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ADTRAN, Inc. Reports Results for the Fourth Quarter 2013 and Declares Quarterly Cash Dividend
[January 21, 2014]

ADTRAN, Inc. Reports Results for the Fourth Quarter 2013 and Declares Quarterly Cash Dividend


HUNTSVILLE, Ala. --(Business Wire)--

ADTRAN, Inc. (NASDAQ:ADTN) reported results for the fourth quarter 2013. For the quarter, sales were $159,094,000 compared to $139,756,000 for the fourth quarter of 2012. Operating income was $10,639,000 compared to $2,874,000 for the fourth quarter of 2012. Net Income was $11,840,000 compared to $3,961,000 for the fourth quarter of 2012. Earnings per share, assuming dilution, were $0.20 compared to $0.06 for the fourth quarter of 2012. Non-GAAP earnings per share were $0.25 compared to $0.11 for the fourth quarter of 2012. 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, "We had a solid quarter with revenue coming in at 14% over the same period last year. Growth was driven by our core product areas, Broadband Access, Internetworking and Optical, which were up 25%. Strong performances in EMEA and Latin America helped drive our international revenue up 78%. Our strategy towards geographic diversification continued to pay benefits during the quarter and we believe we are well positioned for the future as our customers leverage technology advancements to improve their competitive position."

The Company also announced that its Board of Directors declared a cash dividend for the fourth quarter of 2013. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on February 6, 2014. The ex-dividend date is February 4, 2014 and the payment date is February 20, 2014.

The Company confirmed that its fourth quarter conference call will be held Wednesday, January 22, 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 [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, 2012 and on Form 10-Q for the quarter ended September 30, 2013. 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)

 
 
  December 31,

2013

  December 31,
2012
Assets
Cash and cash equivalents $ 58,298 $ 68,457
Short-term investments 105,760 160,481
Accounts receivable, net 85,814 81,194
Other receivables 18,249 16,253
Inventory 90,111 102,583
Prepaid expenses 4,325 4,148
Deferred tax assets, net   17,083   13,055
Total Current Assets 379,640 446,171
 
Property, plant and equipment, net 76,739 80,246
Deferred tax assets, net 9,622 10,261
Goodwill 3,492 3,492
Other assets 11,180 13,482
Long-term investments   309,225   332,729
 
Total Assets $ 789,898 $ 886,381
 
Liabilities and Stockholders' Equity
Accounts payable $ 48,282 $ 42,173
Unearned revenue 22,205 38,051
Accrued expenses 12,776 10,309
Accrued wages and benefits 14,040 15,022
Income tax payable, net   5,002   1,211
Total Current Liabilities 102,305 106,766
 
Non-current unearned revenue 14,643 23,803
Other non-current liabilities 22,144 17,406
Bonds payable   46,200   46,000
Total Liabilities 185,292 193,975
 
Stockholders' Equity   604,606   692,406
 
Total Liabilities and Stockholders' Equity $ 789,898 $ 886,381

 
 
 

Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)

 
 
    Three Months Ended   Twelve Months Ended
December 31, December 31,
2013   2012 2013   2012
 
Sales $ 159,094 $ 139,756 $ 641,744 $ 620,614
Cost of sales   82,230     72,373     332,858     303,971  
 
Gross Profit 76,864 67,383 308,886 316,643
 
Selling, general and administrative expenses 33,284 31,393 129,366 134,523
Research and development expenses   32,941     33,116     131,055     125,951  
 
Operating Income 10,639 2,874 48,465 56,169
 
Interest and dividend income 1,991 2,006 7,012 7,657
Interest expense (588 ) (591 ) (2,325 ) (2,347 )
Net realized investment gain 1,665 2,197 8,614 9,550
Other income (expense), net 610 (82 ) (911 ) 183
Gain on bargain purchase of a business   -     -     -     1,753  
 
Income before provision for income taxes 14,317 6,404 60,855 72,965
 
Provision for income taxes   (2,477 )   (2,443 )   (15,061 )   (25,702 )
 
Net Income $ 11,840   $ 3,961   $ 45,794   $ 47,263  
 
Weighted average shares outstanding - basic 57,178 62,542 59,001 63,259
Weighted average shares outstanding - diluted (1) 57,777 62,690 59,424 63,774
 
Earnings per common share - basic $ 0.21 $ 0.06 $ 0.78 $ 0.75
Earnings per common share - diluted (1) $ 0.20 $ 0.06 $ 0.77 $ 0.74
 
(1) Assumes exercise of dilutive stock options calculated under the treasury stock method.

 
 
 

Consolidated Statements of Comprehensive Income
(Unaudited)
(In thousands)

 
 
  Three Months Ended   Twelve Months Ended
December 31, December 31,
2013   2012 2013   2012
 
Net Income $ 11,840   $ 3,961   $ 45,794   $ 47,263  
 
Other Comprehensive Income (Loss), net of tax:
 
Unrealized gains (losses) on available-for-sale securities 1,409 (2,071 ) 629 (52 )
Defined benefit plan adjustments 1,061 (1,952 ) 1,061 (1,952 )
Foreign currency translation   (707 )   (21 )   (2,205 )   170  
 
Other Comprehensive Income (Loss), net of tax   1,763     (4,044 )   (515 )   (1,834 )
 
Comprehensive Income (Loss), net of tax $ 13,603   $ (83 ) $ 45,279   $ 45,429  

 
 
 

Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

 
 
  Twelve Months Ended
December 31,
2013   2012
Cash flows from operating activities:
Net income $ 45,794 $ 47,263
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 14,628 14,079
Amortization of net premium on available-for-sale investments 5,956 8,257
Net realized gain on long-term investments (8,614 ) (9,550 )
Net (gain) loss on disposal of property, plant and equipment 3 (214 )
Gain on bargain purchase of a business - (1,753 )
Stock-based compensation expense 9,073 9,264
Deferred income taxes (4,058 ) (3,785 )
Tax benefit from stock option exercises 169 1,905
Excess tax benefits from stock-based compensation arrangements (158 ) (1,456 )
Change in operating assets and liabilities:
Accounts receivable, net (4,022 ) (4,365 )
Other receivables (1,549 ) 2,977
Inventory 11,479 7,163
Prepaid expenses and other assets (11 ) (1,045 )
Accounts payable 5,543 7,265
Accrued expenses and other liabilities (17,879 ) 11,583
Income tax payable, net   3,747     (1,960 )
Net cash provided by operating activities 60,101 85,628
 
Cash flows from investing activities:
Purchases of property, plant and equipment (8,510 ) (12,075 )
Proceeds from disposals of property, plant and equipment - 266
Proceeds from sales and maturities of available-for-sale investments 343,567 282,039
Purchases of available-for-sale investments (261,625 ) (282,740 )
Acquisition of business   -     7,496  
Net cash provided by (used in) investing activities 73,432 (5,014 )
 
Cash flows from financing activities:
Proceeds from stock option exercises 3,629 6,049
Purchases of treasury stock (124,267 ) (39,362 )
Dividend payments (21,412 ) (22,813 )
Payments on long-term debt - (500 )
Excess tax benefits from stock-based compensation arrangements   158     1,456  
Net cash used in financing activities (141,892 ) (55,170 )
 
Net increase (decrease) in cash and cash equivalents (8,359 ) 25,444
Effect of exchange rate changes (1,800 ) 34
Cash and cash equivalents, beginning of period   68,457     42,979  
 
Cash and cash equivalents, end of period $ 58,298   $ 68,457  

 
 
 

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, 2013 and 2012 for both transactions are as follows:

 
  Three Months Ended   Twelve Months Ended
December 31, December 31,
2013   2012 2013   2012
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments $ 279   $ 296   $ 1,142   $ 1,463  
 
NSN BBA acquisition
Amortization of acquired intangible assets 301 290 1,174 762
Amortization of other purchase accounting adjustments 391 587 1,378 2,305
Acquisition related professional fees, travel and other expenses   16     323     345     4,860  
 
Subtotal   708     1,200     2,897     7,927  
 
Total acquisition related expenses, amortizations and adjustments 987 1,496 4,039 9,390
Provision for income taxes   (328 )   (488 )   (1,343 )   (3,148 )
 
Total acquisition related expenses, amortizations and adjustments, net of tax $ 659   $ 1,008   $ 2,696   $ 6,242  
 
 

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, 2013 and 2012:

 
Three Months Ended Twelve Months Ended
December 31, December 31,
2013 2012 2013 2012
 
Revenue (adjustments to deferred revenue recognized in the period) $ 211 $ 377 $ 929 $ 1,528
Cost of goods sold   102     154     196     1,086  
 
Subtotal   313     531     1,125     2,614  
 
Selling, general and administrative expenses 24 330 399 4,510
Research and development expenses   650     635     2,515     2,266  
 
Subtotal   674     965     2,914     6,776  
 
Total acquisition related expenses, amortizations and adjustments 987 1,496 4,039 9,390
Provision for income taxes   (328 )   (488 )   (1,343 )   (3,148 )
 
Total acquisition related expenses, amortizations and adjustments, net of tax $ 659   $ 1,008   $ 2,696   $ 6,242  

 
 
 

Supplemental Information
Stock-based Compensation Expense
(Unaudited)
(In thousands)

 
 
  Three Months Ended   Twelve Months Ended
December 31, December 31,
2013   2012 2013   2012
 
Stock-based compensation expense included in cost of sales $ 131   $ 118   $ 465   $ 422  
 
Selling, general and administrative expense 1,314 1,146 4,443 4,351
Research and development expense   1,112     1,217     4,165     4,491  
 
Stock-based compensation expense included in operating expenses   2,426     2,363     8,608     8,842  
 
Total stock-based compensation expense 2,557 2,481 9,073 9,264
Tax benefit for expense associated with non-qualified options   (374 )   (318 )   (1,298 )   (1,234 )
 
Total stock-based compensation expense, net of tax $ 2,183   $ 2,163   $ 7,775   $ 8,030  

 
 
 

Reconciliation of GAAP net income per share, diluted, to
Non-GAAP net income per share, diluted
(Unaudited)

 
 
  Three Months Ended   Twelve Months Ended
December 31, December 31,
2013   2012 2013   2012
 
GAAP earnings per common share - diluted $ 0.20 $ 0.06 $ 0.77 $ 0.74
 
Acquisition related expenses, amortizations and adjustments 0.01 0.02 0.05 0.10
Stock-based compensation expense 0.04 0.03 0.13 0.13
Gain on bargain purchase of business

-

 

-

-

  (0.03 )
 
Non-GAAP earnings per common share - diluted $ 0.25 $ 0.11 $ 0.95 $ 0.94  
 
 
 


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