ADTN » Topics » Cash and Cash Equivalents

These excerpts taken from the ADTN 10-K filed Feb 27, 2009.

Cash and Cash Equivalents

Cash and cash equivalents represent demand deposits, money market funds, and short-term investments classified as available for sale with original maturities of three months or less. We maintain depository investments with certain financial institutions. Although these depository investments may exceed government insured depository limits, we have evaluated the credit worthiness of these applicable financial institutions, and determined the risk of material financial loss due to exposure of such credit risk to be minimal. As of December 31, 2008, $20.1 million of our cash and cash equivalents, primarily certain domestic money market funds and foreign depository accounts, were in excess of government provided insured depository limits. The Temporary Liquidity Guarantee Program adopted during 2008 by the Federal Deposit Insurance Corporation provides full coverage of our domestic depository accounts through December 2009.

Cash and Cash Equivalents

Cash and
cash equivalents represent demand deposits, money market funds, and short-term investments classified as available for sale with original maturities of three months or less. We maintain depository investments with certain financial institutions.
Although these depository investments may exceed government insured depository limits, we have evaluated the credit worthiness of these applicable financial institutions, and determined the risk of material financial loss due to exposure of such
credit risk to be minimal. As of December 31, 2008, $20.1 million of our cash and cash equivalents, primarily certain domestic money market funds and foreign depository accounts, were in excess of government provided insured depository limits.
The Temporary Liquidity Guarantee Program adopted during 2008 by the Federal Deposit Insurance Corporation provides full coverage of our domestic depository accounts through December 2009.

STYLE="margin-top:18px;margin-bottom:0px">Financial Instruments

The carrying amounts reported in the
consolidated balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the immediate or short-term maturity of these financial instruments. The carrying amount reported for bonds payable
was $48.8 million compared to an estimated fair value of $44.4 million, based on a debt security with a comparable interest rate and maturity and a Standard & Poor’s credit rating of AA.

STYLE="margin-top:12px;margin-bottom:0px">Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the
investment of cash that is available for current operations. These investments consist of municipal variable rate demand notes and municipal auction rate securities. We have held no municipal auction rate securities since February 7, 2008.
Variable rate demand notes are designed to be marketed as money market instruments. These instruments’ interest rates reset on a seven, 28 or 35 day basis to maintain the price of the instruments at par. At December 31, 2008, our municipal
variable rate demand notes had a credit rating of A-1+ or VMIG-1 and contained put options of seven days, which allows ADTRAN to sell the security before its stated maturity date to a remarketing agent, tender agent or issuer in the event we decide
to liquidate our investment in a particular variable rate demand note. Approximately 75% of our variable rate demand notes are supported by letters of credit from banks that we believe are in good financial condition.

STYLE="margin-top:12px;margin-bottom:0px">Long-term investments represent a restricted certificate of deposit, municipal fixed-rate bonds, a fixed income bond fund, marketable equity securities, and other equity
investments. Marketable equity securities are reported at fair value as determined by the most recently traded price of the securities at the balance sheet date, although the securities may not be readily marketable due to the size of the available
market. Unrealized gains and losses, net of tax, are reported as a separate component of stockholders’ equity. Realized gains and losses on sales of securities are computed under the specific identification method and are included in current
income. We periodically review our investment portfolio for investments considered to have sustained an other-than-temporary decline in value. Impairment charges for other-than-temporary declines in value are recorded as realized losses in the
accompanying consolidated statements of income. All of our investments at December 31, 2008 and 2007 are classified as available-for-sale (see Note 3).

SIZE="2">Accounts Receivable

We record accounts receivable at net realizable value. Prior to issuing payment terms to a new customer, we perform a
detailed credit review of the customer. Credit limits are established for each new customer based on the results of this credit review. Payment terms are established for each new customer, and collection experience is reviewed periodically in order
to determine if the customer’s payment terms and credit limits need to be revised.

 


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Index to Financial Statements


We maintain allowances for doubtful accounts for losses resulting from the inability of our customers to make required
payments. We regularly review the allowance for doubtful accounts and consider factors such as the age of accounts receivable balances, the current economic conditions that may affect a customer’s ability to pay, significant one-time events and
our historical experience. If the financial condition of a customer deteriorates, resulting in an impairment of their ability to make payments, we may be required to make additional allowances. If circumstances change with regard to individual
receivable balances that have previously been determined to be uncollectible (and for which a specific reserve has been established), a reduction in our allowance for doubtful accounts may be required. Our allowance for doubtful accounts was $38,000
at December 31, 2008 and $109,000 at December 31, 2007.

These excerpts taken from the ADTN 10-K filed Feb 28, 2008.

Cash and Cash Equivalents

Cash and cash equivalents represent demand deposits, money market accounts, and short-term investments classified as available for sale with original maturities of three months or less.

Cash and Cash Equivalents

Cash and
cash equivalents represent demand deposits, money market accounts, and short-term investments classified as available for sale with original maturities of three months or less.

FACE="Times New Roman" SIZE="2">Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash and cash
equivalents, accounts receivable, and accounts payable approximate fair value due to the immediate or short-term maturity of these financial instruments. The carrying amount reported for bonds payable approximates fair value.

STYLE="margin-top:12px;margin-bottom:0px">Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the
investment of cash that is available for current operations. These investments represent municipal variable rate demand notes and municipal auction rate securities. Variable rate demand notes and municipal auction rate securities are designed to be
marketed as money market instruments. These instruments’ interest rates reset on a seven, 28 or 35 day basis to maintain the price of the instruments at par. Municipal variable rate demand notes have a put option that allows ADTRAN to sell the
security before its stated maturity date. Municipal auction rate securities may be redeemed on the date the interest rate resets. The fair value of short-term investments is estimated based on quoted market prices (see Note 3).

STYLE="margin-top:12px;margin-bottom:0px">Long-term investments represent a restricted certificate of deposit, municipal fixed-rate bonds, marketable equity securities, and other equity investments. Marketable
equity securities are reported at market value as determined by the most recently traded price of the securities at the balance sheet date, although the securities may not be readily marketable due to the size of the available market. Unrealized
gains and losses, net of tax, are reported as a separate component of stockholders’ equity. Realized gains and losses on sales of securities are computed under the specific identification method and are included in current income. We
periodically review our investment portfolio for investments considered to have sustained an other-than-temporary decline in value. Impairment charges for other-than-temporary declines in value are recorded as realized losses in the accompanying
consolidated statements of income. All of our investments at December 31, 2007 and 2006 are classified as available-for-sale (see Note 3).

SIZE="2">Accounts Receivable

We record accounts receivable at net realizable value. Prior to issuing payment terms to a new customer, we perform a
detailed credit review of the customer. Credit limits are established for each new customer based on the results of this credit review. Payment terms are established for each new customer, and collection experience is reviewed periodically in order
to determine if the customer’s payment terms and credit limits need to be revised.

We maintain allowances for doubtful accounts for losses resulting
from the inability of our customers to make required payments. We regularly review the allowance for doubtful accounts and consider factors such as the age of accounts receivable balances, the current economic conditions that may affect a
customer’s ability to pay, significant one-time events and our historical experience. If the financial condition of a customer deteriorates, resulting in an impairment of their ability to make payments, we may be required to make additional
allowances. If circumstances change with regard to individual receivable balances that have previously been determined to be uncollectible (and for which a specific reserve has been established), a reduction in our allowance for doubtful accounts
may be required. Our allowance for doubtful accounts was $0.1 million at December 31, 2007 and $0.2 million at December 31, 2006.

 


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This excerpt taken from the ADTN 10-K filed Feb 28, 2007.

Cash and Cash Equivalents

Cash and cash equivalents represent demand deposits, money market accounts, and short-term investments classified as available for sale (see Note 3) with original maturities of three months or less.

This excerpt taken from the ADTN 10-K filed Mar 6, 2006.

Cash and Cash Equivalents

Cash and cash equivalents represent demand deposits, money market accounts, and short-term investments classified as available for sale (see Note 2) with original maturities of three months or less.

This excerpt taken from the ADTN 10-K filed Mar 11, 2005.

Cash and Cash Equivalents

 

Cash and cash equivalents represent demand deposits, money market accounts, and short-term investments classified as held-to-maturity (see Note 2) with original maturities of three months or less.

 

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