ADTRAN INC - FORM 8-K - EX-99.1

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8-K - 8-K - ADTRAN INC	d77551d8k.htm
EX-99.2 - EX-99.2 - ADTRAN INC	d77551dex992.htm

Exhibit 99.1

ADTRAN, INC.

REPORTS RESULTS for the THIRD QUARTER 2015 and DECLARES QUARTERLY CASH DIVIDEND

HUNTSVILLE, Ala.—(BUSINESS WIRE)—October 13, 2015—ADTRAN, Inc. (NASDAQ:ADTN) reported results for the third quarter 2015. For the quarter, sales were $158,078,000 compared to $160,138,000 for the second quarter of 2015. Net income was $7,067,000 compared to $2,544,000 for the second quarter of 2015. Earnings per share, assuming dilution, were $0.14 compared to $0.05 for the second quarter of 2015. Non-GAAP earnings per share were $0.19 compared to $0.10 for the second quarter of 2015. The reconciliation between GAAP earnings per share, diluted, and non-GAAP earnings per share, diluted, is in the table provided.

ADTRAN Chief Executive Officer Tom Stanton stated, “Our U.S. revenue in the quarter was up over 20% compared to the same period last year, driven by a substantial increase in broadband sales. Operating income was slightly better than expected driven by improved gross margin and lower operating expenses. Looking ahead, we continue to see signs that momentum is building for 2016 as CAF and competitive pressures refocus carriers’ investment in broadband access infrastructure.”

The Company also announced that its Board of Directors declared a cash dividend for the third quarter of 2015. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on October 29, 2015. The ex-dividend date is October 27, 2015 and the payment date is November 12, 2015.

The Company confirmed that its third quarter conference call will be held Wednesday, October 14, 2015 at 9:30 a.m. Central Time. This conference call will be web cast live through StreetEvents.com. To listen, simply visit the Investor Relations site at www.adtran.com or www.streetevents.com approximately 10 minutes prior to the start of the call and click on the conference call link provided.

An online replay of the conference call will be available for seven days at www.streetevents.com. In addition, an online replay of the conference call, as well as the text of the Company’s earnings release, will be available on the Investor Relations site at www.adtran.com for at least 12 months following the call.

ADTRAN, Inc. is a leading global provider of networking and communications equipment. ADTRAN’s products enable voice, data, video and Internet communications across a variety of network infrastructures. ADTRAN solutions are currently in use by service providers, private enterprises, government organizations, and millions of individual users worldwide. For more information, please visit www.adtran.com.

For more information, contact the company at 800 9ADTRAN (800 923-8726) or via email at info@adtran.com. On the Web, visit www.adtran.com.

This press release contains forward-looking statements which reflect management’s best judgment based on factors currently known. However, these statements involve risks and uncertainties, including the successful development and market acceptance of new products, the degree of competition in the market for such products, the product and channel mix, component costs, manufacturing efficiencies, and other risks detailed in our annual report on Form 10-K for the year ended December 31, 2014 and on Form 10-Q for the quarter ended June 30, 2015. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.

CONTACT:

Michael Foliano

Senior Vice President & Interim CFO

256-963-8885

INVESTOR SERVICES/ASSISTANCE:

Gayle Ellis

Investor Services

256-963-8220

Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)


	September 30, 2015		December 31, 2014
Assets
Cash and cash equivalents	$	83,687	$	73,439
Short-term investments		42,081		46,919
Accounts receivable, net		86,176		88,502
Other receivables		20,858		33,295
Inventory		100,705		86,710
Prepaid expenses		5,935		5,129
Deferred tax assets, net		17,517		17,095

Total Current Assets		356,959		351,089

Property, plant and equipment, net		73,656		74,828
Deferred tax assets, net		23,341		17,694
Goodwill		3,492		3,492
Other assets		9,893		10,942
Long-term investments		204,513		280,649

Total Assets	$	671,854	$	738,694

Liabilities and Stockholders’ Equity
Accounts payable	$	69,372	$	56,414
Unearned revenue		16,484		22,762
Accrued expenses		13,427		11,077
Accrued wages and benefits		14,842		13,855
Income tax payable, net		12,923		14,901

Total Current Liabilities		127,048		119,009

Non-current unearned revenue		8,685		10,948
Other non-current liabilities		29,680		30,924
Bonds payable		28,800		28,800

Total Liabilities		194,213		189,681
Stockholders’ Equity		477,641		549,013

Total Liabilities and Stockholders’ Equity	$	671,854	$	738,694

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Sales	$	158,078		$	162,892		$	461,051		$	486,025
Cost of sales		87,429			84,635			256,593			243,181

Gross Profit		70,649			78,257			204,458			242,844
Selling, general and administrative expenses		30,016			32,438			93,203			100,165
Research and development expenses		32,561			33,324			100,576			99,547

Operating Income		8,072			12,495			10,679			43,132
Interest and dividend income		839			992			2,680			3,340
Interest expense		(151	)		(150	)		(448	)		(525	)
Net realized investment gain		2,060			2,687			8,430			7,219
Other income (expense), net		52			(963	)		(848	)		(1,615	)

Income before provision for income taxes		10,872			15,061			20,493			51,551
Provision for income taxes		(3,805	)		(3,735	)		(7,565	)		(16,223	)

Net Income	$	7,067		$	11,326		$	12,928		$	35,328

Weighted average shares outstanding - basic		49,862			54,521			51,682			55,552
Weighted average shares outstanding - diluted ⁽¹⁾		49,927			54,824			51,792			55,976

Earnings per common share - basic	$	0.14		$	0.21		$	0.25		$	0.64
Earnings per common share - diluted ⁽¹⁾	$	0.14		$	0.21		$	0.25		$	0.63

⁽¹⁾	Assumes exercise of dilutive stock options calculated under the treasury stock method.

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net Income	$	7,067		$	11,326		$	12,928		$	35,328

Other Comprehensive Income (Loss), net of tax:

Unrealized losses on available-for-sale securities		(4,291	)		(3,148	)		(6,577	)		(2,850	)
Defined benefit plan adjustments		71			—			211			—
Foreign currency translation		(1,351	)		(2,568	)		(3,797	)		(2,182	)

Other Comprehensive Loss, net of tax		(5,571	)		(5,716	)		(10,163	)		(5,032	)

Comprehensive Income, net of tax	$	1,496		$	5,610		$	2,765		$	30,296

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income	$	12,928		$	35,328
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,765			11,127
Amortization of net premium on available-for-sale investments		2,085			3,363
Net realized gain on long-term investments		(8,430	)		(7,219	)
Net loss on disposal of property, plant and equipment		189			109
Stock-based compensation expense		4,788			6,296
Deferred income taxes		(2,332	)		(122	)
Tax benefit from stock option exercises		(40	)		71
Excess tax benefits from stock-based compensation arrangements		38			(53	)
Change in operating assets and liabilities:
Accounts receivable, net		843			(15,807	)
Other receivables		10,532			(10,726	)
Inventory		(14,945	)		2,413
Prepaid expenses and other assets		(1,665	)		(4,095	)
Accounts payable		13,687			3,563
Accrued expenses and other liabilities		(3,996	)		7,507
Income tax payable, net		(1,137	)		9,265

Net cash provided by operating activities		23,310			41,020

Cash flows from investing activities:
Purchases of property, plant and equipment		(7,843	)		(8,162	)
Proceeds from disposals of property, plant and equipment		122			1
Proceeds from sales and maturities of available-for-sale investments		189,728			187,013
Purchases of available-for-sale investments		(113,227	)		(127,074	)

Net cash provided by investing activities		68,780			51,778

Cash flows from financing activities:
Proceeds from stock option exercises		907			2,311
Purchases of treasury stock		(65,808	)		(62,144	)
Dividend payments		(13,989	)		(15,060	)
Payments on long-term debt		—			(16,500	)
Excess tax benefits from stock-based compensation arrangements		(38	)		53

Net cash used in financing activities		(78,928	)		(91,340	)

Net increase in cash and cash equivalents		13,162			1,458
Effect of exchange rate changes		(2,914	)		(1,341	)
Cash and cash equivalents, beginning of period		73,439			58,298

Cash and cash equivalents, end of period	$	83,687		$	58,415

Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts payable	$	1,303		$	598

Supplemental Information

Restructuring Expenses

(Unaudited)

(In thousands)

Restructuring expenses were recorded in the following Consolidated Statements of Income categories for the three and nine months ended September 30, 2015 and 2014:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Restructuring expense included in cost of sales	$	9		$	—	$	107		$	—

Selling, general and administrative expense		194			—		838			—
Research and development expense		712			—		2,095			—

Restructuring expense included in operating expenses		906			—		2,933			—

Total restructuring expense		915			—		3,040			—
Provision for income taxes		(357	)		—		(1,186	)		—

Total restructuring expense, net of tax	$	558		$	—	$	1,854		$	—

Supplemental Information

Acquisition Related Expenses, Amortizations and Adjustments

(Unaudited)

(In thousands)

On August 4, 2011, we closed on the acquisition of Bluesocket, Inc. and on May 4, 2012, we closed on the acquisition of the Nokia Siemens Networks Broadband Access business (NSN BBA). Acquisition related expenses, amortizations and adjustments for the three and nine months ended September 30, 2015 and 2014 for both transactions are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments	$	191		$	227		$	643		$	699

NSN BBA acquisition
Amortization of acquired intangible assets		231			287			701			884
Amortization of other purchase accounting adjustments		101			240			395			895
Acquisition related professional fees, travel and other expenses		20			24			61			89

Subtotal		352			551			1,157			1,868

Total acquisition related expenses, amortizations and adjustments		543			778			1,800			2,567
Provision for income taxes		(183	)		(259	)		(609	)		(851	)

Total acquisition related expenses, amortizations and adjustments, net of tax	$	360		$	519		$	1,191		$	1,716

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three and nine months ended September 30, 2015 and 2014:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenue (adjustments to deferred revenue recognized in the period)	$	65		$	105		$	196		$	528
Cost of goods sold		7			47			52			104

Subtotal		72			152			248			632

Selling, general and administrative expenses		23			31			74			110
Research and development expenses		448			595			1,478			1,825

Subtotal		471			626			1,552			1,935

Total acquisition related expenses, amortizations and adjustments		543			778			1,800			2,567
Provision for income taxes		(183	)		(259	)		(609	)		(851	)

Total acquisition related expenses, amortizations and adjustments, net of tax	$	360		$	519		$	1,191		$	1,716

Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Stock-based compensation expense included in cost of sales	$	59		$	124		$	202		$	359

Selling, general and administrative expense		812			1,048			2,226			3,089
Research and development expense		803			975			2,360			2,848

Stock-based compensation expense included in operating expenses		1,615			2,023			4,586			5,937

Total stock-based compensation expense		1,674			2,147			4,788			6,296
Tax benefit for expense associated with non-qualified options		(218	)		(298	)		(620	)		(878	)

Total stock-based compensation expense, net of tax	$	1,456		$	1,849		$	4,168		$	5,418

Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
GAAP earnings per common share – diluted	$	0.14	$	0.21	$	0.25	$	0.63

Restructuring expense		0.01		—		0.04		—
Acquisition related expenses, amortizations and adjustments		0.01		0.01		0.02		0.03
Stock-based compensation expense		0.03		0.03		0.08		0.10

Non-GAAP earnings per common share – diluted	$	0.19	$	0.25	$	0.39	$	0.76

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