EXHIBIT 99.1
ADTRAN, INC.
DECLARES A TWO-FOR-ONE STOCK SPLIT AND QUARTERLY CASH DIVIDEND AND REPORTS THIRDQUARTER 2003 RESULTS
HUNTSVILLE, AL—(BUSINESS WIRE)—October 13, 2003—ADTRAN, Inc. (NASDAQ: ADTN) announced today that its Board of Directors declared a two-for-one stock split, effective December 15, 2003, to be effected in the form of a stock dividend of one share of common stock for each outstanding share of common stock for shareholders of record on December 1, 2003. ADTRAN Chairman and Chief Executive Officer Mark Smith stated, “With an increasing share price, we believe a stock split should improve shareholders’ flexibility in making portfolio decisions and should dampen volatility in the marketplace.”
The Company also reported results for the third quarter ended September 30, 2003. Sales increased 20% to $106,201,000 for the quarter compared to $88,180,000 for the third quarter of 2002. Net income increased 411% to $17,165,000 for the quarter compared to $3,358,000 for the third quarter of 2002. Earnings per share, assuming dilution, were $0.42 for the quarter compared to $0.09 for the third quarter of 2002.
Net income increased 69% for the quarter compared to pro-forma income of $10,149,000 for the third quarter of 2002. Pro-forma earnings per share were $0.27 per share for the third quarter of 2002. Pro-forma income and pro-forma earnings per share, for the third quarter of 2002, exclude the effect of an impairment charge primarily related to other than temporary declines in the fair value of marketable equity securities and write-downs of private securities. A reconciliation of pro-forma income and pro-forma earnings per share to net income and earnings per share is included in the Condensed Statements of Income attached to this release. Split effected earnings per share and pro-forma earnings per share are also included in the Condensed Statements of Income attached to this release.
Gross margins were 55.5% for the quarter compared to 51.6% for the third quarter of 2002.
Net cash provided by operating activities for the quarter was $28 million. Cash and marketable securities, net of debt, totaled $278 million at September 30, 2003, after paying special and quarterly cash dividends on August 29, 2003, totaling $83 million.
Mr. Smith stated, “Our results for the third quarter and year-to-date speak clearly to our abilities to successfully secure new growth opportunities through new product development initiatives and to aggressively expand market share as the cost leader. We expect these attributes will continue to position us well for future growth, particularly during an improving enterprise spending environment when priorities of low cost, best value and superior service will endure as our customers’ primary focus.”
The Company also announced that its Board of Directors declared its second quarterly cash dividend of $0.15 per common share, to be paid to holders of record at the close of business on October 31, 2003. The ex-dividend date is October 29, 2003 and the payment date is November 17, 2003. This quarterly dividend will be paid prior to the stock split.
The Company will host a conference call on Tuesday, October 14, 2003 at 10:30 a.m. Eastern Time to discuss its third quarter 2003 financial results. To listen to the webcast of this conference call, visit ADTRAN’s Investor Relations page at http://www.adtran.com approximately 10 minutes before the start of the call and click on the conference call link provided. As indicated in the Company’s press release of October 2, 2003, an online replay of the webcast of the conference call, as well as the text of this release, will be available on the Investor Relations page of the Company’s website for at least 12 months following the date of this release.
ADTRAN, Inc. is an established supplier of advanced transmission products that provide users access to today’s expansive telecommunications networks. Widely deployed in carrier, enterprise and global networks worldwide, ADTRAN products support all major digital access technologies. ADTRAN equipment is widely deployed by major Incumbent Local Exchange Carriers, Inter-exchange Carriers, ISPs, Competitive Service Providers, international service providers, public and private enterprises, and original equipment manufacturers.
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 the Company’s annual report on Form 10-K for the year ended December 31, 2002. Such risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.
Condensed Balance Sheet
September 30, 2003
Unaudited
(Dollars in thousands)
| | | September 30, 2003
|
Assets | | | |
Cash and cash equivalents | | $ | 74,922 |
Short-term investments | | $ | 16,703 |
Accounts receivable (net) | | $ | 53,855 |
Other receivables | | $ | 7,569 |
Inventory (net) | | $ | 38,281 |
Prepaid expenses and other current assets | | $ | 7,085 |
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Total current assets | | $ | 198,415 |
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Equipment (net) | | $ | 28,799 |
Land | | $ | 4,263 |
Bldg. & land improvements (net) | | $ | 65,940 |
Other assets | | $ | 491 |
Deferred tax assets | | $ | 740 |
Long-term investments | | $ | 238,845 |
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Total assets | | $ | 537,493 |
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Liabilities and stockholders’ equity | | | |
Accounts payable | | $ | 25,585 |
Accrued wages and benefits | | $ | 9,158 |
Accrued income taxes | | $ | 207 |
Accrued liabilities | | $ | 3,301 |
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Total current liabilities | | $ | 38,251 |
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Deferred tax liabilities | | $ | 6,504 |
Long term debt | | $ | 50,000 |
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Total long term liabilities | | $ | 56,504 |
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Total liabilities | | $ | 94,755 |
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Stockholders’ equity | | $ | 442,738 |
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Total liabilities and stockholders’ equity | | $ | 537,493 |
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Condensed Statements of Income
For the periods ending 9/30/03 and 9/30/02
(Dollars in thousands, except per share data)
| | | Third Quarter
2003
| | | Third Quarter
2002
| |
Sales | | $ | 106,201 | | | $ | 88,180 | |
Cost of sales | | | 47,283 | | | | 42,655 | |
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Gross profit | | | 58,918 | | | | 45,525 | |
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Selling, general and administrative expenses | | | 20,623 | | | | 19,587 | |
Research and development expenses | | | 14,990 | | | | 14,009 | |
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Profit from operations | | | 23,305 | | | | 11,929 | |
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Interest expense | | | (632 | ) | | | (646 | ) |
Net realized investment gain(loss) | | | 0 | | | | (265 | ) |
Other income (primarily interest) | | | 3,035 | | | | 2,608 | |
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Income before provision for income taxes, excluding item detailed below | | | 25,708 | | | | 13,626 | |
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Provision for income taxes | | | (8,543 | ) | | | (3,477 | ) |
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Income, excluding net investment impairment charge | | | 17,165 | | | | 10,149 | |
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Investment impairment charge, net (1) | | | 0 | | | | (6,791 | ) |
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Net income | | $ | 17,165 | | | $ | 3,358 | |
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Weighted average shares outstanding: | | | | | | | | |
Basic | | | 38,718 | | | | 37,645 | |
Diluted (2) | | | 40,720 | | | | 37,671 | |
| | |
Earnings per share, excluding net realized investment impairment charge | | | | | | | | |
Basic | | $ | 0.44 | | | $ | 0.27 | |
Diluted (2) | | $ | 0.42 | | | $ | 0.27 | |
| | |
Earnings per share | | | | | | | | |
Basic | | $ | 0.44 | | | $ | 0.09 | |
Diluted (2) | | $ | 0.42 | | | $ | 0.09 | |
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Weighted average shares outstanding with 2 for 1 split (3) | | | | | | | | |
Basic | | | 77,436 | | | | 75,290 | |
Diluted (2) | | | 81,440 | | | | 75,342 | |
| | |
Earnings per share, excluding net realized investment impairment charge, 2 for 1 split effected (3) | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.13 | |
Diluted (2) | | $ | 0.21 | | | $ | 0.13 | |
| | |
Earnings per share, 2 for 1 split effected (3) | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.04 | |
Diluted (2) | | $ | 0.21 | | | $ | 0.04 | |
| (1) | Amount is comprised of other-than-temporary declines in the fair value of marketable equity securities and write-downs of private securities. |
Investment impairment charge before tax | | $ | 0 | | ($ | 10,290 | ) |
Income tax effect (using statutory rate) | | $ | 0 | | $ | 3,499 | |
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Net investment impairment charge | | $ | 0 | | ($ | 6,791 | ) |
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| (2) | Assumes exercise of dilutive stock options calculated under the treasury stock method |
| (3) | Adtran’s board of directors voted to split the shares of common stock on a 2 for 1 basis to be effected in the form of a stock dividend to stockholders of record on December 1, 2003, with distribution on December 15, 2003. |
Management believes a pro-forma presentation provides investors with additional insight into the Company’s financial results. The pro-forma presentation segregates the financial effect of impairment charges of marketable equity securities and write-downs of private securities from transactional based investment activity, reflected in net realized investment gain (loss), during the reporting period.
Condensed Statements of Income
For the periods ending 9/30/03 and 9/30/02
(Dollars in thousands, except per share data)
| | | Nine Months Ended
2003
| | | Nine Months Ended
2002
| |
Sales | | $ | 282,860 | | | $ | 257,307 | |
Cost of sales | | | 127,170 | | | | 130,800 | |
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Gross profit | | | 155,690 | | | | 126,507 | |
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Selling, general and administrative expenses | | | 61,121 | | | | 60,653 | |
Research and development expenses | | | 42,899 | | | | 42,480 | |
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Profit from operations | | | 51,670 | | | | 23,374 | |
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Interest expense | | | (1,951 | ) | | | (1,961 | ) |
Net Realized investment gain(loss) | | | 226 | | | | 108 | |
Other income (primarily interest) | | | 8,570 | | | | 6,657 | |
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Income before provision for income taxes, excluding item detailed below | | | 58,515 | | | | 28,178 | |
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Provision for income taxes | | | (18,432 | ) | | | (7,575 | ) |
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Income, excluding net investment impairment charge | | | 40,083 | | | | 20,603 | |
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Investment impairment charge, net (1) | | | 0 | | | | (7,938 | ) |
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Net income | | $ | 40,083 | | | $ | 12,665 | |
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Weighted average shares outstanding: | | | | | | | | |
Basic | | | 38,115 | | | | 38,235 | |
Diluted (2) | | | 40,006 | | | | 38,304 | |
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Earnings per share, excluding net realized investment impairment charge | | | | | | | | |
Basic | | $ | 1.05 | | | $ | 0.54 | |
Diluted (2) | | $ | 1.00 | | | $ | 0.54 | |
Earnings per share | | | | | | |
Basic | | $ | 1.05 | | $ | 0.33 |
Diluted (2) | | $ | 1.00 | | $ | 0.33 |
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Weighted average shares outstanding with 2 for 1 split (3) | | | | | | |
Basic | | | 76,230 | | | 76,470 |
Diluted (2) | | | 80,012 | | | 76,608 |
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Earnings per share, excluding net realized investment impairment charge, 2 for 1 split effected (3) | | | | | | |
Basic | | $ | 0.53 | | $ | 0.27 |
Diluted (2) | | $ | 0.50 | | $ | 0.27 |
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Earnings per share, 2 for 1 split effected (3) | | | | | | |
Basic | | $ | 0.53 | | $ | 0.17 |
Diluted (2) | | $ | 0.50 | | $ | 0.17 |
| (1) | Amount is composed of other-than-temporary declines in the fair value of marketable equity securities and write-downs of private securities. |
Investment impairment charge before tax | | $ | 0 | | ($ | 12,027 | ) |
Income tax effect (using statutory rate) | | $ | 0 | | $ | 4,089 | |
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Net investment impairment charge | | $ | 0 | | ($ | 7,938 | ) |
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| (2) | Assumes exercise of dilutive stock options calculated under the treasury stock method. |
| (3) | Adtran’s board of directors voted to split the shares of common stock on a 2 for 1 basis to be effected in the form of a stock dividend to stockholders of record on December 1, 2003, with distribution on December 15, 2003. |
Management believes a pro-forma presentation provides investors with additional insight into the Company’s financial results. The pro-forma presentation segregates the financial effect of impairment charges of marketable equity securities and write-downs of private securities from transactional based investment activity, reflected in net realized investment gain (loss), during the reporting period.
CONTACT:
Jim Matthews
Senior Vice President – Finance
Chief Financial Officer
256-963-8775
INVESTOR SERVICES/ASSISTANCE:
Charlene Little
256-963-8611
Cathy Bartels
256-963-8220
