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Commitments and Contingencies | 6 Months Ended
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Jun. 30, 2020
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies | 18. COMMITMENTS AND CONTINGENCIES Securities Class Action Lawsuit On October 17, 2019, a purported stockholder class action lawsuit, captioned Burbridge v. ADTRAN, Inc. et al., Docket No. 19-cv-09619, was filed in the United States District Court for the Southern District of New York against the Company, two of its current executive officers and one of its former executive officers. The complaint alleges violations of federal securities laws and seeks unspecified compensatory damages on behalf of purported purchasers of ADTRAN securities between February 28, 2019 and October 9, 2019. The lawsuit claims that the defendants made materially false and misleading statements regarding, and/or failed to disclose material adverse facts about, the Company’s business, operations and prospects, specifically relating to the Company’s internal control over financial reporting, excess and obsolete inventory reserves, financial results and demand from certain customers. The lawsuit was transferred to the U.S. District Court for the Northern District of Alabama on January 7, 2020, and co-lead plaintiffs have been appointed to represent the putative class. The plaintiffs filed an amended complaint on April 30, 2020. The defendants filed a motion to dismiss the amended complaint on June 17, 2020. The plaintiffs filed an opposition brief to the defendants’ motion to dismiss on July 17, 2020. The defendants intend to file a reply to the plaintiffs’ brief on August 17, 2020. We deny the allegations in the complaint, as amended, and intend to vigorously defend against this lawsuit. At this time, we are unable to predict the outcome of or estimate the possible loss or range of loss, if any, associated with this lawsuit. Shareholder Derivative Lawsuit On March 31, 2020, a shareholder derivative suit, captioned Johnson (Derivatively on behalf of ADTRAN) v. T. Stanton, M. Foliano, R. Shannon, and Board of Directors, case no. 5:20-cv-00447, was filed in the U.S. District Court of Northern Alabama against two of the Company’s current executive officers, one of its former executive officers and its Board of Directors. The derivative suit, which is purportedly brought on behalf of ADTRAN, makes similar allegations as the shareholder class action and accuses the directors and officers of breaches of fiduciary duty in connection with those allegations. On June 7, 2020, the Court entered an order staying the derivative litigation pending resolution of the motion to dismiss in the securities class action. The Company and its defendants disagree with the claims made in the complaint, and the defendants intend to vigorously defend against this lawsuit. At this time, we are unable to predict the outcome of or estimate the possible loss or range of loss, if any, associated with this lawsuit. Other Legal Matters In addition to the litigation described above, from time to time we are subject to or otherwise involved in various lawsuits, claims, investigations and legal proceedings that arise out of or are incidental to the conduct of our business (collectively, “Legal Matters”), including those relating to employment matters, patent rights, regulatory compliance matters, stockholder claims, and contractual and other commercial disputes. Such Legal Matters, even if not meritorious, could result in the expenditure of significant financial and managerial resources. Additionally, an unfavorable outcome in any legal matter, including in a patent dispute, could require the Company to pay damages, entitle claimants to other relief, such as royalties, or could prevent the Company from selling some of its products in certain jurisdictions. While the Company cannot predict with certainty the results of the Legal Matters in which it is currently involved, the Company does not expect that the ultimate outcome of such Legal Matters will individually or in the aggregate have a material adverse effect on its business, results of operations, financial condition or cash flows. Performance Bonds Certain contracts, customers and jurisdictions in which we do business require us to provide various guarantees of performance such as bid bonds, performance bonds and customs bonds. As of June 30, 2020 and December 31, 2019, we had commitments related to these bonds totaling $11.3 million and $9.3 million, respectively, which expire at various dates through August 2024. Although the triggering events vary from contract to contract, in general we would only be liable for the amount of these guarantees in the event of default under each contract, the probability of which we believe is remote. In June of 2020, the Company entered into a letter of credit with a bank to guarantee performance obligations under a contract with a customer. The letter of credit is secured by a pledge of collateral in the amount of $5.0 million, of which $1.2 million is included in restricted cash and $3.8 million is included in long-term investments on the Condensed Consolidated Balance Sheet as of June 30, 2020. Currently, the Company is required to maintain a minimum collateral value of approximately $5.0 million. The minimum collateral value will increase over time as the Company reaches certain milestones in the contract. The maximum collateral value required under the contract will be approximately $12.0 million, and this is expected to occur in February 2021. This minimum collateral value will increase further if the Company changes the mix of investments away from restricted cash and into other investments. Any shortfalls in the minimum collateral value are required to be restored by the Company from available cash and cash equivalents, short-term investments or long-term investments. The obligations under the customer contract will be performed over multiple years. The collateral under the letter of credit will be released when all obligations under the customer contract have been met. As of June 30, 2020, the Company was in compliance with all contractual requirements under the letter of credit. Investment Commitment We have committed to invest up to an aggregate of $5.0 million in a private equity fund, of which $4.9 million has been contributed as of June 30, 2020.

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