ADTRAN, Inc. Reports Fourth Quarter 2003 Results and Declares Increased Quarterly Cash Dividend.Business Editors HUNTSVILLE Huntsville, town, Canada Huntsville, town (1991 pop. 14,997), SE Ont., Canada, on the Muskoka River. It has lumber mills and a woodworking plant, but it is sustained mainly by its year-round tourist trade. , Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. .--(BUSINESS WIRE)--Jan. 20, 2004 ADTRAN, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ADTN ADTN Administrative Data Transmission Network ADTN Administrative Data Telecommunications Network ) reported results for the fourth quarter and year ended December December: see month. 31, 2003. Sales increased 29% to $113,815,000 for the quarter compared to $88,419,000 for the fourth quarter of 2002, and increased 15% to $396,676,000 for the year compared to $345,725,000 for 2002. Net income increased 77% to $21,432,000 for the quarter compared to $12,110,000 for the fourth quarter of 2002. Earnings per share, assuming dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. , were $0.26 for the quarter compared to $0.16 for the fourth quarter of 2002. Net income increased 148% to $61,515,000 for the year compared to $24,776,000 for 2002. Earnings per share, assuming dilution, were $0.76 for the year compared to $0.32 for 2002. Pro-forma income was $32,714,000 for the year 2002. Pro-forma earnings Pro-Forma Earnings Projected earnings based on a set of assumptions and often used to present a business plan (in Latin pro forma means "for the sake of form"). It also refers to earnings which exclude non-recurring items. Pro-forma earnings are not derived by standard GAAP methods. per share, assuming dilution, were $0.43 for the year 2002. Pro-forma income and pro-forma earnings per share exclude the effect of impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges primarily related to other than temporary declines in the fair value of marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. equity securities and write-downs of private securities. These charges were incurred in the second and third quarters of 2002. A reconciliation of pro-forma income and pro-forma earnings per share to net income and earnings per share is included in the Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Statements of Income attached to this release. Gross margin improved to 58.2% for the quarter compared to 54.8% in the fourth quarter of 2002. The increase in gross margin is the result of continuing improvements in manufacturing efficiencies, product cost reductions, and an increase in revenue from the Enterprise Networks Division. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the quarter increased $3.1 million from the fourth quarter of 2002. The increase in operating expenses relates primarily to sales and marketing expenses associated with the increase in revenue and increased expenditures for research and development activities. Net cash provided by operating activities totaled $36 million for the fourth quarter and $85 million for the year. Cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has , net of debt, totaled $326 million at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . ADTRAN Chairman and Chief Executive Officer Mark Smith stated, "The results speak clearly to the value of our strategies and efforts. During 2003, we returned to revenue growth as we escalated our positions in new, significantly larger markets, in addition to solidifying so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. our leadership positions within our traditional markets. With the additional positive effect of an improving enterprise spending environment, this is an excellent base to build on as we continue to leverage our operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. and assets to significantly expand our business." The Company also announced that its Board of Directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. its third quarterly cash dividend. The quarterly cash dividend is $0.08 per common share to be paid to holders of record at the close of business on February February: see month. 3, 2004. The ex-dividend date Ex-dividend date The first day of trading when the buyer of a stock is no longer entitled to the most recently announced dividend payment ( i.e. the trade will settle the day after the record date, too late for the buyer to appear on the shareholder record and receive the dividend. is January January: see month. 30, 2004 and the payment date is February 17, 2004. Mark Smith stated, "Our quarterly cash dividend to shareholders is a reflection of our continuing confidence in our abilities to increase earnings and generate surplus cash." The Company also confirmed that its fourth quarter conference call will be held Wednesday Wednesday: see week. , January 21 at 9:30 a.m. Central Time. Guidance for the first quarter and year 2004 will be issued during this conference call. This conference call will be webcast live through StreetEvents.com. To listen, simply visit the Investor Relations Investor relations The process by which the corporation communicates with its investors. site at http://www.adtran.com or http://streetevents.com approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 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 http://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 http://www.adtran.com for at least 12 months following the call. ADTRAN, Inc. is an established supplier of advanced transmission products that provide users access to today's expansive telecommunications networks A telecommunications network is a of telecommunications links and nodes arranged so that messages may be passed from one part of the network to another over multiple links and through various nodes. . 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 ILEC, short for incumbent local exchange carrier, is a local telephone company in the United States that was in existence at the time of the break up of AT&T into the Regional Bell Operating Companies (RBOCs) also known as the "Baby Bells". , Inter-exchange Carriers (communications) inter-exchange carrier - (IXC) A company allowed to handle long-distance calls following the break-up of the Bell system in the US by anti-trust regulators. , ISPs, Competitive Service Providers, international service providers, public and private enterprises, and original equipment manufacturers. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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 Statements of Income
For the periods ending 12/31/03 and 12/31/02
(Dollars in thousands, except per share data)
Fourth Quarter Fourth Quarter
2003 2002
-------------- --------------
Sales $113,815 $88,419
Cost of sales $47,511 $39,990
-------------- --------------
Gross profit $66,304 $48,429
Selling, general and administrative
expenses $22,109 $20,463
Research and development expenses $15,246 $13,815
-------------- --------------
Profit from operations $28,949 $14,151
Interest expense ($583) ($611)
Net realized investment gain (loss) $0 $0
Other income (primarily interest) $1,949 $2,485
-------------- --------------
Income before provision for income
taxes $30,315 $16,025
Provision for income taxes ($8,883) ($3,915)
-------------- --------------
Net income $21,432 $12,110
============== ==============
Weighted average shares outstanding:
Basic 79,054 74,572
Diluted (1) 82,588 76,024
Earnings per share
Basic $0.27 $0.16
Diluted (1) $0.26 $0.16
(1) Assumes exercise of dilutive stock options calculated under the
treasury stock method
Condensed Statements of Income
For the periods ending 12/31/03 and 12/31/02
(Dollars in thousands, except per share data)
Year Ended Year Ended
2003 2002
---------- -----------
Sales $396,676 $345,725
Cost of sales $174,681 $170,789
---------- -----------
Gross profit $221,995 $174,936
Selling, general and administrative expenses $83,231 $81,116
Research and development expenses $58,144 $56,295
---------- -----------
Profit from operations $80,620 $37,525
Interest expense ($2,535) ($2,572)
Net realized investment gain (loss) $226 $5
Other income (primarily interest) $10,519 $9,246
---------- -----------
Income before provision for income taxes,
excluding item detailed below $88,830 $44,204
Provision for income taxes ($27,315) ($11,490)
---------- -----------
Income, excluding investment impairment charge,
net of tax $61,515 $32,714
Investment impairment charge, net (1) $0 ($7,938)
---------- -----------
Net income $61,515 $24,776
========== ===========
Weighted average shares outstanding:
Basic 76,942 76,090
Diluted (2) 80,739 76,443
Earnings per share
Basic $0.80 $0.33
Diluted (2) $0.76 $0.32
Reconciliation of 2002 diluted earnings per
share, excluding realized investment impairment
charge, net of tax (2)
GAAP diluted earnings per share $0.32
Investment impairment charge, net of tax $0.11
-----------
Pro-forma diluted earnings per share $0.43
-----------
(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 ($12,027)
Income tax effect (using statutory rate) $4,089
-----------
Investment impairment charge, net of tax ($7,938)
===========
(2) Assumes exercise of dilutive stock options calculated
under the treasury stock method
For 2002, 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 Balance Sheet
Unaudited
(Dollars in thousands)
December 31
2003
---------------
Assets
Cash & cash equivalents $125,167
Short-term investments $18,770
Accounts receivable (net) $52,384
Other receivables $6,989
Income tax receivables $11,586
Inventory (net) $39,975
Prepaid expenses and other current assets $5,508
---------------
Total current assets $260,379
Equipment (net) $28,106
Land $4,263
Bldg. & land improvements (net) $65,297
Other assets $493
Deferred tax assets $1,628
Long-term investments $233,734
---------------
Total assets $593,900
===============
Liabilities and stockholders' equity
Accounts payable $28,030
Accrued wages and benefits $6,721
Accrued liabilities $5,558
---------------
Total current liabilities $40,309
Deferred tax liabilities $8,882
Other non-current liabilities $888
Long term debt $50,000
---------------
Total long term liabilities $59,770
Total liabilities $100,079
Stockholders' equity $493,821
---------------
Total liabilities and stockholders' equity $593,900
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