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ADTRAN, Inc. Reports Results for the First Quarter 2015 and Declares Quarterly Cash Dividend

April 21, 2015 8:05 PM EDT

HUNTSVILLE, Ala.--(BUSINESS WIRE)-- ADTRAN, Inc. (NASDAQ:ADTN) reported results for the first quarter 2015. For the quarter, sales were $142,835,000 compared to $147,004,000 for the first quarter of 2014. Net income was $3,317,000 compared to $9,607,000 for the first quarter of 2014. Earnings per share, assuming dilution, were $0.06 compared to $0.17 for the first quarter of 2014. Non-GAAP earnings per share were $0.10 compared to $0.21 for the first 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 lower than expected, driven by currency fluctuations in our European business, and the cancellation of a planned domestic Tier 1 program that was expected to commence late in the quarter. We did continue to see positive momentum in our European business, as well as the expected improvement in our Tier 2 carriers in the U.S. as CAF funding started to take hold.”

The Company also announced that its Board of Directors declared a cash dividend for the first 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 May 7, 2015. The ex-dividend date is May 5, 2015 and the payment date is May 21, 2015.

The Company confirmed that its first quarter conference call will be held Wednesday, April 22, 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 [email protected]. 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. 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)

 

March 31,2015

December 31,2014
Assets
Cash and cash equivalents $ 87,009 $ 73,439
Short-term investments 78,760 46,919
Accounts receivable, net 90,869 88,502
Other receivables 29,962 33,295
Inventory 93,123 86,710
Prepaid expenses 5,092 5,129
Deferred tax assets, net   16,297   17,095
Total Current Assets 401,112 351,089
 
Property, plant and equipment, net 73,987 74,828
Deferred tax assets, net 18,831 17,694
Goodwill 3,492 3,492
Other assets 10,080 10,942
Long-term investments   236,678   280,649
 
Total Assets $ 744,180 $ 738,694
 
Liabilities and Stockholders' Equity
Accounts payable $ 73,696 $ 56,414
Unearned revenue 16,815 22,762
Accrued expenses 12,773 11,077
Accrued wages and benefits 15,605 13,855
Income tax payable, net   13,088   14,901
Total Current Liabilities 131,977 119,009
 
Non-current unearned revenue 10,088 10,948
Other non-current liabilities 30,646 30,924
Bonds payable   28,800   28,800
Total Liabilities 201,511 189,681
 
Stockholders' Equity   542,669   549,013
 
Total Liabilities and Stockholders' Equity $ 744,180 $ 738,694
   

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

 

Three Months Ended
March 31,
  2015       2014  
 
Sales $ 142,835 $ 147,004
Cost of sales   77,272     69,214  
 
Gross Profit 65,563 77,790
 
Selling, general and administrative expenses 31,064 33,939
Research and development expenses   32,536     32,553  
 
Operating Income 1,963 11,298
 
Interest and dividend income 933 1,294
Interest expense (148 ) (227 )
Net realized investment gain 3,115 2,192
Other income (expense), net   (353 )   122  
 
Income before provision for income taxes 5,510 14,679
 
Provision for income taxes   (2,193 )   (5,072 )
 
Net Income $ 3,317   $ 9,607  
 
Weighted average shares outstanding - basic 53,399 56,751
Weighted average shares outstanding - diluted (1) 53,634 57,368
 
Earnings per common share - basic $ 0.06 $ 0.17
Earnings per common share - diluted (1) $ 0.06 $ 0.17
 
(1) Assumes exercise of dilutive stock options calculated under the treasury stock method.
 

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

 
Three Months Ended
March 31,
  2015       2014  
 
Net Income $ 3,317   $ 9,607  
 
Other Comprehensive Loss, net of tax:
 
Unrealized losses on available-for-sale securities (503 ) (921 )
Defined benefit plan adjustments 68 -
Foreign currency translation   (3,318 )   252  
 
Other Comprehensive Loss, net of tax   (3,753 )   (669 )
 
Comprehensive Income (Loss), net of tax $ (436 ) $ 8,938  
 

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 
Three Months Ended
March 31,
  2015       2014  
Cash flows from operating activities:
Net income $ 3,317 $ 9,607
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,728 3,580
Amortization of net premium on available-for-sale investments 910 1,135
Net realized gain on long-term investments (3,115 ) (2,192 )
Net (gain)/loss on disposal of property, plant and equipment 8 (3 )
Stock-based compensation expense 1,639 2,057
Deferred income taxes (692 ) 627
Tax benefit from stock option exercises 8 57
Excess tax benefits from stock-based compensation arrangements (9 ) (55 )
Change in operating assets and liabilities:
Accounts receivable, net (4,571 ) (15,971 )
Other receivables 511 (9,407 )
Inventory (7,784 ) 2,739
Prepaid expenses and other assets (213 ) (2,024 )
Accounts payable 20,084 11,043
Accrued expenses and other liabilities (282 ) 8,431
Income tax payable, net   (524 )   275  
Net cash provided by operating activities   13,015     9,899  
 
Cash flows from investing activities:
Purchases of property, plant and equipment (2,442 ) (2,042 )
Proceeds from disposals of property, plant and equipment - 1
Proceeds from sales and maturities of available-for-sale investments 58,075 85,072
Purchases of available-for-sale investments   (44,584 )   (69,182 )
Net cash provided by investing activities   11,049     13,849  
 
Cash flows from financing activities:
Proceeds from stock option exercises 280 1,541
Purchases of treasury stock (3,035 ) (9,427 )
Dividend payments (4,811 ) (5,102 )
Payments on long-term debt - (16,500 )
Excess tax benefits from stock-based compensation arrangements   9     55  
Net cash used in financing activities   (7,557 )   (29,433 )
 
Net increase (decrease) in cash and cash equivalents 16,507 (5,685 )
Effect of exchange rate changes (2,937 ) 202
Cash and cash equivalents, beginning of period   73,439     58,298  
 
Cash and cash equivalents, end of period $ 87,009   $ 52,815  
 
Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts payable $ 784 $ 85

Supplemental InformationAcquisition 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 months ended March 31, 2015 and 2014 for both transactions are as follows:

 
Three Months Ended
March 31,
  2015       2014  
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments $ 226   $ 246  
 
NSN BBA acquisition
Amortization of acquired intangible assets 241 302
Amortization of other purchase accounting adjustments 154 361
Acquisition related professional fees, travel and other expenses   6     48  
 
Subtotal   401     711  
 
Total acquisition related expenses, amortizations and adjustments 627 957
Provision for income taxes   (213 )   (316 )
 
Total acquisition related expenses, amortizations and adjustments, net of tax $ 414   $ 641  

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three months ended March 31, 2015 and 2014:

 

Three Months Ended

March 31,
2015   2014
 
Revenue (adjustments to deferred revenue recognized in the period) $ 67 $ 243
Cost of goods sold 12 34
 
Subtotal 79 277
 
Selling, general and administrative expenses 12 55
Research and development expenses 536 625
 
Subtotal 548 680
 
Total acquisition related expenses, amortizations and adjustments 627 957
Provision for income taxes (213) (316)
 
Total acquisition related expenses, amortizations and adjustments, net of tax $ 414 $ 641
 
 

Supplemental InformationStock-based Compensation Expense(Unaudited)(In thousands)

 
Three Months Ended
March 31,
2015   2014
 
Stock-based compensation expense included in cost of sales $ 90 $ 116
 
Selling, general and administrative expense 691 1,026
Research and development expense 858 915
 
Stock-based compensation expense included in operating expenses 1,549 1,941
 
Total stock-based compensation expense 1,639 2,057
Tax benefit for expense associated with non-qualified options (180) (284)
 
Total stock-based compensation expense, net of tax $ 1,459 $ 1,773
 

Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)

 
Three Months Ended
March 31,
  2015     2014
 
GAAP earnings per common share – diluted $ 0.06 $ 0.17
 
Acquisition related expenses, amortizations and adjustments 0.01 0.01
Stock-based compensation expense   0.03   0.03
 
Non-GAAP earnings per common share – diluted $ 0.10 $ 0.21

ADTRAN, Inc.
Michael Foliano, 256-963-8885
Senior Vice President & Interim CFO
or
INVESTOR SERVICES/ASSISTANCE:
Gayle Ellis, 256-963-8220
Investor Services

Source: ADTRAN, Inc.



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