ADTN ADTRAN Holdings Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 20, 2015

 

 

ADTRAN, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware (State of Incorporation)		0-24612 (Commission file number)		63-0918200 (I.R.S. Employer Identification Number)

901 Explorer Boulevard, Huntsville, Alabama 35806-2807

(Address of principal executive offices, including zip code)

(256) 963-8000

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02

Results of Operations and Financial Condition.

On January 20, 2015, ADTRAN, Inc. announced its financial results for the fiscal quarter ended December 31, 2014 and certain other information.

ADTRAN also announced that its Board of Directors declared a quarterly cash dividend of $0.09 per common share to be paid to shareholders 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.

A copy of ADTRAN’s press release announcing such financial results and other information is attached as Exhibit 99.1 hereto and incorporated by reference herein.

In addition, ADTRAN has posted supplemental information regarding revenues by product category, subcategory and segment for the fiscal quarter ended December 31, 2014 on the Investor Relations page of its website, www.adtran.com. A copy of the supplemental information is attached as Exhibit 99.2 hereto and incorporated by reference herein.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished as part of this Current Report on Form 8-K.

 

Exhibit Number		Description
99.1		Press Release dated January 20, 2015
99.2		Revenues by product and segment classification

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on January 21, 2015.

 

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press Release dated January 20, 2015
99.2		Revenues by product and segment classification

EXHIBIT 99.1

ADTRAN, INC.

REPORTS RESULTS FOR THE FOURTH QUARTER 2014 AND DECLARES QUARTERLY CASH DIVIDEND

HUNTSVILLE, Ala. – (BUSINESS WIRE) – January 20, 2015 – 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.

 

CONTACT:         Jim Matthews         Senior Vice President/CFO         256-963-8775		INVESTOR SERVICES/ASSISTANCE:         Gayle Ellis         256-963-8220

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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

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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.

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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

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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

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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

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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

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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

EXHIBIT 99.2

Product and Segment Revenues

(Unaudited)

(In thousands)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2014				2013				2014				2013
Product Revenues:
Carrier Systems		$	100,337			$	108,731			$	442,664			$	427,850
Business Networking			37,346				41,203				156,980				168,871
Loop Access			6,299				9,160				30,363				45,023
Total		$	143,982			$	159,094			$	630,007			$	641,744
Subcategories included in the above:
Broadband Access (included in Carrier Systems)		$	82,544			$	88,566			$	368,464			$	340,560
Optical (included in Carrier Systems)			13,066				14,115				55,374				55,615
Internetworking (Netvanta & Multi-service Access Gateways) (included in Business Networking)			35,661				40,259				152,223				164,422
Total Core Products			131,271				142,940				576,061				560,597
Percentage of Total Revenue			91	%			90	%			91	%			87	%
HDSL (does not include T1) (included in Loop Access)			5,754				8,483				27,829				41,666
Other Products (excluding HDSL)			6,957				7,671				26,117				39,481
Total Legacy Products			12,711				16,154				53,946				81,147
Percentage of Total Revenue			9	%			10	%			9	%			13	%
Total		$	143,982			$	159,094			$	630,007			$	641,744
Segment Revenues:
Carrier Networks		$	115,784			$	126,235			$	510,373			$	500,733
Enterprise Networks			28,198				32,859				119,634				141,011
Total		$	143,982			$	159,094			$	630,007			$	641,744
Sales by Geographic Region:
United States		$	93,038			$	107,177			$	381,382			$	455,996
International			50,944				51,917				248,625				185,748
Total		$	143,982			$	159,094			$	630,007			$	641,744