SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period from ______ to ______
Commission File Number 0-24612
ADTRAN, INC.
(Exact name of Registrant as specified in its charter)
Delaware 63-0918200
(State of Incorporation) (I.R.S. Employer
Identification No.)
901 Explorer Boulevard, Huntsville, Alabama 35806-2807
(Address of principal executive offices, including zip code)
(256) 963-8000
(Registrant's telephone number, including area code)
_______________
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock as of the latest practicable date:
Class Outstanding at October 31, 1998
Common Stock, $.01 Par Value 38,415,879 shares
Page 1 of 15
<PAGE>
ADTRAN, INC.
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 1998
Table of Contents
Item Page
Number PART I. FINANCIAL INFORMATION Number
1 Financial Statements: (unaudited)
Condensed Balance Sheets as of September 30,
1998 and December 31, 1997 3
Condensed Statements of Income for the three
months and nine months ended September 30, 1998 and 1997 4
Condensed Statements of Cash Flows for the nine
months ended September 30, 1998 and 1997 5
Notes to Condensed Financial Statements 6
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
and Results of Operations
PART II. OTHER INFORMATION
5 Other Information 14
6 Exhibits and Reports on Form 8-K 14
SIGNATURE 15
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ADTRAN, INC.
CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31,
1998 1997
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 13,109,385 $ 45,340,961
Short-term investments 56,753,013 37,833,240
Accounts receivable, less allowance
for doubtful accounts of $872,687
and $893,389 in 1998 and 1997,
respectively 48,260,625 40,906,887
Other receivables 747,121 343,463
Inventory 60,655,793 39,369,103
Prepaid expenses 1,628,458 1,148,288
Deferred income taxes 2,458,136 2,458,136
----------- -----------
Total current assets 183,612,531 167,400,078
Property, plant and equipment,less
accumulated depreciation of $27,373,199
and $20,900,272 in 1998 and 1997,
respectively 72,858,246 64,801,132
Other assets 220,000 200,000
Long-term investments 55,035,000 50,000,000
----------- ------------
$311,725,777 $282,401,210
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,505,468 $ 9,121,270
Accrued salaries 2,311,439 1,927,364
Accrued income taxes 2,961,614 4,579,345
Accrued taxes other than income taxes 183,768 180,611
Warranty liability 1,510,259 1,435,259
Compensated absences 1,313,414 972,651
----------- ------------
Total current liabilities 24,785,962 18,216,500
Long term liabilities:
Bonds payable 50,000,000 50,000,000
Deferred income taxes 2,147,635 2,147,635
----------- ----------
Total liabilities 76,933,597 70,364,135
Stockholders' equity:
Common stock, par value $.01 per
share 200,000,000 shares authorized:
39,414,479 and 39,381,264 shares
issued in 1998 and 1997,
respectively 394,145 393,813
Additional paid-in capital 90,621,208 90,582,615
Retained earnings 154,739,452 123,260,647
Less 492,500 and 100,000 shares
treasury stock at cost in
1998 and 1997, respectively (10,962,625) (2,200,000)
------------ ------------
Total stockholders' equity 234,792,180 212,037,075
------------ ------------
$311,725,777 $282,401,210
============ ============
See notes to condensed financial statements
</TABLE>
<PAGE>
<TABLE>
ADTRAN, INC.
CONDENSED STATEMENTS OF INCOME
Unaudited
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Sales $77,043,635 $70,578,975 $213,526,321 $190,934,367
Cost of sales 34,734,064 34,486,972 96,364,654 94,418,912
----------- ----------- ------------ ------------
Gross profit 42,309,571 36,092,003 117,161,667 96,515,455
Selling, general and administrative expenses 16,022,809 11,482,374 44,300,674 32,640,664
Research and development expenses 9,909,567 7,831,535 27,759,729 22,547,141
----------- ---------- ----------- -----------
Income from operations 16,377,195 16,778,094 45,101,264 41,327,650
Interest expense (582,667) (521,449) (1,693,428) (1,272,649)
Other income, net 1,426,290 1,150,447 4,287,323 3,137,314
----------- ---------- ----------- -----------
Income before income taxes 17,220,818 17,407,092 47,695,159 43,192,315
Provision for income taxes (5,779,562) (6,266,553) (16,216,354) (15,549,233)
----------- ---------- ----------- -----------
Net income $11,441,256 $11,140,539 $31,478,805 $27,643,082
Weighted average shares outstanding
assuming dilution (1) 39,138,763 39,693,383 39,276,989 39,611,783
========== ========== ========== ==========
Earnings per common share assuming assuming dilution(1) $0.29 $0.28 $0.80 $0.70
===== ===== ===== =====
Earnings per common share - basic $0.29 $0.28 $0.81 $0.71
===== ===== ===== =====
(1) Assumes exercise of dilutive stock options calculated under
the treasury stock method.
</TABLE>
See notes to condensed financial statements
<PAGE>
<TABLE>
<CAPTION>
ADTRAN, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
Nine Months Ended
September 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $31,478,805 $27,643,082
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 6,459,220 5,398,219
Gain loss)on sale of property, plant and equipment 0 (14,074)
Gain(loss) on short-term investments 32,810 55,930
Change in operating assets:
Accounts receivable (7,353,738) (3,853,971)
Inventory (21,286,690) (5,825,574)
Other receivables and other asets (423,658) (257,829)
Prepaid expenses (480,170) 338,137
Change in operating liabilities:
Accounts payable 7,384,198 (1,322,772)
Accrued salaries 384,075 (840,631)
Accrued income taxes (1,617,731) (968,254)
Accrued taxes other than income taxes 3,157 377
Compensated absences 340,763 218,019
Warranty payable 75,000 378,647
---------- ----------
Net cash provided by operating activities 14,996,041 20,949,306
---------- ----------
Cash flows from investing activities:
Expenditures for property, plant and equipment (14,526,334) (15,843,465)
Proceeds from the disposition of property,
plant and equipment 10,000 39,797
Purchase of restricted investments 0 (50,000,000)
(Purchase) redemption of short-term investments (18,952,583) (1,033,240)
(Purchase) redemption of long-term investment (5,035,000)
----------- -----------
Net cash used in investing activities (38,503,917) (66,836,908)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of bonds 0 50,000,000
Redemption of bonds payable 0 (20,000,000)
Proceeds from issuance of common stock 38,925 331,035
Purchase of treasury stock (8,762,625) (2,200,000)
---------- ----------
Net cash (used in) provided by financing activities (8,723,700) 28,131,035
---------- -----------
Net decrease in cash and cash equivalents (32,231,576) (17,756,567)
Cash and cash equivalents, beginning of period 45,340,961 44,839,131
---------- -----------
Cash and cash equivalents, end of period $13,109,385 $27,082,564
=========== ===========
</TABLE>
See notes to condensed financial statements
<PAGE>
ADTRAN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The condensed balance sheet of ADTRAN, Inc. (the "Company") at December 31,
1997 has been derived from audited financial statements, but does not include
all disclosures required by generally accepted accounting principles. The
accompanying unaudited condensed financial statements of the Company have been
prepared pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and notes required by generally accepted
accounting principles for complete financial statements are not included herein.
In the opinion of management, all adjustments necessary for a fair presentation
of these interim statements have been included and are of a normal and recurring
nature. Operating results for the nine months ended September 30, 1998 are not
necessarily indicative of the results that may be expected to occur for the year
ending December 31, 1998. The interim statements should be read in conjunction
with the financial statements and notes thereto included in the Company's latest
Annual Report on Form 10-K.
2. INVENTORY
At September 30, 1998 and December 31, 1997, inventory consisted of the
following:
September 30, December 31,
1998 1997
Raw materials $44,978,832 $24,199,720
Work in progress 3,353,760 2,565,179
Finished goods 12,323,201 12,604,204
----------- -----------
$60,655,793 $39,369,103
=========== ===========
3. RECENT ACCOUNTING DEVELOPMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income, which requires the reporting and display of comprehensive
income and its components in an entity's financial statements, and SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, which
specifies revised guidelines for determining an entity's operating segments and
the type and level of financial information to be required. The Company is
required to adopt these standards in 1998. The Company does not expect the
impact of these pronouncements to be material. SFAS 130 has been adopted during
the quarters of 1998 and for the nine months ended September 30, 1998 and 1997,
there were no differences between net income and comprehensive income.
<PAGE>
4. EARNINGS PER SHARE
A summary of the calculation of basic and diluted earnings per share for
the three months and nine months ended September 30, 1998 and September 30, 1997
is as follows:
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998
Income Shares Per-Share
(Numerator) (Denominator) Amount
BASIC EPS
Income available to common
stockholders $11,441,256 38,985,629 $0.29
EFFECT OF DILUTIVE SECURITIES
Stock Options 153,134
DILUTED EPS
Income available to common
stockholders + assumed
conversions $11,441,256 9,138,763 $0.29
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
Income Shares Per-Share
(Numerator) (Denominator) Amount
BASIC EPS
Income available to common
stockholders $31,478,805 39,100,156 $0.81
EFFECT OF DILUTIVE SECURITIES
Stock Options 176,833 $0.01
DILUTED EPS
Income available to common
stockholders + assumed
conversions $31,478,805 39,276,989 $0.80
<PAGE>
EARNINGS PER SHARE (Continued)
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997
Income Shares Per-Share
Numerator) (Denominator) Amount
BASIC EPS
Income available to common
stockholders $11,140,539 39,257,528 $0.28
EFFECT OF DILUTIVE SECURITIES
Stock Options 435,855
DILUTED EPS
Income available to common
stockholders + assumed
conversions $11,140,539 39,693,383 $0.28
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
Income Shares Per-Share
(Numerator) (Denominator) Amount
BASIC EPS
Income available to common
stockholders $27,643,082 39,188,559 $0.71
EFFECT OF DILUTIVE SECURITIES
Stock Options 423,224 $0.01
DILUTED EPS
Income available to common
stockholders + assumed
conversions $27,643,082 39,611,783 $0.70
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Overview
The Company designs, develops, manufactures, markets and services a broad
range of high speed digital transmission products utilized by telephone
companies ("Telcos") and corporate end-users to implement advanced digital data
services over existing telephone networks. The Company currently sells its
products to Telcos (including all of the Regional Bell Operating Companies), and
private end-users in the Customer Premises Equipment ("CPE") market.
The Company's sales have increased each year due primarily to increases in
the number of units sold to both new and existing customers. These annual sales
increases reflect the Company's strategy of increasing unit volume and market
share through the introduction of succeeding generations of products having
lower selling prices and increased functionality as compared to the prior
generation of a product and to the products of competitors. An important part of
the Company's strategy is to engineer the reduction of the product cost of each
succeeding product generation and then to lower the product's price based on the
cost savings achieved. As a part of this strategy, the Company seeks in most
instances to be a low-cost, high-quality provider of products in its markets.
The Company's success to date is attributable in large measure to its ability to
initially design its products with a view to their subsequent re-design,
allowing efficient enhancements of the product in each succeeding product
generation. This strategy has enabled the Company to sell succeeding generations
of products to existing customers as well as to increase its market share by
selling these enhanced products to new customers.
The Company intends to retain all earnings for use in the development of
its business and does not anticipate paying any cash dividends in the
foreseeable future.
When used in this Form 10-Q, the words "believe," "anticipate," "think,"
"intend," "will be," and similar expressions identify forward-looking
statements. Such statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from those, projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. Readers are also urged to
carefully review and consider the various disclosures made by the Company which
attempt to advise interested parties of the factors which affect the Company's
business, including the disclosures made in other periodic reports on Forms
10-K, 10-Q and 8-K filed with the Securities and Exchange Commission.
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998
COMPARED TO THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997
SALES
The Company's sales increased 9.2% from $70,578,975 in the three months
ended September 30, 1997 to $77,043,635 in the three months ended September 30,
1998. Sales increased 11.8% from $190,934,367 in the nine months ended September
30, 1997 to $213,526,321 in the nine months ended September 30, 1998. The
increased sales resulted from an increase in sales volume to existing customers
and from increased market penetration. Telco sales decreased slightly from
$45,373,984 in the three months ended September 30, 1997 to $44,733,699 in the
three months ended September 30, 1998. However, Telco sales increased 1.1% from
$123,703,727 in the nine months ended September 30, 1997 to $125,110,869 in the
nine months ended September 30, 1998. The increase in Telco sales in the 1998
period resulted primarily from increased sales of High bit-rate Digital
Subscriber Line products and Digital Data Services products. Telco sales as a
percentage of total sales decreased from 64.3% in the three months ended
September 30, 1997 to 58.1% in the three months ended September 30, 1998 and
decreased from 64.8% in the nine months ended September 30, 1997 to 58.6% in the
nine months ended September 30, 1998. Sales of CPE products increased 28.2% from
$25,204,991 in the three months ended September 30, 1997 to $32,309,935 in the
three months ended September 30, 1998, as a result of increased sales of "T-1"
products, (a digital transmission link with a capacity of 1.544 megabits per
second used predominantly in North America). Sales of CPE products increased
31.5% from $67,230,641 in the nine months ended September 30,1997 to $88,415,452
in the nine months ended September 30, 1998. As a percentage of sales, CPE sales
increased from 35.7% in the three months ended September 30, 1997 to 41.9% in
the three months ended September 30, 1998 and increased from 35.2% in the nine
months ended September 30, 1997 to 41.4% in the nine months ended September 30,
1998. The financial effect of the increase in overall unit volume was offset
somewhat by lower unit selling prices for many of the Company's products.
COST OF SALES
Cost of sales increased slightly from $34,486,972 in the three months ended
September 30, 1997 to $34,734,064 in the three months ended September 30, 1998
and increased 2.1% from $94,418,912 in the nine months ended September 30, 1997
to $96,364,654 in the nine months ended September 30, 1998. As a percentage of
sales, cost of sales decreased from 48.9% in the three months ended September
30, 1997 to 45.1% in the three months ended September 30, 1998 and decreased
from 49.5% in the nine months ended September 30, 1997 to 45.1% in the nine
months ended September 30, 1998. An important part of the Company's strategy is
to reduce the product cost of each succeeding product generation and then to
lower the product's price based on the cost savings achieved. This strategy
sometimes results in variations in the Company's gross profit margins due to
timing differences between the recognition of cost reductions and the lowering
of product selling prices. In view of the rapid pace of new product
introductions by the Company, this strategy may result in variations in gross
profit margins that, for any particular financial period, can be difficult to
predict.
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased 39.5% from
$11,482,374 in the three months ended September 30, 1997 to $16,022,809 in the
three months ended September 30, 1998 and increased 35.7% from $32,640,664 in
the nine months ended September 30, 1997 to $44,300,674 in the nine months ended
September 30, 1998. The increase was due to additional sales and support
expenditures necessary as a result of the Company's expanded sales base.
Selling, general and administrative expenses as a percentage of sales increased
from 16.3% in the three months ended September 30, 1997 to 20.8% in the three
months ended September 30, 1998 and increased from 17.1% in the nine months
ended September 30, 1997 to 20.8% in the nine months ended September 30, 1998.
Sales and support organization expansion, which resulted in increased costs
during the quarter, will continue because they are necessary to position the
Company to accumulate market share and maintain growth over the longer term.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased 26.5% from $7,831,535 in the
three months ended September 30, 1997 to $9,909,567 in the three months ended
September 30, 1998 and increased 23.1% from $22,547,141 in the nine months ended
September 30, 1997 to $27,759,729 in the nine months ended September 30, 1998.
The increase was due to increased investment in product development and cost
reduction through engineering. As a percentage of sales, research and
development expenses increased from 11.1% in the three months ended September
30, 1997 to 12.9% in the three months ended September 30, 1998 and increased
from 11.8% in the nine months ended September 30, 1997 to 13.0% in the nine
months ended September 30, 1998. The Company will continue to invest in these
product development activities because they are necessary to position the
Company to accumulate market share and maintain growth over the longer term.
INTEREST EXPENSE
Interest expense increased 11.7% from $521,449 in the three months ended
September 30, 1997 to $582,667 in the three months ended September 30, 1998 and
increased 33.1% from $1,272,649 in the nine months ended September 30, 1997 to
$1,693,428 in the nine months ended September 30, 1998. This increase was due
primarily to interest being incurred on bonds payable for only $20,000,000
during the first quarter of 1997 versus interest being incurred on bonds payable
of $50,000,000 in the first quarter of 1998. See "Liquidity and Capital
Resources" below.
NET INCOME
As a result of the above factors, net income increased 2.7% from
$11,140,539 in the three months ended September 30, 1997 to $11,441,256 in the
three months ended September 30, 1998 and increased 13.9% from $27,643,082 in
the nine months ended September 30, 1997 to $31,478,805 in the nine months ended
September 30, 1998. As a percentage of sales, net income decreased from 15.8% in
the three months ended September 30, 1997 to 14.9% in the three months ended
September 30, 1998 and increased from 14.5% in the nine months ended September
30, 1997 to 14.7% in the nine months ended September 30, 1998.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company is continuing a project to expand its facilities in Huntsville
in several phases over the next four years at a cost of approximately
$150,000,000, of which $55,455,000 had been incurred at September 30, 1998. The
debt associated with $50,000,000 of this project was approved for participation
in an incentive program offered by the Alabama State Industrial Development
Authority (the "Authority"). During 1997, the Authority issued $30,000,000 of
its taxable revenue bonds (the "Amended and Restated Bond"), pursuant to such
program and loaned the proceeds from the sale of the Amended and Restated Bond
to the Company, increasing the Company's long-term debt to $50,000,000 as of
April 25, 1997. The Company will make payments to the Authority in amounts
necessary to pay the principal of and interest on the Amended and Restated Bond,
which matures on January 1, 2020.
The Company's working capital position improved from $149,183,578 as of
December 31, 1997 to $158,826,569 as of September 30, 1998. This improvement in
the Company's working capital position was due primarily to increased earnings.
The Company has used, and expects to continue to use, the remaining proceeds of
prior public offerings for working capital and other general corporate purposes,
including (i) product development activities to enhance its existing products
and develop new products and (ii) expansion of sales and marketing activities.
Inventory increased 54.1% from December 31, 1997 to September 30, 1998 as a
result of the increase in sales and a desire by the Company to ship larger
orders to customers from available stock.
On March 31, 1997, the Board of Directors authorized the Company to
repurchase up to 1,000,000 shares of the Company's outstanding common stock.
During the nine month period ended September 30, 1998, the Company repurchased
392,500 shares at a cost of $8,762,625 and as of September 30, 1998, the Company
had repurchased 492,500 shares at a total cost of $10,962,625. During the month
of October, 1998 the Company repurchased an additional 507,500 shares at a total
of $10,209,751.
Capital expenditures totaling $18,220,850 for the year ended December 31,
1997 and $14,526,334 in the first nine months of 1998 were used to expand the
Company's headquarters and to purchase equipment.
At September 30, 1998, the Company's cash on hand of $13,109,385,
short-term investments of $56,753,013 and $10,000,000 available under a
$10,000,000 bank line of credit placed the Company's potential cash availability
at $79,862,398 of which a portion is being used to expand the Company's
facilities under the incentive program described above. The Company's
$10,000,000 bank line of credit bears interest at the rate of 87.5 basis points
over the 30 day London inter-bank offered rate. The Company expects to renew its
$10,000,000 bank line of credit upon expiration in May 1999.
The Company expects to finance its operations in the future with cash flow
from operations, the remaining net proceeds of the public offerings, amounts
available under the bank line of credit, borrowed taxable revenue bond proceeds,
and possible additional public financings. These available sources of funds are
expected to be adequate to meet the Company's operating and capital needs for
the foreseeable future.
<PAGE>
YEAR 2000 COMPLIANCE
The Company is conducting a year 2000 program to assess and mitigate the
impact of the year 2000 issue. The Company believes that all critical
Information Technology and non-Information Technoloy hardware and software
systems are, or will be year 2000 compliant before December 31, 1998. This
includes, but is not limited to, business systems, network infrastructure,
manufacturing equipment, engineering tools, customer products and plant
facilities.
The Company has completed the inventory and assessment phases of its year
2000 program. The Company's operations are not dependent upon older legacy
source code or mainframe computers as is often the case with systems with
significant year 2000 issues. Therefore, there is little or no date related code
remediation or conversion necessary to maintain normal business activities. The
primary remaining effort in the year 2000 program is to review and validate the
conclusions reached by the Company's year 2000 assessment. The Company does not
believe that costs associated with bringing the Company's computer systems into
full compliance with year 2000 issue will result in material expense to the
Company.
In July of 1998 the Company completed the implementation of new business
software and hardware which has been determined to be year 2000 compliant.
Ongoing is the upgrade of some secondary systems which have been identified with
minor year 2000 issues. Likewise, testing and year 2000 simulations will be
performed on Company systems to verify date processing capabilities.
The Company has also contacted and assessed its suppliers and
subcontractors regarding the year 2000 issue and concluded that those suppliers
which have a material relationship with the Company, are not expected to cause
significant business interruptions to occur as a result of the year 2000 issue.
The Company's assessment of suppliers has identified those most critical to
Company operations and a worst case contingency plan will be prepared. The
Company's primary external subcontractors are conducting their own independent
internal year 2000 programs and are being assisted by the Company with their
year 2000 preparations where appropriate.
The Company's products are year 2000 compliant as well. Company engineers
have confirmed product design specifications and have verified product date
processing functionality. Customers are provided individual responses to product
inquiries and the Company has posted detailed year 2000 information on its web
site. The Company does not believe that it will have any material exposure to
contingencies related to the year 2000 issue for products it has sold.
Based on information presently available, the Company does not anticipate
any material impact on its financial condition or results of operations from the
effect of the year 2000 issue on its internal systems or on those of its major
suppliers and customers. However, there can be no guarantee that the systems of
other companies on which the Company relies will be timely converted, or that a
failure to convert by another company would not have a material adverse impact
on the Company.
So far, the Company has spent approximately $100,000 in preparation for the
year 2000 readiness. The Company expects to spend an additional $60,000 in 1999.
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
The Securities and Exchange Commission has made recent changes to the proxy
rules in Regulation 14A under the Securities Exchange Act of 1934, as amended,
including Rule 14a-4 and Rule 14a-5. Stockholders are entitled to submit
proposals on matters appropriate for stockholder action consistent with the
rules and regulations of the Securities and Exchange Commission and the
Company's Bylaws.
In connection with a stockholder's proposal to be presented at the 1999
Annual Meeting of Stockholders where such stockholder has not sought inclusion
of the proposal in the Company's proxy statement and form of proxy, a proxy
granted to the Company's management will give management discretionary authority
to vote on any such stockholder proposal at the 1999 Annual Meeting of
Stockholders:
(i) if the Company's Corporate Secretary, ADTRAN, Inc., 901 Explorer
Boulevard, Huntsville, Alabama 35806, receives such proposal after February 2,
1999; or
(ii) if the Company's Corporate Secretary receives such proposal on or
before February 2, 1999 and management describes the proposal and how it intends
to exercise its discretionary voting authority with respect to such proposal in
its proxy statement relating to the 1999 Annual Meeting of Stockholders;
provided that, even if the Company includes such information in its proxy
statement, the Company's management may not exercise its discretionary voting
authority if, among other things, the stockholder submitting the proposal
provides the Company's Corporate Secretary with a written statement on or before
February 2, 1999 that such stockholder intends to deliver a proxy statement and
form of proxy to the number of stockholders required to carry the proposal.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are being filed with this report.
Exhibit No. Description
27 Financial Data Schedule
(b) Reports on form 8-K. None
<PAGE>
SIGNATURE
Pursuant to the requirements 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.
ADTRAN, INC.
(Registrant)
Date: November 13, 1998 /s/ John R. Cooper
John R. Cooper
Vice President - Finance and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed statement of income for the nine months ended September 30,1998 and
the condensed balance sheet as of September 30, 1998 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000926282
<NAME> ADTRAN
<MULTIPLIER> 1
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> $13,109,385
<SECURITIES> 56,753,013
<RECEIVABLES> 49,133,312
<ALLOWANCES> 872,687
<INVENTORY> 60,655,793
<CURRENT-ASSETS> 183,612,531
<PP&E> 100,231,445
<DEPRECIATION> 27,373,199
<TOTAL-ASSETS> 311,725,777
<CURRENT-LIABILITIES> 24,785,962
<BONDS> 50,000,000
0
0
<COMMON> 394,145
<OTHER-SE> 234,792,180
<TOTAL-LIABILITY-AND-EQUITY> 311,725,777
<SALES> 213,526,321
<TOTAL-REVENUES> 213,526,321
<CGS> 96,364,654
<TOTAL-COSTS> 96,364,654
<OTHER-EXPENSES> 44,300,674
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,693,428
<INCOME-PRETAX> 47,695,159
<INCOME-TAX> 16,216,354
<INCOME-CONTINUING> 31,478,805
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,478,805
<EPS-PRIMARY> .80
<EPS-DILUTED> .81
</TABLE>
