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 June 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 July 31, 1998
Common Stock, $.01 Par Value 39,016,979 shares
Page 1 of 15
<PAGE>
ADTRAN, INC.
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 1998
Table of Contents
Item Page
Number PART I. FINANCIAL INFORMATION Number
1 Financial Statements:
Condensed Balance Sheets as of June 30, 1998 and
December 31, 1997 3
Condensed Statements of Income for the three
months and six months 4
ended June 30, 1998 and 1997
Condensed Statements of Cash Flows for the six
months ended June 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
PART II. OTHER INFORMATION
4 Submission of Matters to a Vote of Security 13
Holders
5 Other Information 13
6 Exhibits and Reports on Form 8-K 14
SIGNATURE 15
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ADTRAN, INC.
CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
1998 1997
<S> <C> <C>
(Unaudited)
Current assets:
Cash and cash equivalents $25,539,437 $45,340,961
Short-term investments 63,423,723 37,833,240
Accounts receivable, less
allowance for doubtful accounts
of $820,445 and $893,389 in 1998
and 1997, respectively 36,956,828 40,906,887
Other receivables 1,113,151 343,463
Inventory 41,822,741 39,369,103
Prepaid expenses 1,929,209 1,148,288
Deferred income taxes 2,458,136 2,458,136
----------- -----------
Total current assets 173,243,225 167,400,078
Property, plant and equipment, less
accumulated depreciation of
$24,953,849 and $20,900,272
in 1998 and 1997, respectively 69,023,525 64,801,132
Other assets 220,000 200,000
Long-term investments 55,035,000 50,000,000
------------ ------------
$297,521,750 $282,401,210
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $11,904,214 $ 9,121,270
Accrued salaries 2,879,550 1,927,364
Accrued income taxes 2,294,364 4,579,345
Accrued taxes other than income taxes 260,015 180,611
Warranty liability 1,435,259 1,435,259
Compensated absences 1,239,289 972,651
---------- ----------
Total current liabilities 20,012,691 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 72,160,326 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 143,298,196 123,260,647
Less 397,500 and 100,000 shares
treasury stock at cost in
1998 and 1997, respectively (8,952,125) (2,200,000)
----------- -----------
Total stockholders' equity 225,361,424 212,037,075
----------- ------------
$297,521,750 $282,401,210
============ ============
</TABLE>
See notes to condensed financial statements
<PAGE>
ADTRAN, INC.
CONDENSED STATEMENTS OF INCOME
Unaudited
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Sales $71,155,452 $59,125,208 $136,482,686 $120,355,392
Cost of sales 32,205,894 30,493,144 61,614,431 59,931,941
---------- ---------- ---------- ----------
Gross profit 38,949,558 28,632,064 74,868,255 60,423,451
Selling, general and
administrative expenses 15,064,329 10,624,484 28,321,919 21,161,999
Research and development expenses 9,443,911 7,716,639 17,822,267 14,711,897
---------- ---------- ---------- ----------
Income from operations 14,441,318 10,290,941 28,724,069 24,549,555
Interest expense (576,333) (508,665) (1,110,761) (751,199)
Other income, net 1,506,073 1,124,401 2,861,033 1,986,866
--------- ---------- ---------- ----------
Income before income taxes 15,371,058 10,906,677 30,474,341 25,785,222
Provision for income taxes (5,226,160) (3,926,404) (10,436,792) (9,282,680)
---------- --------- ---------- ---------
Net income $10,144,898 $ 6,980,273 $20,037,549 $16,502,542
=========== ============ =========== ===========
Weighted average shares
outstanding assuming dilution(1) 39,431,601 39,523,277 39,500,980 39,531,615
========== ========== ========== ==========
Earnings per common share assuming
dilution (1 $0.26 $0.18 $0.51 $0.42
----- ----- ----- -----
Earnings per common share - basic $0.26 $0.18 $0.51 $0.42
----- ----- ----- -----
</TABLE>
(1) Assumes exercise of dilutive stock options calculated under the
treasury stock method.
See notes to condensed financial statements
<PAGE>
<TABLE>
<CAPTION>
ADTRAN, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ended
June 30,
<S> <C> <C>
1998 1997
Cash flows from operating activities:
Net income $20,037,549 $16,502,542
Adjustments to reconcile net
income to net cash provided by operating activities:
Depreciation 4,054,508 3,597,865
Gain(loss)on sale of property, plant and equipment 0 (12,220)
Loss on short-term investments 0 55,930
Change in operating assets:
Accounts receivable 3,950,059 2,069,867
Inventory (2,453,638) (14,126,608)
Other receivables (770,618) (91,006)
Prepaid expenses (800,921) (44,648)
Change in operating liabilities:
Accounts payable 2,782,944 523,351
Accrued salaries 952,186 (382,569)
Accrued income taxes (2,284,981) (1,803,706)
Accrued taxes other than income taxes 79,404 12,000
Compensated absences 266,638 230,606
Accrued interest 0 (59,594)
---------- ----------
Net cash provided by operating activities 25,813,130 6,471,810
---------- ----------
Cash flows from investing activities:
Expenditures for property, plant and equipment (8,285,971) (11,814,233)
Proceeds from the disposition of property, plant and
equipment 10,000 28,447
(Purchase) redemption of short-term investments (25,590,483) 3,966,760
Purchase of long-term investments (5,035,000) (50,000,000)
----------- ----------
Net cash used in investing activities (38,901,454) (57,819,026)
----------- ----------
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 38,925 286,229
Purchase of treasury stock (6,752,125) (2,200,000)
----------- ----------
Net cash (used in) provided by financing activities (6,713,200) 28,086,229
----------- ----------
Net (decrease)increase in cash and cash equivalents (19,801,524) (23,260,987)
Cash and cash equivalents, beginning of period 45,340,961 44,839,131
---------- ----------
Cash and cash equivalents, end of period $25,539,437 $21,578,144
=========== ===========
</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 six months ended June 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 June 30, 1998 and December 31, 1997, inventory consisted of the following:
June 30, December 31,
1998 1997
Raw materials $26,961,646 $24,199,720
Work in progress 3,749,075 2,565,179
Finished goods 11,112,020 12,604,204
----------- -----------
$41,822,741 $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. For the six months ended June 30,
1998 and 1997, there were no differences between net income and comprehensive
income.
4. EARNINGS PER SHARE
A summary of the calculation of basic and diluted earnings per share for
the three months and six months ended June 30, 1998 and June 30, 1997 is as
follows:
FOR THE THREE MONTHS ENDED JUNE 30, 1998
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS
Income available to common
stockholders $10,144,898 39,284,750 $0.26
Effect of Dilutive Securities
Stock Options 146,852
Diluted EPS
Income available to common
stockholders + assumed
conversions $10,144,898 39,431,602 $0.26
<PAGE>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS
Income available to common $20,037,549 39,306,033 $0.51
stockholders
Effect of Dilutive Securities
Stock Options 194,947
Diluted EPS
Income available to common
stockholders + assumed
conversions $20,037,549 39,500,980 $0.51
FOR THE THREE MONTHS ENDED JUNE 30, 1997
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS
Income available to common
stockholders $6,980,273 39,244,514 $0.18
Effect of Dilutive Securities
Stock Options 278,763
Diluted EPS
Income available to common
stockholders + assumed
conversions $6,980,273 39,523,277 $0.18
FOR THE SIX MONTHS ENDED JUNE 30, 1997
Income Shares Per-Share
(Numerator) (Denominator) Amount
Basic EPS
Income available to common
stockholders $16,502,542 39,137,998 $0.42
Effect of Dilutive Securities
Stock Options 393,618
Diluted EPS
Income available to common
stockholders + assumed
conversions $16,502,542 39,531,616 $0.42
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION 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 Six Months Ended June 30,1998 Compared
to Three Months and Six Months Ended June 30, 1997
SALES
The Company's sales increased 20.3% from $59,125,208 in the three months
ended June 30, 1997 to $71,155,452 in the three months ended June 30, 1998.
Sales increased 13.4% from $120,355,392 in the six months ended June 30, 1997 to
$136,482,686 in the six months ended June 30, 1998. The increased sales resulted
from an increase in sales volume to existing customers and from increased market
penetration. Sales to Telcos increased slightly from $37,941,567 in the three
months ended June 30, 1997 to $39,681,156 in the three months ended June 30,
1998 and increased from $78,329,743 in the six months ended June 30, 1997 to
$80,377,170 in the six months ended June 30, 1998. The increase in Telco sales
in the 1998 period resulted primarily from increased sales of High bit-rate
Digital Subscriber Line ("HDSL") products and ("DDS") Digital Data Services
products. Telco sales as a percentage of total sales decreased from 64.2% in the
three months ended June 30, 1997 to 55.8% in the three months ended June 30,
1998 and decreased from 65.1% in the six months ended June 30, 1997 to 58.9% in
the six months ended June 30, 1998. Sales of CPE products increased 48.6% from
$21,183,641 in the three months ended June 30, 1997 to $31,474,296 in the three
months ended June 30, 1998, as a result of increased sales of ("T-1") products,
(a digital transmission link with a capacity of 1.544 Mbit/s used predominantly
in North America). Sales of CPE products increased 33.5% from $42,025,649 in the
six months ended June 30,1997 to $56,105,516 in the six months ended June 30,
1998. As a percentage of sales, CPE sales increased from 34.9% in the six months
ended June 30, 1997 to 41.1% in the six months ended June 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 $30,493,144 in the three months ended
June 30, 1997 to $32,205,894 in the three months ended June 30, 1998 and
increased 2.8% from $59,931,941 in the six months ended June 30, 1997 to
$61,614,431 in the six months ended June 30, 1998. As a percentage of sales,
cost of sales decreased from 51.6% in the three months ended June 30, 1997 to
45.3% in the three months ended June 30, 1998 and decreased from 49.8% in the
six months ended June 30, 1997 to 45.1% in the six months ended June 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 margin 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.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased 41.8% from
$10,624,484 in the three months ended June 30, 1997 to $15,064,329 in the three
months ended June 30, 1998 and increased 33.8% from $21,161,999 in the six
months ended June 30, 1997 to $28,321,919 in the six months ended June 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 18.0% in the three months ended
June 30, 1997 to 21.2% in the three months ended June 30, 1998 and increased
from 17.6% in the six months ended June 30, 1997 to 20.8% in the six months
ended June 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 22.4% from $7,716,639 in the
three months ended June 30, 1997 to $9,443,911 in the three months ended June
30, 1998 and increased 21.1% from $14,711,897 in the six months ended June 30,
1997 to $17,822,267 in the six months ended June 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 13.1% in the three months ended June 30, 1997 to 13.3% in the
three months ended June 30, 1998 and increased from 12.2% in the six months
ended June 30, 1997 to 13.1% in the six months ended June 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.
<PAGE>
INTEREST EXPENSE
Interest expense increased 13.3% from $508,665 in the three months ended
June 30, 1997 to $576,333 in the three months ended June 30, 1998 and increased
47.9% from $751,199 in the six months ended June 30, 1997 to $1,110,761 in the
six months ended June 30, 1998. This increase was due to an increase in bonds
payable from $20,000,000 during the first quarter of 1997 to $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 45.3% from
$6,980,273 in the three months ended June 30, 1997 to $10,144,898 in the three
months ended June 30, 1998 and increased 21.4% from $16,502,542 in the six
months ended June 30, 1997 to $20,037,549 in the six months ended June 30, 1998.
As a percentage of sales, net income increased from 11.8% in the three months
ended June 30, 1997 to 14.3% in the three months ended June 30, 1998 and
increased from 13.7% in the six months ended June 30, 1997 to 14.7% in the six
months ended June 30, 1998.
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 $54,032,000 had been incurred at June 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 an additional $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 $153,230,534 as of June 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 6.2% from December 31, 1997 to June 30, 1998.
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 six month period ended June 30, 1998, the Company repurchased 297,500
shares at a cost of $6,752,125 and as of June 30, 1998, the Company has
repurchased 397,500 shares at a total cost of $8,952,125.
Capital expenditures totaling $18,220,850 for the year ended December 31,
1997 and $8,285,971 in the first six months of 1998 were used to expand the
Company's headquarters and to purchase equipment.
At June 30, 1998, the Company's cash on hand of $25,539,437, short- term
investments of $63,423,723 and $10,000,000 available under a $10,000,000 bank
line of credit placed the Company's potential cash availability at $98,963,160
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 intends to renew its $10,000,000 bank line
of credit upon expiration in May 1999.
The Company intends 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 in the process of reviewing current software and hardware to
assess the impact of the year 2000 issue. Initially, the Company has determined
that most of the Company's current business process software and hardware are
year 2000 compliant. The Company is in the process of implementing new business
process software which has been determined to be year 2000 compliant as well.
This implementation should be completed in 1998. The Company expects to complete
its year 2000 analysis by the end of 1998 and does not believe that costs
associated with bringing the Company's computer systems into full compliance
with year 2000 will result in material costs to the Company. The Company's
products are year 2000 compliant as well and therefore, the Company does not
believe that it has any material exposure to contingencies related to the year
2000 issue for products it has sold.
The Company is also in the preliminary stages of assessing the impact of
the year 2000 issue on its major vendors and suppliers to determine the extent
to which the Company is vulnerable to those third parties' failure to remediate
their own year 2000 issues. 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 the Company's
internal systems or those of its major suppliers and customers. However, there
can be no guarantee that the systems of other companies on which the Company's
system rely will be brought into compliance, or that a failure to convert by
another company would not have a material adverse impact on the Company.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The 1998 Annual Meeting of Stockholders of the Company was held on April
27, 1998. Proxies with regard to the matters to be voted upon at the Annual
Meeting were solicited under Regulation 14A of the Securities Exchange Act of
1934, as amended. Set forth below is a brief description of each matter voted
upon at the Annual Meeting and the results of the voting on each such matter.
(a) Election of the seven directors named below to serve until the
next Annual Meeting of Stockholders. There was no solicitation in
opposition to any of the nominees listed in the proxy statement,
and all of the nominees were elected.
NOMINEES VOTES
For Withheld
Mark C. Smith 37,376,135 53,178
Lonnie S. McMillian 37,375,585 53,728
Howard A. Thrailkill 37,345,074 84,239
O. Gene Gabbard* 37,375,535 53,778
William J. Marks 37,343,034 86,279
Roy J. Nichols 37,375,285 54,028
James L. North 37,049,660 379,653
*Mr. Gabbard resigned from the Company's Board of Directors effective
May 23, 1998. No additional director has been appointed.
(b) Ratification of the appointment of PricewaterhouseCoopers LLP,
(formerly Coopers & Lybrand L.L.P.) as independent accountants of
the Company for 1998.
VOTES
For Against Abstain
____________________________________________________
37,399,903 7,264 22,146
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 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'
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: August 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 SIX MONTHS ENDED JUNE 30, 1998 AND THE
CONDENSED BALANCE SHEET AS OF JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENS.
</LEGEND>
<CIK> 0000926282
<NAME> ADTRAN, INC.
<MULTIPLIER> 1
<CURRENCY> US Dollar
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> $25,539,437
<SECURITIES> 63,423,723
<RECEIVABLES> 37,777,273
<ALLOWANCES> 820,445
<INVENTORY> 41,822,741
<CURRENT-ASSETS> 173,243,225
<PP&E> 93,977,374
<DEPRECIATION> 24,953,849
<TOTAL-ASSETS> $297,521,750
<CURRENT-LIABILITIES> 20,012,691
<BONDS> 50,000,000
0
0
<COMMON> 394,145
<OTHER-SE> 225,361,424
<TOTAL-LIABILITY-AND-EQUITY> $297,521,750
<SALES> 136,482,686
<TOTAL-REVENUES> 136,482,686
<CGS> 61,614,431
<TOTAL-COSTS> 61,614,431
<OTHER-EXPENSES> 28,321,919
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<INCOME-TAX> 10,436,792
<INCOME-CONTINUING> 20,037,549
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<CHANGES> 0
<NET-INCOME> 20,037,549
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.51
</TABLE>
