ADTRAN, Inc. (NASDAQ:ADTN) reported results for the fourth
quarter 2016. For the quarter, sales were $162,986,000 compared to
$139,013,000 for the fourth quarter of 2015. Net income was
$7,572,000 compared to $5,718,000 for the fourth quarter of 2015.
Earnings per share, assuming dilution, were $0.16 compared to $0.12
for the fourth quarter of 2015. Non-GAAP earnings per share were
$0.21 compared to $0.16 for the fourth 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 revenue
and EPS performance for the quarter exceeded expectations with
total revenue increasing 17% over the same period last year. The
solid fourth quarter and full year performance was a result of
strong growth in our domestic business, driven by our leading
market positions in CAF II and ultra-broadband solutions, continued
growth in our services business, and the rebound of our
international business. Our services and international businesses
grew 55% and 46% respectively over the same period last year.
Global demand for broadband continued to grow as we bolstered our
market positions in the U.S and Europe. We continue to be
encouraged by the positive momentum we are experiencing as service
providers seek transformation to grow revenue, reduce costs, and
accelerate service delivery and deployment.”
The Company also announced that its Board of Directors declared
a cash dividend for the fourth quarter of 2016. The quarterly cash
dividend is $0.09 per common share to be paid to holders of record
at the close of business on February 2, 2017. The ex-dividend date
is January 31, 2017, and the payment date is February 16, 2017.
The Company confirmed that its fourth quarter conference call
will be held Wednesday, January 18, 2017, 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, 2015. 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, 2016
December 31, 2015
Assets Cash and cash equivalents $ 79,895 $ 84,550
Short-term investments 43,188 34,396 Accounts receivable, net
92,346 71,917 Other receivables 15,137 19,321 Income tax
receivable, net 760 - Inventory 105,117 91,533 Prepaid expenses and
other current assets 16,459 10,145
Total Current
Assets 352,902 311,862 Property, plant and
equipment, net 84,469 73,233 Deferred tax assets, net 38,036 37,015
Goodwill 3,492 3,492 Other assets 12,234 9,276 Long-term
investments 176,102 198,026
Total
Assets $ 667,235 $ 632,904
Liabilities and Stockholders' Equity Accounts payable $
77,342 $ 48,668 Unearned revenue 16,326 16,615 Accrued expenses
12,434 12,108 Accrued wages and benefits 20,433 12,857 Income tax
payable, net - 2,395
Total Current Liabilities
126,535 92,643 Non-current unearned revenue
6,333 7,965 Other non-current liabilities 28,050 24,236 Bonds
payable 26,800 27,900
Total Liabilities
187,718 152,744 Stockholders' Equity
479,517 480,160 Total
Liabilities and Stockholders' Equity $ 667,235
$ 632,904 Consolidated Statements of
Income (Unaudited) (In thousands, except per share
data) Three Months
Ended Twelve Months Ended December 31,
December 31, 2016 2015
2016 2015 Sales Products
$ 126,793 $ 115,699 $ 525,502 $ 527,422 Services 36,193
23,314 111,279 72,642
Total Sales 162,986 139,013
636,781 600,064 Cost of Sales Products
67,790 62,104 270,695 293,843 Services 24,409
14,470 74,742 39,324
Total Cost of Sales 92,199 76,574
345,437 333,167 Gross Profit
70,787 62,439 291,344 266,897
Selling, general and administrative expenses 34,438 30,339 131,805
123,542 Research and development expenses 32,077
29,300 124,804 129,876
Operating Income 4,272 2,800
34,735 13,479 Interest and dividend income
1,226 1,273 3,918 3,953 Interest expense (142 ) (148 ) (572 ) (596
) Net realized investment gain 1,769 1,907 5,923 10,337 Other
expense, net (273 ) (617 ) (651 ) (1,465 ) Gain on bargain purchase
of a business (8 ) - 3,542
-
Income before provision for income
taxes 6,844 5,215 46,895 25,708
Provision for income taxes 728 503
(11,666 ) (7,062 )
Net Income
$ 7,572 $ 5,718 $
35,229 $ 18,646 Weighted
average shares outstanding - basic 48,383 49,552 48,724 51,145
Weighted average shares outstanding - diluted (1) 48,757 49,643
48,949 51,267 Earnings per common share - basic $ 0.16 $
0.12 $ 0.72 $ 0.36 Earnings per common share - diluted (1) $ 0.16 $
0.12 $ 0.72 $ 0.36 (1) 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, 2016
2015 2016 2015 Net Income
$ 7,572 $ 5,718 $ 35,229 $ 18,646
Other Comprehensive Income (Loss), net of tax:
Unrealized losses on available-for-sale securities (1,366 ) (455 )
(1,528 ) (7,032 ) Defined benefit plan adjustments (1,225 ) 1,651
(1,122 ) 1,862 Foreign currency translation (1,771 )
73 (569 ) (3,724 )
Other
Comprehensive Income (Loss), net of tax (4,362
) 1,269 (3,219 )
(8,894 ) Comprehensive Income, net
of tax $ 3,210 $ 6,987
$ 32,010 $ 9,752
Consolidated Statements of Cash Flows
(Unaudited) (In thousands)
Twelve Months Ended December 31, 2016
2015 Cash flows from operating activities: Net
income $ 35,229 $ 18,646 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization 14,407 14,245 Amortization of net premium on
available-for-sale investments 643 2,402 Net realized gain on
long-term investments (5,923 ) (10,337 ) Net loss on disposal of
property, plant and equipment 22 644 Gain on bargain purchase of a
business (3,542 ) - Stock-based compensation expense 6,695 6,712
Deferred income taxes (2,685 ) (692 ) Tax impact from stock option
exercises - (40 ) Excess tax benefits from stock-based compensation
arrangements (2 ) (3 ) Change in operating assets and liabilities:
Accounts receivable, net (21,302 ) 14,918 Other receivables 4,101
11,704 Inventory (10,887 ) (6,877 ) Prepaid expenses and other
assets (7,108 ) (5,070 ) Accounts payable 26,722 (5,826 ) Accrued
expenses and other liabilities 8,792 (10,289 ) Income tax
payable/receivable, net (3,162 ) (11,590 )
Net
cash provided by operating activities 42,000
18,547 Cash flows from
investing activities: Purchases of property, plant and
equipment (21,441 ) (11,753 ) Proceeds from disposals of property,
plant and equipment - 183 Proceeds from sales and maturities of
available-for-sale investments 225,075 280,435 Purchases of
available-for-sale investments (209,172 ) (188,921 ) Acquisition of
business (943 ) -
Net cash provided by
(used in) investing activities (6,481 )
79,944 Cash flows from financing
activities: Proceeds from stock option exercises 4,717 961
Purchases of treasury stock (25,817 ) (66,160 ) Dividend payments
(17,583 ) (18,449 ) Payments on long-term debt (1,100 ) (1,100 )
Excess tax benefits from stock-based compensation arrangements
2 3
Net cash used in financing
activities (39,781 ) (84,745
) Net increase (decrease) in cash and cash
equivalents (4,262 ) 13,746 Effect of exchange rate changes (393 )
(2,635 )
Cash and cash equivalents, beginning of period
84,550 73,439
Cash and cash equivalents, end of period $
79,895 $ 84,550
Supplemental disclosure of non-cash investing activities Purchases
of property, plant and equipment included in accounts payable $
2,103 $ 598
Supplemental InformationRestructuring
Expenses(Unaudited)(In thousands)
Restructuring expenses were recorded in the following
Consolidated Statements of Income categories for the three and
twelve months ended December 31, 2016 and 2015:
Three Months Ended
Twelve Months Ended December 31, December 31,
2016 2015 2016
2015 Restructuring expense included in cost of
sales $ 14 $ 5
$ 1,321 $ 112
Selling, general and administrative expense - 8 637 846 Research
and development expense - 13 -
2,108
Restructuring expense included
in operating expenses - 21
637 2,954
Total restructuring expense 14 26 1,958
3,066 Provision for income taxes (4 ) (10 )
(607 ) (1,196 )
Total restructuring
expense, net of tax $ 10 $
16 $ 1,351 $ 1,870
Supplemental InformationAcquisition
Related Expenses, Amortizations and
Adjustments(Unaudited)(In thousands)
On August 4, 2011, we closed on the acquisition of Bluesocket,
Inc., on May 4, 2012, we closed on the acquisition of the Nokia
Siemens Networks Broadband Access business (NSN BBA), and on
September 13, 2016, we closed on the acquisition of CommScope’s
active fiber business (CommScope). Acquisition related expenses,
amortizations and adjustments for the three and twelve months ended
December 31, 2016 and 2015 for all three transactions are as
follows:
Three Months Ended
Twelve Months Ended December 31, December 31,
2016 2015 2016
2015 Bluesocket, Inc. acquisition Amortization of acquired
intangible assets $ 158 $ 174 $ 662 $ 817
NSN BBA acquisition Amortization of acquired
intangible assets 221 227 901 928 Amortization of other purchase
accounting adjustments 30 48 224 443 Acquisition related
professional fees, travel and other expenses -
14 - 75
Subtotal NSN BBA
acquisition 251 289
1,125 1,446
CommScope acquisition Amortization of acquired intangible assets
673 - 785 - Amortization of other purchase accounting adjustments
42 - 126 - Acquisition related professional fees, travel and other
expenses 29 - 74 -
Subtotal CommScope acquisition 744
- 985
- Total acquisition related expenses,
amortizations and adjustments 1,153 463
2,772 2,263 Provision for income taxes (429 )
(158 ) (991 ) (767 )
Total
acquisition related expenses, amortizations and adjustments, net of
tax $ 724 $ 305
$ 1,781 $ 1,496
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, 2016 and 2015:
Three Months Ended
Twelve Months Ended December 31, December 31,
2016 2015 2016
2015 Revenue (adjustments to deferred revenue
recognized in the period) $ - $ 16 $ - $ 212 Cost of goods sold
43 3 232 55
Subtotal 43 19
232 267 Selling,
general and administrative expenses 70 18 131 92 Research and
development expenses 1,040 426
2,409 1,904
Subtotal
1,110 444 2,540
1,996 Total acquisition
related expenses, amortizations and adjustments 1,153
463 2,772 2,263 Provision for income taxes
(429 ) (158 ) (991 ) (767 )
Total acquisition related expenses, amortizations and
adjustments, net of tax $ 724 $
305 $ 1,781 $
1,496 Supplemental Information
Stock-based Compensation Expense (Unaudited) (In
thousands) Three Months
Ended Twelve Months Ended December 31,
December 31, 2016 2015
2016 2015 Stock-based
compensation expense included in cost of sales $
107 $ 78 $ 389
$ 280 Selling, general and
administrative expense 1,019 1,035 3,341 3,261 Research and
development expense 968 811
2,965 3,171
Stock-based compensation
expense included in operating expenses 1,987
1,846 6,306
6,432 Total stock-based compensation
expense 2,094 1,924 6,695 6,712 Tax
benefit for expense associated with non-qualified options
(320 ) (242 ) (963 ) (862 )
Total
stock-based compensation expense, net of tax $
1,774 $ 1,682 $
5,732 $ 5,850
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,
2016 2015 2016
2015 GAAP earnings per common share – diluted
$ 0.16 $ 0.12 $ 0.72
$ 0.36 Restructuring expense - - 0.03 0.04
Acquisition related expenses, amortizations and adjustments 0.01
0.01 0.04 0.03 Stock-based compensation expense 0.04 0.03 0.12 0.11
Gain on bargain purchase of a business - -
(0.07 ) -
Non-GAAP earnings per common share –
diluted $ 0.21 $ 0.16 $
0.84 $ 0.54
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170117006643/en/
ADTRAN, Inc.Roger Shannon, 256-963-8775Senior Vice President
& CFOorInvestor Services/Assistance:Gayle Ellis,
256-963-8220
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