ADTN ADTRAN Holdings Inc

ADTRAN, Inc. (NASDAQ:ADTN) reported results for the fourth quarter 2014. For the quarter, sales were $143,982,000 compared to $159,094,000 for the fourth quarter of 2013. Net income was $9,292,000 compared to $11,840,000 for the fourth quarter of 2013. Earnings per share, assuming dilution, were $0.17 compared to $0.20 for the fourth quarter of 2013. Non-GAAP earnings per share were $0.19 compared to $0.25 for the fourth quarter of 2013. 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 Company had a solid performance this quarter with most segments meeting or slightly exceeding our expectations. We continue to see positive trends as we enter 2015 and believe our geographic presence, market share gains and new product introductions position us well for the future.”

The Company also announced that its Board of Directors declared a cash dividend for the fourth quarter of 2014. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on February 5, 2015. The ex-dividend date is February 3, 2015 and the payment date is February 19, 2015.

The Company confirmed that its fourth quarter conference call will be held Wednesday, January 21, 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, 2013 and on Form 10-Q for the quarter ended September 30, 2014. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.

    Condensed Consolidated Balance Sheet (Unaudited) (In thousands)   December 31,

2014

December 31,

2013

Assets Cash and cash equivalents $ 73,439 $ 58,298 Short-term investments 46,919 105,760 Accounts receivable, net 86,158 85,814 Other receivables 35,639 18,249 Inventory 86,710 90,111 Prepaid expenses 5,129 4,325 Deferred tax assets, net   17,095   17,083 Total Current Assets 351,089 379,640   Property, plant and equipment, net 74,828 76,739 Deferred tax assets, net 17,694 9,622 Goodwill 3,492 3,492 Other assets 10,942 11,180 Long-term investments   280,649   309,225   Total Assets $ 738,694 $ 789,898   Liabilities and Stockholders' Equity Accounts payable $ 56,414 $ 48,282 Unearned revenue 22,762 22,205 Accrued expenses 11,077 12,776 Accrued wages and benefits 13,855 14,040 Income tax payable, net   14,901   5,002 Total Current Liabilities 119,009 102,305   Non-current unearned revenue 10,948 14,643 Other non-current liabilities 30,924 22,144 Bonds payable   28,800   46,200 Total Liabilities 189,681 185,292   Stockholders' Equity   549,013   604,606   Total Liabilities and Stockholders' Equity $ 738,694 $ 789,898       Consolidated Statements of Income (Unaudited) (In thousands, except per share data)   Three Months Ended Twelve Months Ended December 31, December 31, 2014   2013 2014   2013   Sales $ 143,982 $ 159,094 $ 630,007 $ 641,744 Cost of sales   75,499     82,230     318,680     332,858     Gross Profit 68,483 76,864 311,327 308,886   Selling, general and administrative expenses 31,793 33,284 131,958 129,366 Research and development expenses   32,711     32,941     132,258     131,055     Operating Income 3,979 10,639 47,111 48,465   Interest and dividend income 1,679 1,991 5,019 7,012 Interest expense (152 ) (588 ) (677 ) (2,325 ) Net realized investment gain 59 1,665 7,278 8,614

Other income (expense), net (1)

  2,790     610     1,175     (911 )   Income before provision for income taxes 8,355 14,317 59,906 60,855   Provision for income taxes   937     (2,477 )   (15,286 )   (15,061 )   Net Income $ 9,292   $ 11,840   $ 44,620   $ 45,794     Weighted average shares outstanding - basic 53,835 57,178 55,120 59,001

Weighted average shares outstanding - diluted (2)

54,085 57,777 55,482 59,424   Earnings per common share - basic $ 0.17 $ 0.21 $ 0.81 $ 0.78

Earnings per common share - diluted (2)

$ 0.17 $ 0.20 $ 0.80 $ 0.77  

(1)

Results for the three and twelve months ended December 31, 2014 include a $2.4 million gain related to the settlement of working capital items from an acquisition transaction that closed in 2012.

 

(2)

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

      Consolidated Statements of Comprehensive Income (Unaudited) (In thousands)   Three Months Ended Twelve Months Ended December 31, December 31, 2014   2013 2014   2013   Net Income $ 9,292   $ 11,840   $ 44,620   $ 45,794     Other Comprehensive Income (Loss), net of tax:   Unrealized gains (losses) on available-for-sale securities 1,077 1,409 (1,773 ) 629 Defined benefit plan adjustments (4,866 ) 1,061 (4,866 ) 1,061 Foreign currency translation   (2,007 )   (707 )   (4,189 )   (2,205 )   Other Comprehensive Income (Loss), net of tax   (5,796 )   1,763     (10,828 )   (515 )   Comprehensive Income, net of tax $ 3,496   $ 13,603   $ 33,792   $ 45,279       Consolidated Statements of Cash Flows (Unaudited) (In thousands)   Twelve Months Ended December 31, 2014   2013 Cash flows from operating activities: Net income $ 44,620 $ 45,794 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,845 14,628 Amortization of net premium on available-for-sale investments 4,360 5,956 Net realized gain on long-term investments (7,278 ) (8,614 ) Net loss on disposal of property, plant and equipment 142 3 Stock-based compensation expense 8,563 9,073 Deferred income taxes (5,526 ) (4,058 ) Tax benefit from stock option exercises 81 169 Excess tax benefits from stock-based compensation arrangements (63 ) (158 ) Change in operating assets and liabilities: Accounts receivable, net (2,769 ) (5,541 ) Other receivables (20,439 ) (1,549 ) Inventory 1,953 10,265 Prepaid expenses and other assets (3,627 ) (11 ) Accounts payable 9,973 5,206 Accrued expenses and other liabilities (166 ) (15,146 ) Income tax payable, net   11,168     3,747   Net cash provided by operating activities   55,837     59,764     Cash flows from investing activities: Purchases of property, plant and equipment (11,256 ) (8,173 ) Proceeds from disposals of property, plant and equipment 1 - Proceeds from sales and maturities of available-for-sale investments 230,019 343,567 Purchases of available-for-sale investments   (142,695 )   (261,625 ) Net cash provided by investing activities   76,069     73,769     Cash flows from financing activities: Proceeds from stock option exercises 2,839 3,629 Purchases of treasury stock (80,576 ) (124,267 ) Dividend payments (19,947 ) (21,412 ) Payments on long-term debt (16,500 ) - Excess tax benefits from stock-based compensation arrangements   63     158   Net cash used in financing activities   (114,121 )   (141,892 )   Net increase (decrease) in cash and cash equivalents 17,785 (8,359 ) Effect of exchange rate changes (2,644 ) (1,800 ) Cash and cash equivalents, beginning of period   58,298     68,457     Cash and cash equivalents, end of period $ 73,439   $ 58,298     Supplemental disclosure of non-cash investing activities Purchases of property, plant and equipment included in accounts payable $ 467 $ 444       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 twelve months ended December 31, 2014 and 2013 for both transactions are as follows:

  Three Months Ended Twelve Months Ended December 31, December 31, 2014   2013 2014   2013 Bluesocket, Inc. acquisition Amortization of acquired intangible assets and other purchase accounting adjustments $ 226   $ 279   $ 925   $ 1,142     NSN BBA acquisition Amortization of acquired intangible assets 269 301 1,153 1,174 Amortization of other purchase accounting adjustments 222 391 1,117 1,378 Acquisition related professional fees, travel and other expenses   193     16     282     345     Subtotal   684     708     2,552     2,897     Total acquisition related expenses, amortizations and adjustments 910 987 3,477 4,039 Provision for income taxes   (300 )   (328 )   (1,151 )   (1,343 )   Total acquisition related expenses, amortizations and adjustments, net of tax $ 610   $ 659   $ 2,326   $ 2,696        

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three and twelve months ended December 31, 2014 and 2013:

  Three Months Ended Twelve Months Ended December 31, December 31, 2014   2013 2014   2013   Revenue (adjustments to deferred revenue recognized in the period) $ 73 $ 211 $ 601 $ 929 Cost of goods sold   67     102     171     196     Subtotal   140     313     772     1,125     Selling, general and administrative expenses 200 24 310 399 Research and development expenses   570     650     2,395     2,515     Subtotal   770     674     2,705     2,914     Total acquisition related expenses, amortizations and adjustments 910 987 3,477 4,039 Provision for income taxes   (300 )   (328 )   (1,151 )   (1,343 )   Total acquisition related expenses, amortizations and adjustments, net of tax $ 610   $ 659   $ 2,326   $ 2,696         Supplemental Information Stock-based Compensation Expense (Unaudited) (In thousands)   Three Months Ended Twelve Months Ended December 31, December 31, 2014   2013 2014   2013   Stock-based compensation expense included in cost of sales $ 120   $ 131   $ 479   $ 465     Selling, general and administrative expense 1,096 1,314 4,185 4,443 Research and development expense   1,051     1,112     3,899     4,165     Stock-based compensation expense included in operating expenses   2,147     2,426     8,084     8,608     Total stock-based compensation expense 2,267 2,557 8,563 9,073 Tax benefit for expense associated with non-qualified options   (279 )   (374 )   (1,157 )   (1,298 )   Total stock-based compensation expense, net of tax $ 1,988   $ 2,183   $ 7,406   $ 7,775         Reconciliation of GAAP net income per share, diluted, to Non-GAAP net income per share, diluted (Unaudited)   Three Months Ended Twelve Months Ended December 31, December 31, 2014   2013 2014   2013   GAAP earnings per common share – diluted $ 0.17 $ 0.20 $ 0.80 $ 0.77   Acquisition related expenses, amortizations and adjustments 0.01 0.01 0.04 0.05 Settlement of acquisition related working capital items (0.03 ) - (0.03 ) - Stock-based compensation expense   0.04     0.04   0.13     0.13   Non-GAAP earnings per common share – diluted $ 0.19   $ 0.25 $ 0.94   $ 0.95

ADTRAN, Inc.Jim Matthews, 256-963-8775Senior Vice President/CFOorInvestor Services/Assistance:Gayle Ellis, 256-963-8220