Form 8-K ADTRAN INC For: Jan 19

 

 

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 19, 2016

 

 

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 January 19, 2016, ADTRAN, Inc. announced its financial results for the fiscal quarter ended December 31, 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 holders of record at the close of business on February 4, 2016. The ex-dividend date is February 2, 2016 and the payment date is February 18, 2016.

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, 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 January 19, 2016
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 20, 2016.

 

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Press Release dated January 19, 2016
99.2		Revenues by product and segment classification

EXHIBIT 99.1

ADTRAN, INC.

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

HUNTSVILLE, Ala.—(BUSINESS WIRE)—January 19, 2016—ADTRAN, Inc. (NASDAQ: ADTN) reported results for the fourth quarter 2015. For the quarter, sales were $139,013,000 compared to $143,982,000 for the fourth quarter of 2014. Net income was $5,718,000 compared to $9,292,000 for the fourth quarter of 2014. Earnings per share, assuming dilution, were $0.12 compared to $0.17 for the fourth quarter of 2014. Non-GAAP earnings per share were $0.16 compared to $0.19 for the fourth 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 in the quarter came in better than expected, driven by growth in our U.S. Tier 1 and Tier 2 carrier business. Compared to the same period last year, Q4 domestic revenue was up over 20% due to a significant increase in our broadband sales. Additionally, improved gross margins and lower operating expenses helped us achieve better than expected operating income. We expect further improvement in the carrier environment as customers accelerate investments in upgrading their network infrastructure.”

The Company also announced that its Board of Directors declared a cash dividend for the fourth 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 February 4, 2016. The ex-dividend date is February 2, 2016 and the payment date is February 18, 2016.

The Company confirmed that its fourth quarter conference call will be held Wednesday, January 20, 2016 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 and on Form 10-Q for the quarter ended September 30, 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: Roger Shannon Senior Vice President & CFO 256-963-8775		INVESTOR SERVICES/ASSISTANCE: Gayle Ellis Investor Services 256-963-8220

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Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)

 

		December 31, 2015				December 31, 2014
Assets
Cash and cash equivalents		$	84,550			$	73,439
Short-term investments			34,396				46,919
Accounts receivable, net			71,917				88,502
Other receivables			19,321				33,295
Inventory			96,735				86,710
Prepaid expenses			4,943				5,129
Deferred tax assets, net			18,924				17,095
Total Current Assets			330,786				351,089
Property, plant and equipment, net			73,233				74,828
Deferred tax assets, net			18,091				17,694
Goodwill			3,492				3,492
Other assets			9,276				10,942
Long-term investments			198,026				280,649
Total Assets		$	632,904			$	738,694
Liabilities and Stockholders’ Equity
Accounts payable		$	48,668			$	56,414
Unearned revenue			16,615				22,762
Accrued expenses			12,108				11,077
Accrued wages and benefits			12,857				13,855
Income tax payable, net			2,395				14,901
Total Current Liabilities			92,643				119,009
Non-current unearned revenue			7,965				10,948
Other non-current liabilities			24,236				30,924
Bonds payable			27,900				28,800
Total Liabilities			152,744				189,681
Stockholders’ Equity			480,160				549,013
Total Liabilities and Stockholders’ Equity		$	632,904			$	738,694

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Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2015				2014				2015				2014
Sales		$	139,013			$	143,982			$	600,064			$	630,007
Cost of sales			76,574				75,499				333,167				318,680
Gross Profit			62,439				68,483				266,897				311,327
Selling, general and administrative expenses			30,339				31,793				123,542				131,958
Research and development expenses			29,300				32,711				129,876				132,258
Operating Income			2,800				3,979				13,479				47,111
Interest and dividend income			1,273				1,679				3,953				5,019
Interest expense			(148	)			(152	)			(596	)			(677	)
Net realized investment gain			1,907				59				10,337				7,278
Other income (expense), net (1)			(617	)			2,790				(1,465	)			1,175
Income before provision for income taxes			5,215				8,355				25,708				59,906
Provision for income taxes			503				937				(7,062	)			(15,286	)
Net Income		$	5,718			$	9,292			$	18,646			$	44,620
Weighted average shares outstanding—basic			49,552				53,835				51,145				55,120
Weighted average shares outstanding—diluted (2)			49,643				54,085				51,267				55,482
Earnings per common share—basic		$	0.12			$	0.17			$	0.36			$	0.81
Earnings per common share—diluted (2)		$	0.12			$	0.17			$	0.36			$	0.80

 

(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 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,
		2015				2014				2015				2014
Net Income		$	5,718			$	9,292			$	18,646			$	44,620
Other Comprehensive Income (Loss), net of tax:
Unrealized gains (losses) on available-for-sale securities			(455	)			1,077				(7,032	)			(1,773	)
Defined benefit plan adjustments			1,651				(4,866	)			1,862				(4,866	)
Foreign currency translation			73				(2,007	)			(3,724	)			(4,189	)
Other Comprehensive Income (Loss), net of tax			1,269				(5,796	)			(8,894	)			(10,828	)
Comprehensive Income, net of tax		$	6,987			$	3,496			$	9,752			$	33,792

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Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

		Twelve Months Ended December 31,
		2015				2014
Cash flows from operating activities:
Net income		$	18,646			$	44,620
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			14,245				14,845
Amortization of net premium on available-for-sale investments			2,402				4,360
Net realized gain on long-term investments			(10,336	)			(7,278	)
Net loss on disposal of property, plant and equipment			644				142
Stock-based compensation expense			6,712				8,563
Deferred income taxes			(692	)			(5,526	)
Tax impact from stock option exercises			(40	)			81
Excess tax benefits from stock-based compensation arrangements			(3	)			(63	)
Change in operating assets and liabilities:
Accounts receivable, net			14,918				(3,910	)
Other receivables			11,704				(19,298	)
Inventory			(11,323	)			1,953
Prepaid expenses and other assets			(625	)			(3,627	)
Accounts payable			(5,826	)			9,973
Accrued expenses and other liabilities			(10,289	)			(166	)
Income tax payable, net			(11,590	)			11,168
Net cash provided by operating activities			18,547				55,837
Cash flows from investing activities:
Purchases of property, plant and equipment			(11,753	)			(11,256	)
Proceeds from disposals of property, plant and equipment			183				1
Proceeds from sales and maturities of available-for-sale investments			280,435				230,019
Purchases of available-for-sale investments			(188,921	)			(142,695	)
Net cash provided by investing activities			79,944				76,069
Cash flows from financing activities:
Proceeds from stock option exercises			961				2,839
Purchases of treasury stock			(66,160	)			(80,576	)
Dividend payments			(18,449	)			(19,947	)
Payments on long-term debt			(1,100	)			(16,500	)
Excess tax benefits from stock-based compensation arrangements			3				63
Net cash used in financing activities			(84,745	)			(114,121	)
Net increase in cash and cash equivalents			13,746				17,785
Effect of exchange rate changes			(2,635	)			(2,644	)
Cash and cash equivalents, beginning of period			73,439				58,298
Cash and cash equivalents, end of period		$	84,550			$	73,439
Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts payable		$	598			$	467

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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 twelve months ended December 31, 2015 and 2014:

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2015				2014				2015				2014
Restructuring expense included in cost of sales		$	5			$	—			$	112			$	—
Selling, general and administrative expense			8				—				846				—
Research and development expense			13				—				2,108				—
Restructuring expense included in operating expenses			21				—				2,954				—
Total restructuring expense			26				—				3,066				—
Provision for income taxes			(10	)			—				(1,196	)			—
Total restructuring expense, net of tax		$	16			$	—			$	1,870			$	—

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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, 2015 and 2014 for both transactions are as follows:

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2015				2014				2015				2014
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments		$	174			$	226			$	817			$	925
NSN BBA acquisition
Amortization of acquired intangible assets			227				269				928				1,153
Amortization of other purchase accounting adjustments			48				222				443				1,117
Acquisition related professional fees, travel and other expenses			14				193				75				282
Subtotal			289				684				1,446				2,552
Total acquisition related expenses, amortizations and adjustments			463				910				2,263				3,477
Provision for income taxes			(158	)			(300	)			(767	)			(1,151	)
Total acquisition related expenses, amortizations and adjustments, net of tax		$	305			$	610			$	1,496			$	2,326

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, 2015 and 2014:

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2015				2014				2015				2014
Revenue (adjustments to deferred revenue recognized in the period)		$	16			$	73			$	212			$	601
Cost of goods sold			3				67				55				171
Subtotal			19				140				267				772
Selling, general and administrative expenses			18				200				92				310
Research and development expenses			426				570				1,904				2,395
Subtotal			444				770				1,996				2,705
Total acquisition related expenses, amortizations and adjustments			463				910				2,263				3,477
Provision for income taxes			(158	)			(300	)			(767	)			(1,151	)
Total acquisition related expenses, amortizations and adjustments, net of tax		$	305			$	610			$	1,496			$	2,326

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Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2015				2014				2015				2014
Stock-based compensation expense included in cost of sales		$	78			$	120			$	280			$	479
Selling, general and administrative expense			1,035				1,096				3,261				4,185
Research and development expense			811				1,051				3,171				3,899
Stock-based compensation expense included in operating expenses			1,846				2,147				6,432				8,084
Total stock-based compensation expense			1,924				2,267				6,712				8,563
Tax benefit for expense associated with non-qualified options			(242	)			(279	)			(862	)			(1,157	)
Total stock-based compensation expense, net of tax		$	1,682			$	1,988			$	5,850			$	7,406

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Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2015				2014				2015				2014
GAAP earnings per common share – diluted		$	0.12			$	0.17			$	0.36			$	0.80
Restructuring expense			—				—				0.04				—
Acquisition related expenses, amortizations and adjustments			0.01				0.01				0.03				0.04
Settlement of acquisition related working capital items			—				(0.03	)			—				(0.03	)
Stock-based compensation expense			0.03				0.04				0.11				0.13
Non-GAAP earnings per common share – diluted		$	0.16			$	0.19			$	0.54			$	0.94

EXHIBIT 99.2

Product and Segment Revenues

(Unaudited)

(In thousands)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2015				2014				2015				2014
Product Revenues:
Carrier Systems		$	102,851			$	100,337			$	433,373			$	442,664
Business Networking			30,975				37,346				139,693				156,980
Loop Access			5,187				6,299				26,998				30,363
Total		$	139,013			$	143,982			$	600,064			$	630,007
Subcategories included in the above:
Broadband Access (included in Carrier Systems)		$	84,881			$	82,544			$	364,537			$	368,464
Optical (included in Carrier Systems)			13,946				13,066				56,615				55,374
Internetworking (Netvanta & Multi-service Access Gateways) (included in Business Networking)			30,280				35,661				135,720				152,223
Total Core Products			129,107				131,271				556,872				576,061
Percentage of Total Revenue			93	%			91	%			93	%			91	%
HDSL (does not include T1) (included in Loop Access)			4,850				5,754				25,349				27,829
Other Products (excluding HDSL)			5,056				6,957				17,843				26,117
Total Legacy Products			9,906				12,711				43,192				53,946
Percentage of Total Revenue			7	%			9	%			7	%			9	%
Total		$	139,013			$	143,982			$	600,064			$	630,007
Segment Revenues:
Carrier Networks		$	116,718			$	115,784			$	499,402			$	510,373
Enterprise Networks			22,295				28,198				100,662				119,634
Total		$	139,013			$	143,982			$	600,064			$	630,007
Sales by Geographic Region:
United States		$	112,022			$	93,038			$	419,366			$	381,382
International			26,991				50,944				180,698				248,625
Total		$	139,013			$	143,982			$	600,064			$	630,007

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