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): April 18, 2017
ADTRAN, Inc.
(Exact name of Registrant as Specified in Its Charter)
Delaware | 000-24612 | 63-0918200 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) | ||
901 Explorer Boulevard | ||||
Huntsville, Alabama | 35806-2807 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrants Telephone Number, Including Area Code: (256) 963-8000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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 Instructions 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)) |
Item 2.02 | Results of Operations and Financial Condition. |
On April 18, 2017, ADTRAN, Inc. announced its financial results for the fiscal quarter ended March 31, 2017 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 May 4, 2017. The ex-dividend date is May 2, 2017 and the payment date is May 18, 2017.
A copy of ADTRANs 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 segment and category for the fiscal quarter ended March 31, 2017 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 |
Description | |
99.1 | Press Release dated April 18, 2017 | |
99.2 | Revenues by segment and category classification |
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 April 19, 2017.
ADTRAN, Inc. (Registrant) | ||
By: | /s/ Roger D Shannon | |
Roger D. Shannon Senior Vice President of Finance, Chief Financial Officer, Corporate Secretary and Treasurer (Principal Accounting Officer) |
EXHIBIT INDEX
Exhibit |
Description | |
99.1 | Press Release dated April 18, 2017 | |
99.2 | Revenues by segment and category classification |
EXHIBIT 99.1
ADTRAN, Inc. Reports Record Results for the First Quarter 2017
and Declares Quarterly Cash Dividend
HUNTSVILLE, Ala.(BUSINESS WIRE)Apr. 18, 2017 ADTRAN, Inc. (NASDAQ:ADTN) reported results for the first quarter 2017. For the quarter, sales were $170.3 million compared to $142.2 million for the first quarter of 2016. Net income was $6.7 million compared to $5 million for the first quarter of 2016. Earnings per share, assuming dilution, were $0.14 compared to $0.10 for the first quarter of 2016. Non-GAAP earnings per share were $0.18 compared to $0.14 for the first quarter of 2016. The reconciliation between GAAP earnings per share, diluted, and non-GAAP earnings per share, diluted, is in the table provided.
ADTRAN Chairman and Chief Executive Officer Tom Stanton stated, We started 2017 setting a company record for first quarter revenue, driven by increasing momentum in our ultra-broadband product sales and continuing strength in our services area. Most notably, we had very strong performances in our fiber to the premises and vectoring products in both our domestic and international markets. ADTRAN continues to be at the forefront of enabling internet service providers of all types to meet increasing customer demand and decrease their time to market for next generation services.
The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2017. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on May 4, 2017. The ex-dividend date is May 2, 2017, and the payment date is May 18, 2017.
The Company confirmed that its first quarter conference call will be held Wednesday, April 19, 2017, 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 Companys 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. ADTRANs 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 managements 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, 2016. 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, 2017 |
December 31, 2016 |
|||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 72,558 | $ | 79,895 | ||||
Short-term investments |
52,458 | 43,188 | ||||||
Accounts receivable, net |
85,396 | 92,346 | ||||||
Other receivables |
13,398 | 15,137 | ||||||
Income tax receivable, net |
| 760 | ||||||
Inventory |
112,774 | 105,117 | ||||||
Prepaid expenses and other current assets |
17,816 | 16,459 | ||||||
|
|
|
|
|||||
Total Current Assets |
354,400 | 352,902 | ||||||
Property, plant and equipment, net |
83,514 | 84,469 | ||||||
Deferred tax assets, net |
39,085 | 38,036 | ||||||
Goodwill |
3,492 | 3,492 | ||||||
Other assets |
12,274 | 12,234 | ||||||
Long-term investments |
174,413 | 176,102 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 667,178 | $ | 667,235 | ||||
|
|
|
|
|||||
Liabilities and Stockholders Equity |
||||||||
Accounts payable |
$ | 74,300 | $ | 77,342 | ||||
Unearned revenue |
16,969 | 16,326 | ||||||
Accrued expenses |
15,035 | 12,434 | ||||||
Accrued wages and benefits |
12,199 | 20,433 | ||||||
Income tax payable, net |
3,126 | | ||||||
|
|
|
|
|||||
Total Current Liabilities |
121,629 | 126,535 | ||||||
Non-current unearned revenue |
5,675 | 6,333 | ||||||
Other non-current liabilities |
30,861 | 28,050 | ||||||
Bonds payable |
26,800 | 26,800 | ||||||
|
|
|
|
|||||
Total Liabilities |
184,965 | 187,718 | ||||||
Stockholders Equity |
482,213 | 479,517 | ||||||
|
|
|
|
|||||
Total Liabilities and Stockholders Equity |
$ | 667,178 | $ | 667,235 | ||||
|
|
|
|
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Sales |
||||||||
Products |
$ | 143,597 | $ | 123,883 | ||||
Services |
26,682 | 18,321 | ||||||
|
|
|
|
|||||
Total Sales |
170,279 | 142,204 | ||||||
Cost of Sales |
||||||||
Products |
76,659 | 64,073 | ||||||
Services |
19,905 | 12,337 | ||||||
|
|
|
|
|||||
Total Cost of Sales |
96,564 | 76,410 | ||||||
Gross Profit |
73,715 | 65,794 | ||||||
Selling, general and administrative expenses |
34,767 | 30,785 | ||||||
Research and development expenses |
31,916 | 29,488 | ||||||
|
|
|
|
|||||
Operating Income |
7,032 | 5,521 | ||||||
Interest and dividend income |
933 | 855 | ||||||
Interest expense |
(141 | ) | (145 | ) | ||||
Net realized investment gain |
470 | 1,728 | ||||||
Other income, net |
51 | 119 | ||||||
|
|
|
|
|||||
Income before provision for income taxes |
8,345 | 8,078 | ||||||
Provision for income taxes |
(1,694 | ) | (3,064 | ) | ||||
|
|
|
|
|||||
Net Income |
$ | 6,651 | $ | 5,014 | ||||
|
|
|
|
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Weighted average shares outstanding - basic |
48,430 | 49,220 | ||||||
Weighted average shares outstanding - diluted (1) |
48,939 | 49,389 | ||||||
Earnings per common share - basic |
$ | 0.14 | $ | 0.10 | ||||
Earnings per common share - diluted (1) |
$ | 0.14 | $ | 0.10 |
(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, | ||||||||
2017 | 2016 | |||||||
Net Income |
$ | 6,651 | $ | 5,014 | ||||
|
|
|
|
|||||
Other Comprehensive Income, net of tax: |
||||||||
Unrealized gains (losses) on available-for-sale securities |
1,335 | (255 | ) | |||||
Unrealized gains on cash flow hedges |
79 | | ||||||
Defined benefit plan adjustments |
55 | 45 | ||||||
Foreign currency translation |
1,242 | 1,228 | ||||||
|
|
|
|
|||||
Other Comprehensive Income, net of tax |
2,711 | 1,018 | ||||||
|
|
|
|
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Comprehensive Income, net of tax |
$ | 9,362 | $ | 6,032 | ||||
|
|
|
|
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 6,651 | $ | 5,014 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
4,323 | 3,347 | ||||||
Amortization of net premium on available-for-sale investments |
124 | 220 | ||||||
Net realized gain on long-term investments |
(470 | ) | (1,728 | ) | ||||
Net (gain) loss on disposal of property, plant and equipment |
(16 | ) | 3 | |||||
Stock-based compensation expense |
1,883 | 1,558 | ||||||
Deferred income taxes |
(1,947 | ) | 435 | |||||
Change in operating assets and liabilities: |
||||||||
Accounts receivable, net |
7,247 | 4,752 | ||||||
Other receivables |
1,884 | 10,200 | ||||||
Inventory |
(7,399 | ) | 163 | |||||
Prepaid expenses and other assets |
(2,413 | ) | (3,083 | ) | ||||
Accounts payable |
(1,713 | ) | (6,520 | ) | ||||
Accrued expenses and other liabilities |
(3,166 | ) | 902 | |||||
Income tax payable/receivable, net |
4,049 | 413 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
9,037 | 15,676 | ||||||
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|
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Cash flows from investing activities: |
||||||||
Purchases of property, plant and equipment |
(3,872 | ) | (3,166 | ) | ||||
Proceeds from disposals of property, plant and equipment |
16 | | ||||||
Proceeds from sales and maturities of available-for-sale investments |
24,471 | 60,586 | ||||||
Purchases of available-for-sale investments |
(29,517 | ) | (52,053 | ) | ||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities |
(8,902 | ) | 5,367 | |||||
|
|
|
|
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Cash flows from financing activities: |
||||||||
Proceeds from stock option exercises |
1,377 | 247 | ||||||
Purchases of treasury stock |
(5,559 | ) | (11,003 | ) | ||||
Dividend payments |
(4,369 | ) | (4,453 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
(8,551 | ) | (15,209 | ) | ||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
(8,416 | ) | 5,834 | |||||
Effect of exchange rate changes |
1,079 | 1,225 | ||||||
Cash and cash equivalents, beginning of period |
79,895 | 84,550 | ||||||
|
|
|
|
|||||
Cash and cash equivalents, end of period |
$ | 72,558 | $ | 91,609 | ||||
|
|
|
|
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Supplemental disclosure of non-cash investing activities |
||||||||
Purchases of property, plant and equipment included in accounts payable |
$ | 509 | $ | 485 |
Supplemental Information
Acquisition Related Expenses, Amortizations and Adjustments
(Unaudited)
(In thousands)
On August 4, 2011, we closed on the acquisition of Bluesocket, Inc., on May 4, 2012, we closed on the acquisition of the Nokia Siemens Networks Broadband Access business (NSN BBA), and on September 13, 2016, we closed on the acquisition of CommScopes active fiber business (CommScope). Acquisition related expenses, amortizations and adjustments for the three months ended March 31, 2017 and 2016 for all three transactions are as follows:
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Bluesocket, Inc. acquisition |
||||||||
Amortization of acquired intangible assets |
$ | 158 | $ | 173 | ||||
|
|
|
|
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NSN BBA acquisition |
||||||||
Amortization of acquired intangible assets |
208 | 227 | ||||||
Amortization of other purchase accounting adjustments |
28 | 36 | ||||||
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|
|
|||||
Subtotal NSN BBA acquisition |
236 | 263 | ||||||
|
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|
|
|||||
CommScope acquisition |
||||||||
Amortization of acquired intangible assets |
686 | | ||||||
Amortization of other purchase accounting adjustments |
50 | | ||||||
Acquisition related professional fees, travel and other expenses |
8 | | ||||||
|
|
|
|
|||||
Subtotal CommScope acquisition |
744 | | ||||||
|
|
|
|
|||||
Total acquisition related expenses, amortizations and adjustments |
1,138 | 436 | ||||||
Provision for income taxes |
(425 | ) | (149 | ) | ||||
|
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|
|||||
Total acquisition related expenses, amortizations and adjustments, net of tax |
$ | 713 | $ | 287 | ||||
|
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|
|
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, 2017 and 2016:
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Cost of goods sold |
$ | 50 | $ | 7 | ||||
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|
|
|
|||||
Selling, general and administrative expenses |
62 | 3 | ||||||
Research and development expenses |
1,026 | 426 | ||||||
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|
|||||
Total acquisition related expenses, amortizations and adjustments included in operating expenses |
1,088 | 429 | ||||||
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|
|||||
Total acquisition related expenses, amortizations and adjustments |
1,138 | 436 | ||||||
Provision for income taxes |
(425 | ) | (149 | ) | ||||
|
|
|
|
|||||
Total acquisition related expenses, amortizations and adjustments, net of tax |
$ | 713 | $ | 287 | ||||
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|
Supplemental Information
Stock-based Compensation Expense
(Unaudited)
(In thousands)
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Stock-based compensation expense included in cost of sales |
$ | 91 | $ | 99 | ||||
Selling, general and administrative expense |
1,016 | 769 | ||||||
Research and development expense |
776 | 690 | ||||||
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|
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Stock-based compensation expense included in operating expenses |
1,792 | 1,459 | ||||||
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|
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Total stock-based compensation expense |
1,883 | 1,558 | ||||||
Tax benefit for expense associated with non-qualified options, restricted stock units and restricted stock |
(380 | ) | (212 | ) | ||||
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|
|||||
Total stock-based compensation expense, net of tax |
$ | 1,503 | $ | 1,346 | ||||
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|
Reconciliation of GAAP net income per share, diluted, to
Non-GAAP net income per share, diluted
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
GAAP earnings per common share diluted |
$ | 0.14 | $ | 0.10 | ||||
Acquisition related expenses, amortizations and adjustments |
0.01 | 0.01 | ||||||
Stock-based compensation expense |
0.03 | 0.03 | ||||||
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|
|
|||||
Non-GAAP earnings per common share diluted |
$ | 0.18 | $ | 0.14 | ||||
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|
|
EXHIBIT 99.2
Segment and Category Revenues
(Unaudited)
(In thousands)
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Segment Revenues: |
||||||||
Network Solutions |
$ | 143,597 | $ | 123,883 | ||||
Services & Support |
26,682 | 18,321 | ||||||
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|
|
|||||
Total |
$ | 170,279 | $ | 142,204 | ||||
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|
|||||
Category Revenues: |
||||||||
Access & Aggregation |
$ | 120,143 | $ | 93,855 | ||||
Customer Devices |
36,268 | 32,353 | ||||||
Traditional & Other Products |
13,868 | 15,996 | ||||||
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|
|
|
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Total |
$ | 170,279 | $ | 142,204 | ||||
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|
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Sales by Geographic Region: |
||||||||
United States |
$ | 119,262 | $ | 116,348 | ||||
International |
51,017 | 25,856 | ||||||
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|
|
|||||
Total |
$ | 170,279 | $ | 142,204 | ||||
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