Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2015 | Jan. 31, 2016 | Jun. 30, 2015 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | ARRS | ||
Entity Registrant Name | ARRIS International plc | ||
Entity Central Index Key | 1,645,494 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 195,192,022 | ||
Entity Public Float | $ 4.4 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 863,582 | $ 565,790 |
Short-term investments, at fair value | 15,470 | 126,748 |
Total cash, cash equivalents and short-term investments | 879,052 | 692,538 |
Accounts receivable (net of allowances for doubtful accounts of $9,975 in 2015 and $6,392 in 2014) | 651,893 | 598,603 |
Other receivables | 12,233 | 10,640 |
Inventories (net of reserves of $57,026 in 2015 and $62,359 in 2014) | 401,592 | 401,165 |
Prepaid income taxes | 25,624 | 11,023 |
Prepaids | 19,319 | 27,497 |
Current deferred income taxes | 113,390 | |
Other current assets | 120,490 | 55,257 |
Total current assets | 2,110,203 | 1,910,113 |
Property, plant and equipment (net of accumulated depreciation of $304,532 in 2015 and $265,811 in 2014) | 312,311 | 366,431 |
Goodwill | 1,013,963 | 936,067 |
Intangible assets (net of accumulated amortization of $850,873 in 2015 and $619,283 in 2014) | 810,448 | 943,388 |
Investments | 69,542 | 77,640 |
Noncurrent deferred income taxes | 185,439 | 71,686 |
Other assets | 21,610 | 35,717 |
Total assets | 4,523,516 | 4,341,042 |
Current liabilities: | ||
Accounts payable | 514,877 | 480,150 |
Accrued compensation, benefits and related taxes | 111,389 | 145,278 |
Accrued warranty | 27,630 | 42,763 |
Deferred revenue | 137,606 | 92,772 |
Current portion of long-term debt and lease financing obligation | 43,591 | 67,024 |
Income taxes payable | 8,368 | 10,610 |
Other accrued liabilities | 169,169 | 165,080 |
Total current liabilities | 1,012,630 | 1,003,677 |
Long-term debt and lease financing obligation, net of current portion | 1,496,243 | 1,448,960 |
Accrued pension | 64,052 | 64,917 |
Noncurrent income taxes | 42,197 | 41,082 |
Noncurrent deferred income taxes | 503 | 274 |
Other noncurrent liabilities | 66,930 | 91,371 |
Total liabilities | $ 2,682,555 | $ 2,650,281 |
Stockholders' equity: | ||
Preferred stock, par value $1.00 per share, 5.0 million shares authorized; none issued and outstanding | ||
Common stock, par value $0.01 per share, 320.0 million shares authorized; 147.5 million and 145.1 million shares issued and outstanding in 2015 and 2014, respectively | $ 1,790 | $ 1,796 |
Capital in excess of par value | 1,777,276 | 1,739,700 |
Treasury stock at cost, 35.1 million shares and 34.2 million shares in 2015 and 2014, respectively | (331,329) | (306,330) |
Retained earnings | 358,823 | 266,642 |
Accumulated other comprehensive income | (12,646) | (11,047) |
Total ARRIS Group, Inc. stockholders' equity | 1,793,914 | 1,690,761 |
Stockholders' equity attributable to noncontrolling interest | 47,047 | |
Total stockholders' equity | 1,840,961 | 1,690,761 |
Total liabilities and stockholders' equity | $ 4,523,516 | $ 4,341,042 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Allowances for doubtful accounts | $ 9,975 | $ 6,392 |
Reserves for inventories | 57,026 | 62,359 |
Accumulated depreciation of property, plant and equipment | 304,532 | 265,811 |
Accumulated amortization of intangible assets | $ 850,873 | $ 619,283 |
Preferred stock, par value | $ 1 | $ 1 |
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 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 320,000,000 | 320,000,000 |
Common stock, shares issued | 147,500,000 | 145,100,000 |
Common stock, shares outstanding | 147,500,000 | 145,100,000 |
Treasury stock, shares | 35,100,000 | 34,200,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Net sales | $ 4,798,332 | $ 5,322,921 | $ 3,620,902 | |
Cost of sales | 3,379,409 | 3,740,425 | 2,598,154 | |
Gross margin | 1,418,923 | 1,582,496 | 1,022,748 | |
Operating expenses: | ||||
Selling, general, and administrative expenses | 417,085 | 410,568 | 338,252 | |
Research and development expenses | 534,168 | 556,575 | 425,825 | |
Amortization of intangible assets | 227,440 | 236,521 | 193,637 | |
Integration, acquisition, restructuring and other costs | 29,277 | 37,498 | 83,047 | |
Total operating expenses | 1,207,970 | 1,241,162 | 1,040,761 | |
Operating income (loss) | 210,953 | 341,334 | (18,013) | |
Other expense (income): | ||||
Interest expense | 70,936 | 62,901 | 67,888 | |
Loss on investments | 6,220 | 10,961 | 2,698 | |
Loss (gain) on foreign currency | 20,761 | 2,637 | (3,502) | |
Interest income | (2,379) | (2,590) | (2,936) | |
Other expense (income), net | 8,362 | 28,195 | 13,989 | |
Income (loss) before income taxes | 107,053 | 239,230 | (96,150) | |
Income tax expense (benefit) | 22,594 | (87,981) | (47,390) | |
Consolidated net income (loss) | 84,459 | 327,211 | (48,760) | |
Net loss attributable to noncontrolling interest | (7,722) | |||
Net income (loss) attributable to ARRIS Group, Inc. | $ 92,181 | $ 327,211 | $ (48,760) | |
Net income (loss) per common share: | ||||
Basic | [1] | $ 0.63 | $ 2.27 | $ (0.37) |
Diluted | [1] | $ 0.62 | $ 2.21 | $ (0.37) |
Weighted average common shares: | ||||
Basic | 146,388 | 144,386 | 131,980 | |
Diluted | 149,359 | 148,280 | 131,980 | |
[1] | Calculated based on net income attributable to shareowners of ARRIS Group, Inc. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Consolidated net income (loss) | $ 84,459 | $ 327,211 | $ (48,760) |
Available-for-sale securities: | |||
Unrealized gain (loss) on available-for-sale securities, net of tax (expense) benefit of $37, $73 and $(19) in 2015, 2014 and 2013, respectively | (64) | (127) | 65 |
Reclassification adjustments recognized in net income, net of tax (expense) benefit of $(100), $89 and $(10) in 2015, 2014 and 2013, respectively | 172 | (154) | 35 |
Net change in available-for-sale | 108 | (281) | 100 |
Derivative instruments: | |||
Unrealized loss on derivative instruments, net of tax benefit of $4,936, $3,149 and $2,613 in 2015, 2014 and 2013, respectively | (8,319) | (5,391) | (4,527) |
Reclassification adjustments recognized in net income, net of tax expense of $(2,791), $(2,784) and $(1,146) in 2015, 2014 and 2013, respectively | 4,704 | 4,766 | 1,986 |
Net change in derivative instruments | (3,615) | (625) | (2,541) |
Pension liabilities: | |||
Unrealized gain (loss) on pension liability, net of tax (expense) benefit of $(1,082), $2,709 and $(982) in 2015, 2014 and 2013, respectively | 2,044 | (5,273) | 4,670 |
Reclassification adjustments recognized in net income, net of tax expense of $(498), $(261) and $(309) in 2015, 2014 and 2013, respectively | 942 | 508 | 1,472 |
Net change in pension liabilities | 2,986 | (4,765) | 6,142 |
Cumulative translation adjustments | (1,078) | (714) | 173 |
Other comprehensive income (loss), net of tax | (1,599) | (6,385) | 3,874 |
Comprehensive income (loss) | 82,860 | 320,826 | (44,886) |
Comprehensive income (loss) attributable to noncontrolling interest | (7,747) | ||
Comprehensive income (loss) attributable to ARRIS Group, Inc. | $ 90,607 | $ 320,826 | $ (44,886) |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Unrealized gain (loss) on available-for-sale securities, tax (expense) benefit | $ 37 | $ 73 | $ (19) |
Reclassification adjustments recognized in net income, tax (expense) benefit | (100) | 89 | (10) |
Unrealized loss on derivative instruments, tax benefit | 4,936 | 3,149 | 2,613 |
Reclassification adjustments recognized in net income, tax expense | (2,791) | (2,784) | (1,146) |
Unrealized gain (loss) on pension liability, tax (expense) benefit | (1,082) | 2,709 | (982) |
Reclassification adjustments recognized in net income, tax benefit | (498) | (261) | (309) |
Change related to pension liability, tax (expense) benefit | $ (1,504) | $ 2,447 | $ (1,291) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities: | |||
Consolidated net income (loss) | $ 84,459 | $ 327,211 | $ (48,760) |
Depreciation | 71,780 | 78,988 | 61,516 |
Amortization of intangible assets | 231,590 | 236,751 | 193,637 |
Amortization of deferred financing fees and debt discount | 9,646 | 11,575 | 9,982 |
Deferred income tax provision (benefit) | 5,418 | (163,485) | (55,763) |
Stock compensation expense | 64,218 | 53,799 | 35,789 |
Provision for doubtful accounts | 2,997 | 5,336 | (658) |
Revenue reduction related to Comcast's investment in ARRIS | 13,182 | ||
Mark-to-market fair value adjustment related to Comcast's investment in ARRIS | 13,189 | ||
Non-cash restructuring and related charges | 6,761 | ||
Non-cash interest expense on convertible notes | 9,926 | ||
Loss on disposal and write down of assets | 7,776 | 4,247 | 1,657 |
Loss on investments | 6,220 | 10,961 | 2,698 |
Excess income tax benefits from stock-based compensation plans | (3,997) | (8,959) | (7,178) |
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions: | |||
Accounts receivable | (55,132) | 16,796 | 9,241 |
Other receivables | (6,017) | (2,997) | (2,182) |
Inventories | (6,685) | (71,036) | 74,111 |
Accounts payable and accrued liabilities | 15,065 | (116,909) | 247,301 |
Prepaids and other, net | (83,466) | 77,003 | (1,733) |
Net cash provided by operating activities | 343,872 | 459,281 | 562,716 |
Investing activities: | |||
Purchases of investments | (48,566) | (127,780) | (104,626) |
Sales of investments | 161,824 | 59,679 | 479,781 |
Proceeds from equity investments | 2,904 | 14,780 | |
Purchases of property, plant and equipment | (49,890) | (56,588) | (71,443) |
Purchases of intangible assets | (39,340) | ||
Proceeds from sale-leaseback transaction | 24,960 | ||
Acquisition, net of cash acquired | (97,905) | (2,208,114) | |
Other, net | 67 | 103 | 120 |
Net cash used in investing activities | (45,946) | (124,586) | (1,889,502) |
Financing activities: | |||
Proceeds from issuance of common stock, net | 16,189 | 19,196 | 175,072 |
Repurchase of common stock | (24,999) | ||
Excess income tax benefits from stock-based compensation plans | 3,997 | 8,959 | 7,178 |
Repurchase of shares to satisfy employee minimum tax withholdings | (46,680) | (29,845) | (12,664) |
Proceeds from issuance of debt | 1,925,000 | ||
Payment of debt obligations | (53,500) | (209,653) | (404,488) |
Payment of lease financing obligation | (425) | ||
Proceeds from sale-leaseback financing transaction | 58,729 | ||
Payment for debt discount | (3,247) | (9,853) | |
Payment for deferred financing fees | (4,992) | (42,724) | |
Contribution from noncontrolling interest | 54,794 | ||
Net cash (used in) provided by financing activities | (134) | (211,343) | 1,637,521 |
Net increase in cash and cash equivalents | 297,792 | 123,352 | 310,735 |
Cash and cash equivalents at beginning of year | 565,790 | 442,438 | 131,703 |
Cash and cash equivalents at end of year | 863,582 | 565,790 | 442,438 |
Interest paid during the year | 60,798 | 51,122 | 48,008 |
Income taxes paid during the year | $ 39,065 | $ 37,152 | $ 12,470 |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2015 | |
Supplemental cash flow information: | ||
Non-cash investing and financing activities: debt assumed in acquisition | $ 15,000 | |
Motorola Home | ||
Supplemental cash flow information: | ||
Cash received for indemnification on retained litigation | $ 85,000 | |
Remitted payment as settlement | 85,000 | |
TiVo | ||
Supplemental cash flow information: | ||
Cash received for indemnification on retained litigation | 196,000 | |
Remitted payment as settlement | $ 50,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Capital in Excess of Par Value | Treasury Stock | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss | Total ARRIS Group, Inc stockholders' equity | Non-controlling Interest |
Balance at Dec. 31, 2012 | $ 960,388 | $ 1,488 | $ 1,285,575 | $ (306,330) | $ (11,809) | $ (8,536) | $ 960,388 | |
Net income (loss) | (48,760) | (48,760) | (48,760) | |||||
Other comprehensive income (loss), net of tax | 3,874 | 3,874 | 3,874 | |||||
Compensation under stock award plans | 35,789 | 35,789 | 35,789 | |||||
Issuance of common stock and other | 365,288 | 278 | 365,010 | 365,288 | ||||
Income tax benefit related to exercise of stock options | 2,408 | 2,408 | 2,408 | |||||
Balance at Dec. 31, 2013 | 1,318,987 | 1,766 | 1,688,782 | (306,330) | (60,569) | (4,662) | 1,318,987 | |
Net income (loss) | 327,211 | 327,211 | 327,211 | |||||
Other comprehensive income (loss), net of tax | (6,385) | (6,385) | (6,385) | |||||
Compensation under stock award plans | 53,799 | 53,799 | 53,799 | |||||
Issuance of common stock and other | (10,649) | 30 | (10,679) | (10,649) | ||||
Income tax benefit related to exercise of stock options | 8,959 | 8,959 | 8,959 | |||||
Other | (1,161) | (1,161) | (1,161) | |||||
Balance at Dec. 31, 2014 | 1,690,761 | 1,796 | 1,739,700 | (306,330) | 266,642 | (11,047) | 1,690,761 | |
Net income (loss) | 84,459 | 92,181 | 92,181 | $ (7,722) | ||||
Other comprehensive income (loss), net of tax | (1,624) | (1,599) | (1,599) | (25) | ||||
Contribution from noncontrolling interest | 54,794 | 54,794 | ||||||
Compensation under stock award plans | 64,218 | 64,218 | 64,218 | |||||
Issuance of common stock and other | (30,578) | (6) | (30,572) | (30,578) | ||||
Repurchase of common stock, net of issuances | (24,999) | (24,999) | (24,999) | |||||
Income tax benefit related to exercise of stock options | 3,930 | 3,930 | 3,930 | |||||
Balance at Dec. 31, 2015 | $ 1,840,961 | $ 1,790 | $ 1,777,276 | $ (331,329) | $ 358,823 | $ (12,646) | $ 1,793,914 | $ 47,047 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 2015 | |
Organization and Basis of Presentation | Note 1. Organization and Basis of Presentation On January 4, 2016, ARRIS Group, Inc. (“ARRIS Group”) completed its combination (the “Combination”) with Pace plc, a company incorporated in England and Wales (“Pace”). In connection with the Combination, (i) ARRIS International plc (the “Registrant”), a company incorporated in England and Wales, acquired all of the outstanding ordinary shares of Pace (the “Pace Acquisition”) and (ii) a wholly-owned subsidiary of the Registrant was merged with and into ARRIS Group (the “Merger”), with ARRIS Group surviving the Merger as an indirect wholly-owned subsidiary of the Registrant. Under the terms of the Combination, (a) Pace shareholders received 132.5 pence in cash and 0.1455 ordinary shares of the Registrant for each Pace Share they held, and (b) ARRIS Group stockholders received one ordinary share of the Registrant for each share of ARRIS Group common stock they held. Following the Combination, ARRIS Group became an indirect wholly-owned subsidiary of the Registrant and Pace became a direct wholly-owned subsidiary of the Registrant. The ordinary shares of the Registrant trade on the NASDAQ under the symbol “ARRS.” This Annual Report on Form 10-K is being filed by the Registrant on behalf of, and as successor, to ARRIS Group. The Registrant is deemed to be the successor to ARRIS Group pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the ordinary shares of the Registrant are deemed to be registered under Section 12(b) of the Exchange Act. In accordance with Rule 12g-3(g) under the Exchange Act, this Annual Report on Form 10-K covers the last full fiscal year of ARRIS Group and generally contains information that would be required if filed by ARRIS Group. Historical financial results presented herein are those of ARRIS Group only and do not reflect any results of Pace. ARRIS Group, Inc. (together with its consolidated subsidiaries and consolidated venture, except as the context otherwise indicates, “ARRIS” or the “Company”) is a global media entertainment and data communications solutions provider, headquartered in Suwanee, Georgia. The Company operates in two business segments, Customer Premises Equipment and Network & Cloud (See Note 10 Segment Information |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies (a) Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned foreign and domestic subsidiaries and consolidated venture in which the Company owns more than 50% of the outstanding voting shares of the entity. Intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), and our reporting currency is the United States Dollar (USD). (b) Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. (c) Reclassifications Certain prior year amounts in the financial statements and notes have been reclassified to conform to the fiscal year 2015 presentation. (d) Cash, Cash Equivalents, and Investments ARRIS’s cash and cash equivalents (which are highly-liquid investments with an original maturity of three months or less) are primarily held in demand deposit accounts and money market accounts. The Company holds investments consisting of mutual funds and debt securities classified as available-for-sale, which are stated at estimated fair value. The debt securities consist primarily of commercial paper, certificates of deposits, short term corporate obligations and U.S. government agency financial instruments. These investments are on deposit with major financial institutions. The Company accounts for investments in companies in which it has significant influence, or ownership between 20% and 50% of the investee under the equity method of accounting. Under the equity method, the investment is originally recorded at cost and adjusted to recognize the Company’s share of net earnings or losses, any basis difference of the investee, and dividends received. Investments in which we do not exercise significant influence (generally less than a 20 percent ownership interest) are accounted for under the cost method. The Company evaluates its investments for impairment whenever events or changes in circumstances indicate that the carrying amount of such investments may not be recoverable. An investment is written down to fair value if there is evidence of a loss in value which is other than temporary. (e) Accounts Receivable and Allowance for Doubtful Accounts and Sales Returns Accounts receivable are stated at amounts owed by the customers, net of allowance for doubtful accounts, sales returns and allowances. ARRIS establishes a reserve for doubtful accounts based upon the historical experience and leading market indicators in collecting accounts receivable. A majority of the accounts receivable are from a few large cable system operators and telecommunication companies, either with investment rated debt outstanding or with substantial financial resources, and have favorable payment histories. If ARRIS was to have a collection problem with one of its major customers, it is possible the reserve will not be sufficient. ARRIS calculates the reserve for uncollectible accounts using a model that considers customer payment history, recent customer press releases, bankruptcy filings, if any, Dun & Bradstreet reports, and financial statement reviews. The calculation is reviewed by management to assess whether there needs to be an adjustment to the reserve for uncollectible accounts. The reserve is established through a charge to the provision and represents amounts of current and past due customer receivable balances of which management deems a loss to be both probable and estimable. Accounts receivable are charged to the allowance when determined to be no longer collectible. ARRIS also establishes a reserve for sales returns and allowances. The reserve is an estimate of the impact of potential returns based upon historic trends. The following table represents a summary of the changes in the reserve for allowance for doubtful accounts, and sales returns and allowances for fiscal 2015, 2014 and 2013 (in thousands): 2015 2014 2013 Balance at beginning of fiscal year $ 6,392 $ 1,887 $ 1,630 Charges to expenses 2,997 5,336 257 Reclassification (deductions) 586 (831 ) — Balance at end of fiscal year $ 9,975 $ 6,392 $ 1,887 (f) Inventories Inventories are stated at the lower of cost market. Inventory cost is determined on a first-in, first-out basis. The cost of work-in-process and finished goods is comprised of material, labor, and overhead. (g) Revenue recognition ARRIS generates revenue as a result of varying activities, including the delivery of stand-alone equipment, custom design and installation services, and bundled sales arrangements inclusive of equipment, software and services. The revenue from these activities is recognized in accordance with applicable accounting guidance and their related interpretations. Revenue is recognized when all of the following criteria have been met: • When persuasive evidence of an arrangement exists • Delivery has occurred • The fee is fixed or determinable • Collectability is reasonably assured Revenue is deferred if any of the above revenue recognition criteria is not met as well as when certain circumstances exist for any of our products or services, including, but not limited to: • When undelivered products or services that are essential to the functionality of the delivered product exist, revenue is deferred until such undelivered products or services are delivered as the customer would not have full use of the delivered elements. • When required acceptance has not occurred. • When trade-in rights are granted at the time of sale, that portion of the sale is deferred until the trade-in right is exercised or the right expires. In determining the deferral amount, management estimates the expected trade-in rate and future value of the product upon trade-in. These factors are periodically reviewed and updated by management, and the updates may result in either an increase or decrease in the deferral. Equipment — Multiple Element Arrangements — To determine the estimated selling price in multiple-element arrangements, the Company first looks to establish vendor specific objective evidence (“VSOE”) of the selling price using the prices charged for a deliverable when sold separately. If VSOE of the selling price cannot be established for a deliverable, the Company looks to establish third-party evidence (“TPE”) of the selling price by evaluating the pricing of similar and interchangeable competitor products or services in stand-alone arrangements. However, as ARRIS’s products typically contain a significant element of proprietary technology and may offer substantially different features and functionality from its competitors, ARRIS has been unable to obtain comparable pricing information with respect to its competitors’ products. Therefore, the Company has not been able to obtain reliable evidence of TPE of the selling price. If neither VSOE nor TPE of the selling price can be established for a deliverable, the Company establishes best estimate selling price (“BESP”) by reviewing historical transaction information and considering several other internal factors, including discounting and margin objectives. The Company regularly reviews estimated selling price of the product offerings and maintain internal controls over the establishment and updates of these estimates. ARRIS’s equipment deliverables typically include proprietary operating system software, which together deliver the essential functionality of its products. Therefore, ARRIS’s equipment are considered non-software elements and are not subject to industry-specific software revenue recognition guidance. For equipment, revenue recognition is generally established when the products have been shipped, risk of loss has transferred, objective evidence exists that the product has been accepted, and no significant obligations remain relative to the transaction. For arrangements that fall within the software revenue recognition guidance, the fee is allocated to the various elements based on VSOE of fair value. If sufficient VSOE of fair value does not exist for the allocation of revenue to all the various elements in a multiple element arrangement, all revenue from the arrangement is deferred until the earlier of the point at which such sufficient VSOE of fair value is established or all elements within the arrangement are delivered. If VSOE of fair value exists for all undelivered elements, but does not exist for one or more delivered elements, the arrangement consideration is allocated to the various elements of the arrangement using the residual method of accounting. Under the residual method, the amount of the arrangement consideration allocated to the delivered elements is equal to the total arrangement consideration less the aggregate fair value of the undelivered elements. Using this method, any potential discount on the arrangement is allocated entirely to the delivered elements, which ensures that the amount of revenue recognized at any point in time is not overstated. Under the residual method, if VSOE of fair value exists for the undelivered element, generally PCS, the fair value of the undelivered element is deferred and recognized ratably over the term of the PCS contract, and the remaining portion of the arrangement is recognized as revenue upon delivery, which generally occurs upon delivery of the product or implementation of the system. Many of ARRIS’s products are sold in combination with customer support and maintenance services, which consist of software updates and product support. Software updates provide customers with rights to unspecified software updates that ARRIS chooses to develop and to maintenance releases and patches that the Company chooses to release during the period of the support period. Product support services include telephone support, remote diagnostics, email and web access, access to on-site technical support personnel and repair or replacement of hardware in the event of damage or failure during the term of the support period. Maintenance and support service fees are recognized ratably under the straight-line method over the term of the contract, which is generally one year. The Company does not record receivables associated with maintenance revenues without a firm, non-cancelable order from the customer. VSOE of fair value is determined based on the price charged when the same element is sold separately and based on the prices at which our customers have renewed their customer support and maintenance. For elements that are not yet being sold separately, the price established by management, if it is probable that the price, once established, will not change before the separate introduction of the element into the marketplace is used to measure VSOE of fair value for that element. Software Sold Without Tangible Equipment — Standalone Services — Incentives — Value Added Resellers Retail — (h) Shipping and Handling Fees Shipping and handling costs for the years ended December 31, 2015, 2014, and 2013 were approximately $5.6 million, $6.9 million and $4.9 million, respectively, and are classified in net sales and cost of sales. (i) Taxes Collected from Customers and Remitted to Governmental Authorities Taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between us and our customers are presented on a net basis in our Consolidated Statements of Operations. (j) Depreciation of Property, Plant and Equipment The Company provides for depreciation of property, plant and equipment on the straight-line basis over estimated useful lives of 10 to 40 years for buildings and improvements, 2 to 10 years for machinery and equipment, and the shorter of the term of the lease or useful life for leasehold improvements. Included in depreciation expense is the amortization of landlord funded tenant improvements which amounted to $4.5 million in 2015, $4.0 million in 2014 and $2.5 million in 2013. Depreciation expense, including amortization of capital leases, for the years ended December 31, 2015, 2014, and 2013 was approximately $71.8 million, $79.0 million, and $61.5 million, respectively. Certain events or changes in circumstances may indicate that the recoverability of the carrying amount of property, plant and equipment should be assessed, including, among others, a significant decrease in market value, a significant change in the business climate in a particular market, or a current period operating or cash flow loss combined with historical losses or projected future losses. To test for recovery, we group assets (an “asset group”) in a manner that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. When such events or changes in circumstances are present, we estimate the future cash flows expected to result from the use of the asset or asset group and its eventual disposition. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and pre-tax based upon policy decision) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. We use a variety of methodologies to determine the fair value of property, plant and equipment, including appraisals and discounted cash flow models, which are consistent with the assumptions we believe hypothetical marketplace participants would use. See Note 13 Property, Plant and Equipment (k) Goodwill, and Other Intangible Assets We classify intangible assets into three categories: (1) intangible assets with definite lives subject to amortization, (2) intangible assets with indefinite lives not subject to amortization and (3) goodwill. We determine the useful lives of our identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, the Company’s long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have definite lives are amortized, primarily on a straight-line basis, over their useful lives, generally ranging from 1 to 13 years. See Note 5 Goodwill and Other Intangible Assets Other Intangible Assets When facts and circumstances indicate that the carrying value of definite-lived intangible assets may not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of sales volume and the resulting profit and cash flows. These estimated future cash flows are consistent with those we use in our internal planning. To test for recovery, we group assets (an “asset group”) in a manner that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the expected future cash flows (undiscounted and pre-tax based upon policy decision) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the fair value. We use a variety of methodologies to determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions we believe hypothetical marketplace participants would use. We test intangible assets determined to have indefinite useful lives, including certain trademarks, in-process research and development and goodwill, for impairment annually, or more frequently if events or circumstances indicate that assets might be impaired. Our Company performs these annual impairment reviews as of the first day of our fourth fiscal quarter (October 1). We use a variety of methodologies in conducting impairment assessments of indefinite-lived intangible assets, including, but not limited to, discounted cash flow models, which are based on the assumptions we believe hypothetical marketplace participants would use. For indefinite-lived intangible assets, other than goodwill, if the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess. Acquired in-process research and development assets are initially recognized and measured at fair value and classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the development period after acquisition, this asset is not amortized as charges to earnings. Completion of the associated research and development efforts cause the indefinite-lived in-process research and development assets to become a finite-lived asset. As such, prior to commencing amortization the assets is tested for impairment. The Company has the option to perform a qualitative assessment of indefinite-lived intangible assets, other than goodwill, prior to completing the impairment test described above. The Company must assess whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If the Company concludes that this is the case, it must perform the testing described above. Otherwise, the Company does not need to perform any further assessment. There were no impairment charges related to intangible assets (definite-lived and indefinite-lived other than goodwill), during 2015, 2014 and 2013. Goodwill We perform impairment tests of goodwill at our reporting unit level, which is at or one level below our operating segments. Our operating segments are primarily based on the nature of the products and services offered, which is consistent with the way management runs our business. Our Customer Premises Equipment operating segment is the same as the reporting unit. Our Network & Cloud operating segment is subdivided into three reporting units which are Network Infrastructure, Cloud Services, and Cloud TV. Goodwill is assigned to the reporting unit or units that benefit from the synergies arising from each business combination. The goodwill impairment test consists of a two-step process, if necessary. The first step is to compare the fair value of a reporting unit to its carrying value, including goodwill. We typically use a weighting of income approach using discounted cash flow models and a market approach to determine the fair value of a reporting unit. The assumptions used in these models are consistent with those we believe hypothetical marketplace participants would use. If the fair value of the reporting unit is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of impairment loss, if any. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill. The Company has the option to perform a qualitative assessment of goodwill prior to completing the two-step process described above to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill and other intangible assets. If the Company concludes that this is the case, it must perform the two-step process. Otherwise, the Company will forego the two-step process and does not need to perform any further testing. There was no impairment of goodwill resulting from our annual impairment testing in 2015, 2014 and 2013. (l) Advertising and Sales Promotion Advertising and sales promotion costs are expensed as incurred. Advertising expense was approximately $16.8 million, $8.2 million, and $4.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. (m) Research and Development Research and development (“R&D”) costs are expensed as incurred. The expenditures include compensation costs, materials, other direct expenses, and an allocation of information technology, telecommunications, and facilities costs. (n) Warranty ARRIS provides warranties of various lengths to customers based on the specific product and the terms of individual agreements. For further discussion, see Note 9 Guarantees (o) Income Taxes ARRIS uses the liability method of accounting for income taxes, which requires recognition of temporary differences between financial statement and income tax bases of assets and liabilities, measured by enacted tax rates. If necessary, the measurement of deferred tax assets is reduced by a valuation allowance to the amount that is more-likely-than-not to be realized based on available evidence. ARRIS reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. See Note 16 Income Taxes (p) Foreign Currency Translation A significant portion of the Company’s products are manufactured or assembled in China, Mexico and Taiwan, and we have research and development centers in Argentina, China, India, Ireland, Israel and Sweden. Sales into international markets have been and are expected in the future to be an important part of the Company’s business. These foreign operations are subject to the usual risks inherent in conducting business abroad, including risks with respect to currency exchange rates, economic and political destabilization, restrictive actions and taxation by foreign governments, nationalization, the laws and policies of the United States affecting trade, foreign investment and loans, and foreign tax laws. ARRIS has certain international customers who are billed in their local currency and certain international operations that procure in U.S. dollars. ARRIS also has certain predictable expenditures for international operations in local currency. Additionally, certain intercompany transactions are denominated in foreign currencies and subject to revaluation. The Company enters into forward or currency option contracts based on a percentage of expected foreign currency exposures. The percentage can vary, based on the predictability of the exposures denominated in the foreign currency. See Note 8 Derivative Instruments and Hedging Activities (q) Stock-Based Compensation See Note 17 Stock-Based Compensation of Notes to the Consolidated Financial Statements for further discussion of the Company’s significant accounting policies related to stock based compensation. (r) Concentrations of Credit Risk Financial instruments that potentially subject ARRIS to concentrations of credit risk consist principally of cash, cash equivalents and short-term investments, accounts receivable and derivatives. ARRIS places its temporary cash investments with high credit quality financial institutions. Concentrations with respect to accounts receivable occur as the Company sells primarily to large, well-established companies including companies outside of the United States. The Company’s credit policy generally does not require collateral from its customers. ARRIS closely monitors extensions of credit to other parties and, where necessary, utilizes common financial instruments to mitigate risk or requires cash on delivery terms. Overall financial strategies and the effect of using a hedge are reviewed periodically. (s) Fair Value The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: • Cash, cash equivalents, and short-term investments: The carrying amounts reported in the consolidated balance sheets for cash, cash equivalents, and short-term investments approximate their fair values. • Accounts receivable and accounts payable: The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximate their fair values. • Marketable securities: The fair values for trading and available-for-sale equity securities are based on quoted market prices or observable prices based on inputs not in active markets but corroborated by market data. • Non-marketable securities: Non-marketable equity securities are subject to a periodic impairment review; however, there are no open-market valuations, and the impairment analysis requires significant judgment. This analysis includes assessment of the investee’s financial condition, the business outlook for its products and technology, its projected results and cash flow, recent rounds of financing, and the likelihood of obtaining subsequent rounds of financing. • Senior secured credit facilities: Comprised of term loans and revolving credit facility of which the outstanding principal amount approximates fair value. • Derivative instruments: The carrying amounts reported in the balance sheet for derivative financial instruments approximate their fair values. The Company has designated interest rate derivatives as cash flow hedges and the objective is to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. The Company’s foreign currency derivative instruments economically hedge certain risk but are not designated as hedges. The objective of these derivatives instruments is to add stability to foreign currency gains and losses recorded as other expense (income) and to manage its exposure to foreign currency movements. (t) Computer Software Internal-use software The Company capitalizes costs associated with internally developed and/or purchased software systems for internal use that have reached the application development stage and meet recoverability tests. Capitalized costs include external direct costs of materials and services utilized in developing or obtaining internal-use software and payroll and payroll-related expenses for employees who are directly associated with and devote time to the internal-use software project. Capitalization of such costs begins when the preliminary project stage is complete and ceases no later than the point at which the project is substantially complete and ready for its intended purpose. These capitalized costs are amortized on a straight-line basis over periods of two to seven years, beginning when the asset is ready for its intended use. Capitalized costs are included in property, plant, and equipment on the consolidated balance sheets. External-use software Research and development costs are charged to expense as incurred. ARRIS generally has not capitalized any such development costs because the costs incurred between the attainment of technological feasibility for the related software product through the date when the product is available for general release to customers has been insignificant. (u) Comprehensive Income (Loss) The components of comprehensive income (loss) include net income (loss), unrealized gains (losses) on available-for-sale securities, unrealized gains (losses) on derivative instruments, change in unfunded pension liability, net of tax, if applicable and change in cumulative translation adjustments. |
Impact of Recently Issued Accou
Impact of Recently Issued Accounting Standards | 12 Months Ended |
Dec. 31, 2015 | |
Impact of Recently Issued Accounting Standards | Note 3. Impact of Recently Issued Accounting Standards Adoption of new accounting standards In April 2015, the FASB issued new guidance, which requires the cost of issuing debt to no longer be recorded as a separate asset but rather to be presented on the balance sheet as a direct reduction to the carrying value of the related debt liability, similar to the presentation of debt discounts. This guidance is effective for interim and annual periods beginning after December 15, 2015 including retrospective conforming presentation of prior periods presented. Early adoption of the standard is permitted. We early adopted the standard as of December 31, 2015. As a result of the retrospective adoption, we reclassified unamortized debt issuance costs of $25.3 million as of December 30, 2014 from other current assets and other assets to current and long-term debt on our Consolidated Balance Sheets. Adoption of this standard did not impact our results of operations or cash flows in the current or previous annual reporting periods. In September 2015, the FASB issued updated guidance related to the simplification of the accounting for measurement-period adjustments in business combinations. This standard update eliminates the requirement to account for measurement-period adjustments retrospectively. This standard update instead requires an acquirer to recognize the measurement-period adjustments in the reporting period in which the adjustments are determined. This standard update also requires that an acquirer record the effects on earnings of any changes resulting from the change in provisional amounts, calculated as if the accounting had been completed at the acquisition date. The Company adopted this standard during the fourth quarter of 2015. The adoption of this standard did not have a material impact on our consolidated financial position and results of operations. On November 20, 2015, the Financial Accounting Standards Board issued new guidance, Balance Sheet Classification of Deferred Taxes, requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. The classification change for all deferred taxes as noncurrent eliminates the need to separately identify the net current and net noncurrent deferred tax asset or liability in each jurisdiction and allocate valuation allowances. The Company elected to prospectively adopt the accounting standard in the beginning of our fourth quarter of fiscal 2015. Prior periods in our Consolidated Financial Statements were not retrospectively adjusted. Accounting standards issued but not yet effective In June 2014, the FASB issued an update to its accounting guidance related to share-based compensation. The guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period, be treated as a performance condition, and therefore shall not be reflected in determining the fair value of the award at the grant date. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The guidance will be effective for annual and interim periods beginning after December 15, 2015 and is not expected to have a material effect on the Company’s consolidated financial position and results of operations. In August 2014, the FASB issued new guidance related to the disclosures around going concern. The new standard provides guidance around management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern, and if those conditions exist to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In January 2015, the FASB issued new guidance simplifying income statement presentation by eliminating the concept of “extraordinary items”. This guidance eliminates from U.S. GAAP the concept of extraordinary items. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. We do not anticipate that this guidance will materially impact our consolidated financial statements. In February 2015, the FASB issued new guidance related to consolidations. The new guidance amends certain requirements for determining whether a variable interest entity must be consolidated. The amendments are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The adoption of the new guidance is not expected to have a material impact on the Company’s consolidated financial statements. In April 2015, the FASB issued new guidance, in determining whether fees for purchasing cloud computing services (or hosted software solutions) are considered internal-use software or should be considered a service contract. A cloud computing agreement that includes a software license should be accounted for in the same manner as internal-use software if the customer has contractual right to take possession of the software during the hosting period without significant penalty and it is feasible to either run the software on the customer’s hardware or contract with another vendor to host the software. Arrangements that don’t meet the requirements for internal-use software should be accounted for as a service contract. This guidance will be effective for interim and annual periods beginning after December 15, 2015. Early adoption of the standard is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In July 2015, the FASB issued updated guidance related to the simplification of the measurement of inventory. This standard update does not apply to inventory that is measured using last-in, first-out or the retail inventory method. This standard update applies to all other inventory, which includes inventory that is measured using first-in, first-out or average cost methods. The standard update requires entities to measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This standard update is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard update is not expected to have a material impact on our condensed consolidated financial statements. |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2015 | |
Business Acquisitions | Note 4. Business Acquisitions Acquisition of ActiveVideo In April 2015, the Company and Charter Communications Inc. formed a venture, A-C Acquisition, LLC (“A-C Venture”) with ARRIS’s and Charter’s ownership percentage of the venture being 65% and 35%, respectively. On April 30, 2015, A-C Venture acquired 100% of the outstanding shares in ActiveVideo Networks, Inc. (“ActiveVideo”). The consideration for the acquisition was $98 million in cash. ActiveVideo, headquartered in San Jose, California, is a software company that uses cloud-based technology to bring advanced user interfaces and services to cable and IPTV set-top boxes, as well as connected consumer electronic devices. Goodwill arising from the acquisition is attributable to the workforce of the acquired business, future technology, future customer relationships, and strategic opportunities that are expected to arise from the acquisition. No tax deductible goodwill existed as of the acquisition date. Subsequent to the acquisition date, ActiveVideo converted to a limited liability company creating tax basis in goodwill essentially equal to its book basis. The total goodwill was assigned to the Company’s Cloud TV reporting unit, within the Company’s N&C reportable segment. The results of operations of ActiveVideo have been included in the Company’s Consolidated Financial Statements as of and from the date of acquisition. The following table summarizes the estimated fair value of the net assets acquired and the liabilities assumed at the acquisition dates (in thousands): April 30, 2015 Consideration transferred (net of cash acquired of $523) $ 97,905 Assets acquired and liabilities assumed: Current assets 1,984 Property and equipment 1,714 Other assets 68 Identifiable intangible assets 57,700 Debt assumed (15,000 ) Other liabilities assumed (27,314 ) Net identifiable assets acquired 19,152 Goodwill $ 78,753 The acquired identifiable intangible assets of ActiveVideo as of the date of the acquisition are summarized below (in thousands): Intangible Asset Amount Weighted-Average Useful Life Customer relationships $ 26,200 7 years Developed technology 25,600 5 years Trademarks 5,900 Indefinite $ 57,700 The Company incurred acquisition related costs of $1.1 million in 2015. These amounts were expensed as incurred and are included in the Consolidated Statement of Operations in the line item titled “Integration, acquisition, restructuring and other costs”. As of the acquisition date, total equity contributed by the noncontrolling interest was $54 million, reflecting its proportionate 35% share of the acquisition consideration of $34 million, payment of assumed liabilities of $13 million and additional working capital funding of $7 million. The accounting for the business combination is complete at the end of the reporting period. Acquisition of Motorola Home On April 17, 2013, ARRIS completed its acquisition of Motorola Home from General Instrument Holdings, Inc., a subsidiary of Google, Inc. Consideration for the acquisition consisted of approximately $2,208.1 million in cash, inclusive of working capital adjustments, and 10.6 million shares of ARRIS’s stock (the “Acquisition”). The Acquisition enhanced the Company’s scale and product breadth in the telecom industry, significantly diversified the Company’s customer base and expanded dramatically the Company’s international presence. Notably, the acquisition brought to ARRIS, Motorola Home’s product scale and scope in end-to-end video processing and delivery, including a full range of QAM and IP set-tops products, as well as IP Gateway CPE equipment for data and voice services for broadband service providers. The Acquisition also enhanced the depth and scale of the Company’s R&D capabilities, particularly in the video arena. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets | Note 5. Goodwill and Intangible Assets The changes in the carrying amount of goodwill for the three years ended December 31, 2015 are as follows (in thousands): CPE N & C Total Goodwill $ 31,850 $ 540,921 $ 572,771 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2012 31,850 162,265 194,115 Goodwill acquired 656,808 92,593 749,401 Other — (3,114 ) (3,114 ) Goodwill 688,658 630,400 1,319,058 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2013 688,658 251,744 940,402 Goodwill acquired — 1,682 1,682 Other (4,061 ) (1,956 ) (6,017 ) Goodwill 684,597 630,126 1,314,723 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2014 684,597 251,470 936,067 Goodwill acquired (disposed), net — 78,053 78,053 Other (2,015 ) 1,858 (157 ) Goodwill 682,582 710,037 1,392,619 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2015 $ 682,582 $ 331,381 $ 1,013,963 During the 2015, the Company recorded $78.8 million of goodwill related to the ActiveVideo acquisition and disposed of $(0.7) million of goodwill related to the sale of our Supplies business. Intangible Assets The gross carrying amount and accumulated amortization of the Company’s intangible assets as of December 31, 2015 and December 31, 2014 are as follows (in thousands): December 31, 2015 December 31, 2014 Gross Amount Accumulated Amortization Net Book Value Gross Amount Accumulated Amortization Net Book Value Definite-lived intangible assets : Customer relationships (2) $ 930,212 $ 468,414 $ 461,798 $ 904,012 $ 366,452 $ 537,560 Developed technology, patents & licenses (1,2,3) 704,137 361,719 342,418 632,487 234,882 397,605 Trademarks, trade and domain names 21,072 20,740 332 21,072 17,949 3,123 Sub-total $ 1,655,421 $ 850,873 $ 804,548 $ 1,562,671 $ 619,283 $ 943,388 Indefinite-lived intangible assets: Trademarks (2) $ 5,900 — $ 5,900 $ — — $ — In-process R&D (3) — — — 5,100 — 5,100 Sub-total $ 5,900 — $ 5,900 $ 5,100 — $ 5,100 Total $ 1,661,321 $ 850,873 $ 810,448 $ 1,562,671 $ 619,283 $ 943,388 (1) In 2015, the Company recorded intangible assets of $34.3 million for a non-exclusive license to approximately four thousand patents purchased by RPX Corporation (“RPX”), resulting from its agreement to participate in a syndicate of approximately 30 companies, including certain customers of ARRIS, to fund the RPX purchase of patent assets from Rockstar Consortium and its subsidiaries (“Rockstar”). The license assets have a weighted average useful life of nine years at acquisition. (2) The increase in 2015 reflects intangible assets acquired in the ActiveVideo acquisition. See Note 4 Business Acquisitions (3) In-process research and development of $5.1 million was reclassified in 2015 to become a definite-lived asset upon completion of the associated research and development efforts. Amortization expense recorded on the intangible assets for the years ended December 31, 2015, 2014 and 2013 was $231.6 million, $236.8 million, and $193.6 million, respectively. The estimated total amortization expense for finite-lived intangibles for each of the next five fiscal years is as follows (in thousands): 2016 $ 203,778 2017 186,843 2018 136,281 2019 113,732 2020 104,955 Thereafter 58,959 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2015 | |
Investments | Note 6. Investments ARRIS’s investments consisted of the following (in thousands): As of December 31, As of December 31, Current Assets: Available-for-sale securities $ 15,470 $ 126,748 Noncurrent Assets: Available-for-sale securities 4,036 8,631 Equity method investments 24,452 27,355 Cost method investments 16,646 15,161 Other investments 24,408 26,493 Total classified as non-current assets 69,542 77,640 Total $ 85,012 $ 204,388 Available-for-sale securities — The contractual maturities of the Company’s available-for-sale securities as of December 31, 2015 are shown below. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties (in thousands): December 31, 2015 Within one year $ 15,470 After one year through five years — After five years through ten years — After ten years 4,036 Total $ 19,506 Equity method investments The following table summarizes the ownership structure and ownership percentage of the non-consolidated investments as of December 31, 2015, accounted for using the equity method. Name of Investee Ownership Structure % Ownership MPEG LA Limited Liability Company 8.4% Music Choice Limited Liability Partnership 18.2% Conditional Access Licensing (“CAL”) Limited Liability Company 49.0% Combined Conditional Access Development (“CCAD”) Limited Liability Company 50.0% ARRIS owns investments in two limited liability corporations. The investees were determined to be variable interest entities and ARRIS is not the primary beneficiary, as ARRIS does not have the power to direct the activities of the investee that most significantly impact its economic performance. The limited liability corporations are a licensing and a research and development company. The purpose of the limited liability corporations are to develop, deploy, license, support, and to gain market acceptance for certain technologies that reside in a cable plant or in a cable device. Subject to agreement on annual statements of work, the Company is providing to one of the ventures, engineering services per year approximating 20% to 30% of the approved venture budget, which is expected to be in the range of approximately $6 million to $8 million per year. The Company is also required to make annual contributions for the purpose of funding development projects identified by the venture. During 2015, the Company made funding contributions to the investment of $16.0 million. The following table summarizes the carrying amount and maximum exposure to loss for the investments accounted for using the equity method as of December 31, 2015 (in thousands) Carrying Amount Maximum Exposure Conditional Access Licensing $ 11,238 $ 11,238 Combined Conditional Access Development 2,148 18,000 The Company’s future total annual funding contributions to CCAD are expected to be in the range of approximately $16 million to $18 million, and represent the Company’s annual maximum exposure to loss. During the quarter ended December 31, 2015, the Company recorded a gain of $2.5 million resulting from the transfer of certain technology to CCAD. An additional $2.5 million of unrecognized gain is being treated as a basis difference in the investment, and will be recognized over an expected period of four years. Cost method investments Other investments Other-Than-Temporary Investment Impairments — near-term For the year ended December 31, 2015, ARRIS concluded that one private company had indicators of impairment that resulted in other-than-temporary impairment charge of $0.2 million. For the year ended December 31, 2014, the Company concluded that two private companies had indicators of impairment that resulted in other-than-temporary impairment charges of $7.0 million. These charges are reflected in the Consolidated Statements of Operations. Classification of securities as current or non-current is dependent upon management’s intended holding period, the security’s maturity date and liquidity consideration based on market conditions. If management intends to hold the securities for longer than one year as of the balance sheet date, they are classified as non-current. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurements | Note 7. Fair Value Measurements Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S GAAP establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In order to increase consistency and comparability in fair value measurements, the FASB has established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by U.S. GAAP are as follows: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The following table presents the Company’s investment assets (excluding equity and cost method investments) and derivatives measured at fair value on a recurring basis as of December 31, 2015 and 2014 (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Total Certificates of deposit $ — $ 4,208 $ — $ 4,208 Corporate bonds — 6,257 — 6,257 Short-term bond fund 5,005 — — 5,005 Corporate obligations — 1 — 1 Money markets 209 — — 209 Mutual funds 131 — — 131 Other investments — 3,695 — 3,695 Interest rate derivatives — liability derivatives — (10,759 ) — (10,759 ) Foreign currency contracts — asset position — 7,064 — 7,064 Foreign currency contracts — liability position — (24,371 ) — (24,371 ) December 31, 2014 Level 1 Level 2 Level 3 Total Certificates of deposit $ — $ 63,171 $ — $ 63,171 Commercial paper — 1,000 — 1,000 Corporate bonds — 37,737 — 37,737 Short-term bond fund 29,708 — — 29,708 Corporate obligations — 46 — 46 Money markets 210 — — 210 Mutual funds 133 — — 133 Other investments — 3,369 — 3,369 Interest rate derivatives — asset derivatives — 1,416 — 1,416 Interest rate derivatives — liability derivatives — (6,414 ) — (6,414 ) Foreign currency contracts — asset position — 2,876 — 2,876 Foreign currency contracts — liability position — (201 ) — (201 ) All of the Company’s short-term and long-term investments at December 31, 2015 are classified within Level 1 or Level 2 of the fair value hierarchy as they are valued using quoted market prices, market prices for similar securities, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices in active markets include the Company’s investment in money market funds, mutual funds and municipal bonds. Such instruments are generally classified within Level 1 of the fair value hierarchy. The types of instruments valued based on other observable inputs include corporate obligations and bonds, commercial paper and certificates of deposit. Such instruments are classified within Level 2 of the fair value hierarchy. In addition to the financial instruments included in the above table, certain nonfinancial assets and liabilities are to be measured at fair value on a nonrecurring basis in accordance with applicable authoritative guidance. This includes items such as nonfinancial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) and nonfinancial long-lived asset groups measured at fair value for an impairment assessment. In general, nonfinancial assets including goodwill, other intangible assets and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. As of December 31, 2015, the Company had not recorded any impairment related to such assets and had no other material nonfinancial assets or liabilities requiring adjustments or write-downs to their current fair value. The Company believes the principal amount of the debt as of December 31, 2015 approximated the fair value because it bears interest at rates that are adjusted periodically, analysis of recent market conditions, prevailing interest rates, and other Company specific factors. The Company has classified the debt as a Level 2 item within the fair value hierarchy. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities | Note 8. Derivative Instruments and Hedging Activities Overview ARRIS is exposed to financial market risk, primarily related to foreign currency and interest rates. These exposures are actively monitored by management. To manage the volatility relating to certain of these exposures, the Company enters into a variety of derivative financial instruments. Management’s objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency and interest rates. ARRIS’s policies and practices are to use derivative financial instruments only to the extent necessary to manage exposures. ARRIS does not hold or issue derivative financial instruments for trading or speculative purposes. The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives also may be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In accordance with the FASB’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Cash flow hedges of interest rate risk In April 2013, ARRIS entered into senior secured credit facilities having variable interest rates with Bank of America, N.A. and various other institutions, which are comprised of (i) a “Term Loan A Facility” of $1.1 billion, (ii) a “Term Loan B Facility” of $825 million and (iii) a “Revolving Credit Facility” of $250 million. In June 2015, ARRIS amended and restated its existing credit agreement to improve the terms and conditions of the credit agreement, extend the maturities of certain loan facilities, increase the amount of the revolving credit facility, and add a new “Term Loan A-1 Facility” to fund the acquisition of Pace. As a result of this exposure to interest rate movements, ARRIS entered into various interest rate swap arrangements, which effectively converted $625 million of the Company’s variable-rate debt based on one-month LIBOR to an aggregate fixed rate of approximately 3.15% as of September 30, 2015. This fixed rate could vary up by 50 basis points or down by 25 basis points based on future changes to the Company’s net leverage ratio. $600 million of these swaps matures on December 29, 2017 and $25 million matures on March 31, 2020. Additionally, the Company also entered into six $100 million forward-starting interest rate swap arrangements, which effectively will convert $600 million of the Company’s variable-rate debt based on one-month LIBOR to an aggregate fixed rate of 4.03% based on the Company’s interest rates as of December 31, 2015. This fixed rate could also vary up by 50 basis points or down by 25 basis points based on future changes to the Company’s net leverage ratio. Each of these swaps begins on December 29, 2017 and matures on March 31, 2020. ARRIS has designated these swaps as cash flow hedges, and the objective of these hedges is to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2015, such derivatives were used to hedge the variable cash flows associated with debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the years ended December 31, 2015 and 2014, the Company did not have expenses related to hedge ineffectiveness in earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Over the next 12 months, the Company estimates that an additional $4.5 million may be reclassified as an increase to interest expense. The table below presents the pre-tax impact of the Company’s derivative financial instruments had on the Accumulated Other Comprehensive Income and Statement of Operations for the years ended December 31, 2015 and 2014 (in thousands): Years Ended December 31, 2015 2014 Gain (Loss) Recognized in OCI on Derivative (Effective Portion) $ (13,256 ) $ (8,541 ) Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Interest expense Interest expense Amounts Reclassified from Accumulated OCI into Income (Effective Portion) $ 7,495 $ 7,550 The following table indicates the location on the Consolidated Balance Sheets in which the Company’s derivative assets and liabilities designated as hedging instruments have been recognized and the related fair values of those derivatives as of December 31, 2015 and December 31, 2014 were as follows (in thousands): As of December 31, 2015 As of December 31, 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate derivatives — asset derivatives Other assets $ — Other assets $ 1,416 Interest rate derivatives — liability derivatives Other accrued liabilities (4,489 ) Other accrued liabilities (6,414 ) Interest rate derivatives — liability derivatives Other noncurrent liabilities (6,270 ) Other noncurrent liabilities — The change in the fair values of ARRIS’s derivative designated as hedging instruments recorded in the Consolidated Statements of Operations during the years ended December 31, 2015, 2014, and 2013 were as follows (in thousands): Years Ended December 31, Statement of Operations Location 2015 2014 2013 Derivatives designated as hedging instruments: Interest rates derivatives Interest expense $ 7,495 $ 7,550 $ 3,132 Credit-risk-related contingent features ARRIS has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. As of December 31, 2015, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $11.2 million. As of December 31, 2015, the Company has not posted any collateral related to these agreements nor has it required any of its counterparties to post collateral related to these or any other agreements. Non-designated hedges of foreign currency risk The Company has U.S. dollar functional currency entities that bill certain international customers in their local currency and foreign functional currency entities that procure in U.S. dollars. ARRIS also has certain predictable expenditures for international operations in local currency. Additionally, certain intercompany transactions are denominated in foreign currencies and subject to revaluation. To mitigate the volatility related to fluctuations in the foreign exchange rates for certain exposures, ARRIS has entered into various foreign currency contracts. As of December 31, 2015, the Company had option collars with notional amounts totaling 80 million euros which mature throughout 2016 and 2017, forward contracts with notional amounts totaling 75 million euros which mature throughout 2016 and 2017, forward contracts with a total notional amount of 90 million Australian dollars which mature throughout 2016 and forward contracts with notional amounts totaling 40 million Canadian dollars which mature throughout 2015. As part of the Pace acquisition, the Company paid the former Pace shareholders 132.5 pence per share in cash consideration, which is approximately 434.3 million British pounds, in the aggregate, as of January 4, 2016. As such, the Company entered into foreign currency forward contracts to purchase British pounds and sell U.S. Dollars to mitigate the volatility related to fluctuations in the foreign exchange rate prior to the closing period. As of December 31, 2015, the Company had forward contracts with notional amounts totaling 385 million British pounds which mature on March 31, 2016. The contracts fixed the British pound to U.S. dollar forward exchange rate at various rates. During the year ended December 31, 2015, losses of $22.3 million were recorded related to the British pound forward contracts. These contracts were effectively closed upon the close of the Pace acquisition in January 2016. The Company’s objectives in using foreign currency derivatives are to add stability to foreign currency gains and losses recorded as other expense (income) and to manage its exposure to foreign currency movements. To accomplish this objective, the Company uses foreign currency option and foreign currency forward contracts as part of its foreign currency risk management strategy. The Company’s foreign currency derivative instruments economically hedge certain risk but are not designated as hedges, and accordingly, all changes in the fair value of the instruments are recognized as a loss (gain) on foreign currency in the Consolidated Statements of Operations. The maximum time frame for ARRIS’s derivatives is currently less than 18 months. The following table indicates the location on the Consolidated Balance Sheets in which the Company’s derivative assets and liabilities not designated as hedging instruments have been recognized and the related fair values of those derivatives as of December 31, 2015 and December 31, 2014 were as follows (in thousands): As of December 31, 2015 As of December 31, 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives not designated as hedging instruments Foreign exchange contracts — asset derivatives Other current assets $ 6,495 Other current assets $ 2,876 Foreign exchange contracts — asset derivatives Other assets 569 Other current assets — Foreign exchange contracts — liability derivatives Other accrued liabilities (23,632 ) Other accrued liabilities (201 ) Foreign exchange contracts — liability derivatives Other noncurrent liabilities (739 ) Other noncurrent liabilities — The change in the fair values of ARRIS’s derivatives not designated as hedging instruments recorded in the Consolidated Statements of Operations during the years ended December 31, 2015, 2014, and 2013 were as follows (in thousands): Years Ended December 31, Statement of Operations Location 2015 2014 2013 Derivatives not designated as hedging instruments Foreign exchange contracts Loss (gain) on foreign currency $ 7,597 $ (4,527 ) $ (428 ) |
Guarantees
Guarantees | 12 Months Ended |
Dec. 31, 2015 | |
Guarantees | Note 9. Guarantees Warranty ARRIS provides warranties of various lengths to customers based on the specific product and the terms of individual agreements. The Company provides for the estimated cost of product warranties based on historical trends, the embedded base of product in the field, failure rates, and repair costs at the time revenue is recognized. Expenses related to product defects and unusual product warranty problems are recorded in the period that the problem is identified. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its suppliers, the estimated warranty obligation could be affected by changes in ongoing product failure rates, material usage and service delivery costs incurred in correcting a product failure, as well as specific product failures outside of ARRIS’s baseline experience. If actual product failure rates, material usage or service delivery costs differ from estimates, revisions (which could be material) would be recorded against the warranty liability. The Company offers extended warranties and support service agreements on certain products. Revenue from these agreements is deferred at the time of the sale and recognized on a straight-line basis over the contract period. Costs of services performed under these types of contracts are charged to expense as incurred, which approximates the timing of the revenue stream. Information regarding the changes in ARRIS’s aggregate product warranty liabilities for the years ending December 31, 2015 and 2014 were as follows (in thousands): 2015 2014 Beginning balance $ 74,320 $ 81,500 Accruals related to warranties (including changes in assumptions) 19,111 33,320 Settlements made (in cash or in kind) (44,404 ) (40,500 ) Ending balance $ 49,027 $ 74,320 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2015 | |
Segment Information | Note 10. Segment Information The “management approach” has been used to present the following segment information. This approach is based upon the way the management of the Company organizes segments for making operating decisions and assessing performance. Financial information is reported on the basis that it is used internally by the chief operating decision maker (“CODM”) for evaluating segment performance and deciding how to allocate resources to segments. The Company’s chief executive officer has been identified as the CODM. The CODM manages the Company under two segments: • Customer Premises Equipment (“CPE”) • Network & Cloud (“N&C”) — These operating segments are determined based on the nature of the products and services offered. The measures that are used to assess the reportable segment’s operating performance are sales and direct contribution. Direct contribution is defined as gross margin less direct operating expense. The “Corporate and Unallocated Costs” category of expenses include corporate sales and marketing, home office general and administrative expenses, annual bonus and equity compensation. These expenses are not included in the measure of segment direct contribution and as such are reported as “Corporate and Unallocated Costs” and are included in the reconciliation to income (loss) before income taxes. A measure of assets is not applicable, as segment assets are not regularly reviewed by the CODM for evaluating performance or allocating resources. The tables below present information about the Company’s reportable segments for the years ended December 31, 2015, 2014 and 2013 (in thousands): 2015 2014 2013 Net sales to external customers: CPE $ 3,136,585 $ 3,690,454 $ 2,448,381 N&C 1,661,594 1,637,544 1,193,001 Other 153 (5,077 ) (20,480 ) Total 4,798,332 5,322,921 3,620,902 Direct contribution: CPE 548,840 791,244 509,473 N&C 487,166 430,943 264,589 Segment total 1,036,006 1,222,187 774,062 Corporate and unallocated costs (568,336 ) (606,834 ) (515,391 ) Amortization of intangible assets (227,440 ) (236,521 ) (193,637 ) Integration, acquisition, restructuring and other (29,277 ) (37,498 ) (83,047 ) Operating income (loss) 210,953 341,334 (18,013 ) Interest expense 70,936 62,901 67,888 Loss on investments 6,220 10,961 2,698 Interest income (2,379 ) (2,590 ) (2,936 ) Loss (gain) on foreign currency 20,761 2,637 (3,502 ) Other expense ( income), net 8,362 28,195 13,989 Income (loss) before income taxes $ 107,053 $ 239,230 $ (96,150 ) For the years ended December 31, 2015, 2014 and 2013, the compositions of our corporate and unallocated costs that are reflected in the consolidated statement of operations were as follows (in thousands): 2015 2014 2013 Corporate and unallocated costs: Cost of sales $ 56,311 $ 69,973 $ 122,460 Selling, general and administrative expenses 349,993 349,693 278,921 Research and development expenses 162,032 187,168 114,010 Total $ 568,336 $ 606,834 $ 515,391 The following table summarizes the Company’s net intangible assets and goodwill by reportable segment as of December 31, 2015 and 2014 (in thousands): Network & CPE Total December 31, 2015 Goodwill $ 331,381 $ 682,582 $ 1,013,963 Intangible assets, net 284,528 525,920 810,448 December 31, 2014 Goodwill $ 251,470 $ 684,597 $ 936,067 Intangible assets, net 298,799 644,589 943,388 The following table summarizes the Company’s revenues by products and services as of December 31, 2015, 2014 and 2013 (in thousands): 2015 2014 2013 CPE: CPE products $ 3,136,585 $ 3,690,454 $ 2,448,381 Network & Cloud: Infrastructure equipment 1,407,735 1,435,676 1,020,722 Global services 181,892 141,625 120,314 Cloud solutions 71,967 60,243 51,965 Sub-total 1,661,594 1,637,544 1,193,001 Other: Other 153 (5,077 ) (20,480 ) Total net sales $ 4,798,332 $ 5,322,921 $ 3,620,902 The Company’s two largest customers (including their affiliates, as applicable) are Comcast and Time Warner Cable. Over the past year, certain customers’ beneficial ownership may have changed as a result of mergers and acquisitions. Therefore the revenue for ARRIS’s customers for prior periods has been adjusted to include the affiliates under common control. A summary of sales to these customers for 2015, 2014 and 2013 is set forth below (in thousands, except percentages): Years ended December 31, 2015 2014 2013 Comcast and affiliates $ 1,007,892 $ 1,012,367 $ 674,977 % of sales 21.0 % 19.0 % 18.6 % Time Warner Cable and affiliates $ 687,645 $ 600,770 $ 331,829 % of sales 14.3 % 11.3 % 9.2 % ARRIS sells its products primarily in the United States. The Company’s international revenue is generated from Asia Pacific, Canada, Europe and Latin America. Sales to customers outside of United States were approximately 28.8%, 25.7% and 32.1% of total sales for the years ended December 31, 2015, 2014 and 2013, respectively. International sales for the years ended December 31, 2015, 2014 and 2013 were as follows (in thousands): Years Ended December 31, 2015 2014 2013 Americas, excluding U.S (1) $ 880,581 $ 900,822 $ 746,146 Asia Pacific 142,893 147,921 153,674 EMEA 356,275 316,975 263,910 Total international sales $ 1,379,749 $ 1,365,718 $ 1,163,730 (1) Excludes U.S. sales of $3,418.6 million, $3,957.2 million and $2,457.2 million for the years ended December 31, 2015, 2014 and 2013, respectively. The following table summarizes ARRIS’s international property, plant and equipment assets by geographic region as of December 31, 2015 and 2014 (in thousands): As of December 31, 2015 2014 Americas, excluding U.S. $ 6,659 $ 7,303 Asia Pacific 74,651 76,970 EMEA 7,265 8,129 Total $ 88,575 $ 92,402 (1) Excludes U.S. assets of $223.7 million and $274.0 million for the years ended December 31, 2015 and 2014, respectively. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2015 | |
Inventories | Note 11. Inventories The components of inventory are as follows, net of reserves (in thousands): December 31, 2015 2014 Raw material $ 60,287 $ 61,068 Work in process 3,076 6,713 Finished goods 338,229 333,384 Total inventories, net $ 401,592 $ 401,165 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment | Note 12. Property, Plant and Equipment Property, plant and equipment, at cost, consisted of the following (in thousands): December 31, 2015 2014 Land $ 68,562 $ 87,952 Buildings and leasehold improvements 141,171 141,581 Machinery and equipment 407,110 402,709 616,843 632,242 Less: Accumulated depreciation (304,532 ) (265,811 ) Total property, plant and equipment, net $ 312,311 $ 366,431 During 2014, the Company entered into a binding letter of intent for the sale of land and building for $2.9 million which was lower than its carrying amount of $4.8 million. The asset was reclassified as held for sale and was measured at its fair value less cost to sell and classified as a component of “Other current assets” as of December 31, 2014. The Company recorded an impairment charge of $2.1 million to reduce the asset’s carrying amount to its estimated fair value less cost to sell during 2014, which is reported in the Consolidated Statements of Operations under the caption “Other expense (income), net.” The sale closed in the first quarter of 2015. |
Lease Financing Obligation
Lease Financing Obligation | 12 Months Ended |
Dec. 31, 2015 | |
Lease Financing Obligation | Note 13. Lease Financing Obligation Sale-leaseback of San Diego Office Complex: In 2015, the Company sold its San Diego office complex consisting of land and buildings with a net book value of $71.0 million, for total consideration of $85.5 million. The Company concurrently entered into a leaseback arrangement for two buildings on the San Diego campus (“Building 1” and “Building 2”) with an initial leaseback term of ten years for Building 1 and a maximum term of one year for Building 2. The Company determined that the sale-leaseback of Building 1 did not qualify for sale-leaseback accounting due to continuing involvement that will exist for the 10-year lease term. Accordingly, the carrying amount of Building 1 will remain on the Company’s balance sheet and will be depreciated over its remaining useful life with the proceeds reflected as a financing obligation. At December 31, 2015, the minimum lease payments required on the financing obligation were as follows (in thousands): 2016 $ 4,016 2017 4,136 2018 4,260 2019 4,388 2020 4,520 Thereafter through 2025 20,757 Total minimum lease payments $ 42,077 The Company concluded that Building 2 qualified for sale-leaseback accounting with the subsequent leaseback classified as an operating lease. A loss of $5.3 million was recorded at the closing of the transaction in 2015. |
Indebtedness
Indebtedness | 12 Months Ended |
Dec. 31, 2015 | |
Indebtedness | Note 14. Indebtedness The following is a summary of indebtedness and lease financing obligations as of December 31, 2015 and 2014 (in thousands): As of December 31, 2015 As of December 31, 2014 Current liabilities: Term A loan $ 49,500 $ 75,625 Lease finance obligation 758 — Current obligations 50,258 75,625 Current deferred financing fees and debt discount (6,667 ) (8,601 ) 43,591 67,024 Noncurrent liabilities: Term A loan 915,750 928,125 Term B loan 543,812 543,812 Revolver — — Lease finance obligation 58,676 — Noncurrent obligations 1,518,238 1,471,937 Noncurrent deferred financing fees and debt discount (21,995 ) (22,977 ) 1,496,243 1,448,960 Total $ 1,539,834 $ 1,515,984 Senior Secured Credit Facilities On June 18, 2015, ARRIS amended and restated its existing credit agreement dated March 27, 2013 (the “Existing Credit Agreement”) to improve the terms and conditions of the credit agreement, extend the maturities of certain loan facilities, increase the amount of the revolving credit facility, and add a new term A-1 loan facility to fund the acquisition of Pace. The credit facility under the amended credit agreement (the “Amended Credit Agreement”) was entered into with Bank of America, N.A. and various other institutions, and is comprised of (i) a “Term Loan A Facility” of $990 million, (ii) a “Term Loan B Facility” of $543.8 million, (iii) a “Revolving Credit Facility” of $500 million and (iv) a “Term Loan A-1 Facility” of $800 million, was funded upon the closing of the acquisition of Pace in 2016. The Amended Credit Agreement refinanced the Term Loan A Facility and Revolving Credit Facility under the Existing Credit Agreement while the Term Loan B Facility is a continuation of the Term Loan B Facility under the Existing Credit Agreement. Under the Amended Credit Agreement, the Term Loan A Facility and the Revolving Credit Facility will mature on June 18, 2020. The Term Loan B Facility will mature on April 17, 2020. ARRIS determined that the refinancing transaction was treated as a debt modification as the changes in the terms of the amended Term Loan A Facility and Revolving Credit Facility were not considered substantial. In connection with the Amended Credit Agreement, as of December 31, 2015, the Company capitalized approximately $5.0 million of financing fees and $3.2 million of original issuance discount. An additional $2.3 million of original issuance discount will be capitalized in the first quarter of 2016 related to drawing on the Term A-1 Facility. In addition, the Company expensed approximately $13.0 million of debt issuance costs and wrote off approximately $2.1 million of existing debt issuance costs associated with certain lenders who were not party to the amended Term Loan A Facility and Revolving Credit Facility, which were included as interest expense in the Consolidated Statements of Operations for the year ended December 31, 2015. Interest rates on borrowings under the senior secured credit facilities are set forth in the table below. As of December 31, 2015, ARRIS had $1,509.1 million principal amount outstanding under the Term Loan A and Term Loan B Facilities, no borrowings under the Revolving Credit Facility and letters of credit totaling $2.1 million issued under the Revolving Credit Facility. Rate As of December 31, 2015 Term Loan A LIBOR + 1.75 % 2.17 % Term Loan B LIBOR (1) + 2.50 % 3.25 % Revolving Credit Facility (2) LIBOR + 1.75 % Not Applicable (1) Includes LIBOR floor of 0.75% (2) Includes unused commitment fee of 0.35% and letter of credit fee of 1.75% not reflected in interest rate above. Borrowings under the senior secured credit facilities are secured by first priority liens on substantially all of the assets of ARRIS and certain of its present and future subsidiaries who are or become parties to, or guarantors under, the Amended Credit Agreement governing the senior secured credit facilities. The Amended Credit Agreement provides terms for mandatory prepayments and optional prepayments and commitment reductions. The Amended Credit Agreement also includes events of default, which are customary for facilities of this type (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all amounts outstanding under the credit facilities may be accelerated. The Amended Credit Agreement contains usual and customary limitations on indebtedness, liens, restricted payments, acquisitions and asset sales in the form of affirmative, negative and financial covenants, which are customary for financings of this type, including the maintenance of a minimum interest coverage ratio of 3.50:1 and a maximum leverage ratio of 3.75:1 (with a scheduled decrease to 3.50:1 in the first quarter of 2017). As of December 31, 2015, ARRIS was in compliance with all covenants under the Amended Credit Agreement. The Amended Credit Agreement provides for certain adjustments to the interest rates paid on the Term Loan A, Term Loan A-1, Term Loan B and Revolving Credit Facility based upon certain leverage ratios. During the year ended December 31, 2015, the Company made mandatory prepayments of approximately $38.5 million related to the senior secured credit facilities. In addition, the Company paid $15 million of debt assumed in the ActiveVideo acquisition during the second quarter of 2015. Quarterly mandatory principal repayments on Term Loan A-1 will begin in the first quarter of 2016. As of December 31, 2015, the scheduled maturities of the contractual debt obligations for the next five years are as follows (in thousands): 2016 $ 49,500 2017 49,500 2018 49,500 2019 49,500 2020 1,311,062 |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share | Note 15. Earnings Per Share The following is a reconciliation of the numerators and denominators of the basic and diluted earnings (loss) per share computations for the periods indicated (in thousands, except per share data): For the Years Ended December 31, 2015 2014 2013 Basic: Net income (loss) attributable to ARRIS Group Inc. $ 92,181 $ 327,211 $ (48,760 ) Weighted average shares outstanding 146,388 144,386 131,980 Basic earnings (loss) per share $ 0.63 $ 2.27 $ (0.37 ) Diluted: Net income (loss) attributable to ARRIS Group Inc. $ 92,181 $ 327,211 $ (48,760 ) Weighted average shares outstanding 146,388 144,386 131,980 Net effect of dilutive shares 2,971 3,894 — Total 149,359 148,280 131,980 Diluted earnings (loss) per share $ 0.62 $ 2.21 $ (0.37 ) For the year ended December 31, 2015, 2014 and 2013, approximately 6.8 thousand, 4.3 thousand and 1.1 million of the equity-based awards, respectively, were excluded from the computation of diluted earnings per share shares because their effect would have been anti-dilutive. These exclusions are made if the exercise price of these equity-based awards is in excess of the average market price of the common stock for the period, or if the Company has net losses, both of which have an anti-dilutive effect. During the twelve months ended December 31, 2015, the Company issued 3.2 million shares of its common stock related to stock option exercises and the vesting of restricted shares, as compared to 3.1 million shares for the twelve months ended December 31, 2014. In 2013, in connection with the Motorola Home acquisition, Google was issued approximately 10.6 million shares of ARRIS’s common stock as part of the purchase consideration. Furthermore, Comcast was given an opportunity to invest in ARRIS, and the Company entered into a separate agreement accounted for as a contingent equity forward with a subsidiary of Comcast providing for the purchase by it from the Company of approximately 10.6 million shares of common stock for $150 million. The Company issued 3.1 million shares of its common stock in the fourth quarter of 2013 in conjunction with redeeming its 2% Convertible Notes. The Company has not paid cash dividends on its stock since its inception. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | Note 16. Income Taxes Income (loss) before income taxes (in thousands): Years Ended December 31, 2015 2014 2013 Domestic $ 47,063 $ 180,133 $ (128,588 ) Foreign 59,990 59,097 32,438 $ 107,053 $ 239,230 $ (96,150 ) Income tax expense (benefit) consisted of the following (in thousands): Years Ended December 31, 2015 2014 2013 Current — Federal $ (5,063 ) $ 45,937 $ (5,133 ) State 7,204 13,260 (40 ) Foreign 15,035 18,136 10,624 17,176 77,333 5,451 Deferred — Federal 7,521 (140,404 ) (50,485 ) State (2,402 ) (19,978 ) (2,189 ) Foreign 299 (4,932 ) (167 ) 5,418 (165,314 ) (52,841 ) Income tax expense (benefit) $ 22,594 $ (87,981 ) $ (47,390 ) A reconciliation of the U.S. statutory federal income tax rate of 35% and the effective income tax rates is as follows: Years Ended December 31, 2015 2014 2013 Statutory U.S. federal income tax rate 35.0 % 35.0 % 35.0 % Effects of: State income taxes, net of federal benefit 5.2 (6.6 ) 2.2 Acquired deferred tax assets 5.8 (16.5 ) — U.S. domestic manufacturing deduction (0.7 ) (2.1 ) 1.1 Nontaxable Comcast derivative gain — — (9.6 ) Facilitative acquisition costs — — (3.5 ) Research and development tax credits (26.6 ) (8.7 ) 26.8 Subpart F income 4.8 0.8 — Changes in valuation allowance (26.6 ) (44.2 ) — Foreign tax credits (20.7 ) (0.6 ) 1.3 Non-deductible officer compensation 5.3 0.6 (0.5 ) Non-U.S. tax rate differential (5.0 ) (2.6 ) 1.3 Recapture of dual consolidated losses 1.1 4.0 — Taiwan gain 34.3 — — Other, net 9.2 4.1 (4.8 ) 21.1 % (36.8 )% 49.3 % Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of ARRIS’s net deferred income tax assets (liabilities) were as follows (in thousands): December 31, 2015 2014 Deferred income tax assets (1): Inventory costs $ 28,728 $ 34,695 Accrued vacation 7,138 7,980 Acquisition charges 6,556 — Allowance for bad debt 4,396 — Equity compensation 14,673 14,639 Deferred revenue — 1,001 Federal/state net operating loss carryforwards 95,571 217,656 Federal capital loss carryforwards — 7,701 Foreign net operating loss carryforwards 10,989 11,840 Research and development credits 79,809 62,661 Property, plant and equipment, depreciation and basis differences 1,285 — Pension and deferred compensation 19,166 18,393 Warranty reserve 18,215 26,187 Capitalized research and development 215,894 226,270 Other 22,929 42,188 Total deferred income tax assets 525,349 671,211 Deferred income tax liabilities: Property, plant and equipment, depreciation and basis differences — (19,744 ) Excess tax on future repatriation of foreign earnings (1,184 ) (1,184 ) Other noncurrent liabilities (3,210 ) (30,904 ) Goodwill and intangible assets (248,231 ) (316,192 ) Total deferred income tax liabilities (252,625 ) (368,024 ) Net deferred income tax assets 272,724 303,187 Valuation allowance (87,788 ) (118,629 ) Net deferred income tax assets (liabilities) $ 184,936 $ 184,558 (1) See Note 3 Impact of Recently Issued Accounting Standards As of December 31, 2015 and December 31, 2014, ARRIS had $218.9 million and $552.9 million, respectively, of U.S. federal net operating losses available to offset against future ARRIS taxable income. During 2015, ARRIS utilized approximately $327.1 million of U.S. federal net operating losses against taxable income. The U.S. federal net operating losses may be carried forward for twenty years. The available acquired U.S. Federal net operating losses as of December 31, 2015, will expire between the years 2015 and 2031. A significant portion of the acquired U.S. federal net operating losses expire by 2017. As of December 31, 2015, ARRIS also had $353.1 million of state net operating loss carryforwards in various states. The amounts available for utilization vary by state due to the apportionment of the Company’s taxable income and state law governing the expiration of these net operating losses. State net operating loss carryforwards of approximately $28.9 million relate to the exercise of employee stock options and restricted stock (“equity compensation”). Any future cash benefit resulting from the utilization of these state net operating losses attributable to this portion of equity compensation will be credited directly to paid-in capital during the year in which the cash benefit is realized. ARRIS has foreign net operating loss carryforwards available, as of December 31, 2015, of approximately $54.9 million with varying expiration dates. Approximately $17.8 million of the total foreign net operating loss carryforwards relate to ARRIS’s Irish subsidiary and have an indefinite life. Approximately $11.8 million of the foreign net operating loss carryforwards relate to the Canadian subsidiary and expire within 18 years. During the tax years ending December 31, 2015, and 2014, we utilized $0 and $25.7 million, respectively, of U.S. federal research and development credits to reduce U.S. federal income tax liabilities. As of December 31, 2015, ARRIS has $70.7 million of available U.S. federal research and development tax credits and $28.3 million of available state research and development tax credits to carry forward to subsequent years. The remaining unutilized U.S. federal research and development tax credits can be carried back one year and carried forward twenty years. The state research and development tax credits carry forward and will expire pursuant to various applicable state rules. ARRIS’s ability to use U.S. federal and state net operating loss carryforwards to reduce future taxable income, or to use U.S. federal and state research and development tax credit and foreign tax credit carryforwards to reduce future income tax liabilities, is subject to restrictions attributable to equity transactions that resulted in a change of ownership during prior tax years, as defined in Internal Revenue Code Sections 382, 383 and the separate return limitation year (“SRLY”) rules. The valuation allowance for deferred income tax assets of $87.8 million and $118.6 million at December 31, 2015 and 2014, respectively, relates to the uncertainty surrounding the realization of certain deferred income tax assets in various jurisdictions. The $30.8 million net reduction in valuation allowances for the year was due primarily to a reduction in the valuation allowance on net operating losses from the Motorola Home acquisition. The Company continually reviews the adequacy of its valuation allowances by reassessing whether it is more-likely-than-not to realize its various deferred income tax assets. An analysis of the deferred tax asset valuation allowances is as follows: (in thousands): 2015 2014 2013 Balance at beginning of fiscal year $ 118,629 $ 163,745 $ 17,973 Additions 3,312 37,708 147,349 Deductions (34,153 ) (82,824 ) (1,577 ) Balance at end of fiscal year $ 87,788 $ 118,629 $ 163,745 As of December 31, 2015, the Company did not provide U.S. federal income taxes or foreign withholding taxes on approximately $61 million of undistributed earnings of its foreign subsidiaries as such earnings are intended to be reinvested indefinitely. The Company did record a deferred tax liability of approximately $1.2 million relating to approximately $5.4 million of distributable earnings of an Israeli subsidiary. Should earnings of the other foreign subsidiaries be distributed in the form of dividends, or otherwise, ARRIS would have additional taxable income and, depending on the Company’s tax posture in the year of repatriation, may have to pay additional income taxes. Withholding taxes in various jurisdictions may also apply to the repatriation of foreign earnings. Determination of the amount of unrecognized income tax liability related to these permanently reinvested and undistributed foreign subsidiary earnings is not practicable because of the complexities associated with this hypothetical calculation. Tabular Reconciliation of Unrecognized Tax Benefits (in thousands): December 31, 2015 2014 2013 Beginning balance $ 48,019 $ 28,344 $ 25,704 Gross increases — tax positions in prior period 1,599 17,636 2,442 Gross decreases — tax positions in prior period (2,185 ) (4,115 ) (21 ) Gross increases — current-period tax positions 9,578 9,979 6,999 Increases (decreases) from acquired businesses — (196 ) 2,014 Decreases relating to settlements with taxing authorities and other (6,689 ) (2,480 ) (1,098 ) Decreases due to lapse of statute of limitations (403 ) (1,149 ) (7,696 ) Ending balance $ 49,919 $ 48,019 $ 28,344 The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2011. As of December 31, 2015, the Company and its subsidiaries were under income tax audit in nine jurisdictions (the state of California, the state of New York, the state of Michigan, the state of Illinois, the state of New Jersey, China, Vietnam, Japan and Portugal) and the Company has not received notices of any planned or proposed income tax audits. ARRIS does not anticipate any audit adjustments in excess of its current accrual for uncertain tax positions. At the end of 2015, the Company’s total tax liability related to uncertain net tax positions totaled approximately $46.2 million, all of which would cause the effective income tax rate to change upon the recognition. The difference between the $49.9 million of unrecognized tax benefits reported in the tabular reconciliation above and the $46.2 million of total tax liability relating to uncertain net tax positions are attributable to interest, penalties and the federal benefit of state deductions. Based on information currently available, the Company anticipates that over the next twelve month period, statutes of limitations may close and audit settlements will occur relating to existing unrecognized tax benefits of approximately $0.5 million primarily arising from U.S. Federal and state tax related items. The Company reported approximately $1.7 million and $1.7 million, respectively, of interest and penalty accrual related to the anticipated payment of these potential tax liabilities as of December 31, 2015 and 2014. The Company classifies interest and penalties recognized on the liability for uncertain tax positions as income tax expense. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2015 | |
Stock-Based Compensation | Note 17. Stock-Based Compensation ARRIS grants stock awards under its 2011 Stock Incentive Plan (“SIP”). Upon approval of the 2011 SIP, all shares available for grant under existing stock incentive plans were no longer available. However, all outstanding options granted under the previous plans are still exercisable. The Board of Directors approved the SIP and the prior plans to facilitate the retention and continued motivation of key employees, consultants and directors, and to align more closely their interests with those of the Company and its stockholders. Awards under the SIP may be in the form of stock options, stock grants, stock units, restricted stock, stock appreciation rights, performance shares and units, and dividend equivalent rights. A total of 17,500,000 shares of the Company’s shares may be issued pursuant to the SIP. The SIP has been designed to allow for flexibility in the form of awards; however, awards denominated in shares of common stock other than stock options and stock appreciation rights will be counted against the SIP limit as 1.87 shares for every one share covered by such an award. The vesting requirements for issuance under the SIP may vary; however, awards generally are required to have a minimum three-year vesting period or term. In connection with the 2011 acquisition of BigBand Networks, Inc., ARRIS assumed the BigBand Networks, Inc. 2007 Equity Incentive Plan (the “Assumed BigBand Plan”), including the restricted stock units outstanding under the Assumed BigBand Plan at the time of the acquisition. ARRIS may continue to grant awards under the Assumed BigBand Plan in certain circumstances so long as the grants comply with the applicable requirements of NASDAQ. A total of 125,352 shares of the Company’s ordinary shares remain available for issuance under the Assumed BigBand Plan. Stock Options ARRIS grants stock options to certain employees. Stock options generally vest over three or four years of service and have either seven or ten year contractual terms. The exercise price of an option is equal to the fair market value of ARRIS’s stock on the date of grant. There were no new options granted in 2015, 2014 and 2013. The total intrinsic value of options exercised during 2015, 2014 and 2013 was approximately $0.7 million, $6.5 million and $9.6 million, respectively. A summary of activity of ARRIS’s options granted under its stock incentive plans is presented below: Options Weighted Average Exercise Price Weighted Aggregate Beginning balance, December 31, 2014 38,000 $ 11.97 Exercised (35,422 ) 11.93 Expired (2,578 ) 12.57 Ending balance, December 31, 2015 — — — $ — Exercisable at December 31, 2015 — — — $ — Restricted Stock (Non-Performance) and Stock Units ARRIS grants restricted stock and stock units to certain employees and its non-employee directors. The Company records a fixed compensation expense equal to the fair market value of the shares of restricted stock granted on a straight-line basis over the requisite services period for the restricted shares. The Company applies an estimated forfeiture rate based upon historical rates. The fair value is the market price of the underlying ordinary shares on the date of grant. In connection with the Pace acquisition, ARRIS accelerated the vesting of the time-based restricted shares that otherwise were scheduled to vest in 2016 for all of its executive officers and additional acceleration of Messrs. Stanzione and Margolis time-based restricted shares that otherwise would vest in 2017, 2018 and 2019. The total shares accelerated in December 2015 were 504,833 shares. The following table summarizes ARRIS’s unvested restricted stock (excluding performance-related) and stock unit transactions during the year ending December 31, 2015: Shares Weighted Average Unvested at December 31, 2014 6,991,789 $ 19.29 Granted 2,336,360 29.08 Vested (3,019,824 ) 18.13 Forfeited (323,076 ) 21.24 Unvested at December 31, 2015 5,985,249 23.59 Restricted Shares — Subject to Comparative Market Performance ARRIS grants to certain employees restricted shares, in which the number of shares is dependent upon the Company’s total shareholder return as compared to the shareholder return of the NASDAQ composite over a three year period. The number of shares which could potentially be issued ranges from zero to 200% of the target award. For the shares granted in 2013, the three-year measurement period ended on December 31, 2015. However, in connection with the Pace acquisition, ARRIS accelerated the vesting of the market-based restricted shares that otherwise were scheduled to vest in 2016 for all of its executive officers using measurement period ended on December 23, 2015. This resulted in an achievement of 200.0% of the target award, or 504,810 shares. The remaining grants outstanding that are subject to market performance are 444,790 shares at target; at 200% performance 889,580 would be issued. Compensation expense is recognized on a straight-line basis over the three year measurement period and is based upon the fair market value of the shares estimated to be earned. The fair value of the restricted shares is estimated on the date of grant using a Monte Carlo Simulation model. The total fair value of restricted shares, including both non-performance and performance-related shares, that vested during 2015, 2014 and 2013 was $118.3 million, $82.6 million and $36.3 million, respectively. Employee Stock Purchase Plan (“ESPP”) ARRIS offers an ESPP to certain employees. The plan complies with Section 423 of the U.S. Internal Revenue Code, which provides that employees will not be immediately taxed on the difference between the market price of the stock and a discounted purchase price if it meets certain requirements. Participants can request that up to 10% of their base compensation be applied toward the purchase of ARRIS ordinary shares under ARRIS’s ESPP. Purchases by any one participant are limited to $25,000 (based upon the fair market value) in any one year. The exercise price is the lower of 85% of the fair market value of the ARRIS ordinary shares on either the first day of the purchase period or the last day of the purchase period. A plan provision which allows for the more favorable of two exercise prices is commonly referred to as a “look-back” feature. Any discount offered in excess of five percent generally will be considered compensatory and appropriately is recognized as compensation expense. Additionally, any ESPP offering a look-back feature is considered compensatory. ARRIS uses the Black-Scholes option valuation model to value shares issued under the ESPP. The valuation is comprised of two components; the 15% discount of a share of ordinary shares and 85% of a six month option held (related to the look-back feature). The weighted average assumptions used to estimate the fair value of purchase rights granted under the ESPP for 2015, 2014 and 2013, were as follows: risk-free interest rates of 0.1%; a dividend yield of 0%; volatility factor of the expected market price of ARRIS’s stock of 0.41, 0.37, and 0.26, respectively; and a weighted average expected life of 0.5 year for each. The Company recorded stock compensation expense related to the ESPP of approximately $5.1 million, $4.1 million and $1.4 million for the years ended December 31, 2015, 2014 and 2013, respectively. Unrecognized Compensation Cost As of December 31, 2015, there was approximately $112.7 million of total unrecognized compensation cost related to unvested share-based awards granted under the Company’s incentive plans. This compensation cost is expected to be recognized over a weighted-average period of 2.6 years. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2015 | |
Employee Benefit Plans | Note 18. Employee Benefit Plans The Company sponsors a qualified and a non-qualified non-contributory defined benefit pension plan that covers certain U.S. employees. As of January 1, 2000, the Company froze the qualified defined pension plan benefits for its participants. These participants elected to enroll in ARRIS’s enhanced 401(k) plan. The U.S. pension plan benefit formulas generally provide for payments to retired employees based upon their length of service and compensation as defined in the plans. ARRIS’s investment policy is to fund the qualified plan as required by the Employee Retirement Income Security Act of 1974 (“ERISA”) and to the extent that such contributions are tax deductible. The investment strategies of the plans place a high priority on benefit security. The plans invest conservatively so as not to expose assets to depreciation in adverse markets. The plans’ strategy also places a high priority on earning a rate of return greater than the annual inflation rate along with maintaining average market results. The plan has targeted asset diversification across different asset classes and markets to take advantage of economic environments and to also act as a risk minimizer by dampening the portfolio’s volatility. The following table summarizes the weighted average pension asset allocations as December 31, 2015 and 2014: Weighted Average Allocation Target Actual 2015 2015 2014 Equity securities 40-45 % 40 % 43 % Debt securities 0-5 2 3 Cash and cash equivalents 50-60 58 54 100 % 100 % 100 % The following table summarizes the Company’s U.S. pension plan assets by category and by level (as described in Note 7 of the Notes to the Consolidated Financial Statements) as of December 31, 2015 and 2014 (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Total Cash and cash equivalents (1) $ — $ 7,424 $ — $ 7,424 Equity securities (2) : U.S. large cap 1,330 — — 1,330 U.S. mid cap 1,160 — — 1,160 U.S. small cap 1,160 — — 1,160 International 1,757 — — 1,757 Fixed income securities (3) : 685 — — 685 Total $ 6,092 $ 7,424 $ — $ 13,516 December 31, 2014 Level 1 Level 2 Level 3 Total Cash and cash equivalents (1) $ — $ 7,752 $ — $ 7,752 Equity securities (2) : U.S. large cap 1,571 — — 1,571 U.S. mid cap 1,640 — — 1,640 U.S. small cap 1,367 — — 1,367 International 2,050 — — 2,050 Fixed income securities (3) : 205 — — 205 Total $ 6,833 $ 7,752 $ — $ 14,585 (1) Cash and cash equivalents, which are used to pay benefits and administrative expenses, are held in a stable value fund. (2) Equity securities consist of mutual funds and the underlying investments are indexes. Investments in mutual funds are valued at the net asset value per share multiplied by the number of shares held. (3) Fixed income securities consist of bonds securities in mutual funds, and are valued at the net asset value per share multiplied by the number of shares held. The Company has established a rabbi trust to fund the pension obligations of the Chief Executive Officer under his Supplemental Retirement Plan including the benefit under the Company’s non-qualified defined benefit plan. In addition, the Company has established a rabbi trust for certain executive officers to fund the Company’s pension liability to those officers under the non-qualified plan. Effective June 30, 2013, the Company amended the Supplemental Retirement Plan. This amendment effectively froze entry of any new participants into the Supplemental Plan and, for existing participants, a freeze on any additional benefit accrual after June 30, 2013. The participant’s benefit will continue to be distributed in accordance with the provisions of the Supplemental Plan but the final benefit accrual was frozen as of June 30, 2013. A curtailment gain of approximately $0.3 million, which represents the difference in the projected benefit obligation and the accumulated benefit obligation at June 30, 2013, offsets the existing plan loss and lowers future pension expense. Summary data for the U.S. non-contributory defined benefit pension plans is as follows (in thousands): Years Ended December 31, 2015 2014 Change in Projected Benefit Obligation: Projected benefit obligation at beginning of year $ 46,550 $ 40,382 Service cost — — Interest cost 1,716 1,783 Actuarial (gain) loss (3,962 ) 5,692 Benefit payments (1,305 ) (1,307 ) Other — — Projected benefit obligation at end of year $ 42,999 $ 46,550 Change in Plan Assets: Fair value of plan assets at beginning of year $ 14,585 $ 15,162 Actual return on plan assets 81 575 Company contributions 155 155 Expenses and benefits paid from plan assets (1,305 ) (1,307 ) Other — — Fair value of plan assets at end of year (1) $ 13,516 $ 14,585 Funded Status: Funded status of plan $ (29,483 ) $ (31,965 ) Unrecognized actuarial loss 9,196 13,233 Net amount recognized $ (20,287 ) $ (18,732 ) (1) In addition to the pension plan assets, ARRIS has established two rabbi trusts to further fund the pension obligations of the Chief Executive and certain executive officers of $18.0 million as of December 31, 2015 and $20.3 million as of December 31, 2014, and are included in Investments on the Consolidated Balance Sheets. Amounts recognized in the statement of financial position consist of (in thousands): Years Ended December 31, 2015 2014 Current liabilities $ (426 ) $ (393 ) Noncurrent liabilities (29,057 ) (31,572 ) Accumulated other comprehensive income (1) 9,196 13,233 Total $ (20,287 ) $ (18,732 ) (1) The accumulated other comprehensive income on the Consolidated Balance Sheets as of December 31, 2015 and 2014 is presented net of income tax. Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows (in thousands): Years Ended December 31, 2015 2014 2013 Net (gain) loss $ (3,203 ) $ 5,992 $ (2,359 ) Amortization of net loss (834 ) (305 ) (607 ) Settlement charge — — (318 ) Total recognized in other comprehensive income (loss) $ (4,037 ) $ 5,687 $ 3,284 The following table summarizes the amounts in other comprehensive income (loss) expected to be amortized and recognized as a component of net periodic benefit cost in 2016 (in thousands): Amortization of net loss $ 1,711 Information for defined benefit plans with accumulated benefit obligations in excess of plan assets is as follows (in thousands): December 31, 2015 2014 Accumulated benefit obligation $ 42,999 $ 46,550 Projected benefit obligation $ 42,999 $ 46,550 Plan assets $ 13,516 $ 14,585 Net periodic pension cost for 2015, 2014 and 2013 for pension and supplemental benefit plans includes the following components (in thousands): 2015 2014 2013 Service cost $ — $ — $ 122 Interest cost 1,716 1,783 1,619 Return on assets (expected) (839 ) (874 ) (876 ) Amortization of net actuarial loss (1) 834 305 607 Net periodic pension cost $ 1,711 $ 1,214 $ 1,472 (1) ARRIS uses the allowable 10% corridor approach to determine the amount of gains/losses subject to amortization in pension cost. Gains/losses are amortized on a straight-line basis over the average future service of members expected to receive benefits The weighted-average actuarial assumptions used to determine the benefit obligations for the three years presented are set forth below: 2015 2014 2013 Assumed discount rate for plan participants 4.15 % 3.75 % 4.50 % The weighted-average actuarial assumptions used to determine the net periodic benefit costs are set forth below: 2015 2014 2013 Assumed discount rate for plan participants 3.75 % 4.50 % 3.75 % Rate of compensation increase N/A N/A 3.75 % Expected long-term rate of return on plan assets 6.00 % 6.00 % 6.00 % The expected long-term rate of return on assets is derived using the building block approach which includes assumptions for the long term inflation rate, real return, and equity risk premiums. The Company estimates it will make funding contributions of $728 thousand in 2016. As of December 31, 2015, the expected benefit payments related to the Company’s U.S. defined benefit pension plans during the next ten years are as follows (in thousands): 2016 $ 1,626 2017 14,360 2018 1,652 2019 1,697 2020 1,814 2021 — 2025 9,993 Defined Benefits Plans Outside the U.S. The Company also provides a non-contributory defined benefit plan which cover employees in Taiwan (“Taiwan Plan”). Any other benefit plans outside of the U.S. are not material to the Company either individually or in the aggregate. The funded status of the Taiwan non-contributory defined benefit pension plans is as follows (in thousands): Years Ended December 31, 2015 2014 Change in Projected Benefit Obligation: Projected benefit obligation at beginning of year $ 35,541 $ 33,933 Service cost 738 751 Interest cost 661 599 Actuarial loss 708 1,101 Benefit payments (1,276 ) (843 ) Projected benefit obligation at end of year $ 36,372 $ 35,541 Change in Plan Assets: Fair value of plan assets at beginning of year $ 8,923 $ 8,302 Actual return on plan assets 236 190 Company contributions 1,273 1,274 Expenses and benefits paid from plan assets (1,200 ) (843 ) Fair value of plan assets at end of year $ 9,232 $ 8,923 Funded Status: Funded status of plan $ (27,140 ) $ (26,618 ) Unrecognized actuarial (gain) loss (4,320 ) (4,036 ) Net amount recognized $ (31,460 ) $ (30,654 ) Amounts recognized in the statement of financial position consist of (in thousands): Years Ended December 31, 2015 2014 Noncurrent liabilities $ (27,140 ) $ (26,618 ) Accumulated other comprehensive income (4,320 ) (4,036 ) Total $ (31,460 ) $ (30,654 ) Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows (in thousands): Years Ended December 31, 2015 2014 2013 Net loss (gain) $ 813 $ 1,077 $ (3,107 ) Amortization of net gain (loss) (529 ) (464 ) (808 ) Total recognized in other comprehensive income (loss) $ 284 $ 613 $ (3,915 ) Information for defined benefit plans with accumulated benefit obligations in excess of plan assets is as follows (in thousands): December 31, 2015 2014 Accumulated benefit obligation $ 26,966 $ 25,758 Projected benefit obligation $ 36,372 $ 35,541 Plan assets $ 9,232 $ 8,923 Net periodic pension cost for 2015, 2014 and 2013 for pension and supplemental benefit plans includes the following components (in thousands): 2015 2014 2013 Service cost $ 738 $ 751 $ 999 Interest cost 661 599 698 Return on assets (expected) (176 ) (166 ) (163 ) Amortization of net actuarial loss 529 464 808 Net periodic pension cost $ 1,752 $ 1,648 $ 2,342 As of December 31, 2015, the expected benefit payments related to the Company’s Taiwan defined benefit pension plans during the next ten years are as follows (in thousands): 2016 $ 1,746 2017 1,794 2018 2,528 2019 2,112 2020 2,445 2021 — 2025 13,182 Key assumptions used in the valuation of the Taiwan Plan are as follows: 2015 2014 2013 Assumed discount rate for obligations 1.70 % 1.90 % 1.80 % Assumed discount rate for expense 1.90 % 1.80 % 1.80 % Rate of compensation increase for indirect labor 4.00 % 4.50 % 4.50 % Rate of compensation increase for direct labor 2.00 % 2.00 % 2.00 % Expected long-term rate of return on plan assets (1) 2.00 % 2.00 % 2.00 % (1) Asset allocation is 100% in money market investments ARRIS estimates it will make funding contributions of $10.4 million in 2016. Other Benefit Plans ARRIS has established defined contribution plans pursuant to the Internal Revenue Code Section 401(k) that cover all eligible U.S. employees. ARRIS contributes to these plans based upon the dollar amount of each participant’s contribution. ARRIS made matching contributions to these plans of approximately $16.6 million, $15.3 million and $10.9 million in 2015, 2014 and 2013, respectively. The Company has a deferred compensation plan that does not qualify under Section 401(k) of the Internal Revenue Code, and is available to key executives of the Company and certain other employees. Employee compensation deferrals and matching contributions are held in a rabbi trust. The total of net employee deferrals and matching contributions, which is reflected in other long-term liabilities, was $3.6 million and $3.3 million at December 31, 2015 and 2014, respectively. Total expenses included in continuing operations for the matching contributions were approximately $0.1 million in 2015 and 2014. The Company previously offered a deferred compensation arrangement, which allowed certain employees to defer a portion of their earnings and defer the related income taxes. As of December 31, 2004, the plan was frozen and no further contributions are allowed. The deferred earnings are invested in a rabbi trust. The total of net employee deferral and matching contributions, which is reflected in other long-term liabilities, was $2.8 million and $2.9 million at December 31, 2015 and 2014, respectively. The Company also has a deferred retirement salary plan, which was limited to certain current or former officers of C-COR. The present value of the estimated future retirement benefit payments is being accrued over the estimated service period from the date of signed agreements with the employees. The accrued balance of this plan, the majority of which is included in other long-term liabilities, were $1.7 million and $1.8 million at December 31, 2015 and 2014, respectively. Total expenses (income) included in continuing operations for the deferred retirement salary plan were approximately $0.3 million and $0.1 million for 2015 and 2014, respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss) | Note 19. Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of taxes, for the years ended December 31, 2015 and 2014 (in thousands): Available-for Derivative Change Cumulative Total Balance as of December 31, 2014 $ 25 $ (3,166 ) $ (7,181 ) $ (725 ) $ (11,047 ) Other comprehensive (loss) income before reclassifications (64 ) (8,319 ) 2,044 (1,078 ) (7,417 ) Amounts reclassified from accumulated other comprehensive income (loss) 172 4,704 942 — 5,818 Net current-period other comprehensive income (loss) 108 (3,615 ) 2,986 (1,078 ) (1,599 ) Balance as of December 31, 2015 $ 133 $ (6,781 ) $ (4,195 ) $ (1,803 ) $ (12,646 ) Available-for Derivative Change Cumulative Total Balance as of December 31, 2013 $ 306 $ (2,541 ) $ (2,416 ) $ (11 ) $ (4,662 ) Other comprehensive (loss) income before reclassifications (127 ) (5,391 ) (5,273 ) (714 ) (11,505 ) Amounts reclassified from accumulated other comprehensive income (loss) (154 ) 4,766 508 — 5,120 Net current-period other comprehensive income (loss) (281 ) (625 ) (4,765 ) (714 ) (6,385 ) Balance as of December 31, 2014 $ 25 $ (3,166 ) $ (7,181 ) $ (725 ) $ (11,047 ) |
Repurchases of Stock
Repurchases of Stock | 12 Months Ended |
Dec. 31, 2015 | |
Repurchases of Stock | Note 20. Repurchases of Stock The Company’s Board of Directors previously authorized share repurchase plans, in May 2011 and October 2012, pursuant to which we could purchase up to an aggregate of $300.0 million of our common stock. During the first quarter of 2015, ARRIS repurchased 0.9 million shares of the Company’s common stock at an average price of $28.70 per share, for an aggregate consideration of approximately $25.0 million. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies | Note 21. Commitments and Contingencies General Matters ARRIS leases office, distribution, and warehouse facilities as well as equipment under long-term leases expiring at various dates through 2023. Included in these operating leases are certain amounts related to restructuring activities; these lease payments and related sublease income are included in restructuring accruals on the consolidated balance sheets. Future minimum operating lease payments under non-cancelable leases at December 31, 2015 were as follows (in thousands): Operating Leases 2016 $ 26,241 2017 20,180 2018 15,409 2019 11,592 2020 9,937 Thereafter 35,873 Less sublease income (1,287 ) Total minimum lease payments $ 117,945 Total rental expense for all operating leases amounted to approximately $26.9 million, $32.0 million and $22.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. Additionally, the Company had contractual obligations of approximately $405.8 million under agreements with non-cancelable terms to purchase goods or services over the next year. All contractual obligations outstanding at the end of prior years were satisfied within a 12 month period, and the obligations outstanding as of December 31, 2015 are expected to be satisfied by 2016. Bank Guarantees The Company has outstanding bank guarantees, of which certain amounts are collateralized by restricted cash. As of December 31, 2015, the restricted cash associated with the outstanding bank guarantee was $0.8 million which is reflected in Other Assets on the Consolidated Balance Sheets. Legal Proceedings The Company accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period in which such determinations are made. Unless noted otherwise, the amount of liability is not probable or the amount cannot be reasonably estimated; and, therefore, accruals have not been made. Due to the nature of the Company’s business, it is subject to patent infringement claims, including current suits against it or one or more of its wholly-owned subsidiaries, or one or more of our customers who may seek indemnification from us, alleging infringement by various Company products and services. The Company believes that it has meritorious defenses to the allegation made in its pending cases and intends to vigorously defend these lawsuits; however, it is currently unable to determine the ultimate outcome of these or similar matters. Accordingly, with respect to these proceedings, we are currently unable to reasonably estimate the possible loss or range of possible losses. In addition, the Company is a defendant in various litigation matters generally arising out of the normal course of business. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events | Note 22. Subsequent Events Acquisition of Pace On January 4, 2016, ARRIS completed its acquisition of Pace, a leading technology solutions provider incorporated in England and Wales, for approximately $2,073 million, including $638.8 million in cash and issuance of 47.7 million shares of ARRIS International plc (formerly ARRIS International Limited) (“New ARRIS”) ordinary shares (the “Combination”). In connection with the Combination, (i) New ARRIS, a company incorporated in England and Wales and wholly-owned subsidiary of ARRIS Group, agreed to acquire all of the outstanding ordinary shares of Pace by means of court-sanctioned scheme of arrangement (the “Scheme”) under English law and (ii) ARRIS entered into a Merger Agreement (the “Merger Agreement”), dated April 22, 2015, among ARRIS, New ARRIS, ARRIS US Holdings, Inc. (formerly Archie U.S. Holdings LLC), a Delaware corporation and wholly-owned subsidiary of New ARRIS (“US Holdco”) and Archie U.S. Merger LLC, a Delaware limited liability company and wholly-owned subsidiary of US Holdco (“Merger Sub”), whereby Merger Sub would be merged with and into ARRIS, with ARRIS surviving as an indirect wholly-owned subsidiary of New ARRIS. The Combination combines the strengths of both companies on a global scale—broadening ARRIS’s worldwide CPE leadership with a competitive stake in satellite communications; leveraging new synergies in telco TV; expanding its cloud, network, home, and services portfolio; and increasing its collaboration with the world’s leading service providers. In addition to CPE, the Combination further establishes ARRIS as a global leader in HFC/Optics, complementing its established CMTS leadership position. The following table summarizes the fair value of consideration transferred for Pace (in thousands): Cash Consideration (1) $ 638,790 Stock Consideration (2) 1,434,690 Total consideration transferred $ 2,073,480 (1) Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707) for each of Pace’s shares and equity awards outstanding. (2) Stock consideration represents the conversion of each of Pace’s shares and equity awards outstanding at a conversion rate of 0.1455 with a value of $30.08 at January 4, 2016, which represents the opening price of the Company’s common stock at the date of Combination. The following is a summary of the preliminary estimated fair values of the net assets acquired (in thousands): Total estimated consideration transferred $ 2,073,480 Cash and cash equivalents 298,671 Accounts and other receivables 546,159 Inventories 490,925 Prepaids 21,599 Property, plant and equipment 98,371 Intangible assets 1,100,000 Noncurrent deferred income tax assets 27,635 Other assets 6,704 Accounts payable and other current liabilities (754,838 ) Deferred revenue (24,743 ) Short-term borrowings (263,795 ) Current income taxes liability (7,801 ) Other accrued liabilities (129,915 ) Other noncurrent liabilities (427,831 ) Net assets acquired 981,141 Goodwill $ 1,092,339 The Combination will be accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations The estimated goodwill of $1,092 million arising from the acquisition is attributable to the workforce of the acquired business, strategic opportunities and synergies that are expected to arise from the acquisition of Pace. The goodwill will be assigned to both of the Company’s reportable segments. The goodwill is not expected to be deductible for income tax purposes. The Company incurred acquisition related costs of $25.8 million, during the fiscal year ended December 31, 2015. This amount was expensed by the Company as incurred and is included in the Consolidated Statement of Operations in the line item titled “Acquisition costs”. To fund the Combination, the Company added a new $800 million “Term Loan A-1 Facility” to the existing senior secured credit facilities with Bank of America, N.A. and various other institutions in June 2015, which was funded on January 5, 2016 in conjunction with the Combination. Refer to Note 14 Indebtedness Share Repurchase Program In early 2016, the ARRIS International plc’s Board of Directors approved a new $300 million share repurchase authorization replacing all prior programs. Unless terminated earlier by a Board resolution, this new plan will expire when ARRIS has used all authorized funds for repurchase. |
Summary Quarterly Consolidated
Summary Quarterly Consolidated Financial Information | 12 Months Ended |
Dec. 31, 2015 | |
Summary Quarterly Consolidated Financial Information | Note 23. Summary Quarterly Consolidated Financial Information (unaudited) The following table summarizes ARRIS’s quarterly consolidated financial information (in thousands, except per share data): Quarters in 2015 Ended March 31, June 30, September 30, (1) December 31, (2) Net sales $ 1,215,158 $ 1,260,077 $ 1,221,416 $ 1,101,681 Gross margin 336,556 364,361 359,333 358,673 Operating income 45,718 51,542 60,781 52,912 Net income attributable to ARRIS Group, Inc. $ 19,126 $ 16,758 $ 26,256 $ 30,041 Net income per basic share $ 0.13 $ 0.11 $ 0.18 $ 0.20 Net income per diluted share $ 0.13 $ 0.11 $ 0.18 $ 0.20 Quarters in 2014 Ended March 31, (3) June 30, September 30, (4) December 31, (5) Net sales $ 1,225,017 $ 1,429,071 $ 1,405,445 $ 1,263,388 Gross margin 346,774 419,412 435,734 380,576 Operating income 37,986 91,676 122,109 89,563 Net income attributable to ARRIS Group, Inc. $ 40,800 $ 39,024 $ 54,626 $ 192,761 Net income per basic share $ 0.29 $ 0.27 $ 0.38 $ 1.33 Net income per diluted share $ 0.28 $ 0.26 $ 0.37 $ 1.29 Year 2015 (1) The Company recorded a tax benefit of $27.3 million primarily from the release of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. The Company also recorded a tax expense of $18.9 million on a gain recognition agreement for its Taiwanese entity, inclusive of a benefit of $18.9 million obtained from foreign tax credits generated by the transaction. (2) $20.4 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit permanently during Q4 of 2015. Year 2014 (3) The Company recorded a tax benefit from the release of $18.2 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. (4) The Company identified and corrected an immaterial error in the accounting for income taxes related to the prior year ended December 31, 2013. The correction related to the Company’s subsequent consideration of certain tax consequences related to a legal entity and tax restructuring completed in the fourth quarter of 2013. The impact of adjusting these amounts had a non-cash effect, increasing income tax expense and noncurrent income tax liabilities by $9.8 million. In accordance with ASC Topic 250, Accounting Changes and Error Corrections (5) The Company recorded a tax benefit from the release of $134.8 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses and U.S. federal tax credits and $9.0 million of valuation allowances from deferred tax assets recorded for state net operating losses and state research and development tax credits arising from the acquisition of the Motorola Home business from Google. In addition, $18.1 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit through December 31, 2014. |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Consolidation | (a) Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned foreign and domestic subsidiaries and consolidated venture in which the Company owns more than 50% of the outstanding voting shares of the entity. Intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), and our reporting currency is the United States Dollar (USD). |
Use of Estimates | (b) Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Reclassifications | (c) Reclassifications Certain prior year amounts in the financial statements and notes have been reclassified to conform to the fiscal year 2015 presentation. |
Cash, Cash Equivalents, and Investments | (d) Cash, Cash Equivalents, and Investments ARRIS’s cash and cash equivalents (which are highly-liquid investments with an original maturity of three months or less) are primarily held in demand deposit accounts and money market accounts. The Company holds investments consisting of mutual funds and debt securities classified as available-for-sale, which are stated at estimated fair value. The debt securities consist primarily of commercial paper, certificates of deposits, short term corporate obligations and U.S. government agency financial instruments. These investments are on deposit with major financial institutions. The Company accounts for investments in companies in which it has significant influence, or ownership between 20% and 50% of the investee under the equity method of accounting. Under the equity method, the investment is originally recorded at cost and adjusted to recognize the Company’s share of net earnings or losses, any basis difference of the investee, and dividends received. Investments in which we do not exercise significant influence (generally less than a 20 percent ownership interest) are accounted for under the cost method. The Company evaluates its investments for impairment whenever events or changes in circumstances indicate that the carrying amount of such investments may not be recoverable. An investment is written down to fair value if there is evidence of a loss in value which is other than temporary. |
Accounts Receivable and Allowance for Doubtful Accounts and Sales Returns | (e) Accounts Receivable and Allowance for Doubtful Accounts and Sales Returns Accounts receivable are stated at amounts owed by the customers, net of allowance for doubtful accounts, sales returns and allowances. ARRIS establishes a reserve for doubtful accounts based upon the historical experience and leading market indicators in collecting accounts receivable. A majority of the accounts receivable are from a few large cable system operators and telecommunication companies, either with investment rated debt outstanding or with substantial financial resources, and have favorable payment histories. If ARRIS was to have a collection problem with one of its major customers, it is possible the reserve will not be sufficient. ARRIS calculates the reserve for uncollectible accounts using a model that considers customer payment history, recent customer press releases, bankruptcy filings, if any, Dun & Bradstreet reports, and financial statement reviews. The calculation is reviewed by management to assess whether there needs to be an adjustment to the reserve for uncollectible accounts. The reserve is established through a charge to the provision and represents amounts of current and past due customer receivable balances of which management deems a loss to be both probable and estimable. Accounts receivable are charged to the allowance when determined to be no longer collectible. ARRIS also establishes a reserve for sales returns and allowances. The reserve is an estimate of the impact of potential returns based upon historic trends. The following table represents a summary of the changes in the reserve for allowance for doubtful accounts, and sales returns and allowances for fiscal 2015, 2014 and 2013 (in thousands): 2015 2014 2013 Balance at beginning of fiscal year $ 6,392 $ 1,887 $ 1,630 Charges to expenses 2,997 5,336 257 Reclassification (deductions) 586 (831 ) — Balance at end of fiscal year $ 9,975 $ 6,392 $ 1,887 |
Inventories | (f) Inventories Inventories are stated at the lower of cost market. Inventory cost is determined on a first-in, first-out basis. The cost of work-in-process and finished goods is comprised of material, labor, and overhead. |
Revenue recognition | (g) Revenue recognition ARRIS generates revenue as a result of varying activities, including the delivery of stand-alone equipment, custom design and installation services, and bundled sales arrangements inclusive of equipment, software and services. The revenue from these activities is recognized in accordance with applicable accounting guidance and their related interpretations. Revenue is recognized when all of the following criteria have been met: • When persuasive evidence of an arrangement exists • Delivery has occurred • The fee is fixed or determinable • Collectability is reasonably assured Revenue is deferred if any of the above revenue recognition criteria is not met as well as when certain circumstances exist for any of our products or services, including, but not limited to: • When undelivered products or services that are essential to the functionality of the delivered product exist, revenue is deferred until such undelivered products or services are delivered as the customer would not have full use of the delivered elements. • When required acceptance has not occurred. • When trade-in rights are granted at the time of sale, that portion of the sale is deferred until the trade-in right is exercised or the right expires. In determining the deferral amount, management estimates the expected trade-in rate and future value of the product upon trade-in. These factors are periodically reviewed and updated by management, and the updates may result in either an increase or decrease in the deferral. Equipment — Multiple Element Arrangements — To determine the estimated selling price in multiple-element arrangements, the Company first looks to establish vendor specific objective evidence (“VSOE”) of the selling price using the prices charged for a deliverable when sold separately. If VSOE of the selling price cannot be established for a deliverable, the Company looks to establish third-party evidence (“TPE”) of the selling price by evaluating the pricing of similar and interchangeable competitor products or services in stand-alone arrangements. However, as ARRIS’s products typically contain a significant element of proprietary technology and may offer substantially different features and functionality from its competitors, ARRIS has been unable to obtain comparable pricing information with respect to its competitors’ products. Therefore, the Company has not been able to obtain reliable evidence of TPE of the selling price. If neither VSOE nor TPE of the selling price can be established for a deliverable, the Company establishes best estimate selling price (“BESP”) by reviewing historical transaction information and considering several other internal factors, including discounting and margin objectives. The Company regularly reviews estimated selling price of the product offerings and maintain internal controls over the establishment and updates of these estimates. ARRIS’s equipment deliverables typically include proprietary operating system software, which together deliver the essential functionality of its products. Therefore, ARRIS’s equipment are considered non-software elements and are not subject to industry-specific software revenue recognition guidance. For equipment, revenue recognition is generally established when the products have been shipped, risk of loss has transferred, objective evidence exists that the product has been accepted, and no significant obligations remain relative to the transaction. For arrangements that fall within the software revenue recognition guidance, the fee is allocated to the various elements based on VSOE of fair value. If sufficient VSOE of fair value does not exist for the allocation of revenue to all the various elements in a multiple element arrangement, all revenue from the arrangement is deferred until the earlier of the point at which such sufficient VSOE of fair value is established or all elements within the arrangement are delivered. If VSOE of fair value exists for all undelivered elements, but does not exist for one or more delivered elements, the arrangement consideration is allocated to the various elements of the arrangement using the residual method of accounting. Under the residual method, the amount of the arrangement consideration allocated to the delivered elements is equal to the total arrangement consideration less the aggregate fair value of the undelivered elements. Using this method, any potential discount on the arrangement is allocated entirely to the delivered elements, which ensures that the amount of revenue recognized at any point in time is not overstated. Under the residual method, if VSOE of fair value exists for the undelivered element, generally PCS, the fair value of the undelivered element is deferred and recognized ratably over the term of the PCS contract, and the remaining portion of the arrangement is recognized as revenue upon delivery, which generally occurs upon delivery of the product or implementation of the system. Many of ARRIS’s products are sold in combination with customer support and maintenance services, which consist of software updates and product support. Software updates provide customers with rights to unspecified software updates that ARRIS chooses to develop and to maintenance releases and patches that the Company chooses to release during the period of the support period. Product support services include telephone support, remote diagnostics, email and web access, access to on-site technical support personnel and repair or replacement of hardware in the event of damage or failure during the term of the support period. Maintenance and support service fees are recognized ratably under the straight-line method over the term of the contract, which is generally one year. The Company does not record receivables associated with maintenance revenues without a firm, non-cancelable order from the customer. VSOE of fair value is determined based on the price charged when the same element is sold separately and based on the prices at which our customers have renewed their customer support and maintenance. For elements that are not yet being sold separately, the price established by management, if it is probable that the price, once established, will not change before the separate introduction of the element into the marketplace is used to measure VSOE of fair value for that element. Software Sold Without Tangible Equipment — Standalone Services — Incentives — Value Added Resellers Retail — |
Shipping and Handling Fees | (h) Shipping and Handling Fees Shipping and handling costs for the years ended December 31, 2015, 2014, and 2013 were approximately $5.6 million, $6.9 million and $4.9 million, respectively, and are classified in net sales and cost of sales. |
Taxes Collected from Customers and Remitted to Governmental Authorities | (i) Taxes Collected from Customers and Remitted to Governmental Authorities Taxes assessed by a government authority that are both imposed on and concurrent with specific revenue transactions between us and our customers are presented on a net basis in our Consolidated Statements of Operations. |
Depreciation of Property, Plant and Equipment | (j) Depreciation of Property, Plant and Equipment The Company provides for depreciation of property, plant and equipment on the straight-line basis over estimated useful lives of 10 to 40 years for buildings and improvements, 2 to 10 years for machinery and equipment, and the shorter of the term of the lease or useful life for leasehold improvements. Included in depreciation expense is the amortization of landlord funded tenant improvements which amounted to $4.5 million in 2015, $4.0 million in 2014 and $2.5 million in 2013. Depreciation expense, including amortization of capital leases, for the years ended December 31, 2015, 2014, and 2013 was approximately $71.8 million, $79.0 million, and $61.5 million, respectively. Certain events or changes in circumstances may indicate that the recoverability of the carrying amount of property, plant and equipment should be assessed, including, among others, a significant decrease in market value, a significant change in the business climate in a particular market, or a current period operating or cash flow loss combined with historical losses or projected future losses. To test for recovery, we group assets (an “asset group”) in a manner that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. When such events or changes in circumstances are present, we estimate the future cash flows expected to result from the use of the asset or asset group and its eventual disposition. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and pre-tax based upon policy decision) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. We use a variety of methodologies to determine the fair value of property, plant and equipment, including appraisals and discounted cash flow models, which are consistent with the assumptions we believe hypothetical marketplace participants would use. See Note 13 Property, Plant and Equipment |
Goodwill, and Other Intangible Assets | (k) Goodwill, and Other Intangible Assets We classify intangible assets into three categories: (1) intangible assets with definite lives subject to amortization, (2) intangible assets with indefinite lives not subject to amortization and (3) goodwill. We determine the useful lives of our identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors we consider when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, the Company’s long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have definite lives are amortized, primarily on a straight-line basis, over their useful lives, generally ranging from 1 to 13 years. See Note 5 Goodwill and Other Intangible Assets Other Intangible Assets When facts and circumstances indicate that the carrying value of definite-lived intangible assets may not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of sales volume and the resulting profit and cash flows. These estimated future cash flows are consistent with those we use in our internal planning. To test for recovery, we group assets (an “asset group”) in a manner that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the expected future cash flows (undiscounted and pre-tax based upon policy decision) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the fair value. We use a variety of methodologies to determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions we believe hypothetical marketplace participants would use. We test intangible assets determined to have indefinite useful lives, including certain trademarks, in-process research and development and goodwill, for impairment annually, or more frequently if events or circumstances indicate that assets might be impaired. Our Company performs these annual impairment reviews as of the first day of our fourth fiscal quarter (October 1). We use a variety of methodologies in conducting impairment assessments of indefinite-lived intangible assets, including, but not limited to, discounted cash flow models, which are based on the assumptions we believe hypothetical marketplace participants would use. For indefinite-lived intangible assets, other than goodwill, if the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess. Acquired in-process research and development assets are initially recognized and measured at fair value and classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the development period after acquisition, this asset is not amortized as charges to earnings. Completion of the associated research and development efforts cause the indefinite-lived in-process research and development assets to become a finite-lived asset. As such, prior to commencing amortization the assets is tested for impairment. The Company has the option to perform a qualitative assessment of indefinite-lived intangible assets, other than goodwill, prior to completing the impairment test described above. The Company must assess whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If the Company concludes that this is the case, it must perform the testing described above. Otherwise, the Company does not need to perform any further assessment. There were no impairment charges related to intangible assets (definite-lived and indefinite-lived other than goodwill), during 2015, 2014 and 2013. Goodwill We perform impairment tests of goodwill at our reporting unit level, which is at or one level below our operating segments. Our operating segments are primarily based on the nature of the products and services offered, which is consistent with the way management runs our business. Our Customer Premises Equipment operating segment is the same as the reporting unit. Our Network & Cloud operating segment is subdivided into three reporting units which are Network Infrastructure, Cloud Services, and Cloud TV. Goodwill is assigned to the reporting unit or units that benefit from the synergies arising from each business combination. The goodwill impairment test consists of a two-step process, if necessary. The first step is to compare the fair value of a reporting unit to its carrying value, including goodwill. We typically use a weighting of income approach using discounted cash flow models and a market approach to determine the fair value of a reporting unit. The assumptions used in these models are consistent with those we believe hypothetical marketplace participants would use. If the fair value of the reporting unit is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of impairment loss, if any. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill. The Company has the option to perform a qualitative assessment of goodwill prior to completing the two-step process described above to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill and other intangible assets. If the Company concludes that this is the case, it must perform the two-step process. Otherwise, the Company will forego the two-step process and does not need to perform any further testing. There was no impairment of goodwill resulting from our annual impairment testing in 2015, 2014 and 2013. |
Advertising and Sales Promotion | (l) Advertising and Sales Promotion Advertising and sales promotion costs are expensed as incurred. Advertising expense was approximately $16.8 million, $8.2 million, and $4.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. |
Research and Development | (m) Research and Development Research and development (“R&D”) costs are expensed as incurred. The expenditures include compensation costs, materials, other direct expenses, and an allocation of information technology, telecommunications, and facilities costs. |
Warranty | (n) Warranty ARRIS provides warranties of various lengths to customers based on the specific product and the terms of individual agreements. For further discussion, see Note 9 Guarantees |
Income Taxes | (o) Income Taxes ARRIS uses the liability method of accounting for income taxes, which requires recognition of temporary differences between financial statement and income tax bases of assets and liabilities, measured by enacted tax rates. If necessary, the measurement of deferred tax assets is reduced by a valuation allowance to the amount that is more-likely-than-not to be realized based on available evidence. ARRIS reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. See Note 16 Income Taxes |
Foreign Currency Translation | (p) Foreign Currency Translation A significant portion of the Company’s products are manufactured or assembled in China, Mexico and Taiwan, and we have research and development centers in Argentina, China, India, Ireland, Israel and Sweden. Sales into international markets have been and are expected in the future to be an important part of the Company’s business. These foreign operations are subject to the usual risks inherent in conducting business abroad, including risks with respect to currency exchange rates, economic and political destabilization, restrictive actions and taxation by foreign governments, nationalization, the laws and policies of the United States affecting trade, foreign investment and loans, and foreign tax laws. ARRIS has certain international customers who are billed in their local currency and certain international operations that procure in U.S. dollars. ARRIS also has certain predictable expenditures for international operations in local currency. Additionally, certain intercompany transactions are denominated in foreign currencies and subject to revaluation. The Company enters into forward or currency option contracts based on a percentage of expected foreign currency exposures. The percentage can vary, based on the predictability of the exposures denominated in the foreign currency. See Note 8 Derivative Instruments and Hedging Activities |
Stock-Based Compensation | (q) Stock-Based Compensation See Note 17 Stock-Based Compensation of Notes to the Consolidated Financial Statements for further discussion of the Company’s significant accounting policies related to stock based compensation. |
Concentrations of Credit Risk | (r) Concentrations of Credit Risk Financial instruments that potentially subject ARRIS to concentrations of credit risk consist principally of cash, cash equivalents and short-term investments, accounts receivable and derivatives. ARRIS places its temporary cash investments with high credit quality financial institutions. Concentrations with respect to accounts receivable occur as the Company sells primarily to large, well-established companies including companies outside of the United States. The Company’s credit policy generally does not require collateral from its customers. ARRIS closely monitors extensions of credit to other parties and, where necessary, utilizes common financial instruments to mitigate risk or requires cash on delivery terms. Overall financial strategies and the effect of using a hedge are reviewed periodically. |
Fair Value | (s) Fair Value The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: • Cash, cash equivalents, and short-term investments: The carrying amounts reported in the consolidated balance sheets for cash, cash equivalents, and short-term investments approximate their fair values. • Accounts receivable and accounts payable: The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximate their fair values. • Marketable securities: The fair values for trading and available-for-sale equity securities are based on quoted market prices or observable prices based on inputs not in active markets but corroborated by market data. • Non-marketable securities: Non-marketable equity securities are subject to a periodic impairment review; however, there are no open-market valuations, and the impairment analysis requires significant judgment. This analysis includes assessment of the investee’s financial condition, the business outlook for its products and technology, its projected results and cash flow, recent rounds of financing, and the likelihood of obtaining subsequent rounds of financing. • Senior secured credit facilities: Comprised of term loans and revolving credit facility of which the outstanding principal amount approximates fair value. • Derivative instruments: The carrying amounts reported in the balance sheet for derivative financial instruments approximate their fair values. The Company has designated interest rate derivatives as cash flow hedges and the objective is to manage the variability of cash flows in the interest payments related to the portion of the variable-rate debt designated as being hedged. The Company’s foreign currency derivative instruments economically hedge certain risk but are not designated as hedges. The objective of these derivatives instruments is to add stability to foreign currency gains and losses recorded as other expense (income) and to manage its exposure to foreign currency movements. |
Computer Software | (t) Computer Software Internal-use software The Company capitalizes costs associated with internally developed and/or purchased software systems for internal use that have reached the application development stage and meet recoverability tests. Capitalized costs include external direct costs of materials and services utilized in developing or obtaining internal-use software and payroll and payroll-related expenses for employees who are directly associated with and devote time to the internal-use software project. Capitalization of such costs begins when the preliminary project stage is complete and ceases no later than the point at which the project is substantially complete and ready for its intended purpose. These capitalized costs are amortized on a straight-line basis over periods of two to seven years, beginning when the asset is ready for its intended use. Capitalized costs are included in property, plant, and equipment on the consolidated balance sheets. External-use software Research and development costs are charged to expense as incurred. ARRIS generally has not capitalized any such development costs because the costs incurred between the attainment of technological feasibility for the related software product through the date when the product is available for general release to customers has been insignificant. |
Comprehensive Income (Loss) | (u) Comprehensive Income (Loss) The components of comprehensive income (loss) include net income (loss), unrealized gains (losses) on available-for-sale securities, unrealized gains (losses) on derivative instruments, change in unfunded pension liability, net of tax, if applicable and change in cumulative translation adjustments. |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Changes in Reserve for Allowance for Doubtful Accounts, Sales Returns and Allowances | The following table represents a summary of the changes in the reserve for allowance for doubtful accounts, and sales returns and allowances for fiscal 2015, 2014 and 2013 (in thousands): 2015 2014 2013 Balance at beginning of fiscal year $ 6,392 $ 1,887 $ 1,630 Charges to expenses 2,997 5,336 257 Reclassification (deductions) 586 (831 ) — Balance at end of fiscal year $ 9,975 $ 6,392 $ 1,887 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ActiveVideo | |
Estimated Fair Value of Net Assets Acquired and Liabilities Assumed at Acquisition Dates | The following table summarizes the estimated fair value of the net assets acquired and the liabilities assumed at the acquisition dates (in thousands): April 30, 2015 Consideration transferred (net of cash acquired of $523) $ 97,905 Assets acquired and liabilities assumed: Current assets 1,984 Property and equipment 1,714 Other assets 68 Identifiable intangible assets 57,700 Debt assumed (15,000 ) Other liabilities assumed (27,314 ) Net identifiable assets acquired 19,152 Goodwill $ 78,753 |
Acquired Identifiable Intangible Assets | The acquired identifiable intangible assets of ActiveVideo as of the date of the acquisition are summarized below (in thousands): Intangible Asset Amount Weighted-Average Useful Life Customer relationships $ 26,200 7 years Developed technology 25,600 5 years Trademarks 5,900 Indefinite $ 57,700 |
Pace Plc | |
Estimated Fair Value of Net Assets Acquired and Liabilities Assumed at Acquisition Dates | The following is a summary of the preliminary estimated fair values of the net assets acquired (in thousands): Total estimated consideration transferred $ 2,073,480 Cash and cash equivalents 298,671 Accounts and other receivables 546,159 Inventories 490,925 Prepaids 21,599 Property, plant and equipment 98,371 Intangible assets 1,100,000 Noncurrent deferred income tax assets 27,635 Other assets 6,704 Accounts payable and other current liabilities (754,838 ) Deferred revenue (24,743 ) Short-term borrowings (263,795 ) Current income taxes liability (7,801 ) Other accrued liabilities (129,915 ) Other noncurrent liabilities (427,831 ) Net assets acquired 981,141 Goodwill $ 1,092,339 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the three years ended December 31, 2015 are as follows (in thousands): CPE N & C Total Goodwill $ 31,850 $ 540,921 $ 572,771 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2012 31,850 162,265 194,115 Goodwill acquired 656,808 92,593 749,401 Other — (3,114 ) (3,114 ) Goodwill 688,658 630,400 1,319,058 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2013 688,658 251,744 940,402 Goodwill acquired — 1,682 1,682 Other (4,061 ) (1,956 ) (6,017 ) Goodwill 684,597 630,126 1,314,723 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2014 684,597 251,470 936,067 Goodwill acquired (disposed), net — 78,053 78,053 Other (2,015 ) 1,858 (157 ) Goodwill 682,582 710,037 1,392,619 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2015 $ 682,582 $ 331,381 $ 1,013,963 |
Gross Carrying Amount and Accumulated Amortization of Intangible Assets | The gross carrying amount and accumulated amortization of the Company’s intangible assets as of December 31, 2015 and December 31, 2014 are as follows (in thousands): December 31, 2015 December 31, 2014 Gross Amount Accumulated Amortization Net Book Value Gross Amount Accumulated Amortization Net Book Value Definite-lived intangible assets : Customer relationships (2) $ 930,212 $ 468,414 $ 461,798 $ 904,012 $ 366,452 $ 537,560 Developed technology, patents & licenses (1,2,3) 704,137 361,719 342,418 632,487 234,882 397,605 Trademarks, trade and domain names 21,072 20,740 332 21,072 17,949 3,123 Sub-total $ 1,655,421 $ 850,873 $ 804,548 $ 1,562,671 $ 619,283 $ 943,388 Indefinite-lived intangible assets: Trademarks (2) $ 5,900 — $ 5,900 $ — — $ — In-process R&D (3) — — — 5,100 — 5,100 Sub-total $ 5,900 — $ 5,900 $ 5,100 — $ 5,100 Total $ 1,661,321 $ 850,873 $ 810,448 $ 1,562,671 $ 619,283 $ 943,388 (1) In 2015, the Company recorded intangible assets of $34.3 million for a non-exclusive license to approximately four thousand patents purchased by RPX Corporation (“RPX”), resulting from its agreement to participate in a syndicate of approximately 30 companies, including certain customers of ARRIS, to fund the RPX purchase of patent assets from Rockstar Consortium and its subsidiaries (“Rockstar”). The license assets have a weighted average useful life of nine years at acquisition. (2) The increase in 2015 reflects intangible assets acquired in the ActiveVideo acquisition. See Note 4 Business Acquisitions (3) In-process research and development of $5.1 million was reclassified in 2015 to become a definite-lived asset upon completion of the associated research and development efforts. |
Estimated Total Amortization Expense for Finite-Lived Intangibles for Next Five Fiscal Years | The estimated total amortization expense for finite-lived intangibles for each of the next five fiscal years is as follows (in thousands): 2016 $ 203,778 2017 186,843 2018 136,281 2019 113,732 2020 104,955 Thereafter 58,959 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Investments | ARRIS’s investments consisted of the following (in thousands): As of December 31, As of December 31, Current Assets: Available-for-sale securities $ 15,470 $ 126,748 Noncurrent Assets: Available-for-sale securities 4,036 8,631 Equity method investments 24,452 27,355 Cost method investments 16,646 15,161 Other investments 24,408 26,493 Total classified as non-current assets 69,542 77,640 Total $ 85,012 $ 204,388 |
Contractual Maturities of Available-for-Sale Securities | The contractual maturities of the Company’s available-for-sale securities as of December 31, 2015 are shown below. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties (in thousands): December 31, 2015 Within one year $ 15,470 After one year through five years — After five years through ten years — After ten years 4,036 Total $ 19,506 |
Summary of Ownership Structure and Ownership Percentage of Non-consolidated Investments | The following table summarizes the ownership structure and ownership percentage of the non-consolidated investments as of December 31, 2015, accounted for using the equity method. Name of Investee Ownership Structure % Ownership MPEG LA Limited Liability Company 8.4% Music Choice Limited Liability Partnership 18.2% Conditional Access Licensing (“CAL”) Limited Liability Company 49.0% Combined Conditional Access Development (“CCAD”) Limited Liability Company 50.0% |
Carrying Value and Maximum Exposure to Loss for Equity Method Investments | The following table summarizes the carrying amount and maximum exposure to loss for the investments accounted for using the equity method as of December 31, 2015 (in thousands) Carrying Amount Maximum Exposure Conditional Access Licensing $ 11,238 $ 11,238 Combined Conditional Access Development 2,148 18,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Investment Assets and Interest Rate Swap Positions (Excluding Equity and Cost Method Investments) and Derivatives Measured at Fair Value on Recurring Basis | The following table presents the Company’s investment assets (excluding equity and cost method investments) and derivatives measured at fair value on a recurring basis as of December 31, 2015 and 2014 (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Total Certificates of deposit $ — $ 4,208 $ — $ 4,208 Corporate bonds — 6,257 — 6,257 Short-term bond fund 5,005 — — 5,005 Corporate obligations — 1 — 1 Money markets 209 — — 209 Mutual funds 131 — — 131 Other investments — 3,695 — 3,695 Interest rate derivatives — liability derivatives — (10,759 ) — (10,759 ) Foreign currency contracts — asset position — 7,064 — 7,064 Foreign currency contracts — liability position — (24,371 ) — (24,371 ) December 31, 2014 Level 1 Level 2 Level 3 Total Certificates of deposit $ — $ 63,171 $ — $ 63,171 Commercial paper — 1,000 — 1,000 Corporate bonds — 37,737 — 37,737 Short-term bond fund 29,708 — — 29,708 Corporate obligations — 46 — 46 Money markets 210 — — 210 Mutual funds 133 — — 133 Other investments — 3,369 — 3,369 Interest rate derivatives — asset derivatives — 1,416 — 1,416 Interest rate derivatives — liability derivatives — (6,414 ) — (6,414 ) Foreign currency contracts — asset position — 2,876 — 2,876 Foreign currency contracts — liability position — (201 ) — (201 ) |
Derivative Instruments and He39
Derivative Instruments and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Pre-Tax Impact of Derivative Financial Instruments | The table below presents the pre-tax impact of the Company’s derivative financial instruments had on the Accumulated Other Comprehensive Income and Statement of Operations for the years ended December 31, 2015 and 2014 (in thousands): Years Ended December 31, 2015 2014 Gain (Loss) Recognized in OCI on Derivative (Effective Portion) $ (13,256 ) $ (8,541 ) Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Interest expense Interest expense Amounts Reclassified from Accumulated OCI into Income (Effective Portion) $ 7,495 $ 7,550 |
Fair Values of Derivative Instruments Designated as Hedging Instruments Recorded in Consolidated Balance Sheet | The following table indicates the location on the Consolidated Balance Sheets in which the Company’s derivative assets and liabilities designated as hedging instruments have been recognized and the related fair values of those derivatives as of December 31, 2015 and December 31, 2014 were as follows (in thousands): As of December 31, 2015 As of December 31, 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate derivatives — asset derivatives Other assets $ — Other assets $ 1,416 Interest rate derivatives — liability derivatives Other accrued liabilities (4,489 ) Other accrued liabilities (6,414 ) Interest rate derivatives — liability derivatives Other noncurrent liabilities (6,270 ) Other noncurrent liabilities — |
Change in Fair Values of Derivative Designed as Hedging Instruments Recorded in Consolidated Statements of Operations | The change in the fair values of ARRIS’s derivative designated as hedging instruments recorded in the Consolidated Statements of Operations during the years ended December 31, 2015, 2014, and 2013 were as follows (in thousands): Years Ended December 31, Statement of Operations Location 2015 2014 2013 Derivatives designated as hedging instruments: Interest rates derivatives Interest expense $ 7,495 $ 7,550 $ 3,132 |
Fair Values of Derivative Instruments and Change in Fair Values of Derivative Not Designated as Hedging Instruments Recorded in Consolidated Balance Sheet and Consolidated Statements of Operations | The following table indicates the location on the Consolidated Balance Sheets in which the Company’s derivative assets and liabilities not designated as hedging instruments have been recognized and the related fair values of those derivatives as of December 31, 2015 and December 31, 2014 were as follows (in thousands): As of December 31, 2015 As of December 31, 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives not designated as hedging instruments Foreign exchange contracts — asset derivatives Other current assets $ 6,495 Other current assets $ 2,876 Foreign exchange contracts — asset derivatives Other assets 569 Other current assets — Foreign exchange contracts — liability derivatives Other accrued liabilities (23,632 ) Other accrued liabilities (201 ) Foreign exchange contracts — liability derivatives Other noncurrent liabilities (739 ) Other noncurrent liabilities — The change in the fair values of ARRIS’s derivatives not designated as hedging instruments recorded in the Consolidated Statements of Operations during the years ended December 31, 2015, 2014, and 2013 were as follows (in thousands): Years Ended December 31, Statement of Operations Location 2015 2014 2013 Derivatives not designated as hedging instruments Foreign exchange contracts Loss (gain) on foreign currency $ 7,597 $ (4,527 ) $ (428 ) |
Guarantees (Tables)
Guarantees (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Information Regarding Changes in ARRIS' Aggregate Product Warranty Liabilities | Information regarding the changes in ARRIS’s aggregate product warranty liabilities for the years ending December 31, 2015 and 2014 were as follows (in thousands): 2015 2014 Beginning balance $ 74,320 $ 81,500 Accruals related to warranties (including changes in assumptions) 19,111 33,320 Settlements made (in cash or in kind) (44,404 ) (40,500 ) Ending balance $ 49,027 $ 74,320 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Reportable Segments | The tables below present information about the Company’s reportable segments for the years ended December 31, 2015, 2014 and 2013 (in thousands): 2015 2014 2013 Net sales to external customers: CPE $ 3,136,585 $ 3,690,454 $ 2,448,381 N&C 1,661,594 1,637,544 1,193,001 Other 153 (5,077 ) (20,480 ) Total 4,798,332 5,322,921 3,620,902 Direct contribution: CPE 548,840 791,244 509,473 N&C 487,166 430,943 264,589 Segment total 1,036,006 1,222,187 774,062 Corporate and unallocated costs (568,336 ) (606,834 ) (515,391 ) Amortization of intangible assets (227,440 ) (236,521 ) (193,637 ) Integration, acquisition, restructuring and other (29,277 ) (37,498 ) (83,047 ) Operating income (loss) 210,953 341,334 (18,013 ) Interest expense 70,936 62,901 67,888 Loss on investments 6,220 10,961 2,698 Interest income (2,379 ) (2,590 ) (2,936 ) Loss (gain) on foreign currency 20,761 2,637 (3,502 ) Other expense ( income), net 8,362 28,195 13,989 Income (loss) before income taxes $ 107,053 $ 239,230 $ (96,150 ) |
Composition Of Corporate and Unallocated Costs | For the years ended December 31, 2015, 2014 and 2013, the compositions of our corporate and unallocated costs that are reflected in the consolidated statement of operations were as follows (in thousands): 2015 2014 2013 Corporate and unallocated costs: Cost of sales $ 56,311 $ 69,973 $ 122,460 Selling, general and administrative expenses 349,993 349,693 278,921 Research and development expenses 162,032 187,168 114,010 Total $ 568,336 $ 606,834 $ 515,391 |
Summary of Company's Net Intangible Assets and Goodwill by Reportable Segment | The following table summarizes the Company’s net intangible assets and goodwill by reportable segment as of December 31, 2015 and 2014 (in thousands): Network & CPE Total December 31, 2015 Goodwill $ 331,381 $ 682,582 $ 1,013,963 Intangible assets, net 284,528 525,920 810,448 December 31, 2014 Goodwill $ 251,470 $ 684,597 $ 936,067 Intangible assets, net 298,799 644,589 943,388 |
Summary of Company's Revenues by Products and Services | The following table summarizes the Company’s revenues by products and services as of December 31, 2015, 2014 and 2013 (in thousands): 2015 2014 2013 CPE: CPE products $ 3,136,585 $ 3,690,454 $ 2,448,381 Network & Cloud: Infrastructure equipment 1,407,735 1,435,676 1,020,722 Global services 181,892 141,625 120,314 Cloud solutions 71,967 60,243 51,965 Sub-total 1,661,594 1,637,544 1,193,001 Other: Other 153 (5,077 ) (20,480 ) Total net sales $ 4,798,332 $ 5,322,921 $ 3,620,902 |
Summary of Sales to Customers | A summary of sales to these customers for 2015, 2014 and 2013 is set forth below (in thousands, except percentages): Years ended December 31, 2015 2014 2013 Comcast and affiliates $ 1,007,892 $ 1,012,367 $ 674,977 % of sales 21.0 % 19.0 % 18.6 % Time Warner Cable and affiliates $ 687,645 $ 600,770 $ 331,829 % of sales 14.3 % 11.3 % 9.2 % |
Summary of ARRIS' International Sales by Geographic Region | International sales for the years ended December 31, 2015, 2014 and 2013 were as follows (in thousands): Years Ended December 31, 2015 2014 2013 Americas, excluding U.S (1) $ 880,581 $ 900,822 $ 746,146 Asia Pacific 142,893 147,921 153,674 EMEA 356,275 316,975 263,910 Total international sales $ 1,379,749 $ 1,365,718 $ 1,163,730 (1) Excludes U.S. sales of $3,418.6 million, $3,957.2 million and $2,457.2 million for the years ended December 31, 2015, 2014 and 2013, respectively. |
Summary of ARRIS' International Property, Plant and Equipment by Geographic Region | The following table summarizes ARRIS’s international property, plant and equipment assets by geographic region as of December 31, 2015 and 2014 (in thousands): As of December 31, 2015 2014 Americas, excluding U.S. $ 6,659 $ 7,303 Asia Pacific 74,651 76,970 EMEA 7,265 8,129 Total $ 88,575 $ 92,402 (1) Excludes U.S. assets of $223.7 million and $274.0 million for the years ended December 31, 2015 and 2014, respectively. |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Components of Inventory Net of Reserves | The components of inventory are as follows, net of reserves (in thousands): December 31, 2015 2014 Raw material $ 60,287 $ 61,068 Work in process 3,076 6,713 Finished goods 338,229 333,384 Total inventories, net $ 401,592 $ 401,165 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment, at Cost | Property, plant and equipment, at cost, consisted of the following (in thousands): December 31, 2015 2014 Land $ 68,562 $ 87,952 Buildings and leasehold improvements 141,171 141,581 Machinery and equipment 407,110 402,709 616,843 632,242 Less: Accumulated depreciation (304,532 ) (265,811 ) Total property, plant and equipment, net $ 312,311 $ 366,431 |
Lease Financing Obligation (Tab
Lease Financing Obligation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payments Required on Lease Financing Obligations | At December 31, 2015, the minimum lease payments required on the financing obligation were as follows (in thousands): 2016 $ 4,016 2017 4,136 2018 4,260 2019 4,388 2020 4,520 Thereafter through 2025 20,757 Total minimum lease payments $ 42,077 |
Indebtedness (Tables)
Indebtedness (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Indebtedness and Lease Financing Obligations | The following is a summary of indebtedness and lease financing obligations as of December 31, 2015 and 2014 (in thousands): As of December 31, 2015 As of December 31, 2014 Current liabilities: Term A loan $ 49,500 $ 75,625 Lease finance obligation 758 — Current obligations 50,258 75,625 Current deferred financing fees and debt discount (6,667 ) (8,601 ) 43,591 67,024 Noncurrent liabilities: Term A loan 915,750 928,125 Term B loan 543,812 543,812 Revolver — — Lease finance obligation 58,676 — Noncurrent obligations 1,518,238 1,471,937 Noncurrent deferred financing fees and debt discount (21,995 ) (22,977 ) 1,496,243 1,448,960 Total $ 1,539,834 $ 1,515,984 |
Senior Credit Facility Interest Rates | Rate As of December 31, 2015 Term Loan A LIBOR + 1.75 % 2.17 % Term Loan B LIBOR (1) + 2.50 % 3.25 % Revolving Credit Facility (2) LIBOR + 1.75 % Not Applicable (1) Includes LIBOR floor of 0.75% (2) Includes unused commitment fee of 0.35% and letter of credit fee of 1.75% not reflected in interest rate above. |
Scheduled Maturities of Contractual Debt Obligations for Next Five Years | As of December 31, 2015, the scheduled maturities of the contractual debt obligations for the next five years are as follows (in thousands): 2016 $ 49,500 2017 49,500 2018 49,500 2019 49,500 2020 1,311,062 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Reconciliation of Numerators and Denominators of Basic and Diluted Earnings (Loss) Per Share Computations | The following is a reconciliation of the numerators and denominators of the basic and diluted earnings (loss) per share computations for the periods indicated (in thousands, except per share data): For the Years Ended December 31, 2015 2014 2013 Basic: Net income (loss) attributable to ARRIS Group Inc. $ 92,181 $ 327,211 $ (48,760 ) Weighted average shares outstanding 146,388 144,386 131,980 Basic earnings (loss) per share $ 0.63 $ 2.27 $ (0.37 ) Diluted: Net income (loss) attributable to ARRIS Group Inc. $ 92,181 $ 327,211 $ (48,760 ) Weighted average shares outstanding 146,388 144,386 131,980 Net effect of dilutive shares 2,971 3,894 — Total 149,359 148,280 131,980 Diluted earnings (loss) per share $ 0.62 $ 2.21 $ (0.37 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income (Loss) Before Income Taxes | Income (loss) before income taxes (in thousands): Years Ended December 31, 2015 2014 2013 Domestic $ 47,063 $ 180,133 $ (128,588 ) Foreign 59,990 59,097 32,438 $ 107,053 $ 239,230 $ (96,150 ) |
Components of Income Tax Expense (Benefit) | Income tax expense (benefit) consisted of the following (in thousands): Years Ended December 31, 2015 2014 2013 Current — Federal $ (5,063 ) $ 45,937 $ (5,133 ) State 7,204 13,260 (40 ) Foreign 15,035 18,136 10,624 17,176 77,333 5,451 Deferred — Federal 7,521 (140,404 ) (50,485 ) State (2,402 ) (19,978 ) (2,189 ) Foreign 299 (4,932 ) (167 ) 5,418 (165,314 ) (52,841 ) Income tax expense (benefit) $ 22,594 $ (87,981 ) $ (47,390 ) |
Reconciliation of U.S. Statutory Federal Income Tax Rate and Effective Income Tax Rate | A reconciliation of the U.S. statutory federal income tax rate of 35% and the effective income tax rates is as follows: Years Ended December 31, 2015 2014 2013 Statutory U.S. federal income tax rate 35.0 % 35.0 % 35.0 % Effects of: State income taxes, net of federal benefit 5.2 (6.6 ) 2.2 Acquired deferred tax assets 5.8 (16.5 ) — U.S. domestic manufacturing deduction (0.7 ) (2.1 ) 1.1 Nontaxable Comcast derivative gain — — (9.6 ) Facilitative acquisition costs — — (3.5 ) Research and development tax credits (26.6 ) (8.7 ) 26.8 Subpart F income 4.8 0.8 — Changes in valuation allowance (26.6 ) (44.2 ) — Foreign tax credits (20.7 ) (0.6 ) 1.3 Non-deductible officer compensation 5.3 0.6 (0.5 ) Non-U.S. tax rate differential (5.0 ) (2.6 ) 1.3 Recapture of dual consolidated losses 1.1 4.0 — Taiwan gain 34.3 — — Other, net 9.2 4.1 (4.8 ) 21.1 % (36.8 )% 49.3 % |
Significant Components of ARRIS' Net Deferred Income Tax Assets (Liabilities) | Significant components of ARRIS’s net deferred income tax assets (liabilities) were as follows (in thousands): December 31, 2015 2014 Deferred income tax assets (1): Inventory costs $ 28,728 $ 34,695 Accrued vacation 7,138 7,980 Acquisition charges 6,556 — Allowance for bad debt 4,396 — Equity compensation 14,673 14,639 Deferred revenue — 1,001 Federal/state net operating loss carryforwards 95,571 217,656 Federal capital loss carryforwards — 7,701 Foreign net operating loss carryforwards 10,989 11,840 Research and development credits 79,809 62,661 Property, plant and equipment, depreciation and basis differences 1,285 — Pension and deferred compensation 19,166 18,393 Warranty reserve 18,215 26,187 Capitalized research and development 215,894 226,270 Other 22,929 42,188 Total deferred income tax assets 525,349 671,211 Deferred income tax liabilities: Property, plant and equipment, depreciation and basis differences — (19,744 ) Excess tax on future repatriation of foreign earnings (1,184 ) (1,184 ) Other noncurrent liabilities (3,210 ) (30,904 ) Goodwill and intangible assets (248,231 ) (316,192 ) Total deferred income tax liabilities (252,625 ) (368,024 ) Net deferred income tax assets 272,724 303,187 Valuation allowance (87,788 ) (118,629 ) Net deferred income tax assets (liabilities) $ 184,936 $ 184,558 (1) See Note 3 Impact of Recently Issued Accounting Standards |
Summary Deferred Tax Asset Valuation Allowance | An analysis of the deferred tax asset valuation allowances is as follows: (in thousands): 2015 2014 2013 Balance at beginning of fiscal year $ 118,629 $ 163,745 $ 17,973 Additions 3,312 37,708 147,349 Deductions (34,153 ) (82,824 ) (1,577 ) Balance at end of fiscal year $ 87,788 $ 118,629 $ 163,745 |
Tabular Reconciliation of Unrecognized Tax Benefits | Tabular Reconciliation of Unrecognized Tax Benefits (in thousands): December 31, 2015 2014 2013 Beginning balance $ 48,019 $ 28,344 $ 25,704 Gross increases — tax positions in prior period 1,599 17,636 2,442 Gross decreases — tax positions in prior period (2,185 ) (4,115 ) (21 ) Gross increases — current-period tax positions 9,578 9,979 6,999 Increases (decreases) from acquired businesses — (196 ) 2,014 Decreases relating to settlements with taxing authorities and other (6,689 ) (2,480 ) (1,098 ) Decreases due to lapse of statute of limitations (403 ) (1,149 ) (7,696 ) Ending balance $ 49,919 $ 48,019 $ 28,344 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Activity of ARRIS' Options Granted | A summary of activity of ARRIS’s options granted under its stock incentive plans is presented below: Options Weighted Average Exercise Price Weighted Aggregate Beginning balance, December 31, 2014 38,000 $ 11.97 Exercised (35,422 ) 11.93 Expired (2,578 ) 12.57 Ending balance, December 31, 2015 — — — $ — Exercisable at December 31, 2015 — — — $ — |
Summary of ARRIS' Unvested Restricted Stock (Excluding Performance Related) | The following table summarizes ARRIS’s unvested restricted stock (excluding performance-related) and stock unit transactions during the year ending December 31, 2015: Shares Weighted Average Unvested at December 31, 2014 6,991,789 $ 19.29 Granted 2,336,360 29.08 Vested (3,019,824 ) 18.13 Forfeited (323,076 ) 21.24 Unvested at December 31, 2015 5,985,249 23.59 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Defined Benefit Plan, Actual and Target Plan Asset Allocations | The following table summarizes the weighted average pension asset allocations as December 31, 2015 and 2014: Weighted Average Allocation Target Actual 2015 2015 2014 Equity securities 40-45 % 40 % 43 % Debt securities 0-5 2 3 Cash and cash equivalents 50-60 58 54 100 % 100 % 100 % |
Schedule of Pension Plan Assets By Category and By level | The following table summarizes the Company’s U.S. pension plan assets by category and by level (as described in Note 7 of the Notes to the Consolidated Financial Statements) as of December 31, 2015 and 2014 (in thousands): December 31, 2015 Level 1 Level 2 Level 3 Total Cash and cash equivalents (1) $ — $ 7,424 $ — $ 7,424 Equity securities (2) : U.S. large cap 1,330 — — 1,330 U.S. mid cap 1,160 — — 1,160 U.S. small cap 1,160 — — 1,160 International 1,757 — — 1,757 Fixed income securities (3) : 685 — — 685 Total $ 6,092 $ 7,424 $ — $ 13,516 December 31, 2014 Level 1 Level 2 Level 3 Total Cash and cash equivalents (1) $ — $ 7,752 $ — $ 7,752 Equity securities (2) : U.S. large cap 1,571 — — 1,571 U.S. mid cap 1,640 — — 1,640 U.S. small cap 1,367 — — 1,367 International 2,050 — — 2,050 Fixed income securities (3) : 205 — — 205 Total $ 6,833 $ 7,752 $ — $ 14,585 (1) Cash and cash equivalents, which are used to pay benefits and administrative expenses, are held in a stable value fund. (2) Equity securities consist of mutual funds and the underlying investments are indexes. Investments in mutual funds are valued at the net asset value per share multiplied by the number of shares held. (3) Fixed income securities consist of bonds securities in mutual funds, and are valued at the net asset value per share multiplied by the number of shares held. |
Schedule of Non Contributory Defined Benefit Pension Plans | Summary data for the U.S. non-contributory defined benefit pension plans is as follows (in thousands): Years Ended December 31, 2015 2014 Change in Projected Benefit Obligation: Projected benefit obligation at beginning of year $ 46,550 $ 40,382 Service cost — — Interest cost 1,716 1,783 Actuarial (gain) loss (3,962 ) 5,692 Benefit payments (1,305 ) (1,307 ) Other — — Projected benefit obligation at end of year $ 42,999 $ 46,550 Change in Plan Assets: Fair value of plan assets at beginning of year $ 14,585 $ 15,162 Actual return on plan assets 81 575 Company contributions 155 155 Expenses and benefits paid from plan assets (1,305 ) (1,307 ) Other — — Fair value of plan assets at end of year (1) $ 13,516 $ 14,585 Funded Status: Funded status of plan $ (29,483 ) $ (31,965 ) Unrecognized actuarial loss 9,196 13,233 Net amount recognized $ (20,287 ) $ (18,732 ) (1) In addition to the pension plan assets, ARRIS has established two rabbi trusts to further fund the pension obligations of the Chief Executive and certain executive officers of $18.0 million as of December 31, 2015 and $20.3 million as of December 31, 2014, and are included in Investments on the Consolidated Balance Sheets. |
Schedule of Amounts Recognized in Statement of Financial Position | Amounts recognized in the statement of financial position consist of (in thousands): Years Ended December 31, 2015 2014 Current liabilities $ (426 ) $ (393 ) Noncurrent liabilities (29,057 ) (31,572 ) Accumulated other comprehensive income (1) 9,196 13,233 Total $ (20,287 ) $ (18,732 ) (1) The accumulated other comprehensive income on the Consolidated Balance Sheets as of December 31, 2015 and 2014 is presented net of income tax. |
Schedule of Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) | Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows (in thousands): Years Ended December 31, 2015 2014 2013 Net (gain) loss $ (3,203 ) $ 5,992 $ (2,359 ) Amortization of net loss (834 ) (305 ) (607 ) Settlement charge — — (318 ) Total recognized in other comprehensive income (loss) $ (4,037 ) $ 5,687 $ 3,284 |
Schedule of Amounts in Other Comprehensive Income (Loss) Expected to be Amortized | The following table summarizes the amounts in other comprehensive income (loss) expected to be amortized and recognized as a component of net periodic benefit cost in 2016 (in thousands): Amortization of net loss $ 1,711 |
Schedule of Information for Defined Benefit Plans with Accumulated Benefit Obligations in Excess of Plan Assets | Information for defined benefit plans with accumulated benefit obligations in excess of plan assets is as follows (in thousands): December 31, 2015 2014 Accumulated benefit obligation $ 42,999 $ 46,550 Projected benefit obligation $ 42,999 $ 46,550 Plan assets $ 13,516 $ 14,585 |
Net Periodic Pension Cost | Net periodic pension cost for 2015, 2014 and 2013 for pension and supplemental benefit plans includes the following components (in thousands): 2015 2014 2013 Service cost $ — $ — $ 122 Interest cost 1,716 1,783 1,619 Return on assets (expected) (839 ) (874 ) (876 ) Amortization of net actuarial loss (1) 834 305 607 Net periodic pension cost $ 1,711 $ 1,214 $ 1,472 (1) ARRIS uses the allowable 10% corridor approach to determine the amount of gains/losses subject to amortization in pension cost. Gains/losses are amortized on a straight-line basis over the average future service of members expected to receive benefits |
Assumptions Used | The weighted-average actuarial assumptions used to determine the benefit obligations for the three years presented are set forth below: 2015 2014 2013 Assumed discount rate for plan participants 4.15 % 3.75 % 4.50 % The weighted-average actuarial assumptions used to determine the net periodic benefit costs are set forth below: 2015 2014 2013 Assumed discount rate for plan participants 3.75 % 4.50 % 3.75 % Rate of compensation increase N/A N/A 3.75 % Expected long-term rate of return on plan assets 6.00 % 6.00 % 6.00 % |
Expected Benefit Payments Related to Defined Benefit Pension Plans | As of December 31, 2015, the expected benefit payments related to the Company’s U.S. defined benefit pension plans during the next ten years are as follows (in thousands): 2016 $ 1,626 2017 14,360 2018 1,652 2019 1,697 2020 1,814 2021 — 2025 9,993 |
Taiwan Plan | |
Schedule of Non Contributory Defined Benefit Pension Plans | The funded status of the Taiwan non-contributory defined benefit pension plans is as follows (in thousands): Years Ended December 31, 2015 2014 Change in Projected Benefit Obligation: Projected benefit obligation at beginning of year $ 35,541 $ 33,933 Service cost 738 751 Interest cost 661 599 Actuarial loss 708 1,101 Benefit payments (1,276 ) (843 ) Projected benefit obligation at end of year $ 36,372 $ 35,541 Change in Plan Assets: Fair value of plan assets at beginning of year $ 8,923 $ 8,302 Actual return on plan assets 236 190 Company contributions 1,273 1,274 Expenses and benefits paid from plan assets (1,200 ) (843 ) Fair value of plan assets at end of year $ 9,232 $ 8,923 Funded Status: Funded status of plan $ (27,140 ) $ (26,618 ) Unrecognized actuarial (gain) loss (4,320 ) (4,036 ) Net amount recognized $ (31,460 ) $ (30,654 ) |
Schedule of Amounts Recognized in Statement of Financial Position | Amounts recognized in the statement of financial position consist of (in thousands): Years Ended December 31, 2015 2014 Noncurrent liabilities $ (27,140 ) $ (26,618 ) Accumulated other comprehensive income (4,320 ) (4,036 ) Total $ (31,460 ) $ (30,654 ) |
Schedule of Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) | Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows (in thousands): Years Ended December 31, 2015 2014 2013 Net loss (gain) $ 813 $ 1,077 $ (3,107 ) Amortization of net gain (loss) (529 ) (464 ) (808 ) Total recognized in other comprehensive income (loss) $ 284 $ 613 $ (3,915 ) |
Schedule of Information for Defined Benefit Plans with Accumulated Benefit Obligations in Excess of Plan Assets | Information for defined benefit plans with accumulated benefit obligations in excess of plan assets is as follows (in thousands): December 31, 2015 2014 Accumulated benefit obligation $ 26,966 $ 25,758 Projected benefit obligation $ 36,372 $ 35,541 Plan assets $ 9,232 $ 8,923 |
Net Periodic Pension Cost | Net periodic pension cost for 2015, 2014 and 2013 for pension and supplemental benefit plans includes the following components (in thousands): 2015 2014 2013 Service cost $ 738 $ 751 $ 999 Interest cost 661 599 698 Return on assets (expected) (176 ) (166 ) (163 ) Amortization of net actuarial loss 529 464 808 Net periodic pension cost $ 1,752 $ 1,648 $ 2,342 |
Assumptions Used | Key assumptions used in the valuation of the Taiwan Plan are as follows: 2015 2014 2013 Assumed discount rate for obligations 1.70 % 1.90 % 1.80 % Assumed discount rate for expense 1.90 % 1.80 % 1.80 % Rate of compensation increase for indirect labor 4.00 % 4.50 % 4.50 % Rate of compensation increase for direct labor 2.00 % 2.00 % 2.00 % Expected long-term rate of return on plan assets (1) 2.00 % 2.00 % 2.00 % (1) Asset allocation is 100% in money market investments |
Expected Benefit Payments Related to Defined Benefit Pension Plans | As of December 31, 2015, the expected benefit payments related to the Company’s Taiwan defined benefit pension plans during the next ten years are as follows (in thousands): 2016 $ 1,746 2017 1,794 2018 2,528 2019 2,112 2020 2,445 2021 — 2025 13,182 |
Accumulated Other Comprehensi50
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Changes in Accumulated Other Comprehensive Income (Loss) by Component, Net of Taxes | The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of taxes, for the years ended December 31, 2015 and 2014 (in thousands): Available-for Derivative Change Cumulative Total Balance as of December 31, 2014 $ 25 $ (3,166 ) $ (7,181 ) $ (725 ) $ (11,047 ) Other comprehensive (loss) income before reclassifications (64 ) (8,319 ) 2,044 (1,078 ) (7,417 ) Amounts reclassified from accumulated other comprehensive income (loss) 172 4,704 942 — 5,818 Net current-period other comprehensive income (loss) 108 (3,615 ) 2,986 (1,078 ) (1,599 ) Balance as of December 31, 2015 $ 133 $ (6,781 ) $ (4,195 ) $ (1,803 ) $ (12,646 ) Available-for Derivative Change Cumulative Total Balance as of December 31, 2013 $ 306 $ (2,541 ) $ (2,416 ) $ (11 ) $ (4,662 ) Other comprehensive (loss) income before reclassifications (127 ) (5,391 ) (5,273 ) (714 ) (11,505 ) Amounts reclassified from accumulated other comprehensive income (loss) (154 ) 4,766 508 — 5,120 Net current-period other comprehensive income (loss) (281 ) (625 ) (4,765 ) (714 ) (6,385 ) Balance as of December 31, 2014 $ 25 $ (3,166 ) $ (7,181 ) $ (725 ) $ (11,047 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Future Minimum Operating Lease Payments under Non-Cancelable Leases | Future minimum operating lease payments under non-cancelable leases at December 31, 2015 were as follows (in thousands): Operating Leases 2016 $ 26,241 2017 20,180 2018 15,409 2019 11,592 2020 9,937 Thereafter 35,873 Less sublease income (1,287 ) Total minimum lease payments $ 117,945 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Pace Plc | |
Summary of Fair Value of Consideration Transferred | The following table summarizes the fair value of consideration transferred for Pace (in thousands): Cash Consideration (1) $ 638,790 Stock Consideration (2) 1,434,690 Total consideration transferred $ 2,073,480 (1) Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707) for each of Pace’s shares and equity awards outstanding. (2) Stock consideration represents the conversion of each of Pace’s shares and equity awards outstanding at a conversion rate of 0.1455 with a value of $30.08 at January 4, 2016, which represents the opening price of the Company’s common stock at the date of Combination. |
Summary Quarterly Consolidate53
Summary Quarterly Consolidated Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Schedule of Quarterly Consolidated Financial Information | The following table summarizes ARRIS’s quarterly consolidated financial information (in thousands, except per share data): Quarters in 2015 Ended March 31, June 30, September 30, (1) December 31, (2) Net sales $ 1,215,158 $ 1,260,077 $ 1,221,416 $ 1,101,681 Gross margin 336,556 364,361 359,333 358,673 Operating income 45,718 51,542 60,781 52,912 Net income attributable to ARRIS Group, Inc. $ 19,126 $ 16,758 $ 26,256 $ 30,041 Net income per basic share $ 0.13 $ 0.11 $ 0.18 $ 0.20 Net income per diluted share $ 0.13 $ 0.11 $ 0.18 $ 0.20 Quarters in 2014 Ended March 31, (3) June 30, September 30, (4) December 31, (5) Net sales $ 1,225,017 $ 1,429,071 $ 1,405,445 $ 1,263,388 Gross margin 346,774 419,412 435,734 380,576 Operating income 37,986 91,676 122,109 89,563 Net income attributable to ARRIS Group, Inc. $ 40,800 $ 39,024 $ 54,626 $ 192,761 Net income per basic share $ 0.29 $ 0.27 $ 0.38 $ 1.33 Net income per diluted share $ 0.28 $ 0.26 $ 0.37 $ 1.29 Year 2015 (1) The Company recorded a tax benefit of $27.3 million primarily from the release of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. The Company also recorded a tax expense of $18.9 million on a gain recognition agreement for its Taiwanese entity, inclusive of a benefit of $18.9 million obtained from foreign tax credits generated by the transaction. (2) $20.4 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit permanently during Q4 of 2015. Year 2014 (3) The Company recorded a tax benefit from the release of $18.2 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. (4) The Company identified and corrected an immaterial error in the accounting for income taxes related to the prior year ended December 31, 2013. The correction related to the Company’s subsequent consideration of certain tax consequences related to a legal entity and tax restructuring completed in the fourth quarter of 2013. The impact of adjusting these amounts had a non-cash effect, increasing income tax expense and noncurrent income tax liabilities by $9.8 million. In accordance with ASC Topic 250, Accounting Changes and Error Corrections (5) The Company recorded a tax benefit from the release of $134.8 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses and U.S. federal tax credits and $9.0 million of valuation allowances from deferred tax assets recorded for state net operating losses and state research and development tax credits arising from the acquisition of the Motorola Home business from Google. In addition, $18.1 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit through December 31, 2014. |
Organization and Basis of Pre54
Organization and Basis of Presentation - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2015Segment | Jan. 04, 2016$ / shares | Jan. 04, 2016£ / shares | |
Organization and Basis Of Presentation [Line Items] | |||
Number of business segments operated | 2 | ||
Subsequent Event | Pace Plc | |||
Organization and Basis Of Presentation [Line Items] | |||
Per share price in cash consideration | (per share) | $ 1.95 | £ 1.325 | |
Common stock conversion Basis | 0.1455 | 0.1455 |
Summary of Significant Accoun55
Summary of Significant Accounting Policies - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2015USD ($)Segment | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||
Original maturity period of cash, cash equivalents and investments | Three months or less | ||
Shipping and handling costs | $ 5,600,000 | $ 6,900,000 | $ 4,900,000 |
Amortization of landlord funded tenant improvements | 4,500,000 | 4,000,000 | 2,500,000 |
Depreciation expense, including amortization of capital leases | 71,800,000 | 79,000,000 | 61,500,000 |
Impairment charges related to intangible assets | $ 0 | 0 | 0 |
Number of reporting units | Segment | 3 | ||
Goodwill impairment | $ 0 | 0 | 0 |
Advertising expense | $ 16,800,000 | $ 8,200,000 | $ 4,100,000 |
Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Equity method investment, ownership percentage | 20.00% | ||
Finite lived intangible assets, useful life | 1 year | ||
Maximum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Equity method investment, ownership percentage | 50.00% | ||
Finite lived intangible assets, useful life | 13 years | ||
Building and Improvements | Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Property, plant and equipment, useful life | 10 years | ||
Building and Improvements | Maximum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Property, plant and equipment, useful life | 40 years | ||
Machinery and Equipment | Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Property, plant and equipment, useful life | 2 years | ||
Machinery and Equipment | Maximum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Property, plant and equipment, useful life | 10 years | ||
Internal-Use Software | Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Property, plant and equipment, useful life | 2 years | ||
Internal-Use Software | Maximum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Property, plant and equipment, useful life | 7 years |
Summary of Changes in Reserve f
Summary of Changes in Reserve for Allowance for Doubtful Accounts, Sales Returns and Allowances (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Balance at beginning of fiscal year | $ 6,392 | $ 1,887 | $ 1,630 |
Charges to expenses | 2,997 | 5,336 | 257 |
Reclassification (deductions) | 586 | (831) | |
Balance at end of fiscal year | $ 9,975 | $ 6,392 | $ 1,887 |
Impact of Recently Issued Acc57
Impact of Recently Issued Accounting Standards - Additional Information (Detail) $ in Millions | Dec. 31, 2014USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Unamortized debt issuance costs | $ 25.3 |
Business Acquisitions - Additio
Business Acquisitions - Additional Information (Detail) - USD ($) $ in Thousands, shares in Millions | Apr. 17, 2013 | Apr. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Business Acquisition [Line Items] | |||||
Integration, acquisition, restructuring and other costs | $ 29,277 | $ 37,498 | $ 83,047 | ||
Equity contributed by the noncontrolling interest | $ 54,000 | ||||
Business acquisition, cash consideration | 97,905 | $ 2,208,114 | |||
Non-controlling Interest | |||||
Business Acquisition [Line Items] | |||||
Consideration for the acquisition | 34,000 | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | 13,000 | ||||
Working Capital Fund | |||||
Business Acquisition [Line Items] | |||||
Equity contributed by the noncontrolling interest | 7,000 | ||||
ActiveVideo | |||||
Business Acquisition [Line Items] | |||||
Integration, acquisition, restructuring and other costs | $ 1,100 | ||||
Business acquisition, cash consideration | 97,905 | ||||
ActiveVideo | A-C Acquisition, LLC Venture | |||||
Business Acquisition [Line Items] | |||||
Consideration for the acquisition | $ 98,000 | ||||
Motorola Home | |||||
Business Acquisition [Line Items] | |||||
Business acquisition, cash consideration | $ 2,208,100 | ||||
Business acquisition potential stock issue, shares | 10.6 | 10.6 | |||
Arris Group Inc | A-C Acquisition, LLC Venture | |||||
Business Acquisition [Line Items] | |||||
Membership interest acquired percentage in Active Video Networks, Inc. | 65.00% | ||||
Charter | A-C Acquisition, LLC Venture | |||||
Business Acquisition [Line Items] | |||||
Ownership percentage of joint venture by Charters | 35.00% | ||||
Active Network Inc | A-C Acquisition, LLC Venture | |||||
Business Acquisition [Line Items] | |||||
Membership interest acquired percentage in Active Video Networks, Inc. | 100.00% |
Estimated Fair Value of Net Ass
Estimated Fair Value of Net Assets Acquired and Liabilities Assumed at Acquisition Dates (Detail) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2012 | |
Schedule of Business Acquisitions, Purchase Price [Line Items] | |||||
Consideration transferred (net of cash acquired of $523) | $ 97,905 | $ 2,208,114 | |||
Assets acquired and liabilities assumed: | |||||
Goodwill | 1,013,963 | $ 940,402 | $ 936,067 | $ 194,115 | |
ActiveVideo | |||||
Schedule of Business Acquisitions, Purchase Price [Line Items] | |||||
Consideration transferred (net of cash acquired of $523) | $ 97,905 | ||||
Assets acquired and liabilities assumed: | |||||
Current assets | 1,984 | ||||
Property and equipment | 1,714 | ||||
Other assets | 68 | ||||
Identifiable intangible assets | 57,700 | $ 57,700 | |||
Debt assumed | (15,000) | ||||
Other liabilities assumed | (27,314) | ||||
Net assets acquired | 19,152 | ||||
Goodwill | $ 78,753 |
Estimated Fair Value of Net A60
Estimated Fair Value of Net Assets Acquired and Liabilities Assumed at Acquisition Dates (Parenthetical) (Detail) $ in Thousands | 1 Months Ended |
Apr. 30, 2015USD ($) | |
ActiveVideo | |
Schedule of Business Acquisitions, Purchase Price [Line Items] | |
Cash acquired | $ 523 |
Acquired Identifiable Intangibl
Acquired Identifiable Intangible Assets (Detail) - ActiveVideo - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Apr. 30, 2015 | |
Business Acquisition [Line Items] | ||
Amount | $ 57,700 | $ 57,700 |
Customer relationships | ||
Business Acquisition [Line Items] | ||
Amount | $ 26,200 | |
Weighted-Average Useful Life | 7 years | |
Developed technology, patents & licenses | ||
Business Acquisition [Line Items] | ||
Amount | $ 25,600 | |
Weighted-Average Useful Life | 5 years | |
Trademarks | ||
Business Acquisition [Line Items] | ||
Amount | $ 5,900 |
Carrying Amount of Goodwill (De
Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Goodwill [Line Items] | |||
Goodwill, gross, as of beginning of period | $ 1,314,723 | $ 1,319,058 | $ 572,771 |
Goodwill acquired (disposed), net | 78,053 | ||
Accumulated impairment losses, as of beginning of period | (378,656) | (378,656) | (378,656) |
Balance as of beginning of period | 936,067 | 940,402 | 194,115 |
Goodwill acquired | 78,800 | 1,682 | 749,401 |
Other | (157) | (6,017) | (3,114) |
Goodwill, gross, as of end of period | 1,392,619 | 1,314,723 | 1,319,058 |
Accumulated impairment losses, as of end of period | (378,656) | (378,656) | (378,656) |
Balance as of end of period | 1,013,963 | 936,067 | 940,402 |
CPE | |||
Goodwill [Line Items] | |||
Goodwill, gross, as of beginning of period | 684,597 | 688,658 | 31,850 |
Balance as of beginning of period | 684,597 | 688,658 | 31,850 |
Goodwill acquired | 656,808 | ||
Other | (2,015) | (4,061) | |
Goodwill, gross, as of end of period | 682,582 | 684,597 | 688,658 |
Balance as of end of period | 682,582 | 684,597 | 688,658 |
Network Infrastructure and Cloud Services | |||
Goodwill [Line Items] | |||
Goodwill, gross, as of beginning of period | 630,126 | 630,400 | 540,921 |
Goodwill acquired (disposed), net | 78,053 | ||
Accumulated impairment losses, as of beginning of period | (378,656) | (378,656) | (378,656) |
Balance as of beginning of period | 251,470 | 251,744 | 162,265 |
Goodwill acquired | 1,682 | 92,593 | |
Other | 1,858 | (1,956) | (3,114) |
Goodwill, gross, as of end of period | 710,037 | 630,126 | 630,400 |
Accumulated impairment losses, as of end of period | (378,656) | (378,656) | (378,656) |
Balance as of end of period | $ 331,381 | $ 251,470 | $ 251,744 |
Goodwill and Intangible Asset63
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule Of Goodwill And Intangible Assets [Line Items] | |||
Goodwill | $ 78,800 | $ 1,682 | $ 749,401 |
Goodwill disposed of | (700) | ||
Amortization of intangible assets | $ 231,600 | $ 236,800 | $ 193,600 |
Gross Carrying Amount and Accum
Gross Carrying Amount and Accumulated Amortization of Intangible Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible Assets [Line Items] | |||
Definite-lived intangible assets, Gross Amount | $ 1,655,421 | $ 1,562,671 | |
Definite-lived intangible assets, Accumulated Amortization | 850,873 | 619,283 | |
Definite-lived intangible assets, Net Book Value | 804,548 | 943,388 | |
Indefinite-lived intangible assets | 5,900 | 5,100 | |
Gross Amount | 1,661,321 | 1,562,671 | |
Net Book Value | 810,448 | 943,388 | |
Customer relationships | |||
Intangible Assets [Line Items] | |||
Definite-lived intangible assets, Gross Amount | [1] | 930,212 | 904,012 |
Definite-lived intangible assets, Accumulated Amortization | [1] | 468,414 | 366,452 |
Definite-lived intangible assets, Net Book Value | [1] | 461,798 | 537,560 |
Developed technology, patents & licenses | |||
Intangible Assets [Line Items] | |||
Definite-lived intangible assets, Gross Amount | [1],[2],[3] | 704,137 | 632,487 |
Definite-lived intangible assets, Accumulated Amortization | [1],[2],[3] | 361,719 | 234,882 |
Definite-lived intangible assets, Net Book Value | [1],[2],[3] | 342,418 | 397,605 |
Trademark, trade and domain names | |||
Intangible Assets [Line Items] | |||
Definite-lived intangible assets, Gross Amount | 21,072 | 21,072 | |
Definite-lived intangible assets, Accumulated Amortization | 20,740 | 17,949 | |
Definite-lived intangible assets, Net Book Value | 332 | 3,123 | |
Trademarks | |||
Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | [1] | $ 5,900 | |
In-process R&D | |||
Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | [3] | $ 5,100 | |
[1] | The increase in 2015 reflects intangible assets acquired in the ActiveVideo acquisition. See Note 4 Business Acquisitions of Notes to the Consolidated Financial Statements for further information on ActiveVideo intangible assets acquired. | ||
[2] | In 2015, the Company recorded intangible assets of $34.3 million for a non-exclusive license to approximately four thousand patents purchased by RPX Corporation ("RPX"), resulting from its agreement to participate in a syndicate of approximately 30 companies, including certain customers of ARRIS, to fund the RPX purchase of patent assets from Rockstar Consortium and its subsidiaries ("Rockstar"). The license assets have a weighted average useful life of nine years at acquisition. | ||
[3] | In-process research and development of $5.1 million was reclassified in 2015 to become a definite-lived asset upon completion of the associated research and development efforts. |
Gross Carrying Amount and Acc65
Gross Carrying Amount and Accumulated Amortization of Intangible Assets (Parenthetical) (Detail) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)CompanyPatent | Dec. 31, 2014USD ($) | ||
Intangible Assets [Line Items] | |||
Intangible assets | $ 804,548 | $ 943,388 | |
Indefinite-lived intangible assets | 5,900 | 5,100 | |
In-process R&D | |||
Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | [1] | $ 5,100 | |
Non Exclusive License | |||
Intangible Assets [Line Items] | |||
Intangible assets | $ 34,300 | ||
Number of patents | Patent | 4,000 | ||
Number of companies participated | Company | 30 | ||
Weighted average useful life, intangible assets | 9 years | ||
[1] | In-process research and development of $5.1 million was reclassified in 2015 to become a definite-lived asset upon completion of the associated research and development efforts. |
Estimated Future Amortization E
Estimated Future Amortization Expenses for Finite-Lived Intangibles (Detail) $ in Thousands | Dec. 31, 2015USD ($) |
Finite Lived Intangible Assets Amortization Expense [Line Items] | |
2,016 | $ 203,778 |
2,017 | 186,843 |
2,018 | 136,281 |
2,019 | 113,732 |
2,020 | 104,955 |
Thereafter | $ 58,959 |
Investments (Detail)
Investments (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Available-for-sale securities | $ 15,470 | $ 126,748 |
Noncurrent Assets: | ||
Available-for-sale securities | 4,036 | 8,631 |
Equity method investments | 24,452 | 27,355 |
Cost method investments | 16,646 | 15,161 |
Other investments | 24,408 | 26,493 |
Total classified as non-current assets | 69,542 | 77,640 |
Total | $ 85,012 | $ 204,388 |
Contractual Maturities of Avail
Contractual Maturities of Available-for-Sale Securities (Detail) $ in Thousands | Dec. 31, 2015USD ($) |
Investment Holdings [Line Items] | |
Within one year | $ 15,470 |
After one year through five years | 0 |
After five years through ten years | 0 |
After ten years | 4,036 |
Total | $ 19,506 |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Investment Holdings [Line Items] | |||
Equity method investments | $ 24,452,000 | $ 24,452,000 | $ 27,355,000 |
Future funding contributions | 16,000,000 | ||
Gain from transfer of certain technology | 2,500,000 | ||
Unrecognized gain | $ 2,500,000 | ||
Unrecognized gain recognition period | 4 years | ||
Other-than-temporary impairment losses recognized for the period | $ 200,000 | $ 7,000,000 | |
Minimum | |||
Investment Holdings [Line Items] | |||
Engineering services provided, percentage | 20.00% | ||
Engineering services provided, amount | $ 6,000,000 | ||
Maximum | |||
Investment Holdings [Line Items] | |||
Engineering services provided, percentage | 30.00% | ||
Engineering services provided, amount | $ 8,000,000 | ||
Combined Conditional Access Development | Minimum | |||
Investment Holdings [Line Items] | |||
Future funding contributions | 16,000,000 | ||
Combined Conditional Access Development | Maximum | |||
Investment Holdings [Line Items] | |||
Future funding contributions | $ 18,000,000 |
Summary of Ownership Structure
Summary of Ownership Structure and Ownership Percentage of Non-consolidated Investments (Detail) | Dec. 31, 2015 |
MPEG LA | |
Schedule of Equity Method Investments [Line Items] | |
Equity method ownership, percentage | 8.40% |
Music Choice | |
Schedule of Equity Method Investments [Line Items] | |
Equity method ownership, percentage | 18.20% |
Conditional Access Licensing ("CAL") | |
Schedule of Equity Method Investments [Line Items] | |
Equity method ownership, percentage | 49.00% |
Combined Conditional Access Development ("CCAD") | |
Schedule of Equity Method Investments [Line Items] | |
Equity method ownership, percentage | 50.00% |
Carrying Value and Maximum Expo
Carrying Value and Maximum Exposure to Loss for Equity Method Investments (Detail) | Dec. 31, 2015USD ($) |
Conditional Access Licensing | |
Investment [Line Items] | |
Carrying Amount | $ 11,238,000 |
Maximum Exposure to Loss | 11,238,000 |
Combined Conditional Access Development | |
Investment [Line Items] | |
Carrying Amount | 2,148,000 |
Maximum Exposure to Loss | $ 18,000,000 |
Investment Assets Excluding Equ
Investment Assets Excluding Equity and Cost Method Investments and Derivatives Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Derivative Financial Instruments, Liabilities | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | $ (10,759) | $ (6,414) |
Derivative Financial Instruments, Liabilities | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | (24,371) | (201) |
Derivative Financial Instruments, Assets | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 1,416 | |
Derivative Financial Instruments, Assets | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 7,064 | 2,876 |
Certificates of Deposit | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 4,208 | 63,171 |
Corporate bonds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 6,257 | 37,737 |
Short-Term Bond Fund | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 5,005 | 29,708 |
Corporate Obligations | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 1 | 46 |
Money Market Funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 209 | 210 |
Mutual Funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 131 | 133 |
Other Investments | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 3,695 | 3,369 |
Commercial Paper | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 1,000 | |
Level 1 | Short-Term Bond Fund | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 5,005 | 29,708 |
Level 1 | Money Market Funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 209 | 210 |
Level 1 | Mutual Funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 131 | 133 |
Level 2 | Derivative Financial Instruments, Liabilities | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | (10,759) | (6,414) |
Level 2 | Derivative Financial Instruments, Liabilities | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | (24,371) | (201) |
Level 2 | Derivative Financial Instruments, Assets | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 1,416 | |
Level 2 | Derivative Financial Instruments, Assets | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 7,064 | 2,876 |
Level 2 | Certificates of Deposit | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 4,208 | 63,171 |
Level 2 | Corporate bonds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 6,257 | 37,737 |
Level 2 | Corporate Obligations | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 1 | 46 |
Level 2 | Other Investments | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | $ 3,695 | 3,369 |
Level 2 | Commercial Paper | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | $ 1,000 |
Derivative Instruments and He73
Derivative Instruments and Hedging Activities - Additional Information (Detail) £ / shares in Units, € in Millions, CAD in Millions, AUD in Millions | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)Agreement | Dec. 31, 2014USD ($) | Jan. 04, 2016£ / shares | Dec. 31, 2015AUDAgreement | Dec. 31, 2015CADAgreement | Dec. 31, 2015EUR (€)Agreement | Dec. 31, 2015GBP (£)Agreement | Jun. 18, 2015USD ($) | Apr. 30, 2013USD ($) |
Derivatives, Fair Value [Line Items] | ||||||||||
Hedge ineffectiveness in earnings | $ 0 | $ 0 | ||||||||
Amount estimated reclassified as an increase to interest expense | 4,500,000 | |||||||||
Fair value of derivatives in net liability position | $ 11,200,000 | |||||||||
Maximum time frame for derivatives | 18 months | |||||||||
Option Collars | Euro Member Countries, Euro | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Notional amount | € | € 80 | |||||||||
Forward Contracts | Euro Member Countries, Euro | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Notional amount | € | € 75 | |||||||||
Forward Contracts | Australia, Dollars | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Notional amount | AUD | AUD 90 | |||||||||
Forward Contracts | Canada, Dollars | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Notional amount | CAD | CAD 40 | |||||||||
Interest rate swap | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Variable-rate debt upon conversion | $ 625,000,000 | |||||||||
Maturity date | Dec. 29, 2017 | |||||||||
Fixed interest rate | 3.15% | |||||||||
Basis point increase in fixed rate based on future changes to the Company's net leverage ratio | 0.50% | |||||||||
Basis point decrease in fixed rate based on future changes to the Company's net leverage ratio | 0.25% | |||||||||
Interest rate swap | Matures on December 29, 2017 | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Variable-rate debt upon conversion | $ 600,000,000 | |||||||||
Maturity date | Dec. 29, 2017 | |||||||||
Interest rate swap | Matures on March 31, 2020 | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Variable-rate debt upon conversion | $ 25,000,000 | |||||||||
Maturity date | Mar. 31, 2020 | |||||||||
Pace Plc | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Business acquisition, equity interest issued or issuable, value assigned | £ | £ 434,300,000 | |||||||||
Pace Plc | Forward Contracts | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Notional amount | £ | £ 385,000,000 | |||||||||
Loss on foreign currency exchange rate | $ (22,300,000) | |||||||||
Subsequent Event | Pace Plc | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Per share price in cash consideration | £ / shares | £ 1.325 | |||||||||
Term Loan A-1 Facility | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Line of credit facility | $ 800,000,000 | |||||||||
Term Loan A-1 Facility | Interest rate swap | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Variable-rate debt upon conversion | $ 600,000,000 | |||||||||
Maturity date | Mar. 31, 2020 | |||||||||
Fixed interest rate | 4.03% | 4.03% | 4.03% | 4.03% | 4.03% | |||||
Basis point increase in fixed rate based on future changes to the Company's net leverage ratio | 0.50% | |||||||||
Basis point decrease in fixed rate based on future changes to the Company's net leverage ratio | 0.25% | |||||||||
Number of interest rate swap arrangements | Agreement | 6 | 6 | 6 | 6 | 6 | |||||
Derivative notional amount | $ 100,000,000 | |||||||||
Swaps beginning date | Dec. 29, 2017 | |||||||||
Senior Secured Credit Facilities | Term Loan A | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Line of credit facility | 990,000,000 | $ 1,100,000,000 | ||||||||
Senior Secured Credit Facilities | Term Loan B | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Line of credit facility | 543,800,000 | 825,000,000 | ||||||||
Senior Secured Credit Facilities | Revolving Credit Facility | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Line of credit facility | 500,000,000 | $ 250,000,000 | ||||||||
Senior Secured Credit Facilities | Term Loan A-1 Facility | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Line of credit facility | $ 800,000,000 |
Pre-Tax Impact of Derivative Fi
Pre-Tax Impact of Derivative Financial Instruments (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | $ (13,256) | $ (8,541) |
Interest Expense | ||
Derivative [Line Items] | ||
Amounts Reclassified from Accumulated OCI into Income (Effective Portion) | $ 7,495 | $ 7,550 |
Fair Values of Derivative Desig
Fair Values of Derivative Designated as Hedging Instruments Recorded in Consolidated Balance Sheet (Detail) - Interest rate derivatives - Derivatives Designated as Hedging Instruments - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | $ 1,416 | |
Other accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (4,489) | $ (6,414) |
Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (6,270) |
Change in Fair Values of Deriva
Change in Fair Values of Derivative Designated as Hedging Instruments Recorded in Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Derivatives, Fair Value [Line Items] | |||
Interest expense | $ 70,936 | $ 62,901 | $ 67,888 |
Interest rate derivatives | Interest Expense | Derivatives Designated as Hedging Instruments | |||
Derivatives, Fair Value [Line Items] | |||
Interest expense | $ 7,495 | $ 7,550 | $ 3,132 |
Fair Values of Derivative Not D
Fair Values of Derivative Not Designated as Hedging Instruments Recorded in Consolidated Balance Sheet (Detail) - Foreign currency contracts - Derivatives Not Designated as Hedging Instruments - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | $ 6,495 | $ 2,876 |
Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | 569 | |
Other accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | (23,632) | $ (201) |
Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (739) |
Change in Fair Values of Deri78
Change in Fair Values of Derivative Not Designated as Hedging Instruments Recorded in Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Foreign currency contracts | Loss (gain) on foreign currency | Derivatives Not Designated as Hedging Instruments | |||
Derivatives, Fair Value [Line Items] | |||
Loss (gain) on foreign currency | $ 7,597 | $ (4,527) | $ (428) |
Information Regarding Changes i
Information Regarding Changes in ARRIS' Aggregate Product Warranty Liabilities (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Product Warranty Liability [Line Items] | ||
Beginning balance | $ 74,320 | $ 81,500 |
Accruals related to warranties (including changes in assumptions) | 19,111 | 33,320 |
Settlements made (in cash or in kind) | (44,404) | (40,500) |
Ending balance | $ 49,027 | $ 74,320 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) - Segment | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | |||
Number of segments managed | 2 | ||
International Customers | Customer Concentration Risk | Sales | |||
Segment Reporting Information [Line Items] | |||
Percentage of sales | 28.80% | 25.70% | 32.10% |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||
Dec. 31, 2015 | [1] | Sep. 30, 2015 | [2] | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | [3] | Sep. 30, 2014 | [4] | Jun. 30, 2014 | Mar. 31, 2014 | [5] | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | ||||||||||||||||
Net sales | $ 1,101,681 | $ 1,221,416 | $ 1,260,077 | $ 1,215,158 | $ 1,263,388 | $ 1,405,445 | $ 1,429,071 | $ 1,225,017 | $ 4,798,332 | $ 5,322,921 | $ 3,620,902 | |||||
Direct Contribution | 1,036,006 | 1,222,187 | 774,062 | |||||||||||||
Corporate and unallocated costs | (568,336) | (606,834) | (515,391) | |||||||||||||
Amortization of intangible assets | (227,440) | (236,521) | (193,637) | |||||||||||||
Integration, acquisition, restructuring and other | (29,277) | (37,498) | (83,047) | |||||||||||||
Operating income (loss) | $ 52,912 | $ 60,781 | $ 51,542 | $ 45,718 | $ 89,563 | $ 122,109 | $ 91,676 | $ 37,986 | 210,953 | 341,334 | (18,013) | |||||
Interest expense | 70,936 | 62,901 | 67,888 | |||||||||||||
Loss on investments | 6,220 | 10,961 | 2,698 | |||||||||||||
Interest income | (2,379) | (2,590) | (2,936) | |||||||||||||
Loss (gain) on foreign currency | 20,761 | 2,637 | (3,502) | |||||||||||||
Other expense ( income), net | 8,362 | 28,195 | 13,989 | |||||||||||||
Income (loss) before income taxes | 107,053 | 239,230 | (96,150) | |||||||||||||
Operating Segments | CPE | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Net sales | 3,136,585 | 3,690,454 | 2,448,381 | |||||||||||||
Direct Contribution | 548,840 | 791,244 | 509,473 | |||||||||||||
Operating Segments | Network & Cloud | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Net sales | 1,661,594 | 1,637,544 | 1,193,001 | |||||||||||||
Direct Contribution | 487,166 | 430,943 | 264,589 | |||||||||||||
Intersegment Eliminations | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Net sales | 153 | (5,077) | (20,480) | |||||||||||||
Segment Reconciling Items | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Amortization of intangible assets | (227,440) | (236,521) | (193,637) | |||||||||||||
Integration, acquisition, restructuring and other | $ (29,277) | $ (37,498) | $ (83,047) | |||||||||||||
[1] | $20.4 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit permanently during Q4 of 2015. | |||||||||||||||
[2] | The Company recorded a tax benefit of $27.3 million primarily from the release of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. The Company also recorded a tax expense of $18.9 million on a gain recognition agreement for its Taiwanese entity, inclusive of a benefit of $18.9 million obtained from foreign tax credits generated by the transaction. | |||||||||||||||
[3] | The Company recorded a tax benefit from the release of $134.8 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses and U.S. federal tax credits and $9.0 million of valuation allowances from deferred tax assets recorded for state net operating losses and state research and development tax credits arising from the acquisition of the Motorola Home business from Google. In addition, $18.1 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit through December 31, 2014. | |||||||||||||||
[4] | The Company identified and corrected an immaterial error in the accounting for income taxes related to the prior year ended December 31, 2013. The correction related to the Company's subsequent consideration of certain tax consequences related to a legal entity and tax restructuring completed in the fourth quarter of 2013. The impact of adjusting these amounts had a non-cash effect, increasing income tax expense and noncurrent income tax liabilities by $9.8 million. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, the Company evaluated the impact on its financial statements for the year ended December 31, 2013 and concluded that the results of operations for these periods were not materially misstated. | |||||||||||||||
[5] | The Company recorded a tax benefit from the release of $18.2 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. |
Composition of Corporate and Un
Composition of Corporate and Unallocated Costs (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | |||
Cost of sales | $ 568,336 | $ 606,834 | $ 515,391 |
Cost of sales | |||
Segment Reporting Information [Line Items] | |||
Cost of sales | 56,311 | 69,973 | 122,460 |
Selling, general and administrative expenses | |||
Segment Reporting Information [Line Items] | |||
Cost of sales | 349,993 | 349,693 | 278,921 |
Research and development expenses | |||
Segment Reporting Information [Line Items] | |||
Cost of sales | $ 162,032 | $ 187,168 | $ 114,010 |
Summary of Net Intangible Asset
Summary of Net Intangible Assets and Goodwill by Reportable Segment (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Reporting Information [Line Items] | ||||
Goodwill | $ 1,013,963 | $ 936,067 | $ 940,402 | $ 194,115 |
Intangible assets, net | 810,448 | 943,388 | ||
Network & Cloud | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill | 331,381 | 251,470 | ||
Intangible assets, net | 284,528 | 298,799 | ||
CPE | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill | 682,582 | 684,597 | $ 688,658 | $ 31,850 |
Intangible assets, net | $ 525,920 | $ 644,589 |
Summary of Company's Revenues b
Summary of Company's Revenues by Products and Services (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue, Major Customer [Line Items] | |||
Net sales | $ 4,798,332 | $ 5,322,921 | $ 3,620,902 |
Operating Segments | CPE | |||
Revenue, Major Customer [Line Items] | |||
Net sales | 3,136,585 | 3,690,454 | 2,448,381 |
Operating Segments | Network & Cloud | |||
Revenue, Major Customer [Line Items] | |||
Net sales | 1,661,594 | 1,637,544 | 1,193,001 |
Operating Segments | Network & Cloud | Infrastructure equipment | |||
Revenue, Major Customer [Line Items] | |||
Net sales | 1,407,735 | 1,435,676 | 1,020,722 |
Operating Segments | Network & Cloud | Global services | |||
Revenue, Major Customer [Line Items] | |||
Net sales | 181,892 | 141,625 | 120,314 |
Operating Segments | Network & Cloud | Cloud solutions | |||
Revenue, Major Customer [Line Items] | |||
Net sales | 71,967 | 60,243 | 51,965 |
Operating Segments | Other Segments | |||
Revenue, Major Customer [Line Items] | |||
Net sales | $ 153 | $ (5,077) | $ (20,480) |
Summary of Sales to Customers (
Summary of Sales to Customers (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue, Major Customer [Line Items] | |||
Customers and affiliates | $ 4,798,332 | $ 5,322,921 | $ 3,620,902 |
Customer Concentration Risk | Sales | Comcast and Affiliates | |||
Revenue, Major Customer [Line Items] | |||
Customers and affiliates | $ 1,007,892 | $ 1,012,367 | $ 674,977 |
Percentage of sales | 21.00% | 19.00% | 18.60% |
Customer Concentration Risk | Sales | Time Warner Cable and Affiliates | |||
Revenue, Major Customer [Line Items] | |||
Customers and affiliates | $ 687,645 | $ 600,770 | $ 331,829 |
Percentage of sales | 14.30% | 11.30% | 9.20% |
International Sales by Geograph
International Sales by Geographic Region (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Revenues | $ 4,798,332 | $ 5,322,921 | $ 3,620,902 | |
International sales | ||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Revenues | 1,379,749 | 1,365,718 | 1,163,730 | |
International sales | Americas, excluding U.S. | ||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Revenues | [1] | 880,581 | 900,822 | 746,146 |
International sales | Asia Pacific | ||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Revenues | 142,893 | 147,921 | 153,674 | |
International sales | EMEA | ||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||
Revenues | $ 356,275 | $ 316,975 | $ 263,910 | |
[1] | Excludes U.S. sales of $3,418.6 million, $3,957.2 million and $2,457.2 million for the years ended December 31, 2015, 2014 and 2013, respectively. |
International Sales by Geogra87
International Sales by Geographic Region (Parenthetical) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
International Long-Lived Assets by Geographic Region [Line Items] | |||
Revenue | $ 4,798,332 | $ 5,322,921 | $ 3,620,902 |
UNITED STATES | |||
International Long-Lived Assets by Geographic Region [Line Items] | |||
Revenue | $ 3,418,600 | $ 3,957,200 | $ 2,457,200 |
Summary of ARRIS' International
Summary of ARRIS' International Property, Plant and Equipment by Geographic Region (Detail) - International sales - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | $ 88,575 | $ 92,402 |
Americas, excluding U.S. | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | 6,659 | 7,303 |
Asia Pacific | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | 74,651 | 76,970 |
EMEA | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | $ 7,265 | $ 8,129 |
Summary of ARRIS' Internation89
Summary of ARRIS' International Property, Plant and Equipment by Geographic Region (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
UNITED STATES | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | $ 223.7 | $ 274 |
Components of Inventory Net of
Components of Inventory Net of Reserves (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory [Line Items] | ||
Raw material | $ 60,287 | $ 61,068 |
Work in process | 3,076 | 6,713 |
Finished goods | 338,229 | 333,384 |
Total inventories, net | $ 401,592 | $ 401,165 |
Property, Plant and Equipment,
Property, Plant and Equipment, at Cost (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Land | $ 68,562 | $ 87,952 |
Buildings and leasehold improvements | 141,171 | 141,581 |
Machinery and equipment | 407,110 | 402,709 |
Total property, plant and equipment, gross | 616,843 | 632,242 |
Less: Accumulated depreciation | (304,532) | (265,811) |
Total property, plant and equipment, net | $ 312,311 | $ 366,431 |
Property, Plant and Equipment -
Property, Plant and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, net | $ 366,431 | $ 312,311 |
Land and Building | ||
Property, Plant and Equipment [Line Items] | ||
Asset held for sale | 2,900 | |
Property, plant and equipment, net | 4,800 | |
Impairment charge | $ 2,100 |
Lease Financing Obligation - Ad
Lease Financing Obligation - Additional Information (Detail) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)Building | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Schedule of Finance Lease Obligations [Line Items] | |||
Loss from sale of land and building | $ (7,776) | $ (4,247) | $ (1,657) |
San Diego Office Complex | |||
Schedule of Finance Lease Obligations [Line Items] | |||
Land and buildings, net book value | 71,000 | ||
Proceeds from sale of assets | $ 85,500 | ||
Number of building in sale and leaseback arrangement | Building | 2 | ||
Loss from sale of land and building | $ (5,300) | ||
San Diego Office Complex | Building 1 | |||
Schedule of Finance Lease Obligations [Line Items] | |||
Leasing back term | 10 years | ||
Leasing back term, description | Building 1 did not qualify for sale-leaseback accounting due to continuing involvement that will exist for the 10-year lease term. Accordingly, the carrying amount of Building 1 will remain on the Company's balance sheet and will be depreciated over its remaining useful life with the proceeds reflected as a financing obligation. | ||
San Diego Office Complex | Building 2 | Maximum | |||
Schedule of Finance Lease Obligations [Line Items] | |||
Leasing back term | 1 year |
Payments Required on Lease Fina
Payments Required on Lease Financing Obligations (Detail) $ in Thousands | Dec. 31, 2015USD ($) |
Schedule of Finance Lease Obligations [Line Items] | |
2,016 | $ 4,016 |
2,017 | 4,136 |
2,018 | 4,260 |
2,019 | 4,388 |
2,020 | 4,520 |
Thereafter through 2025 | 20,757 |
Total minimum lease payments | $ 42,077 |
Summary of Indebtedness and Lea
Summary of Indebtedness and Lease Financing Obligations (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | $ 50,258 | $ 75,625 |
Current deferred financing fees and debt discount | (6,667) | (8,601) |
Current portion of long-term debt and lease financing obligation | 43,591 | 67,024 |
Lease finance obligation, non-current | 1,518,238 | 1,471,937 |
Noncurrent deferred financing fees and debt discount | (21,995) | (22,977) |
Long-term debt and lease financing obligation, net of current portion | 1,496,243 | 1,448,960 |
Total | 1,539,834 | 1,515,984 |
Term Loan A | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current portion of long-term debt | 49,500 | 75,625 |
Long-term debt, net of current portion | 915,750 | 928,125 |
Lease finance obligation | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | 758 | |
Lease finance obligation, non-current | 58,676 | |
Term Loan B | ||
Debt and Capital Lease Obligations [Line Items] | ||
Long-term debt, net of current portion | $ 543,812 | $ 543,812 |
Indebtedness - Additional Infor
Indebtedness - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2015 | Dec. 31, 2015 | Mar. 31, 2016 | Jun. 18, 2015 | Apr. 30, 2013 | |
Term Loan A-1 Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility | $ 800,000,000 | ||||
Senior Secured Credit Facilities | |||||
Debt Instrument [Line Items] | |||||
Capitalized financing fees | $ 5,000,000 | ||||
Capitalized additional issuance discount | 3,200,000 | ||||
Debt issuance costs | 13,000,000 | ||||
Debt issuance costs written off | 2,100,000 | ||||
Line of credit facility, amount borrowed | 1,509,100,000 | ||||
Mandatory repayments related to senior secured credit facilities | 38,500,000 | ||||
Repayment of debt assumed | $ 15,000,000 | ||||
Senior Secured Credit Facilities | Term Loan A | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility | 990,000,000 | $ 1,100,000,000 | |||
Senior Secured Credit Facilities | Term Loan B | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility | 543,800,000 | 825,000,000 | |||
Senior Secured Credit Facilities | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility | 500,000,000 | $ 250,000,000 | |||
Line of credit facility, amount borrowed | 0 | ||||
Letters of credit, amount borrowed | $ 2,100,000 | ||||
Senior Secured Credit Facilities | Term Loan A-1 Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility | $ 800,000,000 | ||||
Senior Secured Credit Facilities | Term Loan A-1 Facility | Scenario, Forecast | |||||
Debt Instrument [Line Items] | |||||
Capitalized additional issuance discount | $ 2,300,000 | ||||
Senior Secured Credit Facilities | Minimum | |||||
Debt Instrument [Line Items] | |||||
Consolidated interest leverage ratio | 350.00% | ||||
Senior Secured Credit Facilities | Maximum | |||||
Debt Instrument [Line Items] | |||||
Consolidated net leverage ratio | 375.00% |
Senior Credit Facility Interest
Senior Credit Facility Interest Rates (Detail) | 12 Months Ended | |
Dec. 31, 2015 | ||
Senior Secured Credit Facilities | Term Loan A | ||
Credit Facility [Line Items] | ||
Debt instrument, interest rate at period end | 2.17% | |
Senior Secured Credit Facilities | Term Loan B | ||
Credit Facility [Line Items] | ||
Debt instrument, interest rate at period end | 3.25% | |
LIBOR floor | ||
Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 0.75% | |
LIBOR floor | Senior Secured Credit Facilities | Term Loan A | ||
Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.75% | |
LIBOR floor | Senior Secured Credit Facilities | Term Loan B | ||
Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 2.50% | [1] |
LIBOR floor | Senior Secured Credit Facilities | Revolving Credit Facility | ||
Credit Facility [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.75% | [2] |
[1] | Includes LIBOR floor of 0.75% | |
[2] | Includes unused commitment fee of 0.35% and letter of credit fee of 1.75% not reflected in interest rate above. |
Senior Credit Facility Intere98
Senior Credit Facility Interest Rates (Parenthetical) (Detail) | 12 Months Ended |
Dec. 31, 2015 | |
Credit Facility [Line Items] | |
Unused commitment fee | 0.35% |
Letter of credit fee | 1.75% |
LIBOR floor | |
Credit Facility [Line Items] | |
Debt instrument, basis spread on variable rate | 0.75% |
Scheduled Maturities of Contrac
Scheduled Maturities of Contractual Debt Obligations for Next Five Years (Detail) $ in Thousands | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | |
2,016 | $ 49,500 |
2,017 | 49,500 |
2,018 | 49,500 |
2,019 | 49,500 |
2,020 | $ 1,311,062 |
Reconciliation of Numerators an
Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share Computations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2015 | [1] | Sep. 30, 2015 | [2] | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | [3] | Sep. 30, 2014 | [4] | Jun. 30, 2014 | Mar. 31, 2014 | [5] | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||||
Basic: | |||||||||||||||||||
Net income (loss) attributable to ARRIS Group Inc. | $ 30,041 | $ 26,256 | $ 16,758 | $ 19,126 | $ 192,761 | $ 54,626 | $ 39,024 | $ 40,800 | $ 92,181 | $ 327,211 | $ (48,760) | ||||||||
Weighted average shares outstanding | 146,388 | 144,386 | 131,980 | ||||||||||||||||
Basic earnings (loss) per share | $ 0.20 | $ 0.18 | $ 0.11 | $ 0.13 | $ 1.33 | $ 0.38 | $ 0.27 | $ 0.29 | $ 0.63 | [6] | $ 2.27 | [6] | $ (0.37) | [6] | |||||
Diluted: | |||||||||||||||||||
Net income (loss) attributable to ARRIS Group Inc. | $ 30,041 | $ 26,256 | $ 16,758 | $ 19,126 | $ 192,761 | $ 54,626 | $ 39,024 | $ 40,800 | $ 92,181 | $ 327,211 | $ (48,760) | ||||||||
Weighted average shares outstanding | 146,388 | 144,386 | 131,980 | ||||||||||||||||
Net effect of dilutive shares | 2,971 | 3,894 | |||||||||||||||||
Total | 149,359 | 148,280 | 131,980 | ||||||||||||||||
Diluted earnings (loss) per share | $ 0.20 | $ 0.18 | $ 0.11 | $ 0.13 | $ 1.29 | $ 0.37 | $ 0.26 | $ 0.28 | $ 0.62 | [6] | $ 2.21 | [6] | $ (0.37) | [6] | |||||
[1] | $20.4 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit permanently during Q4 of 2015. | ||||||||||||||||||
[2] | The Company recorded a tax benefit of $27.3 million primarily from the release of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. The Company also recorded a tax expense of $18.9 million on a gain recognition agreement for its Taiwanese entity, inclusive of a benefit of $18.9 million obtained from foreign tax credits generated by the transaction. | ||||||||||||||||||
[3] | The Company recorded a tax benefit from the release of $134.8 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses and U.S. federal tax credits and $9.0 million of valuation allowances from deferred tax assets recorded for state net operating losses and state research and development tax credits arising from the acquisition of the Motorola Home business from Google. In addition, $18.1 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit through December 31, 2014. | ||||||||||||||||||
[4] | The Company identified and corrected an immaterial error in the accounting for income taxes related to the prior year ended December 31, 2013. The correction related to the Company's subsequent consideration of certain tax consequences related to a legal entity and tax restructuring completed in the fourth quarter of 2013. The impact of adjusting these amounts had a non-cash effect, increasing income tax expense and noncurrent income tax liabilities by $9.8 million. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, the Company evaluated the impact on its financial statements for the year ended December 31, 2013 and concluded that the results of operations for these periods were not materially misstated. | ||||||||||||||||||
[5] | The Company recorded a tax benefit from the release of $18.2 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. | ||||||||||||||||||
[6] | Calculated based on net income attributable to shareowners of ARRIS Group, Inc. |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - USD ($) $ in Millions | Apr. 17, 2013 | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Anti-dilutive securities excluded from the computation of diluted earnings per share | 6,800 | 4,300 | 1,100,000 | ||
Common stock related to stock option exercises and the vesting of restricted shares | 3,200,000 | 3,100,000 | |||
Common stock issued on redemption of notes | 3,100,000 | ||||
Interest rate of convertible senior notes | 2.00% | 2.00% | |||
Motorola Home | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Business acquisition potential stock issue, shares | 10,600,000 | 10,600,000 | |||
Comcast Corporation | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
Business acquisition potential stock issue, shares | 10,600,000 | ||||
Business acquisition, equity interest issued or issuable, value assigned | $ 150 | $ 150 |
Income (Loss) Before Income Tax
Income (Loss) Before Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Before Income Taxes [Line Items] | |||
Domestic | $ 47,063 | $ 180,133 | $ (128,588) |
Foreign | 59,990 | 59,097 | 32,438 |
Income (loss) before income taxes | $ 107,053 | $ 239,230 | $ (96,150) |
Components of Income Tax Expens
Components of Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Components Of Income Tax Expense Benefit [Line Items] | |||
Current Federal Tax Expense (Benefit) | $ (5,063) | $ 45,937 | $ (5,133) |
Current State Tax Expense (Benefit) | 7,204 | 13,260 | (40) |
Current Foreign Tax Expense (Benefit) | 15,035 | 18,136 | 10,624 |
Current Income Tax Expense | 17,176 | 77,333 | 5,451 |
Deferred Federal Income Tax Expense (Benefit) | 7,521 | (140,404) | (50,485) |
Deferred State Tax Expense (Benefit) | (2,402) | (19,978) | (2,189) |
Deferred Foreign Income Tax Expense (Benefit) | 299 | (4,932) | (167) |
Deferred Income Tax Expense (Benefit), Total | 5,418 | (165,314) | (52,841) |
Income tax expense (benefit) | $ 22,594 | $ (87,981) | $ (47,390) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes [Line Items] | ||||
Statutory federal income tax expense (benefit) | 35.00% | 35.00% | 35.00% | |
Amount offset against U.S Federal and state income tax liabilities | $ 0 | $ 25,700 | ||
Valuation allowance | 87,788 | 118,629 | $ 163,745 | $ 17,973 |
Net decrease in valuation allowance | 30,800 | |||
Earnings exempted associated with foreign subsidiary | 61,000 | |||
Deferred tax liability relating to distributable earnings of subsidiary | $ 1,184 | 1,184 | ||
Number of jurisdictions under income tax audit | 9 | |||
Company's total tax liability related to uncertain net tax positions | $ 46,200 | |||
Unrecognized tax benefits | 49,919 | 48,019 | $ 28,344 | $ 25,704 |
Unrecognized tax benefits arising from U.S. Federal and state tax | 500 | |||
Anticipated payment of tax liabilities related to interest and penalty accrual | 1,700 | 1,700 | ||
ISRAEL | ||||
Income Taxes [Line Items] | ||||
Earnings exempted associated with foreign subsidiary | 5,400 | |||
Deferred tax liability relating to distributable earnings of subsidiary | 1,200 | |||
U.S. Federal | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | 218,900 | $ 552,900 | ||
Net operating losses available to offset against future taxable income | $ 327,100 | |||
Expiry of federal net operating losses | The available acquired U.S. Federal net operating losses as of December 31, 2015, will expire between the years 2015 and 2031. | |||
Operating loss carryforwards, expiration period | 20 years | |||
U.S. State | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 353,100 | |||
Net operating loss carryforwards related to employee stock options and restricted stock | 28,900 | |||
Foreign Country | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | 54,900 | |||
Foreign Country | Irish | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry forwards related to subsidiary | 17,800 | |||
Foreign Country | Canadian | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry forwards related to subsidiary | $ 11,800 | |||
Net operating loss carry forwards related to subsidiary, expiration period | 18 years | |||
Domestic Federal Research and Development | ||||
Income Taxes [Line Items] | ||||
Available tax credits of research and development, Carry forward | $ 70,700 | |||
Carry Back and Carry Forward of Research and Development Tax Credits | Carried back one year and carried forward twenty years | |||
Domestic State Research and Development | ||||
Income Taxes [Line Items] | ||||
Available tax credits of research and development, Carry forward | $ 28,300 |
Reconciliation of U.S. Statutor
Reconciliation of U.S. Statutory Federal Income Tax Rate and Effective Income Tax Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Reconciliation of Statutory Federal Tax Rate [Line Items] | |||
Statutory U.S. federal income tax rate | 35.00% | 35.00% | 35.00% |
Effects of: | |||
State income taxes, net of federal benefit | 5.20% | (6.60%) | 2.20% |
Acquired deferred tax assets | 5.80% | (16.50%) | |
U.S. domestic manufacturing deduction | (0.70%) | (2.10%) | 1.10% |
Nontaxable Comcast derivative gain | (9.60%) | ||
Facilitative acquisition costs | (3.50%) | ||
Research and development tax credits | (26.60%) | (8.70%) | 26.80% |
Subpart F income | 4.80% | 0.80% | |
Changes in valuation allowance | (26.60%) | (44.20%) | |
Foreign tax credits | (20.70%) | (0.60%) | 1.30% |
Non-deductible officer compensation | 5.30% | 0.60% | (0.50%) |
Non-U.S. tax rate differential | (5.00%) | (2.60%) | 1.30% |
Recapture of dual consolidated losses | 1.10% | 4.00% | |
Taiwan gain | 34.30% | ||
Other, net | 9.20% | 4.10% | (4.80%) |
Effective Income Tax Rate Reconciliation, Percent, Total | 21.10% | (36.80%) | 49.30% |
Significant Components of Net D
Significant Components of Net Deferred Income Tax Assets (Liabilities) (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Deferred income tax assets | |||||
Inventory costs | [1] | $ 28,728 | $ 34,695 | ||
Accrued vacation | [1] | 7,138 | 7,980 | ||
Acquisition charges | [1] | 6,556 | |||
Allowance for bad debt | [1] | 4,396 | |||
Equity compensation | [1] | 14,673 | 14,639 | ||
Deferred revenue | [1] | 1,001 | |||
Federal/state net operating loss carryforwards | [1] | 95,571 | 217,656 | ||
Federal capital loss carryforwards | [1] | 7,701 | |||
Foreign net operating loss carryforwards | [1] | 10,989 | 11,840 | ||
Research and development credits | [1] | 79,809 | 62,661 | ||
Property, plant and equipment, depreciation and basis differences | [1] | 1,285 | |||
Pension and deferred compensation | [1] | 19,166 | 18,393 | ||
Warranty reserve | [1] | 18,215 | 26,187 | ||
Capitalized research and development | [1] | 215,894 | 226,270 | ||
Other | [1] | 22,929 | 42,188 | ||
Total deferred income tax assets | [1] | 525,349 | 671,211 | ||
Deferred income tax liabilities: | |||||
Property, plant and equipment, depreciation and basis differences | (19,744) | ||||
Excess tax on future repatriation of foreign earnings | (1,184) | (1,184) | |||
Other noncurrent liabilities | (3,210) | (30,904) | |||
Goodwill and intangible assets | (248,231) | (316,192) | |||
Total deferred income tax liabilities | (252,625) | (368,024) | |||
Net deferred income tax assets | 272,724 | 303,187 | |||
Valuation allowance | (87,788) | (118,629) | $ (163,745) | $ (17,973) | |
Net deferred income tax assets (liabilities) | $ 184,936 | $ 184,558 | |||
[1] | See Note 3 Impact of Recently Issued Accounting Standards of Notes to Consolidated Financial Statements regarding the early adoption of Balance Sheet Classification of Deferred Taxes requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. |
Deferred Tax Asset Valuation Al
Deferred Tax Asset Valuation Allowance (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Valuation Allowance [Line Items] | |||
Balance at beginning of fiscal year | $ 118,629 | $ 163,745 | $ 17,973 |
Additions | 3,312 | 37,708 | 147,349 |
Deductions | (34,153) | (82,824) | (1,577) |
Balance at end of fiscal year | $ 87,788 | $ 118,629 | $ 163,745 |
Reconciliation of Unrecognized
Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Contingency [Line Items] | |||
Beginning balance | $ 48,019 | $ 28,344 | $ 25,704 |
Gross increases - tax positions in prior period | 1,599 | 17,636 | 2,442 |
Gross decreases - tax positions in prior period | (2,185) | (4,115) | (21) |
Gross increases - current-period tax positions | 9,578 | 9,979 | 6,999 |
Increases (decreases) from acquired businesses | (196) | 2,014 | |
Decreases relating to settlements with taxing authorities and other | (6,689) | (2,480) | (1,098) |
Decreases due to lapse of statute of limitations | (403) | (1,149) | (7,696) |
Ending balance | $ 49,919 | $ 48,019 | $ 28,344 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2015USD ($)Option$ / sharesshares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares issued | 17,500,000 | ||
Allowance for flexibility in awards for every one share | $ / shares | $ 1.87 | ||
Number of ordinary shares available under plan for future issuances | 125,352 | ||
New options granted | 0 | 0 | 0 |
Intrinsic value of options exercised | $ | $ 700,000 | $ 6,500,000 | $ 9,600,000 |
Restricted share vested | 504,833 | ||
Vesting year | 2,016 | ||
Vesting year | 2,017 | ||
Vesting year | 2,018 | ||
Vesting year | 2,019 | ||
Term in which the returns are compared to determine number of shares | 3 years | ||
Minimum percentage of shares issued under comparative market performance restricted stock units awards | 0.00% | ||
Maximum percentage of shares issued under comparative market performance restricted stock units awards | 200.00% | ||
Percentage of shares achieved under comparative market performance restricted stock units awards | 200.00% | ||
Compensation expense measurement period | 3 year | ||
Unrecognized compensation cost | $ | $ 112,700,000 | ||
Weighted average period of compensation cost | 2 years 7 months 6 days | ||
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares in target award | 504,810 | ||
Number of shares in target award outstanding | 444,790 | ||
Modified percentage in performance | 200.00% | ||
Number of shares issued at twice the performance percentage | 889,580 | ||
Fair value of vested restricted shares | $ | $ 118,300,000 | $ 82,600,000 | $ 36,300,000 |
Employee Stock Purchase Plan (ESPP) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum Percentage of base compensation applied towards purchase of common stock | 10.00% | ||
Maximum amount of purchase allowed for a participant | $ | $ 25,000 | ||
Percentage of fair market value of exercise price | 85.00% | ||
Number of exercise price | Option | 2 | ||
Minimum percentage of discount not recognized as compensation expense | 5.00% | ||
Percentage of discount on common stock | 15.00% | ||
Percentage of option held | 85.00% | ||
Risk free interest rate | 0.10% | 0.10% | 0.10% |
Volatility Factor | 41.00% | 37.00% | 26.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Compensation expense related to ESPP | $ | $ 5,100,000 | $ 4,100,000 | $ 1,400,000 |
Weighted average expected life | 6 months | 6 months | 6 months |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Requisite service period | 3 years | ||
Share based Compensation, contractual term | 7 years | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Requisite service period | 4 years | ||
Share based Compensation, contractual term | 10 years |
Summary of Activity of Options
Summary of Activity of Options Granted under Stock Incentive Plans (Detail) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Options | |
Options, beginning Balance | shares | 38,000 |
Options, exercised | shares | (35,422) |
Options, expired | shares | (2,578) |
Options, exercisable | shares | 0 |
Weighted Average Exercise Price | |
Weighted average exercise price, beginning balance | $ / shares | $ 11.97 |
Weighted average exercise price, exercised | $ / shares | 11.93 |
Weighted average exercise price, expired | $ / shares | 12.57 |
Weighted average exercise price, exercisable | $ / shares | $ 0 |
Weighted Average Remaining Contractual Term (in years) | |
Weighted average remaining contractual term , options outstanding | 0 years |
Weighted average remaining contractual term , exercisable | 0 years |
Aggregate Intrinsic Value | |
Aggregate intrinsic value | $ | $ 0 |
Aggregate intrinsic value, exercisable | $ | $ 0 |
Summary of Unvested Restricted
Summary of Unvested Restricted Stock and Stock Unit Transactions (Detail) - Restricted Stock | 12 Months Ended |
Dec. 31, 2015$ / sharesshares | |
Shares | |
Unvested, beginning balance | shares | 6,991,789 |
Granted, shares | shares | 2,336,360 |
Vested, shares | shares | (3,019,824) |
Forfeited, shares | shares | (323,076) |
Unvested, ending balance | shares | 5,985,249 |
Weighted average grant date fair value | |
Weighted average grant date fair value, beginning balance | $ / shares | $ 19.29 |
Weighted average grant date fair value, granted | $ / shares | 29.08 |
Weighted average grant date fair value, vested | $ / shares | 18.13 |
Weighted average grant date fair value, forfeited | $ / shares | 21.24 |
Weighted average grant date fair value, ending Balance | $ / shares | $ 23.59 |
Weighted Average Pension Asset
Weighted Average Pension Asset Allocations (Detail) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 100.00% | |
Actual plan asset allocations | 100.00% | 100.00% |
Equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Actual plan asset allocations | 40.00% | 43.00% |
Equity securities | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 40.00% | |
Equity securities | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 45.00% | |
Debt securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Actual plan asset allocations | 2.00% | 3.00% |
Debt securities | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 0.00% | |
Debt securities | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 5.00% | |
Cash and cash equivalents | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Actual plan asset allocations | 58.00% | 54.00% |
Cash and cash equivalents | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 50.00% | |
Cash and cash equivalents | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 60.00% |
Pension Plan Asset by Category
Pension Plan Asset by Category and Level (Detail) - U.S. Pension Plans - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | $ 13,516 | [1] | $ 14,585 | [1] | $ 15,162 | |
Cash and cash equivalents | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [2] | 7,424 | 7,752 | |||
U.S. large cap | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [3] | 1,330 | 1,571 | |||
U.S. mid cap | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [3] | 1,160 | 1,640 | |||
U.S. small cap | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [3] | 1,160 | 1,367 | |||
International | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [3] | 1,757 | 2,050 | |||
Fixed Income Securities | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [4] | 685 | 205 | |||
Level 1 | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | 6,092 | 6,833 | ||||
Level 1 | U.S. large cap | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [3] | 1,330 | 1,571 | |||
Level 1 | U.S. mid cap | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [3] | 1,160 | 1,640 | |||
Level 1 | U.S. small cap | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [3] | 1,160 | 1,367 | |||
Level 1 | International | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [3] | 1,757 | 2,050 | |||
Level 1 | Fixed Income Securities | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [4] | 685 | 205 | |||
Level 2 | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | 7,424 | 7,752 | ||||
Level 2 | Cash and cash equivalents | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Fair value of plan assets | [2] | $ 7,424 | $ 7,752 | |||
[1] | In addition to the pension plan assets, ARRIS has established two rabbi trusts to further fund the pension obligations of the Chief Executive and certain executive officers of $18.0 million as of December 31, 2015 and $20.3 million as of December 31, 2014, and are included in Investments on the Consolidated Balance Sheets. | |||||
[2] | Cash and cash equivalents, which are used to pay benefits and administrative expenses, are held in a stable value fund. | |||||
[3] | Equity securities consist of mutual funds and the underlying investments are indexes. Investments in mutual funds are valued at the net asset value per share multiplied by the number of shares held. | |||||
[4] | Fixed income securities consist of bonds securities in mutual funds, and are valued at the net asset value per share multiplied by the number of shares held. |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Thousands | Jun. 30, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Defined Benefit Plan Disclosure [Line Items] | ||||
Benefit obligation, Curtailment gain | $ 300 | |||
Matching contribution made by the company | $ 16,600 | $ 15,300 | $ 10,900 | |
Expenses included in continuing operations for the matching contributions | 100 | 100 | ||
Accrued balances of deferred retirement salary plan | 1,700 | 1,800 | ||
Total expenses (income) included in continuing operations for the deferred retirement salary plan | 300 | 100 | ||
U.S. Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Estimate future contribution in 2016 | 728 | |||
Taiwan Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Estimate future contribution in 2016 | 10,400 | |||
Other long-term liabilities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employee deferrals and matching contributions, net | 2,800 | 2,900 | ||
Non-Qualified Deferred Compensation Plan | Other long-term liabilities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employee deferrals and matching contributions, net | $ 3,600 | $ 3,300 |
Non-contributory Defined Benefi
Non-contributory Defined Benefit Pension Plans (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |||
U.S. Pension Plans | |||||
Change in Projected Benefit Obligation: | |||||
Projected benefit obligation at beginning of year | $ 46,550 | $ 40,382 | |||
Service cost | $ 122 | ||||
Interest cost | 1,716 | 1,783 | 1,619 | ||
Actuarial (gain) loss | (3,962) | 5,692 | |||
Benefit payments | (1,305) | (1,307) | |||
Other | 0 | 0 | |||
Projected benefit obligation at end of year | 42,999 | 46,550 | 40,382 | ||
Change in Plan Assets: | |||||
Fair value of plan assets at beginning of year | 14,585 | [1] | 15,162 | ||
Actual return on plan assets | 81 | 575 | |||
Company contributions | 155 | 155 | |||
Expenses and benefits paid from plan assets | (1,305) | (1,307) | |||
Other | 0 | 0 | |||
Fair value of plan assets at end of year | 13,516 | [1] | 14,585 | [1] | 15,162 |
Funded Status: | |||||
Funded status of plan | (29,483) | (31,965) | |||
Unrecognized actuarial (gain) loss | 9,196 | 13,233 | |||
Net amount recognized | (20,287) | (18,732) | |||
Taiwan Plan | |||||
Change in Projected Benefit Obligation: | |||||
Projected benefit obligation at beginning of year | 35,541 | 33,933 | |||
Service cost | 738 | 751 | 999 | ||
Interest cost | 661 | 599 | 698 | ||
Actuarial (gain) loss | 708 | 1,101 | |||
Benefit payments | (1,276) | (843) | |||
Projected benefit obligation at end of year | 36,372 | 35,541 | 33,933 | ||
Change in Plan Assets: | |||||
Fair value of plan assets at beginning of year | 8,923 | 8,302 | |||
Actual return on plan assets | 236 | 190 | |||
Company contributions | 1,273 | 1,274 | |||
Expenses and benefits paid from plan assets | (1,200) | (843) | |||
Fair value of plan assets at end of year | 9,232 | 8,923 | $ 8,302 | ||
Funded Status: | |||||
Funded status of plan | (27,140) | (26,618) | |||
Unrecognized actuarial (gain) loss | (4,320) | (4,036) | |||
Net amount recognized | $ (31,460) | $ (30,654) | |||
[1] | In addition to the pension plan assets, ARRIS has established two rabbi trusts to further fund the pension obligations of the Chief Executive and certain executive officers of $18.0 million as of December 31, 2015 and $20.3 million as of December 31, 2014, and are included in Investments on the Consolidated Balance Sheets. |
Non-contributory Defined Ben116
Non-contributory Defined Benefit Pension Plans (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Defined Benefit Plan Disclosure [Line Items] | ||
Balance assets held in rabbi trust | $ 18 | $ 20.3 |
Amounts Recognized in Statement
Amounts Recognized in Statement of Financial Position (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | |
U.S. Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Current liabilities | $ (426) | $ (393) | |
Noncurrent liabilities | (29,057) | (31,572) | |
Accumulated other comprehensive income | [1] | 9,196 | 13,233 |
Total | (20,287) | (18,732) | |
Taiwan Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Noncurrent liabilities | (27,140) | (26,618) | |
Accumulated other comprehensive income | (4,320) | (4,036) | |
Total | $ (31,460) | $ (30,654) | |
[1] | The accumulated other comprehensive income on the Consolidated Balance Sheets as of December 31, 2015 and 2014 is presented net of income tax. |
Other Changes in Plan Assets an
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
U.S. Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net (gain) loss | $ (3,203) | $ 5,992 | $ (2,359) |
Amortization of net (loss) | (834) | (305) | (607) |
Settlement charge | (318) | ||
Total recognized in other comprehensive income (loss) | (4,037) | 5,687 | 3,284 |
Taiwan Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net (gain) loss | 813 | 1,077 | (3,107) |
Amortization of net (loss) | (529) | (464) | (808) |
Total recognized in other comprehensive income (loss) | $ 284 | $ 613 | $ (3,915) |
Amounts in Other Comprehensive
Amounts in Other Comprehensive Income (Loss) Expected to Amortized and Recognized (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
U.S. Pension Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
Amortization of net loss | $ 1,711 |
Information for Defined Benefit
Information for Defined Benefit Plans with Accumulated Benefit Obligation in Excess of Plan Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
U.S. Pension Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Accumulated benefit obligation | $ 42,999 | $ 46,550 |
Projected benefit obligation | 42,999 | 46,550 |
Plan assets | 13,516 | 14,585 |
Taiwan Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Accumulated benefit obligation | 26,966 | 25,758 |
Projected benefit obligation | 36,372 | 35,541 |
Plan assets | $ 9,232 | $ 8,923 |
Components of Net Periodic Pens
Components of Net Periodic Pension Cost (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
U.S. Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 122 | |||
Interest cost | $ 1,716 | $ 1,783 | 1,619 | |
Return on assets (expected) | (839) | (874) | (876) | |
Amortization of net actuarial loss | [1] | 834 | 305 | 607 |
Net periodic pension cost | 1,711 | 1,214 | 1,472 | |
Taiwan Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 738 | 751 | 999 | |
Interest cost | 661 | 599 | 698 | |
Return on assets (expected) | (176) | (166) | (163) | |
Amortization of net actuarial loss | 529 | 464 | 808 | |
Net periodic pension cost | $ 1,752 | $ 1,648 | $ 2,342 | |
[1] | ARRIS uses the allowable 10% corridor approach to determine the amount of gains/losses subject to amortization in pension cost. Gains/losses are amortized on a straight-line basis over the average future service of members expected to receive benefits |
Components of Net Periodic P122
Components of Net Periodic Pension Cost (Parenthetical) (Detail) | 12 Months Ended |
Dec. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | |
Actuarial gains losses amortization percentage | 10.00% |
Weighted Average Actuarial Assu
Weighted Average Actuarial Assumptions Used to Determine Benefit Obligations (Detail) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
U.S. Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Assumed discount rate for plan participants | 4.15% | 3.75% | 4.50% |
Weighted Average Actuarial A124
Weighted Average Actuarial Assumption Used to Determine Net Periodic Benefit (Detail) - U.S. Pension Plans | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Assumed discount rate for plan participants | 3.75% | 4.50% | 3.75% |
Rate of compensation increase | 3.75% | ||
Expected long-term rate of return on plan assets | 6.00% | 6.00% | 6.00% |
Expected Benefit Payments Relat
Expected Benefit Payments Related to Defined Benefit Pension Plans (Detail) $ in Thousands | Dec. 31, 2015USD ($) |
U.S. Pension Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
2,016 | $ 1,626 |
2,017 | 14,360 |
2,018 | 1,652 |
2,019 | 1,697 |
2,020 | 1,814 |
2021 - 2025 | 9,993 |
Taiwan Plan | |
Defined Benefit Plan Disclosure [Line Items] | |
2,016 | 1,746 |
2,017 | 1,794 |
2,018 | 2,528 |
2,019 | 2,112 |
2,020 | 2,445 |
2021 - 2025 | $ 13,182 |
Key Assumptions Used In Valuati
Key Assumptions Used In Valuation (Detail) - Taiwan Plan | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Defined Benefit Plan Disclosure [Line Items] | ||||
Assumed discount rate for obligations | 1.70% | 1.90% | 1.80% | |
Assumed discount rate for expense | 1.90% | 1.80% | 1.80% | |
Rate of compensation increase for indirect labor | 4.00% | 4.50% | 4.50% | |
Rate of compensation increase for direct labor | 2.00% | 2.00% | 2.00% | |
Expected long-term rate of return on plan assets | [1] | 2.00% | 2.00% | 2.00% |
[1] | Asset allocation is 100% in money market investments |
Key Assumptions Used In Valu127
Key Assumptions Used In Valuation (Parenthetical) (Detail) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Asset allocation | 100.00% | ||
Money Market Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Asset allocation | 100.00% | 100.00% | 100.00% |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income (Loss) by Component Net of Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | $ (11,047) | $ (4,662) | |
Other comprehensive (loss) income before reclassifications | (7,417) | (11,505) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 5,818 | 5,120 | |
Net current-period other comprehensive income (loss) | (1,624) | (6,385) | $ 3,874 |
Net current-period other comprehensive income (loss) | (1,599) | (6,385) | |
Ending balance | (12,646) | (11,047) | (4,662) |
Derivative instruments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Derivative instruments, beginning balance | (3,166) | (2,541) | |
Other comprehensive (loss) income before reclassifications | (8,319) | (5,391) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 4,704 | 4,766 | |
Net current-period other comprehensive income (loss) | (3,615) | (625) | |
Derivative instruments, ending balance | (6,781) | (3,166) | (2,541) |
Cumulative Translation Adjustments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Cumulative translation adjustments, beginning balance | (725) | (11) | |
Other comprehensive (loss) income before reclassifications | (1,078) | (714) | |
Net current-period other comprehensive income (loss) | (1,078) | (714) | |
Cumulative translation adjustments, ending balance | (1,803) | (725) | (11) |
Change related to pension liability | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Change related to pension liability, beginning balance | (7,181) | (2,416) | |
Other comprehensive (loss) income before reclassifications | 2,044 | (5,273) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 942 | 508 | |
Net current-period other comprehensive income (loss) | 2,986 | (4,765) | |
Change related to pension liability, ending balance | (4,195) | (7,181) | (2,416) |
Available-for-sale securities | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Available-for - sale securities, beginning balance | 25 | 306 | |
Other comprehensive (loss) income before reclassifications | (64) | (127) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 172 | (154) | |
Net current-period other comprehensive income (loss) | 108 | (281) | |
Available - for-sale securities, ending balance | $ 133 | $ 25 | $ 306 |
Repurchases of Stock - Addition
Repurchases of Stock - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Millions | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2015 | |
Equity, Class of Treasury Stock [Line Items] | ||
Repurchase of the Company's common stock | 0.9 | |
Average price per share | $ 28.70 | |
Aggregate consideration amount of shares | $ 25,000,000 | |
Previously authorized share repurchase plans, in May 2011 and October 2012 | Maximum | ||
Equity, Class of Treasury Stock [Line Items] | ||
Share repurchase plans, authorized amount | $ 300,000,000 |
Future Minimum Operating Lease
Future Minimum Operating Lease Payments Under Non-Cancelable Leases (Detail) $ in Thousands | Dec. 31, 2015USD ($) |
Operating Leased Assets [Line Items] | |
2,016 | $ 26,241 |
2,017 | 20,180 |
2,018 | 15,409 |
2,019 | 11,592 |
2,020 | 9,937 |
Thereafter | 35,873 |
Less sublease income | (1,287) |
Total minimum lease payments | $ 117,945 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Loss Contingencies [Line Items] | |||
Operating leases rent expense net | $ 26.9 | $ 32 | $ 22.5 |
Contractual obligations under agreements with non cancelable terms to purchase goods or services | 405.8 | ||
Other assets | |||
Loss Contingencies [Line Items] | |||
Restricted cash | $ 0.8 |
Subsequent Events - Additional
Subsequent Events - Additional information (Detail) - USD ($) shares in Millions | Jan. 04, 2016 | Dec. 31, 2015 | Feb. 26, 2016 | Jun. 18, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Subsequent Event [Line Items] | ||||||||
Date of merger agreement | Apr. 22, 2015 | |||||||
Goodwill | $ 1,013,963,000 | $ 936,067,000 | $ 940,402,000 | $ 194,115,000 | ||||
Acquisition related costs | $ 25,800,000 | |||||||
Term Loan A-1 Facility | ||||||||
Subsequent Event [Line Items] | ||||||||
Line of credit facility | $ 800,000,000 | |||||||
Subsequent Event | Maximum | ||||||||
Subsequent Event [Line Items] | ||||||||
Share repurchase plans, authorized amount | $ 300,000,000 | |||||||
Subsequent Event | Pace Plc | ||||||||
Subsequent Event [Line Items] | ||||||||
Aggregate stock and cash consideration | $ 2,073,480,000 | |||||||
Business acquisition, cash consideration | [1] | $ 638,790,000 | ||||||
Business acquisition potential stock issue, shares | 47.7 | |||||||
Goodwill | $ 1,092,339,000 | |||||||
[1] | Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707) for each of Pace's shares and equity awards outstanding. |
Summary of Fair Value of Consid
Summary of Fair Value of Consideration Transferred (Detail) - Pace Plc - Subsequent Event $ in Thousands | Jan. 04, 2016USD ($) | |
Business Acquisition [Line Items] | ||
Cash Consideration | $ 638,790 | [1] |
Stock Consideration | 1,434,690 | [2] |
Total consideration transferred | $ 2,073,480 | |
[1] | Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707) for each of Pace's shares and equity awards outstanding. | |
[2] | Stock consideration represents the conversion of each of Pace's shares and equity awards outstanding at a conversion rate of 0.1455 with a value of $30.08 at January 4, 2016, which represents the opening price of the Company's common stock at the date of Combination. |
Summary of Fair Value of Con134
Summary of Fair Value of Consideration Transferred (Parenthetical) (Detail) - Subsequent Event - Pace Plc | Jan. 04, 2016USD ($)$ / shares | Jan. 04, 2016£ / shares |
Business Acquisition [Line Items] | ||
Per share price in cash consideration | (per share) | $ 1.95 | £ 1.325 |
Foreign Currency Exchange Rate, Translation | 1.4707 | 1.4707 |
Common stock conversion Basis | 0.1455 | 0.1455 |
Stock Issued During Period, Value, per each share | $ 30.08 |
Summary of Preliminary Estimate
Summary of Preliminary Estimated Fair Values of Net Assets Acquired (Detail) - USD ($) $ in Thousands | Jan. 04, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 1,013,963 | $ 936,067 | $ 940,402 | $ 194,115 | |
Pace Plc | Subsequent Event | |||||
Business Acquisition [Line Items] | |||||
Total estimated consideration transferred | $ 2,073,480 | ||||
Cash and cash equivalents | 298,671 | ||||
Accounts and other receivables | 546,159 | ||||
Inventories | 490,925 | ||||
Prepaids | 21,599 | ||||
Property, plant and equipment | 98,371 | ||||
Intangible assets | 1,100,000 | ||||
Noncurrent deferred income tax assets | 27,635 | ||||
Other assets | 6,704 | ||||
Accounts payable and other current liabilities | (754,838) | ||||
Deferred revenue | (24,743) | ||||
Short-term borrowings | (263,795) | ||||
Current income taxes liability | (7,801) | ||||
Other accrued liabilities | (129,915) | ||||
Other noncurrent liabilities | (427,831) | ||||
Net assets acquired | 981,141 | ||||
Goodwill | $ 1,092,339 |
Summary Quarterly Consolidat136
Summary Quarterly Consolidated Financial Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2015 | [1] | Sep. 30, 2015 | [2] | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | [3] | Sep. 30, 2014 | [4] | Jun. 30, 2014 | Mar. 31, 2014 | [5] | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||||
Quarterly Financial Information [Line Items] | |||||||||||||||||||
Net sales | $ 1,101,681 | $ 1,221,416 | $ 1,260,077 | $ 1,215,158 | $ 1,263,388 | $ 1,405,445 | $ 1,429,071 | $ 1,225,017 | $ 4,798,332 | $ 5,322,921 | $ 3,620,902 | ||||||||
Gross margin | 358,673 | 359,333 | 364,361 | 336,556 | 380,576 | 435,734 | 419,412 | 346,774 | 1,418,923 | 1,582,496 | 1,022,748 | ||||||||
Operating income | 52,912 | 60,781 | 51,542 | 45,718 | 89,563 | 122,109 | 91,676 | 37,986 | 210,953 | 341,334 | (18,013) | ||||||||
Net income attributable to ARRIS Group, Inc. | $ 30,041 | $ 26,256 | $ 16,758 | $ 19,126 | $ 192,761 | $ 54,626 | $ 39,024 | $ 40,800 | $ 92,181 | $ 327,211 | $ (48,760) | ||||||||
Net income per basic share | $ 0.20 | $ 0.18 | $ 0.11 | $ 0.13 | $ 1.33 | $ 0.38 | $ 0.27 | $ 0.29 | $ 0.63 | [6] | $ 2.27 | [6] | $ (0.37) | [6] | |||||
Net income per diluted share | $ 0.20 | $ 0.18 | $ 0.11 | $ 0.13 | $ 1.29 | $ 0.37 | $ 0.26 | $ 0.28 | $ 0.62 | [6] | $ 2.21 | [6] | $ (0.37) | [6] | |||||
[1] | $20.4 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit permanently during Q4 of 2015. | ||||||||||||||||||
[2] | The Company recorded a tax benefit of $27.3 million primarily from the release of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. The Company also recorded a tax expense of $18.9 million on a gain recognition agreement for its Taiwanese entity, inclusive of a benefit of $18.9 million obtained from foreign tax credits generated by the transaction. | ||||||||||||||||||
[3] | The Company recorded a tax benefit from the release of $134.8 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses and U.S. federal tax credits and $9.0 million of valuation allowances from deferred tax assets recorded for state net operating losses and state research and development tax credits arising from the acquisition of the Motorola Home business from Google. In addition, $18.1 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit through December 31, 2014. | ||||||||||||||||||
[4] | The Company identified and corrected an immaterial error in the accounting for income taxes related to the prior year ended December 31, 2013. The correction related to the Company's subsequent consideration of certain tax consequences related to a legal entity and tax restructuring completed in the fourth quarter of 2013. The impact of adjusting these amounts had a non-cash effect, increasing income tax expense and noncurrent income tax liabilities by $9.8 million. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, the Company evaluated the impact on its financial statements for the year ended December 31, 2013 and concluded that the results of operations for these periods were not materially misstated. | ||||||||||||||||||
[5] | The Company recorded a tax benefit from the release of $18.2 million of valuation allowances from deferred tax assets recorded for U.S. federal net operating losses arising from the acquisition of the Motorola Home business from Google. | ||||||||||||||||||
[6] | Calculated based on net income attributable to shareowners of ARRIS Group, Inc. |
Summary Quarterly Consolidat137
Summary Quarterly Consolidated Financial Information (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | ||||
Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Mar. 31, 2014 | |
Quarterly Financial Information [Line Items] | |||||
Tax expense on Taiwan gain | $ 18.9 | ||||
Tax benefit from foreign tax credit | 18.9 | ||||
Current tax benefit from research and development tax credits | $ 20.4 | $ 18.1 | |||
Income taxes related to the prior year | $ 9.8 | ||||
U.S. Federal | |||||
Quarterly Financial Information [Line Items] | |||||
Tax benefit from release of valuation allowances from deferred tax assets | $ 27.3 | 134.8 | $ 18.2 | ||
U.S. State | |||||
Quarterly Financial Information [Line Items] | |||||
Tax benefit from release of valuation allowances from deferred tax assets | $ 9 |