1  Nature of Business and Summary of Significant Accounting Policies Principles of Consolidation Changes in Classifications Out of Period Adjustment Use of Estimates Cash and Cash Equivalents ADTRAN, Inc. is a leading global provider of networking and communications equipment. Our solutions enable voice, data, video and Internet communications across a variety of network infrastructures. These solutions are deployed by some  of the world’s largest service providers, distributed enterprises and small and medium-sized businesses, public and private  enterprises, and millions of individual users worldwide. Our consolidated financial statements include ADTRAN and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. Certain balance sheet amounts (including inventory, accounts receivable, unearned revenue and accrued expenses) and related  disclosures have been revised to correct immaterial misclassifications in 2012 that were corrected in 2013. The revisions  decreased both total assets and total liabilities each by $2.7 million at December 31, 2012. The revisions had no impact on our  previously reported stockholders’ equity, income statement, comprehensive income, or earnings per share. Additionally, we  corrected immaterial misclassifications between the operating and investing sections of our consolidated statements of cash  flows and adjusted our 2012 and 2011 cash flows in these categories by $0.2 million and $0.1 million, respectively, in order to  be consistent with the 2013 presentation.  Additionally, changes in classifications have been made to the prior period balances in other comprehensive income to conform to the current period’s presentation as a result of our adoption of Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Comprehensive Income. During the year ended December 31, 2013, we identified two adjustments in the acquired NSN (formerly Nokia Siemens  Networks) Broadband Access business (NSN BBA business) relating to customer payment discounts for one customer, and  recoverable VAT taxes on certain vendor freight invoices that should have been recorded in prior periods. These adjustments  resulted from a $0.4 million understatement of net income in 2012. We evaluated the impact of the adjustments on the results  of our previously issued financial statements for the prior period affected and concluded that the impact was not material. We also evaluated the impact of the cumulative effect of the adjustments in the current year and concluded that the impact was not material to our results for the year 2013. Accordingly, during the year ended December 31, 2013 we recorded an out of period adjustment to correct these issues.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of  America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,  the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue  and expense during the reporting period. Our more significant estimates include the obsolete and excess inventory reserves,  warranty reserves, customer rebates, determination of the deferred revenue components of multiple element sales agreements,  estimated costs to complete obligations associated with deferred revenues, estimated income tax provision and income tax  contingencies, the fair value of stock-based compensation, impairment of goodwill, valuation and estimated lives of intangible  assets, estimated working capital adjustments under negotiation related to the NSN BBA business acquisition, estimated pension liability, fair value of investments, and the evaluation of other-than-temporary declines in the value of investments.  Actual amounts could differ significantly from these estimates. Cash and cash equivalents represent demand deposits, money market funds, and short-term investments classified as  available-for-sale with original maturities of three months or less. We maintain depository investments with certain financial  institutions. Although these depository investments may exceed government insured depository limits, we have evaluated the credit worthiness of these applicable financial institutions, and determined the risk of material financial loss due to the exposure of such credit risk to be minimal. As of December 31, 2013, $53.5 million of our cash and cash equivalents, primarily certain domestic money market funds and foreign depository accounts, were in excess of government provided  insured depository limits.  ADTRAN 2013 Annual Report 40 Notes to Consolidated Financial Statements