Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 30, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | ARRS | |
Entity Registrant Name | ARRIS INTERNATIONAL PLC | |
Entity Central Index Key | 1,645,494 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 187,781,876 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 1,126,248 | $ 980,123 |
Short-term investments, at fair value | 90,673 | 115,553 |
Total cash, cash equivalents and short-term investments | 1,216,921 | 1,095,676 |
Accounts receivable (net of allowances for doubtful accounts of $16,325 in 2017 and $15,253 in 2016) | 1,069,771 | 1,359,430 |
Other receivables | 57,454 | 73,193 |
Inventories (net of reserves of $78,167 in 2017 and $72,596 in 2016) | 556,264 | 551,541 |
Prepaid income taxes | 21,845 | 51,476 |
Prepaids | 27,898 | 21,163 |
Other current assets | 132,338 | 127,593 |
Total current assets | 3,082,491 | 3,280,072 |
Property, plant and equipment (net of accumulated depreciation of $338,846 in 2017 and $319,473 in 2016) | 354,050 | 353,377 |
Goodwill | 2,018,012 | 2,016,169 |
Intangible assets (net of accumulated amortization of $1,312,929 in 2017 and $1,254,360 in 2016) | 1,586,187 | 1,677,178 |
Investments | 65,035 | 72,932 |
Deferred income taxes | 190,037 | 298,757 |
Other assets | 58,919 | 59,877 |
Total assets | 7,354,731 | 7,758,362 |
Current liabilities: | ||
Accounts payable | 1,020,234 | 1,048,904 |
Accrued compensation, benefits and related taxes | 73,220 | 139,794 |
Accrued warranty | 46,330 | 49,618 |
Deferred revenue | 145,197 | 132,128 |
Current portion of long-term debt and financing lease obligation | 82,767 | 82,734 |
Income taxes payable | 20,278 | 23,133 |
Other accrued liabilities | 300,861 | 357,823 |
Total current liabilities | 1,688,887 | 1,834,134 |
Long-term debt and financing lease obligation, net of current portion | 2,159,300 | 2,180,009 |
Accrued pension | 54,809 | 52,652 |
Noncurrent income taxes | 120,493 | 123,344 |
Deferred income taxes | 89,260 | 223,529 |
Other noncurrent liabilities | 112,977 | 117,957 |
Total liabilities | 4,225,726 | 4,531,625 |
Stockholders' equity: | ||
Common stock | 2,802 | 2,831 |
Capital in excess of par value | 3,322,803 | 3,314,707 |
Accumulated deficit | (243,207) | (132,013) |
Accumulated other comprehensive income | 10,628 | 3,291 |
Total ARRIS International plc stockholders' equity | 3,093,026 | 3,188,816 |
Stockholders' equity attributable to noncontrolling interest | 35,979 | 37,921 |
Total stockholders' equity | 3,129,005 | 3,226,737 |
Total liabilities and stockholders' equity | $ 7,354,731 | $ 7,758,362 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) $ in Thousands, shares in Millions | Mar. 31, 2017USD ($)shares | Mar. 31, 2017£ / shares | Dec. 31, 2016USD ($)shares | Dec. 31, 2016£ / shares |
Allowances for doubtful accounts | $ 16,325 | $ 15,253 | ||
Reserves for inventories | 78,167 | 72,596 | ||
Accumulated depreciation of property, plant and equipment | 338,846 | 319,473 | ||
Accumulated amortization of intangible assets | $ 1,312,929 | $ 1,254,360 | ||
Common stock, nominal value | £ / shares | £ 0.01 | £ 0.01 | ||
Common stock, shares issued | shares | 190.7 | 190.1 | ||
Common stock, shares outstanding | shares | 190.7 | 190.1 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Net sales | $ 1,483,105 | $ 1,614,706 | |
Cost of sales | 1,145,848 | 1,230,674 | |
Gross margin | 337,257 | 384,032 | |
Operating expenses: | |||
Selling, general, and administrative expenses | 104,638 | 119,963 | |
Research and development expenses | 132,962 | 161,147 | |
Amortization of acquired intangible assets | 93,646 | 98,493 | |
Integration, acquisition, restructuring and other costs | 10,095 | 90,919 | |
Total operating expenses | 341,341 | 470,522 | |
Operating loss | (4,084) | (86,490) | |
Other expense (income): | |||
Interest expense | 19,683 | 19,626 | |
Loss on investments | 4,530 | 1,959 | |
Loss on foreign currency | 4,740 | 12,241 | |
Interest income | (1,922) | (783) | |
Other expense (income), net | (85) | (350) | |
Loss before income taxes | (31,030) | (119,183) | |
Income tax expense | 10,001 | 86,013 | |
Consolidated net loss | (41,031) | (205,196) | |
Net loss attributable to noncontrolling interest | (1,933) | (2,623) | |
Net loss attributable to ARRIS International plc. | $ (39,098) | $ (202,573) | |
Net loss per ordinary share | |||
Basic | [1] | $ (0.21) | $ (1.06) |
Diluted | [1] | $ (0.21) | $ (1.06) |
Weighted average ordinary shares: | |||
Basic | 189,796 | 191,743 | |
Diluted | 189,796 | 191,743 | |
[1] | Calculated based on net loss attributable to shareowners of ARRIS International plc |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Consolidated net loss | $ (41,031) | $ (205,196) |
Available-for-sale securities: | ||
Unrealized loss on available-for-sale securities, net of tax of $(52) and $137 in 2017 and 2016, respectively | 96 | (232) |
Reclassification adjustments recognized in net loss, net of tax of $2 and $(7) in 2017 and 2016, respectively | (3) | 12 |
Net change in available-for-sale | 93 | (220) |
Derivative instruments: | ||
Unrealized gain (loss) on derivative instruments, net of tax of $(634) and $5,242 in 2017 and 2016, respectively | 1,420 | (9,933) |
Reclassification adjustments recognized in net loss, net of tax of $(372) and $(601) in 2017 and 2016, respectively | 832 | 1,140 |
Net change in derivative instruments | 2,252 | (8,793) |
Pension liabilities: | ||
Reclassification adjustments recognized in net loss | 11 | (1,897) |
Net change in pension liabilities | 11 | (1,897) |
Cumulative translation adjustments | 4,981 | 3,080 |
Net current-period other comprehensive income (loss) | 7,337 | (7,830) |
Comprehensive loss | (33,694) | (213,026) |
Comprehensive loss attributable to noncontrolling interest | (1,942) | (2,626) |
Comprehensive loss attributable to ARRIS International plc | $ (31,752) | $ (210,400) |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Unrealized loss on available-for-sale securities, tax | $ (52) | $ 137 |
Reclassification adjustments recognized in net loss, tax | 2 | (7) |
Unrealized gain (loss) on derivative instruments, tax | (634) | 5,242 |
Reclassification adjustments recognized in net loss, tax | $ (372) | $ (601) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating activities: | ||
Consolidated net loss | $ (41,031) | $ (205,196) |
Depreciation | 21,313 | 23,871 |
Amortization of acquired intangible assets | 95,306 | 99,766 |
Amortization of deferred financing fees and debt discount | 1,903 | 1,929 |
Deferred income tax provision | (20,783) | (36,913) |
Foreign currency remeasurement of certain income tax accounts | 3,131 | |
Stock compensation expense | 19,415 | 14,276 |
Provision for non-cash warrants | 2,423 | |
Provision for doubtful accounts | (179) | 845 |
Loss on disposal of property, plant & equipment and other | 292 | (16) |
Loss on investments and other | 4,530 | 1,959 |
Excess income tax benefits from stock-based compensation | (2,354) | |
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions: | ||
Accounts receivable | 292,297 | 130,461 |
Other receivables | 15,739 | 9,263 |
Inventories | (3,152) | 166,177 |
Accounts payable and accrued liabilities | (144,640) | (535,651) |
Prepaids and other, net | 3,419 | 109,048 |
Net cash provided by (used in) operating activities | 249,983 | (222,535) |
Investing activities: | ||
Purchases of investments | (55,879) | (4,778) |
Sales of investments | 91,885 | 2,093 |
Purchases of property, plant and equipment | (21,867) | (9,140) |
Purchases of intangible assets | (1,310) | |
Acquisition, net of cash acquired | (340,118) | |
Other, net | 826 | 2,932 |
Net cash provided by (used in) investing activities | 14,965 | (350,321) |
Financing activities: | ||
Proceeds from (cost of) issuance of shares, net | 23 | (2,716) |
Repurchase of shares | (83,110) | (150,003) |
Excess income tax benefits from stock-based compensation | 2,354 | |
Repurchase of shares to satisfy employee minimum tax withholdings | (13,754) | (14,045) |
Proceeds from issuance of debt | 800,000 | |
Payment of debt obligations | (22,375) | (252,625) |
Payment of financing lease obligation | (204) | (164) |
Payment for account receivable financing facility | (12,042) | |
Payment for deferred financing fees and debt discount | (2,304) | |
Net cash (used in) provided by financing activities | (119,420) | 368,455 |
Effect of exchange rate changes on cash and cash equivalents | 597 | |
Net increase in cash and cash equivalents | 146,125 | (204,401) |
Cash and cash equivalents at beginning of year | 980,123 | 863,582 |
Cash and cash equivalents at end of year | $ 1,126,248 | $ 659,181 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2017 | |
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.” The Registrant is deemed to be the successor to ARRIS Group pursuant to Rule 12g-3(a) 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 14 Segment Information set-tops, The 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. All intercompany accounts and transactions have been eliminated. The accompanying financial data as of March 31, 2017 and for the three months ended March 31, 2017 and March 31, 2016 has been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The December 31, 2016 Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. In the opinion of management, all normal recurring adjustments necessary to present fairly the consolidated balance sheet as of March 31, 2017 ; the consolidated statements of operations, the statements of comprehensive income (loss), and the statements of cash flows for the three months ended March 31, 2017 and March 31, 2016 as applicable, have been made. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the operating results for the full fiscal year or any future periods. The Company has evaluated subsequent events through the date that the financial statements were issued. |
Impact of Recently Adopted Acco
Impact of Recently Adopted Accounting Standards | 3 Months Ended |
Mar. 31, 2017 | |
Impact of Recently Adopted Accounting Standards | Note 2. Impact of Recently Adopted Accounting Standards Adoption of new accounting standards first-in, first-out In 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. 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. ARRIS adopted this guidance in the first quarter of 2017. Upon adoption, using the modified retrospective transition method, the Company recorded a cumulative-effect adjustment for previously unrecognized excess tax benefits of $8.9 million, decreasing opening accumulated deficit and increasing non-current paid-in In October 2016, the FASB issued new guidance for intra-entity transfer of assets other than inventory that requires 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. ARRIS adopted this update as of January 1, 2017. Upon adoption, using the modified retrospective transition method, the Company recorded a cumulative-effect adjustment for previously recognized prepaid income taxes, increasing opening accumulated deficit by $2.0 million and non-current deferred tax assets by $4.5 million, and decreasing other current prepaid asset by $2.5 million. Applying the guidance prospectively, an income tax expense of approximately $8.0 million was recognized in the quarter ended March 31, 2017. Also as a result of the adoption of this guidance, any future inter-company sale transactions of assets other than inventory will result in either income tax expense or benefit in the period of the transaction. 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 a cross-functional team that is analyzing 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, 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 enters 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 February 2016, the FASB issued new guidance that will require lessees to recognize most leases on their balance sheets as a right-of-use 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 In November 2016, the FASB issued new guidance that 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 end-of-period In January 2017, the FASB issued an accounting standard update that clarifies the definition of a business to help companies evaluate whether acquisition or disposal transactions should be accounted for as asset groups or as businesses. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2019 on a prospective basis. The impact of this accounting standard update will be facts and circumstances dependent, but the Company expects that in some situations transactions that were previously accounted for as business combinations or disposal transactions will be accounted for as asset purchases or asset sales under the accounting standard update. In January 2017, the FASB issued an accounting standard update that removes Step two of the goodwill impairment test, which requires the assessment of fair value of individual assets and liabilities of a reporting unit to measure goodwill impairments. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2021 on a prospective basis, and early adoption is permitted. Given current circumstances, the Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements. Nevertheless, the Company will continue to monitor the potential impact of the new guidance on the Company’s consolidated financial statements. In March 2017, the FASB issued an accounting standard update that requires entities to disaggregate the service cost component from the other components of net periodic benefit costs and present it with other current compensation costs for related employees in the income statement, and present the other components elsewhere in the income statement and outside of income from operations if that subtotal is presented. The amendments in this update also allow only the service cost component to be eligible for capitalization when applicable. The accounting standard update will be effective for the Company in the first quarter of fiscal 2019. Early adoption is permitted. The Company is currently evaluating how the adoption of this standard will have on its consolidated financial statements. |
Business Acquisition
Business Acquisition | 3 Months Ended |
Mar. 31, 2017 | |
Business Acquisition | Note 3. Business Acquisition Acquisition of Pace On January 4, 2016, ARRIS completed its previously announced acquisition of Pace, a leading 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 The Company completed the accounting for the aforementioned business combination during the fourth quarter of 2016. Pending acquisition of Ruckus Wireless and ICX Switch business 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 product lines (the “Ruckus Networks”) 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 acquisition of these product lines 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 segment within the Company focused on innovative wireless networking and wired switching technology to address evolving and emerging needs across a number of vertical markets. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets | Note 4. Goodwill and Intangible Assets Goodwill The changes in the carrying amount of goodwill for the year to date period ended March 31, 2017 are as follows (in thousands): CPE N & C Total 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 Changes in year 2017: Currency translation and other 1,843 – 1,843 Balance as of March 31, 2017 $ 1,393,014 $ 624,998 $ 2,018,012 Goodwill 1,393,014 1,003,654 2,396,668 Accumulated impairment losses – (378,656 ) (378,656 ) Balance as of March 31, 2017 $ 1,393,014 $ 624,998 $ 2,018,012 Intangible Assets The gross carrying amount and accumulated amortization of the Company’s acquired intangible assets as of March 31, 2017 and December 31, 2016 are as follows (in thousands): March 31, 2017 December 31, 2016 Gross Accumulated Net Book Gross Accumulated Net Book Definite-lived intangible assets Customer relationships $ 1,575,351 $ 663,736 $ 911,615 $ 1,572,947 $ 624,719 $ 948,228 Developed technology, patents & licenses 1,250,893 623,144 627,749 1,248,719 571,808 676,911 Trademarks, trade and domain names 62,872 26,049 36,823 83,472 41,433 42,039 Backlog – – – 16,400 16,400 – Sub-total $ 2,889,116 $ 1,312,929 $ 1,576,187 $ 2,921,538 $ 1,254,360 $ 1,667,178 Indefinite-lived intangible assets Trademarks 5,900 – 5,900 5,900 – 5,900 In-process 4,100 – 4,100 4,100 – 4,100 Sub-total 10,000 – 10,000 10,000 – 10,000 Total $ 2,899,116 $ 1,312,929 $ 1,586,187 $ 2,931,538 $ 1,254,360 $ 1,677,178 As of March 31, 2017, certain fully amortized intangible assets have been eliminated from both the gross and accumulated amortization amounts. 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 acquired intangible assets (in thousands): Three Months Ended March 31, 2017 2016 Cost of sales $ 711 $ 324 Selling, general & administrative expense 949 949 Amortization of acquired intangible assets (1) 93,646 98,493 Total $ 95,306 $ 99,766 (1) Reflects amortization expense for the intangible assets acquired through business combinations. The estimated total amortization expense for finite-lived intangibles for each of the next five fiscal years is as follows (in thousands): 2017 (for the remaining nine months) $ 276,400 2018 316,908 2019 270,876 2020 259,145 2021 124,359 Thereafter 328,499 |
Investments
Investments | 3 Months Ended |
Mar. 31, 2017 | |
Investments | Note 5. Investments ARRIS’s investments consisted of the following (in thousands): As of March 31, 2017 As of December 31, 2016 Current Assets: Available-for-sale $ 90,673 $ 115,553 Noncurrent Assets: Available-for-sale 5,101 15,391 Equity method investments 26,458 22,688 Cost method investments 4,091 6,841 Other investments 29,385 28,012 Total classified as non-current 65,035 72,932 Total $ 155,708 $ 188,485 Available-for-sale available-for-sale available-for-sale available-for-sale The amortized costs and fair value of available-for-sale March 31, 2017 December 31, 2016 Amortized Gross Gross Fair Amortized Gross Gross Fair Certificates of deposit (foreign) $ 59,563 $ — $ — $ 59,563 $ 87,372 $ — $ — $ 87,372 Corporate bonds 31,094 35 (19 ) 31,110 34,175 35 (77 ) 34,133 Short-term bond fund — — — — 5,046 69 (69 ) 5,046 Corporate obligations 4 — — 4 3 — — 3 Money markets 54 — — 54 54 — — 54 Mutual funds 101 7 — 108 94 28 (21 ) 101 Other investments 4,823 202 (90 ) 4,935 4,192 530 (487 ) 4,235 Total $ 95,639 $ 244 $ (109 ) $ 95,774 $ 130,936 $ 662 $ (654 ) $ 130,944 The following table represents the breakdown of the available-for-sale March 31, 2017 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized Certificates of deposit (foreign) $ 59,563 $ — $ — $ — $ 59,563 $ — Corporate bonds 31,110 (19 ) — — 31,110 (19 ) Short-term bond fund — — — — — — Corporate obligations 4 — — — 4 — Money markets 54 — — — 54 — Mutual funds 108 — — — 108 — Other investments 4,935 (90 ) — — 4,935 (90 ) Total $ 95,774 $ (109 ) $ — $ — $ 95,774 $ (109 ) December 31, 2016 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair 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 ) As of March 31, 2017, 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 more likely than not that it will not 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 Three Months Ended March 31, 2017 2016 Proceeds from sales $ 91,885 $ 2,093 Gross gains 10 26 Gross losses — — The contractual maturities of the Company’s available-for-sale March 31, 2017 Amortized Cost Fair Value Within 1 year $ 90,657 $ 90,673 After 1 year through 5 years — — After 5 year through 10 years — — After 10 years 4,982 5,101 Total $ 95,639 $ 95,774 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. Classification of securities as current or non-current non-current. |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Measurement | Note 6. Fair Value Measurement 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 March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 Level 1 Level 2 Level 3 Total Certificates of deposit (foreign) $ – $ 59,563 $ – $ 59,563 Corporate bonds – 31,110 – 31,110 Corporate obligations – 4 – 4 Money markets 54 – – 54 Mutual funds 108 – – 108 Other investments – 4,935 – 4,935 Interest rate derivatives – asset derivatives – 9,130 – 9,130 Interest rate derivatives – liability derivatives – (7,018 ) – (7,018 ) Foreign currency contracts – asset position – 3,159 – 3,159 Foreign currency contracts – liability position – (4,941 ) – (4,941 ) 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 ) In addition to the financial instruments included in the above table, certain nonfinancial assets and liabilities are 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 March 31, 2017, 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 debt as of March 31, 2017 approximated fair value because of interest-bearing 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 | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities | Note 7. 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 Group 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 Group 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 one-month 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 one-month 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 2017, 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 three months ended March 31, 2017, 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 $1.2 million may be reclassified as an increase to interest expense. The table below presents the impact the Company’s derivative financial instruments had on the Accumulated Other Comprehensive Income and Statement of Operations for the three months ended March 31, 2017 and 2016 (in thousands): Location of Gain(Loss) Reclassified from AOCI into Income Three months ended 2017 2016 Gain (loss) Recognized in OCI on Derivatives (Effective Portion) Interest $ 2,054 $ (15,175 ) Amounts Reclassified from Accumulated OCI into Income (Effective Portion) Interest 1,204 1,741 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 of March 31, 2017 and December 31, 2016 were as follows (in thousands): Balance Sheet Location March 31, 2017 December 31, 2016 Derivatives designated as Interest rate derivatives Other current assets 1,131 222 Interest rate derivatives Other assets 7,999 8,043 Interest rate derivatives Other accrued liabilities (2,344 ) (2,989 ) Interest rate derivatives Other noncurrent liabilities (4,674 ) (6,421 ) 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 March 31, 2017 and December 31, 2016, the fair value of derivatives, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was a net asset position of $2.0 million and a net liability position of $1.4 million, respectively. As of March 31, 2017, 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 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 March 31, 2017, the Company had option collars with notional amounts totaling 35 million euros which mature in throughout 2017, forward contracts with notional amounts totaling 30 million euros which mature throughout 2017, forward contracts with a total notional amount of 50 million Australian dollars which mature throughout 2017, forward contracts with notional amounts totaling 35 million Canadian dollars which mature throughout 2017, forward contracts with notional amounts totaling 80 million British pounds which mature throughout 2017 and forward contracts with notional amounts totaling 567.2 million South African rand which mature throughout 2017 and 2018. 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 13 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 March 31, 2017 and December 31, 2016 were as follows (in thousands): Balance Sheet Location March 31, 2017 December 31, 2016 Derivatives not designated as Foreign exchange contracts Other current assets $ 3,104 $ 7,369 Foreign exchange contracts Other assets 55 – Foreign exchange contracts Other accrued liabilities (4,941 ) (3,671 ) The change in the fair values of ARRIS’s derivatives not designated as hedging instruments recorded in the Consolidated Statements of Operations during the three months ended March 31, 2017 and 2016 were as follows (in thousands): Three months ended March 31, Statement of Operations Location 2017 2016 Derivatives not designated as Foreign exchange contracts Loss on foreign currency $ 6,707 $ 17,455 |
Pension Benefits
Pension Benefits | 3 Months Ended |
Mar. 31, 2017 | |
Pension Benefits | Note 8. Pension Benefits Components of Net Periodic Pension Cost (in thousands): U.S. Pension Plans Non-U.S. Pension Plans Three months ended March 31, Three months ended March 31, 2017 2016 2017 2016 Service cost $ – $ – $ 154 $ 173 Interest cost 434 438 113 151 Return on assets (expected) (224 ) (199 ) (75 ) (68 ) Amortization of net actuarial loss(gain) 138 194 – (1,897 ) Net periodic pension cost $ 348 $ 433 $ 192 $ (1,641 ) Employer Contributions No minimum funding contributions are required in 2017 under the Company’s U.S. defined benefit plan. During the quarter ended March 31, 2017, the Company made a minimum funding contribution of $0.3 million related to its Taiwan pension plan. |
Guarantees
Guarantees | 3 Months Ended |
Mar. 31, 2017 | |
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 to 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 three months ended March 31, 2017 was as follows (in thousands): Balance at December 31, 2016 $ 88,187 Accruals related to warranties (including changes in assumptions) 9,586 Settlements made (in cash or in kind) (13,052 ) Balance at March 31, 2017 $ 84,721 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2017 | |
Inventories | Note 10. Inventories The components of inventory were as follows, net of reserves (in thousands): March 31, 2017 December 31, Raw material $ 88,747 $ 86,243 Work in process 7,577 3,877 Finished goods 459,940 461,421 Total inventories, net $ 556,264 $ 551,541 |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment | Note 11. Property, Plant and Equipment Property, plant and equipment, at cost, consisted of the following (in thousands): March 31, 2017 December 31, 2016 Land $ 68,562 $ 68,562 Buildings and leasehold improvements 177,352 163,333 Machinery and equipment 446,982 440,955 692,896 672,850 Less: Accumulated depreciation (338,846 ) (319,473 ) Total property, plant and equipment, net $ 354,050 $ 353,377 |
Restructuring, Acquisition and
Restructuring, Acquisition and Integration | 3 Months Ended |
Mar. 31, 2017 | |
Restructuring, Acquisition and Integration | Note 12. Restructuring, Acquisition 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 severance & termination benefits Contractual obligations and other Total Balance at December 31, 2016 $ 27,886 $ 2,243 $ 30,129 Restructuring charges 3,555 2,906 6,461 Cash payments / adjustments (5,153 ) (714 ) (5,867 ) Balance at March 31, 2017 $ 26,288 $ 4,435 $ 30,723 Employee severance and termination benefits In first quarter of 2016, ARRIS completed its acquisition of Pace. ARRIS initiated restructuring plans as a result of the Acquisition that focuses on the rationalization of personnel, facilities and systems across the ARRIS organization. The estimated cost recorded during 2016 was approximately $96.3 million. This amount is included in the Consolidated Statement of Operations in the line item titled “Integration, acquisition, restructuring costs and other costs”. The restructuring plan affected approximately 1,545 employees across the company. The remaining liability is expected to be paid in 2017. Contractual obligations cease-use Acquisition During the three months ended March 31, 2017, acquisition expenses were approximately $2.3 million. These expenses related to the pending acquisition of the Ruckus Wireless and ICX Switch product lines and consisted of banker and other fees. During the three months ended March 31, 2016, acquisition expenses were approximately $27.8 million. These expenses related banker fees, legal fees and other direct costs of the Combination. Integration Integration expenses of approximately $1.3 million and $12.1 million were recorded during the three months ended March 31, 2017 and 2016, respectively, related to integration-related outside services following the Combination. |
Indebtedness
Indebtedness | 3 Months Ended |
Mar. 31, 2017 | |
Indebtedness | Note 13. Indebtedness The following is a summary of indebtedness and lease financing obligations as of March 31, 2017 and December 31, 2016 (in thousands): As of March 31, 2017 As of December 31, 2016 Current liabilities: Term A loan $ 49,500 $ 49,500 Term A-1 40,000 40,000 Lease finance obligation 761 775 Current obligations 90,261 90,275 Current deferred financing fees and debt discount (7,494 ) (7,541 ) 82,767 82,734 Noncurrent liabilities: Term A loan 853,875 866,250 Term A-1 720,000 730,000 Term B loan 543,812 543,812 Revolver – – Lease finance obligation 57,712 57,902 Noncurrent obligations 2,175,399 2,197,964 Noncurrent deferred financing fees and debt discount (16,099 ) (17,955 ) 2,159,300 2,180,009 Total $ 2,242,067 $ 2,262,743 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 A-1 A-1 Rate As of March 31, 2017 Term Loan A LIBOR + 1.75 % 2.73% Term Loan A-1 LIBOR + 1.75 % 2.73% Term Loan B LIBOR (1) + 2.75 % 3.73% 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, 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, 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 3.50:1. As of March 31, 2017, ARRIS was in compliance with all covenants under the Amended Credit Agreement. During the three months ended March 31, 2017, the Company made mandatory prepayments of approximately $22.4 million related to the senior secured credit facilities. Subsequent to March 31, 2017, the Company has entered into a Second Amendment (the “Second Amendment”) to its Amended and Restated Credit Facility dated June 18, 2015, as previously amended on December 15, 2015 (the “Credit Agreement”). See Note 23 Subsequent Events Other As of March 31, 2017, the scheduled maturities of the contractual debt obligations for the next four years are as follows (in thousands): 2017 (for the remaining nine months) $ 67,125 2018 89,500 2019 89,500 2020 1,961,062 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Information | Note 14. 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 within an enterprise 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. Our CODM manages the Company under two segments: • Customer Premises Equipment (“CPE”) set-top • Network & Cloud (“N&C”) – state-of-the-art end-to-end These operating segments were 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 table below represents information about the Company’s reportable segments for the three months ended March 31, 2017 and 2016 (in thousands): Three months ended March 31, 2017 2016 Net sales to external customers: CPE $ 1,055,056 $ 1,090,828 N&C 430,436 524,237 Other (2,387 ) (359 ) Total 1,483,105 1,614,706 Direct contribution: CPE 118,415 131,965 N&C 131,718 156,984 Segment total 250,133 288,949 Corporate and unallocated costs (150,476 ) (186,027 ) Amortization of intangible assets (93,646 ) (98,493 ) Integration, acquisition, restructuring and other (10,095 ) (90,919 ) Operating loss (4,084 ) (86,490 ) Interest expense 19,683 19,626 Loss on investments 4,530 1,959 (Gain) loss on foreign currency 4,740 12,241 Interest income (1,922 ) (783 ) Other expense ( income), net (85 ) (350 ) Loss before income taxes $ (31,030 ) $ (119,183 ) For the three month period ended March 31, 2017 and 2016, the compositions of our corporate and unallocated costs that are reflected in the consolidated statement of operations were as follow (in thousands): Three months ended March 31, 2017 2016 Corporate and unallocated costs: Cost of sales $ 22,083 $ 47,388 Selling, general and administrative expenses 87,025 95,373 Research and development expenses 41,368 43,266 Total $ 150,476 $ 186,027 |
Sales Information
Sales Information | 3 Months Ended |
Mar. 31, 2017 | |
Sales Information | Note 15. Sales Information ARRIS sells its products primarily in the United States. The Company’s international revenue is generated from Asia Pacific, Canada, Europe, Middle East and Latin America. Sales to customers outside of United States were approximately 35.4% and 24.4% of total sales for the three months ended March 31, 2017 and 2016, respectively. The table below set forth our domestic (U.S.) and international sales for the three months ended March 31, 2017 and 2016 were as follows (in thousands): Three months ended March 31, 2017 2016 Domestic – U.S $ 958,477 $ 1,220,966 International Americas, excluding U.S. 292,601 236,639 Asia Pacific 51,915 37,369 EMEA 180,112 119,732 Total international $ 524,628 $ 393,740 Total sales $ 1,483,105 $ 1,614,706 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2017 | |
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 (“EPS”) computations for the periods indicated (in thousands, except per share data): Three months ended March 31 2017 2016 Basic: Net loss attributable to ARRIS International plc. $ (39,098 ) $ (202,573 ) Weighted average shares outstanding 189,796 191,743 Basic earnings per share $ (0.21 ) $ (1.06 ) Diluted: Net loss attributable to ARRIS International plc. $ (39,098 ) $ (202,573 ) Weighted average shares outstanding 189,796 191,743 Net effect of dilutive shares — — Total 189,796 191,743 Diluted earnings per share $ (0.21 ) $ (1.06 ) Potential dilutive shares include stock options, unvested restricted and performance awards and warrants. For the three months ended March 31, 2017 and 2016, all of the equity-based awards were excluded from the computation of diluted earnings per share shares. 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 three months ended March 31, 2017, the Company issued 0.6 million shares of its ordinary shares related to the vesting of restricted shares, as compared to 2.3 million shares for the twelve months ended December 31, 2016. 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 respective customers from the Company. There is no vesting in the first quarter of 2017. 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. The Company has not paid cash dividends on its shares 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. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Taxes | Note 17. Income Taxes The Company’s effective income tax rate for the three months ended March 31, 2017 is (34.0%), as compared to (72.0%) for the three months ended March 31, 2016. The Company’s effective income tax rate fluctuates based on, among other factors, the level and tax jurisdiction of income. The difference between the U.K. statutory income tax rate of 19.25% and the effective income tax rate for the 2017 and 2016 periods is primarily due to the benefits of other foreign income tax regimes and the U.S. federal research and development credits. For the three months ended March 31, 2017 and 2016, the Company recorded income tax expense of $10.0 million and $86.0 million, respectively. The change in income tax expense for the three months ended March 31, 2017 as compared to the three months ended March 31, 2016, was due to a decreased book loss in 2017 when compared to 2016, as well as the impact of non-recurring one-time On January 4, 2016, ARRIS Group completed the Combination transaction with Pace, a company incorporated in England and Wales. In connection with the Combination, (i) ARRIS International plc (“ARRIS”), 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 ARRIS was merged with and into ARRIS Group (the “Merger”), with ARRIS Group surviving the Merger as an indirect wholly-owned subsidiary of ARRIS. As a result of the Merger, ARRIS incurred withholding taxes of $55 million. Subsequent to the Merger, ARRIS is subject to the U.K. statutory tax rate and a territorial corporate tax system. The U.K. statutory rate for 2017 is 19.25% as compared to 20% in 2016. The statutory rate in the U.K. decreased from 20% to 19% effective April 1, 2017. The Company’s statutory rate for 2017 represents the blended rate that will be in effect for the year ended December 31, 2017 based on the 20% statutory rate that was effective for the first quarter of 2017 and the 19% rate effective for the remainder of 2017. Prior to the Merger, ARRIS was subject to the U.S. statutory tax rate of 35% and a worldwide corporate tax system. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2017 | |
Shareholders' Equity | Note 18. Shareholders’ Equity The following table provides a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to shareholders of ARRIS International plc and equity attributable to noncontrolling interest (in thousands): Ordinary Capital in Excess of Par Value Accumulated Accumulated Total ARRIS Non- Total Balance, December 31, 2016 $ 2,831 $ 3,314,707 $ (132,013 ) $ 3,291 $ 3,188,816 $ 37,921 $ 3,226,737 Net loss — — (39,098 ) — (39,098 ) (1,933 ) (41,031 ) Other comprehensive income, net of tax — — — 7,337 7,337 (9 ) 7,328 Compensation under stock award plans — 19,415 — — 19,415 — 19,415 Issuance of ordinary shares and other 11 (13,742 ) — — (13,731 ) — (13,731 ) Provision for warrants — 2,423 — — 2,423 — 2,423 Repurchase of ordinary shares, net (40 ) — (83,070 ) — (83,110 ) — (83,110 ) Cumulative effect adjustment to opening balance (1) — — 10,974 — 10,974 — 10,974 Balance, March 31, 2017 $ 2,802 $ 3,322,803 $ (243,207 ) $ 10,628 $ 3,093,026 $ 35,979 $ 3,129,005 (1) Cumulative adjustment related to the adoption of accounting standards, see Note 2 Impact of Recently Adopted Accounting Standards |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2017 | |
Warrants | Note 19. Warrants During 2016, the Company entered into two separate Warrant and Registration Rights Agreements (the “Warrants”) with certain customers pursuant to which those customers may purchase up to an aggregate of 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 customers from the Company. At March 31, 2017, approximately 2.2 million warrants are vested and outstanding, with a weighted average exercise price of $24.56, which vested based on the amount of purchases of products and services by the customers from the Company in 2016. The table below presents by year, the warrants to purchase ordinary shares that could vest under outstanding Warrant programs with customers, based on achieving certain purchase levels (in thousands). Warrants Issuable Exercise Price per Maximum Share Issuable Minimum Maximum $22.19 $28.54 Note 1 Year 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 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 The Warrants provide for net Share settlement that, if elected, 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 annual 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 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. For the three month ended March 31, 2017, ARRIS recorded $2.4 million as a reduction to net sales in connection with Warrants. This transaction is considered an equity contract, and is classified as such. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) | Note 20. Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in accumulated other comprehensive income (loss) by component, net of taxes, for the three months ended March 31, 2017 and 2016 (in thousands): Available-for Derivative Change Cumulative Total Balance as of December 31, 2016 $ 137 $ 671 $ (6,810 ) $ 9,293 $ 3,291 Other comprehensive income before reclassifications 96 1,420 – 4,981 6,497 Amounts reclassified from accumulated other comprehensive income (loss) (3 ) 832 11 – 840 Net current-period other comprehensive income 93 2,252 11 4,981 7,337 Balance as of March 31, 2017 $ 230 $ 2,923 $ (6,799 ) $ 14,274 $ 10,628 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 (232 ) (9,933 ) – 3,080 (7,085 ) Amounts reclassified from accumulated other comprehensive income (loss) 12 1,140 (1,897 ) – (745 ) Net current-period other comprehensive income (loss) (220 ) (8,793 ) (1,897 ) 3,080 (7,830 ) Balance as of March 31, 2016 $ (87 ) $ (15,574 ) $ (6,092 ) $ 1,277 $ (20,476 ) |
Repurchases of ARRIS Shares
Repurchases of ARRIS Shares | 3 Months Ended |
Mar. 31, 2017 | |
Repurchases of ARRIS Shares | Note 21. Repurchases of ARRIS Shares The table below sets forth the purchases of ARRIS shares for the quarter ended March 31, 2017: Period Total (1) Average Price Total Number of Approximate (in thousands) January 2017 78,263 $ 28.73 – 121,964 February 2017 – $ – – 121,964 March 2017 3,699,976 $ 25.57 3,266,743 338,855 (1) 511,496 shares were subject to equity awards that were cancelled for cash to satisfy minimum tax withholding obligations that arose on the vesting of shares of restricted stock units. Upon completing the Combination, ARRIS International plc conducted a court-approved process in accordance with section 641(1)(b) of the U.K. 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. In March 2017, the Board authorized an additional $300 million for share repurchases. During the first quarter of 2017, ARRIS repurchased 3.3 million shares of the Company’s ordinary shares at an average price of $25.44 per share, for aggregate consideration of approximately $83.1 million. The remaining authorized amount for stock repurchases under these plans was $338.9 million as of March 31, 2017. Unless terminated earlier by a Board resolution, these new plans will expire when ARRIS has used all authorized funds for repurchase. During the first quarter of 2016, the Company repurchased 6.4 million shares of its ordinary shares for $150.0 million at an average stock price of $23.47. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies | Note 22. Commitments and Contingencies Legal Proceedings: The Company accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period in which such determinations are made. Unless noted otherwise, the amount of liability is not probable or the amount cannot be reasonably estimated; and, therefore, accruals have not been made. Due to the nature of the Company’s business, it is subject to patent infringement claims, including current suits against it or one or more of its wholly-owned subsidiaries, or one or more of our customers who may seek indemnification from us, alleging infringement by various Company products and services. The Company believes that it has meritorious defenses to the allegation made in its pending cases and intends to vigorously defend these lawsuits; however, it is currently unable to determine the ultimate outcome of these or similar matters. Accordingly, with respect to these proceedings, we are currently unable to reasonably estimate the possible loss or range of possible losses. In addition, the Company is a defendant in various litigation matters generally arising out of the normal course of business. (See Part II, Item 1 “Legal Proceedings” for additional details) |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Event | Note 23. Subsequent Event On April 26, 2017, ARRIS and certain of ARRIS’s subsidiaries entered into a Second Amendment (the “Second Amendment”) to its Amended and Restated Credit Facility dated June 18, 2015, as previously amended on December 15, 2015 (the “Credit Agreement”). The Second Amendment provides for a new Term B Loan facility in the principal amount of $545 million, the proceeds of which (along with cash on hand) were used to repay in full the existing Term B Loan facility. Under the terms of the Second Amendment, the new Term B Loan has a maturity date of April 2024 and an interest rate of LIBOR plus a percentage ranging from 2.25% to 2.50% for Eurocurrency Rate Loans (as defined in the Credit Agreement), or the prime rate plus a percentage ranging from 1.25% to 1.50% for Base Rate Loans (as defined in the Credit Agreement), in either case depending on the Company’s consolidated net leverage ratio. All other material terms of the Credit Agreement remain unchanged. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the year to date period ended March 31, 2017 are as follows (in thousands): CPE N & C Total 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 Changes in year 2017: Currency translation and other 1,843 – 1,843 Balance as of March 31, 2017 $ 1,393,014 $ 624,998 $ 2,018,012 Goodwill 1,393,014 1,003,654 2,396,668 Accumulated impairment losses – (378,656 ) (378,656 ) Balance as of March 31, 2017 $ 1,393,014 $ 624,998 $ 2,018,012 |
Gross Carrying Amount and Accumulated Amortization of Acquired Intangible Assets | The gross carrying amount and accumulated amortization of the Company’s acquired intangible assets as of March 31, 2017 and December 31, 2016 are as follows (in thousands): March 31, 2017 December 31, 2016 Gross Accumulated Net Book Gross Accumulated Net Book Definite-lived intangible assets Customer relationships $ 1,575,351 $ 663,736 $ 911,615 $ 1,572,947 $ 624,719 $ 948,228 Developed technology, patents & licenses 1,250,893 623,144 627,749 1,248,719 571,808 676,911 Trademarks, trade and domain names 62,872 26,049 36,823 83,472 41,433 42,039 Backlog – – – 16,400 16,400 – Sub-total $ 2,889,116 $ 1,312,929 $ 1,576,187 $ 2,921,538 $ 1,254,360 $ 1,667,178 Indefinite-lived intangible assets Trademarks 5,900 – 5,900 5,900 – 5,900 In-process 4,100 – 4,100 4,100 – 4,100 Sub-total 10,000 – 10,000 10,000 – 10,000 Total $ 2,899,116 $ 1,312,929 $ 1,586,187 $ 2,931,538 $ 1,254,360 $ 1,677,178 |
Schedule of Amortization of Acquired Intangible Assets | The following table presents the amortization of acquired intangible assets (in thousands): Three Months Ended March 31, 2017 2016 Cost of sales $ 711 $ 324 Selling, general & administrative expense 949 949 Amortization of acquired intangible assets (1) 93,646 98,493 Total $ 95,306 $ 99,766 (1) Reflects amortization expense for the intangible assets acquired through business combinations. |
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 (for the remaining nine months) $ 276,400 2018 316,908 2019 270,876 2020 259,145 2021 124,359 Thereafter 328,499 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Investments | ARRIS’s investments consisted of the following (in thousands): As of March 31,2017 As of December 31,2016 Current Assets: Available-for-sale $ 90,673 $ 115,553 Noncurrent Assets: Available-for-sale 5,101 15,391 Equity method investments 26,458 22,688 Cost method investments 4,091 6,841 Other investments 29,385 28,012 Total classified as non-current 65,035 72,932 Total $ 155,708 $ 188,485 |
Amortized Costs and Fair Value of Available-for-sale Securities | The amortized costs and fair value of available-for-sale March 31, 2017 December 31, 2016 Amortized Costs Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Costs Gross Unrealized Gains Gross Unrealized Losses Fair Value Certificates of deposit (foreign) $ 59,563 $ — $ — $ 59,563 $ 87,372 $ — $ — $ 87,372 Corporate bonds 31,094 35 (19 ) 31,110 34,175 35 (77 ) 34,133 Short-term bond fund — — — — 5,046 69 (69 ) 5,046 Corporate obligations 4 — — 4 3 — — 3 Money markets 54 — — 54 54 — — 54 Mutual funds 101 7 — 108 94 28 (21 ) 101 Other investments 4,823 202 (90 ) 4,935 4,192 530 (487 ) 4,235 Total $ 95,639 $ 244 $ (109 ) $ 95,774 $ 130,936 $ 662 $ (654 ) $ 130,944 |
Unrealized Losses on Available-For-Sale Securities and Fair Value | The following table represents the breakdown of the available-for-sale March 31, 2017 Less than 12 months 12 months or more Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Certificates of deposit (foreign) $ 59,563 $ — $ — $ — $ 59,563 $ — Corporate bonds 31,110 (19 ) — — 31,110 (19 ) Short-term bond fund — — — — — — Corporate obligations 4 — — — 4 — Money markets 54 — — — 54 — Mutual funds 108 — — — 108 — Other investments 4,935 (90 ) — — 4,935 (90 ) Total $ 95,774 $ (109 ) $ — $ — $ 95,774 $ (109 ) December 31, 2016 Less than 12 months 12 months or more Total Fair value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses 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 ) |
Sale and/or Maturity of Available-for-Sale Securities | The sale and/or maturity of available-for-sale Three Months Ended March 31, 2017 2016 Proceeds from sales $ 91,885 $ 2,093 Gross gains 10 26 Gross losses — — |
Contractual Maturities of Available-for-Sale Securities | The contractual maturities of the Company’s available-for-sale March 31, 2017 Amortized Cost Fair Value Within 1 year $ 90,657 $ 90,673 After 1 year through 5 years — — After 5 year through 10 years — — After 10 years 4,982 5,101 Total $ 95,639 $ 95,774 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Investment Assets (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 March 31, 2017 and December 31, 2016 (in thousands): March 31, 2017 Level 1 Level 2 Level 3 Total Certificates of deposit (foreign) $ – $ 59,563 $ – $ 59,563 Corporate bonds – 31,110 – 31,110 Corporate obligations – 4 – 4 Money markets 54 – – 54 Mutual funds 108 – – 108 Other investments – 4,935 – 4,935 Interest rate derivatives – asset derivatives – 9,130 – 9,130 Interest rate derivatives – liability derivatives – (7,018 ) – (7,018 ) Foreign currency contracts – asset position – 3,159 – 3,159 Foreign currency contracts – liability position – (4,941 ) – (4,941 ) 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 ) |
Derivative Instruments and He34
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Impact of Derivative Financial Instruments | The table below presents the impact the Company’s derivative financial instruments had on the Accumulated Other Comprehensive Income and Statement of Operations for the three months ended March 31, 2017 and 2016 (in thousands): Location of Gain(Loss) Reclassified Income Three months ended March 31, 2017 2016 Gain (loss) Recognized in OCI on Derivatives (Effective Portion) Interest expense $ 2,054 $ (15,175 ) Amounts Reclassified from Accumulated OCI into Income (Effective Portion) Interest expense 1,204 1,741 |
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 of March 31, 2017 and December 31, 2016 were as follows (in thousands): Balance Sheet Location March 31, 2017 December 31, 2016 Derivatives designated as Interest rate derivatives Other current assets 1,131 222 Interest rate derivatives Other assets 7,999 8,043 Interest rate derivatives Other accrued liabilities (2,344 ) (2,989 ) Interest rate derivatives Other noncurrent liabilities (4,674 ) (6,421 ) |
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 March 31, 2017 and December 31, 2016 were as follows (in thousands): Balance Sheet Location March 31, 2017 December 31, 2016 Derivatives not designated as Foreign exchange contracts Other current assets $ 3,104 $ 7,369 Foreign exchange contracts Other assets 55 – Foreign exchange contracts Other accrued liabilities (4,941 ) (3,671 ) The change in the fair values of ARRIS’s derivatives not designated as hedging instruments recorded in the Consolidated Statements of Operations during the three months ended March 31, 2017 and 2016 were as follows (in thousands): Three months ended March 31, Statement of Operations Location 2017 2016 Derivatives not designated as Foreign exchange contracts Loss on foreign currency $ 6,707 $ 17,455 |
Pension Benefits (Tables)
Pension Benefits (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Components Of Net Periodic Pension Cost | Components of Net Periodic Pension Cost (in thousands): U.S. Pension Plans Non-U.S. Pension Plans Three months ended March 31, Three months ended March 31, 2017 2016 2017 2016 Service cost $ – $ – $ 154 $ 173 Interest cost 434 438 113 151 Return on assets (expected) (224 ) (199 ) (75 ) (68 ) Amortization of net actuarial loss(gain) 138 194 – (1,897 ) Net periodic pension cost $ 348 $ 433 $ 192 $ (1,641 ) |
Guarantees (Tables)
Guarantees (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Information Regarding Changes in ARRIS's Aggregate Product Warranty Liabilities | Information regarding the changes in ARRIS’s aggregate product warranty liabilities for the three months ended March 31, 2017 was as follows (in thousands): Balance at December 31, 2016 $ 88,187 Accruals related to warranties (including changes in assumptions) 9,586 Settlements made (in cash or in kind) (13,052 ) Balance at March 31, 2017 $ 84,721 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Components of Inventory Net of Reserves | The components of inventory were as follows, net of reserves (in thousands): March 31, 2017 December 31, Raw material $ 88,747 $ 86,243 Work in process 7,577 3,877 Finished goods 459,940 461,421 Total inventories, net $ 556,264 $ 551,541 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment, at Cost | Property, plant and equipment, at cost, consisted of the following (in thousands): March 31, 2017 December 31, 2016 Land $ 68,562 $ 68,562 Buildings and leasehold improvements 177,352 163,333 Machinery and equipment 446,982 440,955 692,896 672,850 Less: Accumulated depreciation (338,846 ) (319,473 ) Total property, plant and equipment, net $ 354,050 $ 353,377 |
Restructuring, Acquisition an39
Restructuring, Acquisition and Integration (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 severance & Contractual Total Balance at December 31, 2016 $ 27,886 $ 2,243 $ 30,129 Restructuring charges 3,555 2,906 6,461 Cash payments / adjustments (5,153 ) (714 ) (5,867 ) Balance at March 31, 2017 $ 26,288 $ 4,435 $ 30,723 |
Indebtedness (Tables)
Indebtedness (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Summary of Indebtedness and Lease Financing Obligations | The following is a summary of indebtedness and lease financing obligations as of March 31, 2017 and December 31, 2016 (in thousands): As of March 31, 2017 As of December 31, 2016 Current liabilities: Term A loan $ 49,500 $ 49,500 Term A-1 40,000 40,000 Lease finance obligation 761 775 Current obligations 90,261 90,275 Current deferred financing fees and debt discount (7,494 ) (7,541 ) 82,767 82,734 Noncurrent liabilities: Term A loan 853,875 866,250 Term A-1 720,000 730,000 Term B loan 543,812 543,812 Revolver – – Lease finance obligation 57,712 57,902 Noncurrent obligations 2,175,399 2,197,964 Noncurrent deferred financing fees and debt discount (16,099 ) (17,955 ) 2,159,300 2,180,009 Total $ 2,242,067 $ 2,262,743 |
Interes Rates on Senior Secured Credit Facilities | Interest rates on borrowings under the senior secured credit facilities are set forth in the table below. Rate As of March 31, 2017 Term Loan A LIBOR + 1.75 % 2.73% Term Loan A-1 LIBOR + 1.75 % 2.73% Term Loan B LIBOR (1) + 2.75 % 3.73% 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 March 31, 2017, the scheduled maturities of the contractual debt obligations for the next four years are as follows (in thousands): 2017 (for the remaining nine months) $ 67,125 2018 89,500 2019 89,500 2020 1,961,062 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Summary of Company's Revenues by Products and Services | The table below represents information about the Company’s reportable segments for the three months ended March 31, 2017 and 2016 (in thousands): Three months ended March 31, 2017 2016 Net sales to external customers: CPE $ 1,055,056 $ 1,090,828 N&C 430,436 524,237 Other (2,387 ) (359 ) Total 1,483,105 1,614,706 Direct contribution: CPE 118,415 131,965 N&C 131,718 156,984 Segment total 250,133 288,949 Corporate and unallocated costs (150,476 ) (186,027 ) Amortization of intangible assets (93,646 ) (98,493 ) Integration, acquisition, restructuring and other (10,095 ) (90,919 ) Operating loss (4,084 ) (86,490 ) Interest expense 19,683 19,626 Loss on investments 4,530 1,959 (Gain) loss on foreign currency 4,740 12,241 Interest income (1,922 ) (783 ) Other expense ( income), net (85 ) (350 ) Loss before income taxes $ (31,030 ) $ (119,183 ) |
Composition Of Corporate and Unallocated Costs | For the three month period ended March 31, 2017 and 2016, the compositions of our corporate and unallocated costs that are reflected in the consolidated statement of operations were as follow (in thousands): Three months ended March 31, 2017 2016 Corporate and unallocated costs: Cost of sales $ 22,083 $ 47,388 Selling, general and administrative expenses 87,025 95,373 Research and development expenses 41,368 43,266 Total $ 150,476 $ 186,027 |
Sales Information (Tables)
Sales Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Summary of ARRIS' Domestic (U.S) and International Sales | The table below set forth our domestic (U.S.) and international sales for the three months ended March 31, 2017 and 2016 were as follows (in thousands): Three months ended March 31, 2017 2016 Domestic – U.S $ 958,477 $ 1,220,966 International Americas, excluding U.S. 292,601 236,639 Asia Pacific 51,915 37,369 EMEA 180,112 119,732 Total international $ 524,628 $ 393,740 Total sales $ 1,483,105 $ 1,614,706 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 (“EPS”) computations for the periods indicated (in thousands, except per share data): Three months ended March 31 2017 2016 Basic: Net loss attributable to ARRIS International plc. $ (39,098 ) $ (202,573 ) Weighted average shares outstanding 189,796 191,743 Basic earnings per share $ (0.21 ) $ (1.06 ) Diluted: Net loss attributable to ARRIS International plc. $ (39,098 ) $ (202,573 ) Weighted average shares outstanding 189,796 191,743 Net effect of dilutive shares — — Total 189,796 191,743 Diluted earnings per share $ (0.21 ) $ (1.06 ) |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Reconciliation of Equity | The following table provides a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to shareholders of ARRIS International plc and equity attributable to noncontrolling interest (in thousands): Ordinary Capital in Excess of Par Value Accumulated Accumulated Total ARRIS Non- Total Balance, December 31, 2016 $ 2,831 $ 3,314,707 $ (132,013 ) $ 3,291 $ 3,188,816 $ 37,921 $ 3,226,737 Net loss — — (39,098 ) — (39,098 ) (1,933 ) (41,031 ) Other comprehensive income, net of tax — — — 7,337 7,337 (9 ) 7,328 Compensation under stock award plans — 19,415 — — 19,415 — 19,415 Issuance of ordinary shares and other 11 (13,742 ) — — (13,731 ) — (13,731 ) Provision for warrants — 2,423 — — 2,423 — 2,423 Repurchase of ordinary shares, net (40 ) — (83,070 ) — (83,110 ) — (83,110 ) Cumulative effect adjustment to opening balance (1) — — 10,974 — 10,974 — 10,974 Balance, March 31, 2017 $ 2,802 $ 3,322,803 $ (243,207 ) $ 10,628 $ 3,093,026 $ 35,979 $ 3,129,005 (1) Cumulative adjustment related to the adoption of accounting standards, see Note 2 Impact of Recently Adopted Accounting Standards |
Warrants (Tables)
Warrants (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Warrants to Purchase Ordinary Shares that Could Vest Under Outstanding Warrant Programs with Customers, based on Achieving Certain Purchase Levels | The table below presents by year, the warrants to purchase ordinary shares that could vest under outstanding Warrant programs with customers, based on achieving certain purchase levels (in thousands). Warrants Issuable Exercise Price per Maximum Share Issuable Minimum Maximum $22.19 $28.54 Note 1 Year 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 |
Accumulated Other Comprehensi46
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 three months ended March 31, 2017 and 2016 (in thousands): Available-for Derivative Change Cumulative Total Balance as of December 31, 2016 $ 137 $ 671 $ (6,810 ) $ 9,293 $ 3,291 Other comprehensive income before reclassifications 96 1,420 – 4,981 6,497 Amounts reclassified from accumulated other comprehensive income (loss) (3 ) 832 11 – 840 Net current-period other comprehensive income 93 2,252 11 4,981 7,337 Balance as of March 31, 2017 $ 230 $ 2,923 $ (6,799 ) $ 14,274 $ 10,628 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 (232 ) (9,933 ) – 3,080 (7,085 ) Amounts reclassified from accumulated other comprehensive income (loss) 12 1,140 (1,897 ) – (745 ) Net current-period other comprehensive income (loss) (220 ) (8,793 ) (1,897 ) 3,080 (7,830 ) Balance as of March 31, 2016 $ (87 ) $ (15,574 ) $ (6,092 ) $ 1,277 $ (20,476 ) |
Repurchases of ARRIS Shares (Ta
Repurchases of ARRIS Shares (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Purchases of ARRIS Shares | The table below sets forth the purchases of ARRIS shares for the quarter ended March 31, 2017: Period Total (1) Average Price Total Number of Approximate (in thousands) January 2017 78,263 $ 28.73 – 121,964 February 2017 – $ – – 121,964 March 2017 3,699,976 $ 25.57 3,266,743 338,855 (1) 511,496 shares were subject to equity awards that were cancelled for cash to satisfy minimum tax withholding obligations that arose on the vesting of shares of restricted stock u |
Organization and Basis of Pre48
Organization and Basis of Presentation - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2017Segment | Jan. 04, 2016£ / shares | |
Organization And Basis Of Presentation [Line Items] | ||
Number of business segments operated | Segment | 2 | |
Minimum | ||
Organization And Basis Of Presentation [Line Items] | ||
Voting shares percentage | 50.00% | |
Pace Plc | ||
Organization And Basis Of Presentation [Line Items] | ||
Per share price in cash consideration | £ / shares | £ 1.325 | |
Common stock conversion Basis | 0.1455 |
Impact of Recently Adopted Ac49
Impact of Recently Adopted Accounting Standards - Additional Information (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
March 2016 FASB Guidelines | |
Cumulative-effect adjustment previously recognized excess tax benefits | $ 8.9 |
Adjustment for income tax recognized | 0.4 |
October 2016 FASB Guidelines | |
Adjustment for income tax recognized | 8 |
October 2016 FASB Guidelines | Accumulated Deficit | |
Cumulative-effect adjustment previously recognized excess tax benefits | 2 |
October 2016 FASB Guidelines | Non-current deferred tax assets | |
Cumulative-effect adjustment previously recognized excess tax benefits | 4.5 |
October 2016 FASB Guidelines | Other current prepaid asset | |
Cumulative-effect adjustment previously recognized excess tax benefits | $ (2.5) |
Business Acquisition - Addition
Business Acquisition - Additional information (Detail) - USD ($) shares in Millions, $ in Millions | Jan. 04, 2016 | Mar. 31, 2017 | Feb. 22, 2017 |
Stock and Asset Purchase Agreement | |||
Equity, Class of Treasury Stock [Line Items] | |||
Obligation for business acquisition | $ 800 | ||
Pace Plc | |||
Equity, Class of Treasury Stock [Line Items] | |||
Aggregate stock and cash consideration | $ 2,074 | ||
Business acquisition, cash consideration | $ 638.8 | ||
Business acquisition potential stock issue, shares | 47.7 | 47.7 | |
Business acquisition non-cash consideration | $ 0.3 |
Carrying Amount of Goodwill (De
Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Line Items] | ||
Balance as of beginning of period | $ 2,016,169 | |
Goodwill | $ 2,394,825 | |
Currency translation and other | 1,843 | |
Accumulated impairment losses | (378,656) | |
Balance as of end of period | 2,018,012 | |
Goodwill | 2,018,012 | 2,016,169 |
CPE | ||
Goodwill [Line Items] | ||
Balance as of beginning of period | 1,391,171 | |
Goodwill | 1,391,171 | |
Currency translation and other | 1,843 | |
Balance as of end of period | 1,393,014 | |
Goodwill | 1,393,014 | 1,391,171 |
N & C | ||
Goodwill [Line Items] | ||
Balance as of beginning of period | 624,998 | |
Goodwill | 1,003,654 | |
Accumulated impairment losses | (378,656) | |
Balance as of end of period | 624,998 | |
Goodwill | $ 624,998 | $ 624,998 |
Gross Carrying Amount and Accum
Gross Carrying Amount and Accumulated Amortization of Acquired Intangible Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | $ 2,889,116 | $ 2,921,538 |
Gross Amount | 2,899,116 | 2,931,538 |
Definite-lived intangible assets, Accumulated Amortization | 1,312,929 | 1,254,360 |
Definite-lived intangible assets, Net Book Value | 1,576,187 | 1,667,178 |
Net Book Value | 1,586,187 | 1,677,178 |
Indefinite-lived intangible assets, Gross Amount | 10,000 | 10,000 |
Indefinite-lived intangible assets | 10,000 | 10,000 |
Trademarks | ||
Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, Gross Amount | 5,900 | 5,900 |
Indefinite-lived intangible assets | 5,900 | 5,900 |
In-process Research and Development | ||
Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, Gross Amount | 4,100 | 4,100 |
Indefinite-lived intangible assets | 4,100 | 4,100 |
Customer relationships | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 1,575,351 | 1,572,947 |
Definite-lived intangible assets, Accumulated Amortization | 663,736 | 624,719 |
Definite-lived intangible assets, Net Book Value | 911,615 | 948,228 |
Developed technology, patents & licenses | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 1,250,893 | 1,248,719 |
Definite-lived intangible assets, Accumulated Amortization | 623,144 | 571,808 |
Definite-lived intangible assets, Net Book Value | 627,749 | 676,911 |
Trademarks and Trade Names | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Amount | 62,872 | 83,472 |
Definite-lived intangible assets, Accumulated Amortization | 26,049 | 41,433 |
Definite-lived intangible assets, Net Book Value | $ 36,823 | 42,039 |
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 Acq
Schedule of Amortization of Acquired Intangible Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of acquired intangible assets | $ 95,306 | $ 99,766 | |
Cost of sales | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of acquired intangible assets | 711 | 324 | |
Selling, general, and administrative expenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of acquired intangible assets | 949 | 949 | |
Amortization of intangible assets | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of acquired intangible assets | [1] | $ 93,646 | $ 98,493 |
[1] | Reflects amortization expense for the intangible assets acquired through business combinations. |
Estimated Total Amortization Ex
Estimated Total Amortization Expense for Finite-Lived Intangibles for Next Five Fiscal Years (Detail) $ in Thousands | Mar. 31, 2017USD ($) |
Finite Lived Intangible Assets Amortization Expense [Line Items] | |
2017 (for the remaining nine months) | $ 276,400 |
2,018 | 316,908 |
2,019 | 270,876 |
2,020 | 259,145 |
2,021 | 124,359 |
Thereafter | $ 328,499 |
Investments (Detail)
Investments (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Available-for-sale securities | $ 90,673 | $ 115,553 |
Noncurrent Assets: | ||
Available-for-sale securities | 5,101 | 15,391 |
Equity method investments | 26,458 | 22,688 |
Cost method investments | 4,091 | 6,841 |
Other investments | 29,385 | 28,012 |
Total classified as non-current assets | 65,035 | 72,932 |
Total | $ 155,708 | $ 188,485 |
Amortized Costs and Fair Value
Amortized Costs and Fair Value of Available-for-sale Securities (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | $ 95,639 | $ 130,936 |
Available-for-sale securities, Gross Unrealized Gains | 244 | 662 |
Available-for-sale securities, Gross Unrealized Losses | (109) | (654) |
Available-for-sale securities, Fair Value | 95,774 | 130,944 |
Available-for-sale securities, Less than 12 months, Fair Value | 95,774 | 130,944 |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (109) | (654) |
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 | 95,774 | 130,944 |
Total, Unrealized Losses | (109) | (654) |
Certificates of deposit (foreign) | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 59,563 | 87,372 |
Available-for-sale securities, Fair Value | 59,563 | 87,372 |
Available-for-sale securities, Less than 12 months, Fair Value | 59,563 | 87,372 |
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 | 59,563 | 87,372 |
Corporate bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 31,094 | 34,175 |
Available-for-sale securities, Gross Unrealized Gains | 35 | 35 |
Available-for-sale securities, Gross Unrealized Losses | (19) | (77) |
Available-for-sale securities, Fair Value | 31,110 | 34,133 |
Available-for-sale securities, Less than 12 months, Fair Value | 31,110 | 34,133 |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (19) | (77) |
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 | 31,110 | 34,133 |
Total, Unrealized Losses | (19) | (77) |
Short-term bond fund | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 5,046 | |
Available-for-sale securities, Gross Unrealized Gains | 69 | |
Available-for-sale securities, Gross Unrealized Losses | (69) | |
Available-for-sale securities, Fair Value | 5,046 | |
Available-for-sale securities, Less than 12 months, Fair Value | 5,046 | |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (69) | |
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 | |
Total, Unrealized Losses | (69) | |
Corporate obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 4 | 3 |
Available-for-sale securities, Fair Value | 4 | 3 |
Available-for-sale securities, Less than 12 months, Fair Value | 4 | 3 |
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 | 3 |
Money markets | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 54 | 54 |
Available-for-sale securities, Fair Value | 54 | 54 |
Available-for-sale securities, Less than 12 months, Fair Value | 54 | 54 |
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 | 54 |
Mutual funds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 101 | 94 |
Available-for-sale securities, Gross Unrealized Gains | 7 | 28 |
Available-for-sale securities, Gross Unrealized Losses | (21) | |
Available-for-sale securities, Fair Value | 108 | 101 |
Available-for-sale securities, Less than 12 months, Fair Value | 108 | 101 |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (21) | |
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 | 108 | 101 |
Total, Unrealized Losses | (21) | |
Other investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale securities, Amortized Costs | 4,823 | 4,192 |
Available-for-sale securities, Gross Unrealized Gains | 202 | 530 |
Available-for-sale securities, Gross Unrealized Losses | (90) | (487) |
Available-for-sale securities, Fair Value | 4,935 | 4,235 |
Available-for-sale securities, Less than 12 months, Fair Value | 4,935 | 4,235 |
Available-for-sale securities, Less than 12 months, Unrealized Losses | (90) | (487) |
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 | 4,935 | 4,235 |
Total, Unrealized Losses | $ (90) | $ (487) |
Sale and_or Maturity of Availab
Sale and/or Maturity of Available-for-Sale Securities (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Proceeds from sales | $ 91,885 | $ 2,093 |
Gross gains | 10 | 26 |
Gross losses | $ 0 | $ 0 |
Contractual Maturities of Avail
Contractual Maturities of Available-for-Sale Securities (Detail) $ in Thousands | Mar. 31, 2017USD ($) |
Amortized Cost | |
Within 1 year, Amortized Cost | $ 90,657 |
After 1 year through 5 years, Amortized Cost | 0 |
After 5 year through 10 years, Amortized Cost | 0 |
After 10 years, Amortized Cost | 4,982 |
Total, Amortized Cost | 95,639 |
Fair Value | |
Within 1 year, Fair Value | 90,673 |
After 1 year through 5 years, Fair Value | 0 |
After 5 year through 10 years, Fair Value | 0 |
After 10 years, Fair Value | 5,101 |
Total, Fair Value | $ 95,774 |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Investment Holdings [Line Items] | ||
Other-than-temporary impairment losses recognized for the period | $ 2.8 | $ 12.3 |
Investment Assets (Excluding Eq
Investment Assets (Excluding Equity and Cost Method Investments) and Derivatives Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Derivative Financial Instruments, Liabilities | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | $ (7,018) | $ (9,006) |
Derivative Financial Instruments, Liabilities | Foreign currency contracts | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of liabilities, recurring basis | (4,941) | (3,671) |
Derivative Financial Instruments, Assets | Interest rate derivatives | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 9,130 | 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 | 3,159 | 7,369 |
Certificates of deposit (foreign) | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 59,563 | 87,372 |
Corporate bonds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 31,110 | 34,133 |
Short-term bond fund | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 5,046 | |
Corporate obligations | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 4 | 3 |
Money markets | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 54 | 54 |
Mutual funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 108 | 101 |
Other Investments | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 4,935 | 4,235 |
Level 1 | Short-term bond fund | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 5,046 | |
Level 1 | Money markets | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 54 | 54 |
Level 1 | Mutual funds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 108 | 101 |
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 | (7,018) | (9,006) |
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 | (4,941) | (3,671) |
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 | 9,130 | 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 | 3,159 | 7,369 |
Level 2 | Certificates of deposit (foreign) | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 59,563 | 87,372 |
Level 2 | Corporate bonds | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 31,110 | 34,133 |
Level 2 | Corporate obligations | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | 4 | 3 |
Level 2 | Other Investments | ||
Fair Value Assets Liabilities Measured On Recurring Basis [Line Items] | ||
Fair value of assets, recurring basis | $ 4,935 | $ 4,235 |
Derivative Instruments and He61
Derivative Instruments and Hedging Activities - Additional Information (Detail) € in Millions, £ in Millions, ZAR in Millions, CAD in Millions, AUD in Millions | Mar. 31, 2017USD ($)Agreement | Mar. 31, 2017USD ($)Agreement | Mar. 31, 2017CADAgreement | Mar. 31, 2017AUDAgreement | Mar. 31, 2017GBP (£)Agreement | Mar. 31, 2017EUR (€)Agreement | Mar. 31, 2017ZARAgreement | Dec. 31, 2016USD ($) | Jun. 18, 2015USD ($) | Apr. 30, 2013USD ($) |
Derivatives, Fair Value [Line Items] | ||||||||||
Hedge ineffectiveness in earnings | $ 0 | |||||||||
Amount estimated reclassified as an increase to interest expense | 1,200,000 | |||||||||
Fair value of derivatives in net asset position | $ 2,000,000 | $ 2,000,000 | ||||||||
Fair value of derivatives in net liability position | $ 1,400,000 | |||||||||
Maximum time frame for derivatives | 13 months | |||||||||
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 | € | € 30 | |||||||||
Forward Contracts | Australia, Dollars | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Notional amount | AUD | AUD 50 | |||||||||
Forward Contracts | Canada, Dollars | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Notional amount | CAD | CAD 35 | |||||||||
Forward Contracts | South Africa, Rand | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Notional amount | ZAR | ZAR 567.2 | |||||||||
Forward Contracts | United Kingdom, Pounds | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Notional amount | £ | £ 80 | |||||||||
Interest rate swap | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Variable-rate debt upon conversion | $ 625,000,000 | |||||||||
Term Loan A-1 Facility | 2.73% Interest Rate Swaps 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 | |||||||||
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 | 3.15% Interest Rate Swap through 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 | 4.00% Interest Rate Swap from December 29, 2017 through 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 | Senior Secured Credit Facilities | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Line of credit facility | $ 800,000,000 | |||||||||
Term Loan A | Senior Secured Credit Facilities | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Line of credit facility | 990,000,000 | $ 1,100,000,000 | ||||||||
Term Loan B | Senior Secured Credit Facilities | ||||||||||
Derivatives, Fair Value [Line Items] | ||||||||||
Line of credit facility | 543,800,000 | 825,000,000 | ||||||||
Revolving Facility | Senior Secured Credit Facilities | ||||||||||
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 | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Derivative [Line Items] | ||
Gain (loss) Recognized in OCI on Derivatives (Effective Portion) | $ 2,054 | $ (15,175) |
Amounts Reclassified from Accumulated OCI into Income (Effective Portion) | $ 1,204 | $ 1,741 |
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 | Mar. 31, 2017 | Dec. 31, 2016 |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | $ 1,131 | $ 222 |
Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | 7,999 | 8,043 |
Other accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | (2,344) | (2,989) |
Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (4,674) | $ (6,421) |
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 | Mar. 31, 2017 | Dec. 31, 2016 |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | $ 3,104 | $ 7,369 |
Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets, Fair Value | 55 | |
Other accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities, Fair Value | $ (4,941) | $ (3,671) |
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 | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Foreign currency contracts | (Gain) loss on foreign currency | Derivatives Not Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Loss on foreign currency | $ 6,707 | $ 17,455 |
Components of Net Periodic Pens
Components of Net Periodic Pension Cost (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
U.S. Pension Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 0 | $ 0 |
Interest cost | 434 | 438 |
Return on assets (expected) | (224) | (199) |
Amortization of net actuarial loss(gain) | 138 | 194 |
Net periodic pension cost | 348 | 433 |
Foreign Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 154 | 173 |
Interest cost | 113 | 151 |
Return on assets (expected) | (75) | (68) |
Amortization of net actuarial loss(gain) | (1,897) | |
Net periodic pension cost | $ 192 | $ (1,641) |
Pension Benefits - Additional I
Pension Benefits - Additional Information (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Taiwan | Foreign Pension Plan | |
Retirement Plans [Line Items] | |
Contribution by the company | $ 0.3 |
Information Regarding Changes i
Information Regarding Changes in ARRIS's Aggregate Product Warranty Liabilities (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Product Warranty Liability [Line Items] | |
Beginning balance | $ 88,187 |
Accruals related to warranties (including changes in assumptions) | 9,586 |
Settlements made (in cash or in kind) | (13,052) |
Ending balance | $ 84,721 |
Components of Inventory Net of
Components of Inventory Net of Reserves (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory [Line Items] | ||
Raw material | $ 88,747 | $ 86,243 |
Work in process | 7,577 | 3,877 |
Finished goods | 459,940 | 461,421 |
Total inventories, net | $ 556,264 | $ 551,541 |
Property, Plant and Equipment,
Property, Plant and Equipment, at Cost (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 692,896 | $ 672,850 |
Less: Accumulated depreciation | (338,846) | (319,473) |
Total property, plant and equipment, net | 354,050 | 353,377 |
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 | 177,352 | 163,333 |
Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment, gross | $ 446,982 | $ 440,955 |
Summary of Changes to Restructu
Summary of Changes to Restructuring Accrual (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||
Balance at December 31, 2016 | $ 30,129 | |
Restructuring charges | 6,461 | $ 96,300 |
Cash payments / adjustments | (5,867) | |
Balance at March 31, 2017 | 30,723 | 30,129 |
Employee severance & termination benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Balance at December 31, 2016 | 27,886 | |
Restructuring charges | 3,555 | |
Cash payments / adjustments | (5,153) | |
Balance at March 31, 2017 | 26,288 | 27,886 |
Contractual obligations and other | ||
Restructuring Cost and Reserve [Line Items] | ||
Balance at December 31, 2016 | 2,243 | |
Restructuring charges | 2,906 | |
Cash payments / adjustments | (714) | |
Balance at March 31, 2017 | $ 4,435 | $ 2,243 |
Restructuring, Acquisition an72
Restructuring, Acquisition and Integration - Additional Information (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($)FacilityEmployee | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)Position | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 6,461 | $ 96,300 | |
Integration, acquisition and restructuring | 10,095 | $ 90,919 | |
Ruckus Wireless and ICX Switch business | |||
Restructuring Cost and Reserve [Line Items] | |||
Acquisition expense | 2,300 | ||
Pace Plc | |||
Restructuring Cost and Reserve [Line Items] | |||
Acquisition expense | 27,800 | ||
Employee severance & termination benefits | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 3,555 | ||
Total number of positions affected by the restructuring plan | 76 | 1,545 | |
Integration Related | |||
Restructuring Cost and Reserve [Line Items] | |||
Integration, acquisition and restructuring | $ 1,300 | $ 12,100 | |
Contractual obligations and other | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 2,906 | ||
Leased properties, remaining expiration terms | 2,021 | ||
Number of facilities | Facility | 2 |
Summary of Indebtedness and Lea
Summary of Indebtedness and Lease Financing Obligations (Detail) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | $ 90,261 | $ 90,275 |
Current deferred financing fees and debt discount | (7,494) | (7,541) |
Current portion of long-term debt and financing lease obligation | 82,767 | 82,734 |
Lease finance obligation | 2,175,399 | 2,197,964 |
Noncurrent deferred financing fees and debt discount | (16,099) | (17,955) |
Long-term debt and financing lease obligation, net of current portion | 2,159,300 | 2,180,009 |
Total | 2,242,067 | 2,262,743 |
Term Loan A | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | 49,500 | 49,500 |
Noncurrent obligations | 853,875 | 866,250 |
Term Loan A-1 Facility | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | 40,000 | 40,000 |
Noncurrent obligations | 720,000 | 730,000 |
Lease Finance obligation | ||
Debt and Capital Lease Obligations [Line Items] | ||
Current obligations | 761 | 775 |
Lease finance obligation | 57,712 | 57,902 |
Term Loan B | ||
Debt and Capital Lease Obligations [Line Items] | ||
Noncurrent obligations | $ 543,812 | $ 543,812 |
Indebtedness - Additional Infor
Indebtedness - Additional Information (Detail) - Senior Secured Credit Facilities - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Jun. 18, 2015 | Apr. 30, 2013 | |
Debt Instrument [Line Items] | |||
Mandatory repayments related to senior secured credit facilities | $ 22,400,000 | ||
Term Loan A | |||
Debt Instrument [Line Items] | |||
Line of credit facility | $ 990,000,000 | $ 1,100,000,000 | |
Term Loan B | |||
Debt Instrument [Line Items] | |||
Line of credit facility | 543,800,000 | 825,000,000 | |
Revolving Facility | |||
Debt Instrument [Line Items] | |||
Line of credit facility | 500,000,000 | $ 250,000,000 | |
Term Loan A-1 Facility | |||
Debt Instrument [Line Items] | |||
Line of credit facility | $ 800,000,000 | ||
Minimum | |||
Debt Instrument [Line Items] | |||
Consolidated interest leverage ratio | 350.00% | ||
Maximum | |||
Debt Instrument [Line Items] | |||
Consolidated net leverage ratio | 350.00% |
Interes Rates on Senior Secured
Interes Rates on Senior Secured Credit Facilities (Detail) - Senior Secured Credit Facilities | 3 Months Ended | |
Mar. 31, 2017 | ||
Term Loan A | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate at period end | 2.73% | |
Term Loan A-1 Facility | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate at period end | 2.73% | |
Term Loan B | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate at period end | 3.73% | |
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. |
Interes Rates on Senior Secur76
Interes Rates on Senior Secured Credit Facilities (Parenthetical) (Detail) | 3 Months Ended |
Mar. 31, 2017 | |
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 | Mar. 31, 2017USD ($) |
Debt Instrument [Line Items] | |
2017 (for the remaining nine months) | $ 67,125 |
2,018 | 89,500 |
2,019 | 89,500 |
2,020 | $ 1,961,062 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2017Segment | |
Segment Reporting Information [Line Items] | |
Number of segments managed | 2 |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 1,483,105 | $ 1,614,706 |
Direct Contribution | 250,133 | 288,949 |
Corporate and unallocated costs | (150,476) | (186,027) |
Amortization of intangible assets | (93,646) | (98,493) |
Integration, acquisition, restructuring and other | (10,095) | (90,919) |
Operating loss | (4,084) | (86,490) |
Interest expense | 19,683 | 19,626 |
Loss on investments | 4,530 | 1,959 |
(Gain) loss on foreign currency | 4,740 | 12,241 |
Interest income | (1,922) | (783) |
Other expense ( income), net | (85) | (350) |
Loss before income taxes | (31,030) | (119,183) |
Operating Segments | CPE | ||
Segment Reporting Information [Line Items] | ||
Net sales | 1,055,056 | 1,090,828 |
Direct Contribution | 118,415 | 131,965 |
Operating Segments | N&C | ||
Segment Reporting Information [Line Items] | ||
Net sales | 430,436 | 524,237 |
Direct Contribution | 131,718 | 156,984 |
Intersegment Eliminations | ||
Segment Reporting Information [Line Items] | ||
Net sales | (2,387) | (359) |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Amortization of intangible assets | (93,646) | (98,493) |
Integration, acquisition, restructuring and other | $ (10,095) | $ (90,919) |
Composition of Corporate and Un
Composition of Corporate and Unallocated Costs (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Cost of sales | $ 150,476 | $ 186,027 |
Cost of sales | ||
Segment Reporting Information [Line Items] | ||
Cost of sales | 22,083 | 47,388 |
Selling, general, and administrative expenses | ||
Segment Reporting Information [Line Items] | ||
Cost of sales | 87,025 | 95,373 |
Research and development expenses | ||
Segment Reporting Information [Line Items] | ||
Cost of sales | $ 41,368 | $ 43,266 |
Sales Information - Additional
Sales Information - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
International Customers | Customer Concentration Risk | Sales | ||
Segment Reporting Information [Line Items] | ||
Percentage of sales | 35.40% | 24.40% |
Domestic (U.S) and Internationa
Domestic (U.S) and International Sales (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
International Long-Lived Assets by Geographic Region [Line Items] | ||
Net sales | $ 1,483,105 | $ 1,614,706 |
Domestic Operations | UNITED STATES | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Net sales | 958,477 | 1,220,966 |
International | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Net sales | 524,628 | 393,740 |
International | Americas, excluding U.S. | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Net sales | 292,601 | 236,639 |
International | Asia Pacific | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Net sales | 51,915 | 37,369 |
International | EMEA | ||
International Long-Lived Assets by Geographic Region [Line Items] | ||
Net sales | $ 180,112 | $ 119,732 |
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 | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Basic: | |||
Net loss attributable to ARRIS International plc. | $ (39,098) | $ (202,573) | |
Weighted average shares outstanding | 189,796 | 191,743 | |
Basic earnings per share | [1] | $ (0.21) | $ (1.06) |
Diluted: | |||
Net loss attributable to ARRIS International plc. | $ (39,098) | $ (202,573) | |
Weighted average shares outstanding | 189,796 | 191,743 | |
Net effect of dilutive shares | 0 | 0 | |
Total | 189,796 | 191,743 | |
Diluted earnings per share | [1] | $ (0.21) | $ (1.06) |
[1] | Calculated based on net loss attributable to shareowners of ARRIS International plc |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) | Jan. 04, 2016USD ($)shares | Mar. 31, 2017USD ($)shares | Dec. 31, 2016shares |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Ordinary shares related to the vesting of restricted shares | 600,000 | 2,300,000 | |
Warrants vested | 0 | 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 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Line Items] | ||||
Income tax expense | $ 10,001 | $ 86,013 | ||
Tax expense related to intra-entity sale of an asset | 8,000 | |||
Tax benefit related to accrued interest on uncertain tax positions | (4,800) | |||
Tax expense related to changes in tax rate | 1,400 | |||
Tax expense related to vesting of restricted shares | $ 400 | |||
Expense on expiring net operating loss | $ 2,100 | |||
United Kingdom | ||||
Income Tax Disclosure [Line Items] | ||||
U.K. statutory income tax rate | 19.25% | 20.00% | ||
U.S. | ||||
Income Tax Disclosure [Line Items] | ||||
Statutory U.S. federal income tax rate | 34.00% | 72.00% | 35.00% | |
Effective April 1, 2017 | United Kingdom | ||||
Income Tax Disclosure [Line Items] | ||||
U.K. statutory income tax rate | 19.00% | |||
Pace Plc | ||||
Income Tax Disclosure [Line Items] | ||||
Withholding tax expense | $ 55,000 |
Reconciliation of Equity (Detai
Reconciliation of Equity (Detail) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017USD ($) | ||
Shareholders Equity [Line Items] | ||
Balance | $ 3,226,737 | |
Net loss | (41,031) | |
Other comprehensive income, net of tax | 7,328 | |
Compensation under stock award plans | 19,415 | |
Issuance of ordinary shares and other | (13,731) | |
Provision for warrants | 2,423 | |
Repurchase of ordinary shares, net | (83,110) | |
Cumulative effect adjustment to opening balance | 10,974 | [1] |
Balance | 3,129,005 | |
Ordinary Shares | ||
Shareholders Equity [Line Items] | ||
Balance | 2,831 | |
Issuance of ordinary shares and other | 11 | |
Repurchase of ordinary shares, net | (40) | |
Balance | 2,802 | |
Capital in Excess of Par Value | ||
Shareholders Equity [Line Items] | ||
Balance | 3,314,707 | |
Compensation under stock award plans | 19,415 | |
Issuance of ordinary shares and other | (13,742) | |
Provision for warrants | 2,423 | |
Balance | 3,322,803 | |
Accumulated Deficit | ||
Shareholders Equity [Line Items] | ||
Balance | (132,013) | |
Net loss | (39,098) | |
Repurchase of ordinary shares, net | (83,070) | |
Cumulative effect adjustment to opening balance | 10,974 | [1] |
Balance | (243,207) | |
Accumulated Other Comprehensive Income (Loss) | ||
Shareholders Equity [Line Items] | ||
Balance | 3,291 | |
Other comprehensive income, net of tax | 7,337 | |
Balance | 10,628 | |
Total ARRIS International plc stockholders' equity | ||
Shareholders Equity [Line Items] | ||
Balance | 3,188,816 | |
Net loss | (39,098) | |
Other comprehensive income, net of tax | 7,337 | |
Compensation under stock award plans | 19,415 | |
Issuance of ordinary shares and other | (13,731) | |
Provision for warrants | 2,423 | |
Repurchase of ordinary shares, net | (83,110) | |
Cumulative effect adjustment to opening balance | 10,974 | [1] |
Balance | 3,093,026 | |
Non-controlling Interest | ||
Shareholders Equity [Line Items] | ||
Balance | 37,921 | |
Net loss | (1,933) | |
Other comprehensive income, net of tax | (9) | |
Balance | $ 35,979 | |
[1] | Cumulative adjustment related to the adoption of accounting standards, see Note 2 Impact of Recently Adopted Accounting Standards for additional information. |
Warrants - Additional Informati
Warrants - Additional Information (Detail) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($)Agreement$ / sharesshares | |
Class of Warrant or Right [Line Items] | |
Number of Warrant and Registration Rights Agreements | Agreement | 2 |
Warrants vested and outstanding | 2,200,000 |
Expected dividend yield | 0.00% |
Charter and Comcast | |
Class of Warrant or Right [Line Items] | |
Reduction to net sales in connection with warrants | $ | $ 2.4 |
Weighted Average | |
Class of Warrant or Right [Line Items] | |
Warrants exercise price | $ / shares | $ 24.56 |
Warrants | Maximum | |
Class of Warrant or Right [Line Items] | |
Aggregate number of shares purchase | 14,000,000 |
Warrants to Purchase Ordinary S
Warrants to Purchase Ordinary Shares that Could Vest Under Outstanding Warrant Programs with Customers, based on Achieving Certain Purchase Levels (Detail) | Mar. 31, 2017shares | |
Minimum | ||
Class of Warrant or Right [Line Items] | ||
2,017 | 2,000,000 | |
2,018 | 1,000,000 | |
Maximum | ||
Class of Warrant or Right [Line Items] | ||
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] | ||
2,017 | 5,000,000 | |
Exercise Price per Maximum Share Issuable, $28.54 | Maximum | ||
Class of Warrant or Right [Line Items] | ||
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 $28.54 and the January Price. |
Warrants to Purchase Ordinary89
Warrants to Purchase Ordinary Shares that Could Vest Under Outstanding Warrant Programs with Customers, based on Achieving Certain Purchase Levels (Parenthetical) (Detail) | Mar. 31, 2017$ / 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 |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income (loss) by Component Net of Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | $ 3,226,737 | |
Other comprehensive (loss) income before reclassifications | 6,497 | $ (7,085) |
Amounts reclassified from accumulated other comprehensive income (loss) | 840 | (745) |
Net current-period other comprehensive income (loss) | 7,337 | (7,830) |
Balance | 3,129,005 | |
Available-for-sale securities | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | 137 | 133 |
Other comprehensive (loss) income before reclassifications | 96 | (232) |
Amounts reclassified from accumulated other comprehensive income (loss) | (3) | 12 |
Net current-period other comprehensive income (loss) | 93 | (220) |
Balance | 230 | (87) |
Derivative instruments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | 671 | (6,781) |
Other comprehensive (loss) income before reclassifications | 1,420 | (9,933) |
Amounts reclassified from accumulated other comprehensive income (loss) | 832 | 1,140 |
Net current-period other comprehensive income (loss) | 2,252 | (8,793) |
Balance | 2,923 | (15,574) |
Change related to pension liability | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | (6,810) | (4,195) |
Amounts reclassified from accumulated other comprehensive income (loss) | 11 | (1,897) |
Net current-period other comprehensive income (loss) | 11 | (1,897) |
Balance | (6,799) | (6,092) |
Cumulative Translation Adjustments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | 9,293 | (1,803) |
Other comprehensive (loss) income before reclassifications | 4,981 | 3,080 |
Net current-period other comprehensive income (loss) | 4,981 | 3,080 |
Balance | 14,274 | 1,277 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance | 3,291 | (12,646) |
Balance | $ 10,628 | $ (20,476) |
Purchases of ARRIS Shares (Deta
Purchases of ARRIS Shares (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | 3,300,000 | 6,400,000 | |
Average Price Paid Per Share | $ 25.44 | $ 23.47 | |
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | $ 338,900 | ||
January 2,017 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | [1] | 78,263 | |
Average Price Paid Per Share | $ 28.73 | ||
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | $ 121,964 | ||
February 2,017 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | $ 121,964 | ||
March 2,017 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | [1] | 3,699,976 | |
Average Price Paid Per Share | $ 25.57 | ||
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | $ 338,855 | ||
Shares Purchased as Part of Publicly Announced Plans of Programs | March 2017 | |||
Equity, Class of Treasury Stock [Line Items] | |||
Total Number of Shares Purchased | 3,266,743 | ||
[1] | 511,496 shares were subject to equity awards that were cancelled for cash to satisfy minimum tax withholding obligations that arose on the vesting of shares of restricted stock units. |
Purchases of ARRIS Shares (Pare
Purchases of ARRIS Shares (Parenthetical) (Detail) | 3 Months Ended |
Mar. 31, 2017shares | |
Repurchased to satisfy tax withholding obligations on vesting shares | |
Equity, Class of Treasury Stock [Line Items] | |
Shares subject to equity awards cancelled for cash to satisfy minimum tax withholding obligations | 511,496 |
Repurchases of ARRIS Shares - A
Repurchases of ARRIS Shares - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Millions | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Equity, Class of Treasury Stock [Line Items] | |||
Shares repurchased | 3.3 | 6.4 | |
Average price per share | $ 25.44 | $ 23.47 | |
Aggregate consideration | $ 83,100,000 | $ 150,000,000 | |
Remaining authorized amount for stock repurchases | 338,900,000 | ||
Maximum | |||
Equity, Class of Treasury Stock [Line Items] | |||
Share repurchase plans, authorized amount | $ 300,000,000 | $ 300,000,000 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - Subsequent Event - New Term Loan B $ in Millions | 1 Months Ended |
Apr. 26, 2017USD ($) | |
Subsequent Event [Line Items] | |
Principal amount of term loan facility | $ 545 |
Maturity date of term loan | Apr. 30, 2024 |
Eurodollar | Minimum | |
Subsequent Event [Line Items] | |
Interest rate | 2.25% |
Eurodollar | Maximum | |
Subsequent Event [Line Items] | |
Interest rate | 2.50% |
Base Rate | Minimum | |
Subsequent Event [Line Items] | |
Interest rate | 1.25% |
Base Rate | Maximum | |
Subsequent Event [Line Items] | |
Interest rate | 1.50% |