Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 24, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | SONUS NETWORKS INC | |
Entity Central Index Key | 1,105,472 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 49,436,925 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 32,566 | $ 50,111 |
Marketable securities | 49,829 | 58,533 |
Accounts receivable, net of allowance for doubtful accounts of $0 at September 30, 2016 and $10 at December 31, 2015 | 44,169 | 51,533 |
Inventory | 20,811 | 23,111 |
Other current assets | 13,237 | 11,853 |
Total current assets | 160,612 | 195,141 |
Property and equipment, net | 13,077 | 13,620 |
Intangible assets, net | 38,794 | 26,087 |
Goodwill | 52,136 | 40,310 |
Investments | 38,603 | 33,605 |
Deferred income taxes | 1,797 | 1,879 |
Other assets | 4,834 | 2,249 |
Total assets | 309,853 | 312,891 |
Current liabilities: | ||
Accounts payable | 4,331 | 5,949 |
Accrued expenses | 22,990 | 31,963 |
Current portion of deferred revenue | 37,896 | 38,716 |
Current portion of long-term liabilities | 1,029 | 821 |
Total current liabilities | 66,246 | 77,449 |
Deferred revenue | 8,465 | 7,374 |
Deferred income taxes | 2,806 | 2,282 |
Contingent consideration - acquisition | 10,000 | 0 |
Other long-term liabilities | 1,675 | 2,760 |
Total liabilities | 89,192 | 89,865 |
Commitments and contingencies (Note 15) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share; 5,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $0.001 par value per share; 120,000,000 shares authorized; 49,399,271 shares issued and outstanding at September 30, 2016; 49,473,789 shares issued and outstanding at December 31, 2015 | 49 | 49 |
Additional paid-in capital | 1,249,095 | 1,240,803 |
Accumulated deficit | (1,034,543) | (1,023,242) |
Accumulated other comprehensive income | 6,060 | 5,416 |
Total stockholders' equity | 220,661 | 223,026 |
Total liabilities and stockholders' equity | $ 309,853 | $ 312,891 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Allowance for doubtful accounts | $ 0 | $ 10 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 49,399,271 | 49,473,789 |
Common stock, shares outstanding | 49,399,271 | 49,473,789 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | |
Revenue: | ||||
Product | $ 38,601 | $ 42,230 | $ 108,719 | $ 94,137 |
Service | 26,410 | 25,632 | 76,300 | 78,571 |
Total revenue | 65,011 | 67,862 | 185,019 | 172,708 |
Cost of revenue: | ||||
Product | 12,285 | 13,158 | 35,230 | 36,075 |
Service | 9,140 | 8,992 | 27,572 | 27,277 |
Total cost of revenue | 21,425 | 22,150 | 62,802 | 63,352 |
Gross profit | 43,586 | 45,712 | 122,217 | 109,356 |
Operating expenses: | ||||
Research and development | 18,230 | 19,335 | 53,005 | 58,642 |
Sales and marketing | 18,103 | 16,507 | 50,890 | 53,812 |
General and administrative | 8,998 | 11,074 | 26,656 | 30,742 |
Acquisition-related | 951 | 0 | 951 | 131 |
Restructuring | 1,620 | 158 | 1,620 | 1,306 |
Total operating expenses | 47,902 | 47,074 | 133,122 | 144,633 |
Loss from operations | (4,316) | (1,362) | (10,905) | (35,277) |
Interest income, net | 209 | 82 | 590 | 90 |
Other income, net | 803 | 133 | 916 | 183 |
Loss before income taxes | (3,304) | (1,147) | (9,399) | (35,004) |
Income tax provision | (427) | (749) | (1,902) | (1,594) |
Net loss | $ (3,731) | $ (1,896) | $ (11,301) | $ (36,598) |
Loss per share: | ||||
Basic (in dollars per share) | $ (0.08) | $ (0.04) | $ (0.23) | $ (0.74) |
Diluted (in dollars per share) | $ (0.08) | $ (0.04) | $ (0.23) | $ (0.74) |
Shares used to compute loss per share: | ||||
Basic (in shares) | 49,402 | 49,625 | 49,436 | 49,512 |
Diluted (in shares) | 49,402 | 49,625 | 49,436 | 49,512 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (3,731) | $ (1,896) | $ (11,301) | $ (36,598) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | 49 | 59 | 484 | 11 |
Unrealized (loss) gain on available-for sale marketable securities, net of tax | (112) | 33 | 160 | 113 |
Reclassification adjustment for realized losses included in net loss | 0 | 0 | 18 | 0 |
Other comprehensive income (loss), net of tax | (63) | 92 | 662 | 124 |
Comprehensive loss, net of tax | $ (3,794) | $ (1,804) | $ (10,639) | $ (36,474) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 25, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (11,301) | $ (36,598) |
Adjustments to reconcile net loss to cash flows provided by operating activities: | ||
Depreciation and amortization of property and equipment | 5,914 | 9,646 |
Amortization of intangible assets | 5,493 | 4,975 |
Stock-based compensation | 15,464 | 16,902 |
Loss on disposal of property and equipment | 29 | 112 |
Gain on sale of domain name | (800) | 0 |
Deferred income taxes | 763 | 514 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 9,287 | 11,623 |
Inventory | 2,756 | (2,076) |
Other operating assets | (798) | 1,282 |
Accounts payable | (2,904) | (2,329) |
Accrued expenses and other long-term liabilities | (12,032) | (5,733) |
Deferred revenue | (1,823) | 3,379 |
Net cash provided by operating activities | 10,048 | 1,697 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (3,637) | (6,417) |
Business acquisition, net of cash acquired | (20,669) | (10,897) |
Purchases of marketable securities | (62,468) | (25,577) |
Maturities/sales of marketable securities | 65,327 | 49,328 |
Proceeds from the sale of domain name | 800 | 0 |
Net cash (used in) provided by investing activities | (20,647) | 6,437 |
Cash flows from financing activities: | ||
Proceeds from sale of common stock in connection with employee stock purchase plan | 1,360 | 2,378 |
Proceeds from exercise of stock options | 135 | 1,757 |
Payment of tax withholding obligations related to net share settlements of restricted stock awards | (1,538) | (2,314) |
Repurchase of common stock | (7,130) | (6,083) |
Principal payments of capital lease obligations | (33) | (62) |
Net cash used in financing activities | (7,206) | (4,324) |
Effect of exchange rate changes on cash and cash equivalents | 260 | (194) |
Net (decrease) increase in cash and cash equivalents | (17,545) | 3,616 |
Cash and cash equivalents, beginning of year | 50,111 | 41,157 |
Cash and cash equivalents, end of period | 32,566 | 44,773 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 27 | 46 |
Income taxes paid | 1,024 | 833 |
Income tax refunds received | 275 | 312 |
Supplemental disclosure of non-cash investing activities: | ||
Capital expenditures incurred, but not yet paid | 444 | 556 |
Property and equipment acquired under capital lease | 36 | 0 |
Fair value of contingent consideration related to acquisition | $ 10,000 | $ 0 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Business Sonus Networks, Inc. (“Sonus” or the “Company”) is a leading provider of networked solutions for communications service providers (e.g., telecommunications, wireless and cable service providers) and enterprises to help them advance, protect and unify their communications and improve collaboration. Sonus helps many of the world's leading communications service providers and enterprises embrace the next generation of Session Initiation Protocol ("SIP") and 4G/LTE (Long Term Evolution)-based solutions, including Voice over IP ("VoIP") video and Unified Communications ("UC") through secure, reliable and scalable Internet Protocol ("IP") networks. Sonus' products include session border controllers ("SBCs"), diameter signaling controllers ("DSCs"), policy/routing servers, network intelligence applications ("VellOS") and are designed to provide network-wide security and other cloud network exchange services, media and signaling gateways and network analytics tools. Sonus products are supported by a global services team with experience in design, deployment and maintenance of some of the world's largest IP networks. Sonus utilizes both direct and indirect sales channels to reach its target customers. Customers and prospective customers in the service provider space are traditional and emerging communications service providers, including long distance carriers, local exchange carriers, internet service providers, wireless operators, cable operators, international telephone companies and carriers that provide services to other carriers. Enterprise customers and target enterprise customers include financial institutions, retailers, state and local governments, and other multinational corporations. Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation with accounting principles generally accepted in the United States of America ("GAAP") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Interim results are not necessarily indicative of results for a full year or any future interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2015 (the "Annual Report"), which was filed with the SEC on February 23, 2016. For the year ended December 31, 2015, the Company reported its first, second and third quarters on a 4-4-5 basis, with the quarter ending on the Friday closest to the last day of each third month. Accordingly, the Company's first quarter ended on March 27, 2015, the second quarter ended on June 26, 2015 and the third quarter ended on September 25, 2015. Effective January 1, 2016, the Company is reporting its first, second and third quarters on a month-end basis, such that the first quarter ended on March 31, 2016, the second quarter ended on June 30, 2016 and the third quarter ended on September 30, 2016. The Company's fiscal year will continue to end on December 31. During the preparation of the Company's consolidated financial statements for the three-month period ended June 26, 2015, the Company identified an error related to the historical foreign translation of depreciation expense on certain foreign fixed assets that resulted in a historical understatement of expense in prior fiscal years totaling $1.4 million on a cumulative basis. There is no tax effect on these expenses as the amounts were calculated in the appropriate foreign currencies. The Company does not believe this error is material to its previously issued historical consolidated financial statements for any of the periods impacted and accordingly, has not adjusted its historical financial statements. The Company recorded the cumulative impact of the adjustment in the three months ended June 26, 2015. This adjustment resulted in a one-time $1.4 million overstatement of depreciation expense. The Company does not believe this adjustment is material to its condensed consolidated financial statements for the periods presented. On September 26, 2016 (the "Taqua Acquisition Date"), the Company acquired Taqua, LLC ("Taqua"), a leading supplier of IP communications systems, applications and services to mobile and fixed operators. The financial results of Taqua are included in the Company's condensed consolidated financial statements starting on the Taqua Acquisition Date. On January 2, 2015 (the "Treq Asset Acquisition Date"), the Company acquired from Treq Labs, Inc. ("Treq") certain assets related to Treq's business of designing, developing, marketing, selling, servicing and maintaining software-defined networking ("SDN") technology, SDN controller software and SDN management software (the "SDN Business"). The financial results of the SDN Business are included in the Company's condensed consolidated financial statements starting on the Treq Asset Acquisition Date. Significant Accounting Policies The Company's significant accounting policies are disclosed in Note 2 to the Consolidated Financial Statements included in the Annual Report. There were no material changes to the significant accounting policies during either the three or nine months ended September 30, 2016 . Principles of Consolidation The condensed consolidated financial statements include the accounts of Sonus and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Use of Estimates and Judgments The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and judgments relied upon in preparing these consolidated financial statements include accounting for business combinations, revenue recognition for multiple element arrangements, inventory valuations, assumptions used to determine the fair value of stock-based compensation, intangible assets and goodwill valuations, including impairments, legal contingencies and recoverability of Sonus' net deferred tax assets and the related valuation allowances. Sonus regularly assesses these estimates and records changes in estimates in the period in which they become known. Sonus bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates. Fair Value of Financial Instruments The carrying amounts of the Company's financial instruments, which include cash equivalents, marketable securities, investments, accounts receivable, accounts payable and other long-term liabilities, approximate their fair values. Operating Segments The Company operates in a single segment. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. To date, the chief operating decision maker has made such decisions and assessed performance at the company level, as one segment. The Company's chief operating decision maker is its President and Chief Executive Officer. Recent Accounting Pronouncements In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), which amends the guidance in Accounting Standards Codification ("ASC") 230 on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of ASU 2016-15 is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. ASU 2016-15 adds or clarifies guidance on eight cash flow issues, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or certain other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for the Company beginning January 1, 2018 for both interim and annual reporting periods, with early adoption permitted. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is currently assessing the potential impact of the adoption of ASU 2016-15 on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument s ("ASU 2016-13"), which adds an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 is effective for the Company beginning January 1, 2020 for both interim and annual reporting periods, with early adoption permitted. The Company does not expect the adoption of ASU 2016-13 will have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for the Company beginning January 1, 2017 for both interim and annual reporting periods, with early adoption permitted. The Company is currently assessing the potential impact of the adoption of ASU 2016-09 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Section A - Leases: Amendments to the FASB Accounting Standards Codification ("ASU 2016-02"), its new standard on accounting for leases. ASU 2016-02 introduces a lessee model that brings most leases onto the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in ASC 606, the FASB's new revenue recognition standard (i.e., those related to evaluating when profit can be recognized). Furthermore, ASU 2016-02 addresses other concerns related to the current leases model. For example, ASU 2016-02 eliminates the current GAAP requirement for an entity to use bright-line tests in determining lease classification. ASU 2016-02 is effective for the Company for both interim and annual periods beginning January 1, 2019. The Company is currently assessing the potential impact of the adoption of ASU 2016-02 on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"), which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in the condensed consolidated balance sheet. Netting of deferred tax assets and deferred tax liabilities is still required under ASU 2015-17. The ASU is effective for the Company for its annual report of the year ending December 31, 2018 and for interim period reporting beginning January 1, 2019, with early adoption permitted. The Company elected to early-adopt ASU 2015-17 prospectively and accordingly, reclassified its net current deferred tax asset totaling $1.0 million to its noncurrent net deferred tax asset as of December 31, 2015. No prior periods were retrospectively adjusted. The early adoption of ASU 2015-17 did not have a material impact on the Company's consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments ("ASU 2015-16"), which eliminates the requirement to restate prior periods to reflect adjustments made to provisional amounts recognized in a business combination. Under ASU 2015-16, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, rather than retrospectively, as had previously been required. ASU 2015-16 also requires acquirers to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 was effective for the Company as of January 1, 2016. The adoption of ASU 2015-16 did not have a material impact on the Company's consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory ("ASU 2015-11"), which simplifies the measurement of inventory by requiring entities to measure most inventory at the lower of cost and net realizable value, replacing the previous requirement to measure most inventory at the lower of cost or market. ASU 2015-11 does not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. ASU 2015-11 is effective for the Company for both interim and annual reporting periods beginning January 1, 2017. The adoption of ASU 2015-11 is not expected to have a material impact on the Company's consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"), which provides guidelines for determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 is effective for the Company for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The adoption of ASU 2014-15 is not expected to have a material impact on the Company's consolidated financial statements. In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force) (“ASU 2014-12”). ASU 2014-12 clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date without taking into account the effect of the performance target) related to an award for which transfer to the employee is contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met. ASU 2014-12 does not contain any new disclosure requirements. ASU 2014-12 was effective for the Company as of January 1, 2016. The adoption of ASU 2014-12 did not have a material impact on the Company's consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), its final standard on revenue from contracts with customers. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue model to contracts within its scope, an entity identifies the contract(s) with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations in the contract and recognizes revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers that are within the scope of other topics in the FASB ASC. Certain of ASU 2014-09’s provisions also apply to transfers of nonfinancial assets, including in-substance nonfinancial assets that are not an output of an entity’s ordinary activities (i.e., property, plant and equipment; real estate; or intangible assets). Existing accounting guidance applicable to these transfers has been amended or superseded. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"), which defers the original effective date of interim and annual reporting periods by one year. As a result, the Company will not be required to apply the new revenue standard until annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) ("ASU 2016-08") to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard in response to feedback received from the FASB-International Accounting Standards Board joint revenue recognition transition resource group. ASU 2016-08 clarifies the implementation guidance on principal-versus-agent considerations regarding how an entity determines whether it is a principal or an agent for each specified good or service promised to the customer and how an entity determines the nature of each specified good or service. ASU 2016-08 also provides clarification regarding the application of the principal-versus-agent guidance. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ("ASU 2016-10"), which amends certain aspects of the guidance in ASU 2014-09 on identifying performance obligations, including immaterial promised goods or services, shipping and handling activities and identifying when promises represent performance obligations; and licensing implementation guidance, including determining the nature of an entity's promise in granting a license, sales-based and usage-based royalties, restrictions of time, geographical location and use, and renewals of licenses that provide a right to use IP. In May 2016, the FASB issued ASU 2016-11, R evenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815) ("ASU 2016-11"), which rescinds certain SEC guidance from the Codification in response to announcements made by the SEC staff at the Emerging Issues Task Force's March 3, 2016 meeting, and which supersedes certain SEC observer comments on the topics of revenue and expense recognition for freight services in process, accounting for shipping and handling fees and costs, accounting for consideration given by a vendor to a customer and accounting for gas-balancing arrangements upon the adoption of ASU 2014-09. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606) ("ASU 2016-12"), which amends certain aspects of ASU 2014-09, including regarding collectability, the presentation of sales tax and other similar taxes collected from customers, non-cash consideration, contract modifications and completed contracts at transition. ASU 2016-08, ASU 2016-10, ASU 2016-11 and ASU 2016-12 are effective at the same time as ASU 2014-09 (as amended by ASU 2015-14). The Company is currently assessing the potential impact of the adoption of these ASUs on its consolidated financial statements. |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS Taqua, LLC On the Taqua Acquisition Date, the Company acquired Taqua, a privately-held company. Taqua enables the transformation of software-based service provider networks to deliver next-generation voice, video and messaging services, including VoIP, Voice over Wi-Fi ("VoWiFi") and Voice over Long-Term Evolution ("VoLTE"). The Company believes that the acquisition of Taqua will, among other things, accelerate the Company's mobile strategy by adding a Virtualized Mobile Core ("VMC") Platform and an IP Multimedia Subsystem ("IMS") Service Core and expand the Company's fixed portfolio by adding a Class 5 Softswitch (the T7000) for Network Transformation projects and a Multimedia Controller used in IP Peering applications (the T7100), both of which are complementary to Sonus' current product offerings. In consideration for the acquisition of Taqua, Sonus paid $19.9 million in cash to the sellers on the Taqua Acquisition Date, net of cash acquired. The Company also entered into an Earn-Out Agreement, dated as of September 26, 2016, with Taqua Holdings, LLC and Jeffrey L. Brawner, the seller representative in the transaction, under which there is the potential for additional cash payments of up to $65.0 million in the aggregate to the sellers if certain annual revenue thresholds are exceeded as measured annually through 2020. Based on historical sales and probability weighted cash flows related to forecasted sales, the Company recorded $10.0 million of contingent consideration as of the Taqua Acquisition Date. The Company determined that the estimated fair value of the earn-out at September 30, 2016 equaled its carrying value. Because there are unobservable inputs to the valuation methodology that are significant to the measurement of its fair value, namely, forecasted sales, the Company has categorized the earn-out at Level 3 within the fair value hierarchy. There were no changes to the estimated fair value of the earn-out between the Taqua Acquisition Date and September 30, 2016. The transaction has been accounted for as a business combination and the financial results of Taqua have been included in the Company's condensed consolidated financial statements for the period subsequent to its acquisition. As of September 30, 2016, the valuation of acquired assets, identifiable intangible assets and certain accrued liabilities is preliminary. The Company is in the process of investigating the facts and circumstances existing as of the Taqua Acquisition Date in order to finalize its valuation. Based on the preliminary purchase price allocation, the Company recorded $11.8 million of goodwill, which is primarily due to expected synergies between the combined companies and expanded market opportunities resulting from the expanded product offering portfolio. The goodwill is deductible for tax purposes. A summary of the preliminary allocation of the purchase consideration for Taqua is as follows (in thousands): Fair value of consideration transferred: Cash, net of cash acquired $ 19,919 Contingent consideration estimate 10,000 Fair value of total consideration $ 29,919 Fair value of assets acquired and liabilities assumed: Current assets 3,711 Property and equipment 1,445 Intangible assets: Developed technology 14,200 Customer relationships 4,000 Goodwill 11,826 Other noncurrent assets 493 Current liabilities (5,212 ) Long-term liabilities (544 ) $ 29,919 The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the acquired developed technology and customer relationship intangible assets. The preliminary valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk. The valuation assumptions take into consideration the Company's estimates of technology attrition and revenue growth projections. The Company is amortizing the identifiable intangible assets in relation to the expected cash flows from the individual intangible assets over their respective useful lives (see Note 6 ). Taqua recorded $9.2 million of revenue for the nine months ended September 30, 2016 and $28.3 million of revenue for the year ended December 31, 2015. The Company has not disclosed the amount of revenue or earnings of Taqua since the Taqua Acquisition Date or pro forma financial information, as these amounts are not significant to the Company's consolidated financial statements. Treq Labs, Inc. On the Treq Asset Acquisition Date, the Company acquired from Treq the SDN Business. The SDN Business provides solutions that optimize networks for voice, video and UC for both enterprise and service provider customers. In consideration for the acquisition of the SDN Business, Sonus paid $10.1 million in cash on the Treq Asset Acquisition Date, and an additional consideration payment of $750,000 on each of July 2, 2015 and January 4, 2016. The Company also entered into an Earn-Out Agreement, dated as of January 2, 2015, with Treq and Karl F. May, the seller representative in the transaction (the "Earn-Out Agreement"), under which the Company agreed to issue up to an aggregate of 1.3 million shares of common stock over a three -year period subsequent to the Treq Asset Acquisition Date if aggregate revenue thresholds of at least $60 million are achieved by the SDN Business during that period, and up to an aggregate of an additional 2.2 million shares ( 3.5 million shares in total) if aggregate revenue thresholds of at least $150 million are achieved by the SDN Business during that period. If the initial revenue thresholds are not met, no shares will be issued. Based on historical and forecasted sales, no incremental contingent consideration was recorded either initially as of the Treq Asset Acquisition Date or through September 30, 2016 . Any shares issued pursuant to the Earn-Out Agreement will be issued in reliance on the exemption from registration available under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and will be subsequently registered for resale under the Securities Act by the Company. The transaction has been accounted for as a business combination. The Company finalized its valuation of the identifiable intangible assets in the second quarter of fiscal 2015. Based on the purchase price allocation, the Company recorded $1.0 million of goodwill, primarily due to expected synergies between the combined companies and expanded market opportunities. The goodwill is deductible for tax purposes. A summary of the purchase consideration for the SDN Business is as follows (in thousands): Fair value of consideration transferred: Cash, net of cash acquired $ 11,647 Fair value of assets acquired and liabilities assumed: Intangible assets: In-process research and development $ 9,100 Developed technology 1,500 Goodwill 1,047 $ 11,647 The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the acquired in-process research and development and developed technology intangible assets. The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk. The valuation assumptions take into consideration the Company's estimates of technology attrition and revenue growth projections. During the three months ended March 31, 2016, the Company began to record amortization expense in connection with the in-process research and development intangible assets related to a product that became generally available in that quarter and accordingly, reclassified the asset with a cost basis of $1.6 million to its developed technology intangible assets. During the three months ended September 25, 2015, the Company began to record amortization expense in connection with certain of the in-process research and development intangible assets related to a product that became generally available in that quarter and accordingly, reclassified the asset with a cost basis of $7.5 million to its developed technology intangible assets. Accordingly, as of March 31, 2016, the Company no longer had an in-process research and development intangible asset. The Company is amortizing the identifiable intangible assets in relation to the expected cash flows from the individual intangible assets over their respective useful lives (see Note 6 ). The Company has not disclosed the amount of revenue or earnings of the SDN Business since the Treq Asset Acquisition Date or pro forma financial information, as these amounts are not significant to the Company's consolidated financial statements. Acquisition-Related Expenses Acquisition-related expenses include those expenses related to acquisitions that would otherwise not have been incurred by the Company. These expenses include professional and services fees, such as legal, audit, consulting, paying agent and other fees, as well as cash payments to certain employees of acquired companies in connection with change of control agreements. The amounts recorded in the three and nine months ended September 30, 2016 relate to professional fees in connection with the acquisition of Taqua. The amounts recorded in the nine months ended September 25, 2015 relate to professional fees in connection with the acquisition of the SDN Business. The Company did not record acquisition-related expenses in the three months ended September 25, 2015. The acquisition-related expenses included in the Company's results of operations for the three and nine months ended September 30, 2016 and September 25, 2015 are as follows (in thousands): Three months ended Nine months ended September 30, September 25, September 30, September 25, Professional and services fees $ 951 $ — $ 951 $ 131 |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during the period. For periods in which the Company reports net income, diluted net income per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period unless the effect is antidilutive. The calculations of shares used to compute basic and diluted loss per share are as follows (in thousands): Three months ended Nine months ended September 30, September 25, September 30, September 25, Weighted average shares outstanding—basic 49,402 49,625 49,436 49,512 Potential dilutive common shares — — — — Weighted average shares outstanding—diluted 49,402 49,625 49,436 49,512 Options to purchase the Company's common stock, unvested shares of restricted stock, unvested shares of performance-based stock and shares in connection with future purchases under the Company's Amended and Restated 2000 Employee Stock Purchase Plan, as amended (the "ESPP"), totaling 8.2 million shares for the three and nine months ended September 30, 2016 and 8.6 million shares for the three and nine months ended September 25, 2015 have not been included in the computation of diluted loss per share because their effect would have been antidilutive. |
CASH EQUIVALENTS AND INVESTMENT
CASH EQUIVALENTS AND INVESTMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Investments, All Other Investments [Abstract] | |
CASH EQUIVALENTS, MARKETABLE SECURITIES AND INVESTMENTS | CASH EQUIVALENTS AND INVESTMENTS The Company invests in debt instruments, primarily U.S. government-backed, municipal and corporate obligations, which management believes to be high quality (investment grade) credit instruments. During the three months ended September 30, 2016, the Company sold $1.1 million of its available-for-sale securities that were impacted by the Money Market Reform Act, which became effective October 14, 2016 for institutional money markets, to avoid any negative impact on the Company's institutional money market investments. The Company recognized nominal gross gains from the sale of these securities. During the three months ended March 31, 2016, the Company sold $3.8 million of its available-for-sale securities and recognized gross losses aggregating $18,000 . Accordingly, the Company's Other income, net, in its condensed consolidated statement of operations for the nine months ended September 30, 2016 includes a loss in the aggregate of approximately $18,000 related to the aforementioned sales. The Company did not sell any of its available-for-sale securities during the three or nine months ended September 25, 2015. Investments with continuous unrealized losses for one year or greater at September 30, 2016 were nominal. Since the Company currently does not intend to sell these securities and does not believe it will be required to sell any securities before they recover in value, it does not believe these declines are other-than-temporary. On a quarterly basis, the Company reviews its marketable securities and investments to determine if there have been any events that could create a credit impairment. Based on its reviews, the Company does not believe that any impairment existed with its current holdings at September 30, 2016 . The amortized cost, gross unrealized gains and losses and fair value of the Company's marketable debt securities and investments at September 30, 2016 and December 31, 2015 were comprised of the following (in thousands): September 30, 2016 Amortized cost Unrealized gains Unrealized losses Fair value Cash equivalents $ 12,389 $ — $ — $ 12,389 Marketable securities Municipal obligations $ 2,627 $ 3 $ — $ 2,630 U.S. government agency notes 9,973 9 — 9,982 Corporate debt securities 37,221 12 (16 ) 37,217 $ 49,821 $ 24 $ (16 ) $ 49,829 Investments Municipal obligations $ 1,109 $ 1 $ — $ 1,110 U.S. government agency notes 21,470 17 (2 ) 21,485 Corporate debt securities 16,011 11 (14 ) 16,008 $ 38,590 $ 29 $ (16 ) $ 38,603 December 31, 2015 Amortized cost Unrealized gains Unrealized losses Fair value Cash equivalents $ 7,122 $ — $ — $ 7,122 Marketable securities Municipal obligations $ 3,910 $ — $ (1 ) $ 3,909 U.S. government agency notes 3,450 — (2 ) 3,448 Corporate debt securities 46,736 2 (56 ) 46,682 Commercial paper 3,994 — — 3,994 Certificates of deposit 500 — — 500 $ 58,590 $ 2 $ (59 ) $ 58,533 Investments Municipal obligations $ 2,165 $ — $ (4 ) $ 2,161 U.S. government agency notes 1,999 — (13 ) 1,986 Corporate debt securities 29,541 2 (85 ) 29,458 $ 33,705 $ 2 $ (102 ) $ 33,605 The Company's available-for-sale debt securities classified as Investments in the condensed consolidated balance sheets at September 30, 2016 and December 31, 2015 had maturity dates after one year but within approximately two years or less from the balance sheet date. Fair Value Hierarchy Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tier fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1. Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2. Level 2 applies to assets or liabilities for which there are inputs that are directly or indirectly observable in the marketplace, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets). Level 3. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The following table shows the fair value of the Company's financial assets at September 30, 2016 and December 31, 2015 . These financial assets are comprised of the Company's available-for-sale debt securities and reported under the captions Cash and cash equivalents, Marketable securities and Investments in the condensed consolidated balance sheets (in thousands): Fair value measurements at Total carrying Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Cash equivalents $ 12,389 $ 12,389 $ — $ — Marketable securities Municipal obligations $ 2,630 $ — $ 2,630 $ — U.S. government agency notes 9,982 — 9,982 — Corporate debt securities 37,217 — 37,217 — $ 49,829 $ — $ 49,829 $ — Investments Municipal obligations $ 1,110 $ — $ 1,110 $ — U.S. government agency notes 21,485 — 21,485 — Corporate debt securities 16,008 — 16,008 — $ 38,603 $ — $ 38,603 $ — Fair value measurements at Total carrying Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Cash equivalents $ 7,122 $ 7,122 $ — $ — Marketable securities Municipal obligations $ 3,909 $ — $ 3,909 $ — U.S. government agency notes 3,448 — 3,448 — Corporate debt securities 46,682 — 46,682 — Commercial paper 3,994 — 3,994 — Certificates of deposit 500 — 500 — $ 58,533 $ — $ 58,533 $ — Investments Municipal obligations $ 2,161 $ — $ 2,161 $ — U.S. government agency notes 1,986 — 1,986 — Corporate debt securities 29,458 — 29,458 — $ 33,605 $ — $ 33,605 $ — The Company's marketable securities and investments have been valued with the assistance of valuations provided by third-party pricing services, as derived from such services' pricing models. Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, prices or yields of securities with similar characteristics, benchmark curves or information pertaining to the issuer, as well as industry and economic events. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. The Company is ultimately responsible for the condensed consolidated financial statements and underlying estimates. Accordingly, the Company assesses the reasonableness of the valuations provided by the third-party pricing services by reviewing actual trade data, broker/dealer quotes and other similar data, which are obtained from quoted market prices or other sources. |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory at September 30, 2016 and December 31, 2015 consists of the following (in thousands): September 30, December 31, On-hand final assemblies and finished goods inventories $ 17,319 $ 17,136 Deferred cost of goods sold 4,942 5,975 22,261 23,111 Less current portion (20,811 ) (23,111 ) Noncurrent portion (included in Other assets) $ 1,450 $ — |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL The Company's intangible assets at September 30, 2016 and December 31, 2015 consist of the following (dollars in thousands): September 30, 2016 Weighted average amortization period (years) Cost Accumulated amortization Net carrying value Developed technology 6.92 $ 47,080 $ 14,952 $ 32,128 Customer relationships 5.69 14,030 7,364 6,666 Internal use software 3.00 730 730 — 6.59 $ 61,840 $ 23,046 $ 38,794 December 31, 2015 Weighted average amortization period (years) Cost Accumulated amortization Net carrying value In-process research and development * $ 1,600 $ — $ 1,600 Developed technology 6.42 31,280 10,415 20,865 Customer relationships 5.57 10,030 6,408 3,622 Internal use software 3.00 730 730 — 6.19 $ 43,640 $ 17,553 $ 26,087 ________________ * An in-process research and development intangible asset has an indefinite life until the product is generally available, at which time such asset is reclassified to developed technology. As of September 30, 2016, all of the Company's in-process research and development intangible assets had been reclassified to developed technology and are being amortized over their respective estimated useful lives. Amortization expense for intangible assets for the three and nine months ended September 30, 2016 and September 25, 2015 was as follows (in thousands): Three months ended Nine months ended Statement of operations classification September 30, September 25, September 30, September 25, Developed technology $ 1,455 $ 1,282 $ 4,537 $ 3,505 Cost of revenue - product Customer relationships 319 414 956 1,308 Sales and marketing Internal use software — 41 — 162 Cost of revenue - product $ 1,774 $ 1,737 $ 5,493 $ 4,975 During the three months ended September 30, 2016, the Company recorded intangible assets aggregating $18.2 million , comprised of $14.2 million related to developed technology, with an estimated useful life of 8 years , and $4.0 million related to customer relationships, with an estimated useful life of 6 years . The Company is amortizing these intangible assets in relation to the expected cash flows from the individual intangible assets over their respective useful lives. The Company did not record amortization expense for the Taqua intangible assets for the period from the Taqua Acquisition Date through September 30, 2016, as the amounts were immaterial to the Company's consolidated financial results. The Company is recording amortization expense in connection with the in-process research and development intangible assets that arose from the acquisition of the SDN Business, of which $1.6 million had been reclassified to developed technology in the three months ended March 31, 2016 and $7.5 million had been reclassified to developed technology in the three months ended September 25, 2015, representing the cost basis of products that became generally available in the respective quarters. The Company has determined that the reclassified assets each have an estimated useful life of 7 years . The Company is amortizing the identifiable intangible assets in relation to the expected cash flows from the individual intangible assets over their respective useful lives. Estimated future amortization expense for the Company's intangible assets at September 30, 2016 is as follows (in thousands): Years ending December 31, Remainder of 2016 $ 2,524 2017 10,836 2018 7,747 2019 7,079 2020 4,507 Thereafter 6,101 $ 38,794 The changes in the carrying value of the Company's goodwill in the nine months ended September 30, 2016 were as follows (in thousands): Balance at January 1, 2016 Goodwill $ 43,416 Accumulated impairment losses (3,106 ) 40,310 Acquisition of Taqua 11,826 Balance at September 30, 2016 $ 52,136 Balance at September 30, 2016 Goodwill $ 55,242 Accumulated impairment losses (3,106 ) $ 52,136 The changes in the carrying value of the Company's goodwill in the nine months ended September 25, 2015 were as follows (in thousands): Balance at January 1, 2015 Goodwill $ 42,369 Accumulated impairment losses (3,106 ) 39,263 Acquisition of SDN Business 1,047 Balance at September 25, 2015 $ 40,310 Balance at September 25, 2015 Goodwill $ 43,416 Accumulated impairment losses (3,106 ) $ 40,310 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses at September 30, 2016 and December 31, 2015 consist of the following (in thousands): September 30, December 31, Employee compensation and related costs $ 12,577 $ 22,180 Other 10,413 9,783 $ 22,990 $ 31,963 |
RESTRUCTURING ACCRUAL
RESTRUCTURING ACCRUAL | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING ACCRUAL | RESTRUCTURING ACCRUAL 2016 Restructuring Initiative In July 2016, the Company announced a program to further accelerate its investment in new technologies as the communications industry migrates to a cloud-based architecture (the "2016 Restructuring Initiative"). The Company expects to record between $3 million and $4 million of restructuring expense through the third quarter of 2017 in connection with this action, resulting in expected annual savings of approximately $6 million to $8 million . The Company intends to utilize the entire savings to shift headcount toward new strategic initiatives, such as new products and an expanded go-to-market footprint in selected geographies and discrete vertical markets. In connection with this restructuring initiative, the Company recorded $1.2 million in the three months ended September 30, 2016. A summary of the 2016 Restructuring Initiative accrual activity for the nine months ended September 30, 2016 is as follows: Balance at Initiatives Adjustments for changes in estimate Cash Balance at Severance $ — $ 1,236 $ — $ (216 ) $ 1,020 The Company expects that the amounts accrued under the 2016 Restructuring Initiative will be paid by end of the fourth quarter of 2017. Taqua Restructuring Initiative In connection with the acquisition of Taqua, the Company's management approved an immaterial restructuring plan in the third quarter of 2016 to eliminate certain redundant positions within the combined companies. On October 24, 2016, the Audit Committee of the Board of Directors of the Company approved a broader Taqua restructuring plan related to headcount and redundant facilities (both restructuring plans, the "Taqua Restructuring Initiative"). In connection with this initiative, the Company recorded $0.4 million in the three months ended September 30, 2016. The Company anticipates it will record additional future expense in connection with this initiative for headcount and redundant facilities aggregating approximately $1 million to $2 million . A summary of the Taqua Restructuring Initiative accrual activity for the nine months ended September 30, 2016 is as follows: Balance at Initiatives Adjustments for changes in estimate Cash Balance at Severance $ — $ 384 $ — $ — $ 384 The Company expects that the amounts accrued under the Taqua Restructuring Initiative will be paid by the end of the second quarter of 2017. 2015 Restructuring Initiative To better align the Company's cost structure to its current revenue expectations, in April 2015, the Company announced a cost reduction review and restructuring initiative (the "2015 Restructuring Initiative"). A summary of the 2015 Restructuring Initiative accrual activity for the nine months ended September 30, 2016 is as follows (in thousands): Balance at Initiatives Adjustments for changes in estimate Cash Balance at Severance $ 749 $ — $ — $ (649 ) $ 100 The Company expects that the remaining amounts accrued under the 2015 Restructuring Initiative will be paid by the end of 2016. Balance Sheet Classification At September 30, 2016 , the Company's restructuring accruals aggregated $1.5 million , of which approximately $33,000 was included in Other long-term liabilities, with the remainder included in Accrued expenses in the condensed consolidated balance sheet. At December 31, 2015 , all of the restructuring accrual was included in Accrued expenses, as there was no long-term portion. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The Company entered into a credit agreement by and among the Company, as Borrower, Bank of America, N.A. ("Bank of America"), as Administrative Agent, Swing Line Lender and L/C Issuer, and the other lenders from time to time party thereto on June 27, 2014 (the "Credit Agreement"), which agreement was amended by a First Amendment to Credit Agreement on June 26, 2015 (the "First Amendment") and further amended by a Second Amendment to Credit Agreement on June 13, 2016 (the "Second Amendment" and collectively with the Credit Agreement and the First Amendment, the "Amended Credit Agreement"). Certain terms of the Credit Agreement have been amended by the Second Amendment, including, among other things: (i) an increase of the commitments from $15 million to $20 million ; (ii) an extension of the maturity date from June 30, 2016 to June 30, 2017; (iii) a reduction to the aggregate amount of cash and cash equivalents that the Loan Parties (as defined below) are required to hold at any time from $85 million to $50 million ; and (iv) a reduction of the commitment fee on the unused commitments available for borrowing from 0.15% to 0.1125% . The Amended Credit Agreement provides that the Company may select the interest rates under the credit facility from among the following options: (i) the Eurodollar Rate (which is defined as the rate per annum equal to the London Interbank Offered Rate plus 1.5% per annum) for a Eurodollar Rate Loan; and (ii) the highest of (a) the Federal Funds Rate plus 1/2 of 1% , (b) the rate of interest in effect on the borrowing date as publicly announced from time to time by Bank of America as its prime rate, and (c) the monthly Eurodollar Rate plus 1% . The obligations of the Company under the Amended Credit Agreement are guaranteed by Sonus International, Inc., Sonus Federal, Inc. and Network Equipment Technologies, Inc. ("NET") (collectively with the Company, the "Loan Parties") pursuant to a Master Continuing Guaranty and are secured by the assets of the Loan Parties pursuant to a Security and Pledge Agreement. The Amended Credit Agreement contains affirmative, negative and financial covenants customary for financings of this type. The negative covenants include limitations on liens, indebtedness, fundamental changes, dispositions, restricted payments, investments, transactions with affiliates, certain restrictive agreements and compliance with sanctions laws and regulations. The total revenues of the Loan Parties cannot be less than an aggregate of $50 million as of the last day of the Loan Parties' fiscal quarter, computed on a fiscal quarterly basis. The credit facility will become due on June 30, 2017, subject to acceleration upon certain specified events of default, including, without limitation, payment defaults, defaults in the performance of affirmative and negative covenants, the inaccuracy of representations of warranties, bankruptcy and insolvency-related defaults, defaults relating to judgments, an ERISA Event (as defined in the Amended Credit Agreement), the failure to pay specified indebtedness and a change of control default. The Company did not have any amounts outstanding under the Amended Credit Agreement at either September 30, 2016 or December 31, 2015 . |
COMMON STOCK REPURCHASES AND UN
COMMON STOCK REPURCHASES AND UNDERWRITTEN OFFERING (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
COMMON STOCK REPURCHASES AND UNDERWRITTEN OFFERING | COMMON STOCK REPURCHASES On July 29, 2013, the Company announced that its Board of Directors had authorized a stock buyback program to repurchase up to $100 million of the Company's common stock from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased will be determined by the Company's management based on its evaluation of market conditions and other factors. The Company may elect to implement a 10b5-1 repurchase program, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The Company has not implemented such a 10b5-1 repurchase program to date. The stock buyback program may be suspended or discontinued at any time. The stock buyback program is being funded using the Company's working capital. During the nine months ended September 30, 2016 , the Company spent $7.1 million , including transaction fees, to repurchase and retire 0.9 million shares of its common stock under the stock buyback program. During the nine months ended September 25, 2015 , the Company spent $6.1 million , including transaction fees, to repurchase and retire 0.4 million shares of its common stock under the stock buyback program. At September 30, 2016 , the Company had $7.8 million remaining under the stock buyback program for future repurchases. |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION PLANS | STOCK-BASED COMPENSATION PLANS Stock Incentive Plan The Company's 2007 Stock Incentive Plan, as amended (the "2007 Plan"), provides for the award of options to purchase the Company's common stock ("stock options"), stock appreciation rights ("SARs"), restricted common stock awards ("RSAs"), restricted common stock units ("RSUs"), performance-based stock awards ("PSAs"), performance-based stock units ("PSUs") and other stock-based awards to employees, officers, directors (including those directors who are not employees or officers of the Company), consultants and advisors of the Company and its subsidiaries. At its 2016 annual meeting of stockholders held on June 9, 2016 (the "2016 Annual Meeting"), the Company's stockholders approved (i) changing the name of the 2007 Plan to the Amended and Restated Stock Incentive Plan (the "Stock Plan") and (ii) other amendments to the Stock Plan including, among other things, to: • Increase the number of shares of the Company's common stock authorized for issuance under the Stock Plan by 800,000 shares; • Extend the Stock Plan's termination date through the tenth anniversary of the 2016 Annual Meeting; • Revise the rate at which RSAs, RSUs, PSAs and PSUs (collectively, "full value awards") are counted against the shares of common stock available for issuance under the Stock Plan from 1.61 shares for every one share subject to such award to 1.50 shares for every one share subject to such award. Shares of common stock subject to full value awards that were granted under any prior ratio that applied at the time such awards were granted will continue to return to the Stock Plan upon forfeiture of such awards at the respective previous ratio of 1.50 , 1.57 and 1.61 , as applicable; • Increase the maximum number of shares of the Company's common stock with respect to which awards may be granted to any participant under the Stock Plan to 1,000,000 shares per calendar year; • Increase the maximum number of shares of the Company's common stock with respect to which awards may be granted under the Stock Plan to any director who is not an employee of the Company at the time of grant to 100,000 shares per calendar year; and • Prohibit stock options and SARs granted under the Stock Plan from (i) providing for the payment or accrual of dividend equivalents or (ii) containing any provision entitling the grantee to the automatic grant of additional stock options or SARs, as applicable, in connection with the exercise of the original stock option or SAR, as applicable. In June 2016, the Compensation Committee of the Company's Board of Directors (the "Compensation Committee") voted to change the standard vesting terms for awards of stock options, RSAs and RSUs granted after June 9, 2016 as follows: • Stock options will generally vest over a period of three years , with one-third of the stock options vesting on the first anniversary of the grant date and the remaining two-thirds vesting in equal monthly increments thereafter through the third anniversary of the grant date. • RSAs and RSUs (collectively, the "restricted stock grants") will generally vest over a period of three years , with one-third of the shares underlying the grant vesting on the first anniversary of the grant date and the remaining two-thirds vesting in equal increments semi-annually through the third anniversary of the grant date. The Company neither adjusted nor intends to adjust the vesting schedules of stock options or restricted stock grants awarded prior to June 9, 2016 to reflect the new three-year vesting schedules. Executive Equity Arrangements On April 1, 2016, the Company granted an aggregate of 131,250 PSUs with both market and service conditions to six of its executives (the "2016 PSUs"). The terms of the 2016 PSUs are such that up to one-third of the shares subject to the 2016 PSUs will vest on each of the first, second and third anniversaries of the date of grant (collectively, the "2016 PSU Vesting Dates") to the extent of achievement of the Company's total shareholder return ("TSR") compared to the TSR of the companies included in the NASDAQ Telecommunications Index for the same fiscal year, measured by the Compensation Committee after each of the 2016, 2017 and 2018 fiscal years, respectively (as used in this paragraph, each, a "Performance Period"). The shares determined to be earned will vest on the anniversary of the grant date following each Performance Period. Shares subject to the 2016 PSUs that fail to be earned will be forfeited. The 2016 PSUs include a market condition that requires the use of a Monte Carlo simulation approach to model future stock price movements based upon the risk-free rate of return, the volatility of each entity, and the pair-wise covariance between each entity. These results were then used to calculate the grant date fair values of the 2016 PSUs. Because the 2016 PSUs have market conditions, the Company is required to record expense for the 2016 PSUs through the final 2016 PSU Vesting Date of April 1, 2019, regardless of the number of shares that are ultimately earned. In June 2016, one executive separated from the Company and forfeited his unvested 2016 PSUs; these forfeited unvested 2016 PSUs are reported as such in the performance-based units table below. On March 16, 2015, the Company granted an aggregate of 131,250 PSUs with both market and service conditions to eight of its executives (the "2015 PSUs"). In 2015, subsequent to the grant date, two executives separated from the Company and, in accordance with their respective employment agreements with the Company, the Company accelerated the vesting of certain unvested 2015 PSUs. The terms of the 2015 PSUs are such that up to one-third of the shares subject to the 2015 PSUs will vest on each of the first, second and third anniversaries of the date of grant (collectively, the "2015 PSU Vesting Dates") to the extent of achievement of the Company's TSR compared to the TSR of the companies included in the NASDAQ Telecommunications Index for the same Performance Period, measured by the Compensation Committee at the end of each of the 2015, 2016 and 2017 fiscal years, respectively (as used in this paragraph, each, a "Performance Period"). The shares determined to be earned will vest on the anniversary of the grant date following each Performance Period. Shares subject to the 2015 PSUs that fail to be earned will be forfeited. The 2015 PSUs include a market condition that required the use of a Monte Carlo simulation approach to calculate the grant date fair values of the 2015 PSUs. Because the 2015 PSUs have market conditions, the Company is required to record expense for the 2015 PSUs through the final 2015 PSU Vesting Date of March 16, 2018, regardless of the number of shares that are ultimately earned, if any. In February 2016, the Compensation Committee determined that the performance metrics for the 2015 PSUs were not achieved for the 2015 Performance Period. Accordingly, 37,081 shares in the aggregate, representing one-third of the 2015 PSUs held by the then-remaining six executives, were forfeited, and are reported as such in the performance-based units table below. In June 2016, one executive separated from the Company and forfeited his unvested 2015 PSUs; these forfeited unvested 2015 PSUs are reported as such in the performance-based units table below. In connection with the October 2016 separation of one executive from the Company and the terms of his employment agreement, as amended, the vesting schedules of certain of his stock options, RSAs and PSUs were accelerated to October 3, 2016. Accordingly, the Company accelerated the expense recognition in connection with these accelerated grants, resulting in incremental stock-based compensation expense of $1.9 million recorded in the three months ended September 30, 2016. The Company recorded all such incremental expense in the three months ended September 30, 2016, as any expense attributable to the period in the fourth quarter of 2016 was immaterial to the Company's consolidated financial results. Stock Options The activity related to the Company's outstanding stock options during the nine months ended September 30, 2016 is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2016 6,352,208 $ 15.99 Granted 161,090 $ 8.41 Exercised (19,578 ) $ 6.87 Forfeited (155,787 ) $ 14.80 Expired (569,905 ) $ 16.99 Outstanding at September 30, 2016 5,768,028 $ 15.74 5.51 $ 294 Vested or expected to vest at September 30, 2016 5,666,592 $ 15.78 5.46 $ 282 Exercisable at September 30, 2016 4,619,681 $ 15.82 5.01 $ 238 The grant date fair values of options to purchase common stock granted in the three and nine months ended September 30, 2016 were estimated using the Black-Scholes valuation model with the following assumptions: Three months ended Nine months ended September 30, September 30, Risk-free interest rate 1.13% 1.00% - 1.60% Expected dividends — — Weighted average volatility 51.6% 54.8% Expected life (years) 5.0 5.0-10.0 Additional information regarding the Company's stock options for the three and nine months ended September 30, 2016 is as follows: Three months ended Nine months ended September 30, September 30, Weighted average grant date fair value of stock options granted $ 4.01 $ 4.46 Total intrinsic value of stock options exercised (in thousands) $ 27 $ 38 Cash received from the exercise of stock options (in thousands) $ 120 $ 135 Restricted Stock Awards and Units The activity related to the Company's RSAs for the nine months ended September 30, 2016 is as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2016 1,512,783 $ 13.48 Granted 1,535,902 $ 7.79 Vested (701,774 ) $ 12.82 Forfeited (318,102 ) $ 10.25 Unvested balance at September 30, 2016 2,028,809 $ 9.91 The activity related to the Company's RSUs for the nine months ended September 30, 2016 is as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2016 95,361 $ 16.05 Granted 53,400 $ 7.58 Vested (35,193 ) $ 16.05 Forfeited (3,349 ) $ 16.05 Unvested balance at September 30, 2016 110,219 $ 11.95 The total fair value of shares of restricted stock granted under RSAs and RSUs that vested during the nine months ended September 30, 2016 was $9.6 million . Performance-Based Stock Units The activity related to the Company's PSUs for the nine months ended September 30, 2016 is as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2016 111,250 $ 14.68 Granted 131,250 $ 9.39 Vested — $ — Forfeited (66,665 ) $ 12.77 Unvested balance at September 30, 2016 175,835 $ 10.58 Employee Stock Purchase Plan The Company's ESPP provides for six -month offering periods with the purchase price of the stock equal to 85% of the lesser of the market price on the first or last day of the offering period. The maximum number of shares of common stock an employee may purchase during each offering period is 500 , subject to certain adjustments pursuant to the ESPP. S tock-Based Compensation The condensed consolidated statements of operations include stock-based compensation for the three and nine months ended September 30, 2016 and September 25, 2015 as follows (in thousands): Three months ended Nine months ended September 30, September 25, September 30, September 25, Product cost of revenue $ 95 $ 81 $ 259 $ 238 Service cost of revenue 331 378 985 1,155 Research and development 1,298 1,349 3,687 4,152 Sales and marketing 3,048 1,282 5,292 4,150 General and administrative 1,636 2,183 5,241 7,207 $ 6,408 $ 5,273 $ 15,464 $ 16,902 There is no income tax benefit for employee stock-based compensation expense for the nine months ended September 30, 2016 or September 25, 2015 due to the valuation allowance recorded. At September 30, 2016 , there was $25.2 million , net of expected forfeitures, of unrecognized stock-based compensation expense related to unvested stock options, awards, units and ESPP shares. This expense is expected to be recognized over a weighted average period of approximately two years . |
MAJOR CUSTOMERS
MAJOR CUSTOMERS | 9 Months Ended |
Sep. 30, 2016 | |
Risks and Uncertainties [Abstract] | |
MAJOR CUSTOMERS | MAJOR CUSTOMERS The following customers contributed 10% or more of the Company's revenue in at least one of the three or nine month periods ended September 30, 2016 and September 25, 2015 : Three months ended Nine months ended September 30, September 25, September 30, September 25, AT&T Inc. 12% 15% 13% 14% Inteliquent * 14% * * CenturyLink * 11% * * _______________________ * Represents less than 10% of revenue At September 30, 2016 , two customers accounted for 10% or more of the Company's accounts receivable balance, representing approximately 28% of the Company's accounts receivable balance. At December 31, 2015 , one customer accounted for 10% or more of the Company's accounts receivable balance, representing approximately 11% of the Company's accounts receivable balance. The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable. The Company maintains an allowance for doubtful accounts and such losses have been within management's expectations. |
GEOGRAPHIC INFORMATION
GEOGRAPHIC INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
GEOGRAPHIC INFORMATION | GEOGRAPHIC INFORMATION The Company's classification of revenue by geographic area is determined by the location to which the product is shipped or where the services are performed. The following table summarizes revenue by geographic area as a percentage of total revenue: Three months ended Nine months ended September 30, September 25, September 30, September 25, United States 70 % 77 % 69 % 71 % Europe, Middle East and Africa 14 11 13 12 Japan 7 5 10 10 Other Asia Pacific 5 4 5 4 Other 4 3 3 3 100 % 100 % 100 % 100 % International revenue, both as a percentage of total revenue and absolute dollars, may vary from one period to the next, and accordingly, historical data may not be indicative of future periods. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company's income tax provisions for the nine months ended September 30, 2016 and September 25, 2015 reflect the Company's estimates of the effective rates expected to be applicable for the respective full years, adjusted for any discrete events, which are recorded in the period that they occur. These estimates are reevaluated each quarter based on the Company's estimated tax expense for the full year. The estimated effective rates for the nine months ended September 30, 2016 and September 25, 2015 do not include any benefit for the Company's domestic losses, as the Company has concluded that a valuation allowance on any domestic benefit is required. Included in the Company's provision for the nine months ended September 30, 2016 is a discrete charge of $0.7 million related to an uncertain tax position of the Company's subsidiary in France. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES On April 6, 2015, Ming Huang, a purported shareholder of the Company, filed a Class Action Complaint (Civil Action No. 3:15-02407), alleging violations of the federal securities laws (the "Complaint") in the United States District Court for the District of New Jersey (the "District of New Jersey"), against the Company and two of its officers, Raymond P. Dolan, the Company's President and Chief Executive Officer, and Mark T. Greenquist, the Company's former Chief Financial Officer (collectively, the "Defendants"). On September 21, 2015, in response to motions subsequently filed with the District of New Jersey by four other purported shareholders of the Company seeking status as lead plaintiff, the District of New Jersey appointed Richard Sousa as lead plaintiff (the "Plaintiff"). The Plaintiff claims to represent purchasers of the Company's common stock during the period from October 23, 2014 to March 24, 2015, and seeks unspecified damages. The principal allegation contained in the Complaint is that the Defendants made misleading forward-looking statements concerning the Company's fiscal first quarter of 2015 financial performance. On September 22, 2015, the Company filed a Motion to Transfer (the “Motion to Transfer”) this case to the United States District Court for the District of Massachusetts. The Plaintiff filed his opposition to the Motion to Transfer on October 5, 2015, and the Company filed a reply to the Motion to Transfer on October 13, 2015. On March 21, 2016, the District of New Jersey granted the Company's Motion to Transfer. Thus, this case will now be litigated in the United States District Court for the District of Massachusetts (Civil Action No. 1:16-cv-10657-GAO). On May 4, 2016, the Plaintiff filed an amended complaint (the "Amended Complaint"), which is now the operative complaint in this litigation. On June 20, 2016, the Company and the other Defendants filed a Motion to Dismiss the Amended Complaint (the "Motion to Dismiss") and on July 25, 2016, the Plaintiff filed an opposition to the Motion to Dismiss. The Company filed its reply to the Plaintiff's opposition to the Motion to Dismiss on August 15, 2016. The Company believes that the Defendants have meritorious defenses to the allegations made in the Amended Complaint and does not expect the results of this suit to have a material effect on its business or consolidated financial statements. The Company is also fully cooperating with an SEC inquiry regarding the development and issuance of the Company's first quarter 2015 revenue and earnings guidance. At this time, it is not possible to predict the outcome of the SEC's inquiry, including whether or not any proceedings will be initiated or, if so, when or how the matter will be resolved and therefore an estimate of the possible range of loss, if any, cannot be made. In addition, the Company is often a party to disputes and legal proceedings that it considers routine and incidental to its business. Management does not expect the results of any of these actions to have a material effect on the Company's business or consolidated financial statements. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring items, necessary for their fair presentation with accounting principles generally accepted in the United States of America ("GAAP") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Interim results are not necessarily indicative of results for a full year or any future interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2015 (the "Annual Report"), which was filed with the SEC on February 23, 2016. For the year ended December 31, 2015, the Company reported its first, second and third quarters on a 4-4-5 basis, with the quarter ending on the Friday closest to the last day of each third month. Accordingly, the Company's first quarter ended on March 27, 2015, the second quarter ended on June 26, 2015 and the third quarter ended on September 25, 2015. Effective January 1, 2016, the Company is reporting its first, second and third quarters on a month-end basis, such that the first quarter ended on March 31, 2016, the second quarter ended on June 30, 2016 and the third quarter ended on September 30, 2016. The Company's fiscal year will continue to end on December 31. During the preparation of the Company's consolidated financial statements for the three-month period ended June 26, 2015, the Company identified an error related to the historical foreign translation of depreciation expense on certain foreign fixed assets that resulted in a historical understatement of expense in prior fiscal years totaling $1.4 million on a cumulative basis. There is no tax effect on these expenses as the amounts were calculated in the appropriate foreign currencies. The Company does not believe this error is material to its previously issued historical consolidated financial statements for any of the periods impacted and accordingly, has not adjusted its historical financial statements. The Company recorded the cumulative impact of the adjustment in the three months ended June 26, 2015. This adjustment resulted in a one-time $1.4 million overstatement of depreciation expense. The Company does not believe this adjustment is material to its condensed consolidated financial statements for the periods presented. On September 26, 2016 (the "Taqua Acquisition Date"), the Company acquired Taqua, LLC ("Taqua"), a leading supplier of IP communications systems, applications and services to mobile and fixed operators. The financial results of Taqua are included in the Company's condensed consolidated financial statements starting on the Taqua Acquisition Date. On January 2, 2015 (the "Treq Asset Acquisition Date"), the Company acquired from Treq Labs, Inc. ("Treq") certain assets related to Treq's business of designing, developing, marketing, selling, servicing and maintaining software-defined networking ("SDN") technology, SDN controller software and SDN management software (the "SDN Business"). The financial results of the SDN Business are included in the Company's condensed consolidated financial statements starting on the Treq Asset Acquisition Date. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Sonus and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates and Judgments | Use of Estimates and Judgments The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and judgments relied upon in preparing these consolidated financial statements include accounting for business combinations, revenue recognition for multiple element arrangements, inventory valuations, assumptions used to determine the fair value of stock-based compensation, intangible assets and goodwill valuations, including impairments, legal contingencies and recoverability of Sonus' net deferred tax assets and the related valuation allowances. Sonus regularly assesses these estimates and records changes in estimates in the period in which they become known. Sonus bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company's financial instruments, which include cash equivalents, marketable securities, investments, accounts receivable, accounts payable and other long-term liabilities, approximate their fair values. |
Operating Segments | Operating Segments The Company operates in a single segment. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. To date, the chief operating decision maker has made such decisions and assessed performance at the company level, as one segment. The Company's chief operating decision maker is its President and Chief Executive Officer. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), which amends the guidance in Accounting Standards Codification ("ASC") 230 on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of ASU 2016-15 is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. ASU 2016-15 adds or clarifies guidance on eight cash flow issues, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or certain other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for the Company beginning January 1, 2018 for both interim and annual reporting periods, with early adoption permitted. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is currently assessing the potential impact of the adoption of ASU 2016-15 on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument s ("ASU 2016-13"), which adds an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 is effective for the Company beginning January 1, 2020 for both interim and annual reporting periods, with early adoption permitted. The Company does not expect the adoption of ASU 2016-13 will have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for the Company beginning January 1, 2017 for both interim and annual reporting periods, with early adoption permitted. The Company is currently assessing the potential impact of the adoption of ASU 2016-09 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Section A - Leases: Amendments to the FASB Accounting Standards Codification ("ASU 2016-02"), its new standard on accounting for leases. ASU 2016-02 introduces a lessee model that brings most leases onto the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in ASC 606, the FASB's new revenue recognition standard (i.e., those related to evaluating when profit can be recognized). Furthermore, ASU 2016-02 addresses other concerns related to the current leases model. For example, ASU 2016-02 eliminates the current GAAP requirement for an entity to use bright-line tests in determining lease classification. ASU 2016-02 is effective for the Company for both interim and annual periods beginning January 1, 2019. The Company is currently assessing the potential impact of the adoption of ASU 2016-02 on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"), which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in the condensed consolidated balance sheet. Netting of deferred tax assets and deferred tax liabilities is still required under ASU 2015-17. The ASU is effective for the Company for its annual report of the year ending December 31, 2018 and for interim period reporting beginning January 1, 2019, with early adoption permitted. The Company elected to early-adopt ASU 2015-17 prospectively and accordingly, reclassified its net current deferred tax asset totaling $1.0 million to its noncurrent net deferred tax asset as of December 31, 2015. No prior periods were retrospectively adjusted. The early adoption of ASU 2015-17 did not have a material impact on the Company's consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments ("ASU 2015-16"), which eliminates the requirement to restate prior periods to reflect adjustments made to provisional amounts recognized in a business combination. Under ASU 2015-16, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, rather than retrospectively, as had previously been required. ASU 2015-16 also requires acquirers to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 was effective for the Company as of January 1, 2016. The adoption of ASU 2015-16 did not have a material impact on the Company's consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory ("ASU 2015-11"), which simplifies the measurement of inventory by requiring entities to measure most inventory at the lower of cost and net realizable value, replacing the previous requirement to measure most inventory at the lower of cost or market. ASU 2015-11 does not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. ASU 2015-11 is effective for the Company for both interim and annual reporting periods beginning January 1, 2017. The adoption of ASU 2015-11 is not expected to have a material impact on the Company's consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"), which provides guidelines for determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 is effective for the Company for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The adoption of ASU 2014-15 is not expected to have a material impact on the Company's consolidated financial statements. In June 2014, the FASB issued ASU 2014-12, Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force) (“ASU 2014-12”). ASU 2014-12 clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date without taking into account the effect of the performance target) related to an award for which transfer to the employee is contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met. ASU 2014-12 does not contain any new disclosure requirements. ASU 2014-12 was effective for the Company as of January 1, 2016. The adoption of ASU 2014-12 did not have a material impact on the Company's consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), its final standard on revenue from contracts with customers. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue model to contracts within its scope, an entity identifies the contract(s) with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations in the contract and recognizes revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers that are within the scope of other topics in the FASB ASC. Certain of ASU 2014-09’s provisions also apply to transfers of nonfinancial assets, including in-substance nonfinancial assets that are not an output of an entity’s ordinary activities (i.e., property, plant and equipment; real estate; or intangible assets). Existing accounting guidance applicable to these transfers has been amended or superseded. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ("ASU 2015-14"), which defers the original effective date of interim and annual reporting periods by one year. As a result, the Company will not be required to apply the new revenue standard until annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) ("ASU 2016-08") to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard in response to feedback received from the FASB-International Accounting Standards Board joint revenue recognition transition resource group. ASU 2016-08 clarifies the implementation guidance on principal-versus-agent considerations regarding how an entity determines whether it is a principal or an agent for each specified good or service promised to the customer and how an entity determines the nature of each specified good or service. ASU 2016-08 also provides clarification regarding the application of the principal-versus-agent guidance. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ("ASU 2016-10"), which amends certain aspects of the guidance in ASU 2014-09 on identifying performance obligations, including immaterial promised goods or services, shipping and handling activities and identifying when promises represent performance obligations; and licensing implementation guidance, including determining the nature of an entity's promise in granting a license, sales-based and usage-based royalties, restrictions of time, geographical location and use, and renewals of licenses that provide a right to use IP. In May 2016, the FASB issued ASU 2016-11, R evenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815) ("ASU 2016-11"), which rescinds certain SEC guidance from the Codification in response to announcements made by the SEC staff at the Emerging Issues Task Force's March 3, 2016 meeting, and which supersedes certain SEC observer comments on the topics of revenue and expense recognition for freight services in process, accounting for shipping and handling fees and costs, accounting for consideration given by a vendor to a customer and accounting for gas-balancing arrangements upon the adoption of ASU 2014-09. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606) ("ASU 2016-12"), which amends certain aspects of ASU 2014-09, including regarding collectability, the presentation of sales tax and other similar taxes collected from customers, non-cash consideration, contract modifications and completed contracts at transition. ASU 2016-08, ASU 2016-10, ASU 2016-11 and ASU 2016-12 are effective at the same time as ASU 2014-09 (as amended by ASU 2015-14). The Company is currently assessing the potential impact of the adoption of these ASUs on its consolidated financial statements. |
BUSINESS ACQUISITIONS (Tables)
BUSINESS ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | A summary of the preliminary allocation of the purchase consideration for Taqua is as follows (in thousands): Fair value of consideration transferred: Cash, net of cash acquired $ 19,919 Contingent consideration estimate 10,000 Fair value of total consideration $ 29,919 Fair value of assets acquired and liabilities assumed: Current assets 3,711 Property and equipment 1,445 Intangible assets: Developed technology 14,200 Customer relationships 4,000 Goodwill 11,826 Other noncurrent assets 493 Current liabilities (5,212 ) Long-term liabilities (544 ) $ 29,919 |
Summary of preliminary allocation of the purchase consideration | A summary of the purchase consideration for the SDN Business is as follows (in thousands): Fair value of consideration transferred: Cash, net of cash acquired $ 11,647 Fair value of assets acquired and liabilities assumed: Intangible assets: In-process research and development $ 9,100 Developed technology 1,500 Goodwill 1,047 $ 11,647 |
Schedule of Components of Acquisition Related Costs | The acquisition-related expenses included in the Company's results of operations for the three and nine months ended September 30, 2016 and September 25, 2015 are as follows (in thousands): Three months ended Nine months ended September 30, September 25, September 30, September 25, Professional and services fees $ 951 $ — $ 951 $ 131 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of calculations of shares used to compute basic and diluted earnings (loss) per share | The calculations of shares used to compute basic and diluted loss per share are as follows (in thousands): Three months ended Nine months ended September 30, September 25, September 30, September 25, Weighted average shares outstanding—basic 49,402 49,625 49,436 49,512 Potential dilutive common shares — — — — Weighted average shares outstanding—diluted 49,402 49,625 49,436 49,512 |
CASH EQUIVALENTS AND INVESTME25
CASH EQUIVALENTS AND INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments, All Other Investments [Abstract] | |
Schedule of amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | The amortized cost, gross unrealized gains and losses and fair value of the Company's marketable debt securities and investments at September 30, 2016 and December 31, 2015 were comprised of the following (in thousands): September 30, 2016 Amortized cost Unrealized gains Unrealized losses Fair value Cash equivalents $ 12,389 $ — $ — $ 12,389 Marketable securities Municipal obligations $ 2,627 $ 3 $ — $ 2,630 U.S. government agency notes 9,973 9 — 9,982 Corporate debt securities 37,221 12 (16 ) 37,217 $ 49,821 $ 24 $ (16 ) $ 49,829 Investments Municipal obligations $ 1,109 $ 1 $ — $ 1,110 U.S. government agency notes 21,470 17 (2 ) 21,485 Corporate debt securities 16,011 11 (14 ) 16,008 $ 38,590 $ 29 $ (16 ) $ 38,603 December 31, 2015 Amortized cost Unrealized gains Unrealized losses Fair value Cash equivalents $ 7,122 $ — $ — $ 7,122 Marketable securities Municipal obligations $ 3,910 $ — $ (1 ) $ 3,909 U.S. government agency notes 3,450 — (2 ) 3,448 Corporate debt securities 46,736 2 (56 ) 46,682 Commercial paper 3,994 — — 3,994 Certificates of deposit 500 — — 500 $ 58,590 $ 2 $ (59 ) $ 58,533 Investments Municipal obligations $ 2,165 $ — $ (4 ) $ 2,161 U.S. government agency notes 1,999 — (13 ) 1,986 Corporate debt securities 29,541 2 (85 ) 29,458 $ 33,705 $ 2 $ (102 ) $ 33,605 |
Schedule of fair value of financial assets | The following table shows the fair value of the Company's financial assets at September 30, 2016 and December 31, 2015 . These financial assets are comprised of the Company's available-for-sale debt securities and reported under the captions Cash and cash equivalents, Marketable securities and Investments in the condensed consolidated balance sheets (in thousands): Fair value measurements at Total carrying Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Cash equivalents $ 12,389 $ 12,389 $ — $ — Marketable securities Municipal obligations $ 2,630 $ — $ 2,630 $ — U.S. government agency notes 9,982 — 9,982 — Corporate debt securities 37,217 — 37,217 — $ 49,829 $ — $ 49,829 $ — Investments Municipal obligations $ 1,110 $ — $ 1,110 $ — U.S. government agency notes 21,485 — 21,485 — Corporate debt securities 16,008 — 16,008 — $ 38,603 $ — $ 38,603 $ — Fair value measurements at Total carrying Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Cash equivalents $ 7,122 $ 7,122 $ — $ — Marketable securities Municipal obligations $ 3,909 $ — $ 3,909 $ — U.S. government agency notes 3,448 — 3,448 — Corporate debt securities 46,682 — 46,682 — Commercial paper 3,994 — 3,994 — Certificates of deposit 500 — 500 — $ 58,533 $ — $ 58,533 $ — Investments Municipal obligations $ 2,161 $ — $ 2,161 $ — U.S. government agency notes 1,986 — 1,986 — Corporate debt securities 29,458 — 29,458 — $ 33,605 $ — $ 33,605 $ — |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventory at September 30, 2016 and December 31, 2015 consists of the following (in thousands): September 30, December 31, On-hand final assemblies and finished goods inventories $ 17,319 $ 17,136 Deferred cost of goods sold 4,942 5,975 22,261 23,111 Less current portion (20,811 ) (23,111 ) Noncurrent portion (included in Other assets) $ 1,450 $ — |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | The Company's intangible assets at September 30, 2016 and December 31, 2015 consist of the following (dollars in thousands): September 30, 2016 Weighted average amortization period (years) Cost Accumulated amortization Net carrying value Developed technology 6.92 $ 47,080 $ 14,952 $ 32,128 Customer relationships 5.69 14,030 7,364 6,666 Internal use software 3.00 730 730 — 6.59 $ 61,840 $ 23,046 $ 38,794 December 31, 2015 Weighted average amortization period (years) Cost Accumulated amortization Net carrying value In-process research and development * $ 1,600 $ — $ 1,600 Developed technology 6.42 31,280 10,415 20,865 Customer relationships 5.57 10,030 6,408 3,622 Internal use software 3.00 730 730 — 6.19 $ 43,640 $ 17,553 $ 26,087 |
Schedule of amortization expense related to intangible assets | Amortization expense for intangible assets for the three and nine months ended September 30, 2016 and September 25, 2015 was as follows (in thousands): Three months ended Nine months ended Statement of operations classification September 30, September 25, September 30, September 25, Developed technology $ 1,455 $ 1,282 $ 4,537 $ 3,505 Cost of revenue - product Customer relationships 319 414 956 1,308 Sales and marketing Internal use software — 41 — 162 Cost of revenue - product $ 1,774 $ 1,737 $ 5,493 $ 4,975 |
Schedule of estimated future amortization expense for intangible assets | Estimated future amortization expense for the Company's intangible assets at September 30, 2016 is as follows (in thousands): Years ending December 31, Remainder of 2016 $ 2,524 2017 10,836 2018 7,747 2019 7,079 2020 4,507 Thereafter 6,101 $ 38,794 |
Schedule of goodwill | ill in the nine months ended September 30, 2016 were as follows (in thousands): Balance at January 1, 2016 Goodwill $ 43,416 Accumulated impairment losses (3,106 ) 40,310 Acquisition of Taqua 11,826 Balance at September 30, 2016 $ 52,136 Balance at September 30, 2016 Goodwill $ 55,242 Accumulated impairment losses (3,106 ) $ 52,136 The changes in the carrying value of the Company's goodwill in the nine months ended September 25, 2015 were as follows (in thousands): Balance at January 1, 2015 Goodwill $ 42,369 Accumulated impairment losses (3,106 ) 39,263 Acquisition of SDN Business 1,047 Balance at September 25, 2015 $ 40,310 Balance at September 25, 2015 Goodwill $ 43,416 Accumulated impairment losses (3,106 ) $ 40,310 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses at September 30, 2016 and December 31, 2015 consist of the following (in thousands): September 30, December 31, Employee compensation and related costs $ 12,577 $ 22,180 Other 10,413 9,783 $ 22,990 $ 31,963 |
RESTRUCTURING ACCRUAL (Tables)
RESTRUCTURING ACCRUAL (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Summary of restructuring accrual activity | A summary of the 2015 Restructuring Initiative accrual activity for the nine months ended September 30, 2016 is as follows (in thousands): Balance at Initiatives Adjustments for changes in estimate Cash Balance at Severance $ 749 $ — $ — $ (649 ) $ 100 A summary of the Taqua Restructuring Initiative accrual activity for the nine months ended September 30, 2016 is as follows: Balance at Initiatives Adjustments for changes in estimate Cash Balance at Severance $ — $ 384 $ — $ — $ 384 A summary of the 2016 Restructuring Initiative accrual activity for the nine months ended September 30, 2016 is as follows: Balance at Initiatives Adjustments for changes in estimate Cash Balance at Severance $ — $ 1,236 $ — $ (216 ) $ 1,020 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of activity related to outstanding stock options | The activity related to the Company's outstanding stock options during the nine months ended September 30, 2016 is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2016 6,352,208 $ 15.99 Granted 161,090 $ 8.41 Exercised (19,578 ) $ 6.87 Forfeited (155,787 ) $ 14.80 Expired (569,905 ) $ 16.99 Outstanding at September 30, 2016 5,768,028 $ 15.74 5.51 $ 294 Vested or expected to vest at September 30, 2016 5,666,592 $ 15.78 5.46 $ 282 Exercisable at September 30, 2016 4,619,681 $ 15.82 5.01 $ 238 |
Schedule of assumptions used to estimate the fair value of options at the date of grant using the Black-Scholes option pricing model | The grant date fair values of options to purchase common stock granted in the three and nine months ended September 30, 2016 were estimated using the Black-Scholes valuation model with the following assumptions: Three months ended Nine months ended September 30, September 30, Risk-free interest rate 1.13% 1.00% - 1.60% Expected dividends — — Weighted average volatility 51.6% 54.8% Expected life (years) 5.0 5.0-10.0 |
Schedule of stock options, additional information | Additional information regarding the Company's stock options for the three and nine months ended September 30, 2016 is as follows: Three months ended Nine months ended September 30, September 30, Weighted average grant date fair value of stock options granted $ 4.01 $ 4.46 Total intrinsic value of stock options exercised (in thousands) $ 27 $ 38 Cash received from the exercise of stock options (in thousands) $ 120 $ 135 |
Schedule of activity related to unvested restricted stock grants | The activity related to the Company's RSAs for the nine months ended September 30, 2016 is as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2016 1,512,783 $ 13.48 Granted 1,535,902 $ 7.79 Vested (701,774 ) $ 12.82 Forfeited (318,102 ) $ 10.25 Unvested balance at September 30, 2016 2,028,809 $ 9.91 The activity related to the Company's RSUs for the nine months ended September 30, 2016 is as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2016 95,361 $ 16.05 Granted 53,400 $ 7.58 Vested (35,193 ) $ 16.05 Forfeited (3,349 ) $ 16.05 Unvested balance at September 30, 2016 110,219 $ 11.95 |
Schedule of activity related to performance stock awards | The activity related to the Company's PSUs for the nine months ended September 30, 2016 is as follows: Shares Weighted Average Grant Date Fair Value Unvested balance at January 1, 2016 111,250 $ 14.68 Granted 131,250 $ 9.39 Vested — $ — Forfeited (66,665 ) $ 12.77 Unvested balance at September 30, 2016 175,835 $ 10.58 |
Schedule of stock-based compensation expenses which are included in condensed consolidated statement of operations | The condensed consolidated statements of operations include stock-based compensation for the three and nine months ended September 30, 2016 and September 25, 2015 as follows (in thousands): Three months ended Nine months ended September 30, September 25, September 30, September 25, Product cost of revenue $ 95 $ 81 $ 259 $ 238 Service cost of revenue 331 378 985 1,155 Research and development 1,298 1,349 3,687 4,152 Sales and marketing 3,048 1,282 5,292 4,150 General and administrative 1,636 2,183 5,241 7,207 $ 6,408 $ 5,273 $ 15,464 $ 16,902 |
MAJOR CUSTOMERS (Tables)
MAJOR CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Risks and Uncertainties [Abstract] | |
Schedule of customers contributing 10% or more of the revenue | The following customers contributed 10% or more of the Company's revenue in at least one of the three or nine month periods ended September 30, 2016 and September 25, 2015 : Three months ended Nine months ended September 30, September 25, September 30, September 25, AT&T Inc. 12% 15% 13% 14% Inteliquent * 14% * * CenturyLink * 11% * * _______________________ * Represents less than 10% of revenue |
GEOGRAPHIC INFORMATION (Tables)
GEOGRAPHIC INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Summary of revenue by geographic area as a percentage of total revenue | The Company's classification of revenue by geographic area is determined by the location to which the product is shipped or where the services are performed. The following table summarizes revenue by geographic area as a percentage of total revenue: Three months ended Nine months ended September 30, September 25, September 30, September 25, United States 70 % 77 % 69 % 71 % Europe, Middle East and Africa 14 11 13 12 Japan 7 5 10 10 Other Asia Pacific 5 4 5 4 Other 4 3 3 3 100 % 100 % 100 % 100 % |
BASIS OF PRESENTATION - Narrati
BASIS OF PRESENTATION - Narrative (Details) | Jan. 30, 2015 | Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($)segment | Dec. 31, 2015USD ($) |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Stock split, conversion ratio | 0.2 | |||
Number of reportable operating segments | segment | 1 | |||
Foreign Translation of Depreciation Expense | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Cumulative understatement of expense | $ 1,400,000 | |||
Tax effect of understatement | 0 | |||
Depreciation | $ 1,400,000 | $ 1,400,000 | ||
New Accounting Pronouncement, Early Adoption, Effect | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Deferred tax assets, net, current | $ (1,000,000) |
BUSINESS ACQUISITIONS - Narrati
BUSINESS ACQUISITIONS - Narrative Taqua LLC Acquisition (Details) - USD ($) $ in Thousands | Sep. 26, 2016 | Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | |||||||
Cash, net of cash acquired | $ 20,669 | $ 10,897 | |||||
Revenues | $ 65,011 | $ 67,862 | 185,019 | 172,708 | |||
Goodwill | $ 52,136 | $ 40,310 | 52,136 | $ 40,310 | $ 40,310 | $ 39,263 | |
Taqua, LLC [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Cash, net of cash acquired | $ 19,919 | ||||||
Revenues | $ 9,200 | $ 28,300 | |||||
Contingent consideration estimate | 10,000 | ||||||
Goodwill | 11,826 | ||||||
Maximum [Member] | Taqua, LLC [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Contingent consideration estimate | $ 65,000 |
BUSINESS ACQUISITIONS - Summary
BUSINESS ACQUISITIONS - Summary of Taquq LLC Acquisition (Details) - USD ($) $ in Thousands | Sep. 26, 2016 | Sep. 30, 2016 | Sep. 25, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Feb. 19, 2014 |
Business Acquisition [Line Items] | ||||||
Cash, net of cash acquired | $ 20,669 | $ 10,897 | ||||
Current assets | $ 3,711 | |||||
Goodwill | $ 52,136 | $ 40,310 | $ 40,310 | $ 39,263 | ||
Taqua, LLC [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Cash, net of cash acquired | $ 19,919 | |||||
Contingent consideration estimate | 10,000 | |||||
Fair value of total consideration | 29,919 | |||||
Property and equipment | 1,445 | |||||
Intangible assets | 18,200 | |||||
Goodwill | 11,826 | |||||
Other noncurrent assets | 493 | |||||
Current liabilities | (5,212) | |||||
Long-term liabilities | (544) | |||||
Total Assets and Liabilities, Net | 29,919 | |||||
Developed technology [Member] | Taqua, LLC [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 14,200 | |||||
Customer Relationships [Member] | Taqua, LLC [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 4,000 |
BUSINESS ACQUISITIONS - Treq La
BUSINESS ACQUISITIONS - Treq Labs, Inc. Acquisition (Details) - USD ($) | Jan. 02, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | Dec. 31, 2015 | Jul. 02, 2015 | Dec. 31, 2014 |
Acquisition Of Net | ||||||||
Cash, net of cash acquired | $ 20,669,000 | $ 10,897,000 | ||||||
Allocation of the purchase consideration: | ||||||||
Goodwill | $ 52,136,000 | $ 40,310,000 | 52,136,000 | 40,310,000 | $ 40,310,000 | $ 39,263,000 | ||
Treq Labs, Inc [Member] | ||||||||
Acquisition Of Net | ||||||||
Cash, net of cash acquired | $ 10,100,000 | |||||||
Cash, net of cash acquired | $ 11,647,000 | |||||||
Future consideration payment | $ 750,000 | |||||||
Shares authorized in earn-out agreement | 3,500,000 | |||||||
Business combination, contingent liability | 0 | 0 | ||||||
Allocation of the purchase consideration: | ||||||||
Total Assets and Liabilities, Net | $ 11,647,000 | |||||||
PT [Member] | ||||||||
Allocation of the purchase consideration: | ||||||||
Professional Fees | 951,000 | 0 | $ 951,000 | $ 131,000 | ||||
In Process Research and Development [Member] | ||||||||
Acquisition Of Net | ||||||||
Intangible asset increase (decrease) due to transfer | (1,600,000) | (7,500,000) | ||||||
In Process Research and Development [Member] | Treq Labs, Inc [Member] | ||||||||
Allocation of the purchase consideration: | ||||||||
Intangible assets | 9,100,000 | |||||||
Developed technology [Member] | ||||||||
Acquisition Of Net | ||||||||
Intangible asset increase (decrease) due to transfer | $ 1,600,000 | $ 7,500,000 | ||||||
Developed technology [Member] | Treq Labs, Inc [Member] | ||||||||
Allocation of the purchase consideration: | ||||||||
Intangible assets | 1,500,000 | |||||||
Goodwill | $ 1,047,000 | |||||||
Earn-Out Agreement Revenue Level 1 [Member] | ||||||||
Acquisition Of Net | ||||||||
Duration of earn-out agreement | 3 years | |||||||
Earn-Out Agreement Revenue Level 1 [Member] | Treq Labs, Inc [Member] | ||||||||
Acquisition Of Net | ||||||||
Shares authorized in earn-out agreement | 1,300,000 | |||||||
Earn-out agreement aggregate revenue threshold | $ 60,000,000 | |||||||
Earn-Out Agreement Revenue Level 2 [Member] | Treq Labs, Inc [Member] | ||||||||
Acquisition Of Net | ||||||||
Shares authorized in earn-out agreement | 2,200,000 | |||||||
Earn-out agreement aggregate revenue threshold | $ 150,000,000 | |||||||
Earn-Out Agreement Revenue Level 3 [Member] | Treq Labs, Inc [Member] | ||||||||
Acquisition Of Net | ||||||||
Shares authorized in earn-out agreement | 0 |
EARNINGS (LOSS) PER SHARE - (De
EARNINGS (LOSS) PER SHARE - (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | |
Reconciliation of weighted average shares outstanding from basic to diluted | ||||
Weighted average shares outstanding - basic | 49,402 | 49,625 | 49,436 | 49,512 |
Potential dilutive common shares | 0 | 0 | 0 | 0 |
Weighted average shares outstanding - diluted | 49,402 | 49,625 | 49,436 | 49,512 |
Common stock and unvested shares of restricted stock not included because their effect would have been antidilutive (in shares) | 8,200 | 8,600 | 8,200 | 8,600 |
CASH EQUIVALENTS AND INVESTME38
CASH EQUIVALENTS AND INVESTMENTS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2016 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale securities sold | $ 1,100 | $ 3,800 | |
Available-for-sale securities, gross realized gains | $ 18 | $ 18 | |
Minimum [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Period considered to classify available-for-sale securities as investments | 1 year | ||
Maximum [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Period considered to classify available-for-sale securities as investments | 2 years |
CASH EQUIVALENTS AND INVESTME39
CASH EQUIVALENTS AND INVESTMENTS - Schedule of Activity for Short-Term Investments (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | ||
Cash equivalents, amortized cost | $ 12,389 | $ 7,122 |
Cash equivalents, fair value | 12,389 | 7,122 |
Marketable securities, amortized cost | 49,821 | 58,590 |
Marketable securities, unrealized gains | 24 | 2 |
Marketable securities, unrealized losses | (16) | (59) |
Marketable securities, fair value | 49,829 | 58,533 |
Investments, amortized cost | 38,590 | 33,705 |
Investments, unrealized gains | 29 | 2 |
Investments, unrealized losses | (16) | (102) |
Investments, fair value | 38,603 | 33,605 |
Municipal obligations [Member] | ||
Amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | ||
Marketable securities, amortized cost | 2,627 | 3,910 |
Marketable securities, unrealized gains | 3 | 0 |
Marketable securities, unrealized losses | 0 | (1) |
Marketable securities, fair value | 2,630 | 3,909 |
Investments, amortized cost | 1,109 | 2,165 |
Investments, unrealized gains | 1 | 0 |
Investments, unrealized losses | 0 | (4) |
Investments, fair value | 1,110 | 2,161 |
U.S. government agency notes [Member] | ||
Amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | ||
Marketable securities, amortized cost | 9,973 | 3,450 |
Marketable securities, unrealized gains | 9 | 0 |
Marketable securities, unrealized losses | 0 | (2) |
Marketable securities, fair value | 9,982 | 3,448 |
Investments, amortized cost | 21,470 | 1,999 |
Investments, unrealized gains | 17 | 0 |
Investments, unrealized losses | (2) | (13) |
Investments, fair value | 21,485 | 1,986 |
Corporate debt securities [Member] | ||
Amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | ||
Marketable securities, amortized cost | 37,221 | 46,736 |
Marketable securities, unrealized gains | 12 | 2 |
Marketable securities, unrealized losses | (16) | (56) |
Marketable securities, fair value | 37,217 | 46,682 |
Investments, amortized cost | 16,011 | 29,541 |
Investments, unrealized gains | 11 | 2 |
Investments, unrealized losses | (14) | (85) |
Investments, fair value | $ 16,008 | 29,458 |
Commercial paper [Member] | ||
Amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | ||
Marketable securities, amortized cost | 3,994 | |
Marketable securities, unrealized gains | 0 | |
Marketable securities, unrealized losses | 0 | |
Marketable securities, fair value | 3,994 | |
Certificates of deposit [Member] | ||
Amortized cost, gross unrealized gains and losses and fair value of marketable debt and equity securities and investments | ||
Marketable securities, amortized cost | 500 | |
Marketable securities, unrealized gains | 0 | |
Marketable securities, unrealized losses | 0 | |
Marketable securities, fair value | $ 500 |
CASH EQUIVALENTS AND INVESTME40
CASH EQUIVALENTS AND INVESTMENTS - Schedule of Short-Term Investments by Measurement (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Cash and cash equivalents, Marketable securities and Investments | ||
Cash equivalents, fair value | $ 12,389 | $ 7,122 |
Marketable securities, fair value | 49,829 | 58,533 |
Investments, fair value | 38,603 | 33,605 |
Total carrying value [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Cash equivalents, fair value | 12,389 | 7,122 |
Marketable securities, fair value | 49,829 | 58,533 |
Investments, fair value | 38,603 | 33,605 |
Quoted prices in active markets (Level 1) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Cash equivalents, fair value | 12,389 | 7,122 |
Marketable securities, fair value | 0 | 0 |
Investments, fair value | 0 | 0 |
Significant other observable inputs (Level 2) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Cash equivalents, fair value | 0 | 0 |
Marketable securities, fair value | 49,829 | 58,533 |
Investments, fair value | 38,603 | 33,605 |
Significant unobservable inputs (Level 3) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Cash equivalents, fair value | 0 | 0 |
Marketable securities, fair value | 0 | 0 |
Investments, fair value | 0 | 0 |
Municipal obligations [Member] | Total carrying value [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 2,630 | 3,909 |
Investments, fair value | 1,110 | 2,161 |
Municipal obligations [Member] | Quoted prices in active markets (Level 1) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | 0 |
Investments, fair value | 0 | 0 |
Municipal obligations [Member] | Significant other observable inputs (Level 2) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 2,630 | 3,909 |
Investments, fair value | 1,110 | 2,161 |
Municipal obligations [Member] | Significant unobservable inputs (Level 3) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | 0 |
Investments, fair value | 0 | 0 |
U.S. government agency notes [Member] | Total carrying value [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 9,982 | 3,448 |
Investments, fair value | 21,485 | 1,986 |
U.S. government agency notes [Member] | Quoted prices in active markets (Level 1) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | 0 |
Investments, fair value | 0 | 0 |
U.S. government agency notes [Member] | Significant other observable inputs (Level 2) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 9,982 | 3,448 |
Investments, fair value | 21,485 | 1,986 |
U.S. government agency notes [Member] | Significant unobservable inputs (Level 3) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | 0 |
Investments, fair value | 0 | 0 |
Corporate debt securities [Member] | Total carrying value [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 37,217 | 46,682 |
Investments, fair value | 16,008 | 29,458 |
Corporate debt securities [Member] | Quoted prices in active markets (Level 1) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | 0 |
Investments, fair value | 0 | 0 |
Corporate debt securities [Member] | Significant other observable inputs (Level 2) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 37,217 | 46,682 |
Investments, fair value | 16,008 | 29,458 |
Corporate debt securities [Member] | Significant unobservable inputs (Level 3) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | 0 |
Investments, fair value | $ 0 | 0 |
Commercial paper [Member] | Total carrying value [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 3,994 | |
Commercial paper [Member] | Quoted prices in active markets (Level 1) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | |
Commercial paper [Member] | Significant other observable inputs (Level 2) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 3,994 | |
Commercial paper [Member] | Significant unobservable inputs (Level 3) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | |
Certificates of deposit [Member] | Total carrying value [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 500 | |
Certificates of deposit [Member] | Quoted prices in active markets (Level 1) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 0 | |
Certificates of deposit [Member] | Significant other observable inputs (Level 2) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | 500 | |
Certificates of deposit [Member] | Significant unobservable inputs (Level 3) [Member] | ||
Cash and cash equivalents, Marketable securities and Investments | ||
Marketable securities, fair value | $ 0 |
INVENTORY - (Details)
INVENTORY - (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
On-hand final assemblies and finished goods inventories | $ 17,319 | $ 17,136 |
Deferred cost of goods sold | 4,942 | 5,975 |
Gross inventory | 22,261 | 23,111 |
Less current portion | (20,811) | (23,111) |
Inventory, Noncurrent | $ 1,450 | $ 0 |
INTANGIBLE ASSETS AND GOODWIL42
INTANGIBLE ASSETS AND GOODWILL - (Details) - USD ($) $ in Thousands | Sep. 26, 2016 | Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | Dec. 31, 2015 |
Intangible Assets And Goodwill | ||||||
Weighted average amortization period (years) | 6 years 7 months 4 days | 6 years 2 months 8 days | ||||
Cost | $ 61,840 | $ 61,840 | $ 43,640 | |||
Accumulated amortization | 23,046 | 23,046 | 17,553 | |||
Net carrying value | 38,794 | 38,794 | $ 26,087 | |||
Amortization expense | 1,774 | $ 1,737 | 5,493 | $ 4,975 | ||
Estimated future amortization expense for intangible assets | ||||||
Remainder of 2016 | 2,524 | 2,524 | ||||
2,017 | 10,836 | 10,836 | ||||
2,018 | 7,747 | 7,747 | ||||
2,019 | 7,079 | 7,079 | ||||
2,020 | 4,507 | 4,507 | ||||
Thereafter | 6,101 | 6,101 | ||||
Total | 38,794 | $ 38,794 | ||||
In Process Research and Development [Member] | ||||||
Intangible Assets And Goodwill | ||||||
Intangible asset increase (decrease) due to transfer | (1,600) | $ (7,500) | ||||
Developed technology [Member] | ||||||
Intangible Assets And Goodwill | ||||||
Weighted average amortization period (years) | 7 years | 6 years 11 months 2 days | 6 years 5 months 2 days | |||
Cost | 47,080 | $ 47,080 | $ 31,280 | |||
Accumulated amortization | 14,952 | 14,952 | 10,415 | |||
Net carrying value | 32,128 | 32,128 | $ 20,865 | |||
Amortization expense | 1,455 | $ 1,282 | $ 4,537 | 3,505 | ||
Intangible asset increase (decrease) due to transfer | 1,600 | 7,500 | ||||
Customer Relationships [Member] | ||||||
Intangible Assets And Goodwill | ||||||
Weighted average amortization period (years) | 5 years 8 months 8 days | 5 years 6 months 24 days | ||||
Cost | 14,030 | $ 14,030 | $ 10,030 | |||
Accumulated amortization | 7,364 | 7,364 | 6,408 | |||
Net carrying value | 6,666 | 6,666 | $ 3,622 | |||
Amortization expense | 319 | 414 | $ 956 | 1,308 | ||
Internal use software [Member] | ||||||
Intangible Assets And Goodwill | ||||||
Weighted average amortization period (years) | 3 years | 3 years | ||||
Cost | 730 | $ 730 | $ 730 | |||
Accumulated amortization | 730 | 730 | 730 | |||
Net carrying value | 0 | 0 | 0 | |||
Amortization expense | $ 0 | $ 41 | $ 0 | $ 162 | ||
In Process Research and Development [Member] | ||||||
Intangible Assets And Goodwill | ||||||
Indefinite-lived intangible assets | $ 1,600 | |||||
Taqua, LLC [Member] | ||||||
Intangible Assets And Goodwill | ||||||
Intangible assets | $ 18,200 | |||||
Taqua, LLC [Member] | Developed technology [Member] | ||||||
Intangible Assets And Goodwill | ||||||
Weighted average amortization period (years) | 8 years | |||||
Intangible assets | $ 14,200 | |||||
Taqua, LLC [Member] | Customer Relationships [Member] | ||||||
Intangible Assets And Goodwill | ||||||
Weighted average amortization period (years) | 6 years | |||||
Intangible assets | $ 4,000 |
INTANGIBLE ASSETS AND GOODWIL43
INTANGIBLE ASSETS AND GOODWILL - (Details 2) - USD ($) $ in Thousands | 9 Months Ended | ||||||
Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 26, 2016 | Dec. 31, 2015 | Sep. 25, 2015 | Dec. 31, 2014 | |
Goodwill [Roll Forward] | |||||||
Goodwill | $ 55,242 | $ 43,416 | $ 43,416 | $ 42,369 | |||
Accumulated impairment losses | (3,106) | (3,106) | (3,106) | (3,106) | |||
Goodwill, beginning of period | $ 52,136 | $ 40,310 | $ 52,136 | $ 40,310 | $ 40,310 | $ 39,263 | |
Goodwill, end of period | 52,136 | 40,310 | |||||
Taqua, LLC [Member] | |||||||
Goodwill [Roll Forward] | |||||||
Goodwill, beginning of period | $ 11,826 | ||||||
Acquisition | $ 11,826 | ||||||
SDN Business [Member] | |||||||
Goodwill [Roll Forward] | |||||||
Acquisition | $ 1,047 |
ACCRUED EXPENSES - (Details)
ACCRUED EXPENSES - (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Employee compensation and related costs | $ 12,577 | $ 22,180 |
Other | 10,413 | 9,783 |
Total | $ 22,990 | $ 31,963 |
RESTRUCTURING ACCRUAL - Narrati
RESTRUCTURING ACCRUAL - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | Dec. 31, 2015 | |
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring | $ 1,620 | $ 158 | $ 1,620 | $ 1,306 | |
Restructuring reserve | 1,500 | 1,500 | |||
Other Noncurrent Liabilities [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring reserve | 33 | 33 | |||
2016 Restructuring [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring | 1,200 | 1,236 | |||
Restructuring reserve | 1,020 | 1,020 | $ 0 | ||
Taqua Restructuring Incentive [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring | 400 | 384 | |||
Restructuring reserve | 384 | 384 | $ 0 | ||
Minimum [Member] | 2016 Restructuring [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected cost remaining | 3,000 | 3,000 | |||
Expected annual savings | 6,000 | 6,000 | |||
Minimum [Member] | Taqua Restructuring Incentive [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected cost remaining | 1,000 | 1,000 | |||
Maximum [Member] | 2016 Restructuring [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected cost remaining | 4,000 | 4,000 | |||
Expected annual savings | 8,000 | 8,000 | |||
Maximum [Member] | Taqua Restructuring Incentive [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expected cost remaining | $ 2,000 | $ 2,000 |
RESTRUCTURING ACCRUAL - Rollfor
RESTRUCTURING ACCRUAL - Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | |
Restructuring Reserve [Roll Forward] | ||||
Initiatives charged to expense | $ 1,620 | $ 158 | $ 1,620 | $ 1,306 |
Balance at the end of the period | 1,500 | 1,500 | ||
2016 Restructuring [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at the beginning of the period | 0 | |||
Initiatives charged to expense | 1,200 | 1,236 | ||
Adjustments for changes in estimate | 0 | |||
Cash payments | (216) | |||
Balance at the end of the period | 1,020 | 1,020 | ||
Taqua Restructuring Incentive [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at the beginning of the period | 0 | |||
Initiatives charged to expense | 400 | 384 | ||
Adjustments for changes in estimate | 0 | |||
Cash payments | 0 | |||
Balance at the end of the period | 384 | 384 | ||
2015 Restructuring [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Balance at the beginning of the period | 749 | |||
Initiatives charged to expense | 0 | |||
Adjustments for changes in estimate | 0 | |||
Cash payments | (649) | |||
Balance at the end of the period | $ 100 | $ 100 |
DEBT - (Details)
DEBT - (Details) - USD ($) | Jun. 13, 2016 | Sep. 30, 2016 | Sep. 25, 2015 | Dec. 31, 2015 |
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 20,000,000 | $ 15,000,000 | ||
Revolving Credit Facility [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Covenant terms, minimum cash and cash equivalents | $ 50,000,000 | $ 85,000,000 | ||
Unused commitment fee percentage | 0.1125% | 0.15% | ||
Covenant terms, minimum total revenues | $ 50,000,000 | |||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 1.50% | |||
Revolving Credit Facility [Member] | Federal Funds Purchased [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 0.50% | |||
Revolving Credit Facility [Member] | Eurodollar [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 1.00% |
COMMON STOCK REPURCHASES AND 48
COMMON STOCK REPURCHASES AND UNDERWRITTEN OFFERING (Details) - USD ($) shares in Millions | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | Jul. 29, 2013 | |
Class of Stock [Line Items] | |||
Payments for repurchase of common stock | $ 7,130,000 | $ 6,083,000 | |
Stock repurchased and retired during period (in shares) | 0.9 | 0.4 | |
Remaining authorized repurchase amount | $ 7,800,000 | ||
Common Stock [Member] | |||
Class of Stock [Line Items] | |||
Stock buyback program authorized amount | $ 100,000,000 | ||
Stock Buyback Program [Member] | |||
Class of Stock [Line Items] | |||
Payments for repurchase of common stock | $ 7,100,000 | $ 6,100,000 |
STOCK-BASED COMPENSATION PLAN49
STOCK-BASED COMPENSATION PLANS - (Details) | Jun. 09, 2016shares | Apr. 01, 2016executivesshares | Mar. 16, 2015executivesshares | Jun. 30, 2016executives | Feb. 29, 2016executivesshares | Mar. 28, 2014shares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 25, 2015USD ($) | Jun. 10, 2015 | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 25, 2015USD ($) | Jun. 08, 2016 | Dec. 31, 2015executives$ / sharesshares | Dec. 14, 2014 |
Stock-based compensation | ||||||||||||||
Stock-based compensation (in dollars) | $ | $ 6,408,000 | $ 5,273,000 | $ 15,464,000 | $ 16,902,000 | ||||||||||
Range of assumptions used in estimating fair value of options | ||||||||||||||
Expected life | 5 years | 5 years | ||||||||||||
Cash received from the exercise of stock options (in dollars) | $ | $ 135,000 | 1,757,000 | ||||||||||||
Weighted average grant-date fair value | ||||||||||||||
Tax benefit from stock based compensation expense | $ | 0 | |||||||||||||
Fair value of the assumed awards attributable to future stock-based compensation expense | $ | $ 25,200,000 | $ 25,200,000 | ||||||||||||
Expected period for unrecognized expense | 2 years | |||||||||||||
Product cost of revenue [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Stock-based compensation (in dollars) | $ | 95,000 | 81,000 | $ 259,000 | 238,000 | ||||||||||
Service cost of revenue [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Stock-based compensation (in dollars) | $ | 331,000 | 378,000 | 985,000 | 1,155,000 | ||||||||||
Research and development [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Stock-based compensation (in dollars) | $ | 1,298,000 | 1,349,000 | 3,687,000 | 4,152,000 | ||||||||||
Sales and marketing [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Stock-based compensation (in dollars) | $ | 3,048,000 | 1,282,000 | 5,292,000 | 4,150,000 | ||||||||||
General and Administrative Expense [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Stock-based compensation (in dollars) | $ | $ 1,636,000 | $ 2,183,000 | $ 5,241,000 | $ 7,207,000 | ||||||||||
Minimum [Member] | ||||||||||||||
Range of assumptions used in estimating fair value of options | ||||||||||||||
Expected life | 5 years | |||||||||||||
Maximum [Member] | ||||||||||||||
Range of assumptions used in estimating fair value of options | ||||||||||||||
Expected life | 10 years | |||||||||||||
Stock Options [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |||||||||||||
Weighted average grant date fair value of stock options granted (in dollars per share) | $ / shares | $ 4.01 | $ 4.46 | ||||||||||||
Number of shares | ||||||||||||||
Outstanding at the beginning of the period (in shares) | 6,352,208 | |||||||||||||
Granted (in shares) | 161,090 | |||||||||||||
Exercised (in shares) | (19,578) | |||||||||||||
Forfeited (in shares) | (155,787) | |||||||||||||
Expired (in shares) | (569,905) | |||||||||||||
Outstanding at the end of the period (in shares) | 5,768,028 | 5,768,028 | 6,352,208 | |||||||||||
Vested or expected to vest at the end of the period (in shares) | 5,666,592 | 5,666,592 | ||||||||||||
Exercisable at the end of the period (in shares) | 4,619,681 | 4,619,681 | ||||||||||||
Weighted average exercise price | ||||||||||||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 15.99 | |||||||||||||
Granted (in dollars per share) | $ / shares | 8.41 | |||||||||||||
Exercised (in dollars per share) | $ / shares | 6.87 | |||||||||||||
Forfeited (in dollars per share) | $ / shares | 14.80 | |||||||||||||
Expired (in dollars per share) | $ / shares | 16.99 | |||||||||||||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 15.74 | 15.74 | $ 15.99 | |||||||||||
Vested or expected to vest at the end of the period (in dollars per share) | $ / shares | 15.78 | 15.78 | ||||||||||||
Exercisable at the end of the period (in dollars per share) | $ / shares | $ 15.82 | $ 15.82 | ||||||||||||
Weighted average remaining contractual life (in years) | ||||||||||||||
Outstanding at the end of the period | 5 years 6 months 5 days | |||||||||||||
Vested or expected to vest at the end of the period | 5 years 5 months 15 days | |||||||||||||
Exercisable at the end of the period | 5 years 3 days | |||||||||||||
Aggregate intrinsic value (in dollars) | ||||||||||||||
Outstanding at the end of the period (in dollars) | $ | $ 294,000 | $ 294,000 | ||||||||||||
Vested or expected to vest at the end of the period (in dollars) | $ | 282,000 | 282,000 | ||||||||||||
Exercisable at the end of the period (in dollars) | $ | $ 238,000 | $ 238,000 | ||||||||||||
Range of assumptions used in estimating fair value of options | ||||||||||||||
Risk-free interest rate | 1.00% | |||||||||||||
Expected dividends | 0.00% | 0.00% | ||||||||||||
Weighted average volatility | 51.60% | 54.80% | ||||||||||||
Total intrinsic values of stock options exercised (in dollars) | $ | $ 27,000 | $ 38,000 | ||||||||||||
Cash received from the exercise of stock options (in dollars) | $ | $ 120,000 | $ 135,000 | ||||||||||||
Stock Options [Member] | Minimum [Member] | ||||||||||||||
Range of assumptions used in estimating fair value of options | ||||||||||||||
Risk-free interest rate | 1.00% | |||||||||||||
Stock Options [Member] | Maximum [Member] | ||||||||||||||
Range of assumptions used in estimating fair value of options | ||||||||||||||
Risk-free interest rate | 1.60% | |||||||||||||
Stock Options [Member] | Share-based Compensation Award, Tranche One [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 33.33% | |||||||||||||
Stock Options [Member] | Share-based Compensation Award, Tranche Two [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 66.67% | |||||||||||||
Restricted Stock Grants [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |||||||||||||
Restricted Stock Grants [Member] | Share-based Compensation Award, Tranche One [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 33.33% | |||||||||||||
Restricted Stock Grants [Member] | Share-based Compensation Award, Tranche Two [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 66.67% | |||||||||||||
Restricted stock awards [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Total fair value (in dollars) | $ | $ 9,600,000 | |||||||||||||
Change in unvested restricted stock awards | ||||||||||||||
Unvested balance at the beginning of the period (in shares) | 1,512,783 | |||||||||||||
Granted (in shares) | 1,535,902 | |||||||||||||
Vested (in shares) | (701,774) | |||||||||||||
Forfeited (in shares) | (318,102) | |||||||||||||
Unvested balance at the end of the period (in shares) | 2,028,809 | 2,028,809 | 1,512,783 | |||||||||||
Weighted average grant-date fair value | ||||||||||||||
Unvested balance at the end of the period (in dollars per share) | $ / shares | $ 13.48 | |||||||||||||
Granted (in dollars per share) | $ / shares | 7.79 | |||||||||||||
Vested (in dollars per share) | $ / shares | 12.82 | |||||||||||||
Forfeited (in dollars per share) | $ / shares | 10.25 | |||||||||||||
Unvested balance at end of the period (in dollars per share) | $ / shares | $ 9.91 | $ 9.91 | $ 13.48 | |||||||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||||||
Change in unvested restricted stock awards | ||||||||||||||
Unvested balance at the beginning of the period (in shares) | 95,361 | |||||||||||||
Granted (in shares) | 53,400 | |||||||||||||
Vested (in shares) | (35,193) | |||||||||||||
Forfeited (in shares) | (3,349) | |||||||||||||
Unvested balance at the end of the period (in shares) | 110,219 | 110,219 | 95,361 | |||||||||||
Weighted average grant-date fair value | ||||||||||||||
Unvested balance at the end of the period (in dollars per share) | $ / shares | $ 16.05 | |||||||||||||
Granted (in dollars per share) | $ / shares | 7.58 | |||||||||||||
Vested (in dollars per share) | $ / shares | 16.05 | |||||||||||||
Forfeited (in dollars per share) | $ / shares | 16.05 | |||||||||||||
Unvested balance at end of the period (in dollars per share) | $ / shares | $ 11.95 | $ 11.95 | $ 16.05 | |||||||||||
Performance Share Units [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Executives Granted Shares | executives | 6 | 8 | 1 | 6 | 2 | |||||||||
Stock-based compensation (in dollars) | $ | $ 1,900,000 | |||||||||||||
Change in unvested restricted stock awards | ||||||||||||||
Unvested balance at the beginning of the period (in shares) | 111,250 | |||||||||||||
Granted (in shares) | 131,250 | 131,250 | 131,250 | |||||||||||
Vested (in shares) | 0 | |||||||||||||
Forfeited (in shares) | (37,081) | (66,665) | ||||||||||||
Unvested balance at the end of the period (in shares) | 175,835 | 175,835 | 111,250 | |||||||||||
Weighted average grant-date fair value | ||||||||||||||
Unvested balance at the end of the period (in dollars per share) | $ / shares | $ 14.68 | |||||||||||||
Granted (in dollars per share) | $ / shares | 9.39 | |||||||||||||
Vested (in dollars per share) | $ / shares | 0 | |||||||||||||
Forfeited (in dollars per share) | $ / shares | 12.77 | |||||||||||||
Unvested balance at end of the period (in dollars per share) | $ / shares | $ 10.58 | $ 10.58 | $ 14.68 | |||||||||||
Performance Share Units [Member] | Share-based Compensation Award, Tranche One [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 33.33% | 33.33% | ||||||||||||
Performance Share Units [Member] | Share-based Compensation Award, Tranche Two [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 33.33% | 33.33% | ||||||||||||
Performance Share Units [Member] | Share-based Compensation Award, Tranche Three [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 33.33% | 33.33% | ||||||||||||
Employee Stock [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation by Share-based Payment Award, Offering Period | 6 months | |||||||||||||
Purchase price of common stock (percentage) | 85.00% | |||||||||||||
Weighted average grant-date fair value | ||||||||||||||
Maximum number of shares purchasable per employee | 500 | |||||||||||||
the Stock Plan [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Number of shares of common stock authorized for issuance | 800,000 | |||||||||||||
Rate at which full value awards are counted against shares of common stock available for issuance | 1.50 | 1.57 | 1.61 | 1.50 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,000,000 | |||||||||||||
the Stock Plan [Member] | Director [Member] | ||||||||||||||
Stock-based compensation | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 100,000 |
MAJOR CUSTOMERS - (Details)
MAJOR CUSTOMERS - (Details) - customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | Dec. 31, 2015 | |
Revenue [Member] | Less than [Member] | |||||
MAJOR CUSTOMERS | |||||
Threshold percentage | 10.00% | ||||
Revenue [Member] | Customer [Member] | AT&T [Member] | |||||
MAJOR CUSTOMERS | |||||
Concentration risk, percentage | 12.00% | 15.00% | 13.00% | 14.00% | |
Revenue [Member] | Customer [Member] | Inteliquent [Member] | |||||
MAJOR CUSTOMERS | |||||
Concentration risk, percentage | 14.00% | ||||
Revenue [Member] | Customer [Member] | CenturyLink [Member] | |||||
MAJOR CUSTOMERS | |||||
Concentration risk, percentage | 11.00% | ||||
Accounts receivable balance [Member] | |||||
MAJOR CUSTOMERS | |||||
Threshold percentage | 10.00% | ||||
Accounts receivable balance [Member] | Customer [Member] | |||||
MAJOR CUSTOMERS | |||||
Concentration risk, percentage | 28.00% | 11.00% | |||
Number of major customers | 2 | 2 | 1 |
GEOGRAPHIC INFORMATION - Summar
GEOGRAPHIC INFORMATION - Summary of Revenue by Geographic Area as a Percentage of Total Revenue (Details) - Revenue [Member] - Geographical area [Member] | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 25, 2015 | Sep. 30, 2016 | Sep. 25, 2015 | |
Revenue by geographic area and by customer | ||||
Percentage of total revenue | 100.00% | 100.00% | 100.00% | 100.00% |
United States [Member] | ||||
Revenue by geographic area and by customer | ||||
Percentage of total revenue | 70.00% | 77.00% | 69.00% | 71.00% |
Europe, Middle East and Africa [Member] | ||||
Revenue by geographic area and by customer | ||||
Percentage of total revenue | 14.00% | 11.00% | 13.00% | 12.00% |
Japan [Member] | ||||
Revenue by geographic area and by customer | ||||
Percentage of total revenue | 7.00% | 5.00% | 10.00% | 10.00% |
Other Asia Pacific [Member] | ||||
Revenue by geographic area and by customer | ||||
Percentage of total revenue | 5.00% | 4.00% | 5.00% | 4.00% |
Other [Member] | ||||
Revenue by geographic area and by customer | ||||
Percentage of total revenue | 4.00% | 3.00% | 3.00% | 3.00% |
INCOME TAXES - (Details)
INCOME TAXES - (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Income Tax Disclosure [Abstract] | |
Discrete charge related to an uncertain tax position | $ 0.7 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Sep. 21, 2015shareholder | Apr. 06, 2015officers |
Commitments and Contingencies Disclosure [Abstract] | ||
Number of officers listed as defendants | officers | 2 | |
Number of shareholders seeking plaintiff status | shareholder | 4 |