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)	
Registrant’s 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 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, 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
Number	  	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
Number	  	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 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, 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	 	

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	 	

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	 	

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	 	

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	 	

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 CommScope’s 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	 	

NSN BBA acquisition	    				  				
Amortization of acquired intangible assets	    	 	208	 	  	 	227	 	
Amortization of other purchase accounting adjustments	    	 	28	 	  	 	36	 	
	    	 	 	 	  	 	 	 	
Subtotal NSN BBA acquisition	    	 	236	 	  	 	263	 	

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	) 	

Total acquisition related expenses, amortizations and adjustments, net of tax	    	$	713	 	  	$	287	 	
	    	 	 	 	  	 	 	 	
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	 	
	    	 	 	 	  	 	 	 	
Selling, general and administrative expenses	    	 	62	 	  	 	3	 	
Research and development expenses	    	 	1,026	 	  	 	426	 	
	    	 	 	 	  	 	 	 	
Total acquisition related expenses, amortizations and adjustments included in operating expenses	    	 	1,088	 	  	 	429	 	

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	 	

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	 	

Stock-based compensation expense included in operating expenses	  	 	1,792	 	 	 	1,459	 	

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	) 	

Total stock-based compensation expense, net of tax	  	$	1,503	 	 	$	1,346	 	

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	 	

Non-GAAP earnings per common share – diluted	  	$	0.18	 	  	$	0.14	 	

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	 	
	  	 	 	 	  	 	 	 	
Total	  	$	170,279	 	  	$	142,204	 	

Category Revenues:	  				  				
Access & Aggregation	  	$	120,143	 	  	$	93,855	 	
Customer Devices	  	 	36,268	 	  	 	32,353	 	
Traditional & Other Products	  	 	13,868	 	  	 	15,996	 	
	  	 	 	 	  	 	 	 	
Total	  	$	170,279	 	  	$	142,204	 	

Sales by Geographic Region:	  				  				
United States	  	$	119,262	 	  	$	116,348	 	
International	  	 	51,017	 	  	 	25,856	 	
	  	 	 	 	  	 	 	 	
Total	  	$	170,279	 	  	$	142,204