary of the charges in the consolidated statement of operations resulting from our restructuring activities is shown below:
A summary of balance sheet activity related to the restructuring activity is shown below:
The restructuring liability of $3.5 million at September 30, 2017 relating to the restructuring activity is recorded in the “accrued compensation” line item of the consolidated balance sheet. |
Litigation |
9 Months Ended |
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Sep. 30, 2017 | |
Litigation [Abstract] | |
Litigation | Litigation We are not currently a party to any material litigation. However, in the ordinary course of our business, we are involved in a limited number of legal actions, both as plaintiff and defendant, and could incur uninsured liability in any one or more of them. We also periodically receive notifications from various third parties related to alleged infringement of patents or intellectual property rights, commercial disputes or other matters. No assurances can be given with respect to the extent or outcome of any future litigation or dispute. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent events On October 25, 2017, our Board of Directors declared a quarterly cash dividend of $0.21 per common share, payable on December 4, 2017, to stockholders of record on November 13, 2017. |
Basis of presentation (Policies) |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16, Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory. The standard is intended to address diversity in practice and complexity in financial reporting, particularly for intra-entity transfers of intellectual property. We early adopted ASU 2016-16 effective January 1, 2017. Using the modified retrospective method, the impact of the adoption of the standard was to increase deferred tax assets by $0.4 million, decrease other assets, net by $6.2 million and decrease retained earnings by $5.8 million. The adoption of the amendments had the effect of increasing our diluted earnings per share by $0.01 and $0.03 for the three and nine months ended September 30, 2017, respectively. Recently Issued Accounting Pronouncements In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The ASU simplifies certain aspects of hedge accounting and improves disclosures of hedging arrangements through the elimination of the requirement to separately measure and report hedge ineffectiveness. The ASU generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item in order to align financial reporting of hedge relationships with economic results. Entities must apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements must be applied prospectively. Our effective date for adoption of this guidance is our fiscal year beginning January 1, 2019. We are currently evaluating the effect that this guidance will have on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases. The guidance requires lessees to recognize most lease liabilities on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The update is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. Based on our initial assessment, we expect that the adoption of this standard will have a material impact on our balance sheet but that it will not have a material impact on our ongoing results of operations. We do not expect to adopt the new standard prior to the required effective date. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The update is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. We intend to adopt this standard as of January 1, 2018 by applying the modified retrospective transition method. Consequently, the cumulative effect of applying the new standard to existing contracts as of January 1, 2018 will be recognized as an adjustment to the opening balance of equity in the first quarter of 2018. We have reached initial conclusions on our key accounting matters related to the new standard and believe adoption of the new standard will generally result in revenue recognition earlier or at the same time as existing US GAAP. The most significant impact of the standard relates to our accounting for certain software arrangements. We primarily license software on a perpetual basis. However, we also license software under enterprise agreements which includes an unlimited quantity of certain software licenses for a fixed-term bundled with software maintenance, technical support, and a specified amount of training and service credits. Currently, we defer revenue for software licensed under our enterprise agreements and certain perpetual arrangements due to a lack of vendor specific objective evidence (“VSOE”) for certain elements in the contract. Under the new standard, we are no longer required to establish VSOE to recognize software license revenue separately from the other elements, and we will be able to recognize software license revenue once the customer obtains control of the license, which will generally occur at the start of each license term. Due to the complexity of our enterprise agreement contracts, the actual revenue recognition treatment required under the new standard will be dependent on contract-specific terms, and may vary in some instances from recognition at the time of billing. Additionally, we expect the new standard will impact the way we allocate the transaction price for arrangements with separately-priced extended warranty offerings. ASU 2014-09, as amended, could have a material impact on our consolidated financial statements and disclosures. While we are still evaluating the matter we believe the impact of the change to the timing of revenue recognition for our limited offerings mentioned above may have a material impact on our deferred revenue balance on the adoption date under the application of the modified retrospective transition method. However, it is not expected to have a material impact to our results of operations in subsequent annual periods. |
Earnings per share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation Of The Denominators Used To Calculate Basic EPS And Diluted EPS | The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three and nine months ended September 30, 2017 and 2016, are as follows:
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Short-term investments (Tables) |
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Cash, Cash Equivalents, and Short-term Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-sale Securities Reconciliation | The following tables summarize unrealized gains and losses related to our short-term investments designated as available-for-sale:
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Investments Classified by Contractual Maturity Date | The following tables summarize the contractual maturities of our short-term investments designated as available-for-sale:
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Fair value measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis are summarized below:
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Derivative instruments and hedging activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Notional Amounts Of Derivative Instruments | We held forward contracts designated as cash flow hedges with the following notional amounts:
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Fair Value Of Derivative Instruments On Consolidated Balance Sheets | The following tables present the fair value of derivative instruments on our Consolidated Balance Sheets at September 30, 2017 and December 31, 2016, respectively.
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Derivative Instruments, Gain (Loss) | The following tables present the effect of derivative instruments on our Consolidated Statements of Income for the nine months ended September 30, 2017 and 2016, respectively:
The following tables present the effect of derivative instruments on our Consolidated Statements of Income for three month periods ended September 30, 2017 and 2016, respectively:
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Inventories, net (Tables) |
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories, net consist of the following:
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Intangible assets, net (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | Intangible assets at September 30, 2017 and December 31, 2016 are as follows:
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Goodwill (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||
Goodwill [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of Goodwill | The carrying amount of goodwill as of September 30, 2017, was as follows:
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Comprehensive income (Tables) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) | The accumulated OCI, net of tax, for the nine months ended September 30, 2017 and 2016, consisted of the following:
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Segment and geographic information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales By Major Geographical Areas | Total net sales by the major geographic areas in which we operate, are as follows:
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Commitments and contingencies (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Product Warranty Liability | The warranty reserve for the nine months ended September 30, 2017 and 2016 was as follows:
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Restructuring (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Related Costs | A summary of the charges in the consolidated statement of operations resulting from our restructuring activities is shown below:
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Restructuring Reserve | A summary of balance sheet activity related to the restructuring activity is shown below:
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Earnings per share (Reconciliation Of The Denominators Used To Calculate Basic EPS And Diluted EPS) (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Weighted average shares outstanding-basic | 130,660,000 | 128,815,000 | 130,103,000 | 128,233,000 |
RSUs (in shares) | 957,000 | 232,000 | 947,000 | 505,000 |
Weighted average shares outstanding-diluted | 131,617,000 | 129,047,000 | 131,050,000 | 128,738,000 |
Anti-dilutive securities excluded from the computation of diluted EPS (in shares) | 40,700 | 1,068,800 | 22,300 | 58,000 |
Short-term investments (Unrealized Gains And Losses Related To Cash, Cash Equivalents, And Short-Term Investments Designated As Available-For-Sale) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | $ 92,577 | $ 74,746 |
Gross Unrealized Gain | 170 | 89 |
Gross Unrealized Loss | (76) | (182) |
Cumulative Translation Adjustment | (1,448) | (1,536) |
Fair Value | 91,223 | 73,117 |
Corporate bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 90,817 | 72,986 |
Gross Unrealized Gain | 170 | 89 |
Gross Unrealized Loss | (76) | (182) |
Cumulative Translation Adjustment | (1,448) | (1,536) |
Fair Value | 89,463 | 71,357 |
Time deposits | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Adjusted Cost | 1,760 | 1,760 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized Loss | 0 | 0 |
Cumulative Translation Adjustment | 0 | 0 |
Fair Value | $ 1,760 | $ 1,760 |
Derivative instruments and hedging activities (Summary Of Notional Amounts Of Derivative Instruments) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Derivative [Line Items] | ||
Total forward contracts notional amount | $ 291,136 | $ 295,505 |
Chinese yuan | ||
Derivative [Line Items] | ||
Total forward contracts notional amount | 27,760 | 27,414 |
Euro | ||
Derivative [Line Items] | ||
Total forward contracts notional amount | 158,490 | 123,522 |
Japanese yen | ||
Derivative [Line Items] | ||
Total forward contracts notional amount | 23,726 | 44,982 |
Hungarian forint | ||
Derivative [Line Items] | ||
Total forward contracts notional amount | 48,722 | 57,077 |
Malaysian ringgit | ||
Derivative [Line Items] | ||
Total forward contracts notional amount | $ 32,438 | $ 42,510 |
Inventories, net (Summary Of Inventories) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 93,023 | $ 92,906 |
Work-in-process | 9,095 | 9,125 |
Finished goods | 82,523 | 91,577 |
Inventory, Net | $ 184,641 | $ 193,608 |
Goodwill (Schedule Of Goodwill) (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 253,197 |
Acquisitions | 0 |
Foreign currency translation impact | 11,894 |
Balance at end of period | $ 265,091 |
Goodwill (Narrative) (Details) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2017
USD ($)
segment
reporting_unit
|
Dec. 31, 2016
USD ($)
|
|
Goodwill [Abstract] | ||
Number of operating segments | segment | 1 | |
Number of reporting units | reporting_unit | 1 | |
Goodwill impairment | $ | $ 0 | $ 0 |
Segment and geographic information (Narrative) (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
segment
|
Sep. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Number of operating segments | segment | 1 | ||||
Number of geographic regions company operates in | 3 | ||||
Total sales | $ 320,921 | $ 306,364 | $ 939,635 | $ 899,647 | |
Property and equipment, net | 254,918 | 254,918 | $ 260,456 | ||
Outside The United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Total sales | 195,000 | $ 184,000 | 588,000 | $ 564,000 | |
Property and equipment, net | $ 133,000 | $ 133,000 | $ 133,000 |
Segment and geographic information (Net Sales By Major Geographical Areas) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue, Net | $ 320,921 | $ 306,364 | $ 939,635 | $ 899,647 |
Americas | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue, Net | 133,191 | 129,710 | 373,277 | 354,806 |
EMEIA | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue, Net | 93,277 | 92,232 | 288,565 | 278,616 |
APAC | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue, Net | $ 94,453 | $ 84,422 | $ 277,793 | $ 266,225 |
Commitments and contingencies (Narrative) (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Commitments and Contingencies Disclosure [Abstract] | |
Limited warranty on most hardware products (in number of years) | 1 year |
Non-cancelable purchase commitments | $ 7.8 |
Outstanding guarantees for payment of customs and foreign grants | $ 3.1 |
Commitments and contingencies (Schedule Of Warranty Reserve) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at the beginning of the period | $ 2,686 | $ 1,755 |
Accruals for warranties issued during the period | 1,929 | 1,764 |
Accruals related to pre-existing warranties | 193 | 690 |
Settlements made (in cash or in kind) during the period | (1,983) | (2,088) |
Balance at the end of the period | $ 2,825 | $ 2,121 |
Restructuring (Narrative) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Restructuring and Related Activities [Abstract] | ||
Estimated restructuring reduction, percent | 2.00% | |
Restructuring accrual | $ 3,452 | $ 0 |
Restructuring (Restructuring Related Costs) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Total restructuring and other related costs | $ 1,990 | $ 0 | $ 11,166 | $ 0 |
Cost of sales | ||||
Total restructuring and other related costs | 79 | 0 | 986 | 0 |
Research and development | ||||
Total restructuring and other related costs | 86 | 0 | 1,382 | 0 |
Sales and marketing | ||||
Total restructuring and other related costs | 1,618 | 0 | 7,997 | 0 |
General and Administration | ||||
Total restructuring and other related costs | $ 207 | $ 0 | $ 801 | $ 0 |
Restructuring (Restructuring Reserve) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Restructuring Reserve [Roll Forward] | ||||
December 31, 2016 | $ 0 | |||
Income statement expense | $ 1,990 | $ 0 | 11,166 | $ 0 |
Cash payments | (7,714) | |||
September 30, 2017 | $ 3,452 | $ 3,452 |
Subsequent Events (Details) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 25, 2017 |
|
Subsequent Event [Line Items] | ||
Dividend payable, date declared | Oct. 25, 2017 | |
Dividend payable, date payable | Dec. 04, 2017 | |
Dividend payable, date of record | Nov. 13, 2017 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Dividend payable (in dollars per share) | $ 0.21 |
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