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 17, 2019
 
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)	
Registrant’s Telephone Number, Including Area Code: (256) 963-8000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
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))	
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.  ☐

  

Item 2.02 Results of Operations and Financial Condition.
 
On April 17, 2019, ADTRAN, Inc. announced its financial results for the fiscal quarter ended March 31, 2019 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 2, 2019. The ex-dividend date is May 1, 2019 and the payment date is May 16, 2019.
 
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 segment and category for the fiscal quarter ended March 31, 2019 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 April 17, 2019	
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 18, 2019.
ADTRAN, Inc.
(Registrant) 

By : /s/ Michael Foliano
Michael Foliano
Senior Vice President of Finance and
Chief Financial Officer
(Principal Accounting Officer)

 

 

EXHIBIT 99.1
 
ADTRAN, Inc. Reports Earnings for the First Quarter 2019 and Declares Quarterly Cash Dividend
 
HUNTSVILLE, Ala. -- (BUSINESS WIRE) – April 17, 2019 -- ADTRAN, Inc. (NASDAQ:ADTN) reported results for the first quarter 2019. For the quarter, sales were $143.8 million compared to $120.8 million for the first quarter of 2018. Net income was $0.8 million compared to a net loss of $10.8 million for the first quarter of 2018. Earnings per share, assuming dilution, were $0.02 compared to a loss per share of $0.22 for the first quarter of 2018. Non-GAAP net income was $4.9 million compared to a net loss of $15.8 million for the first quarter of 2018.  Non-GAAP earnings per share, assuming dilution, were $0.10 compared to a loss per share of $0.33 for the first quarter of 2018.  Non-GAAP earnings per share exclude stock-based compensation expense, acquisition related amortizations and other expenses, restructuring expenses, gain on bargain purchase of a business, and amortization of pension actuarial losses.   The reconciliation between GAAP net income (loss) and earnings (loss) per share to non-GAAP net income (loss) and non-GAAP earnings (loss) per share is in the table provided.
 
ADTRAN Chairman and Chief Executive Officer Tom Stanton stated, “We are pleased with our progress in the first quarter of 2019. Our revenue was diverse and well balanced with material contributions across the LATAM, EMEA, North America, and Pacific Rim regions. Furthermore, our broad portfolio of next-generation solutions continues to gain market traction with a growing number of customers in an expanding range of market segments. This progress underscores the company’s global strategy of diversification across geographies and markets.”
 
The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2019. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on May 2, 2019. The ex-dividend date is May 1, 2019, and the payment date is May 16, 2019.
 
The Company confirmed that it will hold a conference call to discuss its first quarter results Thursday, April 18, 2019, at 9:30 a.m. Central Time. ADTRAN will webcast this conference call. To listen, simply visit the Investor Relations site at www.investors.adtran.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, as well as the text of the Company's earnings release, will be available on the Investor Relations site approximately 24 hours following the call and will remain available for at least 12 months. For more information, visit www.investors.adtran.com or via email at investor.relations@adtran.com.
 
At ADTRAN, we believe amazing things happen when people connect. From the cloud edge to the subscriber edge, we help communications service providers around the world manage and scale services that connect people, places and things to advance human progress. Whether rural or urban, domestic or international, telco or cable, enterprise or residential—ADTRAN solutions optimize existing technology infrastructures and create new, multi-gigabit platforms that leverage cloud economics, data analytics, machine learning and open ecosystems—the future of global networking. Find more at ADTRAN, LinkedIn and Twitter.
 
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, 2018. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.
 
To provide additional transparency, we have disclosed non-GAAP operating income (loss) which has been reconciled to operating income (loss) and non-GAAP net income (loss) and non-GAAP adjusted earnings (loss) per share - basic and diluted which have been reconciled to net income (loss) and earnings (loss) per share - basic and diluted as reported based on Generally Accepted Accounting Principles in the United States (U.S. GAAP). These measures exclude certain items which management believes are not reflective of the ongoing operating performance of the business. We believe this information is useful in providing period-to-period comparisons of the results of our ongoing operations. Additionally, these measures are used by management in our ongoing planning and annual budgeting processes. The presentation of non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP earnings (loss) per share- basic and diluted, when combined with the U.S. GAAP presentation of operating income (loss), net income (loss), and net income (loss) per share is beneficial to the overall understanding of ongoing operating performance of the company.
 
These measures are not in accordance with, or an alternative for, U.S. GAAP and therefore should not be considered in isolation or as a substitution for analysis of our results as reported under U.S. GAAP. Our calculation of non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP earnings (loss) per share - basic and diluted may not be comparable to similar measures calculated by other companies.

Condensed Consolidated Balance Sheet
(Unaudited)
(In thousands)
 
	March 31,	 	 	December 31,	 	
 	2019	 	 	2018	 	
Assets	 	 	 	 	 	 	 	
Cash and cash equivalents	$	109,119	 	 	$	105,504	 	
Short-term investments	 	31,290	 	 	 	3,246	 	
Accounts receivable, net	 	99,032	 	 	 	99,385	 	
Other receivables	 	34,583	 	 	 	36,699	 	
Inventory, net	 	93,609	 	 	 	99,848	 	
Prepaid expenses and other current assets	 	9,683	 	 	 	10,744	 	
Total Current Assets	 	377,316	 	 	 	355,426	 	
 	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	79,505	 	 	 	80,635	 	
Deferred tax assets, net	 	36,891	 	 	 	37,187	 	
Goodwill	 	6,982	 	 	 	7,106	 	
Intangibles, net	 	31,817	 	 	 	33,183	 	
Other assets	 	14,885	 	 	 	5,668	 	
Long-term investments	 	85,227	 	 	 	108,822	 	
Total Assets	$	632,623	 	 	$	628,027	 	
 	 	 	 	 	 	 	 	
Liabilities and Stockholders' Equity	 	 	 	 	 	 	 	
Accounts payable	$	60,116	 	 	$	60,054	 	
Bonds payable	 	25,600	 	 	 	1,000	 	
Unearned revenue	 	15,230	 	 	 	17,940	 	
Accrued expenses	 	14,039	 	 	 	11,746	 	
Accrued wages and benefits	 	15,105	 	 	 	14,752	 	
Income tax payable, net	 	11,785	 	 	 	12,518	 	
Total Current Liabilities	 	141,875	 	 	 	118,010	 	
 	 	 	 	 	 	 	 	
Non-current unearned revenue	 	4,514	 	 	 	5,296	 	
Other non-current liabilities	 	42,687	 	 	 	33,842	 	
Bonds payable	 	—	 	 	 	24,600	 	
Total Liabilities	 	189,076	 	 	 	181,748	 	
 	 	 	 	 	 	 	 	
Stockholders' Equity	 	443,547	 	 	 	446,279	 	
 	 	 	 	 	 	 	 	
Total Liabilities and Stockholders' Equity	$	632,623	 	 	$	628,027	 	

  

Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
 
	 	Three Months Ended	 	
 	 	March 31,	 	
 	 	2019	 	 	2018	 	
Sales	 	 	 	 	 	 	 	 	
Products	 	$	125,822	 	 	$	105,253	 	
Services	 	 	17,969	 	 	 	15,553	 	
Total Sales	 	 	143,791	 	 	 	120,806	 	
Cost of Sales	 	 	 	 	 	 	 	 	
Products	 	 	70,734	 	 	 	68,612	 	
Services	 	 	12,445	 	 	 	12,461	 	
Total Cost of Sales	 	 	83,179	 	 	 	81,073	 	
Gross Profit	 	 	60,612	 	 	 	39,733	 	
Selling, general and administrative expenses	 	 	35,132	 	 	 	33,531	 	
Research and development expenses	 	 	31,647	 	 	 	32,849	 	
Operating Loss	 	 	(6,167	)	 	 	(26,647	)	
Interest and dividend income	 	 	591	 	 	 	866	 	
Interest expense	 	 	(127	)	 	 	(132	)	
Net investment gain (loss)	 	 	5,926	 	 	 	(97	)	
Other income (expense), net	 	 	855	 	 	 	(57	)	
Gain on bargain purchase of a business	 	 	—	 	 	 	11,322	 	
Income (Loss) Before Provision for Income Taxes	 	 	1,078	 	 	 	(14,745	)	
(Provision) benefit for income taxes	 	 	(308	)	 	 	3,931	 	
Net Income (Loss)	 	$	770	 	 	$	(10,814	)	
 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding – basic	 	 	47,782	 	 	 	48,232	 	
Weighted average shares outstanding – diluted (1)	 	 	47,853	 	 	 	48,292	 	
 	 	 	 	 	 	 	 	 	
Earnings (loss) per common share – basic	 	$	0.02	 	 	$	(0.22	)	
Earnings (loss) per common share – diluted (1)	 	$	0.02	 	 	$	(0.22	)	
 
(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,	 	
 	 	2019	 	 	2018	 	
 	 	 	 	 	 	 	 	 	
Net Income (Loss)	 	$	770	 	 	$	(10,814	)	
Other Comprehensive Loss, net of tax	 	 	 	 	 	 	 	 	
Net unrealized gains (losses) on available-for-sale securities	 	 	185	 	 	 	(3,412	)	
Defined benefit plan adjustments	 	 	121	 	 	 	62	 	
Foreign currency translation	 	 	(1,160	)	 	 	842	 	
Other Comprehensive Loss, net of tax	 	 	(854	)	 	 	(2,508	)	
Comprehensive Loss, net of tax	 	$	(84	)	 	$	(13,322	)	

 

Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
	 	Three Months Ended	 	
 	 	March 31,	 	
 	 	2019	 	 	2018	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	
Net income (loss)	 	$	770	 	 	$	(10,814	)	
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	4,496	 	 	 	3,614	 	
Amortization of net premium on available-for-sale investments	 	 	6	 	 	 	42	 	
Net (gain) loss on long-term investments	 	 	(5,926	)	 	 	97	 	
Net (gain) loss on disposal of property, plant and equipment	 	 	(6	)	 	 	67	 	
Gain on bargain purchase of a business	 	 	—	 	 	 	(11,322	)	
Stock-based compensation expense	 	 	1,859	 	 	 	1,819	 	
Deferred income taxes	 	 	235	 	 	 	(1,877	)	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	
Accounts receivable, net	 	 	170	 	 	 	63,904	 	
Other receivables	 	 	1,185	 	 	 	(6,598	)	
Inventory	 	 	5,974	 	 	 	3,368	 	
Prepaid expenses and other assets	 	 	(566	)	 	 	10,583	 	
Accounts payable	 	 	166	 	 	 	(10,233	)	
Accrued expenses and other liabilities	 	 	(2,355	)	 	 	826	 	
Income tax payable	 	 	(487	)	 	 	2,753	 	
Net cash provided by operating activities	 	 	5,521	 	 	 	46,229	 	
 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	
Purchases of property, plant and equipment	 	 	(1,872	)	 	 	(1,950	)	
Proceeds from sales and maturities of available-for-sale investments	 	 	17,039	 	 	 	49,074	 	
Purchases of available-for-sale investments	 	 	(11,127	)	 	 	(75,960	)	
Acquisition of business	 	 	—	 	 	 	(7,806	)	
Net cash provided by (used in) investing activities	 	 	4,040	 	 	 	(36,642	)	
 	 	 	 	 	 	 	 	 	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	
Proceeds from stock option exercises	 	 	—	 	 	 	369	 	
Purchases of treasury stock	 	 	(184	)	 	 	(10,171	)	
Dividend payments	 	 	(4,301	)	 	 	(4,367	)	
Net cash used in financing activities	 	 	(4,485	)	 	 	(14,169	)	
 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	 	 	5,076	 	 	 	(4,582	)	
Effect of exchange rate changes	 	 	(1,461	)	 	 	772	 	
Cash and cash equivalents, beginning of period	 	 	105,504	 	 	 	86,433	 	
 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of period	 	$	109,119	 	 	$	82,623	 	
 	 	 	 	 	 	 	 	 	
Supplemental disclosure of non-cash investing activities:	 	 	 	 	 	 	 	 	
Purchases of property, plant and equipment included in accounts payable	 	$	273	 	 	$	95	 	
Right-of-use asset obtained in exchange for lease obligations	 	$	10,371	 	 	$	—	 	

  

Supplemental Information
Reconciliation of Operating Loss to Non-GAAP Operating Income (Loss)
(Unaudited)

	 	Three Months Ended
March 31,	 	 	 	 	
 	 	2019	 	 	 	 	2018	 	 	 	 	
Operating Loss	 	$	(6,167	)	 	 	 	$	(26,647	)	 	 	 	
Acquisition related expenses, amortizations and adjustments	 	 	1,497	 	(1)	 	 	 	583	 	(5)	 	 	
Stock-based compensation expense	 	 	1,859	 	(2)	 	 	 	1,819	 	(6)	 	 	
Restructuring expenses	 	 	2,063	 	(3)	 	 	 	5,950	 	(7)	 	 	
Deferred compensation investment fluctuations	 	 	2,124	 	(4)	 	 	 	(386	)	(4)	 	 	
Non-GAAP Operating Income (Loss)	 	$	1,376	 	 	 	 	$	(18,681	)	 	 	 	
 
(1) $0.5 million is included in total cost of sales, $0.5 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the consolidated statements of income.	
 	
(2) $0.1 million is included in total cost of sales, $1.1 million is included in selling, general and administrative expenses and $0.7 million is included in research and development expenses on the consolidated statements of income.	
 	
(3) $0.6 million is included in total cost of sales, $0.8 million is included in selling, general and administrative expenses and $0.6 million is included in research and development expenses on the consolidated statements of income.	
 	
(4) Includes non-cash change in fair value of equity investments held in the ADTRAN, Inc. Deferred Compensation Program for Employees (as amended and restated as of June 1, 2010) per ASU 2016-01, all of which is included in selling, general and administrative expenses on the consolidated statements of income.	
 	
(5) $0.3 million is included in selling, general and administrative expenses and $0.3 million is included in research and development expenses on the consolidated statements of income.	
 	
(6) $0.1 million is included in total cost of sales, $1.0 million is included in selling, general and administrative expenses and $0.7 million is included in research and development expenses on the consolidated statements of income.	
 	
(7) $2.4 million is included in total cost of sales, $1.8 million is included in selling, general and administrative expenses and $1.8 million is included in research and development expenses on the consolidated statements of income.	

  

Reconciliation of Net Income (Loss) and Earnings (Loss) per Share – Basic and Diluted to Non-GAAP
Net Income (Loss) and Non-GAAP Earnings (Loss) per Share – Basic and Diluted
(Unaudited)

	 	Three Months Ended
March 31,	 	 	 	 	
 	 	2019	 	 	 	 	2018	 	 	 	 	
Net Income (Loss)	 	$	770	 	 	 	 	$	(10,814	)	 	 	 	
Restructuring expenses	 	 	2,063	 	 	 	 	 	5,950	 	 	 	 	
Acquisition related expenses, amortizations and adjustments	 	 	1,497	 	 	 	 	 	583	 	 	 	 	
Stock-based compensation expense	 	 	1,859	 	 	 	 	 	1,819	 	 	 	 	
Pension expense	 	 	203	 	 	(1	)	 	64	 	 	(1	)	
Gain on bargain purchase of a business	 	 	—	 	 	 	 	 	(11,322	)	 	 	 	
Tax effect of adjustments to Net Income (Loss)	 	 	(1,524	)	 	 	 	 	(2,107	)	 	 	 	
Non-GAAP Net Income (Loss)	 	$	4,868	 	 	 	 	$	(15,827	)	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding – basic	 	 	47,782	 	 	 	 	 	48,232	 	 	 	 	
Weighted average shares outstanding – diluted	 	 	47,853	 	 	 	 	 	48,292	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings (loss) per common share - basic	 	$	0.02	 	 	 	 	$	(0.22	)	 	 	 	
Earnings (loss) per common share - diluted	 	$	0.02	 	 	 	 	$	(0.22	)	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP earnings (loss) per common share - basic	 	$	0.10	 	 	 	 	$	(0.33	)	 	 	 	
Non-GAAP earnings (loss) per common share - diluted	 	$	0.10	 	 	 	 	$	(0.33	)	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(1) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.	 	

 

EXHIBIT 99.2
 
Segment and Category Revenues
(Unaudited)
(In thousands)
 
	 	Three Months Ended	 	
 	 	March 31,	 	
 	 	2019	 	 	2018	 	
Segment Revenues:	 	 	 	 	 	 	 	 	
Network Solutions	 	$	125,822	 	 	$	105,253	 	
Services & Support	 	 	17,969	 	 	 	15,553	 	
Total	 	$	143,791	 	 	$	120,806	 	
 	 	 	 	 	 	 	 	 	
Category Revenues:	 	 	 	 	 	 	 	 	
Access & Aggregation	 	$	99,778	 	 	$	81,680	 	
Subscriber Solutions & Experience	 	 	36,753	 	 	 	30,101	 	
Traditional & Other Products	 	 	7,260	 	 	 	9,025	 	
Total	 	$	143,791	 	 	$	120,806	 	
 	 	 	 	 	 	 	 	 	
Sales by Geographic Region:	 	 	 	 	 	 	 	 	
United States	 	$	72,528	 	 	$	62,086	 	
International	 	 	71,263	 	 	 	58,720	 	
Total	 	$	143,791	 	 	$	120,806