<PAGE>
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, 2000
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, 2000
---------------------------- ----------------------------
Common Stock, $.01 Par Value 38,692,386 shares
Page 1 of 16
<PAGE>
ADTRAN, INC.
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 2000
Table of Contents
-----------------
<TABLE>
<CAPTION>
Item Page
Number PART I. FINANCIAL INFORMATION Number
----- ------
<S> <C> <C>
1 Financial Statements (unaudited): 3
Condensed Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999 3
Condensed Consolidated Statements of Income for the three
months and six months ended June 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
4 Submission of Matters to a Vote of Security Holders 14
6 Exhibits and Reports on Form 8-K 15
SIGNATURE 16
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ADTRAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................ $ 23,599,150 $ 37,500,674
Short-term investments............................................... 61,678,506 41,080,776
Accounts receivable, less allowance for doubtful accounts of
$956,410 and $1,018,400 in 2000 and 1999, respectively............ 68,465,342 60,036,876
Other receivables.................................................... 5,516,419 4,458,525
Inventory............................................................ 68,796,454 58,568,773
Prepaid expenses..................................................... 3,264,408 1,410,286
Deferred income taxes................................................ 4,069,937 4,069,937
------------ ------------
Total current assets....................................... 235,390,216 207,125,847
Property, plant and equipment, less accumulated depreciation of
$46,092,360 and $40,416,461 in 2000 and 1999, respectively....... 116,674,840 104,587,755
Other assets.............................................................. 220,000 220,000
Long-term investments..................................................... 326,556,039 244,362,579
------------ ------------
$678,841,095 $556,296,181
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 19,582,889 $ 12,773,848
Accrued salaries..................................................... 1,662,790 3,240,692
Accrued income taxes................................................. 1,478,074 6,096,459
Accrued taxes other than income taxes................................ 883,270 728,077
Warranty liability................................................... 1,519,945 1,519,945
Compensated absences................................................. 1,998,624 1,619,534
------------ ------------
Total current liabilities...................................... 27,125,592 25,978,555
Long term liabilities:
Bonds payable........................................................ 50,000,000 50,000,000
Deferred income taxes................................................ 111,307,146 80,265,155
------------ ------------
Total liabilities............................................... 188,432,738 156,243,710
------------ ------------
Stockholders' equity:
Common stock, par value $.01 per share 200,000,000 shares
authorized: 39,466,664 and 39,446,644 shares issued in 2000 and
1999, respectively................................................ 394,467 394,466
Additional paid-in capital........................................... 90,830,257 90,832,913
Accumulated other comprehensive income............................... 165,141,125 116,000,000
Retained earnings.................................................... 250,276,450 214,834,541
Less treasury stock at cost: 771,106 and 1,047,225 shares
in 2000 and 1999, respectively.................................... (16,233,942) (22,009,449)
------------ ------------
Total stockholders' equity........................................... 490,408,357 400,052,471
------------ ------------
$678,841,095 $556,296,181
============ ============
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
ADTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Sales...................................................... $114,446,655 $88,506,872 $213,917,006 $165,669,520
Cost of sales.............................................. 52,776,203 45,151,016 97,842,065 82,635,552
------------ ----------- ------------ ------------
Gross profit..................................... 61,670,452 43,355,856 116,074,941 83,033,968
Selling, general and administrative expenses............... 21,427,211 17,463,138 40,099,910 34,218,521
Research and development expenses.......................... 12,993,822 10,362,428 24,255,790 20,059,091
------------ ----------- ------------ ------------
Income from operations........................... 27,249,419 15,530,290 51,719,241 28,756,356
Interest expense........................................... (576,333) (576,333) (1,152,667) (1,146,333)
Other income, net.......................................... 1,581,686 1,160,678 3,134,737 2,204,616
------------ ----------- ------------ ------------
Income before income taxes................................. 28,254,772 16,114,635 53,701,311 29,814,639
Provision for income taxes................................. (9,606,622) (5,398,403) (18,258,687) (9,987,904)
------------ ----------- ------------ ------------
Net income....................................... $ 18,648,150 $10,716,232 $ 35,442,624 $ 19,826,735
============ =========== ============ ============
Weighted average shares outstanding assuming dilution (1).. 39,840,435 38,552,383 39,869,569 38,482,792
============ =========== ============ ============
Earnings per common share assuming dilution (1)............ $ .47 $ .28 $ .89 $ .51
============ =========== ============ ============
Earnings per common share - basic......................... $ .48 $ .28 $ .92 $ .52
============ =========== ============ ============
</TABLE>
(1) Assumes exercise of dilutive stock options calculated under the treasury
stock method.
See notes to condensed consolidated financial statements
4
<PAGE>
ADTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 35,442,624 $ 19,826,735
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.................................................... 6,004,577 5,246,222
Provisions for losses on warranty claims........................ 3,425,575 0
Gain on sale of property, plant and equipment................... 0 (5,000)
Loss on short-term investments.................................. 86,218 37,050
Change in operating assets:
Accounts receivable.......................................... (8,428,466) (14,659,594)
Inventory.................................................... (13,653,260) 10,252,107
Other receivables............................................ (1,059,635) (780,768)
Prepaid expenses............................................. (1,854,122) (163,484)
Deferred Income taxes........................................ (1,041,883) 0
Change in operating liabilities:
Accounts payable............................................. 6,377,678 6,948,462
Accrued salaries............................................. (1,577,903) 2,673,864
Accrued income taxes......................................... (4,618,385) 1,650,204
Accrued taxes other than income taxes........................ 155,193 225,057
Other payables............................................... 431,364 0
Compensated absences......................................... 379,090 210,098
------------ ------------
Net cash provided by operating activities......................... 20,068,665 31,460,953
------------ ------------
Cash flows from investing activities:
Expenditures for property, plant and equipment.................... (18,090,491) (19,543,744)
Proceeds from the disposition of property, plant and equipment.... 0 5,000
Redemption (Purchase) of short-term investments................... (20,683,948) 16,625,910
Purchase of long-term investments................................. (968,460) (699,945)
------------ ------------
Net cash used in investing activities............................. (39,742,899) (3,612,779)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock............................ 5,772,711 61,207
Purchase of treasury stock........................................ 0 (318,750)
------------ ------------
Net cash provided by (used in) financing activities............... 5,772,711 (257,543)
------------ ------------
Net (decrease) increase in cash and cash equivalents.............. (13,901,523) 27,590,631
Cash and cash equivalents, beginning of period........................ 37,500,674 10,009,320
------------ ------------
Cash and cash equivalents, end of period.............................. $ 23,599,151 $ 37,599,951
============ ------------
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
ADTRAN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The interim condensed balance sheet of ADTRAN, Inc. at December 31, 1999 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 ADTRAN 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, 2000 are not
necessarily indicative of the results that may be expected to occur for the year
ending December 31, 2000. The interim statements should be read in conjunction
with the financial statements and notes thereto included in ADTRAN's latest
Annual Report on Form 10-K.
2. INVENTORY
At June 30, 2000 and December 31, 1999, inventory consisted of the following:
June 30, December 31,
2000 1999
---- ----
Raw materials $40,144,954 $30,143,435
Work in progress 15,197,510 15,763,155
Finished goods 13,453,990 12,662,183
----------- -----------
$68,796,454 $58,568,773
=========== ===========
6
<PAGE>
3. EARNINGS PER SHARE
A summary of the calculation of basic and diluted earnings per share (EPS) for
the three months and six months ended June 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended June 30, 2000
----------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Basic EPS
Income available to common stockholders $18,648,150 38,667,341 $0.48
Effect of Dilutive Securities
Stock Options 0 1,173,094
Diluted EPS
Income available to common stockholders
+ assumed conversions $18,648,150 39,840,435 $0.47
<CAPTION>
For the Six Months Ended June 30, 2000
--------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Basic EPS
Income available to common stockholders $35,442,624 38,611,437 $.92
Effect of Dilutive Securities
Stock Options 0 1,258,132
Diluted EPS
Income available to common stockholders
+ assumed conversions $35,442,624 39,869,569 $.89
</TABLE>
7
<PAGE>
Earnings Per Share (continued)
<TABLE>
<CAPTION>
For the Three Months Ended June 30, 1999
-----------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Basic EPS
Income available to common stockholders $10,716,232 38,314,483 $0.28
Effect of Dilutive Securities
Stock Options 0 237,900
Diluted EPS
Income available to common stockholders
+ assumed conversions $10,716,232 38,552,383 $0.28
<CAPTION>
For the Six Months Ended June 30, 1999
--------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Basic EPS
Income available to common stockholders $19,826,735 38,320,374 $0.52
Effect of Dilutive Securities
Stock Options 0 162,418
Diluted EPS
Income available to common stockholders
+ assumed conversions $19,826,735 38,482,792 $0.51
</TABLE>
4. SEGMENT INFORMATION
ADTRAN, Inc. operates two reportable segments - (1) the Carrier Network Division
(formerly Telco) and (2) the Enterprise Network Division (formerly Customer
Premise Equipment). ADTRAN evaluates the performance of its segments based on
gross profit; therefore, selling, general and administrative costs, as well as
research and development, interest income/expense, and the provision for taxes
are reported on an entity wide basis only. There are no intersegment revenues.
8
<PAGE>
The table below presents information about the reported sales and gross profit
of ADTRAN for the three months and six months ended June 30, 2000 and 1999.
Asset information by reportable segment is not reported, since ADTRAN does not
produce such information internally.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000
Sales Gross Profit Sales Gross Profit
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(in thousands)
Carrier Network $ 77,053,480 $40,313,974 $144,589,269 $ 76,422,233
Enterprise Network 37,393,175 21,356,478 69,327,737 39,652,708
-------------------------------------------------------------------------------
Total $114,446,655 $61,670,452 $213,917,006 $116,074,941
Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000
Sales Gross Profit Sales Gross Profit
-------------------------------------------------------------------------------
(in thousands)
Carrier Network $ 56,624,433 $27,704,392 $104,276,102 $ 52,111,749
Enterprise Network 31,882,439 15,651,464 61,393,418 30,922,219
-------------------------------------------------------------------------------
Total $ 88,506,872 $43,355,856 $165,669,520 $ 83,033,968
</TABLE>
The following table presents sales information by geographic area for the three
months and six months ended June 30, 2000 and 1999.
<TABLE>
<CAPTION>
Sales (in thousands) Three Months Ended Six Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States $112,268,918 $85,364,394 $208,711,367 $161,087,975
Foreign 2,177,737 2,692,478 5,205,639 4,581,545
-------------------------------------------------------------------------------
Total $114,446,655 $88,506,872 $213,917,006 $165,669,520
</TABLE>
5. SUBSEQUENT EVENTS.
During July 2000, ADTRAN sold certain marketable equity securities (included in
long-term investments in the accompanying condensed consolidated balance sheet)
for $85,932,536 net of transaction cost of $4,705,670, resulting in a realized
gain of $85,356,467. The realized gain will be reflected in the financial
statements of ADTRAN in the third quarter 2000.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
Overview
ADTRAN, Inc. 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. We currently sell our products to Telcos
including all Regional Bell Operating Companies (through what is now referred
to as our Carrier Network Division), and to private end-users through our
Enterprise Network Division (formerly known as the Customer Premises Equipment
or CPE Division).
ADTRAN'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 our 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 ADTRAN'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, we seek in most instances to be a low-cost, high-quality
provider of products in our markets. ADTRAN's success to date is attributable in
large measure to our ability to initially design our products with a view to
their subsequent re-design, allowing efficient enhancements of the product in
each succeeding product generation. This strategy enables ADTRAN to sell
succeeding generations of products to existing customers while increasing our
market share by selling these enhanced products to new customers.
ADTRAN intends to retain all earnings for use in the development of our 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 ADTRAN which
attempt to advise interested parties of the factors which affect our 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.
10
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 COMPARED
TO THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1999
SALES
ADTRAN's sales increased 29.3% from $88,506,872 in the three months ended June
30, 1999 to $114,446,655 in the three months ended June 30, 2000. Sales
increased 29.1% from $165,669,520 in the six months ended June 30, 1999 to
$213,917,006 in the six months ended June 30, 2000. The increased sales
resulted from an increase in sales volume to existing customers and from
increased market penetration. Carrier Network sales increased from $56,624,433
in the three months ended June 30, 1999 to $77,053,480 in the three months ended
June 30, 2000 and increased from $104,276,102 in the six months ended June 30,
1999 to $144,589,269 in the six months ended June 30, 2000. Carrier Network
sales for the 2000 period increased primarily from continued success of High
bit-rate Digital Subscriber Line ("HDSL") products and strong sequential growth
in our Systems products. Carrier Network sales as a percentage of total sales
increased from 64.0% in the three months ended June 30, 1999 to 67.3% in the
three months ended June 30, 2000 and increased from 62.9% in the six months
ended June 30, 1999 to 67.5% in the six months ended June 30, 2000. Sales of
Enterprise Network products increased from $31,882,439 in the three months ended
June 30, 1999 to $37,393,175 in the three months ended June 30, 2000. The
increase was also due to strong growth in our Systems products as well as
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
Enterprise Network products increased 12.9% from $61,393,418 in the six months
ended June 30,1999 to $69,327,737 in the six months ended June 30, 2000. As a
percentage of sales, Enterprise Network sales decreased from 36.0% in the three
months ended June 30, 1999 to 32.7% in the three months ended June 30, 2000 and
decreased from 37.1% in the six months ended June 30, 1999 to 32.5% in the six
months ended June 30, 2000. The financial effect of the increase in overall unit
volume was offset somewhat by lower unit selling prices for many of ADTRAN's
products.
COST OF SALES
Cost of sales increased 16.9% from $45,151,016 in the three months ended June
30, 1999 to $52,776,203 in the three months ended June 30, 2000 and increased
18.4% from $82,635,552 in the six months ended June 30, 1999 to $97,842,065 in
the six months ended June 30, 2000. As a percentage of sales, cost of sales
decreased from 51.0% in the three months ended June 30, 1999 to 46.1% in the
three months ended June 30, 2000 and decreased from 49.9% in the six months
ended June 30, 1999 to 45.7% in the six months ended June 30, 2000. An
important part of ADTRAN'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
ADTRAN'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 ADTRAN, this strategy may result in
variations in gross profit margins that, for any particular financial period,
can be difficult to predict.
11
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased 22.7% from $17,463,138 in
the three months ended June 30, 1999 to $21,427,211 in the three months ended
June 30, 2000 and increased 17.2% from $34,218,521 in the six months ended June
30, 1999 to $40,099,910 in the six months ended June 30, 2000. The increase
was due to additional sales and support expenditures necessary as a result of
our expanded sales base. Selling, general and administrative expenses as a
percentage of sales decreased from 19.7% in the three months ended June 30,
1999 to 18.7% in the three months ended June 30, 2000 and decreased from 20.7%
in the six months ended June 30, 1999 and 18.8% in the six months ended June 30,
2000. Sales and support organization expansion, which resulted in increased
costs during the quarter, will continue because they are necessary to position
ADTRAN to accumulate market share and maintain growth over the longer term.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased 25.4% from $10,362,428 in the three
months ended June 30, 1999 to $12,993,822 in the three months ended June 30,
2000 and increased 20.9% from $20,059,091 in the six months ended June 30, 1999
to $24,255,790 in the six months ended June 30, 2000. The increase was due to
increased investment in product development and cost reduction through
engineering. As a percentage of sales, research and development expenses
decreased from 11.7% in the three months ended June 30, 1999 to 11.3% in the
three months ended June 30, 2000 and decreased from 12.1% in the six months
ended June 30, 1999 to 11.3% in the six months ended June 30, 2000. ADTRAN
will continue to invest in these product development activities because they are
necessary to position us to accumulate market share and maintain growth over the
longer term.
INTEREST EXPENSE
Interest expense remained the same at $576,333 for the three months ended June
30, 1999 and the three months ended June 30, 2000 and remained relatively
unchanged from $1,146,333 in the six months ended June 30, 1999 to $1,152,667 in
the six months ended June 30, 2000.
NET INCOME
As a result of the above factors, net income increased 74.0% from $10,716,232 in
the three months ended June 30, 1999 to $18,648,150 in the three months ended
June 30, 2000 and increased 78.8% from $19,826,735 in the six months ended June
30, 1999 to $35,442,624 in the six months ended June 30, 2000. As a percentage
of sales, net income decreased from 12.1% in the three months ended June 30,
1999 to 16.3% in the three months ended June 30, 2000 and increased from 12.0%
in the six months ended June 30, 1999 to 16.6% in the six months ended June 30,
2000.
Liquidity and Capital Resources
ADTRAN is committed to spend approximately an additional $4,500,000 completing
the construction of Phase IV of our corporate headquarters in Huntsville,
Alabama, with an expected completion date of October 30, 2000. Over the next
several years, we expect to spend approximately an additional $25,000,000 to
equip Phase IV. Fifty million dollars of ADTRAN's Phase III expansion was
approved for participation in an incentive program offered by the Alabama State
Industrial Development Authority (the "Authority"). The incentive program
enables participating companies to generate Alabama corporate income tax credits
that can be used to reduce the amount of Alabama corporate income taxes that
would otherwise be payable. There can be no assurance that the State of Alabama
will continue to make these corporate income tax credits available in the
future, and ADTRAN therefore may not realize the full benefit of these
incentives. Through December 31, 1999, the
12
<PAGE>
Authority had issued $50,000,000 of its taxable revenue bonds pursuant to the
incentive program and loaned the proceeds from the sale of the bonds to ADTRAN.
ADTRAN is required to make payments to the Authority in the amounts necessary to
pay the principal of and interest on the Authority's Taxable Revenue Bond,
Series 1995, as amended, currently outstanding in the aggregate principal amount
of $50,000,000. The bond matures on January 1, 2020, and bears interest at the
rate of 45 basis points over the money market rate of First Union National Bank
of Tennessee.
ADTRAN's working capital position increased from $181,147,292 as of December 31,
1999 to $208,264,624 as of June 30, 2000 due to cash generated from operations.
ADTRAN has used, and expects to continue to use, the cash generated from
operations 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 17.5% from December 31, 1999 to June 30, 2000. The increase is
attributable to our anticipation of increased shipments to existing customers.
On March 31, 1997, the Board of Directors authorized ADTRAN to re-purchase up to
1,000,000 shares of our outstanding common stock. In October 1998, the Board
approved the re-purchase of an additional 2,000,000 shares. As of June 30,
2000, we had re-purchased 1,121,017 shares of our common stock at a total cost
of $23,595,265.
Capital expenditures totaling $36,237,000 for the year ended December 31, 1999
and $8,832,000 in the first six months of 2000 were used to expand our
headquarters and to purchase equipment.
At June 30, 2000, ADTRAN's cash on hand of $23,599,150 and short-term
investments of $61,678,506 placed our potential cash availability at
$85,277,656, of which a portion is being used to expand ADTRAN's facilities
under the incentive program described above. ADTRAN determined not to renew the
$10,000,000 bank line of credit, which expired on March 29, 2000.
During July 2000, ADTRAN sold certain marketable equity securities (included in
long-term investments in the accompanying condensed consolidated balance sheet)
for $85,932,536 net of transaction cost of $4,705,670, resulting in a realized
gain of $85,356,467. The realized gain will be reflected in the financial
statements of ADTRAN in the third quarter 2000.
We intend to finance our operations in the future with cash flow from operations
and remaining borrowed taxable revenue bond proceeds. We believe these available
sources of funds to be adequate to meet our operating and capital needs for the
foreseeable future.
13
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The 2000 Annual Meeting of Stockholders of ADTRAN was held on April 21, 2000.
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 each director 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 32,570,893 1,552,909
Lonnie S. McMillian 32,570,759 1,553,043
Howard A. Thrailkill 32,571,229 1,552,573
W. Frank Blount 33,618,699 505,103
William J. Marks 33,637,118 486,684
Roy J. Nichols 33,636,044 487,758
James L. North 33,193,675 930,127
(b) Ratification of the appointment of PricewaterhouseCoopers LLP,
(formerly Coopers & Lybrand L.L.P.) as independent accountants of
ADTRAN for 2000.
Votes
-----------------------------------------------------------------------
For Against Abstain
-----------------------------------------------------------------------
34,046,526 41,319 35,957
(c) Approval of an amendment to the 1996 Employee Incentive Stock Option
Plan which increases the aggregate number of shares of Common Stock
authorized for issuance under the plan from 2,488,100 to 5,488,100.
Votes
-----------------------------------------------------------------------
For Against Abstain
-----------------------------------------------------------------------
28,352,188 1,552,508 41,494
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are being filed with this report.
27 - Financial Data Schedule
(b) Reports on Form 8-K. None
15
<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 14, 2000 /s/ John R. Cooper
------------------
John R. Cooper
Vice President - Finance and
Chief Financial Officer
16
