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): July 14, 2015

 

 

ADTRAN, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		0-24612		63-0918200
(State of Incorporation)		(Commission file number)		(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 July 14, 2015, ADTRAN, Inc. announced its financial results for the fiscal quarter ended June 30, 2015 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 July 30, 2015. The ex-dividend date is July 28, 2015 and the payment date is August 13, 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 June 30, 2015 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 July 14, 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 July 15, 2015.

 

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press Release dated July 14, 2015
99.2		Revenues by product and segment classification

EXHIBIT 99.1

ADTRAN, INC.

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

HUNTSVILLE, Ala.—(BUSINESS WIRE)—July 14, 2015—ADTRAN, Inc. (NASDAQ:ADTN) reported results for the second quarter 2015. For the quarter, sales were $160,138,000 compared to $176,129,000 for the second quarter of 2014. Net income was $2,544,000 compared to $14,395,000 for the second quarter of 2014. Earnings per share, assuming dilution, were $0.05 compared to $0.26 for the second quarter of 2014. Non-GAAP earnings per share were $0.10 compared to $0.30 for the second quarter of 2014. 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, “Revenue for the quarter came in higher than expected, driven by the timing of CAF-related orders in our domestic business. EPS on a GAAP basis was reduced due to one-time restructuring charges as we continue to focus our company on the opportunities that are ahead. During the quarter, we saw an increase in broadband infrastructure activity in our domestic markets as carriers seek to position themselves competitively and utilize CAF funding to accelerate their deployment plans.”

The Company also announced that its Board of Directors declared a cash dividend for the second 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 July 30, 2015. The ex-dividend date is July 28, 2015 and the payment date is August 13, 2015.

The Company confirmed that its second quarter conference call will be held Wednesday, July 15, 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 March 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.

 

CONTACT: Michael Foliano Senior Vice President & Interim CFO 256-963-8885		INVESTOR SERVICES/ASSISTANCE: Gayle Ellis Investor Services 256-963-8220

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Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)

 

		June 30, 2015				December 31, 2014
Assets
Cash and cash equivalents		$	87,215			$	73,439
Short-term investments			54,127				46,919
Accounts receivable, net			89,088				88,502
Other receivables			31,442				33,295
Inventory			100,048				86,710
Prepaid expenses			5,817				5,129
Deferred tax assets, net			17,038				17,095
Total Current Assets			384,775				351,089
Property, plant and equipment, net			73,347				74,828
Deferred tax assets, net			20,473				17,694
Goodwill			3,492				3,492
Other assets			10,236				10,942
Long-term investments			216,665				280,649
Total Assets		$	708,988			$	738,694
Liabilities and Stockholders’ Equity
Accounts payable		$	85,456			$	56,414
Unearned revenue			17,495				22,762
Accrued expenses			15,538				11,077
Accrued wages and benefits			15,515				13,855
Income tax payable, net			10,072				14,901
Total Current Liabilities			144,076				119,009
Non-current unearned revenue			9,444				10,948
Other non-current liabilities			31,268				30,924
Bonds payable			28,800				28,800
Total Liabilities			213,588				189,681
Stockholders’ Equity			495,400				549,013
Total Liabilities and Stockholders’ Equity		$	708,988			$	738,694

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Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Sales		$	160,138			$	176,129			$	302,973			$	323,133
Cost of sales			91,892				89,332				169,164				158,546
Gross Profit			68,246				86,797				133,809				164,587
Selling, general and administrative expenses			32,123				33,788				63,187				67,727
Research and development expenses			35,479				33,670				68,015				66,223
Operating Income			644				19,339				2,607				30,637
Interest and dividend income			908				1,054				1,841				2,348
Interest expense			(149	)			(148	)			(297	)			(375	)
Net realized investment gain			3,255				2,340				6,370				4,532
Other income (expense), net			(547	)			(774	)			(900	)			(652	)
Income before provision for income taxes			4,111				21,811				9,621				36,490
Provision for income taxes			(1,567	)			(7,416	)			(3,760	)			(12,488	)
Net Income		$	2,544			$	14,395			$	5,861			$	24,002
Weighted average shares outstanding - basic			51,822				55,409				52,607				56,077
Weighted average shares outstanding - diluted (1)			51,917				55,729				52,742				56,559
Earnings per common share - basic		$	0.05			$	0.26			$	0.11			$	0.43
Earnings per common share - diluted (1)		$	0.05			$	0.26			$	0.11			$	0.42

 

(1)	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 June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Net Income		$	2,544			$	14,395			$	5,861			$	24,002
Other Comprehensive Income (Loss), net of tax:
Unrealized gains (losses) on available-for-sale securities			(1,783	)			1,219				(2,286	)			298
Defined benefit plan adjustments			72				—				140				—
Foreign currency translation			872				134				(2,446	)			386
Other Comprehensive Income (Loss), net of tax			(839	)			1,353				(4,592	)			684
Comprehensive Income, net of tax		$	1,705			$	15,748			$	1,269			$	24,686

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Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

		Six Months Ended June 30,
		2015				2014
Cash flows from operating activities:
Net income		$	5,861			$	24,002
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			7,256				7,467
Amortization of net premium on available-for-sale investments			1,578				2,272
Net realized gain on long-term investments			(6,370	)			(4,532	)
Net loss on disposal of property, plant and equipment			160				37
Stock-based compensation expense			3,114				4,149
Deferred income taxes			(1,743	)			377
Tax benefit from stock option exercises			(23	)			67
Excess tax benefits from stock-based compensation arrangements			38				(58	)
Change in operating assets and liabilities:
Accounts receivable, net			(2,003	)			(31,583	)
Other receivables			(119	)			(4,072	)
Inventory			(14,254	)			841
Prepaid expenses and other assets			(1,433	)			(3,103	)
Accounts payable			30,938				14,425
Accrued expenses and other liabilities			2,175				8,248
Income tax payable, net			(3,961	)			4,442
Net cash provided by operating activities			21,214				22,979
Cash flows from investing activities:
Purchases of property, plant and equipment			(5,392	)			(4,919	)
Proceeds from disposals of property, plant and equipment			8				1
Proceeds from sales and maturities of available-for-sale investments			120,422				166,518
Purchases of available-for-sale investments			(62,626	)			(106,406	)
Net cash provided by investing activities			52,412				55,194
Cash flows from financing activities:
Proceeds from stock option exercises			833				1,781
Purchases of treasury stock			(49,307	)			(53,091	)
Dividend payments			(9,509	)			(10,137	)
Payments on long-term debt			—				(16,500	)
Excess tax benefits from stock-based compensation arrangements			(38	)			58
Net cash used in financing activities			(58,021	)			(77,889	)
Net increase in cash and cash equivalents			15,605				284
Effect of exchange rate changes			(1,829	)			321
Cash and cash equivalents, beginning of period			73,439				58,298
Cash and cash equivalents, end of period		$	87,215			$	58,903
Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts payable		$	270			$	423

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Supplemental Information

Restructuring Expenses

(Unaudited)

(In thousands)

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

 

		Three and Six Months Ended June 30,
		2015				2014
Restructuring expense included in cost of sales		$	98			$	—
Selling, general and administrative expense			644				—
Research and development expense			1,383				—
Restructuring expense included in operating expenses			2,027				—
Total restructuring expense			2,125				—
Provision for income taxes			(829	)			—
Total restructuring expense, net of tax		$	1,296			$	—

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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 six months ended June 30, 2015 and 2014 for both transactions are as follows:

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments		$	226			$	226			$	452			$	472
NSN BBA acquisition
Amortization of acquired intangible assets			229				295				470				597
Amortization of other purchase accounting adjustments			140				294				294				655
Acquisition related professional fees, travel and other expenses			35				17				41				65
Subtotal			404				606				805				1,317
Total acquisition related expenses, amortizations and adjustments			630				832				1,257				1,789
Provision for income taxes			(213	)			(276	)			(426	)			(592	)
Total acquisition related expenses, amortizations and adjustments, net of tax		$	417			$	556			$	831			$	1,197

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

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Revenue (adjustments to deferred revenue recognized in the period)		$	64			$	180			$	131			$	423
Cost of goods sold			33				23				45				57
Subtotal			97				203				176				480
Selling, general and administrative expenses			39				24				51				79
Research and development expenses			494				605				1,030				1,230
Subtotal			533				629				1,081				1,309
Total acquisition related expenses, amortizations and adjustments			630				832				1,257				1,789
Provision for income taxes			(213	)			(276	)			(426	)			(592	)
Total acquisition related expenses, amortizations and adjustments, net of tax		$	417			$	556			$	831			$	1,197

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Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Stock-based compensation expense included in cost of sales		$	53			$	119			$	143			$	235
Selling, general and administrative expense			723				1,015				1,414				2,041
Research and development expense			699				958				1,557				1,873
Stock-based compensation expense included in operating expenses			1,422				1,973				2,971				3,914
Total stock-based compensation expense			1,475				2,092				3,114				4,149
Tax benefit for expense associated with non-qualified options			(222	)			(296	)			(402	)			(580	)
Total stock-based compensation expense, net of tax		$	1,253			$	1,796			$	2,712			$	3,569

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Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
GAAP earnings per common share – diluted		$	0.05			$	0.26			$	0.11			$	0.42
Restructuring expense			0.02				—				0.02				—
Acquisition related expenses, amortizations and adjustments			0.01				0.01				0.02				0.02
Stock-based compensation expense			0.02				0.03				0.05				0.06
Non-GAAP earnings per common share – diluted		$	0.10			$	0.30			$	0.20			$	0.50

EXHIBIT 99.2

Product and Segment Revenues

(Unaudited)

(In thousands)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Product Revenues:
Carrier Systems		$	119,039			$	128,824			$	219,478			$	228,377
Business Networking			34,210				41,969				69,591				79,888
Loop Access			6,889				5,336				13,904				14,868
Total		$	160,138			$	176,129			$	302,973			$	323,133
Subcategories included in the above:
Broadband Access (included in Carrier Systems)		$	100,746			$	108,309			$	185,540			$	189,836
Optical (included in Carrier Systems)			16,432				15,833				28,936				28,622
Internetworking (Netvanta & Multi-service Access Gateways) (included in Business Networking)			33,158				40,986				67,317				77,932
Total Core Products			150,336				165,128				281,793				296,390
Percentage of Total Revenue			94	%			94	%			93	%			92	%
HDSL (does not include T1) (included in Loop Access)			6,399				4,798				13,102				13,675
Other Products (excluding HDSL)			3,403				6,203				8,078				13,068
Total Legacy Products			9,802				11,001				21,180				26,743
Percentage of Total Revenue			6	%			6	%			7	%			8	%
Total		$	160,138			$	176,129			$	302,973			$	323,133
Segment Revenues:
Carrier Networks		$	135,397			$	143,455			$	251,411			$	261,617
Enterprise Networks			24,741				32,674				51,562				61,516
Total		$	160,138			$	176,129			$	302,973			$	323,133
Sales by Geographic Region:
United States		$	104,396			$	97,017			$	187,868			$	189,721
International			55,742				79,112				115,105				133,412
Total		$	160,138			$	176,129			$	302,973			$	323,133