Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 05, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | DASAN ZHONE SOLUTIONS INC | |
Trading Symbol | DZSI | |
Entity Central Index Key | 1,101,680 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 16,575,229 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 20,028 | $ 17,475 |
Restricted cash | 7,825 | 12,425 |
Accounts receivable, net, trade receivables | 58,880 | 48,257 |
Accounts receivable, net, related parties | 2,139 | 13,498 |
Other receivables, others | 28,097 | 12,494 |
Other receivables, related parties | 91 | 164 |
Inventories | 45,457 | 25,344 |
Prepaid expenses and other current assets | 12,256 | 3,652 |
Total current assets | 174,773 | 133,309 |
Property and equipment, net | 5,374 | 5,873 |
Goodwill | 3,977 | 3,977 |
Intangible assets, net | 5,933 | 6,785 |
Non-current deferred taxes | 2,895 | 2,954 |
Long-term restricted cash | 847 | 1,512 |
Other assets | 1,400 | 4,717 |
Total assets | 195,199 | 159,127 |
Current liabilities: | ||
Accounts payable, trade | 52,943 | 31,441 |
Accounts payable, related parties | 1,302 | 1,351 |
Short-term debt, bank and trade facilities | 34,171 | 19,790 |
Short-term debts, related parties | 3,148 | 0 |
Other payables, others | 1,769 | 2,032 |
Other payables, related parties | 1,859 | 1,956 |
Contract liabilities - current | 2,394 | 3,279 |
Accrued and other liabilities | 10,315 | 11,174 |
Total current liabilities | 107,901 | 71,023 |
Long-term debt, others | 0 | 2,987 |
Long-term debt, related parties | 5,000 | 6,800 |
Contract liabilities - non-current | 1,851 | 1,883 |
Other long-term liabilities | 2,677 | 2,667 |
Total liabilities | 117,429 | 85,360 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity and non-controlling interest: | ||
Common stock, authorized 36,000 shares, 16,566 shares and 16,410 shares outstanding as of September 30, 2018 and December 31, 2017 at $0.001 par value | 16 | 16 |
Additional paid-in capital | 92,408 | 90,198 |
Other comprehensive income (loss) | 5 | 1,871 |
Accumulated deficit | (15,190) | (18,852) |
Total stockholders’ equity | 77,239 | 73,233 |
Non-controlling interest | 531 | 534 |
Total stockholders’ equity and non-controlling interest | 77,770 | 73,767 |
Total liabilities, stockholders’ equity and non-controlling interest | $ 195,199 | $ 159,127 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, authorized (in shares) | 36,000,000 | 36,000,000 |
Common stock, outstanding (in shares) | 16,566,000 | 16,410,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Third parties | $ 70,227 | $ 60,513 | $ 203,317 | $ 150,834 |
Related parties | 1,687 | 5,925 | 4,358 | 27,657 |
Total net revenue | 71,914 | 66,438 | 207,675 | 178,491 |
Products and services - third parties | 46,565 | 38,301 | 134,234 | 95,103 |
Products and services - related parties | 1,765 | 5,569 | 4,651 | 22,851 |
Amortization of intangible assets | 153 | 153 | 459 | 459 |
Total cost of revenue | 48,483 | 44,023 | 139,344 | 118,413 |
Gross profit | 23,431 | 22,415 | 68,331 | 60,078 |
Operating expenses: | ||||
Research and product development | 8,655 | 8,939 | 26,346 | 27,462 |
Selling, marketing, general and administrative | 11,106 | 11,661 | 35,212 | 33,096 |
Amortization of intangible assets | 131 | 154 | 393 | 1,191 |
Total operating expenses | 19,892 | 20,754 | 61,951 | 61,749 |
Operating income (loss) | 3,539 | 1,661 | 6,380 | (1,671) |
Interest income | 42 | 36 | 203 | 82 |
Interest expense | (447) | (263) | (1,330) | (793) |
Other income (expense), net | (572) | 60 | (859) | 43 |
Income (loss) before income taxes | 2,562 | 1,494 | 4,394 | (2,339) |
Income tax expense | 735 | 107 | 1,071 | 646 |
Net income (loss) | 1,827 | 1,387 | 3,323 | (2,985) |
Net income (loss) attributable to non-controlling interest | 29 | (12) | 2 | 172 |
Net income (loss) attributable to DASAN Zhone Solutions, Inc. | 1,798 | 1,399 | 3,321 | (3,157) |
Foreign currency translation adjustments | 391 | (284) | (1,839) | 1,782 |
Comprehensive income (loss) | 2,218 | 1,103 | 1,484 | (1,203) |
Comprehensive income (loss) attributable to non-controlling interest | 16 | (14) | (3) | 191 |
Comprehensive income (loss) attributable to DASAN Zhone Solutions, Inc. | $ 2,202 | $ 1,117 | $ 1,487 | $ (1,394) |
Basic (in dollars per share) | $ 0.11 | $ 0.09 | $ 0.20 | $ (0.19) |
Diluted (in dollars per share) | $ 0.11 | $ 0.09 | $ 0.20 | $ (0.19) |
Weighted average shares outstanding used to compute basic net income (loss) per share (in shares) | 16,683 | 16,382 | 16,425 | 16,380 |
Weighted average shares outstanding used to compute diluted net income (loss) per share (in shares) | 16,891 | 16,382 | 16,640 | 16,380 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||||
Net income (loss) | $ 1,827 | $ 1,387 | $ 3,323 | $ (2,985) | $ 1,200 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||
Depreciation and amortization | 2,033 | 3,105 | |||
Stock-based compensation | 1,357 | 670 | |||
Valuation allowance on inventories | 753 | 1,003 | |||
Unrealized loss (gain) on foreign currency transactions | 226 | (185) | |||
Deferred taxes | (56) | 0 | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (14,536) | (2,948) | |||
Inventories | (21,967) | (1,581) | |||
Prepaid expenses and other assets | (7,942) | (101) | |||
Accounts payable | 24,790 | 6,713 | |||
Accrued and other liabilities | (3,695) | (4,314) | |||
Net cash used in operating activities | (15,714) | (623) | |||
Cash flows from investing activities: | |||||
Proceeds from sale of short-term investments | 0 | 1,463 | |||
Purchase of short-term investments | 0 | (430) | |||
Proceeds from disposal of property and equipment and other assets | 1 | 6 | |||
Purchase of property and equipment | (753) | (840) | |||
Purchase of intangible asset | 0 | (72) | |||
Net cash (used in) provided by investing activities | (752) | 127 | |||
Cash flows from financing activities: | |||||
Proceeds from short-term borrowings from bank and trade facilities | 61,419 | 13,778 | |||
Proceeds from short-term borrowings from related party | 6,098 | 0 | |||
Repayments of borrowings from bank and trade facilities | (48,739) | (15,627) | |||
Repayments of borrowings related party | (4,460) | 0 | |||
Proceeds from issuance of common stock | 853 | 28 | |||
Net cash provided by (used in) financing activities | 15,171 | (1,821) | |||
Effect of exchange rate changes on cash and restricted cash | (1,417) | 977 | |||
Net decrease in cash and cash equivalents | (2,712) | (1,340) | |||
Cash, cash equivalents and restricted cash at beginning of period | 31,412 | 24,543 | 24,543 | ||
Cash, cash equivalents and restricted cash at end of period | 28,700 | 23,203 | 28,700 | 23,203 | 31,412 |
Cash and cash equivalents | 20,028 | 10,145 | 20,028 | 10,145 | 17,475 |
Restricted cash | 7,825 | 13,058 | 7,825 | 13,058 | 12,425 |
Long-term restricted cash | $ 847 | $ 0 | $ 847 | $ 0 | $ 1,512 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies (a) Description of Business DASAN Zhone Solutions, Inc. (referred to, collectively with its subsidiaries, as "DZS" or the "Company") is a global provider of network access solutions and communications equipment for service provider and enterprise networks. The Company provides a wide array of reliable, cost-effective networking technologies, including broadband access, Ethernet switching, mobile backhaul, Passive Optical LAN and software-defined networks, to a diverse customer base that includes more than 1,000 customers in more than 50 countries worldwide. DZS was incorporated under the laws of the state of Delaware in June 1999, under the name Zhone Technologies, Inc. On September 9, 2016, the Company acquired Dasan Network Solutions, Inc., a California corporation ("DNS") through the merger of a wholly owned subsidiary of the Company with and into DNS, with DNS surviving as a wholly owned subsidiary of the Company (the "Merger"). At the effective time of the Merger, all issued and outstanding shares of capital stock of DNS held by DASAN Networks, Inc. ("DNI") were canceled and converted into the right to receive shares of the Company's common stock in an amount equal to 57.3% of the issued and outstanding shares of the Company's common stock immediately following the Merger. In connection with the Merger, the Company changed its name from Zhone Technologies, Inc. to DASAN Zhone Solutions, Inc. The Company is headquartered in Oakland, California with flexible in-house production facilities in Seminole, Florida and contract manufacturers located in China, India, Korea and Vietnam. The Company also maintains offices to provide sales and customer support at various domestic and international locations. (b) Risks and Uncertainties Liquidity The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States ("U.S. GAAP"), assuming the Company will continue as a going concern. The Company had net income of $ 3.3 million for the nine months ended September 30, 2018 , and $1.2 million for the year ended December 31, 2017. As of September 30, 2018 , the Company had an accumulated deficit of $15.2 million and working capital of $66.9 million . In addition, the Company had a net cash outflow from operations of $15.7 million for the nine months ended September 30, 2018 . As of September 30, 2018 , the Company had $20.0 million in cash and cash equivalents, which included $6.0 million in cash balances held by its international subsidiaries, and $42.3 million in aggregate principal debt of which $37.3 million was in current liabilities. Also, as of September 30, 2018 , the Company had $6.4 million committed as cash collateral for letters of credit under its revolving credit facilities, and $12.9 million outstanding indebtedness under those facilities, leaving $21.3 million in aggregate financing availability under the facilities. Subsequent to the end of the quarter, the Company repaid $6.0 million in borrowings to Wells Fargo Bank ("WFB"), which constituted all of the outstanding balance under its Wells Fargo Bank Facility (the “WFB Facility”). On July 12, 2018, the Company amended the WFB Facility by entering into an Amended and Restated Credit and Security Agreement (the “A&R Domestic Credit Agreement”) and an Amended and Restated Credit and Security Agreement (the “A&R Ex-Im Credit Agreement”) with WFB which amended and replaced the Company’s existing senior secured revolving line of credit and letter of credit facilities with WFB and revised certain reporting and compliance provisions. The A&R Domestic Credit Agreement and the A&R Ex-Im Credit Agreement (together, the “Amended WFB Facility") is described more fully in Note 7 to the unaudited condensed consolidated financial statements. On October 22, 2018, the Company borrowed $3.0 million under the Amended WFB Facility. On October 31, 2018, the Company repaid the $3.0 million in full. The Company’s current lack of liquidity could harm it by: • increasing its vulnerability to adverse economic conditions in its industry or the economy in general; • requiring substantial amounts of cash to be used for debt servicing, rather than other purposes, including operations; • limiting its ability to plan for, or react to, changes in its business and industry; • limiting its ability to complete the Keymile acquisition; and • influencing investor and customer perceptions about its financial stability and limiting its ability to obtain financing or acquire customers. These factors indicate that cash flows might not be sufficient for the Company to meet its obligations as they come due in the ordinary course of business for a period of 12 months from the date of this Quarterly Report on Form 10-Q. The Company’s ability to meet its obligations as they become due in the ordinary course of business for the next 12 months will depend on its ability (i) to achieve forecasted results, (ii) access funds approved under existing or new credit facilities and/or raise additional capital through sales of the Company’s common stock to the public and (iii) effectively manage inventory procurement. If the Company cannot raise additional funds when it needs or wants them, its operations and prospects could be negatively affected. Management’s belief that it will achieve forecasted results assumes that, among other things, the Company will continue to be successful in implementing its business strategy and that there will be no material adverse development in its business, liquidity or capital requirements. If one or more of these factors do not occur as expected, it could cause the Company to fail to meet its obligations as they come due. The Company plans to focus on capital raising, cost management, operating efficiency and restrictions on discretionary spending. In addition, if necessary, the Company may sell assets, issue or enter into amendments of its debt or equity securities, or purchase credit insurance. The Company may also reduce the scope of its planned product development, reduce sales and marketing efforts and reduce its operations in low margin regions, including reductions in headcount. Based on the Company's current plans and current business conditions, the Company believes that these measures along with its existing cash, cash equivalents and available credit facilities will be sufficient to satisfy its anticipated cash requirements for at least the next 12 months from the date of this Quarterly Report on Form 10-Q. Other Uncertainties DNI owned approximately 57.3% of the outstanding shares of the Company's common stock as of September 30, 2018 . For so long as DNI and its affiliates hold shares of the Company's common stock representing at least a majority of the votes, DNI will be able to freely nominate and elect all the members of the Company's board of directors, subject to the provisions of the Company's bylaws and applicable requirements under Nasdaq listing rules and applicable laws. The directors elected by DNI will have the authority to make decisions affecting the Company's capital structure, including the issuance of additional capital stock or options, the incurrence of additional indebtedness, the implementation of stock repurchase programs, and the declaration of dividends. The interests of DNI may not coincide with the interests of the Company's other stockholders or with holders of the Company's indebtedness. DNI’s ability to control all matters submitted to the Company's stockholders for approval limits the ability of other stockholders to influence corporate matters and, as a result, the Company may take actions that the Company's other stockholders or holders of the Company's indebtedness do not view as beneficial. See Notes 9 and 11 to the unaudited condensed consolidated financial statements for additional information. (c) Reclassifications For the three months ended September 30, 2017, certain statement of comprehensive income (loss) items have been reclassified to correctly reflect research and product development expenses and selling, marketing, general and administrative expenses of $0.1 million and $0.2 million , respectively, which were previously incorrectly classified as cost of revenue-products and services. For the nine months ended September 30, 2017 certain prior period statement of comprehensive loss items have been reclassified to correctly reflect research and product development expenses and selling, marketing, general and administrative expenses of $0.4 million and $0.6 million , respectively, which were incorrectly classified as cost of revenue-products and services. (d) Basis of Presentation For a description of what the Company believes to be the critical accounting policies and estimates used in the preparation of the Company's unaudited condensed consolidated financial statements, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the Company does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the current interim period are not necessarily indicative of results to be expected for the current year or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission ("SEC"). (e) Reverse Stock Split On February 28, 2017, the Company filed a Certificate of Amendment with the Delaware Secretary of State to amend the Company's Restated Certificate of Incorporation, which amendment effected a one-for-five reverse stock split of the Company's common stock and reduced the authorized shares of the Company's common stock from 180 million to 36 million . As a result of the reverse stock split, the number of shares of the Company’s common stock then issued and outstanding was reduced from approximately 81.9 million to approximately 16.4 million . References to shares of the Company's common stock, stock options (and associated exercise price) and restricted stock units in this Quarterly Report on Form 10-Q are provided on a post-reverse stock split basis. (f) Concentration of Risk The Company’s customers include competitive and incumbent local exchange carriers, competitive access providers, internet service providers, wireless carriers and resellers serving these markets. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential doubtful accounts. For the three and nine months ended September 30, 2018 , one customer each accounted for 11% of net revenue, respectively. For the three months ended September 30, 2017 , two customers represented 10% and 9% (a related party) of net revenue, respectively. For the nine months ended September 30, 2017 , two customers each represented 9% of net revenue (one of which was a related party). As of September 30, 2018 , one customer represented 12% of net accounts receivable. As of December 31, 2017, two customers represented 20% (a related party) and 11% of net accounts receivable, respectively. As of September 30, 2018 and December 31, 2017, receivables from customers in countries other than the United States represented 89% and 84% , of net accounts receivable, respectively. (g) Recent Accounting Pronouncements Recent Accounting Pronouncements Adopted In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers” (“Topic 606”), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Topic 606 replaced most existing revenue recognition standards under U.S. GAAP, including ASC 605, Revenue Recognition ("Topic 605"). On January 1, 2018 , the Company adopted Topic 606 and applied this guidance to all open contracts at the date of adoption using the modified retrospective method. The Company recognized the cumulative effect of initially applying Topic 606 as an adjustment to the balance of accumulated deficit at January 1, 2018. The comparative information has not been restated and continues to be reported under Topic 605. The Company’s adoption of Topic 606 primarily impacted the following: • Topic 606 requires an allocation of revenue to performance obligations identified within an arrangement. Topic 605 restricted the allocation of revenue that is contingent on future deliverables to current deliverables, however, Topic 606 removes this restriction, to the extent that the future deliverables represent performance obligations that are distinct. Under Topic 606, the nature of the performance obligations identified within a contract impacts the allocation of the transaction price between deliverables. • Some of the Company’s contracts include customer acceptance terms, which provide protection to the customer by allowing it to either cancel a contract or force the Company to take corrective actions if products or services do not meet the requirements in the contract. Under Topic 606, customer acceptance that is considered a “formality”, would result in revenue recognized when control of the product or service is transferred to customer, which is typically upon shipment or delivery dependent upon the terms of the underlying contract. The following table summarizes the effects of Topic 606 on the Company’s unaudited condensed consolidated balance sheet at January 1, 2018 (in thousands): As of January 1, 2018 Balance after adoption of ASC 606 Adjustments Balance without adoption of ASC 606 Assets Accounts receivable, net $ 62,099 $ 344 (1) $ 61,755 Inventories 25,239 (105 ) (2) 25,344 Liabilities Contract liabilities - current 3,038 (241 ) (2) 3,279 Accrued and other liabilities 11,518 344 (1) 11,174 Contract liabilities - non-current 1,711 (172 ) (2) 1,883 Stockholders’ equity Accumulated deficit (18,544 ) 308 (18,852 ) (1) Allowance for sales returns was historically presented as a contra-asset within accounts receivable on the Company's consolidated balance sheets. Upon the adoption of Topic 606, the Company presents the allowance for sales returns in Accrued and other liabilities (current). (2) Represents the impact of allocation of transaction price to separate performance obligations in open contracts as of the adoption date on a relative standalone selling price basis and acceleration of revenue (and related costs) for contracts for which acceptance clauses are a formality. The following table summarizes the effects of Topic 606 on the Company’s unaudited condensed consolidated balance sheet as of September 30, 2018 (in thousands): As of September 30, 2018 As reported Adjustments Balance without adoption of ASC 606 Assets Accounts receivable, net $ 61,019 $ (5,356 ) (1) (3) $ 66,375 Inventories 45,457 62 (2) 45,395 Prepaid expenses and other current assets 12,256 5,984 (3) 6,272 Liabilities Contract liabilities - current 2,394 (75 ) (2) 2,469 Accrued and other liabilities 10,315 628 (1) 9,687 Contract liabilities - non-current 1,851 36 (2) 1,815 Stockholders’ equity Accumulated deficit (15,190 ) 101 (15,291 ) (1) Allowance for sales returns was historically presented as a contra-asset within accounts receivable on the Company's consolidated balance sheets. Upon the adoption of Topic 606, the Company presents the allowance for sales returns in Accrued and other liabilities (current). (2) Represents the impact of allocation of transaction price to separate performance obligations in open contracts as of September 30, 2018 on a relative standalone selling price basis and acceleration of revenue (and related costs) for contracts for which acceptance clauses are a formality. (3) Represents conditional rights to consideration as of September 30, 2018 . The following table summarizes the effects of Topic 606 on the Company’s unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2018 (in thousands): Three Months Ended September 30, 2018 As reported Adjustments Balance without adoption of ASC 606 Net revenue $ 71,914 $ 386 $ 71,528 Cost of revenue - products and services 48,483 5 48,478 Gross profit 23,431 381 23,050 Income tax expense (735 ) — (735 ) Net income 1,827 381 1,446 Nine Months Ended September 30, 2018 As reported Adjustments Balance without adoption of ASC 606 Net revenue $ 207,675 $ 39 $ 207,636 Cost of revenue - products and services 139,344 (62 ) 139,406 Gross profit 68,331 101 68,230 Income tax expense (1,071 ) — (1,071 ) Net income 3,323 101 3,222 There was no impact on net revenue from related parties as a result of Topic 606. Revenue Recognition Accounting Policy Revenue Recognition Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates revenue primarily from sales of products and services, including, extended warranty service and customer support. Revenue from product sales is recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery dependent upon the terms of the underlying contract. Revenue from services is generally recognized over time on a ratable basis over the contract term, using an output measure of progress, as the contracts usually provide the customer equal benefit throughout the contract period. The Company typically invoices customers for support contracts in advance, for periods ranging from one to five years. Revenue from all sales types is recognized at the transaction price, which is the amount the Company expects to be entitled to in exchange for transferring goods and/or providing services. Transaction price is calculated as selling price net of variable consideration. Sales to certain distributors are made under arrangements which provide the distributors with volume discounts, price adjustments, and other allowances under certain circumstances. These adjustments and allowances are accounted for as variable consideration. To estimate variable consideration, the Company analyzes historical data, channel inventory levels, current economic trends and changes in customer demand for the Company's products, among other factors. Historically, variable consideration has not been a significant component of the Company’s contracts with customers. As of September 30, 2018, the total estimate of variable consideration was not significant. Contracts with Multiple Performance Obligations Some of the Company's contracts with customers contain multiple promised goods or services. For these contracts, the Company accounts for the promises separately as individual performance obligations if they are distinct. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, including the degree of interrelation and interdependence between obligations and whether or not the good or service significantly modifies or transforms another good or service in the contract. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices for products are determined using either an adjusted market assessment or expected cost-plus margin . For customer support and extended warranty services, standalone selling price is primarily based on the prices charged to customers. Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations primarily consist of backlog, which are products and services for which customer purchase orders have been accepted and that are in the process of being delivered. Contract Balances Topic 606 distinguishes between contract assets and accounts receivable based on whether receipt of the consideration is conditional on something other than the passage of time. The Company records contract assets when it has a right to consideration and records accounts receivable when it has an “unconditional” right to consideration. Contract liabilities consist of cash payments received (or unconditional rights to receive cash) in advance of fulfilling performance obligations. The following table reflects the changes in contract balances for the nine months ended September 30, 2018 (in thousands): Item Balance Sheet Location September 30, January 1, $ change % change Contract assets Prepaid expenses and other current assets $ 5,984 $ — $ 5,984 — Contract liabilities - current Contract liabilities - current 2,394 3,038 (644 ) (21 )% Contract liabilities - non-current Contract liabilities - non-current 1,851 1,711 140 8 % During the nine months ended September 30, 2018, contract liabilities - non-current increased and contract liabilities - current decreased primarily as a result of changes in open contracts containing multiple performance obligations. As of September 30, 2018, contract assets increased as a result of the timing of certain events for the right to consideration to become unconditional. There were no significant changes in estimates during the nine months ended September 30, 2018 that would affect the contract assets and liabilities balances. During the three and nine months ended September 30, 2018 , $0.4 million and $2.7 million , respectively, was recognized as revenue from the opening contract liabilities balance. Warranties Products sold to customers include standard warranties, covering bug fixes, minor updates such that the product continues to function according to published technical specifications. These standard warranties are assurance type warranties and do not offer any services in addition to the assurance that the product will continue working as specified. Therefore, standard warranties are not considered separate performance obligations in the arrangement. Instead, the expected cost of warranty is accrued as expense in accordance with applicable guidance. Extended warranties are sold with certain products and include additional support services. The transaction price for extended warranties is accounted for as service revenue and recognized ratably over the life of the contract. Contract Costs Applying a practical expedient, the Company recognizes the incremental costs of obtaining contracts, which primarily consist of sales commissions, as an expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in sales and marketing expenses. If the incremental direct costs of obtaining a contract relate to a service recognized over a period longer than one year, such costs are capitalized and amortized in line with the related services over the period of benefit. As of September 30, 2018, such capitalizable costs were not significant. Financing The Company's contracts do not include a significant financing component. The Company applies the practical expedient not to adjust the promised amount of consideration for the effects of a financing component if the Company expects, at contract inception, that the period between when the Company transfers a good or service to the customer and when the customer pays for the good or service will be one year or less. Shipping and Handling The Company has elected to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost rather than as an additional promised service. As a result, the Company accrues the costs of shipping and handling when the related revenue is recognized . Unsatisfied performance obligations The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice for the services performed. The majority of the Company's performance obligations in its contracts with customers relate to contracts with duration of less than one year and therefore transaction price allocated to unsatisfied performance obligations included in contracts with duration of more than 12 months was not material. Disaggregation of Revenue The disaggregation of revenue by geographical regions for the three and nine months ended September 30, 2018 is disclosed in Note 12. In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments , which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated guidance became effective for the Company on January 1, 2018 and was adopted accordingly. The adoption of this standard did not have any effect on the Company's condensed consolidated statement of cash flows for the three and nine months ended September 30, 2018 or 2017. In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows, Restricted Cash , which requires that a statement of cash flows to explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents. The updated guidance became effective for the Company beginning on January 1, 2018 and was adopted accordingly, using the retrospective approach. As a result, the Company no longer presents transfers between cash and cash equivalents and restricted cash in the consolidated cash flow statements. The condensed consolidated statement of cash flows for the nine months ended September 30, 2017 was revised to exclude the $6.1 million change in restricted cash from net cash used in investing activities and to include $6.7 million in cash, cash equivalents and restricted cash, beginning of period and $13.1 million in cash, cash equivalents and restricted cash, end of period. Other Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases . ASU 2016-02 requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. The updated guidance is effective for the Company on January 1, 2019, and early adoption is permitted. The Company does not plan to early adopt this guidance. The Company expects its assets and liabilities to increase as a result of the adoption of this standard. In July 2018, the FASB issued ASU 2018-18-11, Leases (Topic 842): Targeted Improvements , ASU 2018-11 states that, separating components of a contract affect the amendments in Update 2016-02, which are not yet effective but can be early adopted. All entities, including early adopters that elect the practical expedient related to separating components of a contract in this Update 2016-02 must apply the expedient, by class of underlying asset, to all existing lease transactions that qualify for the expedient at the date elected. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. In January 2017, FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment , which simplifies the accounting for goodwill impairment. The updated guidance is effective for the Company on January 1, 2020, and will be adopted accordingly. Early adoption is permitted. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the "Tax Act"). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act. Because the amendments only relate to the reclassification of the income rate tax effect of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018 and interim periods in those years. The Company does not expect the impact of the new standard to have a material impact on its consolidated financial statements. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 . The amendments add various Securities and Exchange Commission (“SEC) paragraphs pursuant to the issuance of SEC Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“Act”) (“SAB 118”). The SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Act in the period of enactment. SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Act are incomplete by the due date of the financial statements and if possible to provide a reasonable estimate. The Company has provided a reasonable estimate of the tax reform in the notes to the consolidated financial statements. On July 30, 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-0210 (codified as ASC 842). Specifically, under the amendments in ASU 2018-11, entities may elect not to recast the comparative periods presented when transitioning to ASC 842, and lessors may elect not to separate lease and nonlease components when certain conditions are met. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. On August 28, 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement The Company utilizes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels: Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The following financial instruments are not measured at fair value on the Company’s condensed consolidated balance sheet as of September 30, 2018 and the consolidated balance sheet as of December 31, 2017, but require disclosure of their fair values: cash and cash equivalents, accounts receivable, accounts payable and debt. The carrying values of financial instruments such as cash and cash equivalents, accounts receivable and accounts payable approximate their fair values based on their short-term nature. The carrying value of the Company's debt approximates their fair values based on the current rates available to the Company for debt of similar terms and maturities. To manage certain exposures to currency fluctuations, the Company started a limited hedging program by entering into foreign currency forward contracts with maturities of one month to hedge a portion of its net outstanding foreign currency monetary assets and liabilities. These derivatives are recorded at fair value on the condensed consolidated balance sheet under "Other Current Assets" or "Accounts Payable - Trade" with changes in the fair value being recorded in "Other income (loss), net". These derivative contracts are entered into with a single counterparty, and are not designated as hedging instruments under applicable accounting guidance. As such, all changes in the fair value of these derivative contracts are recorded in other income (loss), net on the condensed consolidated statements of comprehensive income (loss). These derivative contracts are intended to offset the foreign currency gains or losses associated with the underlying monetary assets and liabilities, and changes in the related derivative assets and liabilities balances are classified outside of operating income (loss), consistent with the related underlying foreign currency gain or loss. These derivative contracts expose the Company to credit risk to the extent that the counterparty may be unable to meet the terms of the arrangement. The Company mitigates this credit risk by transacting with reputable financial institutions and entering into master netting arrangements, which permit net settlement of transactions with the same counterparty. While the contract or notional amount is often used to express the volume of foreign currency derivative contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed the obligations of the Company to the counterparties. The Company is not required to pledge, and is not entitled to receive, cash collateral related to these derivative instruments. The Company does not enter into derivative contracts for trading or speculative purposes. The Company's foreign currency contracts are classified within Level 2 because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates. As of September 30, 2018 , the Company had no derivative contracts, and no liability was included in accounts payable - trade. |
Cash, Cash Equivalents and Rest
Cash, Cash Equivalents and Restricted Cash | 9 Months Ended |
Sep. 30, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash As of September 30, 2018 and December 31, 2017, the Company's cash and cash equivalents comprised financial deposits. Restricted cash consisted primarily of cash restricted for performance bonds, warranty bonds and collateral for borrowings. Current and long-term restricted cash was $8.7 million at September 30, 2018 and $13.9 million at December 31, 2017. Reconciliation of cash, cash equivalents and restricted cash to statement of financial position as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, December 31, Cash and cash equivalents $ 20,028 $ 17,475 Restricted cash 7,825 12,425 Long-term restricted cash 847 1,512 Cash, cash equivalents and restricted cash $ 28,700 $ 31,412 |
Balance Sheet Detail
Balance Sheet Detail | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Balance Sheet Detail | Balance Sheet Detail Accounts Receivable - Trade Accounts receivable - trade, net as of September 30, 2018 and December 31, 2017 was as follows (in thousands): September 30, December 31, Gross accounts receivable $ 61,324 $ 63,446 Allowance for doubtful accounts (305 ) (922 ) Allowance for sales returns — (1) (769 ) Total allowances (305 ) (1,691 ) Accounts receivable - trade, net $ 61,019 $ 61,755 (1) Upon adoption of ASC 606, allowances for sales returns were reclassified to accrued and other liabilities as these reserve balances are considered estimated refund liabilities. Refer to footnote 1(g) for additional information about the adoption impact. Inventories Inventories as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, December 31, Raw materials $ 19,227 $ 12,671 Work in process 3,474 2,150 Finished goods 22,756 10,523 Total inventories $ 45,457 $ 25,344 Inventories provided as collateral for borrowings from Export-Import Bank of Korea amounted to $9.5 million and $11.4 million as of September 30, 2018 and December 31, 2017, respectively. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, December 31, Furniture and fixtures $ 22,495 $ 22,988 Machinery and equipment 5,577 5,455 Leasehold improvements 3,619 3,647 Computers and software 728 621 Others 1,034 1,007 33,453 33,718 Less: accumulated depreciation and amortization (27,872 ) (27,584 ) Less: government grants (207 ) (261 ) Property and equipment, net $ 5,374 $ 5,873 Depreciation expense associated with property and equipment for the three and nine months ended September 30, 2018 was $0.4 million and $1.2 million respectively. Depreciation expense for the three and nine months ended September 30, 2017 was $0.5 million and $1.4 million , respectively. The Company receives grants from various government entities, mainly to support capital expenditures. Such grants are deferred and are generally refundable to the extent the Company does not utilize the funds for qualifying expenditures. Once earned, the Company records the grants as a contra amount to the assets and amortizes such amount over the useful lives of the related assets as a reduction to depreciation expense. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill as of September 30, 2018 and December 31, 2017 was as follows (in thousands): September 30, December 31, Beginning balance $ 3,977 $ 3,977 Less: accumulated impairment — — Ending balance $ 3,977 $ 3,977 The Company did not recognize impairment loss on goodwill during the nine months ended September 30, 2018 and 2017. Intangible assets as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, 2018 Gross Carrying Amount Accumulated Amortization Net Developed technology $ 3,060 $ (1,276 ) $ 1,784 Customer relationships 5,240 (1,091 ) 4,149 Backlog 2,179 (2,179 ) — Total intangible assets $ 10,479 $ (4,546 ) $ 5,933 December 31, 2017 Gross Carrying Amount Accumulated Amortization Net Developed technology $ 3,060 $ (816 ) $ 2,244 Customer relationships 5,240 (699 ) 4,541 Backlog 2,179 (2,179 ) — Total intangible assets $ 10,479 $ (3,694 ) $ 6,785 Amortization expense associated with intangible assets for the three and nine months ended September 30, 2018 was $0.3 million and $0.9 million , respectively. Amortization expense associated with intangible assets for the three and nine months ended September 30, 2017 was $0.3 million and $1.7 million , respectively. |
Debts
Debts | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debts | Debts Wells Fargo Bank Facility On July 12, 2018, the Company entered into the A&R Domestic Credit Agreement and the A&R Ex-Im Credit Agreement with WFB, which amended and replaced the Company’s existing senior secured revolving line of credit and letter of credit facilities with WFB and revised certain reporting and compliance provisions. The Amended WFB Facility provides for a revolving line of credit of $25.0 million (including up to $5.0 million of letters of credit), with the amount that the Company is able to borrow based on eligible accounts receivable and inventory, less the amount committed as cash collateral for letters of credit. The amounts borrowed under the Amended WFB Facility bears interest, payable monthly, at a floating rate equal to the three-month LIBOR plus a margin based on the Company's average excess availability (as calculated under the WFB Facility). To maintain availability of funds under the Amended WFB Facility, the Company pays a commitment fee on the unused portion. The commitment fee is 0.25% per annum and is recorded as interest expense. The maturity date of the Amended WFB Facility is July 12, 2021. As of September 30, 2018 , the Company had $6.0 million in outstanding borrowings under its Amended WFB Facility (included in short-term debts), and $ 2.1 million was committed as cash collateral for letters of credit. Subsequent to the end of the quarter, the Company repaid $6.0 million in borrowings under the WFB Facility. Based on the Company's eligible accounts receivable and inventory, the Company had $ 6.5 million of financing availability under the Amended WFB Facility as of September 30, 2018 . The interest rate on the Amended WFB Facility was 4.4% at September 30, 2018 . The Company’s obligations under the Amended WFB Facility are secured by substantially all of its assets and those of its subsidiaries that guarantee the Amended WFB Facility, including their intellectual property. The Amended WFB Facility contains certain financial covenants, and customary affirmative and negative covenants. If the Company defaults under the Amended WFB Facility due to a covenant breach or otherwise, WFB may, after the lapse of any applicable grace periods, be entitled to, among other things, require the immediate repayment of all outstanding amounts and sell the Company’s assets to satisfy the obligations under the Amended WFB Facility. As of September 30, 2018 , the Company was in compliance with the covenants under the WFB Facility. On October 22, 2018, the Company borrowed $3.0 million under the Amended WFB Facility. On October 31, 2018, the Company repaid the $3.0 million in full. Bank and Trade Facilities - Foreign Operations Certain of the Company's foreign subsidiaries have entered into various financing arrangements with foreign banks and other lending institutions consisting primarily of revolving lines of credit, trade facilities, term loans and export development loans. These facilities are renewed as they mature and are generally secured by a security interest in certain assets of the applicable foreign subsidiaries and supported by guarantees given by DNI or third parties. Payments under such facilities are made in accordance with the given lender’s amortization schedules. As of September 30, 2018 and December 31, 2017, the Company had an aggregate outstanding balance of $28.2 million (included in short-term debts) and $22.8 million ( $19.8 million included in short-term debts), respectively, under such financing arrangements, and the interest rates per annum applicable to outstanding borrowings under these financing arrangements were as listed in the tables below (amount in thousands). As of September 30, 2018 Maturity Date Denomination Interest rate (%) Amount Industrial Bank of Korea Credit facility 10/2/2018 - 2/4/2019 USD 3.81~4.03 $ 4,229 Industrial Bank of Korea Credit facility 10/10/2018 - 11/12/2018 USD 3.81~3.84 1,834 Industrial Bank of Korea Trade finance 10/15/2018 USD 6.82 651 Shinhan Bank General loan 3/30/2019 KRW 6.06 2,876 NongHyup Bank Credit facility 11/19/2018 - 3/4/2019 USD 3.95~4.17 852 The Export-Import Bank of Korea Export development loan 12/29/2018 KRW 3.28 6,471 The Export-Import Bank of Korea Import development loan 11/14/2018 USD 4.02 850 Korea Development Bank General loan 8/8/2019 KRW 3.48 4,494 LGUPlus General loan 6/17/2019 KRW 0 1,797 JECC Factoring AR Factoring 10/26/2018 - 12/25/2018 JPY 1.58 3,236 Shoko Chukin Bank General loan 6/28/2019 JPY 1.33 881 $ 28,171 As of December 31, 2017 Maturity Date Denomination Interest rate (%) Amount Industrial Bank of Korea Credit facility 1/2/2018 - 5/2/2018 USD 2.89 - 3.26 $ 2,328 Industrial Bank of Korea Trade Finance 1/2/2018 - 5/23/2018 USD 4.47 - 5.97 2,401 Shinhan Bank General loan 3/30/2019 KRW 5.91 2,987 Shinhan Bank Trade finance 2/19/2018- 3/26/2018 KRW 3.90 - 4.14 3,050 NongHyup Bank (Korea) Credit facility 1/8/2018- 6/18/2018 USD 2.83 - 3.42 860 The Export-Import Bank of Korea Export development loan 2/13/2018 & 6/29/2018 KRW 3.20 - 3.28 7,570 Mitsubishi Bank (Japan) AR factoring 1/31/2018 - 5/31/2018 JPY 1.58 1,872 Shinhan Bank (India) General loan 4/24/2018 - 11/12/2018 INR 8.70 - 8.90 1,709 $ 22,777 As of September 30, 2018 , the Company had $6.9 million in outstanding borrowings and $ 4.3 million committed as cash collateral for letters of credit under the Company's $25.9 million credit facility with certain foreign banks. On June 18, 2018, the Company's Korean subsidiary received a mutual cooperation capital loan of $1.8 million from LGUPlus and provided a letter of guarantee of the same amount from Seoul Guarantee Insurance as collateral. See Note 9 for a discussion of related-party debt. |
Non-Controlling Interests
Non-Controlling Interests | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interests | Non-Controlling Interests Non-controlling interests for the nine months ended September 30, 2018 and 2017 were as follows (in thousands): Nine Months Ended September 30, 2018 2017 Beginning non-controlling interests $ 534 $ 416 Net income (loss) attributable to non-controlling interests 2 172 Foreign currency translation adjustments (5 ) 19 Ending non-controlling interests $ 531 $ 607 |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related-Party Transactions Related-Party Acquisitions On December 31, 2017, DNS acquired 100% and 99.99% of the common stock of D-Mobile Limited (“D-Mobile”) and DASAN India Private Limited ("DASAN India"), respectively, from DNI. D-Mobile and DASAN India are resellers of the Company's products in Taiwan and India, respectively. The consideration payable by the Company to DNI for the common stock of the two subsidiaries is the net book value of D-Mobile and DASAN India at December 31, 2017, subject to final adjustments. The net book value of D-Mobile and DASAN India was an aggregate of $0.8 million . These transactions were accounted for by the Company as common control transactions, with the net assets transferred recorded at historical cost. The transactions did not result in a change in reporting entity and hence were accounted for prospectively. Related-Party Debt In connection with the Merger, on September 9, 2016, the Company entered into a loan agreement with DNI for a $5.0 million unsecured subordinated term loan facility. Under the loan agreement, the Company was permitted to request drawdowns of one or more term loans in an aggregate principal amount not to exceed $5.0 million . As of September 30, 2018 , $5.0 million in term loans was outstanding under the facility. Such term loans mature in September 2021 and are pre-payable a t any time by the Company without premium or penalty. The interest rate as of September 30, 2018 under this facility was 4.6% per annum. In February 2016, the Company borrowed $1.8 million from DNI for capital investment, which was outstanding as of September 30, 2018 . This loan matures in July 2019 and bears interest at a rate of 4.6% per annum, payable annually. On March 21, 2018, DNS borrowed $5.8 million from DNI, of which $4.5 million was repaid on August 8, 2018. As of September 30, 2018 , $1.3 million remained outstanding. The loan bears interest at a rate of 4.6% and matures on June 27, 2019, and is secured by certain accounts receivable of DNS Korea. Other Related-Party Transactions Sales and purchases, cost of revenue, research and product development, selling, marketing, general and administrative, interest expense and other expenses to and from related parties for the three and nine months ended September 30, 2018 and 2017 were as follows (in thousands): Three Months Ended September 30, 2018 Counterparty DNI ownership Interest Sales Cost of revenue Research and product development Selling, marketing, general and administrative Interest expense Other expenses DNI (Parent Company) N/A $ 1,472 $ 1,270 $ — $ 784 $ 112 $ 89 Tomato Soft Ltd. 100% — 27 — — — — Tomato Soft (Xi'an) Ltd. 100% — — 119 — — — Chasan Networks Co., Ltd. 100% — 260 21 — — — Handysoft, Inc. 17.63% 215 208 — 2 — — $ 1,687 $ 1,765 $ 140 $ 786 $ 112 $ 89 Three Months Ended September 30, 2017 Counterparty DNI ownership Interest Sales Cost of revenue Research and product development Selling, marketing, Other expenses DNI (Parent Company) N/A $ 3,976 $ 3,604 $ — $ 1,291 $ 51 Chasan Networks Co., Ltd. 100% — 257 20 — — Dasan France 100% 662 576 — 83 — Dasan India Private Limited 100% — — — 30 — D-Mobile 100% 1,233 1,077 — 122 — HandySoft, Inc. 17.64% 54 12 — 6 4 Tomato Soft Ltd. 100% — 43 108 — — Tomato Soft (Xi'an) Ltd. 100% — — 144 — — $ 5,925 $ 5,569 $ 272 $ 1,532 $ 55 Nine Months Ended September 30, 2018 Counterparty DNI ownership Interest Sales Cost of revenue Research and product development Selling, marketing, general and administrative Interest expense Other expenses DNI (Parent Company) N/A $ 3,683 $ 3,143 $ — $ 2,950 $ 338 $ 234 Tomato Soft Ltd. 100% — 84 — — — — Tomato Soft (Xi'an) Ltd. 100% — 10 396 — — — Chasan Networks Co., Ltd. 100% — 880 57 — — — Dasan France 100% 202 177 — — — — HandySoft, Inc. 17.63% 473 357 — 4 — — $ 4,358 $ 4,651 $ 453 $ 2,954 $ 338 $ 234 Nine Months Ended September 30, 2017 Counterparty DNI ownership Interest Sales Cost of revenue Research and product development Selling, marketing, Other expenses DNI (Parent Company) N/A $ 16,608 $ 14,020 $ — $ 3,491 $ 171 Chasan Networks Co., Ltd. 100% — 578 79 — — Dasan France 100% 1,612 1,512 — 383 — Dasan India Private Limited (1) 100% 6,287 4,783 — 30 — D-Mobile (1) 100% 3,054 1,831 — 318 — Fine Solution 100% — — — 4 — HandySoft, Inc. 17.64% 88 23 — 6 4 J-Mobile Corporation 90.47% 8 — — 132 — Tomato Soft Ltd. 100% 104 108 Tomato Soft (Xi'an) Ltd. 100% — — 448 37 — Solueta 27.21% — — — — 3 $ 27,657 $ 22,851 $ 635 $ 4,401 $ 178 (1) As discussed above, on December 31, 2017 DNS acquired DASAN India and D-Mobile from DNI. The Company has entered into sales agreements with DNI and certain of its subsidiaries. Sales and cost of revenue to DNI and DASAN France (and with respect to the first three quarters of 2017, DASAN India and D-Mobile) represent finished goods produced by the Company that are sold to these related parties who sell the Company's products in Korea, France, India and Taiwan, respectively. The Company has entered into an agreement with Chasan Networks Co., Ltd. to provide manufacturing and research and development services for the Company. Under the agreement with Chasan Networks., Ltd., the Company is charged a cost plus 7% fee for the manufacturing and development of certain deliverables. The Company has entered into an agreement with Tomato Soft Ltd., a wholly owned subsidiary of DNI, to provide manufacturing and research and development services for the Company. The Company has entered into an agreement with Tomato Soft (Xi'an) Ltd. to provide research and development services for the Company. Under the agreement with Tomato Soft (Xi'an) Ltd., the Company is charged an expected annual fee of $0.8 million for the development of certain deliverables. Prior to the Merger, as DNS was then a wholly owned subsidiary of DNI, DNI had sales agreements with certain customers on DNS' behalf. Since the Merger, due to these prior sales agreements, the Company has entered into an agreement with DNI in which DNI acts as a sales channel to these customers. Sales to DNI necessary for DNI to fulfill agreements with its customers are recorded net of royalty fees in related-party revenue. The Company shares office space with DNI and certain of DNI's subsidiaries. Prior to the Merger, DNS, then a wholly owned subsidiary of DNI, shared human resources, treasury and other administrative support with DNI. As such, the Company entered into certain service sharing agreements with DNI and certain of its subsidiaries for the office space and administrative services. Expenses related to leases and administrative services are allocated and billed to the Company based on square footage occupied and headcount, respectively. Other expenses to related parties represent payment to DNI for its guarantees relating to the Company's borrowings. The Company pays DNI a guarantee fee which is calculated as 0.9% of the guaranteed amount. Balances of Receivables and Payables with Related Parties Balances of receivables and payables arising from sales and purchases of goods and services with related parties as of September 30, 2018 and December 31, 2017 were as follows (in thousands): As of September 30, 2018 Counterparty DNI ownership Interest Account receivables Other receivables Deposits for lease * Loans Payable Accounts payable Other Payables Accrued and other liabilities** DNI (parent company) N/A $ 1,679 $ 26 $ 738 $ 8,148 $ 1,000 $ 1,810 $ 157 Tomato Soft Ltd. 100% — — — — — 9 — Tomato Soft (Xi'an) Ltd. 100% — — — — — 40 — Dasan France 100% 285 65 — — — — — HandySoft, Inc. 17.63% 175 — — — 216 — — Chasan Networks Co., Ltd. 100% — — — — 86 — — $ 2,139 $ 91 $ 738 $ 8,148 $ 1,302 $ 1,859 $ 157 As of December 31, 2017 Counterparty DNI Ownership Interest Account receivables Other receivables Deposits for lease * Long-term debt Accounts payable Other Payables Accrued and other liabilities** DNI (parent company) N/A $ 12,576 $ 93 $ 786 $ 6,800 $ 1,264 $ 1,859 $ 59 Tomato Soft Ltd. 100% — — — — — 18 — Tomato Soft (Xi'an) Ltd. 100% — — — — — 54 — Dasan France 100% 870 71 — — — — — HandySoft, Inc. 17.63% 52 — — — — — — Chasan Networks Co., Ltd. 100% — — — — 87 — — Solueta 100% — — — — — 25 — $ 13,498 $ 164 $ 786 $ 6,800 $ 1,351 $ 1,956 $ 59 * Included in other assets in the condensed consolidated balance sheets as of September 30, 2018 and December 31, 2017. **Included in accrued and other liabilities in the condensed consolidated balance sheet as of September 30, 2018 and December 31, 2017. |
Net Income (Loss) Per Share Att
Net Income (Loss) Per Share Attributable to DASAN Zhone Solutions, Inc. | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share Attributable to DASAN Zhone Solutions, Inc. | Net Income (Loss) Per Share Attributable to DASAN Zhone Solutions, Inc. Basic net income (loss) per share attributable to DASAN Zhone Solutions, Inc. is computed by dividing the net income (loss) attributable to DASAN Zhone Solutions, Inc. for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income (loss) per share attributable to DASAN Zhone Solutions, Inc. gives effect to common stock equivalents; however, potential common equivalent shares are excluded if their effect is antidilutive. Potential common equivalent shares are composed of incremental shares of common equivalent shares issuable upon the exercise of stock options and the vesting of restricted stock units. The following table is a reconciliation of the numerator and denominator in the basic and diluted net income (loss) per share calculation (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net income (loss) attributable to DASAN Zhone Solutions, Inc. $ 1,798 $ 1,399 $ 3,321 $ (3,157 ) Weighted average number of shares outstanding: Basic 16,683 16,382 16,425 16,380 Effect of dilutive securities: Stock options, restricted stock units and share awards 208 — 215 — Diluted 16,891 16,382 16,640 16,380 Net income (loss) per share attributable to DASAN Zhone Solutions, Inc.: Basic $ 0.11 $ 0.09 $ 0.20 $ (0.19 ) Diluted $ 0.11 $ 0.09 $ 0.20 $ (0.19 ) During the three and nine months ended September 30, 2018, the Company excluded 1.0 million , and 26 thousand stock options at a weighted average exercise price of $10.89 , and $14.73 , respectively, from diluted net income per share because their effect would have been antidilutive. Basic net income (loss) per share is the same as diluted net income (loss) per share for the nine months ended September 30, 2017 because the effects of stock options and restricted stock units would have been anti-dilutive. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company has entered into operating leases for certain office space and equipment, some of which contain renewal options and escalation clauses. Estimated future lease payments under all non-cancellable operating leases with terms in excess of one year, including taxes and service fees, are as follows (in thousands): Operating Leases Year ending December 31: 2018 (remainder of the year) $ 1,053 2019 4,088 2020 2,998 2021 2,590 2022 2,664 Thereafter 8,423 Total minimum lease payments $ 21,816 Warranties The Company accrues warranty costs based on historical trends for the expected material and labor costs to provide warranty services. Warranty periods are generally one to five years from the date of shipment. The following table reconciles changes in the Company’s accrued warranties and related costs for the nine months ended September 30, 2018 and 2017 (in thousands): Nine Months Ended September 30, 2018 2017 Beginning balance $ 931 $ 878 Charged to cost of revenue 1,022 126 Claims and settlements (598 ) (195 ) Foreign exchange impact 6 14 Ending balance $ 1,361 $ 823 Performance Bonds In the normal course of operations, from time to time, the Company arranges for the issuance of various types of surety bonds, such as bid and performance bonds, which are agreements under which the surety company guarantees that the Company will perform in accordance with contractual or legal obligations. As of September 30, 2018 , and 2017, the Company had $2.9 million and $1.0 million of surety bonds guaranteed by third parties, respectively. Purchase Commitments The Company has agreements with various contract manufacturers which include non-cancellable inventory purchase commitments. The Company’s inventory purchase commitments typically allow for cancellation of orders 30 days in advance of the required inventory availability date as set by the Company at time of order. The amount of non-cancellable purchase commitments outstanding, net of reserve, was $2.4 million as of September 30, 2018 . Payment Guarantees provided by Third Parties and DNI The following table sets forth payment guarantees of the Company's indebtedness and other obligations as of September 30, 2018 (in thousands) that have been provided by third parties and DNI. DNI owns approximately 57.3% of the outstanding shares of the Company's common stock: Guarantor Amount Guaranteed (in thousands) Description of Obligations Guaranteed DNI $ 3,451 Borrowings from Shinhan Bank DNI 1,726 Purchasing Card from Shinhan Bank DNI 10,730 LC from Industrial Bank of Korea DNI 2,157 Purchasing Card from Industrial Bank of Korea DNI 6,000 LC from NongHyup Bank DNI 6,170 Borrowings from Export-Import Bank of Korea DNI 6,000 LC from KookMin Bank DNI 5,392 Borrowings from Korea Development Bank DNI 8,400 LC from Korea Development Bank Industrial Bank of Korea 6,486 Borrowings and letter of credit NongHyup Bank 3,497 Borrowings and letter of credit Kookmin Bank 304 Letter of credit Korea Development Bank 894 Letter of credit Shinhan Bank 933 Purchasing Card Industrial Bank of Korea 4,075 Performance bonds State Bank of India 34 Performance bonds Seoul Guarantee Insurance Co. 4,232 Performance payment guarantee* $ 70,481 *The Company is responsible for the warranty liabilities generally for the period of two years on major product sales and has contracted surety insurance to cover part of the warranty liabilities. Royalties The Company has certain royalty commitments associated with the shipment and licensing of certain products. Royalty expense is generally based on a dollar amount per unit shipped or a percentage of the underlying revenue and is recorded in cost of revenue. Legal Proceedings The Company is subject to various legal proceedings, claims and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, the Company records an accrual for legal contingencies that it has determined to be probable to the extent the amount of the loss can be reasonably estimated. The Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its consolidated financial position or results of operations. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the results of operations of the period in which the ruling occurs, or future periods. |
Stock Option and Other Benefit
Stock Option and Other Benefit Plans | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Option and Other Benefit Plans | Stock Option and Other Benefit Plans 2018 Employee Stock Purchase Plan On May 22, 2018, the stockholders of the Company approved the adoption of the DASAN Zhone Solutions, Inc. 2018 Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective upon stockholder approval and replaced the Company’s existing DASAN Zhone Solutions, Inc. 2002 Employee Stock Purchase Plan. The ESPP authorizes the issuance of up to 250,000 shares of the Company’s common stock. In addition, the ESPP provides for an annual increase on the first day of each calendar year beginning on January 1, 2019 and ending on and including January 1, 2028 equal to the lesser of (i) 1% of the shares outstanding on the last day of the immediately preceding calendar year and (ii) such smaller number of shares as may be determined by the Board in its sole discretion. Notwithstanding the foregoing, the number of shares of stock that may be issued or transferred pursuant to awards under the ESPP may not exceed an aggregate of 2,000,000 shares. These 2,000,000 shares have been registered pursuant to a registration statement on Form S-8 filed with the SEC on November 8, 2018. |
Enterprise-Wide Information
Enterprise-Wide Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Enterprise-Wide Information | Enterprise-Wide Information The Company is a global provider of network access solutions and communications equipment for service provider and enterprise networks. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the Company unit level. Accordingly, the Company is considered to be in a single reporting segment and operating unit structure. The Company’s chief operating decision maker is the Company’s Chief Executive Officer, who reviews financial information presented on a consolidated basis accompanied by disaggregated information about revenues by geographic region for purposes of making operating decisions and assessing financial performance. The Company attributes revenue from customers to individual bill to countries. The following summarizes required disclosures about geographical concentrations and revenue by products and services (in thousands): Three Months Ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Revenue by geography: United States $ 11,125 $ 13,068 $ 41,373 $ 37,176 Canada 1,131 1,498 3,344 4,112 Total North America 12,256 14,566 44,717 41,288 Latin America 6,841 7,480 21,713 19,425 Europe, Middle East, Africa 10,425 7,378 27,264 19,134 Korea 19,609 20,520 50,844 69,032 Other Asia Pacific 22,783 16,494 63,137 29,612 Total International 59,658 51,872 162,958 137,203 Total $ 71,914 $ 66,438 $ 207,675 $ 178,491 Three Months Ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Revenue by classification: Products $ 68,787 $ 63,257 $ 198,830 $ 169,831 Services 3,127 3,181 8,845 8,660 Total $ 71,914 $ 66,438 $ 207,675 $ 178,491 The Company's property and equipment, net of accumulated depreciation, were located in the following geographical areas as of September 30, 2018 and December 31, 2017 (in thousands): As of September 30, 2018 As of December 31, 2017 United States $ 3,131 $ 3,393 Korea 1,441 1,633 Other Asia Pacific 802 847 $ 5,374 $ 5,873 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense for the three and nine months ended September 30, 2018 was $0.7 million and $1.1 million , respectively, on pre-tax income of $ 2.6 million and $4.4 million , respectively. For the t hree and nine months ended September 30, 2017 , income tax expense was $0.1 million and $0.6 million , respectively, on pre-tax income (loss) of $1.5 million and $(2.3) million , respectively. As of September 30, 2018 , the income tax rate varied from the United States statutory income tax rate primarily due to valuation allowances in the United States and taxable income generated by the Company’s wholly-owned foreign subsidiaries. The total amount of unrecognized tax benefits, including interest and penalties, at September 30, 2018 was $0.5 million . The amount of tax benefits that would impact the effective income tax rate, if recognized, is $0.1 million . There were no significant changes to unrecognized tax benefits during the quarters ended September 30, 2018 and 2017. The Company does not anticipate any significant changes with respect to unrecognized tax benefits within the next 12 months. The Company has recognized the provisional tax impacts related to the Tax Act in the Company’s consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. The Company has not yet determined its policy election with respect to whether to record deferred taxes for basis differences expected to reverse as a result of the global intangible low-taxed income (“GILTI”) provisions in future periods or use the period cost method. The Company has, however, included an estimate of the current GILTI impact in its tax provision for 2018. The Company continues to evaluate the impact of the tax reform and the accounting is expected to be completed before the end of the measurement period in the fourth quarter of 2018. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Keymile Acquisition / Share Purchase Agreement On October 5, 2018, ZTI Merger Subsidiary III, Inc., a Delaware corporation, and wholly owned subsidiary of the Company (the “Purchaser”) and Riverside KM Beteiligung GmbH, a limited liability company organized under the laws of Germany (the “Seller”) entered into a Share Purchase Agreement (the “Purchase Agreement”) whereby the Purchaser agreed to purchase from the Seller all shares in Keymile GmbH (“Keymile”), a limited liability company organized under the laws of Germany, and certain of its subsidiaries, for an aggregate cash purchase price of EUR 10.25 million ( $11.9 million ) (the “Keymile Acquisition”). The purchase price is to be paid at closing and is subject to customary regulatory approval and satisfaction of certain closing conditions. Certain liabilities including unfunded pension liabilities are to be assumed by the Purchaser. Keymile offers a series of multi-service access platforms for FTTx network architectures, including ultra-fast broadband copper access based on VDSL/Vectoring & G. Fast technology. The Company has pursued the acquisition to enable the strengthening of its global broadband access service market. The Company has $42,000 of outstanding receivables and $59,000 of sales to Keymile as of and for the nine months period ended September 30, 2018. Guarantee Agreement and Working Capital Facility In connection with the Keymile Acquisition and the Purchase Agreement, the Company has also entered into a guarantee agreement with the Seller, dated October 5, 2018, which guarantees the purchase price of EUR 10.25 million ( $11.9 million ) and guarantees a working capital facility of EUR 4.0 million ( $4.6 million ). Both the guarantee agreement and the working capital facility are to be provided at closing of the Keymile Acquisition, which is expected to be completed in the fourth quarter of 2018. The foregoing description of the Keymile Acquisition and the Purchase Agreement, which includes the Guarantee Agreement and Working Capital Facility as exhibits, is not complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which will be filed by the Company when the Keymile Acquisition closes on a Form 8-K. Wells Fargo Bank Facility On October 22, 2018, the Company borrowed $3.0 million under the Amended WFB Facility. On October 31, 2018, the Company repaid the $3.0 million in full. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Reclassifications | Reclassifications For the three months ended September 30, 2017, certain statement of comprehensive income (loss) items have been reclassified to correctly reflect research and product development expenses and selling, marketing, general and administrative expenses of $0.1 million and $0.2 million , respectively, which were previously incorrectly classified as cost of revenue-products and services. For the nine months ended September 30, 2017 certain prior period statement of comprehensive loss items have been reclassified to correctly reflect research and product development expenses and selling, marketing, general and administrative expenses of $0.4 million and $0.6 million , respectively, which were incorrectly classified as cost of revenue-products and services. |
Basis of Presentation | Basis of Presentation For a description of what the Company believes to be the critical accounting policies and estimates used in the preparation of the Company's unaudited condensed consolidated financial statements, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2017. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the Company does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the current interim period are not necessarily indicative of results to be expected for the current year or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission ("SEC"). |
Concentration of Risk | Concentration of Risk The Company’s customers include competitive and incumbent local exchange carriers, competitive access providers, internet service providers, wireless carriers and resellers serving these markets. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential doubtful accounts. For the three and nine months ended September 30, 2018 , one customer each accounted for 11% of net revenue, respectively. For the three months ended September 30, 2017 , two customers represented 10% and 9% (a related party) of net revenue, respectively. For the nine months ended September 30, 2017 , two customers each represented 9% of net revenue (one of which was a related party). As of September 30, 2018 , one customer represented 12% of net accounts receivable. As of December 31, 2017, two customers represented 20% (a related party) and 11% of net accounts receivable, respectively. As of September 30, 2018 and December 31, 2017, receivables from customers in countries other than the United States represented 89% and 84% , of net accounts receivable, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recent Accounting Pronouncements Adopted In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers” (“Topic 606”), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Topic 606 replaced most existing revenue recognition standards under U.S. GAAP, including ASC 605, Revenue Recognition ("Topic 605"). On January 1, 2018 , the Company adopted Topic 606 and applied this guidance to all open contracts at the date of adoption using the modified retrospective method. The Company recognized the cumulative effect of initially applying Topic 606 as an adjustment to the balance of accumulated deficit at January 1, 2018. The comparative information has not been restated and continues to be reported under Topic 605. The Company’s adoption of Topic 606 primarily impacted the following: • Topic 606 requires an allocation of revenue to performance obligations identified within an arrangement. Topic 605 restricted the allocation of revenue that is contingent on future deliverables to current deliverables, however, Topic 606 removes this restriction, to the extent that the future deliverables represent performance obligations that are distinct. Under Topic 606, the nature of the performance obligations identified within a contract impacts the allocation of the transaction price between deliverables. • Some of the Company’s contracts include customer acceptance terms, which provide protection to the customer by allowing it to either cancel a contract or force the Company to take corrective actions if products or services do not meet the requirements in the contract. Under Topic 606, customer acceptance that is considered a “formality”, would result in revenue recognized when control of the product or service is transferred to customer, which is typically upon shipment or delivery dependent upon the terms of the underlying contract. The following table summarizes the effects of Topic 606 on the Company’s unaudited condensed consolidated balance sheet at January 1, 2018 (in thousands): As of January 1, 2018 Balance after adoption of ASC 606 Adjustments Balance without adoption of ASC 606 Assets Accounts receivable, net $ 62,099 $ 344 (1) $ 61,755 Inventories 25,239 (105 ) (2) 25,344 Liabilities Contract liabilities - current 3,038 (241 ) (2) 3,279 Accrued and other liabilities 11,518 344 (1) 11,174 Contract liabilities - non-current 1,711 (172 ) (2) 1,883 Stockholders’ equity Accumulated deficit (18,544 ) 308 (18,852 ) (1) Allowance for sales returns was historically presented as a contra-asset within accounts receivable on the Company's consolidated balance sheets. Upon the adoption of Topic 606, the Company presents the allowance for sales returns in Accrued and other liabilities (current). (2) Represents the impact of allocation of transaction price to separate performance obligations in open contracts as of the adoption date on a relative standalone selling price basis and acceleration of revenue (and related costs) for contracts for which acceptance clauses are a formality. The following table summarizes the effects of Topic 606 on the Company’s unaudited condensed consolidated balance sheet as of September 30, 2018 (in thousands): As of September 30, 2018 As reported Adjustments Balance without adoption of ASC 606 Assets Accounts receivable, net $ 61,019 $ (5,356 ) (1) (3) $ 66,375 Inventories 45,457 62 (2) 45,395 Prepaid expenses and other current assets 12,256 5,984 (3) 6,272 Liabilities Contract liabilities - current 2,394 (75 ) (2) 2,469 Accrued and other liabilities 10,315 628 (1) 9,687 Contract liabilities - non-current 1,851 36 (2) 1,815 Stockholders’ equity Accumulated deficit (15,190 ) 101 (15,291 ) (1) Allowance for sales returns was historically presented as a contra-asset within accounts receivable on the Company's consolidated balance sheets. Upon the adoption of Topic 606, the Company presents the allowance for sales returns in Accrued and other liabilities (current). (2) Represents the impact of allocation of transaction price to separate performance obligations in open contracts as of September 30, 2018 on a relative standalone selling price basis and acceleration of revenue (and related costs) for contracts for which acceptance clauses are a formality. (3) Represents conditional rights to consideration as of September 30, 2018 . The following table summarizes the effects of Topic 606 on the Company’s unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2018 (in thousands): Three Months Ended September 30, 2018 As reported Adjustments Balance without adoption of ASC 606 Net revenue $ 71,914 $ 386 $ 71,528 Cost of revenue - products and services 48,483 5 48,478 Gross profit 23,431 381 23,050 Income tax expense (735 ) — (735 ) Net income 1,827 381 1,446 Nine Months Ended September 30, 2018 As reported Adjustments Balance without adoption of ASC 606 Net revenue $ 207,675 $ 39 $ 207,636 Cost of revenue - products and services 139,344 (62 ) 139,406 Gross profit 68,331 101 68,230 Income tax expense (1,071 ) — (1,071 ) Net income 3,323 101 3,222 There was no impact on net revenue from related parties as a result of Topic 606. Revenue Recognition Accounting Policy Revenue Recognition Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates revenue primarily from sales of products and services, including, extended warranty service and customer support. Revenue from product sales is recognized at a point in time when control of the goods is transferred to the customer, generally occurring upon shipment or delivery dependent upon the terms of the underlying contract. Revenue from services is generally recognized over time on a ratable basis over the contract term, using an output measure of progress, as the contracts usually provide the customer equal benefit throughout the contract period. The Company typically invoices customers for support contracts in advance, for periods ranging from one to five years. Revenue from all sales types is recognized at the transaction price, which is the amount the Company expects to be entitled to in exchange for transferring goods and/or providing services. Transaction price is calculated as selling price net of variable consideration. Sales to certain distributors are made under arrangements which provide the distributors with volume discounts, price adjustments, and other allowances under certain circumstances. These adjustments and allowances are accounted for as variable consideration. To estimate variable consideration, the Company analyzes historical data, channel inventory levels, current economic trends and changes in customer demand for the Company's products, among other factors. Historically, variable consideration has not been a significant component of the Company’s contracts with customers. As of September 30, 2018, the total estimate of variable consideration was not significant. Contracts with Multiple Performance Obligations Some of the Company's contracts with customers contain multiple promised goods or services. For these contracts, the Company accounts for the promises separately as individual performance obligations if they are distinct. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, including the degree of interrelation and interdependence between obligations and whether or not the good or service significantly modifies or transforms another good or service in the contract. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices for products are determined using either an adjusted market assessment or expected cost-plus margin . For customer support and extended warranty services, standalone selling price is primarily based on the prices charged to customers. Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations primarily consist of backlog, which are products and services for which customer purchase orders have been accepted and that are in the process of being delivered. Contract Balances Topic 606 distinguishes between contract assets and accounts receivable based on whether receipt of the consideration is conditional on something other than the passage of time. The Company records contract assets when it has a right to consideration and records accounts receivable when it has an “unconditional” right to consideration. Contract liabilities consist of cash payments received (or unconditional rights to receive cash) in advance of fulfilling performance obligations. The following table reflects the changes in contract balances for the nine months ended September 30, 2018 (in thousands): Item Balance Sheet Location September 30, January 1, $ change % change Contract assets Prepaid expenses and other current assets $ 5,984 $ — $ 5,984 — Contract liabilities - current Contract liabilities - current 2,394 3,038 (644 ) (21 )% Contract liabilities - non-current Contract liabilities - non-current 1,851 1,711 140 8 % During the nine months ended September 30, 2018, contract liabilities - non-current increased and contract liabilities - current decreased primarily as a result of changes in open contracts containing multiple performance obligations. As of September 30, 2018, contract assets increased as a result of the timing of certain events for the right to consideration to become unconditional. There were no significant changes in estimates during the nine months ended September 30, 2018 that would affect the contract assets and liabilities balances. During the three and nine months ended September 30, 2018 , $0.4 million and $2.7 million , respectively, was recognized as revenue from the opening contract liabilities balance. Warranties Products sold to customers include standard warranties, covering bug fixes, minor updates such that the product continues to function according to published technical specifications. These standard warranties are assurance type warranties and do not offer any services in addition to the assurance that the product will continue working as specified. Therefore, standard warranties are not considered separate performance obligations in the arrangement. Instead, the expected cost of warranty is accrued as expense in accordance with applicable guidance. Extended warranties are sold with certain products and include additional support services. The transaction price for extended warranties is accounted for as service revenue and recognized ratably over the life of the contract. Contract Costs Applying a practical expedient, the Company recognizes the incremental costs of obtaining contracts, which primarily consist of sales commissions, as an expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in sales and marketing expenses. If the incremental direct costs of obtaining a contract relate to a service recognized over a period longer than one year, such costs are capitalized and amortized in line with the related services over the period of benefit. As of September 30, 2018, such capitalizable costs were not significant. Financing The Company's contracts do not include a significant financing component. The Company applies the practical expedient not to adjust the promised amount of consideration for the effects of a financing component if the Company expects, at contract inception, that the period between when the Company transfers a good or service to the customer and when the customer pays for the good or service will be one year or less. Shipping and Handling The Company has elected to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost rather than as an additional promised service. As a result, the Company accrues the costs of shipping and handling when the related revenue is recognized . Unsatisfied performance obligations The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice for the services performed. The majority of the Company's performance obligations in its contracts with customers relate to contracts with duration of less than one year and therefore transaction price allocated to unsatisfied performance obligations included in contracts with duration of more than 12 months was not material. Disaggregation of Revenue The disaggregation of revenue by geographical regions for the three and nine months ended September 30, 2018 is disclosed in Note 12. In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments , which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated guidance became effective for the Company on January 1, 2018 and was adopted accordingly. The adoption of this standard did not have any effect on the Company's condensed consolidated statement of cash flows for the three and nine months ended September 30, 2018 or 2017. In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows, Restricted Cash , which requires that a statement of cash flows to explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents. The updated guidance became effective for the Company beginning on January 1, 2018 and was adopted accordingly, using the retrospective approach. As a result, the Company no longer presents transfers between cash and cash equivalents and restricted cash in the consolidated cash flow statements. The condensed consolidated statement of cash flows for the nine months ended September 30, 2017 was revised to exclude the $6.1 million change in restricted cash from net cash used in investing activities and to include $6.7 million in cash, cash equivalents and restricted cash, beginning of period and $13.1 million in cash, cash equivalents and restricted cash, end of period. Other Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases . ASU 2016-02 requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. The updated guidance is effective for the Company on January 1, 2019, and early adoption is permitted. The Company does not plan to early adopt this guidance. The Company expects its assets and liabilities to increase as a result of the adoption of this standard. In July 2018, the FASB issued ASU 2018-18-11, Leases (Topic 842): Targeted Improvements , ASU 2018-11 states that, separating components of a contract affect the amendments in Update 2016-02, which are not yet effective but can be early adopted. All entities, including early adopters that elect the practical expedient related to separating components of a contract in this Update 2016-02 must apply the expedient, by class of underlying asset, to all existing lease transactions that qualify for the expedient at the date elected. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. In January 2017, FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment , which simplifies the accounting for goodwill impairment. The updated guidance is effective for the Company on January 1, 2020, and will be adopted accordingly. Early adoption is permitted. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the "Tax Act"). Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act. Because the amendments only relate to the reclassification of the income rate tax effect of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018 and interim periods in those years. The Company does not expect the impact of the new standard to have a material impact on its consolidated financial statements. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 . The amendments add various Securities and Exchange Commission (“SEC) paragraphs pursuant to the issuance of SEC Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“Act”) (“SAB 118”). The SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Act in the period of enactment. SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Act are incomplete by the due date of the financial statements and if possible to provide a reasonable estimate. The Company has provided a reasonable estimate of the tax reform in the notes to the consolidated financial statements. On July 30, 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), to provide entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-0210 (codified as ASC 842). Specifically, under the amendments in ASU 2018-11, entities may elect not to recast the comparative periods presented when transitioning to ASC 842, and lessors may elect not to separate lease and nonlease components when certain conditions are met. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. On August 28, 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC 820. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of the Effects of Topic 606 | The following table summarizes the effects of Topic 606 on the Company’s unaudited condensed consolidated balance sheet at January 1, 2018 (in thousands): As of January 1, 2018 Balance after adoption of ASC 606 Adjustments Balance without adoption of ASC 606 Assets Accounts receivable, net $ 62,099 $ 344 (1) $ 61,755 Inventories 25,239 (105 ) (2) 25,344 Liabilities Contract liabilities - current 3,038 (241 ) (2) 3,279 Accrued and other liabilities 11,518 344 (1) 11,174 Contract liabilities - non-current 1,711 (172 ) (2) 1,883 Stockholders’ equity Accumulated deficit (18,544 ) 308 (18,852 ) (1) Allowance for sales returns was historically presented as a contra-asset within accounts receivable on the Company's consolidated balance sheets. Upon the adoption of Topic 606, the Company presents the allowance for sales returns in Accrued and other liabilities (current). (2) Represents the impact of allocation of transaction price to separate performance obligations in open contracts as of the adoption date on a relative standalone selling price basis and acceleration of revenue (and related costs) for contracts for which acceptance clauses are a formality. The following table summarizes the effects of Topic 606 on the Company’s unaudited condensed consolidated balance sheet as of September 30, 2018 (in thousands): As of September 30, 2018 As reported Adjustments Balance without adoption of ASC 606 Assets Accounts receivable, net $ 61,019 $ (5,356 ) (1) (3) $ 66,375 Inventories 45,457 62 (2) 45,395 Prepaid expenses and other current assets 12,256 5,984 (3) 6,272 Liabilities Contract liabilities - current 2,394 (75 ) (2) 2,469 Accrued and other liabilities 10,315 628 (1) 9,687 Contract liabilities - non-current 1,851 36 (2) 1,815 Stockholders’ equity Accumulated deficit (15,190 ) 101 (15,291 ) (1) Allowance for sales returns was historically presented as a contra-asset within accounts receivable on the Company's consolidated balance sheets. Upon the adoption of Topic 606, the Company presents the allowance for sales returns in Accrued and other liabilities (current). (2) Represents the impact of allocation of transaction price to separate performance obligations in open contracts as of September 30, 2018 on a relative standalone selling price basis and acceleration of revenue (and related costs) for contracts for which acceptance clauses are a formality. (3) Represents conditional rights to consideration as of September 30, 2018 . The following table summarizes the effects of Topic 606 on the Company’s unaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2018 (in thousands): Three Months Ended September 30, 2018 As reported Adjustments Balance without adoption of ASC 606 Net revenue $ 71,914 $ 386 $ 71,528 Cost of revenue - products and services 48,483 5 48,478 Gross profit 23,431 381 23,050 Income tax expense (735 ) — (735 ) Net income 1,827 381 1,446 Nine Months Ended September 30, 2018 As reported Adjustments Balance without adoption of ASC 606 Net revenue $ 207,675 $ 39 $ 207,636 Cost of revenue - products and services 139,344 (62 ) 139,406 Gross profit 68,331 101 68,230 Income tax expense (1,071 ) — (1,071 ) Net income 3,323 101 3,222 |
Change in Contract Balances | The following table reflects the changes in contract balances for the nine months ended September 30, 2018 (in thousands): Item Balance Sheet Location September 30, January 1, $ change % change Contract assets Prepaid expenses and other current assets $ 5,984 $ — $ 5,984 — Contract liabilities - current Contract liabilities - current 2,394 3,038 (644 ) (21 )% Contract liabilities - non-current Contract liabilities - non-current 1,851 1,711 140 8 % |
Cash, Cash Equivalents and Re_2
Cash, Cash Equivalents and Restricted Cash (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Cash and Cash Equivalents [Abstract] | |
Restrictions on Cash and Cash Equivalents | Reconciliation of cash, cash equivalents and restricted cash to statement of financial position as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, December 31, Cash and cash equivalents $ 20,028 $ 17,475 Restricted cash 7,825 12,425 Long-term restricted cash 847 1,512 Cash, cash equivalents and restricted cash $ 28,700 $ 31,412 |
Schedule of Cash and Cash Equivalents | Reconciliation of cash, cash equivalents and restricted cash to statement of financial position as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, December 31, Cash and cash equivalents $ 20,028 $ 17,475 Restricted cash 7,825 12,425 Long-term restricted cash 847 1,512 Cash, cash equivalents and restricted cash $ 28,700 $ 31,412 |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Accounts receivable, net | Accounts receivable - trade, net as of September 30, 2018 and December 31, 2017 was as follows (in thousands): September 30, December 31, Gross accounts receivable $ 61,324 $ 63,446 Allowance for doubtful accounts (305 ) (922 ) Allowance for sales returns — (1) (769 ) Total allowances (305 ) (1,691 ) Accounts receivable - trade, net $ 61,019 $ 61,755 (1) Upon adoption of ASC 606, allowances for sales returns were reclassified to accrued and other liabilities as these reserve balances are considered estimated refund liabilities. Refer to footnote 1(g) for additional information about the adoption impact. |
Inventories | Inventories as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, December 31, Raw materials $ 19,227 $ 12,671 Work in process 3,474 2,150 Finished goods 22,756 10,523 Total inventories $ 45,457 $ 25,344 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and equipment as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, December 31, Furniture and fixtures $ 22,495 $ 22,988 Machinery and equipment 5,577 5,455 Leasehold improvements 3,619 3,647 Computers and software 728 621 Others 1,034 1,007 33,453 33,718 Less: accumulated depreciation and amortization (27,872 ) (27,584 ) Less: government grants (207 ) (261 ) Property and equipment, net $ 5,374 $ 5,873 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill as of September 30, 2018 and December 31, 2017 was as follows (in thousands): September 30, December 31, Beginning balance $ 3,977 $ 3,977 Less: accumulated impairment — — Ending balance $ 3,977 $ 3,977 |
Schedule of Intangible Assets | Intangible assets as of September 30, 2018 and December 31, 2017 were as follows (in thousands): September 30, 2018 Gross Carrying Amount Accumulated Amortization Net Developed technology $ 3,060 $ (1,276 ) $ 1,784 Customer relationships 5,240 (1,091 ) 4,149 Backlog 2,179 (2,179 ) — Total intangible assets $ 10,479 $ (4,546 ) $ 5,933 December 31, 2017 Gross Carrying Amount Accumulated Amortization Net Developed technology $ 3,060 $ (816 ) $ 2,244 Customer relationships 5,240 (699 ) 4,541 Backlog 2,179 (2,179 ) — Total intangible assets $ 10,479 $ (3,694 ) $ 6,785 |
Debts (Tables)
Debts (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | As of September 30, 2018 and December 31, 2017, the Company had an aggregate outstanding balance of $28.2 million (included in short-term debts) and $22.8 million ( $19.8 million included in short-term debts), respectively, under such financing arrangements, and the interest rates per annum applicable to outstanding borrowings under these financing arrangements were as listed in the tables below (amount in thousands). As of September 30, 2018 Maturity Date Denomination Interest rate (%) Amount Industrial Bank of Korea Credit facility 10/2/2018 - 2/4/2019 USD 3.81~4.03 $ 4,229 Industrial Bank of Korea Credit facility 10/10/2018 - 11/12/2018 USD 3.81~3.84 1,834 Industrial Bank of Korea Trade finance 10/15/2018 USD 6.82 651 Shinhan Bank General loan 3/30/2019 KRW 6.06 2,876 NongHyup Bank Credit facility 11/19/2018 - 3/4/2019 USD 3.95~4.17 852 The Export-Import Bank of Korea Export development loan 12/29/2018 KRW 3.28 6,471 The Export-Import Bank of Korea Import development loan 11/14/2018 USD 4.02 850 Korea Development Bank General loan 8/8/2019 KRW 3.48 4,494 LGUPlus General loan 6/17/2019 KRW 0 1,797 JECC Factoring AR Factoring 10/26/2018 - 12/25/2018 JPY 1.58 3,236 Shoko Chukin Bank General loan 6/28/2019 JPY 1.33 881 $ 28,171 As of December 31, 2017 Maturity Date Denomination Interest rate (%) Amount Industrial Bank of Korea Credit facility 1/2/2018 - 5/2/2018 USD 2.89 - 3.26 $ 2,328 Industrial Bank of Korea Trade Finance 1/2/2018 - 5/23/2018 USD 4.47 - 5.97 2,401 Shinhan Bank General loan 3/30/2019 KRW 5.91 2,987 Shinhan Bank Trade finance 2/19/2018- 3/26/2018 KRW 3.90 - 4.14 3,050 NongHyup Bank (Korea) Credit facility 1/8/2018- 6/18/2018 USD 2.83 - 3.42 860 The Export-Import Bank of Korea Export development loan 2/13/2018 & 6/29/2018 KRW 3.20 - 3.28 7,570 Mitsubishi Bank (Japan) AR factoring 1/31/2018 - 5/31/2018 JPY 1.58 1,872 Shinhan Bank (India) General loan 4/24/2018 - 11/12/2018 INR 8.70 - 8.90 1,709 $ 22,777 |
Non-Controlling Interests (Tabl
Non-Controlling Interests (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Non-controlling interests | Non-controlling interests for the nine months ended September 30, 2018 and 2017 were as follows (in thousands): Nine Months Ended September 30, 2018 2017 Beginning non-controlling interests $ 534 $ 416 Net income (loss) attributable to non-controlling interests 2 172 Foreign currency translation adjustments (5 ) 19 Ending non-controlling interests $ 531 $ 607 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Sales and purchases, cost of revenue, research and product development, selling, marketing, general and administrative, interest expense and other expenses to and from related parties for the three and nine months ended September 30, 2018 and 2017 were as follows (in thousands): Three Months Ended September 30, 2018 Counterparty DNI ownership Interest Sales Cost of revenue Research and product development Selling, marketing, general and administrative Interest expense Other expenses DNI (Parent Company) N/A $ 1,472 $ 1,270 $ — $ 784 $ 112 $ 89 Tomato Soft Ltd. 100% — 27 — — — — Tomato Soft (Xi'an) Ltd. 100% — — 119 — — — Chasan Networks Co., Ltd. 100% — 260 21 — — — Handysoft, Inc. 17.63% 215 208 — 2 — — $ 1,687 $ 1,765 $ 140 $ 786 $ 112 $ 89 Three Months Ended September 30, 2017 Counterparty DNI ownership Interest Sales Cost of revenue Research and product development Selling, marketing, Other expenses DNI (Parent Company) N/A $ 3,976 $ 3,604 $ — $ 1,291 $ 51 Chasan Networks Co., Ltd. 100% — 257 20 — — Dasan France 100% 662 576 — 83 — Dasan India Private Limited 100% — — — 30 — D-Mobile 100% 1,233 1,077 — 122 — HandySoft, Inc. 17.64% 54 12 — 6 4 Tomato Soft Ltd. 100% — 43 108 — — Tomato Soft (Xi'an) Ltd. 100% — — 144 — — $ 5,925 $ 5,569 $ 272 $ 1,532 $ 55 Nine Months Ended September 30, 2018 Counterparty DNI ownership Interest Sales Cost of revenue Research and product development Selling, marketing, general and administrative Interest expense Other expenses DNI (Parent Company) N/A $ 3,683 $ 3,143 $ — $ 2,950 $ 338 $ 234 Tomato Soft Ltd. 100% — 84 — — — — Tomato Soft (Xi'an) Ltd. 100% — 10 396 — — — Chasan Networks Co., Ltd. 100% — 880 57 — — — Dasan France 100% 202 177 — — — — HandySoft, Inc. 17.63% 473 357 — 4 — — $ 4,358 $ 4,651 $ 453 $ 2,954 $ 338 $ 234 Nine Months Ended September 30, 2017 Counterparty DNI ownership Interest Sales Cost of revenue Research and product development Selling, marketing, Other expenses DNI (Parent Company) N/A $ 16,608 $ 14,020 $ — $ 3,491 $ 171 Chasan Networks Co., Ltd. 100% — 578 79 — — Dasan France 100% 1,612 1,512 — 383 — Dasan India Private Limited (1) 100% 6,287 4,783 — 30 — D-Mobile (1) 100% 3,054 1,831 — 318 — Fine Solution 100% — — — 4 — HandySoft, Inc. 17.64% 88 23 — 6 4 J-Mobile Corporation 90.47% 8 — — 132 — Tomato Soft Ltd. 100% 104 108 Tomato Soft (Xi'an) Ltd. 100% — — 448 37 — Solueta 27.21% — — — — 3 $ 27,657 $ 22,851 $ 635 $ 4,401 $ 178 (1) As discussed above, on December 31, 2017 DNS acquired DASAN India and D-Mobile from DNI. Balances of receivables and payables arising from sales and purchases of goods and services with related parties as of September 30, 2018 and December 31, 2017 were as follows (in thousands): As of September 30, 2018 Counterparty DNI ownership Interest Account receivables Other receivables Deposits for lease * Loans Payable Accounts payable Other Payables Accrued and other liabilities** DNI (parent company) N/A $ 1,679 $ 26 $ 738 $ 8,148 $ 1,000 $ 1,810 $ 157 Tomato Soft Ltd. 100% — — — — — 9 — Tomato Soft (Xi'an) Ltd. 100% — — — — — 40 — Dasan France 100% 285 65 — — — — — HandySoft, Inc. 17.63% 175 — — — 216 — — Chasan Networks Co., Ltd. 100% — — — — 86 — — $ 2,139 $ 91 $ 738 $ 8,148 $ 1,302 $ 1,859 $ 157 As of December 31, 2017 Counterparty DNI Ownership Interest Account receivables Other receivables Deposits for lease * Long-term debt Accounts payable Other Payables Accrued and other liabilities** DNI (parent company) N/A $ 12,576 $ 93 $ 786 $ 6,800 $ 1,264 $ 1,859 $ 59 Tomato Soft Ltd. 100% — — — — — 18 — Tomato Soft (Xi'an) Ltd. 100% — — — — — 54 — Dasan France 100% 870 71 — — — — — HandySoft, Inc. 17.63% 52 — — — — — — Chasan Networks Co., Ltd. 100% — — — — 87 — — Solueta 100% — — — — — 25 — $ 13,498 $ 164 $ 786 $ 6,800 $ 1,351 $ 1,956 $ 59 * Included in other assets in the condensed consolidated balance sheets as of September 30, 2018 and December 31, 2017. **Included in accrued and other liabilities in the condensed consolidated balance sheet as of September 30, 2018 and December 31, 2017. |
Net Income (Loss) Per Share A_2
Net Income (Loss) Per Share Attributable to DASAN Zhone Solutions, Inc. (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | The following table is a reconciliation of the numerator and denominator in the basic and diluted net income (loss) per share calculation (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net income (loss) attributable to DASAN Zhone Solutions, Inc. $ 1,798 $ 1,399 $ 3,321 $ (3,157 ) Weighted average number of shares outstanding: Basic 16,683 16,382 16,425 16,380 Effect of dilutive securities: Stock options, restricted stock units and share awards 208 — 215 — Diluted 16,891 16,382 16,640 16,380 Net income (loss) per share attributable to DASAN Zhone Solutions, Inc.: Basic $ 0.11 $ 0.09 $ 0.20 $ (0.19 ) Diluted $ 0.11 $ 0.09 $ 0.20 $ (0.19 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Estimated Future Lease Payments under All Non Cancelable Operating Leases | The Company has entered into operating leases for certain office space and equipment, some of which contain renewal options and escalation clauses. Estimated future lease payments under all non-cancellable operating leases with terms in excess of one year, including taxes and service fees, are as follows (in thousands): Operating Leases Year ending December 31: 2018 (remainder of the year) $ 1,053 2019 4,088 2020 2,998 2021 2,590 2022 2,664 Thereafter 8,423 Total minimum lease payments $ 21,816 |
Reconciliation of Changes in Accrued Warranties and Related Costs | The following table reconciles changes in the Company’s accrued warranties and related costs for the nine months ended September 30, 2018 and 2017 (in thousands): Nine Months Ended September 30, 2018 2017 Beginning balance $ 931 $ 878 Charged to cost of revenue 1,022 126 Claims and settlements (598 ) (195 ) Foreign exchange impact 6 14 Ending balance $ 1,361 $ 823 |
Payment Guarantees Provided by Third Parties | The following table sets forth payment guarantees of the Company's indebtedness and other obligations as of September 30, 2018 (in thousands) that have been provided by third parties and DNI. DNI owns approximately 57.3% of the outstanding shares of the Company's common stock: Guarantor Amount Guaranteed (in thousands) Description of Obligations Guaranteed DNI $ 3,451 Borrowings from Shinhan Bank DNI 1,726 Purchasing Card from Shinhan Bank DNI 10,730 LC from Industrial Bank of Korea DNI 2,157 Purchasing Card from Industrial Bank of Korea DNI 6,000 LC from NongHyup Bank DNI 6,170 Borrowings from Export-Import Bank of Korea DNI 6,000 LC from KookMin Bank DNI 5,392 Borrowings from Korea Development Bank DNI 8,400 LC from Korea Development Bank Industrial Bank of Korea 6,486 Borrowings and letter of credit NongHyup Bank 3,497 Borrowings and letter of credit Kookmin Bank 304 Letter of credit Korea Development Bank 894 Letter of credit Shinhan Bank 933 Purchasing Card Industrial Bank of Korea 4,075 Performance bonds State Bank of India 34 Performance bonds Seoul Guarantee Insurance Co. 4,232 Performance payment guarantee* $ 70,481 *The Company is responsible for the warranty liabilities generally for the period of two years on major product sales and has contracted surety insurance to cover part of the warranty liabilities. |
Enterprise-Wide Information (Ta
Enterprise-Wide Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Revenue by Geography | The following summarizes required disclosures about geographical concentrations and revenue by products and services (in thousands): Three Months Ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Revenue by geography: United States $ 11,125 $ 13,068 $ 41,373 $ 37,176 Canada 1,131 1,498 3,344 4,112 Total North America 12,256 14,566 44,717 41,288 Latin America 6,841 7,480 21,713 19,425 Europe, Middle East, Africa 10,425 7,378 27,264 19,134 Korea 19,609 20,520 50,844 69,032 Other Asia Pacific 22,783 16,494 63,137 29,612 Total International 59,658 51,872 162,958 137,203 Total $ 71,914 $ 66,438 $ 207,675 $ 178,491 |
Revenue by Products and Services | Three Months Ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Revenue by classification: Products $ 68,787 $ 63,257 $ 198,830 $ 169,831 Services 3,127 3,181 8,845 8,660 Total $ 71,914 $ 66,438 $ 207,675 $ 178,491 |
Revenue by Geographical Area | The Company's property and equipment, net of accumulated depreciation, were located in the following geographical areas as of September 30, 2018 and December 31, 2017 (in thousands): As of September 30, 2018 As of December 31, 2017 United States $ 3,131 $ 3,393 Korea 1,441 1,633 Other Asia Pacific 802 847 $ 5,374 $ 5,873 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands | Oct. 31, 2018USD ($) | Oct. 22, 2018USD ($) | Oct. 01, 2018USD ($) | Feb. 28, 2017 | Sep. 30, 2018USD ($)countrycustomershares | Sep. 30, 2017USD ($)customer | Sep. 30, 2018USD ($)countrycustomershares | Sep. 30, 2017USD ($)customer | Dec. 31, 2017USD ($)customershares | Jan. 01, 2018USD ($) | Feb. 27, 2017shares |
Significant Accounting Policies [Line Items] | |||||||||||
Number of customers | customer | 1,000 | 1,000 | |||||||||
Number of countries in which entity operates | country | 50 | 50 | |||||||||
Net income | $ 1,827 | $ 1,387 | $ 3,323 | $ (2,985) | $ 1,200 | ||||||
Accumulated deficit | 15,190 | 15,190 | 18,852 | $ 18,544 | |||||||
Working capital | 66,900 | 66,900 | |||||||||
Net cash used in operating activities | (15,714) | (623) | |||||||||
Cash and cash equivalents | 20,028 | $ 10,145 | 20,028 | 10,145 | $ 17,475 | ||||||
Debt | 42,300 | 42,300 | |||||||||
Debt, current | 37,300 | 37,300 | |||||||||
Credit facility, remaining borrowing capacity | $ 21,300 | 21,300 | |||||||||
Repayments of borrowings | $ 48,739 | $ 15,627 | |||||||||
Common stock, authorized (in shares) | shares | 36,000,000 | 36,000,000 | 36,000,000 | 180,000,000 | |||||||
Common stock, issued (in shares) | shares | 16,400,000 | 81,900,000 | |||||||||
Stock split, conversion ratio | 0.2 | ||||||||||
Contract liability, revenue recognized | $ 400 | $ 2,700 | |||||||||
Net Revenue | One major customer | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Number of customers | customer | 1 | 1 | 2 | ||||||||
Net Revenue | Two major customers | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Number of customers | customer | 2 | ||||||||||
Net Revenue | Customer concentration risk | One major customer | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Concentration risk, percentage | 11.00% | 11.00% | 9.00% | ||||||||
Net Revenue | Customer concentration risk | Two major customers, customer one | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Concentration risk, percentage | 10.00% | ||||||||||
Net Revenue | Customer concentration risk | Two major customers, customer two | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Concentration risk, percentage | 9.00% | ||||||||||
Accounts receivable | Two major customers | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Number of customers | customer | 1 | 2 | |||||||||
Accounts receivable | Customer concentration risk | Two major customers, customer one | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Concentration risk, percentage | 12.00% | 20.00% | |||||||||
Accounts receivable | Customer concentration risk | Two major customers, customer two | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Concentration risk, percentage | 11.00% | ||||||||||
Accounts receivable | Geographic concentration risk | Other than the United States | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Concentration risk, percentage | 89.00% | 84.00% | |||||||||
Wells Fargo DZS and DNS Facilities | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Credit facility, outstanding | $ 12,900 | $ 12,900 | |||||||||
WFB Facility | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Credit facility, remaining borrowing capacity | $ 6,500 | $ 6,500 | |||||||||
Merger Agreement with Dragon Acquisition Company | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Percent of voting interest acquired | 57.30% | 57.30% | |||||||||
Dasan Network Solutions, Inc. | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Cash and cash equivalents | $ 6,000 | $ 6,000 | |||||||||
Revolving Credit Facility | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Credit facility, remaining borrowing capacity | $ 6,400 | 6,400 | |||||||||
Research and product development expense | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Error correction, amount | $ 100 | $ 400 | |||||||||
Selling, general and administrative expenses | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Error correction, amount | $ 200 | 600 | |||||||||
Accounting Standards Update 2016-18 | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Cash, cash equivalents and restricted cash, increase (decrease) | $ 13,100 | $ (6,100) | $ 6,700 | ||||||||
Subsequent Event | WFB Facility | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Repayments of borrowings | $ 3,000 | $ 6,000 | |||||||||
Amount borrowed | $ 3,000 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Topic 606 Adoption (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Jan. 01, 2018 | |
Consolidated Balance Balance Sheet | ||||||
Accounts receivable, net | $ 61,019 | $ 61,019 | $ 61,755 | $ 62,099 | ||
Inventories | 45,457 | 45,457 | 25,344 | 25,239 | ||
Prepaid expenses and other current assets | 12,256 | 12,256 | 3,652 | |||
Contract liabilities - current | 2,394 | 2,394 | 3,279 | 3,038 | ||
Accrued and other liabilities | 10,315 | 10,315 | 11,174 | 11,518 | ||
Contract liabilities - non-current | 1,851 | 1,851 | 1,883 | 1,711 | ||
Accumulated deficit | (15,190) | (15,190) | (18,852) | (18,544) | ||
Consolidated Statement of Operations | ||||||
Net revenue | 71,914 | $ 66,438 | 207,675 | $ 178,491 | ||
Cost of revenue - products and services | 48,483 | 44,023 | 139,344 | 118,413 | ||
Gross profit | 23,431 | 22,415 | 68,331 | 60,078 | ||
Income tax expense | (735) | (107) | (1,071) | (646) | ||
Net income (loss) | 1,827 | $ 1,387 | 3,323 | $ (2,985) | 1,200 | |
Difference between revenue guidance in effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||||
Consolidated Balance Balance Sheet | ||||||
Accounts receivable, net | (5,356) | (5,356) | 344 | |||
Inventories | 62 | 62 | (105) | |||
Prepaid expenses and other current assets | 5,984 | 5,984 | ||||
Contract liabilities - current | (75) | (75) | (241) | |||
Accrued and other liabilities | 628 | 628 | 344 | |||
Contract liabilities - non-current | 36 | 36 | (172) | |||
Accumulated deficit | 101 | 101 | $ 308 | |||
Consolidated Statement of Operations | ||||||
Net revenue | 386 | 39 | ||||
Cost of revenue - products and services | 5 | (62) | ||||
Gross profit | 381 | 101 | ||||
Income tax expense | 0 | 0 | ||||
Net income (loss) | 381 | 101 | ||||
Calculated under revenue guidance in effect before Topic 606 | ||||||
Consolidated Balance Balance Sheet | ||||||
Accounts receivable, net | 66,375 | 66,375 | 61,755 | |||
Inventories | 45,395 | 45,395 | 25,344 | |||
Prepaid expenses and other current assets | 6,272 | 6,272 | ||||
Contract liabilities - current | 2,469 | 2,469 | 3,279 | |||
Accrued and other liabilities | 9,687 | 9,687 | 11,174 | |||
Contract liabilities - non-current | 1,815 | 1,815 | 1,883 | |||
Accumulated deficit | (15,291) | (15,291) | $ (18,852) | |||
Consolidated Statement of Operations | ||||||
Net revenue | 71,528 | 207,636 | ||||
Cost of revenue - products and services | 48,478 | 139,406 | ||||
Gross profit | 23,050 | 68,230 | ||||
Income tax expense | (735) | (1,071) | ||||
Net income (loss) | $ 1,446 | $ 3,222 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Change in Contract with Customer, Asset [Roll Forward] | |||
Contract assets | $ 5,984 | $ 0 | |
Contract assets, change | $ 5,984 | ||
Contract assets, percent change | 0.00% | ||
Change in Contract with Customer, Liability [Roll Forward] | |||
Contract liabilities - current | $ 2,394 | 3,038 | $ 3,279 |
Contract liabilities - current, change | $ (644) | ||
Contract liabilities - current, percent change | (21.00%) | ||
Contract liabilities - non-current | $ 1,851 | $ 1,711 | $ 1,883 |
Contract liabilities - non-current, change | $ 140 | ||
Contract liabilities - non-current, percent change | 8.00% |
Cash, Cash Equivalents and Re_3
Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Cash and Cash Equivalents [Abstract] | ||
Restricted cash | $ 8.7 | $ 13.9 |
Cash, Cash Equivalents and Re_4
Cash, Cash Equivalents and Restricted Cash - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Cash and Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 20,028 | $ 17,475 | $ 10,145 | |
Restricted cash | 7,825 | 12,425 | 13,058 | |
Long-term restricted cash | 847 | 1,512 | 0 | |
Cash, cash equivalents and restricted cash | $ 28,700 | $ 31,412 | $ 23,203 | $ 24,543 |
Balance Sheet Detail - Accounts
Balance Sheet Detail - Accounts Receivable - Trade (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Accounts Receivable Additional Disclosures [Abstract] | |||
Gross accounts receivable | $ 61,324 | $ 63,446 | |
Allowance for doubtful accounts | (305) | (922) | |
Allowance for sales returns | 0 | (769) | |
Total allowances | (305) | (1,691) | |
Accounts receivable - trade, net | $ 61,019 | $ 62,099 | $ 61,755 |
Balance Sheet Detail - Inventor
Balance Sheet Detail - Inventories (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | |||
Raw materials | $ 19,227 | $ 12,671 | |
Work in process | 3,474 | 2,150 | |
Finished goods | 22,756 | 10,523 | |
Inventories | 45,457 | $ 25,239 | 25,344 |
Collateral pledged | |||
Inventory [Line Items] | |||
Inventories | $ 9,500 | $ 11,400 |
Property and Equipment (Detail)
Property and Equipment (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 33,453 | $ 33,718 |
Less: accumulated depreciation and amortization | (27,872) | (27,584) |
Less: government grants | (207) | (261) |
Property and equipment, net | 5,374 | 5,873 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 22,495 | 22,988 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,577 | 5,455 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,619 | 3,647 |
Computers and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 728 | 621 |
Others | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,034 | $ 1,007 |
Property and Equipment - Addit
Property and Equipment - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Property, Plant and Equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation and amortization associated with property and equipment | $ 0.4 | $ 0.5 | $ 1.2 | $ 1.4 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Goodwill [Roll Forward] | |||||
Beginning balance, Goodwill | $ 3,977,000 | $ 3,977,000 | |||
Less: accumulated impairment | $ 0 | 0 | $ 0 | ||
Ending balance, Goodwill | 3,977,000 | 3,977,000 | |||
Goodwill, impairment loss | 0 | 0 | |||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, gross | 10,479,000 | 10,479,000 | 10,479,000 | ||
Accumulated Amortization | (4,546,000) | (4,546,000) | (3,694,000) | ||
Intangible assets, net | 5,933,000 | 5,933,000 | 6,785,000 | ||
Amortization of intangible assets | 300,000 | $ 300,000 | 900,000 | $ 1,700,000 | |
Developed Technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, gross | 3,060,000 | 3,060,000 | 3,060,000 | ||
Accumulated Amortization | (1,276,000) | (1,276,000) | (816,000) | ||
Intangible assets, net | 1,784,000 | 1,784,000 | 2,244,000 | ||
Customer relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, gross | 5,240,000 | 5,240,000 | 5,240,000 | ||
Accumulated Amortization | (1,091,000) | (1,091,000) | (699,000) | ||
Intangible assets, net | 4,149,000 | 4,149,000 | 4,541,000 | ||
Backlog | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, gross | 2,179,000 | 2,179,000 | 2,179,000 | ||
Accumulated Amortization | (2,179,000) | (2,179,000) | (2,179,000) | ||
Intangible assets, net | $ 0 | $ 0 | $ 0 |
Debts - Additional Information
Debts - Additional Information (Detail) - USD ($) $ in Thousands | Oct. 31, 2018 | Oct. 22, 2018 | Oct. 01, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Jul. 12, 2018 | Dec. 31, 2017 |
Line of Credit Facility [Line Items] | |||||||
Letters of credit outstanding | $ 6,900 | ||||||
Repayments of borrowings | 48,739 | $ 15,627 | |||||
Credit facility, remaining borrowing capacity | 21,300 | ||||||
Debt | 28,171 | $ 22,777 | |||||
Short-term debt | $ 19,800 | ||||||
WFB Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Letters of credit outstanding | 2,100 | ||||||
Credit facility, remaining borrowing capacity | $ 6,500 | ||||||
Credit facility, interest rate | 4.40% | ||||||
LGUPlus, General Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt | $ 1,797 | ||||||
Revolving Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility, remaining borrowing capacity | 6,400 | ||||||
Revolving Credit Facility | A&R Domestic Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility, maximum borrowing capacity | $ 25,000 | ||||||
Letter of Credit | A&R Domestic Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility, maximum borrowing capacity | $ 5,000 | ||||||
Letter of Credit | Letter of Credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Letters of credit outstanding | 4,300 | ||||||
Foreign Line of Credit | Foreign Line of Credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Letters of credit outstanding | $ 25,900 | ||||||
Subsequent Event | WFB Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Amount borrowed | $ 3,000 | ||||||
Repayments of borrowings | $ 3,000 | $ 6,000 |
Debts - Schedule of Short-Term
Debts - Schedule of Short-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | ||
Debt | $ 28,171 | $ 22,777 |
Letter of credit from Industrial Bank of Korea, maturing February 2019 | ||
Short-term Debt [Line Items] | ||
Debt | 4,229 | |
Letter of credit from Industrial Bank of Korea, maturing November 2018 | ||
Short-term Debt [Line Items] | ||
Debt | $ 1,834 | |
Industrial Bank of Korean, Trade Finance | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 6.82% | |
Debt | $ 651 | $ 2,401 |
Borrowings from Shinhan Bank | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 6.06% | 5.91% |
Debt | $ 2,876 | $ 2,987 |
Nonghyup Bank, Credit Facility | ||
Short-term Debt [Line Items] | ||
Debt | $ 852 | 860 |
The Export-Import Bank of Korea, Export Development Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.28% | |
Debt | $ 6,471 | 7,570 |
The Export-Import Bank of Korea, Import Development Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 4.02% | |
Debt | $ 850 | |
Korea Development Bank, General Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.48% | |
Debt | $ 4,494 | |
LGUPlus, General Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 0.00% | |
Debt | $ 1,797 | |
JECC Factoring, AR Factoring | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 1.58% | |
Debt | $ 3,236 | |
Shoko Chukin Bank, General Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 1.33% | |
Debt | $ 881 | |
Letter of credit from Industrial Bank of Korea, maturing May 2018 | ||
Short-term Debt [Line Items] | ||
Debt | 2,328 | |
Shinhan Bank, Trade Finance | ||
Short-term Debt [Line Items] | ||
Debt | $ 3,050 | |
Mitsubishi Bank, SoftBank AR Factoring | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 1.58% | 1.58% |
Debt | $ 1,872 | |
Shinhan Bank (India), General Loan | ||
Short-term Debt [Line Items] | ||
Debt | $ 1,709 | |
Minimum | Letter of credit from Industrial Bank of Korea, maturing February 2019 | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.81% | |
Minimum | Letter of credit from Industrial Bank of Korea, maturing November 2018 | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.81% | |
Minimum | Industrial Bank of Korean, Trade Finance | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 4.47% | |
Minimum | Nonghyup Bank, Credit Facility | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.95% | 2.83% |
Minimum | The Export-Import Bank of Korea, Export Development Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.20% | |
Minimum | Letter of credit from Industrial Bank of Korea, maturing May 2018 | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 2.89% | |
Minimum | Shinhan Bank, Trade Finance | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.90% | |
Minimum | Shinhan Bank (India), General Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 8.70% | |
Maximum | Letter of credit from Industrial Bank of Korea, maturing February 2019 | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 4.03% | |
Maximum | Letter of credit from Industrial Bank of Korea, maturing November 2018 | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.48% | |
Maximum | Industrial Bank of Korean, Trade Finance | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 5.97% | |
Maximum | Nonghyup Bank, Credit Facility | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 4.17% | 3.42% |
Maximum | The Export-Import Bank of Korea, Export Development Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.28% | |
Maximum | Letter of credit from Industrial Bank of Korea, maturing May 2018 | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.26% | |
Maximum | Shinhan Bank, Trade Finance | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 4.14% | |
Maximum | Shinhan Bank (India), General Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 8.90% |
Non-Controlling Interests (Deta
Non-Controlling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
Beginning balance, non-controlling interest | $ 534 | $ 416 | ||
Net income (loss) attributable to non-controlling interests | $ 29 | $ (12) | 2 | 172 |
Foreign currency translation adjustments | (5) | 19 | ||
Ending balance, non-controlling interest | $ 531 | $ 607 | $ 531 | $ 607 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Thousands | Aug. 08, 2018 | Mar. 21, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Sep. 09, 2016 |
Related Party Transaction [Line Items] | ||||||||
Repayments of borrowings | $ 48,739 | $ 15,627 | ||||||
Long-term debt | $ 42,300 | 42,300 | ||||||
Research and product development | $ 8,655 | $ 8,939 | $ 26,346 | $ 27,462 | ||||
Receivables And Payables With Related Parties | ||||||||
Related Party Transaction [Line Items] | ||||||||
Long-term debt | $ 6,800 | |||||||
D-Mobile | ||||||||
Related Party Transaction [Line Items] | ||||||||
Percent of voting interest acquired | 100.00% | |||||||
DASAN INDIA Private Limited | ||||||||
Related Party Transaction [Line Items] | ||||||||
Percent of voting interest acquired | 99.99% | |||||||
D-Mobile and DASAN India | ||||||||
Related Party Transaction [Line Items] | ||||||||
Purchase consideration | $ 800 | |||||||
DASAN | Loan Agreement | DNS US | ||||||||
Related Party Transaction [Line Items] | ||||||||
Stated interest rate | 4.60% | 4.60% | ||||||
Origination of notes receivable from related parties | $ 5,800 | |||||||
Repayments of borrowings | $ 4,500 | |||||||
Long-term debt | $ 1,300 | $ 1,300 | ||||||
DASAN | Majority Shareholder | ||||||||
Related Party Transaction [Line Items] | ||||||||
Guarantee fee, percent | 0.90% | |||||||
DASAN | Majority Shareholder | Receivables And Payables With Related Parties | ||||||||
Related Party Transaction [Line Items] | ||||||||
Long-term debt | 6,800 | |||||||
CHASAN Networks Co., Ltd. | Affiliated Entity | Receivables And Payables With Related Parties | ||||||||
Related Party Transaction [Line Items] | ||||||||
Long-term debt | 0 | |||||||
Tomato Soft (Xi'an) Ltd. | ||||||||
Related Party Transaction [Line Items] | ||||||||
Research and product development | $ 800 | |||||||
Tomato Soft (Xi'an) Ltd. | Affiliated Entity | Receivables And Payables With Related Parties | ||||||||
Related Party Transaction [Line Items] | ||||||||
Long-term debt | $ 0 | |||||||
Junior lien | DASAN | Majority Shareholder | Loan Agreement | DNS US | ||||||||
Related Party Transaction [Line Items] | ||||||||
Origination of notes receivable from related parties | $ 1,800 | |||||||
Junior lien | CHASAN Networks Co., Ltd. | Affiliated Entity | Loan Agreement | DNS US | ||||||||
Related Party Transaction [Line Items] | ||||||||
Manufacturing and development fee, percent | 7.00% | 7.00% | ||||||
Unsecured debt | Junior lien | DASAN | Term Loan | Majority Shareholder | Loan Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Maximum borrowing amount | $ 5,000 | $ 5,000 | ||||||
Stated interest rate | 4.60% | 4.60% | 4.60% |
Related-Party Transactions - Sa
Related-Party Transactions - Sales and Purchases to and from Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Related Party Transaction [Line Items] | ||||
Sales | $ 1,687 | $ 5,925 | $ 4,358 | $ 27,657 |
Cost of revenue | 1,765 | 5,569 | 4,651 | 22,851 |
Interest expense | 112 | 338 | ||
Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Sales | 1,687 | 5,925 | 4,358 | 27,657 |
Cost of revenue | 1,765 | 5,569 | 4,651 | 22,851 |
Research and product development | 140 | 272 | 453 | 635 |
Selling, marketing, general and administrative | 786 | 1,532 | 2,954 | 4,401 |
Other expenses | 89 | 55 | 234 | 178 |
DASAN | Majority Shareholder | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Sales | 1,472 | 3,976 | 3,683 | 16,608 |
Cost of revenue | 1,270 | 3,604 | 3,143 | 14,020 |
Research and product development | 0 | 0 | 0 | 0 |
Selling, marketing, general and administrative | 784 | 1,291 | 2,950 | 3,491 |
Interest expense | 112 | 338 | ||
Other expenses | $ 89 | $ 51 | $ 234 | $ 171 |
Tomato Soft Ltd. | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 100.00% | 100.00% | 100.00% | 100.00% |
Sales | $ 0 | $ 0 | $ 0 | |
Cost of revenue | 27 | 43 | 84 | 104 |
Research and product development | 0 | 108 | 0 | 108 |
Selling, marketing, general and administrative | 0 | 0 | 0 | |
Interest expense | 0 | 0 | ||
Other expenses | $ 0 | $ 0 | $ 0 | |
Tomato Soft (Xi'an) Ltd. | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 100.00% | 100.00% | 100.00% | 100.00% |
Sales | $ 0 | $ 0 | $ 0 | $ 0 |
Cost of revenue | 0 | 0 | 10 | 0 |
Research and product development | 119 | 144 | 396 | 448 |
Selling, marketing, general and administrative | 0 | 0 | 0 | 37 |
Interest expense | 0 | 0 | ||
Other expenses | $ 0 | $ 0 | $ 0 | $ 0 |
CHASAN Networks Co., Ltd. | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 100.00% | 100.00% | 100.00% | 100.00% |
Sales | $ 0 | $ 0 | $ 0 | $ 0 |
Cost of revenue | 260 | 257 | 880 | 578 |
Research and product development | 21 | 20 | 57 | 79 |
Selling, marketing, general and administrative | 0 | 0 | 0 | 0 |
Interest expense | 0 | 0 | ||
Other expenses | $ 0 | $ 0 | $ 0 | $ 0 |
DASAN FRANCE | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 100.00% | 100.00% | 100.00% | 100.00% |
Sales | $ 662 | $ 202 | $ 1,612 | |
Cost of revenue | 576 | 177 | 1,512 | |
Research and product development | 0 | 0 | 0 | |
Selling, marketing, general and administrative | 83 | 0 | 383 | |
Interest expense | 0 | |||
Other expenses | $ 0 | $ 0 | $ 0 | |
HANDYSOFT, Inc. | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 17.63% | 17.64% | 17.63% | 17.64% |
Sales | $ 215 | $ 54 | $ 473 | $ 88 |
Cost of revenue | 208 | 12 | 357 | 23 |
Research and product development | 0 | 0 | 0 | 0 |
Selling, marketing, general and administrative | 2 | 6 | 4 | 6 |
Interest expense | 0 | 0 | ||
Other expenses | $ 0 | $ 4 | $ 0 | $ 4 |
DASAN INDIA Private Limited | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 100.00% | 100.00% | ||
Sales | $ 0 | $ 6,287 | ||
Cost of revenue | 0 | 4,783 | ||
Research and product development | 0 | 0 | ||
Selling, marketing, general and administrative | 30 | 30 | ||
Other expenses | $ 0 | $ 0 | ||
D-Mobile | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 100.00% | 100.00% | ||
Sales | $ 1,233 | $ 3,054 | ||
Cost of revenue | 1,077 | 1,831 | ||
Research and product development | 0 | 0 | ||
Selling, marketing, general and administrative | 122 | 318 | ||
Other expenses | $ 0 | $ 0 | ||
Fine Solution | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 100.00% | 100.00% | ||
Sales | $ 0 | |||
Cost of revenue | 0 | |||
Research and product development | 0 | |||
Selling, marketing, general and administrative | 4 | |||
Other expenses | $ 0 | |||
J-Mobile Corporation | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 90.47% | 90.47% | ||
Sales | $ 8 | |||
Cost of revenue | 0 | |||
Research and product development | 0 | |||
Selling, marketing, general and administrative | 132 | |||
Other expenses | $ 0 | |||
Solueta | Affiliated Entity | Sales And Purchases To And From Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Ownership interest | 27.21% | 27.21% | ||
Sales | $ 0 | |||
Cost of revenue | 0 | |||
Research and product development | 0 | |||
Selling, marketing, general and administrative | 0 | |||
Other expenses | $ 3 |
Related-Party Transactions - Ba
Related-Party Transactions - Balances of Receivables and Payables with Related Parties (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Related Party Transaction [Line Items] | ||
Long-term debt | $ 42,300 | |
Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Account receivables | 2,139 | $ 13,498 |
Other receivables | 91 | 164 |
Deposits for lease | 738 | 786 |
Loans Payable | 8,148 | |
Long-term debt | 6,800 | |
Accounts payable | 1,302 | 1,351 |
Other Payables | 1,859 | 1,956 |
Accrued and other liabilities | 157 | 59 |
DASAN | Majority Shareholder | Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Account receivables | 1,679 | 12,576 |
Other receivables | 26 | 93 |
Deposits for lease | 738 | 786 |
Loans Payable | 8,148 | |
Long-term debt | 6,800 | |
Accounts payable | 1,000 | 1,264 |
Other Payables | 1,810 | 1,859 |
Accrued and other liabilities | $ 157 | $ 59 |
Tomato Soft Ltd. | Affiliated Entity | Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Ownership interest | 100.00% | 100.00% |
Account receivables | $ 0 | $ 0 |
Other receivables | 0 | 0 |
Deposits for lease | 0 | 0 |
Loans Payable | 0 | |
Long-term debt | 0 | |
Accounts payable | 0 | 0 |
Other Payables | $ 9 | 18 |
Accrued and other liabilities | $ 0 | |
Tomato Soft (Xi'an) Ltd. | Affiliated Entity | Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Ownership interest | 100.00% | 100.00% |
Account receivables | $ 0 | $ 0 |
Other receivables | 0 | 0 |
Deposits for lease | 0 | 0 |
Loans Payable | 0 | |
Long-term debt | 0 | |
Accounts payable | 0 | 0 |
Other Payables | $ 40 | 54 |
Accrued and other liabilities | $ 0 | |
DASAN FRANCE | Affiliated Entity | Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Ownership interest | 100.00% | 100.00% |
Account receivables | $ 285 | $ 870 |
Other receivables | 65 | 71 |
Deposits for lease | 0 | 0 |
Loans Payable | 0 | |
Long-term debt | 0 | |
Accounts payable | 0 | 0 |
Other Payables | $ 0 | 0 |
Accrued and other liabilities | $ 0 | |
HANDYSOFT, Inc. | Affiliated Entity | Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Ownership interest | 17.63% | 17.63% |
Account receivables | $ 175 | $ 52 |
Other receivables | 0 | 0 |
Deposits for lease | 0 | 0 |
Loans Payable | 0 | |
Long-term debt | 0 | |
Accounts payable | 216 | 0 |
Other Payables | $ 0 | 0 |
Accrued and other liabilities | $ 0 | |
CHASAN Networks Co., Ltd. | Affiliated Entity | Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Ownership interest | 100.00% | 100.00% |
Account receivables | $ 0 | $ 0 |
Other receivables | 0 | 0 |
Deposits for lease | 0 | 0 |
Loans Payable | 0 | |
Long-term debt | 0 | |
Accounts payable | 86 | 87 |
Other Payables | $ 0 | 0 |
Accrued and other liabilities | $ 0 | |
Solueta | Affiliated Entity | Receivables And Payables With Related Parties | ||
Related Party Transaction [Line Items] | ||
Ownership interest | 100.00% | |
Account receivables | $ 0 | |
Other receivables | 0 | |
Deposits for lease | 0 | |
Long-term debt | 0 | |
Accounts payable | 0 | |
Other Payables | 25 | |
Accrued and other liabilities | $ 0 |
Net Income (Loss) Per Share A_3
Net Income (Loss) Per Share Attributable to DASAN Zhone Solutions, Inc. - Reconciliation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to DASAN Zhone Solutions, Inc. | $ 1,798 | $ 1,399 | $ 3,321 | $ (3,157) |
Basic, weighted average number of shares outstanding (in shares) | 16,683 | 16,382 | 16,425 | 16,380 |
Dilutive effect of stock options and share awards (in shares) | 208 | 0 | 215 | 0 |
Diluted (in shares) | 16,891 | 16,382 | 16,640 | 16,380 |
Basic (in dollars per share) | $ 0.11 | $ 0.09 | $ 0.20 | $ (0.19) |
Diluted (in dollars per share) | $ 0.11 | $ 0.09 | $ 0.20 | $ (0.19) |
Net Income (Loss) Per Share A_4
Net Income (Loss) Per Share Attributable to DASAN Zhone Solutions, Inc. - Antidilutive securities (Details) - Stock options - $ / shares shares in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 1,000 | 26 |
Weighted average exercise price (in dollars per share) | $ 10.89 | $ 14.73 |
Commitments and Contingencies -
Commitments and Contingencies - Estimated Future Lease Payments under All Non-Cancelable Operating Leases (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Operating leases | |
2018 (remainder of the year) | $ 1,053 |
2,019 | 4,088 |
2,020 | 2,998 |
2,021 | 2,590 |
2,022 | 2,664 |
Thereafter | 8,423 |
Total minimum lease payments | $ 21,816 |
Commitments and Contingencies
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Purchase Commitment | ||
Guarantor Obligations [Line Items] | ||
Number of notice days required to notice in advance for cancellation of orders | 30 days | |
Amount of non-cancellable purchase commitments outstanding | $ 2.4 | |
Performance Bonds | ||
Guarantor Obligations [Line Items] | ||
Guarantor obligations | $ 2.9 | $ 1 |
Minimum | ||
Guarantor Obligations [Line Items] | ||
Product warranty period from the date of shipment | 1 year | |
Maximum | ||
Guarantor Obligations [Line Items] | ||
Product warranty period from the date of shipment | 5 years |
Commitments and Contingencies_2
Commitments and Contingencies - Reconciliation of Changes in Accrued Warranties and Related Costs (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 931 | $ 878 |
Charged to cost of revenue | 1,022 | 126 |
Claims and settlements | (598) | (195) |
Foreign exchange impact | 6 | 14 |
Ending balance | $ 1,361 | $ 823 |
Commitments and Contingencies_3
Commitments and Contingencies - Payment Guarantees to Third Parties (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Guarantor Obligations [Line Items] | |
Product warranty term | 2 years |
Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | $ 70,481 |
DNS US | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Ownership interest | 57.30% |
DNS US | Borrowings from Shinhan Bank | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | $ 3,451 |
DNS US | Purchasing card from Shinhan Bank | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 1,726 |
DNS US | Letter of credit from Industrial Bank of Korea | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 10,730 |
DNS US | Purchasing Card from Industrial Bank of Korea | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 2,157 |
DNS US | Letter of credit from NongHyup Bank | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 6,000 |
DNS US | Borrowings from Export-Import Bank of Korea | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 6,170 |
DNS US | Letter of credit from KookMin Bank | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 6,000 |
DNS US | Korea Development Bank, General Loan | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 5,392 |
DNS US | Korea Development Bank, Letter Of Credit | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 8,400 |
Industrial Bank of Korea | Letter of credit | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 6,486 |
Industrial Bank of Korea | Performance bonds | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 4,075 |
NongHyup Bank | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 3,497 |
Kookmin Bank | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 304 |
Korea Development Bank | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 894 |
Shinhan Bank | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 933 |
State Bank of India | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | 34 |
Seoul Guarantee Insurance Co. | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Guarantor obligations | $ 4,232 |
Stock Option and Other Benefi_2
Stock Option and Other Benefit Plans (Details) - Employee Stock Purchase Plan (ESPP) | May 22, 2018shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares authorized (in shares) | 250,000 |
Percent of shares outstanding maximum | 1.00% |
Shares that amy be issued or transferred (in shares) | 2,000,000 |
Enterprise-Wide Information - R
Enterprise-Wide Information - Revenue by Geography (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue from External Customer [Line Items] | ||||
Net revenue | $ 71,914 | $ 66,438 | $ 207,675 | $ 178,491 |
Total North America | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 12,256 | 14,566 | 44,717 | 41,288 |
United States | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 11,125 | 13,068 | 41,373 | 37,176 |
Canada | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 1,131 | 1,498 | 3,344 | 4,112 |
Total International | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 59,658 | 51,872 | 162,958 | 137,203 |
Latin America | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 6,841 | 7,480 | 21,713 | 19,425 |
Europe, Middle East, Africa | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 10,425 | 7,378 | 27,264 | 19,134 |
Korea | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 19,609 | 20,520 | 50,844 | 69,032 |
Other Asia Pacific | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | $ 22,783 | $ 16,494 | $ 63,137 | $ 29,612 |
Enterprise-Wide Information -_2
Enterprise-Wide Information - Revenue by Products and Services (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue from External Customer [Line Items] | ||||
Net revenue | $ 71,914 | $ 66,438 | $ 207,675 | $ 178,491 |
Products | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 68,787 | 63,257 | 198,830 | 169,831 |
Services | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | $ 3,127 | $ 3,181 | $ 8,845 | $ 8,660 |
Enterprise-Wide Information - P
Enterprise-Wide Information - Property and Equipment, Net of Accumulated Depreciation (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 5,374 | $ 5,873 |
United States | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 3,131 | 3,393 |
Korea | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 1,441 | 1,633 |
Other Asia Pacific | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 802 | $ 847 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 735 | $ 107 | $ 1,071 | $ 646 |
Income (loss) before income taxes | 2,562 | 1,494 | 4,394 | $ (2,339) |
Unrecognized tax benefits | 500 | 500 | ||
Unrecognized tax benefits that would impact effective tax rate | 100 | $ 100 | ||
Unrecognized tax benefits, period increase (decrease) | $ 0 | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) € in Thousands, $ in Thousands | Oct. 31, 2018USD ($) | Oct. 22, 2018USD ($) | Oct. 05, 2018USD ($) | Oct. 05, 2018EUR (€) | Oct. 01, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) |
Subsequent Event [Line Items] | |||||||||
Sales | $ 71,914 | $ 66,438 | $ 207,675 | $ 178,491 | |||||
Repayments of borrowings | 48,739 | $ 15,627 | |||||||
Keymile GmbH, LLC | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Payment to acquire business, gross | $ 11,900 | € 10,250 | |||||||
Business Combination, Consideration Transferred, Working Capital Adjustment | 4,600 | 4,000 | |||||||
Keymile GmbH, LLC | ZTI Merger Subsidiary III Inc. and Riverside KM Beteiligung GmbH, LLC | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Payment to acquire business, gross | $ 11,900 | € 10,250 | |||||||
Keymile GmbH, LLC | |||||||||
Subsequent Event [Line Items] | |||||||||
Sales | 59 | ||||||||
Outstanding receivables | $ 42 | $ 42 | |||||||
WFB Facility | Subsequent Event | |||||||||
Subsequent Event [Line Items] | |||||||||
Amount borrowed | $ 3,000 | ||||||||
Repayments of borrowings | $ 3,000 | $ 6,000 |