ADTRAN INC - FORM 8-K - EX-99.1

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EX-99.2 - EX-99.2 - ADTRAN INC	d804459dex992.htm

EXHIBIT 99.1

ADTRAN, INC.

REPORTS RESULTS for the THIRD QUARTER 2014 and DECLARES QUARTERLY CASH DIVIDEND

HUNTSVILLE, Ala.—(BUSINESS WIRE)—October 14, 2014—ADTRAN, Inc. (NASDAQ:ADTN) reported results for the third quarter 2014. For the quarter, sales were $162,892,000 compared to $177,404,000 for the third quarter of 2013. Net income was $11,326,000 compared to $16,205,000 for the third quarter of 2013. Earnings per share, assuming dilution, were $0.21 compared to $0.28 for the third quarter of 2013. Non-GAAP earnings per share were $0.25 compared to $0.32 for the third 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, “Revenue came in as we anticipated in our press release of October 2, 2014 with a sequential decrease in our European business and a soft enterprise spending environment. Our domestic carrier business saw a sequential revenue increase. We believe our company is well positioned to take advantage of a re-acceleration of carrier spending in both Europe and the US we expect to begin in 2015.”

The Company also announced that its Board of Directors declared a cash dividend for the third 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 October 30, 2014. The ex-dividend date is October 28, 2014 and the payment date is November 13, 2014.

The Company confirmed that its third quarter conference call will be held Wednesday, October 15, 2014 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 June 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

Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)


	September 30, 2014		December 31, 2013
Assets
Cash and cash equivalents	$	58,415	$	58,298
Short-term investments		55,587		105,760
Accounts receivable, net		99,341		85,814
Other receivables		27,262		18,249
Inventory		86,879		90,111
Prepaid expenses		5,579		4,325
Deferred tax assets, net		15,697		17,083

Total Current Assets		348,760		379,640

Property, plant and equipment, net		75,201		76,739
Deferred tax assets, net		12,991		9,622
Goodwill		3,492		3,492
Other assets		11,748		11,180
Long-term investments		298,542		309,225

Total Assets	$	750,734	$	789,898

Liabilities and Stockholders’ Equity
Accounts payable	$	49,972	$	48,282
Unearned revenue		23,418		22,205
Accrued expenses		12,356		12,776
Accrued wages and benefits		17,591		14,040
Income tax payable, net		13,650		5,002

Total Current Liabilities		116,987		102,305

Non-current unearned revenue		13,822		14,643
Other non-current liabilities		23,548		22,144
Bonds payable		30,000		46,200

Total Liabilities		184,357		185,292

Stockholders’ Equity		566,377		604,606

Total Liabilities and Stockholders’ Equity	$	750,734	$	789,898

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Sales	$	162,892		$	177,404		$	486,025		$	482,650
Cost of sales		84,635			94,857			243,181			250,628

Gross Profit		78,257			82,547			242,844			232,022
Selling, general and administrative expenses		32,438			32,794			100,165			96,082
Research and development expenses		33,324			32,543			99,547			98,114

Operating Income		12,495			17,210			43,132			37,826
Interest and dividend income		992			1,579			3,340			5,021
Interest expense		(150	)		(581	)		(525	)		(1,737	)
Net realized investment gain		2,687			1,751			7,219			6,949
Other income (expense), net		(963	)		22			(1,615	)		(1,521	)

Income before provision for income taxes		15,061			19,981			51,551			46,538
Provision for income taxes		(3,735	)		(3,776	)		(16,223	)		(12,584	)

Net Income	$	11,326		$	16,205		$	35,328		$	33,954

Weighted average shares outstanding - basic		54,521			57,947			55,552			59,561
Weighted average shares outstanding - diluted ⁽¹⁾		54,824			58,617			55,976			59,929

Earnings per common share - basic	$	0.21		$	0.28		$	0.64		$	0.57
Earnings per common share - diluted ⁽¹⁾	$	0.21		$	0.28		$	0.63		$	0.57

⁽¹⁾	Assumes exercise of dilutive stock options calculated under the treasury stock method.

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net Income	$	11,326		$	16,205		$	35,328		$	33,954

Other Comprehensive Income (Loss), net of tax:
Unrealized gains (losses) on available-for-sale securities		(3,148	)		2,562			(2,850	)		(780	)
Foreign currency translation		(2,568	)		(108	)		(2,182	)		(1,498	)

Other Comprehensive Income (Loss), net of tax		(5,716	)		2,454			(5,032	)		(2,278	)

Comprehensive Income, net of tax	$	5,610		$	18,659		$	30,296		$	31,676

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Nine Months Ended
	September 30,
	2014			2013
Cash flows from operating activities:
Net income	$	35,328		$	33,954
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,127			11,021
Amortization of net premium on available-for-sale investments		3,363			4,688
Net realized gain on long-term investments		(7,219	)		(6,949	)
Net loss on disposal of property, plant and equipment		109			6
Stock-based compensation expense		6,296			6,516
Deferred income taxes		(122	)		(1,296	)
Tax benefit from stock option exercises		71			113
Excess tax benefits from stock-based compensation arrangements		(53	)		(106	)
Change in operating assets and liabilities:
Accounts receivable, net		(15,957	)		(25,844	)
Other receivables		(10,576	)		(3,724	)
Inventory		2,413			8,584
Prepaid expenses and other assets		(4,095	)		(417	)
Accounts payable		3,563			30,073
Accrued expenses and other liabilities		7,507			(4,339	)
Income tax payable, net		9,265			(678	)

Net cash provided by operating activities		41,020			51,602

Cash flows from investing activities:
Purchases of property, plant and equipment		(8,162	)		(6,123	)
Proceeds from disposals of property, plant and equipment		1			—
Proceeds from sales and maturities of available-for-sale investments		187,013			275,581
Purchases of available-for-sale investments		(127,074	)		(216,129	)

Net cash provided by investing activities		51,778			53,329

Cash flows from financing activities:
Proceeds from stock option exercises		2,311			2,332
Purchases of treasury stock		(62,144	)		(104,147	)
Dividend payments		(15,060	)		(16,220	)
Payments on long-term debt		(16,500	)		—
Excess tax benefits from stock-based compensation arrangements		53			106

Net cash used in financing activities		(91,340	)		(117,929	)

Net increase (decrease) in cash and cash equivalents		1,458			(12,998	)
Effect of exchange rate changes		(1,341	)		(1,148	)
Cash and cash equivalents, beginning of period		58,298			68,457

Cash and cash equivalents, end of period	$	58,415		$	54,311

Supplemental disclosure of non-cash investing activities:
Purchases of property, plant and equipment included in accounts payable	$	598		$	494

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 nine months ended September 30, 2014 and 2013 for both transactions are as follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments	$	227		$	283		$	699		$	863

NSN BBA acquisition
Amortization of acquired intangible assets		287			291			884			873
Amortization of other purchase accounting adjustments		240			235			895			987
Acquisition related professional fees, travel and other expenses		24			93			89			329

Subtotal		551			619			1,868			2,189

Total acquisition related expenses, amortizations and adjustments		778			902			2,567			3,052
Provision for income taxes		(259	)		(302	)		(851	)		(1,015	)

Total acquisition related expenses, amortizations and adjustments, net of tax	$	519		$	600		$	1,716		$	2,037

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three and nine months ended September 30, 2014 and 2013:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Revenue (adjustments to deferred revenue recognized in the period)	$	105		$	221		$	528		$	718
Cost of goods sold		47			(57	)		104			94

Subtotal		152			164			632			812

Selling, general and administrative expenses		31			101			110			375
Research and development expenses		595			637			1,825			1,865

Subtotal		626			738			1,935			2,240

Total acquisition related expenses, amortizations and adjustments		778			902			2,567			3,052
Provision for income taxes		(259	)		(302	)		(851	)		(1,015	)

Total acquisition related expenses, amortizations and adjustments, net of tax	$	519		$	600		$	1,716		$	2,037

Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Stock-based compensation expense included in cost of sales	$	124		$	118		$	359		$	334

Selling, general and administrative expense		1,048			1,024			3,089			3,129
Research and development expense		975			1,034			2,848			3,053

Stock-based compensation expense included in operating expenses		2,023			2,058			5,937			6,182

Total stock-based compensation expense		2,147			2,176			6,296			6,516
Tax benefit for expense associated with non-qualified options		(298	)		(307	)		(878	)		(924	)

Total stock-based compensation expense, net of tax	$	1,849		$	1,869		$	5,418		$	5,592

Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
GAAP earnings per common share – diluted	$	0.21	$	0.28	$	0.63	$	0.57
Acquisition related expenses, amortizations and adjustments		0.01		0.01		0.03		0.03
Stock-based compensation expense		0.03		0.03		0.10		0.09

Non-GAAP earnings per common share – diluted	$	0.25	$	0.32	$	0.76	$	0.69

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