Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2016 | Jan. 31, 2017 | Jun. 30, 2016 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
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 | 190,227,443 | ||
Entity Public Float | $ 4 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 980,123 | $ 863,582 |
Short-term investments, at fair value | 115,553 | 15,470 |
Total cash, cash equivalents and short-term investments | 1,095,676 | 879,052 |
Accounts receivable (net of allowances for doubtful accounts of $15,253 in 2016 and $9,975 in 2015) | 1,359,430 | 651,893 |
Other receivables | 73,193 | 12,233 |
Inventories (net of reserves of $72,596 in 2016 and $57,026 in 2015) | 551,541 | 401,592 |
Prepaid income taxes | 51,476 | 25,624 |
Prepaids | 21,163 | 19,319 |
Other current assets | 127,593 | 120,490 |
Total current assets | 3,280,072 | 2,110,203 |
Property, plant and equipment (net of accumulated depreciation of $319,473 in 2016 and $304,532 in 2015) | 353,377 | 312,311 |
Goodwill | 2,016,169 | 1,013,963 |
Intangible assets (net of accumulated amortization of $1,254,360 in 2016 and $850,873 in 2015) | 1,677,178 | 810,448 |
Investments | 72,932 | 69,542 |
Deferred income taxes | 298,757 | 185,439 |
Other assets | 59,877 | 21,610 |
Total assets | 7,758,362 | 4,523,516 |
Current liabilities: | ||
Accounts payable | 1,048,904 | 514,877 |
Accrued compensation, benefits and related taxes | 139,794 | 111,389 |
Accrued warranty | 49,618 | 27,630 |
Deferred revenue | 132,128 | 137,606 |
Current portion of long-term debt and financing lease obligation | 82,734 | 43,591 |
Income taxes payable | 23,133 | 8,368 |
Other accrued liabilities | 357,823 | 169,169 |
Total current liabilities | 1,834,134 | 1,012,630 |
Long-term debt and financing lease obligation, net of current portion | 2,180,009 | 1,496,243 |
Accrued pension | 52,652 | 64,052 |
Noncurrent income taxes | 123,344 | 42,197 |
Deferred income taxes | 223,529 | 503 |
Other noncurrent liabilities | 117,957 | 66,930 |
Total liabilities | 4,531,625 | 2,682,555 |
Stockholders' equity: | ||
Capital in excess of par value | 3,314,707 | 1,777,276 |
Treasury stock at cost, 35.1 million shares in 2015 | (331,329) | |
Retained earnings (deficit) | (132,013) | 358,823 |
Accumulated other comprehensive income (loss) | 3,291 | (12,646) |
Total ARRIS International plc stockholders' equity | 3,188,816 | 1,793,914 |
Stockholders' equity attributable to noncontrolling interest | 37,921 | 47,047 |
Total stockholders' equity | 3,226,737 | 1,840,961 |
Total liabilities and stockholders' equity | 7,758,362 | 4,523,516 |
Common Stock | ||
Stockholders' equity: | ||
Common stock | $ 1,790 | |
Ordinary Shares | ||
Stockholders' equity: | ||
Common stock | $ 2,831 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) $ in Thousands | Dec. 31, 2016USD ($)shares | Dec. 31, 2016£ / shares | Dec. 31, 2015USD ($)$ / sharesshares |
Allowances for doubtful accounts | $ | $ 15,253 | $ 9,975 | |
Reserves for inventories | $ | 72,596 | 57,026 | |
Accumulated depreciation of property, plant and equipment | $ | 319,473 | 304,532 | |
Accumulated amortization of intangible assets | $ | $ 1,254,360 | $ 850,873 | |
Treasury stock, shares | 35,100,000 | ||
Common Stock | |||
Common stock, nominal value | $ / shares | $ 0.01 | ||
Common stock, shares authorized | 320,000,000 | ||
Common stock, shares issued | 147,500,000 | ||
Common stock, shares outstanding | 147,500,000 | ||
Ordinary Shares | |||
Common stock, nominal value | £ / shares | £ 0.01 | ||
Common stock, shares issued | 190,100,000 | ||
Common stock, shares outstanding | 190,100,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Net sales | $ 6,829,118 | $ 4,798,332 | $ 5,322,921 | |
Cost of sales | 5,121,501 | 3,379,409 | 3,740,425 | |
Gross margin | 1,707,617 | 1,418,923 | 1,582,496 | |
Operating expenses: | ||||
Selling, general, and administrative expenses | 454,190 | 417,085 | 410,568 | |
Research and development expenses | 584,909 | 534,168 | 556,575 | |
Amortization of intangible assets | 397,464 | 227,440 | 236,521 | |
Integration, acquisition, restructuring and other costs | 160,337 | 29,277 | 37,498 | |
Total operating expenses | 1,596,900 | 1,207,970 | 1,241,162 | |
Operating income | 110,717 | 210,953 | 341,334 | |
Other expense (income): | ||||
Interest expense | 79,817 | 70,936 | 62,901 | |
Loss on investments | 21,194 | 6,220 | 10,961 | |
(Gain) loss on foreign currency | (13,982) | 20,761 | 2,637 | |
Interest income | (4,395) | (2,379) | (2,590) | |
Other expense (income), net | 3,991 | 8,362 | 28,195 | |
Income before income taxes | 24,092 | 107,053 | 239,230 | |
Income tax expense (benefit) | 15,131 | 22,594 | (87,981) | |
Consolidated net income | 8,961 | 84,459 | 327,211 | |
Net loss attributable to noncontrolling interest | (9,139) | (7,722) | ||
Net income attributable to ARRIS International plc. | $ 18,100 | $ 92,181 | $ 327,211 | |
Net income per common share: | ||||
Basic | [1] | $ 0.09 | $ 0.63 | $ 2.27 |
Diluted | [1] | $ 0.09 | $ 0.62 | $ 2.21 |
Weighted average common shares: | ||||
Basic | 190,701 | 146,388 | 144,386 | |
Diluted | 192,185 | 149,359 | 148,280 | |
[1] | Calculated based on net income attributable to shareowners of ARRIS International plc. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated net income | $ 8,961 | $ 84,459 | $ 327,211 |
Pension liabilities: | |||
Net current-period other comprehensive income (loss) | 15,950 | (1,624) | (6,385) |
Comprehensive income | 24,898 | 82,860 | 320,826 |
Comprehensive loss attributable to noncontrolling interest | (9,127) | (7,747) | |
Comprehensive income attributable to ARRIS International plc | 34,025 | 90,607 | 320,826 |
Total ARRIS Group, Inc stockholders' equity | |||
Available-for-sale securities: | |||
Unrealized loss on available-for-sale securities, net of tax of $6, $37 and $73 in 2016, 2015 and 2014, respectively | (11) | (64) | (127) |
Reclassification adjustments recognized in net income, net of tax of $(9), $(100) and $89 in 2016, 2015 and 2014, respectively | 15 | 172 | (154) |
Net change in available-for-sale | 4 | 108 | (281) |
Derivative instruments: | |||
Unrealized gain (loss) on derivative instruments, net of tax of $(472), $4,936 and $3,149 in 2016, 2015 and 2014, respectively | 1,631 | (8,319) | (5,391) |
Reclassification adjustments recognized in net income, net of tax of $(1,691), $(2,791) and $(2,784) in 2016, 2015 and 2014, respectively | 5,821 | 4,704 | 4,766 |
Net change in derivative instruments | 7,452 | (3,615) | (625) |
Pension liabilities: | |||
Unrealized (loss) gain on pension liability, net of tax of $1,425, $(1,082) and $2,709 in 2016, 2015 and 2014, respectively | (2,934) | 2,044 | (5,273) |
Reclassification adjustments recognized in net income, net of tax of $(155), $(498) and $(261) in 2016, 2015 and 2014, respectively | 319 | 942 | 508 |
Net change in pension liabilities | (2,615) | 2,986 | (4,765) |
Cumulative translation adjustments | 11,096 | (1,078) | (714) |
Net current-period other comprehensive income (loss) | $ 15,937 | $ (1,599) | $ (6,385) |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - Total ARRIS Group, Inc stockholders' equity - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Unrealized loss on available-for-sale securities, tax | $ 6 | $ 37 | $ 73 |
Reclassification adjustments recognized in net income, tax | (9) | (100) | 89 |
Unrealized gain (loss) on derivative instruments, tax | (472) | 4,936 | 3,149 |
Reclassification adjustments recognized in net income, tax | (1,691) | (2,791) | (2,784) |
Unrealized (loss) gain on pension liability, tax | 1,425 | (1,082) | 2,709 |
Reclassification adjustments recognized in net income, tax | $ (155) | $ (498) | $ (261) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities: | |||
Consolidated net income | $ 8,961 | $ 84,459 | $ 327,211 |
Depreciation | 90,577 | 71,780 | 78,988 |
Amortization of intangible assets | 404,475 | 231,590 | 236,751 |
Amortization of deferred financing fees and debt discount | 7,705 | 9,646 | 11,575 |
Deferred income tax provision (benefit) | (148,418) | 5,418 | (163,485) |
Foreign currency remeasurement of deferred tax liability | (16,356) | ||
Stock compensation expense | 60,049 | 64,218 | 53,799 |
Impairment of intangible assets | 2,200 | 0 | 0 |
Provision for non-cash warrants | 30,159 | ||
Provision for doubtful accounts | 1,386 | 2,997 | 5,336 |
Loss on disposal of property, plant & equipment and other | 8,706 | 7,776 | 4,247 |
Loss on investments and other | 21,194 | 6,220 | 10,961 |
Excess income tax benefits from stock-based compensation plans | (20,085) | (3,997) | (8,959) |
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions: | |||
Accounts receivable | (258,677) | (55,132) | 16,796 |
Other receivables | (31,517) | (6,017) | (2,997) |
Inventories | 282,644 | (6,685) | (71,036) |
Accounts payable and accrued liabilities | (178,086) | 15,065 | (116,909) |
Prepaids and other, net | 97,578 | (83,466) | 77,003 |
Net cash provided by operating activities | 362,495 | 343,872 | 459,281 |
Investing activities: | |||
Purchases of investments | (141,543) | (48,566) | (127,780) |
Sales of investments | 25,931 | 161,824 | 59,679 |
Purchases of property, plant and equipment | (66,760) | (49,890) | (56,588) |
Purchases of intangible assets | (5,526) | (39,340) | |
Proceeds from sale-leaseback transaction | 24,960 | ||
Acquisition, net of cash acquired | (340,118) | (97,905) | |
Other, net | 3,507 | 2,971 | 103 |
Net cash used in investing activities | (524,509) | (45,946) | (124,586) |
Financing activities: | |||
Proceeds from issuance of shares, net | 12,885 | 16,189 | 19,196 |
Repurchase of shares | (178,035) | (24,999) | |
Excess income tax benefits from stock-based compensation plans | 20,085 | 3,997 | 8,959 |
Repurchase of shares to satisfy employee minimum tax withholdings | (17,925) | (46,680) | (29,845) |
Proceeds from issuance of debt | 800,000 | ||
Payment of debt obligations | (319,750) | (53,500) | (209,653) |
Payment of financing lease obligation | (758) | (425) | |
Proceeds from sale-leaseback financing transaction | 58,729 | ||
Payment for account receivable financing facility | (23,546) | ||
Payment for deferred financing fees and debt discount | (2,304) | (8,239) | |
Contribution from noncontrolling interest | 54,794 | ||
Net cash provided by (used in) financing activities | 290,652 | (134) | (211,343) |
Effect of exchange rate changes on cash and cash equivalents | (12,097) | ||
Net increase in cash and cash equivalents | 116,541 | 297,792 | 123,352 |
Cash and cash equivalents at beginning of year | 863,582 | 565,790 | 442,438 |
Cash and cash equivalents at end of year | 980,123 | 863,582 | 565,790 |
Supplemental cash flow information: | |||
Interest paid during the year | 71,127 | 60,798 | 51,122 |
Income taxes paid during the year | 111,524 | 39,065 | $ 37,152 |
Non-cash investing and financing activities: debt assumed in acquisition | $ 263,795 | $ 15,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Ordinary Shares | Capital in Excess of Par Value | Treasury Stock | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Total ARRIS Group, Inc stockholders' equity | Non-controlling Interest |
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 | |
Net income (loss) | 8,961 | 18,100 | 18,100 | (9,139) | |||||
Other comprehensive income (loss), net of tax | 15,950 | 15,937 | 15,937 | 13 | |||||
Compensation under stock award plans | 60,049 | 60,049 | 60,049 | ||||||
Effect of combination on ARRIS Group | (1,439) | $ 2,173 | (734) | ||||||
Cancellation of treasury stock | $ (351) | $ 331,329 | (330,978) | ||||||
Issuance of ordinary shares for Pace combination | 1,434,690 | 703 | 1,433,987 | 1,434,690 | |||||
Issuance of common stock and other | (2,210) | 32 | (2,242) | (2,210) | |||||
Provision for warrants | 30,159 | 30,159 | 30,159 | ||||||
Repurchase of common stock, net of issuances | (178,035) | (77) | (177,958) | (178,035) | |||||
Income tax benefit related to exercise of stock options | 18,929 | 18,929 | 18,929 | ||||||
Other | (2,717) | (2,717) | (2,717) | ||||||
Balance at Dec. 31, 2016 | $ 3,226,737 | $ 2,831 | $ 3,314,707 | $ (132,013) | $ 3,291 | $ 3,188,816 | $ 37,921 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 2016 | |
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. ARRIS International plc (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 (“CPE”) and Network & Cloud (“N&C”) (See Note 10 Segment Information |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
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) Cash, Cash Equivalents, and Investments ARRIS’s cash and cash equivalents (which are highly-liquid investments with a remaining maturity at the date of purchase 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. (d) 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 2016, 2015 and 2014 (in thousands): 2016 2015 2014 Balance at beginning of fiscal year $ 9,975 $ 6,392 $ 1,887 Charges to expenses 1,386 2,997 5,336 Recoveries (deductions) 3,892 586 (831 ) Balance at end of fiscal year $ 15,253 $ 9,975 $ 6,392 (e) Inventories Inventories are stated at the lower of cost or 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. (f) 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 — (g) Shipping and Handling Fees Shipping and handling costs for the years ended December 31, 2016, 2015, and 2014 were approximately $4.3 million, $5.6 million and $6.9 million, respectively, and are classified in net sales and cost of sales. (h) 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. (i) 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 $6.6 million in 2016, $4.5 million in 2015 and $4.0 million in 2014. Depreciation expense, including amortization of capital leases, for the years ended December 31, 2016, 2015, and 2014 was approximately $90.6 million, $71.8 million, and $79.0 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 12 Property, Plant and Equipment (j) 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. Certain intangible assets are being amortized using an accelerated method, as an accelerated method best approximates the distribution of cash flows generated by the intangible assets. 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 amount 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, 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. During 2016, we wrote off $2.2 million of in-process R&D related to projects for which development efforts were abandoned subsequent to the Pace acquisition. There were no impairment charges related to intangible assets (definite-lived and indefinite-lived) other than goodwill in 2015 and 2014. Goodwill The Company perform impairment tests of goodwill at the reporting unit level, which is at or one level below the operating segments. The operating segments are primarily based on the nature of the products and services offered, which is consistent with the way management runs the business. The Customer Premises Equipment operating segment is the same as the reporting unit. The 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 2016, 2015 and 2014. The Company continues to evaluate the anticipated discounted cash flows from the Cloud software portion of the Network & Cloud segment. If current long-term projections for this unit are not realized or materially decrease, the Company may be required to write off all or a portion of the $81.1 million of goodwill and $42.9 million of associated intangible assets. (k) Advertising and Sales Promotion Advertising and sales promotion costs are expensed as incurred. Advertising expense was approximately $19.6 million, $16.8 million, and $8.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. (l) 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. (m) 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 (n) 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 18 Income Taxes (o) Foreign Currency Translation A significant portion of the Company’s products are manufactured or assembled in Brazil, China, Mexico and Taiwan, and we have research and development centers in Canada, China, England, France, India, Northern Ireland 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 (p) Stock-Based Compensation See Note 19 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. (q) 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. (r) 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. (s) 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. (t) 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 pension liability, net of tax, if applicable and change in foreign currency translation adjustments. (u) Warrants The Company has outstanding warrants with certain customers to purchase ARRIS’s ordinary shares. Vesting of the warrants is subject to certain purchase volume commitments by the customers. Under applicable accounting guidance, if the vesting of a tranche of the warrants is probable, the Company is required to mark-to-market the fair value of the warrant until it vests, and any increase in the fair value is treated as a reduction in revenues from sales to the customers. See Note 17 Warrants |
Impact of Recently Issued Accou
Impact of Recently Issued Accounting Standards | 12 Months Ended |
Dec. 31, 2016 | |
Impact of Recently Issued Accounting Standards | Note 3. Impact of Recently Issued Accounting Standards Adoption of new accounting standards June 2014, the Financial Accounting Standards Board (“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 is effective for annual and interim periods beginning after December 15, 2015. ARRIS adopted this update in the first quarter of 2016. The adoption of this guidance did not have a material impact 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 ending after December 15, 2016, and interim periods within those fiscal years beginning after December 15, 2016. ARRIS adopted this update in the fourth quarter of 2016. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position and results of operations. In January 2015, the FASB issued new guidance simplifying income statement presentation by eliminating 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. ARRIS adopted this new guidance in the beginning of the first quarter of 2016. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position and results of operations. 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. ARRIS adopted this new guidance in the beginning of the first quarter of 2016. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position and results of operations. In April 2015, the FASB issued new guidance to determine 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. As a result, all software licenses within the scope of this guidance will be accounted for consistently with other licenses of intangible assets. This guidance is effective for interim and annual periods beginning after December 15, 2015. ARRIS adopted this guidance prospectively in the beginning of the first quarter of 2016 and it did not have a significant impact on our consolidated financial statements. In March 2016, the FASB issued new guidance which eliminates the requirement that when an existing cost method investment qualifies for use of the equity method, an investor must restate its historical financial statements, as if the equity method had been used during all previous periods. Under the new guidance, at the point an investment qualifies for the equity method, any unrealized gain or loss on available-for-sale securities in accumulated other comprehensive income (loss) will be recognized through earnings. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company early adopted this standard during the three months ended March 31, 2016. None of the available-for-sale or cost investments qualified for use of the equity method during the year. Accounting standards issued but not yet effective There are two permitted transition methods under the new standard, the full retrospective method or the modified retrospective method. Under the full retrospective method, the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown on the face of the financial statements being presented. Under the modified retrospective method, the cumulative effect of applying the standard would be recognized at the date of the initial application of the standard and the effect of the prior periods would be calculated and shown through a change in retained earnings. ARRIS currently anticipates adopting the standard using the modified retrospective method on January 1, 2018. The Company has created a cross-functional team to analyze the impact of the standard on our revenue streams and contract portfolio to identify potential differences that would arise from applying the requirements of the new standard. To date the Company has identified major revenue streams and customers, performed an analysis of a sample of contracts to evaluate the impact of the standard, and begun the drafting of our accounting policies and evaluating the new disclosure requirements. ARRIS is in the process of implementing changes to its systems, business processes and controls to support the adoption of the new standard. At this stage, the Company is currently evaluating the potential impact of this standard on its consolidated financial statements. The actual impact of adoption will be based on open contracts existing at December 31, 2017 and is subject to the finalization of our transition method. While the Company has not finalized its evaluation, in certain instances, the Company will recognize revenue earlier under the new standard. For example, ARRIS will recognize revenue earlier for certain software license contracts that the Company enter into with its customers. Likewise, the Company will recognize revenue earlier for certain arrangements with Value Added Resellers (VARs) currently accounted for utilizing the sell-through method. In July 2015, the FASB issued updated guidance related to the simplification of the measurement of inventory. This standard update applies to 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, 2016. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial position and results of operations. In February 2016, the FASB issued new guidance that will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required. This standard is effective for interim and annual reporting periods beginning after December 15, 2018, although early adoption is permitted. The Company is currently assessing the potential impact of this update on its consolidated financial statements. On March 2016, the FASB issued guidance, Improvements to Employee Share-Based Payment Accounting, which simplifies the accounting for share-based payment transactions. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, the new standard includes provisions that impact the classification of awards as either equity or liabilities and the classification of excess tax benefits on the cash flow statements. We will adopt the standard effective January 1, 2017. Following adoption, the primary impact on our Consolidated Financial Statements will be the recognition of excess tax benefits in the provision for income taxes rather than Additional paid-in capital, which will likely result in increased volatility in the reported amounts of income tax expense and net income. The actual impact of adopting this standard on the effective tax rate will vary depending on our share price during fiscal 2017. We are continuing to evaluate the impacts of the adoption of this guidance and our preliminary assessments are subject to change. In August 2016, the FASB issued amended guidance on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of the amended guidance is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. The amended guidance adds or clarifies guidance on eight cash flow issues, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or certain other debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. The guidance is effective for the Company beginning January 1, 2018 for both interim and annual reporting periods, with early adoption permitted. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is currently assessing the potential impact of the adoption of this guidance on our Consolidated Financial Statements. In October 2016, the FASB issued new guidance for intra-entity transfer of assets other than inventory that would require companies to immediately recognize income tax effects of intercompany transactions in their income statements, eliminating the current exception that allows companies to defer the income tax effects of certain intercompany transactions. The new guidance will be effective for public business entities in fiscal years beginning after December 15, 2017. Early adoption is only permitted as of the beginning of an annual reporting period. The Company is currently assessing the potential impact of this standard on its consolidated financial statements. In November 2016, the FASB issued new guidance which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new guidance is effective for interim and annual periods beginning after December 15, 2017 and early adoption is permitted. The amendment should be adopted retrospectively. The Company is currently evaluating how the adoption of this standard will have on its consolidated financial statements. |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2016 | |
Business Acquisitions | Note 4. Business Acquisitions Acquisition of Pace On January 4, 2016, ARRIS completed the acquisition of Pace, an international technology solutions provider, for approximately $2,074 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 and $0.3 million of non-cash consideration. In connection with the Combination, (i) 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 Group entered into a Merger Agreement (the “Merger Agreement”), dated April 22, 2015, among ARRIS Group, ARRIS, ARRIS US Holdings, Inc. (formerly Archie U.S. Holdings LLC), a Delaware corporation and wholly-owned subsidiary of 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 Group, with ARRIS Group surviving as an indirect wholly-owned subsidiary of 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; and expanding its cable pay TV, cloud, network, home, and services portfolio. The goodwill of $989.5 million arising from the acquisition is attributable to the strategic opportunities and synergies that are expected to arise from the acquisition of Pace and the workforce of the acquired business. The Company finalized the accounting for the business combination in the fourth quarter of 2016 and goodwill has been assigned to our reporting units. Goodwill is not expected to be deductible for income tax purposes. The following table summarizes the fair value of consideration transferred for Pace (in thousands): Cash Consideration (1) $ 638,789 Stock Consideration (2) 1,434,690 Non-cash Consideration (3) 323 Total consideration transferred $ 2,073,802 (1) Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707 as of January 4, 2016) 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 shares at the date of Combination. (3) Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. The following is a summary of the estimated fair values of the net assets acquired (in thousands): Amounts Recognized as of Acquisition Date Total estimated consideration transferred $ 2,073,802 Cash and cash equivalents 298,671 Accounts and other receivables 480,815 Inventories 427,642 Prepaids 40,501 Other current assets 54,217 Property, plant & equipment 73,983 Intangible assets 1,258,660 Other assets 9,280 Accounts payable and other current liabilities (795,283 ) Deferred revenue (4,805 ) Short-term borrowings (263,795 ) Other accrued liabilities (136,789 ) Noncurrent deferred income tax liabilities (285,937 ) Other noncurrent liabilities (72,895 ) Net assets acquired 1,084,265 Goodwill $ 989,537 As a result of measurement period changes for intangible assets, the impact to previously recorded amortization for the first, second and third quarters of 2016 was an increase of $6.4 million, a decrease of $6.6 million, and an increase of $5.6 million, respectively. The Combination was accounted for using the acquisition method of accounting in accordance with the guidance in ASC 805, Business Combinations The $1,258.7 million of acquired intangible assets are as follows (in thousands): Estimated Estimated Weighted Customer contracts and relationships $ 634,400 9.8 Technology and patents 539,160 6.0 In-process research and development 6,300 indefinite Trademarks and tradenames 62,400 3.0 Backlog 16,400 0.5 Total estimated fair value of intangible assets $ 1,258,660 The fair value of trade accounts receivable is $452.3 million with the gross contractual amount being $454.3 million. The Company expects $2.0 million to be uncollectible. The Company incurred acquisition related costs of $29.0 million during 2016. This amount was expensed by the Company as incurred and is included in the Consolidated Statement of Operations in the line item titled “Integration, acquisition and restructuring costs”. The Company also assumed $263.8 million of debt in conjunction with the Combination, and this debt was subsequently repaid in January 2016. With regard to revenue and earnings of Pace since the acquisition date, the Company has made significant progress in integrating the acquired Pace operations and has undergone a business transformation which impacts the ability to provide separate reporting for Pace. As a result, the Company believes that disclosure related to amounts of revenues and earnings of Pace since the acquisition date is now impractical. The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition of Pace occurred on January 1, 2015. The pro forma adjustments primarily relate to the additional depreciation expense on property, plant and equipment and amortization of acquired intangibles assets, interest expense related to new financing arrangements and the estimated impact on the Company’s income tax provision. The unaudited pro forma combined results of operations are provided for illustrative purposes only and are not indicative of the Company’s actual consolidated results. Unaudited pro forma net income (loss) for the years ended December 31, 2016 and 2015 was adjusted to (exclude) include certain acquisition-related nonrecurring adjustments, including income tax related to stock transfer, retention bonus, executive severances, acceleration of restricted stock, acquisition related costs, and fair value adjustments to acquisition date inventory, deferred revenue and deferred costs. These adjustments in the aggregate were $(147.4) million and $167.0 million for the years December 31, 2016 and 2015, respectively. These additional adjustments exclude the income tax impact. Years Ended December 31, 2016 2015 (in thousands) (unaudited) Net sales $ 6,829,118 $ 7,115,871 Net income (loss) attributable to ARRIS International plc 138,674 (79,414 ) Net income (loss) per share (1) Basic $ 0.73 $ (0.41 ) Diluted $ 0.72 $ (0.41 ) (1) Calculated based on net income (loss) attributable to shareowners of ARRIS International plc. These pro forma results are based on estimates and assumptions, which the Company believes are reasonable. ActiveVideo acquisition 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. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 are as follows (in thousands): CPE N & C Total 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 Changes in year 2014: Goodwill acquired — 1,682 1,682 Other (4,061 ) (1,956 ) (6,017 ) Balance as of December 31, 2014 $ 684,597 $ 251,470 $ 936,067 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 Changes in year 2015: Goodwill acquired (disposed), net — 78,053 78,053 Other (2,015 ) 1,858 (157 ) Balance as of December 31, 2015 $ 682,582 $ 331,381 $ 1,013,963 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 Changes in year 2016: Goodwill acquired (disposed), net 698,106 291,331 989,437 Currency translation 10,483 (60 ) 10,423 Other — 2,346 2,346 Balance as of December 31, 2016 $ 1,391,171 $ 624,998 $ 2,016,169 Goodwill 1,391,171 1,003,654 2,394,825 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2016 $ 1,391,171 $ 624,998 $ 2,016,169 During 2016, the Company recorded $989.5 million of goodwill related to the Pace acquisition, and disposed of $(0.1) million of goodwill related to a business divestiture. During 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 its Supplies business. During 2014, the Company recorded $1.7 million of goodwill related to the SeaWell Network acquisition. Intangible Assets The gross carrying amount and accumulated amortization of the Company’s intangible assets as of December 31, 2016 and December 31, 2015 are as follows (in thousands): December 31, 2016 December 31, 2015 Gross Amount Accumulated Amortization Net Book Value Gross Amount Accumulated Amortization Net Book Value Definite-lived intangible assets Customer relationships $ 1,572,947 $ 624,719 $ 948,228 $ 930,212 $ 468,414 $ 461,798 Developed technology, patents & licenses 1,248,719 571,808 676,911 704,137 361,719 342,418 Trademarks, trade and domain names 83,472 41,433 42,039 21,072 20,740 332 Backlog 16,400 16,400 — — — — Sub-total $ 2,921,538 $ 1,254,360 $ 1,667,178 $ 1,655,421 $ 850,873 $ 804,548 Indefinite-lived intangible assets Trademarks 5,900 — 5,900 5,900 — 5,900 In-process research and development 4,100 — 4,100 — — — Sub-total 10,000 — 10,000 5,900 — 5,900 Total $ 2,931,538 $ 1,254,360 $ 1,677,178 $ 1,661,321 $ 850,873 $ 810,448 During 2016, the Company recorded $1,258.7 million of intangible assets (other than goodwill) associated with the Pace acquisition, see Note 4 Business Acquisitions Amortization expense is reported in the consolidated statements of operations within cost of goods sold and operating expenses. The following table presents the amortization of intangible assets (in thousands): Years Ended December 31, 2016 2015 2014 Cost of sales $ 2,963 $ 670 $ 230 Selling, general & administrative expense 4,048 3,480 — Amortization of intangible assets 397,464 227,440 236,521 Total $ 404,475 $ 231,590 $ 236,751 The estimated total amortization expense for finite-lived intangibles for each of the next five fiscal years is as follows (in thousands): 2017 $ 370,767 2018 315,942 2019 269,910 2020 258,905 2021 124,119 Thereafter 327,535 |
Investments
Investments | 12 Months Ended |
Dec. 31, 2016 | |
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 $ 115,553 $ 15,470 Noncurrent Assets: Available-for-sale securities 15,391 4,036 Equity method investments 22,688 24,452 Cost method investments 6,841 16,646 Other investments 28,012 24,408 Total classified as non-current assets 72,932 69,542 Total $ 188,485 $ 85,012 Available-for-sale securities — The amortized costs and fair value of available-for-sale securities were as follows (in thousands): December 31, 2016 December 31, 2015 Amortized Gross Gross Fair Amortized Gross Gross Fair Certificates of deposit (foreign) $ 87,372 $ — $ — $ 87,372 $ 4,208 $ — $ — $ 4,208 Corporate bonds 34,175 35 (77 ) 34,133 6,198 78 (19 ) 6,257 Short-term bond fund 5,046 69 (69 ) 5,046 4,711 370 (76 ) 5,005 Corporate obligations 3 — — 3 1 — — 1 Money markets 54 — — 54 209 — — 209 Mutual funds 94 28 (21 ) 101 146 1 (16 ) 131 Other investments 4,192 530 (487 ) 4,235 3,712 214 (231 ) 3,695 Total $ 130,936 $ 662 $ (654 ) $ 130,944 $ 19,185 $ 663 $ (342 ) $ 19,506 The following table represents the breakdown of the available-for-sale investments with gross realized losses and the duration that those losses had been unrealized as of December 31, 2016 and 2015 (in thousands): December 31, 2016 Less than 12 months 12 months or more Total Fair Value Unrealized Fair Unrealized Fair Value Unrealized Certificates of deposit (foreign) $ 87,372 $ — $ — $ — $ 87,372 $ — Corporate bonds 34,133 (77 ) — — 34,133 (77 ) Short-term bond fund 5,046 (69 ) — — 5,046 (69 ) Corporate obligations 3 — — — 3 — Money markets 54 — — — 54 — Mutual funds 101 (21 ) — — 101 (21 ) Other investments 4,235 (487 ) — — 4,235 (487 ) Total $ 130,944 $ (654 ) $ — $ — $ 130,944 $ (654 ) December 31, 2015 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Certificates of deposit (foreign) $ 4,208 $ — $ — $ — $ 4,208 $ — Corporate bonds 6,257 (19 ) — — 6,257 (19 ) Short-term bond fund 5,005 (76 ) — — 5,005 (76 ) Corporate obligations 1 — — — 1 — Money markets 209 — — — 209 — Mutual funds 131 (16 ) — — 131 (16 ) Other investments 3,695 (231 ) — — 3,695 (231 ) Total $ 19,506 $ (342 ) $ — $ — $ 19,506 $ (342 ) As of December 31, 2016, for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments, and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. The sale and/or maturity of available-for-sale securities resulted in the following activity (in thousands): Years Ended December 31, 2016 2015 2014 Proceeds from sales $ 25,932 $ 157,965 $ 54,057 Gross gains 33 305 1 Gross losses — (452 ) (83 ) The contractual maturities of the Company’s available-for-sale securities as of December 31, 2016 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, 2016 Amortized Cost Fair Value Within 1 year $ 115,559 $ 115,553 After 1 year through 5 years 11,034 10,998 After 5 year through 10 years — — After 10 years 4,343 4,393 Total $ 130,936 $ 130,944 Equity method investments The following table summarizes the ownership structure and ownership percentage of the non-consolidated investments as of December 31, 2016, 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 2016, the Company made funding contributions to the investment of $15.9 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, 2016 (in thousands) Carrying Amount Maximum Exposure Conditional Access Licensing $ 12,751 $ 12,751 Combined Conditional Access Development 2,113 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, 2016, the Company concluded that two private companies had indicators of impairment, as the cost basis exceeded the fair value of the investments, resulting in other-than-temporary impairment charges of $12.3 million. For the year ended December 31, 2015, ARRIS concluded that one private company had indicators of impairment, as the cost basis exceeded the fair value of the investment, resulting in other-than-temporary impairment charge of $0.2 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, 2016 | |
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, 2016 and 2015 (in thousands): December 31, 2016 Level 1 Level 2 Level 3 Total Certificates of deposit (foreign) $ — $ 87,372 $ — $ 87,372 Corporate bonds — 34,133 — 34,133 Short-term bond fund 5,046 — — 5,046 Corporate obligations — 3 — 3 Money markets 54 — — 54 Mutual funds 101 — — 101 Other investments — 4,235 — 4,235 Interest rate derivatives — asset derivatives — 7,860 — 7,860 Interest rate derivatives — liability derivatives — (9,006 ) — (9,006 ) Foreign currency contracts — asset position — 7,369 — 7,369 Foreign currency contracts — liability position — (3,671 ) — (3,671 ) December 31, 2015 Level 1 Level 2 Level 3 Total Certificates of deposit (foreign) $ — $ 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 ) All of the Company’s short-term and long-term investments at December 31, 2016 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, 2016, 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, 2016 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, 2016 | |
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. The aggregated fixed rate changes as certain swaps mature and other swaps begin and could vary up by 50 basis points or down by 25 basis points based on future changes to the Company’s net leverage ratio. Based on the Company’s interest rates as of December 31, 2016, the aggregate fixed rate for swaps in effect and outstanding through December 29, 2017 is 3.15% per annum, and the aggregate fixed rate for swaps in effect and outstanding from December 29, 2017 through March 31, 2020 is 4.00% per annum. 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. During 2016, ARRIS entered into nine $50 million interest rate swap arrangements as a result of the additional exposure from the new Term Loan A-1 Facility. These arrangements effectively converted $450 million of the Company’s variable-rate debt based on one-month LIBOR to an aggregate fixed rate of 2.73% per annum based on the Company’s interest rates as of December 31, 2016. This fixed rate could vary by up 50 basis points or down by 25 basis points based on future changes to the Company’s net leverage ratio. Each of these swaps 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 2016, 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, 2016 and 2015, 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 $2.8 million may be reclassified as an increase to interest expense. The table below presents the 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, 2016 and 2015 (in thousands): Location of Years Ended December 31, 2016 2015 2014 Gain (loss) Recognized in OCI on Derivatives (Effective Portion) Interest expense $ 2,103 $ (13,256 ) $ (8,541 ) Amounts Reclassified from Accumulated OCI into Income (Effective Portion) Interest expense 7,510 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, 2016 and December 31, 2015 were as follows (in thousands): Balance Sheet Location December 31, 2016 December 31, 2015 Derivatives designated as hedging instruments: Interest rate derivatives — asset derivatives Other current assets 222 — Interest rate derivatives — asset derivatives Other assets 8,043 — Interest rate derivatives — liability derivatives Other accrued liabilities (2,989 ) (4,489 ) Interest rate derivatives — liability derivatives Other noncurrent liabilities (6,421 ) (6,270 ) 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, 2016, 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 $1.4 million. As of December 31, 2016, 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, 2016, the Company had option collars with notional amounts totaling 35 million euros which mature throughout 2017, forward contracts with notional amounts totaling 55 million euros which mature throughout 2017, forward contracts with a total notional amount of 70 million Australian dollars which mature throughout 2017, forward contracts with notional amounts totaling 45 million Canadian dollars which mature throughout 2017, forward contracts with notional amounts totaling 100.0 million British pounds which mature throughout 2017, forward contracts with notional amounts totaling 374.3 million South African rand which mature throughout 2017 and a swap with notional amount totaling 69 million South African rand which mature in 2017 . 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 date. 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. These foreign currency forward contracts were effectively terminated upon the close of the Pace acquisition in January 2016 and cash settled upon maturity on March 31, 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 12 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, 2016 and December 31, 2015 were as follows (in thousands): Balance Sheet Location December 31, 2016 December 31, 2015 Derivatives not designated as hedging instruments: Foreign exchange contracts — asset derivatives Other current assets $ 7,369 $ 6,495 Foreign exchange contracts — asset derivatives Other assets — 569 Foreign exchange contracts — liability derivatives Other accrued liabilities (3,671 ) (23,632 ) Foreign exchange contracts — liability derivatives Other noncurrent liabilities — (739 ) 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, 2016, 2015, and 2014 were as follows (in thousands): Years Ended December 31, Statement of Operations Location 2016 2015 2014 Derivatives not designated as hedging instruments Foreign exchange contracts Loss (gain) on foreign currency $ 5,909 $ 7,597 $ (4,527 ) |
Guarantees
Guarantees | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 and 2015 were as follows (in thousands): 2016 2015 Beginning balance $ 49,027 $ 74,320 Warranty reserve at acquisition 43,723 — Accruals related to warranties (including changes in assumptions) 51,947 19,111 Settlements made (in cash or in kind) (56,510 ) (44,404 ) Ending balance $ 88,187 $ 49,027 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016, 2015 and 2014 (in thousands): 2016 2015 2014 Net sales to external customers: CPE $ 4,747,445 $ 3,136,585 $ 3,690,454 N&C 2,111,708 1,661,594 1,637,544 Other (30,035 ) 153 (5,077 ) Total 6,829,118 4,798,332 5,322,921 Direct contribution: CPE 684,744 548,840 791,244 N&C 681,608 487,166 430,943 Segment total 1,366,352 1,036,006 1,222,187 Corporate and unallocated costs (697,834 ) (568,336 ) (606,834 ) Amortization of intangible assets (397,464 ) (227,440 ) (236,521 ) Integration, acquisition, restructuring and other (160,337 ) (29,277 ) (37,498 ) Operating income 110,717 210,953 341,334 Interest expense 79,817 70,936 62,901 Loss on investments 21,194 6,220 10,961 (Gain) loss on foreign currency (13,982 ) 20,761 2,637 Interest income (4,395 ) (2,379 ) (2,590 ) Other expense ( income), net 3,991 8,362 28,195 Income before income taxes $ 24,092 $ 107,053 $ 239,230 For the years ended December 31, 2016, 2015 and 2014, the compositions of our corporate and unallocated costs that are reflected in the consolidated statement of operations were as follows (in thousands): 2016 2015 2014 Corporate and unallocated costs: Cost of sales $ 150,588 $ 56,311 $ 69,973 Selling, general and administrative expenses 375,747 349,993 349,693 Research and development expenses 171,499 162,032 187,168 Total $ 697,834 $ 568,336 $ 606,834 The following table summarizes the Company’s net intangible assets and goodwill by reportable segment as of December 31, 2016 and 2015 (in thousands): CPE N&C Total December 31, 2016 Goodwill $ 1,391,171 $ 624,998 $ 2,016,169 Intangible assets, net 1,064,692 612,486 1,677,178 December 31, 2015 Goodwill $ 682,582 $ 331,381 $ 1,013,963 Intangible assets, net 525,920 284,528 810,448 The following table summarizes the Company’s revenues by products and services as of December 31, 2016, 2015 and 2014 (in thousands): 2016 2015 2014 CPE: Broadband CPE $ 1,683,491 $ 1,452,164 $ 1,494,925 Video CPE 3,063,954 1,684,421 2,195,529 Sub-total 4,747,445 3,136,585 3,690,454 Network & Cloud: Infrastructure equipment 1,800,480 1,407,735 1,435,676 Global services 230,588 181,892 141,625 Cloud solutions 80,640 71,967 60,243 Sub-total 2,111,708 1,661,594 1,637,544 Other: Other (30,035 ) 153 (5,077 ) Total net sales $ 6,829,118 $ 4,798,332 $ 5,322,921 The Company’s three largest customers (including their affiliates, as applicable) are AT&T, Charter and Comcast. 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 2016, 2015 and 2014 is set forth below (in thousands, except percentages): Years ended December 31, 2016 2015 2014 AT&T and affiliates $ 901,001 $ 347,063 $ 612,413 % of sales 13.2 % 7.2 % 11.5 % Charter and affiliates $ 1,064,408 (1) $ 960,497 $ 1,031,553 % of sales 15.6 % 20.0 % 19.4 % Comcast and affiliates $ 1,637,519 (1) $ 1,007,376 $ 1,012,367 % of sales 24.0 % 21.0 % 19.0 % (1) Revenues were reduced by $30.2 million in total as a result of Warrants held by Charter and Comcast that are intended to incent additional purchases from them. (see Note 17 Warrants 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 28.1%, 28.8% and 25.7% of total sales for the years ended December 31, 2016, 2015 and 2014, respectively. International sales for the years ended December 31, 2016, 2015 and 2014 were as follows (in thousands): For the Years Ended December 31, 2016 2015 2014 Domestic — U.S $ 4,909,698 $ 3,418,583 $ 3,957,203 International Americas, excluding U.S. 982,769 880,581 900,822 Asia Pacific 291,504 142,893 147,921 EMEA 645,147 356,275 316,975 Total international $ 1,919,420 $ 1,379,749 $ 1,365,718 Total sales $ 6,829,118 $ 4,798,332 $ 5,322,921 The following table summarizes ARRIS’s international property, plant and equipment assets by geographic region as of December 31, 2016 and 2015 (in thousands): For the Years Ended 2016 2015 Domestic — U.S $ 220,397 $ 223,736 International Americas, excluding U.S. 12,838 6,659 Asia Pacific 81,655 74,651 EMEA 38,487 7,265 Total international $ 132,980 $ 88,575 Total property, plant and equipment assets $ 353,377 $ 312,311 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2016 | |
Inventories | Note 11. Inventories The components of inventory are as follows, net of reserves (in thousands): December 31, 2016 2015 Raw material $ 86,243 $ 60,287 Work in process 3,877 3,076 Finished goods 461,421 338,229 Total inventories, net $ 551,541 $ 401,592 |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment | Note 12. Property, Plant and Equipment Property, plant and equipment, at cost, consisted of the following (in thousands): December 31, 2016 2015 Land $ 68,562 $ 68,562 Buildings and leasehold improvements 163,333 141,171 Machinery and equipment 440,955 407,110 672,850 616,843 Less: Accumulated depreciation (319,473 ) (304,532 ) Total property, plant and equipment, net $ 353,377 $ 312,311 |
Restructuring and Integration
Restructuring and Integration | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring and Integration | Note 13. Restructuring and Integration Restructuring The following table represents a summary of and changes to the restructuring accrual, which is primarily composed of accrued severance and other employee costs and contractual obligations that related to excess leased facilities (in thousands): Employee Contractual Write-off Total Balance at December 31, 2015 $ 3 $ 87 $ — $ 90 Restructuring charges 92,246 3,379 716 96,341 Cash payments / adjustments (64,363 ) (1,223 ) — (65,586 ) Non-cash expense — — (716 ) (716 ) Balance at December 31, 2016 $ 27,886 $ 2,243 $ — $ 30,129 Employee severance and termination benefits The estimated cost recorded during 2016 for the restructuring plan was approximately $96.3 million. This amount is included in the Consolidated Statement of Operations in the line item titled “Integration, acquisition, restructuring and other costs”. The restructuring plan affected approximately 1,545 positions across the Company. The remaining liability is expected to be paid in 2017. Contractual obligations Write-off of property, plant and equipment Integration Integration expenses was approximately $24.2 million, $1.6 million and $34.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. The expense was related to outside services and other integration related activities. |
Lease Financing Obligation
Lease Financing Obligation | 12 Months Ended |
Dec. 31, 2016 | |
Lease Financing Obligation | Note 14. 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. 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 in Other expense (income), net on the Consolidated Statements of Operations at the closing of the transaction in 2015. At December 31, 2016, the minimum lease payments required on the financing obligation were as follows (in thousands): 2017 $ 4,136 2018 4,260 2019 4,388 2020 4,520 2021 4,655 Thereafter through 2025 16,102 Total minimum lease payments $ 38,061 |
Indebtedness
Indebtedness | 12 Months Ended |
Dec. 31, 2016 | |
Indebtedness | Note 15. Indebtedness The following is a summary of indebtedness and lease financing obligations as of December 31, 2016 and 2015 (in thousands): As of December 31, 2016 As of December 31, 2015 Current liabilities: Term A loan $ 49,500 $ 49,500 Term A-1 loan 40,000 — Lease finance obligation 775 758 Current obligations 90,275 50,258 Current deferred financing fees and debt discount (7,541 ) (6,667 ) 82,734 43,591 Noncurrent liabilities: Term A loan 866,250 915,750 Term A-1 loan 730,000 — Term B loan 543,812 543,812 Revolver — — Lease finance obligation 57,902 58,676 Noncurrent obligations 2,197,964 1,518,238 Noncurrent deferred financing fees and debt discount (17,955 ) (21,995 ) 2,180,009 1,496,243 Total $ 2,262,743 $ 1,539,834 Senior Secured Credit Facilities On June 18, 2015, ARRIS Group 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”) 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. Under the Amended Credit Agreement, the Term Loan A Facility, Term Loan A-1 Facility and the Revolving Credit Facility will mature on June 18, 2020. The Term Loan B Facility will mature on April 17, 2020. Interest rates on borrowings under the senior secured credit facilities are set forth in the table below. Rate As of December 31, 2016 Term Loan A LIBOR + 1.75 % 2.52 % Term Loan A-1 LIBOR + 1.75 % 2.52 % Term Loan B LIBOR (1) + 2.75 % 3.52 % 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. The Amended Credit Agreement provides for adjustments to the interest rates paid on the Term Loan A, Term Loan A-1, Term Loan B and Revolving Credit Facility based upon the achievement of certain leverage ratios. 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, 2016, ARRIS was in compliance with all covenants under the Amended Credit Agreement. During 2016, the Company made mandatory prepayments of approximately $79.5 million related to the senior secured credit facilities. In addition, the Company repaid $240.2 million of debt assumed in the Pace acquisition in the first quarter of 2016. Account Receivable Financing Program In connection with the Combination on January 4, 2016, ARRIS assumed an accounts receivable financing program (the “AR Financing Program” or the “Program”) which was entered into by Pace on June 30, 2015. Under this Program, the Company assigns trade receivables on a revolving basis of up to $50 million to the lender and the lender advances 95% of the receivable value to the Company. The remaining 5% is remitted to ARRIS upon receipt of cash from the customer. As of December 31, 2016, there is no outstanding balance under this program. The AR Financing Program was accounted for as secured borrowings and amounts outstanding were included in the current portion of long-term debt on the consolidated balance sheet. The Company paid certain transaction fees and interest of 1.23% on the outstanding balance in connection with this Program. Other As of December 31, 2016, the scheduled maturities of the contractual debt obligations for the next four years are as follows (in thousands): 2017 $ 89,500 2018 89,500 2019 89,500 2020 1,961,063 |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share | Note 16. Earnings Per Share The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the periods indicated (in thousands, except per share data): For the Years Ended December 31, 2016 2015 2014 Basic: Net income attributable to ARRIS International plc. $ 18,100 $ 92,181 $ 327,211 Weighted average shares outstanding 190,701 146,388 144,386 Basic earnings per share $ 0.09 $ 0.63 $ 2.27 Diluted: Net income attributable to ARRIS International plc. $ 18,100 $ 92,181 $ 327,211 Weighted average shares outstanding 190,701 146,388 144,386 Net effect of dilutive shares 1,484 2,971 3,894 Total 192,185 149,359 148,280 Diluted earnings per share $ 0.09 $ 0.62 $ 2.21 Potential dilutive shares include stock options, unvested restricted and performance awards and warrants. For the year ended December 31, 2016, 2015 and 2014, approximately 0.9 million, 6.8 thousand and 4.3 million of the equity-based awards, respectively, were excluded from the computation of diluted earnings per share 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 shares 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, 2016, the Company issued 2.3 million shares of its ordinary shares related to the vesting of restricted shares, as compared to 3.2 million shares for the twelve months ended December 31, 2015. The warrants have a dilutive effect in those periods in which the average market price of the shares exceeds the current effective conversion price (under the treasury stock method), and are not subject to performance conditions. During the fourth quarter of 2016, approximately 2.2 million warrants vested based on the amount of purchases of products and services by the customer from the Company. The dilutive effect of these vested shares was immaterial. In connection with the Combination, ARRIS issued approximately 47.7 million shares of ARRIS International plc ordinary shares as part of the purchase consideration. The fair value of the 47.7 million shares issued, $1,434.7 million, was determined based on 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 shares at the date of Combination. (See Note 4 Business Acquisitions The Company has not paid cash dividends on its stock since its inception. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent on then-existing conditions, including the Company’s financial condition, results of operations, capital requirements, contractual and legal restrictions, business prospects and other factors that the Board considers relevant. The credit agreement governing the Company’s senior secured credit facilities contains restrictions on the Company’s ability to pay dividends on its ordinary shares. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2016 | |
Warrants | Note 17. Warrants During 2016, the Company entered into Warrant and Registration Rights Agreements (the “Warrants”) with certain customers pursuant to which those customers may purchase up to 14.0 million of ARRIS’s ordinary shares, (subject to adjustment in accordance with the terms of the Warrants, the “Shares”). The Warrants will vest in tranches based on the amount of purchases of products and services by the customer from the Company. The table below presents by year, the ordinary shares issuable under outstanding Warrant programs with customers, based on achieving certain purchase levels (in thousands). Warrants Issuable Exercise Price per Minimum Maximum $22.19 $28.54 Note 1 Year 2016 1,500 4,000 3,000 1,000 — 2017 2,000 7,500 5,000 2,500 — 2018 1,000 2,500 — — 2,500 (1) The exercise price for the 2018 warrants will be determined based upon the lower of 1) the volume-weighted price for the 10-day trading period preceding January 1, 2018 (“the January Price”) or 2) the average of $28.54 and the January Price. For Warrants in which an exercise price has been established, the exercise price per Share was established based upon the average volume-weighted price of ARRIS’s ordinary shares on NASDAQ for the 10-day trading period preceding the date of the Warrants. The Warrants provide for net Share settlement that, if elected by the holders, will reduce the number of Shares issued upon exercise to reflect net settlement of the exercise price. Customers’ may also request cash settlement of the Warrants upon exercise in lieu of issuing Shares, however, such cash election is at the discretion of ARRIS. The Warrants will expire by September 30, 2023. The Warrants provide for certain adjustments that may be made to the exercise price and the number of Shares issuable upon exercise due to customary anti-dilution provisions based on future corporate events. In addition, in connection with any consolidation, merger or similar extraordinary event involving the Company, the Warrants will be deemed to represent the right to receive, upon exercise, the same consideration received by the holders of the Company’s ordinary shares in connection with such transaction. Upon a change of control of ARRIS or if ARRIS materially breaches its applicable agreements with customers (and such breach is not cured pursuant to the terms of the agreements), the Warrants will immediately vest for the minimum threshold of Shares that would otherwise be issuable. ARRIS has also agreed, if requested by the holders, to register the Shares issuable upon exercise of the Warrants under the Securities Act of 1933, as amended (the “Securities Act”) and has also granted “piggyback” registration rights in the event ARRIS files a registration statement with the U.S. Securities and Exchange Commission under the Securities Act covering its equity securities, subject to the terms and conditions included in the Warrants. Because the Warrants contain performance criteria, which includes aggregate purchase levels and product mix, under which customers must achieve for the Warrants to vest, as detailed above, the final measurement date for the Warrants is the date on which the Warrants vest. Prior to the final measurement, when achievement of the performance criteria has been deemed probable, the estimated fair value of Warrants is being recorded as a reduction to net sales based on the projected number of Warrants expected to vest, the proportion of purchases by customers and its affiliates within the period relative to the aggregate purchase levels required for the Warrants to vest and the then-current fair value of the related Warrants. To the extent that projections change in the future as to the number of Warrants that will vest, as well as changes in the fair market value of the Warrants, a cumulative catch-up adjustment will be recorded in the period in which the estimates change. The fair value of the Warrants is determined using the Black-Scholes option pricing model. The assumptions utilized in the Black-Scholes model include the risk-free interest rate, expected volatility, and expected life in years. The risk-free interest rate over the expected life is equal to the prevailing U.S. Treasury note rate over the same period. Expected volatility is determined utilizing historical volatility over a period of time equal to the expected life of the warrant. Expected life is equal to the remaining contractual term of the warrant. The dividend yield is assumed to be zero since we have not historically declared dividends and do not have any plans to declare dividends in the future. During the fourth quarter of 2016, approximately 2.2 million warrants, with a weighted average exercise price of $24.56, vested based on the amount of purchases of products and services by the customers from the Company. For the year ended December 31, 2016, ARRIS recorded $30.2 million as a reduction to net sales in connection with Warrants. This transaction is considered an equity contract, and is classified as such. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | Note 18. Income Taxes Income (loss) before income taxes (in thousands): Years Ended December 31, 2016 2015 2014 U.K $ (36,300 ) $ (5,321 ) $ (1,604 ) U.S (149,605 ) 47,063 180,133 Other Foreign 209,997 65,311 60,701 $ 24,092 $ 107,053 $ 239,230 Income tax expense (benefit) consisted of the following (in thousands): Years Ended December 31, 2016 2015 2014 Current — U.K $ 81,822 $ 559 $ (94 ) U.S. 47,025 2,141 59,197 Other Foreign 31,552 14,476 18,230 160,399 17,176 77,333 Deferred — U.K. (23,177 ) (30 ) 121 U.S. (105,735 ) 5,119 (160,382 ) Other Foreign (16,356 ) 329 (5,053 ) (145,268 ) 5,418 (165,314 ) Income tax expense (benefit) $ 15,131 $ 22,594 $ (87,981 ) A reconciliation of the U.K. statutory income tax rate of 20% for 2016 and the U.S. federal statutory income tax rate of 35% for 2015 and 2014 and the effective income tax rates is as follows: Years Ended December 31, 2016 2015 2014 Statutory income tax rate 20.0 % 35.0 % 35.0 % Effects of: State income taxes, net of federal benefit (10.0 ) 5.2 (6.6 ) Acquired deferred tax assets — 5.8 (16.5 ) U.S. domestic manufacturing deduction (12.0 ) (0.7 ) (2.1 ) Transaction costs 22.0 — — Research and development tax credits (90.6 ) (26.6 ) (8.7 ) Withholding taxes (U.K. entities) 245.5 — — U.K. stamp duty 9.4 — — Subpart F income 4.0 4.8 0.8 Changes in valuation allowance 6.0 (26.6 ) (44.2 ) Foreign tax credits (14.0 ) (20.7 ) (0.6 ) Non-deductible officer compensation — 5.3 0.6 Non-U.S. tax rate differential — (5.0 ) (2.6 ) Non-U.K. tax rate differential (8.9 ) — — Benefit of other foreign tax regimes (124.5 ) — — Recapture of dual consolidated losses — 1.1 4.0 Taiwan gain — 34.3 — Other, net 15.9 9.2 4.1 62.8 % 21.1 % (36.8 )% 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’ net deferred income tax assets (liabilities) were as follows (in thousands): December 31, 2016 2015 Deferred income tax assets Inventory costs $ 63,887 $ 28,728 Accrued vacation 7,062 7,138 Acquisition charges — 6,556 Allowance for bad debt 7,611 4,396 Equity compensation 18,861 14,673 Federal/state net operating loss carryforwards 53,116 95,571 Foreign net operating loss carryforwards 14,409 10,989 Research and development credits 113,061 79,809 Pension and deferred compensation 15,933 19,166 Warranty reserve 36,693 18,215 Capitalized interest 24,963 — Capitalized research and development 177,574 215,894 Other 71,500 24,214 Total deferred income tax assets 604,670 525,349 Deferred income tax liabilities: Other noncurrent liabilities (3,713 ) (4,394 ) Goodwill and intangible assets (467,957 ) (248,231 ) Total deferred income tax liabilities (471,670 ) (252,625 ) Net deferred income tax assets 133,000 272,724 Valuation allowance (57,772 ) (87,788 ) Net deferred income tax assets (liabilities) $ 75,228 $ 184,936 As of December 31, 2016 and December 31, 2015, ARRIS had $85.7 million and $218.9 million, respectively, of U.S. federal net operating losses available to offset against future taxable income. During 2016, ARRIS utilized approximately $66.4 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, 2016, will expire between the years 2017 and 2031. A significant portion of the acquired U.S. federal net operating losses expire in 2017. As of December 31, 2016, ARRIS also had $453.0 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 laws governing the expiration of these net operating losses. State net operating loss carryforwards of approximately $26.4 million relate to the exercise of employee stock options and restricted stock (“equity compensation”). When cash benefit is realized from the utilization of these state net operating losses attributable to equity compensation, the benefit is recorded. ARRIS has foreign net operating loss carryforwards available, as of December 31, 2016, of approximately $59.5 million with varying expiration dates. NOLs related to our Irish and Luxemburg subsidiaries in the amount of $23.8 million have indefinite lives. Other foreign NOLs arise from our Canadian subsidiary ($8.5 million, expiring within 17 years). The net operating losses are subject to various limitations on how and when the losses can be used to offset against taxable income. During the tax years ending December 31, 2016, and 2015, we utilized $11.1 and $0.0 million, respectively, of U.S. federal research and development credits to reduce U.S. federal income tax liabilities. We also utilized $23.4 million and $0.1 million of U.S. foreign tax credits during the tax years ending December 31, 2016 and 2015, respectively. As of December 31, 2016, ARRIS has $91.9 million of available U.S. federal research and development tax credits and $51.3 million of available state research and development tax credits to carry forward to subsequent years. U.S. research and development credit carryforwards of approximately $8.9 million relate to the exercise of restricted stock (“equity compensation”). 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’ 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 other 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. These limitations, as noted above, prevent the Company from utilizing certain deferred tax assets and were considered in establishing the valuation allowances. The valuation allowance for deferred income tax assets of $57.8 million and $87.8 million at December 31, 2016 and 2015, respectively, relates to the uncertainty surrounding the realization of certain deferred income tax assets in various jurisdictions. The $30.0 million net reduction in valuation allowances for the year was due primarily to net operating losses and research and development credits that expired unutilized in the current year. 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): 2016 2015 2014 Balance at beginning of fiscal year $ 87,788 $ 118,629 $ 163,745 Additions 17,973 3,312 37,708 Deductions (47,989 ) (34,153 ) (82,824 ) Balance at end of fiscal year $ 57,772 $ 87,788 $ 118,629 As of December 31, 2016, the Company did not provide U.S. federal income taxes or foreign withholding taxes on approximately $23.8 million of undistributed earnings of its foreign subsidiaries as such earnings are intended to be reinvested indefinitely. 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) For the Period ended December 31, 2016 2015 2014 Beginning balance $ 49,919 $ 48,019 $ 28,344 Gross increases — tax positions in prior period 8,068 1,599 17,636 Gross decreases — tax positions in prior period (5,700 ) (2,185 ) (4,115 ) Gross increases — current-period tax positions 27,774 9,578 9,979 Increases (decreases) from acquired businesses 60,796 — (196 ) Changes related to foreign currency translation adjustment and remeasurement (1,087 ) — — Decreases relating to settlements with taxing authorities and other (3,933 ) (6,689 ) (2,480 ) Decreases due to lapse of statute of limitations (7,784 ) (403 ) (1,149 ) Ending balance 128,053 $ 49,919 $ 48,019 The Company and its subsidiaries file income tax returns in the U.S. and U.K. jurisdictions, and various state and other foreign jurisdictions. As of December 31, 2016, the Company and its subsidiaries were under income tax audit in various jurisdictions including The United Kingdom, The United States, and various states and other foreign countries. ARRIS does not anticipate any audit adjustments in excess of its current accrual for uncertain tax positions. Liabilities related to uncertain tax positions were $137.2 million and $51.6 million at December 31, 2016 and 2015, respectively, inclusive of interest and penalties of $9.2 million and $1.7 million at December 31, 2016 and 2015, respectively. These liabilities at December 31, 2016 and 2015 were reduced by $28.4 million and $5.9 million, respectively, for offsetting benefits from the corresponding effects of potential transfer pricing adjustments, state income taxes and other unrecognized tax benefits. These offsetting benefits are recorded in other non-current assets and noncurrent deferred income taxes. The net result of $108.7 million and $46.2 million at December 31, 2016 and 2015, respectively, if recognized and released, would favorably affect earnings. 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 $7.2 million primarily arising from U.S. Federal and state tax related items. The Company reported approximately $9.2 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, 2016 and 2015. The increase in interest and penalty accrual in 2016 results from interest on the positions added from the acquisition of Pace. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Stock-Based Compensation | Note 19. Stock-Based Compensation ARRIS grants stock awards under its 2016 Stock Incentive Plan (“SIP”). Upon approval of the 2016 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 31,215,000 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 180,613 shares of the Company’s ordinary shares remain available for issuance under the Assumed BigBand Plan. 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, 2016: Shares Weighted Average Fair Value Unvested at December 31, 2015 5,985,249 $ 23.59 Granted 3,358,005 22.85 Vested (2,155,527 ) 20.91 Forfeited (692,678 ) 24.17 Unvested at December 31, 2016 6,495,049 24.04 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 2014, the three-year measurement period ended on December 31, 2016. This resulted in an achievement of 99.8% of the target award, or 211,655 shares. The remaining grants outstanding that are subject to market performance are 608,095 shares at target; at 200% performance 1,216,190 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 expected to vest. 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 2016, 2015 and 2014 was $52.3 million, $118.3 million and $82.6 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 2016, 2015 and 2014, were as follows: risk-free interest rates of 0.5%, 0.1% and 0.1%, respectively; a dividend yield of 0%; volatility factor of the expected market price of ARRIS’s stock of 0.37, 0.41, and 0.37, 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 $4.6 million, $5.1 million and $4.1 million for the years ended December 31, 2016, 2015 and 2014, respectively. Unrecognized Compensation Cost As of December 31, 2016, there was approximately $124.6 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 2.7 years. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2016 | |
Employee Benefit Plans | Note 20. Employee Benefit Plans The Company sponsors a qualified and a non-qualified non-contributory defined benefit pension plan that covers certain U.S. and non-U.S. employees. As of January 1, 2000, the Company froze the U.S. 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. ARRIS also provides a non-contributory defined benefit plan which cover employees in Taiwan. Any other benefit plans outside of the U.S. are not material to ARRIS either individually or in the aggregate. During 2016, in an effort to reduce future premiums and administrative fees as well as to increase our funded status in connection with our U.S. pension obligation, we made a voluntary funding contribution of $5.0 million. The Company also made funding contributions of $10.9 million related to our non-U.S pension plan in 2016. 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. The following table summarizes the change in projected benefit obligations, fair value of plan assets and the funded status of pension plan for the years ended December 31, 2016 and 2015 (in thousands): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2016 2015 Change in Projected Benefit Obligation: Projected benefit obligation at beginning of year $ 42,999 $ 46,550 $ 36,372 $ 35,541 Service cost — — 703 738 Interest cost 1,751 1,716 614 661 Actuarial (gain) loss 2,024 (3,962 ) 81 708 Benefit payments (1,504 ) (1,305 ) (1,041 ) (1,276 ) Settlements — — (1,626 ) — Foreign currency — — 603 — Projected benefit obligation at end of year $ 45,270 $ 42,999 $ 35,706 $ 36,372 Change in Plan Assets: Fair value of plan assets at beginning of year $ 13,516 $ 14,585 $ 9,232 $ 8,923 Actual return on plan assets 751 81 131 236 Company contributions 5,747 155 11,120 1,273 Expenses and benefits paid from plan assets (1,504 ) (1,305 ) — (1,200 ) Settlements — — (1,626 ) — Foreign currency — — 154 — Fair value of plan assets at end of year (1) $ 18,510 $ 13,516 $ 19,011 $ 9,232 Funded Status: Funded status of plan $ (26,760 ) $ (29,483 ) $ (16,695 ) $ (27,140 ) Unrecognized actuarial (gain) loss 10,720 9,196 (2,038 ) (4,320 ) Net amount recognized $ (16,040 ) $ (20,287 ) $ (18,733 ) $ (31,460 ) (1) In addition to the U.S. pension plan assets, ARRIS has established two rabbi trusts to further fund the pension obligations of the Chief Executive and certain executive officers of $21.2 million as of December 31, 2016 and $18.0 million as of December 31, 2015, and are included in Investments on the Consolidated Balance Sheets. Amounts recognized in the statement of financial position consist of (in thousands): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2016 2015 Current liabilities $ (399 ) $ (426 ) $ — $ — Noncurrent liabilities (26,361 ) (29,057 ) (16,695 ) (27,140 ) Accumulated other comprehensive income (loss) (1) 10,720 9,196 (2,038 ) (4,320 ) Total $ (16,040 ) $ (20,287 ) $ (18,733 ) $ (31,460 ) (1) The accumulated other comprehensive income on the Consolidated Balance Sheets as of December 31, 2016 and 2015 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): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2014 2016 2015 2014 Net (gain) loss $ 2,068 $ (3,203 ) $ 5,992 $ 225 $ 813 $ 1,077 Amortization of net gain (loss) (544 ) (834 ) (305 ) 248 (529 ) (464 ) Adjustments — — — 1,849 — — Foreign currency — — — 31 — — Total recognized in other (loss) comprehensive income $ 1,524 $ (4,037 ) $ 5,687 $ 2,353 $ 284 $ 613 Information for defined benefit plans with accumulated benefit obligations or projected benefit obligation in excess of plan assets as of December 31, 2016 and 2015 is as follows (in thousands): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2016 2015 Accumulated benefit obligation in excess of plan assets: Accumulated benefit obligation $ 45,269 $ 42,999 $ 27,551 $ 26,966 Fair value of plan assets 18,510 13,516 19,011 9,232 Projected benefit obligation in excess of plan assets: Projected benefit obligation $ 45,269 $ 42,999 35,706 $ 36,372 Fair value of plan assets 18,510 13,516 19,011 9,232 Net periodic pension cost for 2016, 2015 and 2014 for pension and supplemental benefit plans includes the following components (in thousands): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2014 2016 2015 2014 Service cost $ — $ — $ — $ 703 $ 738 $ 751 Interest cost 1,751 1,716 1,783 614 661 599 Return on assets (expected) (795 ) (839 ) (874 ) (275 ) (176 ) (166 ) Amortization of net actuarial loss(gain) (1) 544 834 305 (70 ) 529 464 Settlement charge — — — (178 ) — — Adjustments — — — (1,849 ) — — Foreign currency — — — (31 ) — — Net periodic pension cost $ 1,500 $ 1,711 $ 1,214 $ (1,086 ) $ 1,752 $ 1,648 (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 Estimated amounts to be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs in the year ending December 31, 2017 based on December 31, 2016 plan measurements are $0.6 million, consisting primarily of amortization of the net actuarial loss in the U.S. pension plans. The assumptions used to determine the benefit obligations as of December 31, 2016 and 2015 are as set forth below (in percentage): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2014 2016 2015 2014 Weighted-average assumptions used to determine benefit obligations: Discount rate 3.90 % 4.15 % 3.75 % 1.30 % 1.70 % 1.90 % Rate of compensation increase N/A N/A N/A N/A N/A N/A Weighted-average assumptions used to determine net periodic benefit costs: Discount rate 4.15 % 3.75 % 4.50 % 1.70 % 1.90 % 1.80 % Expected long-term rate of return on plan assets 6.00 % 6.00 % 6.00 % 1.60 % 2.00 % 2.00 % Rate of compensation increase(1) N/A N/A N/A 3.00 % 3.00 % 3.25 % (1) Represent an average rate for the non-U.S. pension plans. Rate of compensation increase is 4.00% for indirect labor and 2.00% for direct labor for 2016 and 2015. Rate of compensation increase is 4.50% for indirect labor and 2.00% for direct labor for 2014. 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. No minimum funding contributions are required for 2017 for the U.S. Pension plan, however the Company may make a voluntary contribution. The Company estimates it will make funding contributions of $1.5 million in 2017 for the non-U.S. plan. As of December 31, 2016, the expected benefit payments related to the Company’s defined benefit pension plans during the next ten years are as follows (in thousands): U.S. Pension Plans Non-U.S. Pension Plans 2017 $ 1,629 $ 2,067 2018 16,443 2,486 2019 1,689 2,083 2020 1,809 2,323 2021 1,929 2,489 2022 — 2026 10,152 12,817 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, 2016 and 2015: U.S. Pension Plans Target Actual 2016 2015 2016 2015 Equity securities 30% - 40% 40% - 45% 30 % 40 % Debt securities 0% - 5% 0% - 5% 2 % 2 % Cash and cash equivalents 60% - 70% 50% - 60% 68 % 58 % 100% 100% 100 % 100 % Asset allocation for the non-U.S. pension assets is 100% in money market investments. 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, 2016 and 2015 (in thousands): December 31, 2016 Level 1 Level 2 Level 3 Total Cash and cash equivalents (1) $ — $ 12,722 $ — $ 12,722 Equity securities (2) : U.S. large cap 1,123 — — 1,123 U.S. mid cap 1,118 — — 1,118 U.S. small cap 1,118 — — 1,118 International 1,685 — — 1,685 Fixed income securities (3) : 743 — — 743 Total $ 5,787 $ 12,722 $ — $ 18,509 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 (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. 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 $16.4 million, $16.6 million and $15.3 million in 2016, 2015 and 2014, 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 $4.2 million and $3.6 million at December 31, 2016 and 2015, respectively. Total expenses included in continuing operations for the matching contributions were approximately $0.2 million and $0.1 million in 2016 and 2015, respectively. 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 $3.0 million and $2.8 million at December 31, 2016 and 2015, 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 $1.6 million and $1.7 million at December 31, 2016 and 2015, respectively. Total expenses (income) included in continuing operations for the deferred retirement salary plan were approximately $0.4 million and $0.3 million for 2016 and 2015, respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) | Note 21. Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of taxes, for the year ended December 31, 2016 and 2015 (in thousands): Available-for Derivative Change Cumulative Total Balance as of December 31, 2015 $ 133 $ (6,781 ) $ (4,195 ) $ (1,803 ) $ (12,646 ) Other comprehensive (loss) income before reclassifications (11 ) 1,631 (2,934 ) 11,096 9,782 Amounts reclassified from accumulated other comprehensive income (loss) 15 5,821 319 — 6,155 Net current-period other comprehensive income (loss) 4 7,452 (2,615 ) 11,096 15,937 Balance as of December 31, 2016 $ 137 $ 671 $ (6,810 ) $ 9,293 $ 3,291 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 ) |
Repurchases of Stock
Repurchases of Stock | 12 Months Ended |
Dec. 31, 2016 | |
Repurchases of Stock | Note 22. Repurchases of Stock Upon completing the Combination, ARRIS International plc conducted a court-approved process in accordance with section 641(1)(b) of the UK Companies Act 2006, pursuant to which the Company reduced its stated share capital and thereby increased its distributable reserves or excess capital out of which ARRIS may legally pay dividends or repurchase shares. Distributable reserves are not linked to a U.S. GAAP reported amount. In early 2016, the Company’s Board of Directors approved a $300 million share repurchase authorization replacing all prior programs. During 2016, the Company repurchased 7.4 million shares of its common stock for $178.0 million at an average stock price of $24.09. The remaining authorized amount for stock repurchases under this plan was $122.0 million as of December 31, 2016. Unless terminated earlier by a Board resolution, this new plan will expire when ARRIS has used all authorized funds for repurchase. During 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, 2016 | |
Commitments and Contingencies | Note 23. 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, 2016 were as follows (in thousands): Operating Leases 2017 $ 31,742 2018 26,745 2019 22,349 2020 19,129 2021 16,729 Thereafter 50,128 Less sublease income (1,977 ) Total minimum lease payments $ 164,845 Total rental expense for all operating leases amounted to approximately $34.0 million, $26.9 million and $32.0 million for the years ended December 31, 2016, 2015 and 2014, respectively. Additionally, the Company had contractual obligations of approximately $692.9 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, 2016 are expected to be satisfied by 2017. Bank Guarantees The Company has outstanding bank guarantees, of which certain amounts are collateralized by restricted cash. As of December 31, 2016, the restricted cash associated with the outstanding bank guarantee was $1.5 million which is reflected in Other Assets and $0.1 million in Other Current Asset 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 allegations 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 two of the matters listed in Part II, Item 1 “Legal Proceedings”, the Company estimates the aggregate range of loss for which a reasonable estimate can be made, to be between $0 and $10.0 million. This estimate covers only two of the matters listed in Part II, Item 1 “Legal Proceedings” and we are currently unable to reasonably estimate the possible loss or range of possible loss for each of the remaining identified matters. The results in litigation are unpredictable and an adverse resolution of one or more of such matters not included in the estimate provided, or if losses are higher than what is currently estimated, it could have a material adverse effect on our business, financial position, results of operations or cash flows. In addition, the Company is a defendant in various litigation matters generally arising out of the normal course of business. (See Part I, Item 3 “Legal Proceedings” for additional details). |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events | Note 24. Subsequent Events On February 22, 2017, ARRIS, Broadcom Corporation, and a subsidiary of Broadcom entered into a Stock and Asset Purchase Agreement (“Purchase Agreement”), pursuant to which, upon the terms and subject to the satisfaction or waiver of the conditions in the Purchase Agreement, ARRIS will acquire Brocade Communication Systems Inc.’s Ruckus Wireless and ICX Switch business for approximately $800 million in cash, subject to adjustment as provided in the Purchase Agreement. The acquisition is subject to the completion of the acquisition of Brocade by Broadcom. This portfolio will expand ARRIS’s leadership in converged wired and wireless networking technologies beyond the home into the education, public venue, enterprise, hospitality, and MDU segments. ARRIS plans to establish a dedicated business unit within the company focused on innovative wireless networking and wired switching technology to address evolving and emerging needs across a number of vertical markets. |
Summary Quarterly Consolidated
Summary Quarterly Consolidated Financial Information | 12 Months Ended |
Dec. 31, 2016 | |
Summary Quarterly Consolidated Financial Information | Note 25. Summary Quarterly Consolidated Financial Information (unaudited) The following table summarizes ARRIS’s quarterly consolidated financial information (in thousands, except per share data): Quarters in 2016 Ended, March 31, June 30, September 30 December 31, (1)(2) Net sales $ 1,614,706 $ 1,730,044 $ 1,725,145 $ 1,759,223 Gross margin 384,032 444,734 442,850 436,001 Operating (loss) income (86,490 ) 33,388 91,313 72,506 Net (loss) income attributable to ARRIS International plc. $ (202,573 ) $ 84,228 $ 48,162 $ 88,283 Net (loss) income per basic share $ (1.06 ) $ 0.44 $ 0.25 $ 0.46 Net (loss) income per diluted share $ (1.06 ) $ 0.44 $ 0.25 $ 0.46 Quarters in 2015 Ended March 31, June 30, September 30, (3) December 31, (4) 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 (loss) income 45,718 51,542 60,781 52,912 Net (loss) income attributable to ARRIS Group, Inc. $ 19,126 $ 16,758 $ 26,256 $ 30,041 Net income per diluted share $ 0.13 $ 0.11 $ 0.18 $ 0.20 Net income per basic share $ 0.13 $ 0.11 $ 0.18 $ 0.20 Year 2016 (1) For the quarter ended December 31, 2016, the Company recorded $16.4 million as a reduction to net sales in connection with Warrants. (2) In the fourth quarter of 2016, the Company recorded foreign currency remeasurement gains of approximately $16 million related to the remeasurement of net deferred income tax liabilities in the U.K. where the functional currency is the U.S. dollar. Approximately $8 million resulted from changes in exchange rates prior to the 4 th quarter in 2016 and was considered the correction of an immaterial misstatement of interim financial statements in 2016. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, th quarter adjustment on its previously issued interim financial statements in 2016 and concluded that the results of operations for these periods were not materially misstated and accordingly the correction was recorded in the 4 th quarter. Year 2015 (3) 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. (4) $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. |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
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. |
Cash, Cash Equivalents, and Investments | (c) Cash, Cash Equivalents, and Investments ARRIS’s cash and cash equivalents (which are highly-liquid investments with a remaining maturity at the date of purchase 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 | (d) 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 2016, 2015 and 2014 (in thousands): 2016 2015 2014 Balance at beginning of fiscal year $ 9,975 $ 6,392 $ 1,887 Charges to expenses 1,386 2,997 5,336 Recoveries (deductions) 3,892 586 (831 ) Balance at end of fiscal year $ 15,253 $ 9,975 $ 6,392 |
Inventories | (e) Inventories Inventories are stated at the lower of cost or 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 | (f) 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 | (g) Shipping and Handling Fees Shipping and handling costs for the years ended December 31, 2016, 2015, and 2014 were approximately $4.3 million, $5.6 million and $6.9 million, respectively, and are classified in net sales and cost of sales. |
Taxes Collected from Customers and Remitted to Governmental Authorities | (h) 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 | (i) 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 $6.6 million in 2016, $4.5 million in 2015 and $4.0 million in 2014. Depreciation expense, including amortization of capital leases, for the years ended December 31, 2016, 2015, and 2014 was approximately $90.6 million, $71.8 million, and $79.0 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 12 Property, Plant and Equipment |
Goodwill, and Other Intangible Assets | (j) 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. Certain intangible assets are being amortized using an accelerated method, as an accelerated method best approximates the distribution of cash flows generated by the intangible assets. 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 amount 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, 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. During 2016, we wrote off $2.2 million of in-process R&D related to projects for which development efforts were abandoned subsequent to the Pace acquisition. There were no impairment charges related to intangible assets (definite-lived and indefinite-lived) other than goodwill in 2015 and 2014. Goodwill The Company perform impairment tests of goodwill at the reporting unit level, which is at or one level below the operating segments. The operating segments are primarily based on the nature of the products and services offered, which is consistent with the way management runs the business. The Customer Premises Equipment operating segment is the same as the reporting unit. The 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 2016, 2015 and 2014. The Company continues to evaluate the anticipated discounted cash flows from the Cloud software portion of the Network & Cloud segment. If current long-term projections for this unit are not realized or materially decrease, the Company may be required to write off all or a portion of the $81.1 million of goodwill and $42.9 million of associated intangible assets. |
Advertising and Sales Promotion | (k) Advertising and Sales Promotion Advertising and sales promotion costs are expensed as incurred. Advertising expense was approximately $19.6 million, $16.8 million, and $8.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Research and Development | (l) 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 | (m) 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 | (n) 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 18 Income Taxes |
Foreign Currency Translation | (o) Foreign Currency Translation A significant portion of the Company’s products are manufactured or assembled in Brazil, China, Mexico and Taiwan, and we have research and development centers in Canada, China, England, France, India, Northern Ireland 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 | (p) Stock-Based Compensation See Note 19 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 | (q) 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 | (r) 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 | (s) 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) | (t) 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 pension liability, net of tax, if applicable and change in foreign currency translation adjustments. |
Warrants | (u) Warrants The Company has outstanding warrants with certain customers to purchase ARRIS’s ordinary shares. Vesting of the warrants is subject to certain purchase volume commitments by the customers. Under applicable accounting guidance, if the vesting of a tranche of the warrants is probable, the Company is required to mark-to-market the fair value of the warrant until it vests, and any increase in the fair value is treated as a reduction in revenues from sales to the customers. See Note 17 Warrants |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 2016, 2015 and 2014 (in thousands): 2016 2015 2014 Balance at beginning of fiscal year $ 9,975 $ 6,392 $ 1,887 Charges to expenses 1,386 2,997 5,336 Recoveries (deductions) 3,892 586 (831 ) Balance at end of fiscal year $ 15,253 $ 9,975 $ 6,392 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Acquired Intangible Assets | The $1,258.7 million of acquired intangible assets are as follows (in thousands): Estimated Estimated Weighted Customer contracts and relationships $ 634,400 9.8 Technology and patents 539,160 6.0 In-process research and development 6,300 indefinite Trademarks and tradenames 62,400 3.0 Backlog 16,400 0.5 Total estimated fair value of intangible assets $ 1,258,660 |
Unaudited Pro Forma Consolidated Financial Information | The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition of Pace occurred on January 1, 2015. The pro forma adjustments primarily relate to the additional depreciation expense on property, plant and equipment and amortization of acquired intangibles assets, interest expense related to new financing arrangements and the estimated impact on the Company’s income tax provision. The unaudited pro forma combined results of operations are provided for illustrative purposes only and are not indicative of the Company’s actual consolidated results. Years Ended December 31, 2016 2015 (in thousands) (unaudited) Net sales $ 6,829,118 $ 7,115,871 Net income (loss) attributable to ARRIS International plc 138,674 (79,414 ) Net income (loss) per share (1) Basic $ 0.73 $ (0.41 ) Diluted $ 0.72 $ (0.41 ) (1) Calculated based on net income (loss) attributable to shareowners of ARRIS International plc. |
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) $ 638,789 Stock Consideration (2) 1,434,690 Non-cash Consideration (3) 323 Total consideration transferred $ 2,073,802 (1) Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707 as of January 4, 2016) 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 shares at the date of Combination. (3) Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. |
Summary of Estimated Fair Values of Net Assets Acquired | The following is a summary of the estimated fair values of the net assets acquired (in thousands): Amounts Recognized as of Acquisition Date Total estimated consideration transferred $ 2,073,802 Cash and cash equivalents 298,671 Accounts and other receivables 480,815 Inventories 427,642 Prepaids 40,501 Other current assets 54,217 Property, plant & equipment 73,983 Intangible assets 1,258,660 Other assets 9,280 Accounts payable and other current liabilities (795,283 ) Deferred revenue (4,805 ) Short-term borrowings (263,795 ) Other accrued liabilities (136,789 ) Noncurrent deferred income tax liabilities (285,937 ) Other noncurrent liabilities (72,895 ) Net assets acquired 1,084,265 Goodwill $ 989,537 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the three years ended December 31, 2016 are as follows (in thousands): CPE N & C Total 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 Changes in year 2014: Goodwill acquired — 1,682 1,682 Other (4,061 ) (1,956 ) (6,017 ) Balance as of December 31, 2014 $ 684,597 $ 251,470 $ 936,067 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 Changes in year 2015: Goodwill acquired (disposed), net — 78,053 78,053 Other (2,015 ) 1,858 (157 ) Balance as of December 31, 2015 $ 682,582 $ 331,381 $ 1,013,963 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 Changes in year 2016: Goodwill acquired (disposed), net 698,106 291,331 989,437 Currency translation 10,483 (60 ) 10,423 Other — 2,346 2,346 Balance as of December 31, 2016 $ 1,391,171 $ 624,998 $ 2,016,169 Goodwill 1,391,171 1,003,654 2,394,825 Accumulated impairment losses — (378,656 ) (378,656 ) Balance as of December 31, 2016 $ 1,391,171 $ 624,998 $ 2,016,169 |
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, 2016 and December 31, 2015 are as follows (in thousands): December 31, 2016 December 31, 2015 Gross Amount Accumulated Amortization Net Book Value Gross Amount Accumulated Amortization Net Book Value Definite-lived intangible assets Customer relationships $ 1,572,947 $ 624,719 $ 948,228 $ 930,212 $ 468,414 $ 461,798 Developed technology, patents & licenses 1,248,719 571,808 676,911 704,137 361,719 342,418 Trademarks, trade and domain names 83,472 41,433 42,039 21,072 20,740 332 Backlog 16,400 16,400 — — — — Sub-total $ 2,921,538 $ 1,254,360 $ 1,667,178 $ 1,655,421 $ 850,873 $ 804,548 Indefinite-lived intangible assets Trademarks 5,900 — 5,900 5,900 — 5,900 In-process research and development 4,100 — 4,100 — — — Sub-total 10,000 — 10,000 5,900 — 5,900 Total $ 2,931,538 $ 1,254,360 $ 1,677,178 $ 1,661,321 $ 850,873 $ 810,448 |
Schedule of Amortization of Intangible Assets | The following table presents the amortization of intangible assets (in thousands): Years Ended December 31, 2016 2015 2014 Cost of sales $ 2,963 $ 670 $ 230 Selling, general & administrative expense 4,048 3,480 — Amortization of intangible assets 397,464 227,440 236,521 Total $ 404,475 $ 231,590 $ 236,751 |
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): 2017 $ 370,767 2018 315,942 2019 269,910 2020 258,905 2021 124,119 Thereafter 327,535 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Investments | ARRIS’s investments consisted of the following (in thousands): As of December 31, As of December 31, Current Assets: Available-for-sale securities $ 115,553 $ 15,470 Noncurrent Assets: Available-for-sale securities 15,391 4,036 Equity method investments 22,688 24,452 Cost method investments 6,841 16,646 Other investments 28,012 24,408 Total classified as non-current assets 72,932 69,542 Total $ 188,485 $ 85,012 |
Amortized Costs and Fair Value of Available-for-sale Securities | The amortized costs and fair value of available-for-sale securities were as follows (in thousands): December 31, 2016 December 31, 2015 Amortized Gross Gross Fair Amortized Gross Gross Fair Certificates of deposit (foreign) $ 87,372 $ — $ — $ 87,372 $ 4,208 $ — $ — $ 4,208 Corporate bonds 34,175 35 (77 ) 34,133 6,198 78 (19 ) 6,257 Short-term bond fund 5,046 69 (69 ) 5,046 4,711 370 (76 ) 5,005 Corporate obligations 3 — — 3 1 — — 1 Money markets 54 — — 54 209 — — 209 Mutual funds 94 28 (21 ) 101 146 1 (16 ) 131 Other investments 4,192 530 (487 ) 4,235 3,712 214 (231 ) 3,695 Total $ 130,936 $ 662 $ (654 ) $ 130,944 $ 19,185 $ 663 $ (342 ) $ 19,506 |
Unrealized Losses on Available-For-Sale Securities and Fair Value | The following table represents the breakdown of the available-for-sale investments with gross realized losses and the duration that those losses had been unrealized as of December 31, 2016 and 2015 (in thousands): December 31, 2016 Less than 12 months 12 months or more Total Fair Value Unrealized Fair Unrealized Fair Value Unrealized Certificates of deposit (foreign) $ 87,372 $ — $ — $ — $ 87,372 $ — Corporate bonds 34,133 (77 ) — — 34,133 (77 ) Short-term bond fund 5,046 (69 ) — — 5,046 (69 ) Corporate obligations 3 — — — 3 — Money markets 54 — — — 54 — Mutual funds 101 (21 ) — — 101 (21 ) Other investments 4,235 (487 ) — — 4,235 (487 ) Total $ 130,944 $ (654 ) $ — $ — $ 130,944 $ (654 ) December 31, 2015 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Certificates of deposit (foreign) $ 4,208 $ — $ — $ — $ 4,208 $ — Corporate bonds 6,257 (19 ) — — 6,257 (19 ) Short-term bond fund 5,005 (76 ) — — 5,005 (76 ) Corporate obligations 1 — — — 1 — Money markets 209 — — — 209 — Mutual funds 131 (16 ) — — 131 (16 ) Other investments 3,695 (231 ) — — 3,695 (231 ) Total $ 19,506 $ (342 ) $ — $ — $ 19,506 $ (342 ) |
Sale and/or Maturity of Available-for-Sale Securities | The sale and/or maturity of available-for-sale securities resulted in the following activity (in thousands): Years Ended December 31, 2016 2015 2014 Proceeds from sales $ 25,932 $ 157,965 $ 54,057 Gross gains 33 305 1 Gross losses — (452 ) (83 ) |
Contractual Maturities of Available-for-Sale Securities | The contractual maturities of the Company’s available-for-sale securities as of December 31, 2016 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, 2016 Amortized Cost Fair Value Within 1 year $ 115,559 $ 115,553 After 1 year through 5 years 11,034 10,998 After 5 year through 10 years — — After 10 years 4,343 4,393 Total $ 130,936 $ 130,944 |
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, 2016, 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, 2016 (in thousands) Carrying Amount Maximum Exposure Conditional Access Licensing $ 12,751 $ 12,751 Combined Conditional Access Development 2,113 18,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016 and 2015 (in thousands): December 31, 2016 Level 1 Level 2 Level 3 Total Certificates of deposit (foreign) $ — $ 87,372 $ — $ 87,372 Corporate bonds — 34,133 — 34,133 Short-term bond fund 5,046 — — 5,046 Corporate obligations — 3 — 3 Money markets 54 — — 54 Mutual funds 101 — — 101 Other investments — 4,235 — 4,235 Interest rate derivatives — asset derivatives — 7,860 — 7,860 Interest rate derivatives — liability derivatives — (9,006 ) — (9,006 ) Foreign currency contracts — asset position — 7,369 — 7,369 Foreign currency contracts — liability position — (3,671 ) — (3,671 ) December 31, 2015 Level 1 Level 2 Level 3 Total Certificates of deposit (foreign) $ — $ 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 ) |
Derivative Instruments and He40
Derivative Instruments and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Impact of Derivative Financial Instruments | The table below presents the 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, 2016 and 2015 (in thousands): Location of Years Ended December 31, 2016 2015 2014 Gain (loss) Recognized in OCI on Derivatives (Effective Portion) Interest expense $ 2,103 $ (13,256 ) $ (8,541 ) Amounts Reclassified from Accumulated OCI into Income (Effective Portion) Interest expense 7,510 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, 2016 and December 31, 2015 were as follows (in thousands): Balance Sheet Location December 31, 2016 December 31, 2015 Derivatives designated as hedging instruments: Interest rate derivatives — asset derivatives Other current assets 222 — Interest rate derivatives — asset derivatives Other assets 8,043 — Interest rate derivatives — liability derivatives Other accrued liabilities (2,989 ) (4,489 ) Interest rate derivatives — liability derivatives Other noncurrent liabilities (6,421 ) (6,270 ) |
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, 2016 and December 31, 2015 were as follows (in thousands): Balance Sheet Location December 31, 2016 December 31, 2015 Derivatives not designated as hedging instruments: Foreign exchange contracts — asset derivatives Other current assets $ 7,369 $ 6,495 Foreign exchange contracts — asset derivatives Other assets — 569 Foreign exchange contracts — liability derivatives Other accrued liabilities (3,671 ) (23,632 ) Foreign exchange contracts — liability derivatives Other noncurrent liabilities — (739 ) 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, 2016, 2015, and 2014 were as follows (in thousands): Years Ended December 31, Statement of Operations Location 2016 2015 2014 Derivatives not designated as hedging instruments Foreign exchange contracts Loss (gain) on foreign currency $ 5,909 $ 7,597 $ (4,527 ) |
Guarantees (Tables)
Guarantees (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Information Regarding Changes in ARRIS's Aggregate Product Warranty Liabilities | Information regarding the changes in ARRIS’s aggregate product warranty liabilities for the years ending December 31, 2016 and 2015 were as follows (in thousands): 2016 2015 Beginning balance $ 49,027 $ 74,320 Warranty reserve at acquisition 43,723 — Accruals related to warranties (including changes in assumptions) 51,947 19,111 Settlements made (in cash or in kind) (56,510 ) (44,404 ) Ending balance $ 88,187 $ 49,027 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Reportable Segments | The tables below present information about the Company’s reportable segments for the years ended December 31, 2016, 2015 and 2014 (in thousands): 2016 2015 2014 Net sales to external customers: CPE $ 4,747,445 $ 3,136,585 $ 3,690,454 N&C 2,111,708 1,661,594 1,637,544 Other (30,035 ) 153 (5,077 ) Total 6,829,118 4,798,332 5,322,921 Direct contribution: CPE 684,744 548,840 791,244 N&C 681,608 487,166 430,943 Segment total 1,366,352 1,036,006 1,222,187 Corporate and unallocated costs (697,834 ) (568,336 ) (606,834 ) Amortization of intangible assets (397,464 ) (227,440 ) (236,521 ) Integration, acquisition, restructuring and other (160,337 ) (29,277 ) (37,498 ) Operating income 110,717 210,953 341,334 Interest expense 79,817 70,936 62,901 Loss on investments 21,194 6,220 10,961 (Gain) loss on foreign currency (13,982 ) 20,761 2,637 Interest income (4,395 ) (2,379 ) (2,590 ) Other expense ( income), net 3,991 8,362 28,195 Income before income taxes $ 24,092 $ 107,053 $ 239,230 |
Composition Of Corporate and Unallocated Costs | For the years ended December 31, 2016, 2015 and 2014, the compositions of our corporate and unallocated costs that are reflected in the consolidated statement of operations were as follows (in thousands): 2016 2015 2014 Corporate and unallocated costs: Cost of sales $ 150,588 $ 56,311 $ 69,973 Selling, general and administrative expenses 375,747 349,993 349,693 Research and development expenses 171,499 162,032 187,168 Total $ 697,834 $ 568,336 $ 606,834 |
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, 2016 and 2015 (in thousands): CPE N&C Total December 31, 2016 Goodwill $ 1,391,171 $ 624,998 $ 2,016,169 Intangible assets, net 1,064,692 612,486 1,677,178 December 31, 2015 Goodwill $ 682,582 $ 331,381 $ 1,013,963 Intangible assets, net 525,920 284,528 810,448 |
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, 2016, 2015 and 2014 (in thousands): 2016 2015 2014 CPE: Broadband CPE $ 1,683,491 $ 1,452,164 $ 1,494,925 Video CPE 3,063,954 1,684,421 2,195,529 Sub-total 4,747,445 3,136,585 3,690,454 Network & Cloud: Infrastructure equipment 1,800,480 1,407,735 1,435,676 Global services 230,588 181,892 141,625 Cloud solutions 80,640 71,967 60,243 Sub-total 2,111,708 1,661,594 1,637,544 Other: Other (30,035 ) 153 (5,077 ) Total net sales $ 6,829,118 $ 4,798,332 $ 5,322,921 |
Summary of Sales to Customers | A summary of sales to these customers for 2016, 2015 and 2014 is set forth below (in thousands, except percentages): Years ended December 31, 2016 2015 2014 AT&T and affiliates $ 901,001 $ 347,063 $ 612,413 % of sales 13.2 % 7.2 % 11.5 % Charter and affiliates $ 1,064,408 (1) $ 960,497 $ 1,031,553 % of sales 15.6 % 20.0 % 19.4 % Comcast and affiliates $ 1,637,519 (1) $ 1,007,376 $ 1,012,367 % of sales 24.0 % 21.0 % 19.0 % (1) Revenues were reduced by $30.2 million in total as a result of Warrants held by Charter and Comcast that are intended to incent additional purchases from them. (see Note 17 Warrants |
Summary of ARRIS' International Sales by Geographic Region | International sales for the years ended December 31, 2016, 2015 and 2014 were as follows (in thousands): For the Years Ended December 31, 2016 2015 2014 Domestic — U.S $ 4,909,698 $ 3,418,583 $ 3,957,203 International Americas, excluding U.S. 982,769 880,581 900,822 Asia Pacific 291,504 142,893 147,921 EMEA 645,147 356,275 316,975 Total international $ 1,919,420 $ 1,379,749 $ 1,365,718 Total sales $ 6,829,118 $ 4,798,332 $ 5,322,921 |
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, 2016 and 2015 (in thousands): For the Years Ended 2016 2015 Domestic — U.S $ 220,397 $ 223,736 International Americas, excluding U.S. 12,838 6,659 Asia Pacific 81,655 74,651 EMEA 38,487 7,265 Total international $ 132,980 $ 88,575 Total property, plant and equipment assets $ 353,377 $ 312,311 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Components of Inventory Net of Reserves | The components of inventory are as follows, net of reserves (in thousands): December 31, 2016 2015 Raw material $ 86,243 $ 60,287 Work in process 3,877 3,076 Finished goods 461,421 338,229 Total inventories, net $ 551,541 $ 401,592 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment, at Cost | Property, plant and equipment, at cost, consisted of the following (in thousands): December 31, 2016 2015 Land $ 68,562 $ 68,562 Buildings and leasehold improvements 163,333 141,171 Machinery and equipment 440,955 407,110 672,850 616,843 Less: Accumulated depreciation (319,473 ) (304,532 ) Total property, plant and equipment, net $ 353,377 $ 312,311 |
Restructuring and Integration (
Restructuring and Integration (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Changes to Restructuring Accrual | The following table represents a summary of and changes to the restructuring accrual, which is primarily composed of accrued severance and other employee costs and contractual obligations that related to excess leased facilities (in thousands): Employee Contractual Write-off Total Balance at December 31, 2015 $ 3 $ 87 $ — $ 90 Restructuring charges 92,246 3,379 716 96,341 Cash payments / adjustments (64,363 ) (1,223 ) — (65,586 ) Non-cash expense — — (716 ) (716 ) Balance at December 31, 2016 $ 27,886 $ 2,243 $ — $ 30,129 |
Lease Financing Obligation (Tab
Lease Financing Obligation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payments Required on Lease Financing Obligations | At December 31, 2016, the minimum lease payments required on the financing obligation were as follows (in thousands): 2017 $ 4,136 2018 4,260 2019 4,388 2020 4,520 2021 4,655 Thereafter through 2025 16,102 Total minimum lease payments $ 38,061 |
Indebtedness (Tables)
Indebtedness (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Indebtedness and Lease Financing Obligations | The following is a summary of indebtedness and lease financing obligations as of December 31, 2016 and 2015 (in thousands): As of December 31, 2016 As of December 31, 2015 Current liabilities: Term A loan $ 49,500 $ 49,500 Term A-1 loan 40,000 — Lease finance obligation 775 758 Current obligations 90,275 50,258 Current deferred financing fees and debt discount (7,541 ) (6,667 ) 82,734 43,591 Noncurrent liabilities: Term A loan 866,250 915,750 Term A-1 loan 730,000 — Term B loan 543,812 543,812 Revolver — — Lease finance obligation 57,902 58,676 Noncurrent obligations 2,197,964 1,518,238 Noncurrent deferred financing fees and debt discount (17,955 ) (21,995 ) 2,180,009 1,496,243 Total $ 2,262,743 $ 1,539,834 |
Senior Credit Facility Interest Rates | Interest rates on borrowings under the senior secured credit facilities are set forth in the table below. Rate As of December 31, 2016 Term Loan A LIBOR + 1.75 % 2.52 % Term Loan A-1 LIBOR + 1.75 % 2.52 % Term Loan B LIBOR (1) + 2.75 % 3.52 % 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, 2016, the scheduled maturities of the contractual debt obligations for the next four years are as follows (in thousands): 2017 $ 89,500 2018 89,500 2019 89,500 2020 1,961,063 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share Computations | The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the periods indicated (in thousands, except per share data): For the Years Ended December 31, 2016 2015 2014 Basic: Net income attributable to ARRIS International plc. $ 18,100 $ 92,181 $ 327,211 Weighted average shares outstanding 190,701 146,388 144,386 Basic earnings per share $ 0.09 $ 0.63 $ 2.27 Diluted: Net income attributable to ARRIS International plc. $ 18,100 $ 92,181 $ 327,211 Weighted average shares outstanding 190,701 146,388 144,386 Net effect of dilutive shares 1,484 2,971 3,894 Total 192,185 149,359 148,280 Diluted earnings per share $ 0.09 $ 0.62 $ 2.21 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Ordinary Shares Issuable under Outstanding Warrant Programs with Customers, Based on Achieving Certain Purchase Levels | The table below presents by year, the ordinary shares issuable under outstanding Warrant programs with customers, based on achieving certain purchase levels (in thousands). Warrants Issuable Exercise Price per Minimum Maximum $22.19 $28.54 Note 1 Year 2016 1,500 4,000 3,000 1,000 — 2017 2,000 7,500 5,000 2,500 — 2018 1,000 2,500 — — 2,500 (1) The exercise price for the 2018 warrants will be determined based upon the lower of 1) the volume-weighted price for the 10-day trading period preceding January 1, 2018 (“the January Price”) or 2) the average of $28.54 and the January Price. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income (Loss) Before Income Taxes | Income (loss) before income taxes (in thousands): Years Ended December 31, 2016 2015 2014 U.K $ (36,300 ) $ (5,321 ) $ (1,604 ) U.S (149,605 ) 47,063 180,133 Other Foreign 209,997 65,311 60,701 $ 24,092 $ 107,053 $ 239,230 |
Components of Income Tax Expense (Benefit) | Income tax expense (benefit) consisted of the following (in thousands): Years Ended December 31, 2016 2015 2014 Current — U.K $ 81,822 $ 559 $ (94 ) U.S. 47,025 2,141 59,197 Other Foreign 31,552 14,476 18,230 160,399 17,176 77,333 Deferred — U.K. (23,177 ) (30 ) 121 U.S. (105,735 ) 5,119 (160,382 ) Other Foreign (16,356 ) 329 (5,053 ) (145,268 ) 5,418 (165,314 ) Income tax expense (benefit) $ 15,131 $ 22,594 $ (87,981 ) |
Reconciliation of U.S. Statutory Federal Income Tax Rate and Effective Income Tax Rate | A reconciliation of the U.K. statutory income tax rate of 20% for 2016 and the U.S. federal statutory income tax rate of 35% for 2015 and 2014 and the effective income tax rates is as follows: Years Ended December 31, 2016 2015 2014 Statutory income tax rate 20.0 % 35.0 % 35.0 % Effects of: State income taxes, net of federal benefit (10.0 ) 5.2 (6.6 ) Acquired deferred tax assets — 5.8 (16.5 ) U.S. domestic manufacturing deduction (12.0 ) (0.7 ) (2.1 ) Transaction costs 22.0 — — Research and development tax credits (90.6 ) (26.6 ) (8.7 ) Withholding taxes (U.K. entities) 245.5 — — U.K. stamp duty 9.4 — — Subpart F income 4.0 4.8 0.8 Changes in valuation allowance 6.0 (26.6 ) (44.2 ) Foreign tax credits (14.0 ) (20.7 ) (0.6 ) Non-deductible officer compensation — 5.3 0.6 Non-U.S. tax rate differential — (5.0 ) (2.6 ) Non-U.K. tax rate differential (8.9 ) — — Benefit of other foreign tax regimes (124.5 ) — — Recapture of dual consolidated losses — 1.1 4.0 Taiwan gain — 34.3 — Other, net 15.9 9.2 4.1 62.8 % 21.1 % (36.8 )% |
Significant Components of ARRIS' Net Deferred Income Tax Assets (Liabilities) | Significant components of ARRIS’ net deferred income tax assets (liabilities) were as follows (in thousands): December 31, 2016 2015 Deferred income tax assets Inventory costs $ 63,887 $ 28,728 Accrued vacation 7,062 7,138 Acquisition charges — 6,556 Allowance for bad debt 7,611 4,396 Equity compensation 18,861 14,673 Federal/state net operating loss carryforwards 53,116 95,571 Foreign net operating loss carryforwards 14,409 10,989 Research and development credits 113,061 79,809 Pension and deferred compensation 15,933 19,166 Warranty reserve 36,693 18,215 Capitalized interest 24,963 — Capitalized research and development 177,574 215,894 Other 71,500 24,214 Total deferred income tax assets 604,670 525,349 Deferred income tax liabilities: Other noncurrent liabilities (3,713 ) (4,394 ) Goodwill and intangible assets (467,957 ) (248,231 ) Total deferred income tax liabilities (471,670 ) (252,625 ) Net deferred income tax assets 133,000 272,724 Valuation allowance (57,772 ) (87,788 ) Net deferred income tax assets (liabilities) $ 75,228 $ 184,936 |
Summary Deferred Tax Asset Valuation Allowance | An analysis of the deferred tax asset valuation allowances is as follows: (in thousands): 2016 2015 2014 Balance at beginning of fiscal year $ 87,788 $ 118,629 $ 163,745 Additions 17,973 3,312 37,708 Deductions (47,989 ) (34,153 ) (82,824 ) Balance at end of fiscal year $ 57,772 $ 87,788 $ 118,629 |
Tabular Reconciliation of Unrecognized Tax Benefits | Tabular Reconciliation of Unrecognized Tax Benefits (in thousands) For the Period ended December 31, 2016 2015 2014 Beginning balance $ 49,919 $ 48,019 $ 28,344 Gross increases — tax positions in prior period 8,068 1,599 17,636 Gross decreases — tax positions in prior period (5,700 ) (2,185 ) (4,115 ) Gross increases — current-period tax positions 27,774 9,578 9,979 Increases (decreases) from acquired businesses 60,796 — (196 ) Changes related to foreign currency translation adjustment and remeasurement (1,087 ) — — Decreases relating to settlements with taxing authorities and other (3,933 ) (6,689 ) (2,480 ) Decreases due to lapse of statute of limitations (7,784 ) (403 ) (1,149 ) Ending balance 128,053 $ 49,919 $ 48,019 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2016: Shares Weighted Average Fair Value Unvested at December 31, 2015 5,985,249 $ 23.59 Granted 3,358,005 22.85 Vested (2,155,527 ) 20.91 Forfeited (692,678 ) 24.17 Unvested at December 31, 2016 6,495,049 24.04 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of Change in Projected Benefit Obligations, Fair Value of Plan Assets and the Funded Status of Pension Plan | The following table summarizes the change in projected benefit obligations, fair value of plan assets and the funded status of pension plan for the years ended December 31, 2016 and 2015 (in thousands): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2016 2015 Change in Projected Benefit Obligation: Projected benefit obligation at beginning of year $ 42,999 $ 46,550 $ 36,372 $ 35,541 Service cost — — 703 738 Interest cost 1,751 1,716 614 661 Actuarial (gain) loss 2,024 (3,962 ) 81 708 Benefit payments (1,504 ) (1,305 ) (1,041 ) (1,276 ) Settlements — — (1,626 ) — Foreign currency — — 603 — Projected benefit obligation at end of year $ 45,270 $ 42,999 $ 35,706 $ 36,372 Change in Plan Assets: Fair value of plan assets at beginning of year $ 13,516 $ 14,585 $ 9,232 $ 8,923 Actual return on plan assets 751 81 131 236 Company contributions 5,747 155 11,120 1,273 Expenses and benefits paid from plan assets (1,504 ) (1,305 ) — (1,200 ) Settlements — — (1,626 ) — Foreign currency — — 154 — Fair value of plan assets at end of year (1) $ 18,510 $ 13,516 $ 19,011 $ 9,232 Funded Status: Funded status of plan $ (26,760 ) $ (29,483 ) $ (16,695 ) $ (27,140 ) Unrecognized actuarial (gain) loss 10,720 9,196 (2,038 ) (4,320 ) Net amount recognized $ (16,040 ) $ (20,287 ) $ (18,733 ) $ (31,460 ) (1) In addition to the U.S. pension plan assets, ARRIS has established two rabbi trusts to further fund the pension obligations of the Chief Executive and certain executive officers of $21.2 million as of December 31, 2016 and $18.0 million as of December 31, 2015, 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): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2016 2015 Current liabilities $ (399 ) $ (426 ) $ — $ — Noncurrent liabilities (26,361 ) (29,057 ) (16,695 ) (27,140 ) Accumulated other comprehensive income (loss) (1) 10,720 9,196 (2,038 ) (4,320 ) Total $ (16,040 ) $ (20,287 ) $ (18,733 ) $ (31,460 ) (1) The accumulated other comprehensive income on the Consolidated Balance Sheets as of December 31, 2016 and 2015 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): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2014 2016 2015 2014 Net (gain) loss $ 2,068 $ (3,203 ) $ 5,992 $ 225 $ 813 $ 1,077 Amortization of net gain (loss) (544 ) (834 ) (305 ) 248 (529 ) (464 ) Adjustments — — — 1,849 — — Foreign currency — — — 31 — — Total recognized in other (loss) comprehensive income $ 1,524 $ (4,037 ) $ 5,687 $ 2,353 $ 284 $ 613 |
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 or projected benefit obligation in excess of plan assets as of December 31, 2016 and 2015 is as follows (in thousands): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2016 2015 Accumulated benefit obligation in excess of plan assets: Accumulated benefit obligation $ 45,269 $ 42,999 $ 27,551 $ 26,966 Fair value of plan assets 18,510 13,516 19,011 9,232 Projected benefit obligation in excess of plan assets: Projected benefit obligation $ 45,269 $ 42,999 35,706 $ 36,372 Fair value of plan assets 18,510 13,516 19,011 9,232 |
Net Periodic Pension Cost | Net periodic pension cost for 2016, 2015 and 2014 for pension and supplemental benefit plans includes the following components (in thousands): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2014 2016 2015 2014 Service cost $ — $ — $ — $ 703 $ 738 $ 751 Interest cost 1,751 1,716 1,783 614 661 599 Return on assets (expected) (795 ) (839 ) (874 ) (275 ) (176 ) (166 ) Amortization of net actuarial loss(gain) (1) 544 834 305 (70 ) 529 464 Settlement charge — — — (178 ) — — Adjustments — — — (1,849 ) — — Foreign currency — — — (31 ) — — Net periodic pension cost $ 1,500 $ 1,711 $ 1,214 $ (1,086 ) $ 1,752 $ 1,648 (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 assumptions used to determine the benefit obligations as of December 31, 2016 and 2015 are as set forth below (in percentage): U.S. Pension Plans Non-U.S. Pension Plans 2016 2015 2014 2016 2015 2014 Weighted-average assumptions used to determine benefit obligations: Discount rate 3.90 % 4.15 % 3.75 % 1.30 % 1.70 % 1.90 % Rate of compensation increase N/A N/A N/A N/A N/A N/A Weighted-average assumptions used to determine net periodic benefit costs: Discount rate 4.15 % 3.75 % 4.50 % 1.70 % 1.90 % 1.80 % Expected long-term rate of return on plan assets 6.00 % 6.00 % 6.00 % 1.60 % 2.00 % 2.00 % Rate of compensation increase(1) N/A N/A N/A 3.00 % 3.00 % 3.25 % (1) Represent an average rate for the non-U.S. pension plans. Rate of compensation increase is 4.00% for indirect labor and 2.00% for direct labor for 2016 and 2015. Rate of compensation increase is 4.50% for indirect labor and 2.00% for direct labor for 2014. |
Expected Benefit Payments Related to Defined Benefit Pension Plans | As of December 31, 2016, the expected benefit payments related to the Company’s defined benefit pension plans during the next ten years are as follows (in thousands): U.S. Pension Plans Non-U.S. Pension Plans 2017 $ 1,629 $ 2,067 2018 16,443 2,486 2019 1,689 2,083 2020 1,809 2,323 2021 1,929 2,489 2022 — 2026 10,152 12,817 |
Summary of Weighted Average Pension Asset Allocations | The following table summarizes the weighted average pension asset allocations as December 31, 2016 and 2015: U.S. Pension Plans Target Actual 2016 2015 2016 2015 Equity securities 30% - 40% 40% - 45% 30 % 40 % Debt securities 0% - 5% 0% - 5% 2 % 2 % Cash and cash equivalents 60% - 70% 50% - 60% 68 % 58 % 100% 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, 2016 and 2015 (in thousands): December 31, 2016 Level 1 Level 2 Level 3 Total Cash and cash equivalents (1) $ — $ 12,722 $ — $ 12,722 Equity securities (2) : U.S. large cap 1,123 — — 1,123 U.S. mid cap 1,118 — — 1,118 U.S. small cap 1,118 — — 1,118 International 1,685 — — 1,685 Fixed income securities (3) : 743 — — 743 Total $ 5,787 $ 12,722 $ — $ 18,509 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 (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. |
Accumulated Other Comprehensi53
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 year ended December 31, 2016 and 2015 (in thousands): Available-for Derivative Change Cumulative Total Balance as of December 31, 2015 $ 133 $ (6,781 ) $ (4,195 ) $ (1,803 ) $ (12,646 ) Other comprehensive (loss) income before reclassifications (11 ) 1,631 (2,934 ) 11,096 9,782 Amounts reclassified from accumulated other comprehensive income (loss) 15 5,821 319 — 6,155 Net current-period other comprehensive income (loss) 4 7,452 (2,615 ) 11,096 15,937 Balance as of December 31, 2016 $ 137 $ 671 $ (6,810 ) $ 9,293 $ 3,291 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 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Future Minimum Operating Lease Payments under Non-Cancelable Leases | Future minimum operating lease payments under non-cancelable leases at December 31, 2016 were as follows (in thousands): Operating Leases 2017 $ 31,742 2018 26,745 2019 22,349 2020 19,129 2021 16,729 Thereafter 50,128 Less sublease income (1,977 ) Total minimum lease payments $ 164,845 |
Summary Quarterly Consolidate55
Summary Quarterly Consolidated Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of Quarterly Consolidated Financial Information | The following table summarizes ARRIS’s quarterly consolidated financial information (in thousands, except per share data): Quarters in 2016 Ended, March 31, June 30, September 30 December 31, (1)(2) Net sales $ 1,614,706 $ 1,730,044 $ 1,725,145 $ 1,759,223 Gross margin 384,032 444,734 442,850 436,001 Operating (loss) income (86,490 ) 33,388 91,313 72,506 Net (loss) income attributable to ARRIS International plc. $ (202,573 ) $ 84,228 $ 48,162 $ 88,283 Net (loss) income per basic share $ (1.06 ) $ 0.44 $ 0.25 $ 0.46 Net (loss) income per diluted share $ (1.06 ) $ 0.44 $ 0.25 $ 0.46 Quarters in 2015 Ended March 31, June 30, September 30, (3) December 31, (4) 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 (loss) income 45,718 51,542 60,781 52,912 Net (loss) income attributable to ARRIS Group, Inc. $ 19,126 $ 16,758 $ 26,256 $ 30,041 Net income per diluted share $ 0.13 $ 0.11 $ 0.18 $ 0.20 Net income per basic share $ 0.13 $ 0.11 $ 0.18 $ 0.20 Year 2016 (1) For the quarter ended December 31, 2016, the Company recorded $16.4 million as a reduction to net sales in connection with Warrants. (2) In the fourth quarter of 2016, the Company recorded foreign currency remeasurement gains of approximately $16 million related to the remeasurement of net deferred income tax liabilities in the U.K. where the functional currency is the U.S. dollar. Approximately $8 million resulted from changes in exchange rates prior to the 4 th quarter in 2016 and was considered the correction of an immaterial misstatement of interim financial statements in 2016. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, th quarter adjustment on its previously issued interim financial statements in 2016 and concluded that the results of operations for these periods were not materially misstated and accordingly the correction was recorded in the 4 th quarter. Year 2015 (3) 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. (4) $20.4 million of current tax benefit was recorded when the President signed legislation to approve the extension of the U.S. federal research and development tax credit permanently during Q4 of 2015. |
Organization and Basis of Pre56
Organization and Basis of Presentation - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2016Segment | Jan. 04, 2016$ / shares | Jan. 04, 2016£ / shares | |
Organization And Basis Of Presentation [Line Items] | |||
Number of business segments operated | 2 | ||
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 Accoun57
Summary of Significant Accounting Policies - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($)Segment | Dec. 31, 2014USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||
Original maturity period of cash, cash equivalents and investments | Three months or less | ||
Shipping and handling costs | $ 4,300,000 | $ 5,600,000 | $ 6,900,000 |
Amortization of landlord funded tenant improvements | 6,600,000 | 4,500,000 | 4,000,000 |
Depreciation expense, including amortization of capital leases | 90,600,000 | 71,800,000 | 79,000,000 |
Impairment of intangible assets | 2,200,000 | $ 0 | 0 |
Number of reporting units | Segment | 3 | ||
Goodwill impairment | 0 | $ 0 | 0 |
Advertising expense | 19,600,000 | $ 16,800,000 | $ 8,200,000 |
N&C | Cloud software | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Goodwill impairment | 81,100,000 | ||
Impairment of intangible assets | 42,900,000 | ||
In-process Research and Development | |||
Summary Of Significant Accounting Policies [Line Items] | |||
In-process R&D written off | $ 2,200,000 | ||
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 Building Improvements | Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Property, plant and equipment, useful life | 10 years | ||
Building and Building 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, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Balance at beginning of fiscal year | $ 9,975 | $ 6,392 | $ 1,887 |
Charges to expenses | 1,386 | 2,997 | 5,336 |
Recoveries (deductions) | 3,892 | 586 | (831) |
Balance at end of fiscal year | $ 15,253 | $ 9,975 | $ 6,392 |
Business Acquisitions - Additio
Business Acquisitions - Additional information (Detail) - USD ($) $ in Thousands, shares in Millions | Jan. 04, 2016 | Jan. 31, 2016 | Apr. 30, 2015 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Date of merger agreement | Apr. 22, 2015 | ||||||||||
Goodwill | $ 2,016,169 | $ 1,013,963 | $ 936,067 | $ 940,402 | |||||||
Amortization of intangible assets | 397,464 | 227,440 | $ 236,521 | ||||||||
Trade accounts receivable, Fair value | 452,300 | ||||||||||
Accounts receivable, gross contractual amount | 454,300 | ||||||||||
Accounts receivable, uncollectible receivable amount | 2,000 | ||||||||||
Acquisition related costs | $ 29,000 | ||||||||||
Business combination, debt assumed | $ 263,800 | ||||||||||
Business combination, payment of debt assumed | $ 263,800 | ||||||||||
ARRIS Group Inc | A-C Acquisition, LLC Venture | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Membership interest acquired percentage in Active Video Networks, Inc. | 65.00% | ||||||||||
Charter and affiliates | A-C Acquisition, LLC Venture | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Ownership percentage of joint venture by Charters | 35.00% | ||||||||||
Active Network Inc | A-C Acquisition, LLC Venture | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Membership interest acquired percentage in Active Video Networks, Inc. | 100.00% | ||||||||||
Pace Plc | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Aggregate stock and cash consideration | 2,073,802 | ||||||||||
Business acquisition, cash consideration | [1] | $ 638,789 | |||||||||
Business acquisition potential stock issue, shares | 47.7 | 47.7 | |||||||||
Business acquisition non-cash consideration | [2] | $ 323 | |||||||||
Goodwill | 989,537 | ||||||||||
Acquired intangible assets | $ 1,258,660 | ||||||||||
Business combination, payment of debt assumed | $ 240,200 | ||||||||||
Net income (loss) | $ 138,674 | (79,414) | |||||||||
Pace Plc | Adjustments | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Amortization of intangible assets | $ 5,600 | $ (6,600) | $ 6,400 | ||||||||
Pace Plc | Acquisition Related Costs | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Net income (loss) | $ (147,400) | $ 167,000 | |||||||||
ActiveVideo | A-C Acquisition, LLC Venture | |||||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||||
Business acquisition, cash consideration | $ 98,000 | ||||||||||
[1] | Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707 as of January 4, 2016) for each of Pace's shares and equity awards outstanding. | ||||||||||
[2] | Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. |
Summary of Fair Value of Consid
Summary of Fair Value of Consideration Transferred (Detail) - Pace Plc $ in Thousands | Jan. 04, 2016USD ($) | |
Business Acquisition [Line Items] | ||
Cash Consideration | $ 638,789 | [1] |
Stock Consideration | 1,434,690 | [2] |
Non-cash Consideration | 323 | [3] |
Total consideration transferred | $ 2,073,802 | |
[1] | Cash consideration represents the cash payment of 132.5 pence (converted to $1.95 at an exchange rate of 1.4707 as of January 4, 2016) 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 shares at the date of Combination. | |
[3] | Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. |
Summary of Fair Value of Cons61
Summary of Fair Value of Consideration Transferred (Parenthetical) (Detail) - Pace Plc | Jan. 04, 2016USD ($)$ / 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 | ||
Business acquisition non-cash consideration | $ 323,000 | [1] | |
[1] | Non-cash consideration represents $0.3 million settlement of preexisting payables and receivables between Pace and ARRIS. |
Summary of Estimated Fair Value
Summary of Estimated Fair Values of Net Assets Acquired (Detail) - USD ($) $ in Thousands | Jan. 04, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Business Acquisition [Line Items] | |||||
Goodwill | $ 2,016,169 | $ 1,013,963 | $ 936,067 | $ 940,402 | |
Pace Plc | |||||
Business Acquisition [Line Items] | |||||
Total estimated consideration transferred | $ 2,073,802 | ||||
Cash and cash equivalents | 298,671 | ||||
Accounts and other receivables | 480,815 | ||||
Inventories | 427,642 | ||||
Prepaids | 40,501 | ||||
Other current assets | 54,217 | ||||
Property, plant & equipment | 73,983 | ||||
Intangible assets | 1,258,660 | ||||
Other assets | 9,280 | ||||
Accounts payable and other current liabilities | (795,283) | ||||
Deferred revenue | (4,805) | ||||
Short-term borrowings | (263,795) | ||||
Other accrued liabilities | (136,789) | ||||
Noncurrent deferred income tax liabilities | (285,937) | ||||
Other noncurrent liabilities | (72,895) | ||||
Net assets acquired | 1,084,265 | ||||
Goodwill | $ 989,537 |
Acquired Intangible Assets (Det
Acquired Intangible Assets (Detail) - Pace Plc $ in Thousands | Jan. 04, 2016USD ($) |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 1,258,660 |
Customer Contracts & Relationships | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 634,400 |
Estimated Weighted Average Life (years) | 9 years 9 months 18 days |
Technology and Patents | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 539,160 |
Estimated Weighted Average Life (years) | 6 years |
Trademarks and Trade Names | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 62,400 |
Estimated Weighted Average Life (years) | 3 years |
Backlog | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 16,400 |
Estimated Weighted Average Life (years) | 6 months |
In-process Research and Development | |
Business Acquisition [Line Items] | |
Estimated Fair value | $ 6,300 |
Unaudited Pro Forma Consolidate
Unaudited Pro Forma Consolidated Financial Information (Detail) - Pace Plc - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | ||
Business Acquisition [Line Items] | |||
Net sales | $ 6,829,118 | $ 7,115,871 | |
Net income (loss) attributable to ARRIS International plc | $ 138,674 | $ (79,414) | |
Net income (loss) per share | |||
Basic | [1] | $ 0.73 | $ (0.41) |
Diluted | [1] | $ 0.72 | $ (0.41) |
[1] | Calculated based on net income (loss) attributable to shareowners of ARRIS International plc. |
Carrying Amount of Goodwill (De
Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Goodwill [Line Items] | ||||
Balance as of beginning of period | $ 1,013,963 | $ 936,067 | $ 940,402 | |
Goodwill acquired (disposed), net | 989,437 | 78,053 | ||
Goodwill acquired | 1,682 | |||
Currency translation | 10,423 | |||
Other | 2,346 | (157) | (6,017) | |
Goodwill | 2,394,825 | 1,392,619 | 1,314,723 | $ 1,319,058 |
Accumulated impairment losses | (378,656) | (378,656) | (378,656) | (378,656) |
Balance as of end of period | 2,016,169 | 1,013,963 | 936,067 | |
CPE | ||||
Goodwill [Line Items] | ||||
Balance as of beginning of period | 682,582 | 684,597 | 688,658 | |
Goodwill acquired (disposed), net | 698,106 | |||
Currency translation | 10,483 | |||
Other | (2,015) | (4,061) | ||
Goodwill | 1,391,171 | 682,582 | 684,597 | 688,658 |
Balance as of end of period | 1,391,171 | 682,582 | 684,597 | |
Network Infrastructure and Cloud Services | ||||
Goodwill [Line Items] | ||||
Balance as of beginning of period | 331,381 | 251,470 | 251,744 | |
Goodwill acquired (disposed), net | 291,331 | 78,053 | ||
Goodwill acquired | 1,682 | |||
Currency translation | (60) | |||
Other | 2,346 | 1,858 | (1,956) | |
Goodwill | 1,003,654 | 710,037 | 630,126 | 630,400 |
Accumulated impairment losses | (378,656) | (378,656) | (378,656) | $ (378,656) |
Balance as of end of period | $ 624,998 | $ 331,381 | $ 251,470 |
Goodwill and Intangible Asset66
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands | Jan. 04, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Schedule Of Goodwill And Intangible Assets [Line Items] | ||||
Goodwill acquired | $ 1,682 | |||
Goodwill disposed of | $ (700) | |||
Foreign currency translation gain | $ (10,423) | |||
Pace Plc | ||||
Schedule Of Goodwill And Intangible Assets [Line Items] | ||||
Goodwill acquired | 989,500 | |||
Goodwill disposed of | (100) | |||
Acquired intangible assets | $ 1,258,660 | |||
Foreign currency translation gain | 8,300 | |||
Pace Plc | Technology Licenses | ||||
Schedule Of Goodwill And Intangible Assets [Line Items] | ||||
Finite-lived intangible assets acquired | 5,400 | |||
ActiveVideo | ||||
Schedule Of Goodwill And Intangible Assets [Line Items] | ||||
Goodwill acquired | $ 78,800 | |||
SeaWell Network | ||||
Schedule Of Goodwill And Intangible Assets [Line Items] | ||||
Goodwill acquired | $ 1,700 | |||
In-process Research and Development | ||||
Schedule Of Goodwill And Intangible Assets [Line Items] | ||||
In-process R&D written off | $ 2,200 | |||
In-process Research and Development | Pace Plc | ||||
Schedule Of Goodwill And Intangible Assets [Line Items] | ||||
Acquired intangible assets | $ 6,300 |
Gross Carrying Amount and Accum
Gross Carrying Amount and Accumulated Amortization of Intangible Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | $ 2,921,538 | $ 1,655,421 |
Gross Amount | 2,931,538 | 1,661,321 |
Definite-lived intangible assets, Accumulated Amortization | 1,254,360 | 850,873 |
Definite-lived intangible assets, Net Book Value | 1,667,178 | 804,548 |
Net Book Value | 1,677,178 | 810,448 |
Indefinite-lived intangible assets | 10,000 | 5,900 |
Trademarks | ||
Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 5,900 | 5,900 |
In-process Research and Development | ||
Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 4,100 | |
Customer relationships | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 1,572,947 | 930,212 |
Definite-lived intangible assets, Accumulated Amortization | 624,719 | 468,414 |
Definite-lived intangible assets, Net Book Value | 948,228 | 461,798 |
Developed technology, patents & licenses | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 1,248,719 | 704,137 |
Definite-lived intangible assets, Accumulated Amortization | 571,808 | 361,719 |
Definite-lived intangible assets, Net Book Value | 676,911 | 342,418 |
Trademarks and Trade Names | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 83,472 | 21,072 |
Definite-lived intangible assets, Accumulated Amortization | 41,433 | 20,740 |
Definite-lived intangible assets, Net Book Value | 42,039 | $ 332 |
Backlog | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 16,400 | |
Definite-lived intangible assets, Accumulated Amortization | $ 16,400 |
Schedule of Amortization of Int
Schedule of Amortization of Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | $ 404,475 | $ 231,590 | $ 236,751 |
Cost of sales | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 2,963 | 670 | 230 |
Selling, general and administrative expenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 4,048 | 3,480 | |
Amortization of intangible assets | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | $ 397,464 | $ 227,440 | $ 236,521 |
Estimated Total Amortization Ex
Estimated Total Amortization Expense for Finite-Lived Intangibles for Next Five Fiscal Years (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Finite Lived Intangible Assets Amortization Expense [Line Items] | |
2,017 | $ 370,767 |
2,018 | 315,942 |
2,019 | 269,910 |
2,020 | 258,905 |
2,021 | 124,119 |
Thereafter | $ 327,535 |
Investments (Detail)
Investments (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Available-for-sale securities | $ 115,553 | $ 15,470 |
Noncurrent Assets: | ||
Available-for-sale securities | 15,391 | 4,036 |
Equity method investments | 22,688 | 24,452 |
Cost method investments | 6,841 | 16,646 |
Other investments | 28,012 | 24,408 |
Total classified as non-current assets | 72,932 | 69,542 |
Total | $ 188,485 | $ 85,012 |
Amortized Costs and Fair Value
Amortized Costs and Fair Value of Available-for-sale Securities (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | $ 130,936 | $ 19,185 |
Available-for-sale securities, Gross Unrealized Gains | 662 | 663 |
Available-for-sale securities, Gross Unrealized Losses | (654) | (342) |
Available-for-sale securities, Fair Value | 130,944 | 19,506 |
Available-for-sale securities, Less than 12 months, Fair Value | 130,944 | 19,506 |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (654) | (342) |
Available-for-sale securities, 12 months or more, Fair Value | 0 | 0 |
Available-for-sale securities, 12 months or more, Unrealized Losses | 0 | 0 |
Total, Fair Value | 130,944 | 19,506 |
Total, Unrealized Losses | (654) | (342) |
Certificates of deposit (foreign) | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 87,372 | 4,208 |
Available-for-sale securities, Fair Value | 87,372 | 4,208 |
Available-for-sale securities, Less than 12 months, Fair Value | 87,372 | 4,208 |
Available-for-sale securities, 12 months or more, Fair Value | 0 | 0 |
Available-for-sale securities, 12 months or more, Unrealized Losses | 0 | 0 |
Total, Fair Value | 87,372 | 4,208 |
Corporate bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 34,175 | 6,198 |
Available-for-sale securities, Gross Unrealized Gains | 35 | 78 |
Available-for-sale securities, Gross Unrealized Losses | (77) | (19) |
Available-for-sale securities, Fair Value | 34,133 | 6,257 |
Available-for-sale securities, Less than 12 months, Fair Value | 34,133 | 6,257 |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (77) | (19) |
Available-for-sale securities, 12 months or more, Fair Value | 0 | 0 |
Available-for-sale securities, 12 months or more, Unrealized Losses | 0 | 0 |
Total, Fair Value | 34,133 | 6,257 |
Total, Unrealized Losses | (77) | (19) |
Short-term bond fund | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 5,046 | 4,711 |
Available-for-sale securities, Gross Unrealized Gains | 69 | 370 |
Available-for-sale securities, Gross Unrealized Losses | (69) | (76) |
Available-for-sale securities, Fair Value | 5,046 | 5,005 |
Available-for-sale securities, Less than 12 months, Fair Value | 5,046 | 5,005 |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (69) | (76) |
Available-for-sale securities, 12 months or more, Fair Value | 0 | 0 |
Available-for-sale securities, 12 months or more, Unrealized Losses | 0 | 0 |
Total, Fair Value | 5,046 | 5,005 |
Total, Unrealized Losses | (69) | (76) |
Corporate obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 3 | 1 |
Available-for-sale securities, Fair Value | 3 | 1 |
Available-for-sale securities, Less than 12 months, Fair Value | 3 | 1 |
Available-for-sale securities, 12 months or more, Fair Value | 0 | 0 |
Available-for-sale securities, 12 months or more, Unrealized Losses | 0 | 0 |
Total, Fair Value | 3 | 1 |
Money markets | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 54 | 209 |
Available-for-sale securities, Fair Value | 54 | 209 |
Available-for-sale securities, Less than 12 months, Fair Value | 54 | 209 |
Available-for-sale securities, 12 months or more, Fair Value | 0 | 0 |
Available-for-sale securities, 12 months or more, Unrealized Losses | 0 | 0 |
Total, Fair Value | 54 | 209 |
Mutual funds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 94 | 146 |
Available-for-sale securities, Gross Unrealized Gains | 28 | 1 |
Available-for-sale securities, Gross Unrealized Losses | (21) | (16) |
Available-for-sale securities, Fair Value | 101 | 131 |
Available-for-sale securities, Less than 12 months, Fair Value | 101 | 131 |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (21) | (16) |
Available-for-sale securities, 12 months or more, Fair Value | 0 | 0 |
Available-for-sale securities, 12 months or more, Unrealized Losses | 0 | 0 |
Total, Fair Value | 101 | 131 |
Total, Unrealized Losses | (21) | (16) |
Other investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 4,192 | 3,712 |
Available-for-sale securities, Gross Unrealized Gains | 530 | 214 |
Available-for-sale securities, Gross Unrealized Losses | (487) | (231) |
Available-for-sale securities, Fair Value | 4,235 | 3,695 |
Available-for-sale securities, Less than 12 months, Fair Value | 4,235 | 3,695 |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (487) | (231) |
Available-for-sale securities, 12 months or more, Fair Value | 0 | 0 |
Available-for-sale securities, 12 months or more, Unrealized Losses | 0 | 0 |
Total, Fair Value | 4,235 | 3,695 |
Total, Unrealized Losses | $ (487) | $ (231) |
Sale and_or Maturity of Availab
Sale and/or Maturity of Available-for-Sale Securities (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Proceeds from sales | $ 25,932 | $ 157,965 | $ 54,057 |
Gross gains | $ 33 | 305 | 1 |
Gross losses | $ (452) | $ (83) |
Contractual Maturities of Avail
Contractual Maturities of Available-for-Sale Securities (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
Investment Holdings [Line Items] | |
Within 1 year, Amortized Cost | $ 115,559 |
After 1 year through 5 years, Amortized Cost | 11,034 |
After 5 year through 10 years, Amortized Cost | 0 |
After 10 years, Amortized Cost | 4,343 |
Total, Amortized Cost | 130,936 |
Within 1 year, Fair Value | 115,553 |
After 1 year through 5 years, Fair Value | 10,998 |
After 5 year through 10 years, Fair Value | 0 |
After 10 years, Fair Value | 4,393 |
Total, Fair Value | $ 130,944 |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Investment Holdings [Line Items] | |||
Equity method investments | $ 24,452,000 | $ 22,688,000 | $ 24,452,000 |
Future funding contributions | 15,900,000 | ||
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 | $ 12,300,000 | $ 200,000 | |
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, 2016 |
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, 2016USD ($) |
Conditional Access Licensing | |
Investment [Line Items] | |
Carrying Amount | $ 12,751,000 |
Maximum Exposure to Loss | 12,751,000 |
Combined Conditional Access Development | |
Investment [Line Items] | |
Carrying Amount | 2,113,000 |
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, 2016 | Dec. 31, 2015 |
Derivative Financial Instruments, Liabilities | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | $ (9,006) | $ (10,759) |
Derivative Financial Instruments, Liabilities | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | (3,671) | (24,371) |
Derivative Financial Instruments, Assets | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 7,860 | |
Derivative Financial Instruments, Assets | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 7,369 | 7,064 |
Certificates of deposit (foreign) | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 87,372 | 4,208 |
Corporate bonds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 34,133 | 6,257 |
Short-term bond fund | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 5,046 | 5,005 |
Corporate obligations | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 3 | 1 |
Money markets | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 54 | 209 |
Mutual funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 101 | 131 |
Other Investments | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 4,235 | 3,695 |
Level 1 | Short-term bond fund | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 5,046 | 5,005 |
Level 1 | Money markets | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 54 | 209 |
Level 1 | Mutual funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 101 | 131 |
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 | (9,006) | (10,759) |
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 | (3,671) | (24,371) |
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 | 7,860 | |
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 | 7,369 | 7,064 |
Level 2 | Certificates of deposit (foreign) | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 87,372 | 4,208 |
Level 2 | Corporate bonds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 34,133 | 6,257 |
Level 2 | Corporate obligations | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 3 | 1 |
Level 2 | Other Investments | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | $ 4,235 | $ 3,695 |
Derivative Instruments and He78
Derivative Instruments and Hedging Activities - Additional Information (Detail) £ / shares in Units, € in Millions, ZAR in Millions, CAD in Millions, AUD in Millions | Dec. 31, 2016USD ($)Agreement | Dec. 31, 2016USD ($)Agreement | Dec. 31, 2015USD ($) | Dec. 31, 2016GBP (£)Agreement | Dec. 31, 2016CADAgreement | Dec. 31, 2016AUDAgreement | Dec. 31, 2016EUR (€)Agreement | Dec. 31, 2016ZARAgreement | Jan. 04, 2016GBP (£)£ / shares | Dec. 31, 2015GBP (£) | Jun. 18, 2015USD ($) | Apr. 30, 2013USD ($) |
Derivatives, Fair Value [Line Items] | ||||||||||||
Hedge ineffectiveness in earnings | $ 0 | $ 0 | ||||||||||
Amount estimated reclassified as an increase to interest expense | 2,800,000 | |||||||||||
Fair value of derivatives in net liability position | $ 1,400,000 | $ 1,400,000 | ||||||||||
Maximum time frame for derivatives | 12 months | |||||||||||
Interest rate swap | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Variable-rate debt upon conversion | $ 625,000,000 | |||||||||||
Option Collars | Euro Member Countries, Euro | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | € | € 35 | |||||||||||
Forward Contracts | Euro Member Countries, Euro | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | € | € 55 | |||||||||||
Forward Contracts | Australia, Dollars | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | AUD | AUD 70 | |||||||||||
Forward Contracts | Canada, Dollars | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | CAD | CAD 45 | |||||||||||
Forward Contracts | United Kingdom, Pounds | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | £ | £ 100,000,000 | |||||||||||
Forward Contracts | South Africa, Rand | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | ZAR | ZAR 374.3 | |||||||||||
Currency Swap | South Africa, Rand | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Notional amount | ZAR | ZAR 69 | |||||||||||
Pace Plc | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Per share price in cash consideration | £ / shares | £ 1.325 | |||||||||||
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 | |||||||||||
Term Loan A-1 Facility | Interest rate swap | Cash Flow Hedging | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Fixed interest rate | 2.73% | 2.73% | 2.73% | 2.73% | 2.73% | 2.73% | 2.73% | |||||
Number of interest rate swap arrangements | Agreement | 9 | 9 | 9 | 9 | 9 | 9 | 9 | |||||
Derivative notional amount | $ 50,000,000 | $ 50,000,000 | ||||||||||
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% | |||||||||||
Term Loan A-1 Facility | Interest rate swap | Matures on December 29, 2017 | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Maturity date | Dec. 29, 2017 | |||||||||||
Fixed interest rate | 3.15% | 3.15% | 3.15% | 3.15% | 3.15% | 3.15% | 3.15% | |||||
Term Loan A-1 Facility | Interest rate swap | Matures on March 31, 2020 | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Maturity date | Mar. 31, 2020 | |||||||||||
Fixed interest rate | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% | 4.00% | |||||
Swaps beginning date | Dec. 29, 2017 | |||||||||||
Term Loan A-1 Facility | Interest rate swap | Matures on March 31, 2020 | Cash Flow Hedging | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Variable-rate debt upon conversion | $ 450,000,000 | |||||||||||
Maturity date | Mar. 31, 2020 | |||||||||||
Senior Secured Credit Facilities | Term Loan A-1 Facility | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Line of credit facility | $ 800,000,000 | |||||||||||
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 Facility | ||||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||||
Line of credit facility | $ 500,000,000 | $ 250,000,000 |
Impact of Derivative Financial
Impact of Derivative Financial Instruments (Detail) - Interest Expense - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Derivative [Line Items] | |||
Gain (loss) Recognized in OCI on Derivatives (Effective Portion) | $ 2,103 | $ (13,256) | $ (8,541) |
Amounts Reclassified from Accumulated OCI into Income (Effective Portion) | $ 7,510 | $ 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, 2016 | Dec. 31, 2015 |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | $ 222 | |
Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | 8,043 | |
Other accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | (2,989) | $ (4,489) |
Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (6,421) | $ (6,270) |
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, 2016 | Dec. 31, 2015 |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | $ 7,369 | $ 6,495 |
Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | 569 | |
Other accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (3,671) | (23,632) |
Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (739) |
Change in Fair Values of Deriva
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, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Foreign currency contracts | Gain on foreign currency | Derivatives Not Designated as Hedging Instruments | |||
Derivatives, Fair Value [Line Items] | |||
Loss (gain) on foreign currency | $ 5,909 | $ 7,597 | $ (4,527) |
Information Regarding Changes i
Information Regarding Changes in ARRIS's Aggregate Product Warranty Liabilities (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Product Warranty Liability [Line Items] | ||
Beginning balance | $ 49,027 | $ 74,320 |
Warranty reserve at acquisition | 43,723 | |
Accruals related to warranties (including changes in assumptions) | 51,947 | 19,111 |
Settlements made (in cash or in kind) | (56,510) | (44,404) |
Ending balance | $ 88,187 | $ 49,027 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) - Segment | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||
Number of segments managed | 2 | ||
International Customers | Customer Concentration Risk | Sales | |||
Segment Reporting Information [Line Items] | |||
Percentage of sales | 28.10% | 28.80% | 25.70% |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2016 | [1],[2] | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | [3] | Sep. 30, 2015 | [4] | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | ||||||||||||||
Net sales | $ 1,759,223 | $ 1,725,145 | $ 1,730,044 | $ 1,614,706 | $ 1,101,681 | $ 1,221,416 | $ 1,260,077 | $ 1,215,158 | $ 6,829,118 | $ 4,798,332 | $ 5,322,921 | |||
Direct Contribution | 1,366,352 | 1,036,006 | 1,222,187 | |||||||||||
Corporate and unallocated costs | (697,834) | (568,336) | (606,834) | |||||||||||
Amortization of intangible assets | (397,464) | (227,440) | (236,521) | |||||||||||
Integration, acquisition, restructuring and other | (160,337) | (29,277) | (37,498) | |||||||||||
Operating income | $ 72,506 | $ 91,313 | $ 33,388 | $ (86,490) | $ 52,912 | $ 60,781 | $ 51,542 | $ 45,718 | 110,717 | 210,953 | 341,334 | |||
Interest expense | 79,817 | 70,936 | 62,901 | |||||||||||
Loss on investments | 21,194 | 6,220 | 10,961 | |||||||||||
(Gain) loss on foreign currency | (13,982) | 20,761 | 2,637 | |||||||||||
Interest income | (4,395) | (2,379) | (2,590) | |||||||||||
Other expense (income), net | 3,991 | 8,362 | 28,195 | |||||||||||
Income before income taxes | 24,092 | 107,053 | 239,230 | |||||||||||
Operating Segments | CPE | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Net sales | 4,747,445 | 3,136,585 | 3,690,454 | |||||||||||
Direct Contribution | 684,744 | 548,840 | 791,244 | |||||||||||
Operating Segments | N&C | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Net sales | 2,111,708 | 1,661,594 | 1,637,544 | |||||||||||
Direct Contribution | 681,608 | 487,166 | 430,943 | |||||||||||
Intersegment Eliminations | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Net sales | (30,035) | 153 | (5,077) | |||||||||||
Segment Reconciling Items | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Amortization of intangible assets | (397,464) | (227,440) | (236,521) | |||||||||||
Integration, acquisition, restructuring and other | $ (160,337) | $ (29,277) | $ (37,498) | |||||||||||
[1] | For the quarter ended December 31, 2016, the Company recorded $16.4 million as a reduction to net sales in connection with Warrants. | |||||||||||||
[2] | In the fourth quarter of 2016, the Company recorded foreign currency remeasurement gains of approximately $16 million related to the remeasurement of net deferred income tax liabilities in the U.K. where the functional currency is the U.S. dollar. Approximately $8 million resulted from changes in exchange rates prior to the 4th quarter in 2016 and was considered the correction of an immaterial misstatement of interim financial statements in 2016. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, the Company evaluated the impact of the 4th quarter adjustment on its previously issued interim financial statements in 2016 and concluded that the results of operations for these periods were not materially misstated and accordingly the correction was recorded in the 4th quarter. | |||||||||||||
[3] | $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. | |||||||||||||
[4] | 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 $18.9 million obtained from foreign tax credits generated by the transaction. |
Composition of Corporate and Un
Composition of Corporate and Unallocated Costs (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||
Cost of sales | $ 697,834 | $ 568,336 | $ 606,834 |
Cost of sales | |||
Segment Reporting Information [Line Items] | |||
Cost of sales | 150,588 | 56,311 | 69,973 |
Selling, general and administrative expenses | |||
Segment Reporting Information [Line Items] | |||
Cost of sales | 375,747 | 349,993 | 349,693 |
Research and development expenses | |||
Segment Reporting Information [Line Items] | |||
Cost of sales | $ 171,499 | $ 162,032 | $ 187,168 |
Summary of Net Intangible Asset
Summary of Net Intangible Assets and Goodwill by Reportable Segment (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Segment Reporting Information [Line Items] | ||||
Goodwill | $ 2,016,169 | $ 1,013,963 | $ 936,067 | $ 940,402 |
Intangible assets, net | 1,677,178 | 810,448 | ||
CPE | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill | 1,391,171 | 682,582 | $ 684,597 | $ 688,658 |
Intangible assets, net | 1,064,692 | 525,920 | ||
N&C | ||||
Segment Reporting Information [Line Items] | ||||
Goodwill | 624,998 | 331,381 | ||
Intangible assets, net | $ 612,486 | $ 284,528 |
Summary of Company's Revenues b
Summary of Company's Revenues by Products and Services (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2016 | [1],[2] | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | [3] | Sep. 30, 2015 | [4] | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue, Major Customer [Line Items] | ||||||||||||||
Net sales | $ 1,759,223 | $ 1,725,145 | $ 1,730,044 | $ 1,614,706 | $ 1,101,681 | $ 1,221,416 | $ 1,260,077 | $ 1,215,158 | $ 6,829,118 | $ 4,798,332 | $ 5,322,921 | |||
Operating Segments | CPE | ||||||||||||||
Revenue, Major Customer [Line Items] | ||||||||||||||
Net sales | 4,747,445 | 3,136,585 | 3,690,454 | |||||||||||
Operating Segments | CPE | Broadband | ||||||||||||||
Revenue, Major Customer [Line Items] | ||||||||||||||
Net sales | 1,683,491 | 1,452,164 | 1,494,925 | |||||||||||
Operating Segments | CPE | Video | ||||||||||||||
Revenue, Major Customer [Line Items] | ||||||||||||||
Net sales | 3,063,954 | 1,684,421 | 2,195,529 | |||||||||||
Operating Segments | N&C | ||||||||||||||
Revenue, Major Customer [Line Items] | ||||||||||||||
Net sales | 2,111,708 | 1,661,594 | 1,637,544 | |||||||||||
Operating Segments | N&C | Infrastructure Equipment [Member] | ||||||||||||||
Revenue, Major Customer [Line Items] | ||||||||||||||
Net sales | 1,800,480 | 1,407,735 | 1,435,676 | |||||||||||
Operating Segments | N&C | Global Services [Member] | ||||||||||||||
Revenue, Major Customer [Line Items] | ||||||||||||||
Net sales | 230,588 | 181,892 | 141,625 | |||||||||||
Operating Segments | N&C | Cloud Solutions [Member] | ||||||||||||||
Revenue, Major Customer [Line Items] | ||||||||||||||
Net sales | 80,640 | 71,967 | 60,243 | |||||||||||
Operating Segments | Other Segments [Member] | ||||||||||||||
Revenue, Major Customer [Line Items] | ||||||||||||||
Net sales | $ (30,035) | $ 153 | $ (5,077) | |||||||||||
[1] | For the quarter ended December 31, 2016, the Company recorded $16.4 million as a reduction to net sales in connection with Warrants. | |||||||||||||
[2] | In the fourth quarter of 2016, the Company recorded foreign currency remeasurement gains of approximately $16 million related to the remeasurement of net deferred income tax liabilities in the U.K. where the functional currency is the U.S. dollar. Approximately $8 million resulted from changes in exchange rates prior to the 4th quarter in 2016 and was considered the correction of an immaterial misstatement of interim financial statements in 2016. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, the Company evaluated the impact of the 4th quarter adjustment on its previously issued interim financial statements in 2016 and concluded that the results of operations for these periods were not materially misstated and accordingly the correction was recorded in the 4th quarter. | |||||||||||||
[3] | $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. | |||||||||||||
[4] | 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 $18.9 million obtained from foreign tax credits generated by the transaction. |
Summary of Sales to Customers (
Summary of Sales to Customers (Detail) - Customer Concentration Risk - Sales - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Comcast and affiliates | ||||
Revenue, Major Customer [Line Items] | ||||
Customers and affiliates | $ 1,637,519 | [1] | $ 1,007,376 | $ 1,012,367 |
Percentage of sales | 24.00% | 21.00% | 19.00% | |
AT&T and affiliates | ||||
Revenue, Major Customer [Line Items] | ||||
Customers and affiliates | $ 901,001 | $ 347,063 | $ 612,413 | |
Percentage of sales | 13.20% | 7.20% | 11.50% | |
Charter and affiliates | ||||
Revenue, Major Customer [Line Items] | ||||
Customers and affiliates | $ 1,064,408 | [1] | $ 960,497 | $ 1,031,553 |
Percentage of sales | 15.60% | 20.00% | 19.40% | |
[1] | Revenues were reduced by $30.2 million in total as a result of Warrants held by Charter and Comcast that are intended to incent additional purchases from them. (see Note 17 Warrants for additional information). |
Summary of Sales to Customers90
Summary of Sales to Customers (Parenthetical) (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Charter and Comcast | |
Revenue, Major Customer [Line Items] | |
Reduction to net sales in connection with warrants | $ 30.2 |
International Sales by Geograph
International Sales by Geographic Region (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2016 | [1],[2] | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | [3] | Sep. 30, 2015 | [4] | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
International Long-Lived Assets by Geographic Region [Line Items] | ||||||||||||||
Net sales | $ 1,759,223 | $ 1,725,145 | $ 1,730,044 | $ 1,614,706 | $ 1,101,681 | $ 1,221,416 | $ 1,260,077 | $ 1,215,158 | $ 6,829,118 | $ 4,798,332 | $ 5,322,921 | |||
Domestic Operations | UNITED STATES | ||||||||||||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||||||||||||
Net sales | 4,909,698 | 3,418,583 | 3,957,203 | |||||||||||
International | ||||||||||||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||||||||||||
Net sales | 1,919,420 | 1,379,749 | 1,365,718 | |||||||||||
International | Americas, excluding U.S. | ||||||||||||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||||||||||||
Net sales | 982,769 | 880,581 | 900,822 | |||||||||||
International | Asia Pacific | ||||||||||||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||||||||||||
Net sales | 291,504 | 142,893 | 147,921 | |||||||||||
International | EMEA | ||||||||||||||
International Long-Lived Assets by Geographic Region [Line Items] | ||||||||||||||
Net sales | $ 645,147 | $ 356,275 | $ 316,975 | |||||||||||
[1] | For the quarter ended December 31, 2016, the Company recorded $16.4 million as a reduction to net sales in connection with Warrants. | |||||||||||||
[2] | In the fourth quarter of 2016, the Company recorded foreign currency remeasurement gains of approximately $16 million related to the remeasurement of net deferred income tax liabilities in the U.K. where the functional currency is the U.S. dollar. Approximately $8 million resulted from changes in exchange rates prior to the 4th quarter in 2016 and was considered the correction of an immaterial misstatement of interim financial statements in 2016. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, the Company evaluated the impact of the 4th quarter adjustment on its previously issued interim financial statements in 2016 and concluded that the results of operations for these periods were not materially misstated and accordingly the correction was recorded in the 4th quarter. | |||||||||||||
[3] | $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. | |||||||||||||
[4] | 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 $18.9 million obtained from foreign tax credits generated by the transaction. |
Summary of ARRIS' International
Summary of ARRIS' International Property, Plant and Equipment by Geographic Region (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | $ 353,377 | $ 312,311 |
Domestic Operations | UNITED STATES | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | 220,397 | 223,736 |
International | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | 132,980 | 88,575 |
International | Americas, excluding U.S. | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | 12,838 | 6,659 |
International | Asia Pacific | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | 81,655 | 74,651 |
International | EMEA | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Long lived assets | $ 38,487 | $ 7,265 |
Components of Inventory Net of
Components of Inventory Net of Reserves (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory [Line Items] | ||
Raw material | $ 86,243 | $ 60,287 |
Work in process | 3,877 | 3,076 |
Finished goods | 461,421 | 338,229 |
Total inventories, net | $ 551,541 | $ 401,592 |
Property, Plant and Equipment,
Property, Plant and Equipment, at Cost (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 672,850 | $ 616,843 |
Less: Accumulated depreciation | (319,473) | (304,532) |
Total property, plant and equipment, net | 353,377 | 312,311 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | 68,562 | 68,562 |
Buildings and Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | 163,333 | 141,171 |
Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 440,955 | $ 407,110 |
Summary of Changes to Restructu
Summary of Changes to Restructuring Accrual (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Balance at December 31, 2015 | $ 90 |
Restructuring charges | 96,341 |
Cash payments / adjustments | (65,586) |
Non-cash expense | (716) |
Balance at December 31, 2016 | 30,129 |
Employee severance & termination benefits | |
Restructuring Cost and Reserve [Line Items] | |
Balance at December 31, 2015 | 3 |
Restructuring charges | 92,246 |
Cash payments / adjustments | (64,363) |
Balance at December 31, 2016 | 27,886 |
Contractual obligations and other | |
Restructuring Cost and Reserve [Line Items] | |
Balance at December 31, 2015 | 87 |
Restructuring charges | 3,379 |
Cash payments / adjustments | (1,223) |
Balance at December 31, 2016 | 2,243 |
Write-off of property, plant and equipment | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges | 716 |
Non-cash expense | $ (716) |
Restructuring and Integration -
Restructuring and Integration - Additional Information (Detail) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)Position | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 96,341 | ||
Integration, acquisition and restructuring | 160,337 | $ 29,277 | $ 37,498 |
Employee severance & termination benefits | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 92,246 | ||
Total number of positions affected by the restructuring plan | Position | 1,545 | ||
Contractual obligations and other | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 3,379 | ||
Fair value of restructuring liability | $ 2,200 | ||
Leased properties, remaining expiration terms | 2,018 | ||
Integration And Other | |||
Restructuring Cost and Reserve [Line Items] | |||
Integration, acquisition and restructuring | $ 24,200 | $ 1,600 | $ 34,500 |
Write-off of property, plant and equipment | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 716 |
Lease Financing Obligation - Ad
Lease Financing Obligation - Additional Information (Detail) - San Diego Office Complex $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015USD ($)Building | |
Schedule of Finance Lease Obligations [Line Items] | ||
Land and buildings, net book value | $ 71 | |
Proceeds from sale of assets | $ 85.5 | |
Number of building in sale and leaseback arrangement | Building | 2 | |
Loss from sale of land and building | $ (5.3) | |
Building One | ||
Schedule of Finance Lease Obligations [Line Items] | ||
Leasing back term | 10 years | |
Leasing back term, description | 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. | |
Building Two | 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, 2016USD ($) |
Schedule of Finance Lease Obligations [Line Items] | |
2,017 | $ 4,136 |
2,018 | 4,260 |
2,019 | 4,388 |
2,020 | 4,520 |
2,021 | 4,655 |
Thereafter through 2025 | 16,102 |
Total minimum lease payments | $ 38,061 |
Summary of Indebtedness and Lea
Summary of Indebtedness and Lease Financing Obligations (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | $ 90,275 | $ 50,258 |
Current deferred financing fees and debt discount | (7,541) | (6,667) |
Current portion of long-term debt and financing lease obligation | 82,734 | 43,591 |
Lease finance obligation | 2,197,964 | 1,518,238 |
Noncurrent deferred financing fees and debt discount | (17,955) | (21,995) |
Long-term debt and financing lease obligation, net of current portion | 2,180,009 | 1,496,243 |
Total | 2,262,743 | 1,539,834 |
Term Loan A | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | 49,500 | 49,500 |
Noncurrent obligations | 866,250 | 915,750 |
Term Loan A-1 Facility | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | 40,000 | |
Noncurrent obligations | 730,000 | |
Lease Finance obligation | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | 775 | 758 |
Lease finance obligation | 57,902 | 58,676 |
Term Loan B | ||
Debt and Capital Lease Obligations [Line Items] | ||
Noncurrent obligations | $ 543,812 | $ 543,812 |
Indebtedness - Additional Infor
Indebtedness - Additional Information (Detail) - USD ($) | Jan. 04, 2016 | Jan. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | Jun. 18, 2015 | Apr. 30, 2013 |
Debt Instrument [Line Items] | ||||||
Business combination, payment of debt assumed | $ 263,800,000 | |||||
Pace Plc | ||||||
Debt Instrument [Line Items] | ||||||
Business combination, payment of debt assumed | $ 240,200,000 | |||||
Revolving Facility | AR Financing Program | ||||||
Debt Instrument [Line Items] | ||||||
Percentage of transaction fee and interest rate paid | 1.23% | |||||
HSBC | AR Financing Program | ||||||
Debt Instrument [Line Items] | ||||||
Trade receivables as percentage of receivable advance | 95.00% | |||||
Percentage of trade receivables to be remitted upon customer cash payments | 5.00% | |||||
Accounts receivable outstanding under accounts receivable financing program | $ 0 | |||||
Maximum | HSBC | AR Financing Program | ||||||
Debt Instrument [Line Items] | ||||||
Trade receivables | $ 50,000,000 | |||||
Senior Secured Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Mandatory repayments related to senior secured credit facilities | $ 79,500,000 | |||||
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 Facility | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility | 500,000,000 | $ 250,000,000 | ||||
Senior Secured Credit Facilities | Term Loan A-1 Facility | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility | $ 800,000,000 | |||||
Senior Secured Credit Facilities | 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) - Senior Secured Credit Facilities | 12 Months Ended | |
Dec. 31, 2016 | ||
Term Loan A | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate at period end | 2.52% | |
Term Loan A-1 Facility | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate at period end | 2.52% | |
Term Loan B | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate at period end | 3.52% | |
LIBOR | Term Loan A | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.75% | |
LIBOR | Term Loan A-1 Facility | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate | 1.75% | |
LIBOR | Term Loan B | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate | 2.75% | [1] |
LIBOR | Revolving Facility | ||
Debt Instrument [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 Inter102
Senior Credit Facility Interest Rates (Parenthetical) (Detail) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Instrument [Line Items] | |
Unused commitment fee | 0.35% |
Letter of credit fee | 1.75% |
Term Loan B | LIBOR floor | Senior Secured Credit Facilities | |
Debt Instrument [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, 2016USD ($) |
Debt Instrument [Line Items] | |
2,017 | $ 89,500 |
2,018 | 89,500 |
2,019 | 89,500 |
2,020 | $ 1,961,063 |
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, 2016 | [1],[2] | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | [3] | Sep. 30, 2015 | [4] | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Basic: | |||||||||||||||||
Net income attributable to ARRIS International plc. | $ 88,283 | $ 48,162 | $ 84,228 | $ (202,573) | $ 30,041 | $ 26,256 | $ 16,758 | $ 19,126 | $ 18,100 | $ 92,181 | $ 327,211 | ||||||
Weighted average shares outstanding | 190,701 | 146,388 | 144,386 | ||||||||||||||
Basic earnings per share | $ 0.46 | $ 0.25 | $ 0.44 | $ (1.06) | $ 0.20 | $ 0.18 | $ 0.11 | $ 0.13 | $ 0.09 | [5] | $ 0.63 | [5] | $ 2.27 | [5] | |||
Diluted: | |||||||||||||||||
Net income attributable to ARRIS International plc. | $ 88,283 | $ 48,162 | $ 84,228 | $ (202,573) | $ 30,041 | $ 26,256 | $ 16,758 | $ 19,126 | $ 18,100 | $ 92,181 | $ 327,211 | ||||||
Weighted average shares outstanding | 190,701 | 146,388 | 144,386 | ||||||||||||||
Net effect of dilutive shares | 1,484 | 2,971 | 3,894 | ||||||||||||||
Total | 192,185 | 149,359 | 148,280 | ||||||||||||||
Diluted earnings per share | $ 0.46 | $ 0.25 | $ 0.44 | $ (1.06) | $ 0.20 | $ 0.18 | $ 0.11 | $ 0.13 | $ 0.09 | [5] | $ 0.62 | [5] | $ 2.21 | [5] | |||
[1] | For the quarter ended December 31, 2016, the Company recorded $16.4 million as a reduction to net sales in connection with Warrants. | ||||||||||||||||
[2] | In the fourth quarter of 2016, the Company recorded foreign currency remeasurement gains of approximately $16 million related to the remeasurement of net deferred income tax liabilities in the U.K. where the functional currency is the U.S. dollar. Approximately $8 million resulted from changes in exchange rates prior to the 4th quarter in 2016 and was considered the correction of an immaterial misstatement of interim financial statements in 2016. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, the Company evaluated the impact of the 4th quarter adjustment on its previously issued interim financial statements in 2016 and concluded that the results of operations for these periods were not materially misstated and accordingly the correction was recorded in the 4th quarter. | ||||||||||||||||
[3] | $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. | ||||||||||||||||
[4] | 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 $18.9 million obtained from foreign tax credits generated by the transaction. | ||||||||||||||||
[5] | Calculated based on net income attributable to shareowners of ARRIS International plc. |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) | Jan. 04, 2016USD ($)shares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015shares | Dec. 31, 2014shares |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from the computation of diluted earnings per share | 900,000 | 6,800 | 4,300,000 | |
Ordinary shares related to the vesting of restricted shares | 2,300,000 | 3,200,000 | ||
Warrants outstanding | 2,200,000 | |||
Pace Plc | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Business combination potential stock issue, shares | 47,700,000 | 47,700,000 | ||
Business combination potential stock issue, Value | $ | $ 1,434,700,000 | |||
Business combination, Common stock Conversion ratio | 0.1455 | |||
Business combination, Stock Issued During Period, Value, per each share | $ | $ 30.08 |
Warrants - Additional Informati
Warrants - Additional Information (Detail) $ / shares in Units, $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Expected dividend yield | 0.00% |
Warrants outstanding | 2,200,000 |
Charter and Comcast | |
Class of Warrant or Right [Line Items] | |
Reduction to net sales in connection with warrants | $ | $ 30.2 |
Weighted Average | |
Class of Warrant or Right [Line Items] | |
Warrants exercise price | $ / shares | $ 24.56 |
Warrants | Maximum | |
Class of Warrant or Right [Line Items] | |
Number of shares purchase | 14,000,000 |
Ordinary Shares Issuable under
Ordinary Shares Issuable under Outstanding Warrant Programs with Customers, Based on Achieving Certain Purchase Levels (Detail) | Dec. 31, 2016shares | |
Minimum | ||
Class of Warrant or Right [Line Items] | ||
2,016 | 1,500,000 | |
2,017 | 2,000,000 | |
2,018 | 1,000,000 | |
Maximum | ||
Class of Warrant or Right [Line Items] | ||
2,016 | 4,000,000 | |
2,017 | 7,500,000 | |
2,018 | 2,500,000 | |
Exercise Price per Maximum Share Issuable, $22.19 | Maximum | ||
Class of Warrant or Right [Line Items] | ||
2,016 | 3,000,000 | |
2,017 | 5,000,000 | |
Exercise Price per Maximum Share Issuable, $28.54 | Maximum | ||
Class of Warrant or Right [Line Items] | ||
2,016 | 1,000,000 | |
2,017 | 2,500,000 | |
The exercise price for the 2018 warrants will be determined based upon the lower of 1) the January Price or 2) the average of $28.54 and the January Price | Maximum | ||
Class of Warrant or Right [Line Items] | ||
2,018 | 2,500,000 | [1] |
[1] | The exercise price for the 2018 warrants will be determined based upon the lower of 1) the volume-weighted price for the 10-day trading period preceding January 1, 2018 ("the January Price") or 2) the average of $28.54 and the January Price. |
Ordinary Shares Issuable und108
Ordinary Shares Issuable under Outstanding Warrant Programs with Customers, Based on Achieving Certain Purchase Levels (Parenthetical) (Detail) | Dec. 31, 2016$ / shares |
Exercise Price per Maximum Share Issuable, $22.19 | Maximum | |
Class of Warrant or Right [Line Items] | |
Exercise Price per Maximum Share Issuable | $ 22.19 |
Exercise Price per Maximum Share Issuable, $28.54 | Maximum | |
Class of Warrant or Right [Line Items] | |
Exercise Price per Maximum Share Issuable | 28.54 |
The exercise price for the 2018 warrants will be determined based upon the lower of 1) the January Price or 2) the average of $28.54 and the January Price | |
Class of Warrant or Right [Line Items] | |
Exercise Price per Maximum Share Issuable | $ 28.54 |
Income (Loss) Before Income Tax
Income (Loss) Before Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Before Income Taxes [Line Items] | |||
U.S | $ (149,605) | $ 47,063 | $ 180,133 |
Income before income taxes | 24,092 | 107,053 | 239,230 |
UNITED KINGDOM | |||
Income Before Income Taxes [Line Items] | |||
Foreign | (36,300) | (5,321) | (1,604) |
Other Foreign | |||
Income Before Income Taxes [Line Items] | |||
Foreign | $ 209,997 | $ 65,311 | $ 60,701 |
Components of Income Tax Expens
Components of Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Components Of Income Tax Expense Benefit [Line Items] | |||
U.S. | $ 47,025 | $ 2,141 | $ 59,197 |
Current Income Tax Expense | 160,399 | 17,176 | 77,333 |
U.S. | (105,735) | 5,119 | (160,382) |
Deferred Income Tax Expense (Benefit), Total | (145,268) | 5,418 | (165,314) |
Income tax expense (benefit) | 15,131 | 22,594 | (87,981) |
UNITED KINGDOM | |||
Components Of Income Tax Expense Benefit [Line Items] | |||
Foreign | 81,822 | 559 | (94) |
Foreign | (23,177) | (30) | 121 |
Other Foreign | |||
Components Of Income Tax Expense Benefit [Line Items] | |||
Foreign | 31,552 | 14,476 | 18,230 |
Foreign | $ (16,356) | $ 329 | $ (5,053) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes [Line Items] | ||||
Statutory federal income tax expense (benefit) | 20.00% | 35.00% | 35.00% | |
Amount offset against U.S Federal and state income tax liabilities | $ 11,100 | $ 0 | ||
Valuation allowance | 57,772 | 87,788 | $ 118,629 | $ 163,745 |
Net decrease in valuation allowance | 30,000 | |||
Company's total tax liability related to uncertain net tax positions | 137,200 | 51,600 | ||
Anticipated payment of tax liabilities related to interest and penalty accrual | 9,200 | 1,700 | ||
Income tax examination, Increase (decrease) in liability from prior year | (28,400) | (5,900) | ||
Unrecognized tax benefits net of offsetting assets | 108,700 | 46,200 | ||
Unrecognized tax benefits arising from U.S. Federal and state tax | 7,200 | |||
ISRAEL | ||||
Income Taxes [Line Items] | ||||
Earnings exempted associated with foreign subsidiary | $ 23,800 | |||
UNITED KINGDOM | ||||
Income Taxes [Line Items] | ||||
Statutory foreign income tax expense (benefit) | 20.00% | |||
Domestic Tax Authority | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 85,700 | 218,900 | ||
Net operating losses available to offset against future taxable income | $ 66,400 | |||
Expiry of federal net operating losses | The available acquired U.S. Federal net operating losses as of December 31, 2016, will expire between the years 2017 and 2031 | |||
Operating loss carryforwards, expiration period | 20 years | |||
State and Local Jurisdiction | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 453,000 | |||
Net operating loss carryforwards related to employee stock options and restricted stock | 26,400 | |||
Foreign Tax Authority | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | 59,500 | |||
Tax credit carryforward, amount | 23,400 | $ 100 | ||
Foreign Tax Authority | Subsidiary One | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry forwards related to subsidiary | 23,800 | |||
Foreign Tax Authority | Subsidiary Two | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry forwards related to subsidiary | $ 8,500 | |||
Net operating loss carry forwards related to subsidiary, expiration period | 17 years | |||
Domestic Federal Research And Development | ||||
Income Taxes [Line Items] | ||||
Tax credit carryforward, amount | $ 8,900 | |||
Available tax credits of research and development, Carry forward | $ 91,900 | |||
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 | $ 51,300 |
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, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of Statutory Federal Tax Rate [Line Items] | |||
Statutory income tax rate | 20.00% | 35.00% | 35.00% |
Effects of: | |||
State income taxes, net of federal benefit | (10.00%) | 5.20% | (6.60%) |
Acquired deferred tax assets | 5.80% | (16.50%) | |
U.S. domestic manufacturing deduction | (12.00%) | (0.70%) | (2.10%) |
Transaction costs | 22.00% | ||
Research and development tax credits | (90.60%) | (26.60%) | (8.70%) |
Withholding taxes (U.K. entities) | 245.50% | ||
U.K. stamp duty | 9.40% | ||
Subpart F income | 4.00% | 4.80% | 0.80% |
Changes in valuation allowance | 6.00% | (26.60%) | (44.20%) |
Foreign tax credits | (14.00%) | (20.70%) | (0.60%) |
Non-deductible officer compensation | 5.30% | 0.60% | |
Benefit of other foreign tax regimes | (124.50%) | ||
Recapture of dual consolidated losses | 1.10% | 4.00% | |
Taiwan gain | 34.30% | ||
Other, net | 15.90% | 9.20% | 4.10% |
Effective Income Tax Rate Reconciliation, Percent, Total | 62.80% | 21.10% | (36.80%) |
Non-US | |||
Effects of: | |||
Foreign tax rate differential | (5.00%) | (2.60%) | |
Other Foreign | |||
Effects of: | |||
Foreign tax rate differential | (8.90%) |
Significant Components of Net D
Significant Components of Net Deferred Income Tax Assets (Liabilities) (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred income tax assets | ||||
Inventory costs | $ 63,887 | $ 28,728 | ||
Accrued vacation | 7,062 | 7,138 | ||
Acquisition charges | 6,556 | |||
Allowance for bad debt | 7,611 | 4,396 | ||
Equity compensation | 18,861 | 14,673 | ||
Federal/state net operating loss carryforwards | 53,116 | 95,571 | ||
Foreign net operating loss carryforwards | 14,409 | 10,989 | ||
Research and development credits | 113,061 | 79,809 | ||
Pension and deferred compensation | 15,933 | 19,166 | ||
Warranty reserve | 36,693 | 18,215 | ||
Capitalized interest | 24,963 | |||
Capitalized research and development | 177,574 | 215,894 | ||
Other | 71,500 | 24,214 | ||
Total deferred income tax assets | 604,670 | 525,349 | ||
Deferred income tax liabilities: | ||||
Other noncurrent liabilities | (3,713) | (4,394) | ||
Goodwill and intangible assets | (467,957) | (248,231) | ||
Total deferred income tax liabilities | (471,670) | (252,625) | ||
Net deferred income tax assets | 133,000 | 272,724 | ||
Valuation allowance | (57,772) | (87,788) | $ (118,629) | $ (163,745) |
Net deferred income tax assets (liabilities) | $ 75,228 | $ 184,936 |
Deferred Tax Asset Valuation Al
Deferred Tax Asset Valuation Allowance (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Valuation Allowance [Line Items] | |||
Balance at beginning of fiscal year | $ 87,788 | $ 118,629 | $ 163,745 |
Additions | 17,973 | 3,312 | 37,708 |
Deductions | (47,989) | (34,153) | (82,824) |
Balance at end of fiscal year | $ 57,772 | $ 87,788 | $ 118,629 |
Reconciliation of Unrecognized
Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Contingency [Line Items] | |||
Beginning balance | $ 49,919 | $ 48,019 | $ 28,344 |
Gross increases - tax positions in prior period | 8,068 | 1,599 | 17,636 |
Gross decreases - tax positions in prior period | (5,700) | (2,185) | (4,115) |
Gross increases - current-period tax positions | 27,774 | 9,578 | 9,979 |
Increases (decreases) from acquired businesses | 60,796 | (196) | |
Changes related to foreign currency translation adjustment and remeasurement | (1,087) | ||
Decreases relating to settlements with taxing authorities and other | (3,933) | (6,689) | (2,480) |
Decreases due to lapse of statute of limitations | (7,784) | (403) | (1,149) |
Ending balance | $ 128,053 | $ 49,919 | $ 48,019 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2015shares | Dec. 31, 2016USD ($)Option$ / sharesshares | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares issued | 31,215,000 | |||
Allowance for flexibility in awards for every one share | $ / shares | $ 1.87 | |||
Number of ordinary shares available under plan for future issuances | 180,613 | |||
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 | 99.80% | |||
Compensation expense measurement period | 3 year | |||
Expected dividend yield | 0.00% | |||
Unrecognized compensation cost | $ | $ 124,600,000 | |||
Weighted average period of compensation cost | 2 years 8 months 12 days | |||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares in target award | 211,655 | |||
Number of shares in target award outstanding | 608,095 | |||
Modified percentage in performance | 200.00% | |||
Number of shares issued at twice the performance percentage | 1,216,190 | |||
Fair value of vested restricted shares | $ | $ 52,300,000 | $ 118,300,000 | $ 82,600,000 | |
Employee Stock Purchase Plan [Member] | ||||
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 | 0.50% | 0.10% | 0.10% | |
Volatility Factor | 37.00% | 41.00% | 37.00% | |
Expected dividend yield | 0.00% | 0.00% | 0.00% | |
Compensation expense related to ESPP | $ | $ 4,600,000 | $ 5,100,000 | $ 4,100,000 | |
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 |
Summary of Unvested Restricted
Summary of Unvested Restricted Stock and Stock Unit Transactions (Detail) - Restricted Stock [Member] | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Shares | |
Unvested, beginning balance | shares | 5,985,249 |
Granted, shares | shares | 3,358,005 |
Vested, shares | shares | (2,155,527) |
Forfeited, shares | shares | (692,678) |
Unvested, ending balance | shares | 6,495,049 |
Weighted average grant date fair value | |
Weighted average grant date fair value, beginning balance | $ / shares | $ 23.59 |
Weighted average grant date fair value, granted | $ / shares | 22.85 |
Weighted average grant date fair value, vested | $ / shares | 20.91 |
Weighted average grant date fair value, forfeited | $ / shares | 24.17 |
Weighted average grant date fair value, ending Balance | $ / shares | $ 24.04 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Estimated amounts to be amortized from AOCI into net periodic benefit costs | $ 0.6 | ||
Matching contribution made by the company | 16.4 | $ 16.6 | $ 15.3 |
Expenses included in continuing operations for the matching contributions | 0.2 | 0.1 | |
Accrued balances of deferred retirement salary plan | 1.6 | 1.7 | |
Total expenses (income) included in continuing operations for the deferred retirement salary plan | 0.4 | 0.3 | |
Other long-term liabilities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employee deferrals and matching contributions, net | 3 | 2.8 | |
Nonqualified Deferred Compensation Plan | Other long-term liabilities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employee deferrals and matching contributions, net | 4.2 | $ 3.6 | |
U.S. Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Voluntary funding contribution | 5 | ||
Estimate future contribution in 2017 | 0 | ||
Foreign Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Voluntary funding contribution | 10.9 | ||
Estimate future contribution in 2017 | $ 1.5 |
Schedule of Change in Projected
Schedule of Change in Projected Benefit Obligations, Fair Value of Plan Assets and the Funded Status of Pension Plan (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Change in Plan Assets: | ||||||
Fair value of plan assets at beginning of year | $ 13,516 | |||||
Fair value of plan assets at end of year | 18,509 | $ 13,516 | ||||
U.S. Pension Plans | ||||||
Change in Projected Benefit Obligation: | ||||||
Projected benefit obligation at beginning of year | 42,999 | 46,550 | ||||
Interest cost | 1,751 | 1,716 | $ 1,783 | |||
Actuarial (gain) loss | 2,024 | (3,962) | ||||
Benefit payments | (1,504) | (1,305) | ||||
Projected benefit obligation at end of year | 45,270 | 42,999 | 46,550 | |||
Change in Plan Assets: | ||||||
Fair value of plan assets at beginning of year | 13,516 | [1] | 14,585 | |||
Actual return on plan assets | 751 | 81 | ||||
Company contributions | 5,747 | 155 | ||||
Expenses and benefits paid from plan assets | (1,504) | (1,305) | ||||
Fair value of plan assets at end of year | 18,510 | [1] | 13,516 | [1] | 14,585 | |
Funded Status: | ||||||
Funded status of plan | (26,760) | (29,483) | ||||
Unrecognized actuarial (gain) loss | [2] | 10,720 | 9,196 | |||
Net amount recognized | (16,040) | (20,287) | ||||
Foreign Pension Plan | ||||||
Change in Projected Benefit Obligation: | ||||||
Projected benefit obligation at beginning of year | 36,372 | 35,541 | ||||
Service cost | 703 | 738 | 751 | |||
Interest cost | 614 | 661 | 599 | |||
Actuarial (gain) loss | 81 | 708 | ||||
Benefit payments | (1,041) | (1,276) | ||||
Settlements | (1,626) | |||||
Foreign currency | 603 | |||||
Projected benefit obligation at end of year | 35,706 | 36,372 | 35,541 | |||
Change in Plan Assets: | ||||||
Fair value of plan assets at beginning of year | 9,232 | [1] | 8,923 | |||
Actual return on plan assets | 131 | 236 | ||||
Company contributions | 11,120 | 1,273 | ||||
Expenses and benefits paid from plan assets | (1,200) | |||||
Settlements | (1,626) | |||||
Foreign currency | 154 | |||||
Fair value of plan assets at end of year | 19,011 | [1] | 9,232 | [1] | $ 8,923 | |
Funded Status: | ||||||
Funded status of plan | (16,695) | (27,140) | ||||
Unrecognized actuarial (gain) loss | [2] | (2,038) | (4,320) | |||
Net amount recognized | $ (18,733) | $ (31,460) | ||||
[1] | In addition to the U.S. pension plan assets, ARRIS has established two rabbi trusts to further fund the pension obligations of the Chief Executive and certain executive officers of $21.2 million as of December 31, 2016 and $18.0 million as of December 31, 2015, and are included in Investments on the Consolidated Balance Sheets. | |||||
[2] | The accumulated other comprehensive income on the Consolidated Balance Sheets as of December 31, 2016 and 2015 is presented net of income tax. |
Schedule of Change in Projec120
Schedule of Change in Projected Benefit Obligations, Fair Value of Plan Assets and the Funded Status of Pension Plan (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Defined Benefit Plan Disclosure [Line Items] | ||
Balance assets held in rabbi trust | $ 21.2 | $ 18 |
Amounts Recognized in Statement
Amounts Recognized in Statement of Financial Position (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | |
U.S. Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Current liabilities | $ (399) | $ (426) | |
Noncurrent liabilities | (26,361) | (29,057) | |
Accumulated other comprehensive income (loss) | [1] | 10,720 | 9,196 |
Total | (16,040) | (20,287) | |
Foreign Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Noncurrent liabilities | (16,695) | (27,140) | |
Accumulated other comprehensive income (loss) | [1] | (2,038) | (4,320) |
Total | $ (18,733) | $ (31,460) | |
[1] | The accumulated other comprehensive income on the Consolidated Balance Sheets as of December 31, 2016 and 2015 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, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
U.S. Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net (gain) loss | $ 2,068 | $ (3,203) | $ 5,992 |
Amortization of net gain (loss) | (544) | (834) | (305) |
Total recognized in other (loss) comprehensive income | 1,524 | (4,037) | 5,687 |
Foreign Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Net (gain) loss | 225 | 813 | 1,077 |
Amortization of net gain (loss) | 248 | (529) | (464) |
Adjustments | 1,849 | ||
Foreign currency | 31 | ||
Total recognized in other (loss) comprehensive income | $ 2,353 | $ 284 | $ 613 |
Information for Defined Benefit
Information for Defined Benefit Plans with Accumulated Benefit Obligation in Excess of Plan Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
Defined Benefit Plan Disclosure [Line Items] | |||||
Accumulated benefit obligation in excess of plan assets, Fair value of plan assets | $ 18,509 | $ 13,516 | |||
U.S. Pension Plans | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Accumulated benefit obligation in excess of plan assets, Accumulated benefit obligation | 45,269 | 42,999 | |||
Accumulated benefit obligation in excess of plan assets, Fair value of plan assets | 18,510 | [1] | 13,516 | [1] | $ 14,585 |
Projected benefit obligation in excess of plan assets, Projected benefit obligation | 45,269 | 42,999 | |||
Projected benefit obligation in excess of plan assets, Fair value of plan assets | 18,510 | 13,516 | |||
Foreign Pension Plan | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Accumulated benefit obligation in excess of plan assets, Accumulated benefit obligation | 27,551 | 26,966 | |||
Accumulated benefit obligation in excess of plan assets, Fair value of plan assets | 19,011 | [1] | 9,232 | [1] | $ 8,923 |
Projected benefit obligation in excess of plan assets, Projected benefit obligation | 35,706 | 36,372 | |||
Projected benefit obligation in excess of plan assets, Fair value of plan assets | $ 19,011 | $ 9,232 | |||
[1] | In addition to the U.S. pension plan assets, ARRIS has established two rabbi trusts to further fund the pension obligations of the Chief Executive and certain executive officers of $21.2 million as of December 31, 2016 and $18.0 million as of December 31, 2015, and are included in Investments on the Consolidated Balance Sheets. |
Components of Net Periodic Pens
Components of Net Periodic Pension Cost (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
U.S. Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | $ 1,751 | $ 1,716 | $ 1,783 | |
Return on assets (expected) | (795) | (839) | (874) | |
Amortization of net actuarial loss (gain) | [1] | 544 | 834 | 305 |
Net periodic pension cost | 1,500 | 1,711 | 1,214 | |
Foreign Pension Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 703 | 738 | 751 | |
Interest cost | 614 | 661 | 599 | |
Return on assets (expected) | (275) | (176) | (166) | |
Amortization of net actuarial loss (gain) | [1] | (70) | 529 | 464 |
Settlement charge | (178) | |||
Adjustments | (1,849) | |||
Foreign currency | (31) | |||
Net periodic pension cost | $ (1,086) | $ 1,752 | $ 1,648 | |
[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 P125
Components of Net Periodic Pension Cost (Parenthetical) (Detail) | 12 Months Ended |
Dec. 31, 2016 | |
Defined Benefit Plan Disclosure [Line Items] | |
Actuarial gains losses amortization percentage | 10.00% |
Assumptions Used to Determine B
Assumptions Used to Determine Benefit Obligations (Detail) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||
U.S. Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Weighted-average assumptions used to determine benefit obligations, Discount rate | 3.90% | 4.15% | 3.75% | |
Weighted-average assumptions used to determine benefit obligations, Rate of compensation increase | 0.00% | 0.00% | 0.00% | |
Weighted-average assumptions used to determine net periodic benefit costs, Discount rate | 4.15% | 3.75% | 4.50% | |
Weighted-average assumptions used to determine net periodic benefit costs, Expected long-term rate of return on plan assets | 6.00% | 6.00% | 6.00% | |
Foreign Pension Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Weighted-average assumptions used to determine benefit obligations, Discount rate | 1.30% | 1.70% | 1.90% | |
Weighted-average assumptions used to determine benefit obligations, Rate of compensation increase | 0.00% | 0.00% | 0.00% | |
Weighted-average assumptions used to determine net periodic benefit costs, Discount rate | 1.70% | 1.90% | 1.80% | |
Weighted-average assumptions used to determine net periodic benefit costs, Expected long-term rate of return on plan assets | 1.60% | 2.00% | 2.00% | |
Weighted-average assumptions used to determine net periodic benefit costs, Rate of compensation increase | [1] | 3.00% | 3.00% | 3.25% |
[1] | Represent an average rate for the non-U.S. pension plans. Rate of compensation increase is 4.00% for indirect labor and 2.00% for direct labor for 2016 and 2015. Rate of compensation increase is 4.50% for indirect labor and 2.00% for direct labor for 2014. |
Assumptions Used to Determin127
Assumptions Used to Determine Benefit Obligations (Parenthetical) (Detail) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Indirect labors | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Weighted-average assumptions used to determine net periodic benefit costs, Rate of compensation increase | 4.00% | 4.00% | 4.50% |
Direct labors | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Weighted-average assumptions used to determine net periodic benefit costs, Rate of compensation increase | 2.00% | 2.00% | 2.00% |
Expected Benefit Payments Relat
Expected Benefit Payments Related to Defined Benefit Pension Plans (Detail) $ in Thousands | Dec. 31, 2016USD ($) |
U.S. Pension Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
2,017 | $ 1,629 |
2,018 | 16,443 |
2,019 | 1,689 |
2,020 | 1,809 |
2,021 | 1,929 |
2022 - 2026 | 10,152 |
Foreign Pension Plan | |
Defined Benefit Plan Disclosure [Line Items] | |
2,017 | 2,067 |
2,018 | 2,486 |
2,019 | 2,083 |
2,020 | 2,323 |
2,021 | 2,489 |
2022 - 2026 | $ 12,817 |
Weighted Average Pension Asset
Weighted Average Pension Asset Allocations (Detail) - U.S. Pension Plans | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 100.00% | 100.00% |
Actual plan asset allocations | 100.00% | 100.00% |
Equity Securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Actual plan asset allocations | 30.00% | 40.00% |
Equity Securities | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 30.00% | 40.00% |
Equity Securities | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 40.00% | 45.00% |
Debt Securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Actual plan asset allocations | 2.00% | 2.00% |
Debt Securities | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 0.00% | 0.00% |
Debt Securities | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 5.00% | 5.00% |
Cash and Cash Equivalents | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Actual plan asset allocations | 68.00% | 58.00% |
Cash and Cash Equivalents | Minimum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 60.00% | 50.00% |
Cash and Cash Equivalents | Maximum | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target plan asset allocations | 70.00% | 60.00% |
Pension Plan Asset by Category
Pension Plan Asset by Category and Level (Detail) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 18,509 | $ 13,516 | |
Cash and Cash Equivalents | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [1] | 12,722 | 7,424 |
U.S. Large Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [2] | 1,123 | 1,330 |
U.S. Mid Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [2] | 1,118 | 1,160 |
U.S. Small Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [2] | 1,118 | 1,160 |
International | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [2] | 1,685 | 1,757 |
Fixed Income Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [3] | 743 | 685 |
Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 5,787 | 6,092 | |
Level 1 | U.S. Large Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [2] | 1,123 | 1,330 |
Level 1 | U.S. Mid Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [2] | 1,118 | 1,160 |
Level 1 | U.S. Small Cap | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [2] | 1,118 | 1,160 |
Level 1 | International | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [2] | 1,685 | 1,757 |
Level 1 | Fixed Income Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [3] | 743 | 685 |
Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 12,722 | 7,424 | |
Level 2 | Cash and Cash Equivalents | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | [1] | $ 12,722 | $ 7,424 |
[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. |
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, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | $ 1,840,961 | $ 1,690,761 | $ 1,318,987 |
Net current-period other comprehensive income (loss) | 15,950 | (1,624) | (6,385) |
Balance | 3,226,737 | 1,840,961 | 1,690,761 |
Available-for-sale securities | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | 133 | 25 | |
Other comprehensive (loss) income before reclassifications | (11) | (64) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 15 | 172 | |
Net current-period other comprehensive income (loss) | 4 | 108 | |
Balance | 137 | 133 | 25 |
Derivative instruments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | (6,781) | (3,166) | |
Other comprehensive (loss) income before reclassifications | 1,631 | (8,319) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 5,821 | 4,704 | |
Net current-period other comprehensive income (loss) | 7,452 | (3,615) | |
Balance | 671 | (6,781) | (3,166) |
Change related to pension liability | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | (4,195) | (7,181) | |
Other comprehensive (loss) income before reclassifications | (2,934) | 2,044 | |
Amounts reclassified from accumulated other comprehensive income (loss) | 319 | 942 | |
Net current-period other comprehensive income (loss) | (2,615) | 2,986 | |
Balance | (6,810) | (4,195) | (7,181) |
Cumulative Translation Adjustments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | (1,803) | (725) | |
Other comprehensive (loss) income before reclassifications | 11,096 | (1,078) | |
Net current-period other comprehensive income (loss) | 11,096 | (1,078) | |
Balance | 9,293 | (1,803) | (725) |
Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | (12,646) | (11,047) | (4,662) |
Net current-period other comprehensive income (loss) | 15,937 | (1,599) | (6,385) |
Balance | 3,291 | (12,646) | (11,047) |
Total ARRIS Group, Inc stockholders' equity | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance | 1,793,914 | 1,690,761 | 1,318,987 |
Other comprehensive (loss) income before reclassifications | 9,782 | (7,417) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 6,155 | 5,818 | |
Net current-period other comprehensive income (loss) | 15,937 | (1,599) | (6,385) |
Balance | $ 3,188,816 | $ 1,793,914 | $ 1,690,761 |
Repurchases of ARRIS Shares - A
Repurchases of ARRIS Shares - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Equity, Class of Treasury Stock [Line Items] | ||
Repurchase of the Company's common stock | 7.4 | 0.9 |
Average price per share | $ 24.09 | $ 28.70 |
Aggregate consideration | $ 178,000,000 | $ 25,000,000 |
Remaining authorized amount for stock repurchases | 122,000,000 | |
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, 2016USD ($) |
Operating Leased Assets [Line Items] | |
2,017 | $ 31,742 |
2,018 | 26,745 |
2,019 | 22,349 |
2,020 | 19,129 |
2,021 | 16,729 |
Thereafter | 50,128 |
Less sublease income | (1,977) |
Total minimum lease payments | $ 164,845 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Loss Contingencies [Line Items] | |||
Operating leases rent expense net | $ 34,000,000 | $ 26,900,000 | $ 32,000,000 |
Contractual obligations under agreements with non cancelable terms to purchase goods or services | 692,900,000 | ||
Other assets | |||
Loss Contingencies [Line Items] | |||
Restricted cash | 1,500,000 | ||
Other current assets | |||
Loss Contingencies [Line Items] | |||
Restricted cash | 100,000 | ||
Minimum | |||
Loss Contingencies [Line Items] | |||
Estimated aggregate possible loss | 0 | ||
Maximum | |||
Loss Contingencies [Line Items] | |||
Estimated aggregate possible loss | $ 10,000,000 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) $ in Millions | Feb. 22, 2017USD ($) |
Subsequent Event | Stock and Asset Purchase Agreement | |
Subsequent Event [Line Items] | |
Obligation for business acquisition | $ 800 |
Summary Quarterly Consolidat136
Summary Quarterly Consolidated Financial Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||
Dec. 31, 2016 | [1],[2] | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | [3] | Sep. 30, 2015 | [4] | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | ||||
Quarterly Financial Information [Line Items] | |||||||||||||||||
Net sales | $ 1,759,223 | $ 1,725,145 | $ 1,730,044 | $ 1,614,706 | $ 1,101,681 | $ 1,221,416 | $ 1,260,077 | $ 1,215,158 | $ 6,829,118 | $ 4,798,332 | $ 5,322,921 | ||||||
Gross margin | 436,001 | 442,850 | 444,734 | 384,032 | 358,673 | 359,333 | 364,361 | 336,556 | 1,707,617 | 1,418,923 | 1,582,496 | ||||||
Operating (loss) income | 72,506 | 91,313 | 33,388 | (86,490) | 52,912 | 60,781 | 51,542 | 45,718 | 110,717 | 210,953 | 341,334 | ||||||
Net (loss) income attributable to ARRIS Group, Inc. | $ 88,283 | $ 48,162 | $ 84,228 | $ (202,573) | $ 30,041 | $ 26,256 | $ 16,758 | $ 19,126 | $ 18,100 | $ 92,181 | $ 327,211 | ||||||
Net (loss) income per basic share | $ 0.46 | $ 0.25 | $ 0.44 | $ (1.06) | $ 0.20 | $ 0.18 | $ 0.11 | $ 0.13 | $ 0.09 | [5] | $ 0.63 | [5] | $ 2.27 | [5] | |||
Net (loss) income per diluted share | $ 0.46 | $ 0.25 | $ 0.44 | $ (1.06) | $ 0.20 | $ 0.18 | $ 0.11 | $ 0.13 | $ 0.09 | [5] | $ 0.62 | [5] | $ 2.21 | [5] | |||
[1] | For the quarter ended December 31, 2016, the Company recorded $16.4 million as a reduction to net sales in connection with Warrants. | ||||||||||||||||
[2] | In the fourth quarter of 2016, the Company recorded foreign currency remeasurement gains of approximately $16 million related to the remeasurement of net deferred income tax liabilities in the U.K. where the functional currency is the U.S. dollar. Approximately $8 million resulted from changes in exchange rates prior to the 4th quarter in 2016 and was considered the correction of an immaterial misstatement of interim financial statements in 2016. In accordance with ASC Topic 250, Accounting Changes and Error Corrections, the Company evaluated the impact of the 4th quarter adjustment on its previously issued interim financial statements in 2016 and concluded that the results of operations for these periods were not materially misstated and accordingly the correction was recorded in the 4th quarter. | ||||||||||||||||
[3] | $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. | ||||||||||||||||
[4] | 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 $18.9 million obtained from foreign tax credits generated by the transaction. | ||||||||||||||||
[5] | Calculated based on net income attributable to shareowners of ARRIS International plc. |
Summary Quarterly Consolidat137
Summary Quarterly Consolidated Financial Information (Parenthetical) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information [Line Items] | ||||||
Foreign currency remeasurement gain | $ 13,982 | $ (20,761) | $ (2,637) | |||
Tax expense on Taiwan gain | $ 18,900 | |||||
Tax benefit from foreign tax credit | 18,900 | |||||
Current tax benefit from research and development tax credits | $ 20,400 | |||||
Sales | ||||||
Quarterly Financial Information [Line Items] | ||||||
Reduction to net sales | $ 16,400 | |||||
Gain on foreign currency | ||||||
Quarterly Financial Information [Line Items] | ||||||
Correction of an immaterial misstatement from changes in exchange rates | 8,000 | |||||
Pace Plc | ||||||
Quarterly Financial Information [Line Items] | ||||||
Foreign currency remeasurement gain | $ 16,000 | |||||
Domestic Tax Authority | ||||||
Quarterly Financial Information [Line Items] | ||||||
Tax benefit from release of valuation allowances from deferred tax assets | $ 27,300 |