ADTRAN, Inc. Reports Third Quarter 2002 Results.Business Editors & High-Tech high-tech also hi-tech adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. Writers 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)--Oct. 14, 2002 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 third quarter and nine months ended September September: see month. 30, 2002. Sales were $88,180,000 for the quarter compared to $95,513,000 for the third quarter of 2001, and $257,307,000 for the nine months compared to $297,987,000 for the same period in 2001. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income was $3,358,000 for the quarter compared to $4,949,000 for the third quarter of 2001, and $12,666,000 for the nine months compared to $13,545,000 for the same period in 2001. Pro-forma net income was $10,282,000 for the quarter compared to $4,983,000 for the third quarter of 2001, and $20,746,000 for the nine months compared to $13,642,000 for the same period in 2001. Pro-forma net income excludes the effect of an 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. charge 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. GAAP 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 $.09 for the quarter compared to $.13 for the third quarter of 2001, and $0.33 for the nine months compared to $.35 for the same period in 2001. 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 $0.27 for the quarter compared to $0.13 for the third quarter of 2001, and $0.54 for the nine months compared to $0.35 for the same period last year. Pro-forma earnings per share 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. Gross margin improved to 51.6% compared to 44.4% in the third quarter of 2001 and 48.5% in the second quarter of 2002. 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 decreased $3.7 million from the third quarter of 2001 and $1.3 million from the second quarter of 2002. Additionally, the change in effective tax rate for the quarter, and year to date, is a result of our mix of taxable versus tax-exempt income Tax-exempt income Dividends and interest not subject to federal and, in some cases, state and local income taxes. , certain income tax credits, and economic incentive credits. Net cash provided by operating activities was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $30 million for the quarter. The Company invested $17.8 million to re-purchase 966,000 shares of ADTRAN common stock during the quarter, as part of a program announced last year to re-purchase two million shares. The total number of shares re-purchased under the program is 1,555,000 as of September 30, 2002. 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 $246 million at the end of the quarter. ADTRAN Chairman and Chief Executive Officer Mark Smith stated, "We continue to realize the results of increasing operating efficiencies, and market share gains as we enhance our competitive advantage. These accomplishments have resulted in sequential One after the other in some consecutive order such as by name or number. revenue increases and substantial profitability enhancements in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of a very challenging market environment. Our ability to reduce cost and sustain investment in engineering and new product development initiatives, augmented by our financial strength, is serving us well." 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 Local Exchange Carriers, 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 December: see month. 31, 2001. 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, 2002
Unaudited
(Dollars in thousands)
September 30,
2002
--------------------
Assets
Cash & cash equivalents $84,917
Short-term investments $39,769
Accounts receivable (net) $45,688
Other receivables $9,408
Inventory (net) $41,446
Prepaid expenses $8,712
------
Total current assets $229,940
Equipment (net) $36,662
Land $4,263
Bldg. & land improvements (net) $68,509
Other assets $469
Deferred tax assets $4,044
Long term investments $172,127
--------
Totals $516,014
Liabilities and stockholders' equity
Accounts payable $25,953
Accrued wages and benefits $7,045
Accrued income taxes $8,647
Accrued liabilities $2,882
------
Total current liabilities $44,527
Long term liabilities $53,996
-------
Total liabilities $98,523
Stockholders' equity $417,491
--------
Totals $516,014
Condensed Statements of Income
For the periods ending 9/30/02 and 9/30/01
(Dollars in thousands, except per share data)
Nine Months Nine Months
Ended 2002 Ended 2001
------------- ------------
Sales $257,307 $297,987
Cost of Sales $130,800 $164,595
-------- --------
Gross Profit $126,507 $133,392
Selling, general and administrative
expenses $60,653 $73,023
Research and development expenses $42,480 $44,954
------- -------
Operating Income $23,374 $15,415
Interest expense ($1,961) ($1,444)
Other income (primarily interest) $7,055 $5,594
------ ------
Income before provision for income taxes,
excluding item detailed below $28,468 $19,565
Provision for income taxes ($7,722) ($5,923)
-------- --------
Income, excluding net realized investment
loss $20,746 $13,642
Net realized investment loss (1) ($8,080) ($97)
-------- -----
Net income $12,666 $13,545
======= =======
Weighted average shares outstanding:
Basic 38,234,791 38,656,006
Diluted (2) 38,303,667 38,764,304
Earnings per share, excluding net realized
investment loss
Basic $0.54 $0.35
Diluted (2) $0.54 $0.35
Earnings per share
Basic $0.33 $0.35
Diluted (2) $0.33 $0.35
(1) Amount is comprised of other than
temporary declines in the fair value of
marketable equity securities and write-
downs of private securities.
Net realized investment loss before tax ($12,317) ($147)
Income tax effect $4,237 $50
------- ---
Net realized investment loss ($8,080) ($97)
======== =====
(2) Assumes exercise of dilutive stock options
calculated under the treasury stock method
Condensed Statements of Income
For the periods ending 9/30/02 and 9/30/01
(Dollars in thousands, except per share data)
Third Third
Quarter Quarter
2002 2001
------------- ------------
Sales $88,180 $95,513
Cost of Sales $42,655 $53,114
------- -------
Gross Profit $45,525 $42,399
Selling, general and administrative expenses $19,587 $22,120
Research and development expenses $14,009 $15,181
------- -------
Operating Income $11,929 $5,098
Interest expense ($646) ($462)
Other income (primarily interest) $2,608 $1,810
------ ------
Income before provision for income taxes,
excluding item detailed below $13,891 $6,446
Provision for income taxes ($3,609) ($1,463)
-------- --------
Income, excluding net realized investment
loss $10,282 $4,983
Net realized investment loss (1) ($6,924) ($34)
-------- -----
Net income $3,358 $4,949
====== ======
Weighted average shares outstanding:
Basic 37,644,721 38,639,907
Diluted (2) 37,670,734 38,679,763
Earnings per share, excluding net realized
investment loss
Basic $0.27 $0.13
Diluted (2) $0.27 $0.13
Earnings per share
Basic $0.09 $0.13
Diluted (2) $0.09 $0.13
(1) Amount is comprised of other than
temporary declines in the fair value of
marketable equity securities and write-
downs of private securities.
Net realized investment loss before tax ($10,555) ($52)
Income tax effect $3,631 $18
------- ---
Net realized investment loss ($6,924) ($34)
======== =====
(2) Assumes exercise of dilutive stock
options calculated under the treasury stock
method
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