UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from _______ to _______
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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Securities registered pursuant to Section 12(b) of the Act:
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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 12 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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 4, 2022, the registrant had
ADTRAN, Inc.
Quarterly Report on Form 10-Q
For the three months ended March 31, 2022
Table of Contents
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1 |
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Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 – (Unaudited) |
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Notes to Condensed Consolidated Financial Statements – (Unaudited) |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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1A |
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2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of ADTRAN, Inc. (“ADTRAN”, the “Company”, “we”, “our” or “us”). ADTRAN and its representatives may from time to time make written or oral forward-looking statements, including statements contained in this report, our other filings with the Securities and Exchange Commission (the “SEC”) and other communications with our stockholders. Any statement that does not directly relate to a historical or current fact is a forward-looking statement. Generally, the words, “believe”, “expect”, “intend”, “estimate”, “anticipate”, “will”, “may”, “could” and similar expressions identify forward-looking statements. We caution you that any forward-looking statements made by us or on our behalf are subject to uncertainties and other factors that could affect the accuracy of such statements. The following are some of the risks that could affect our financial performance or could cause actual results to differ materially from those expressed or implied in our forward-looking statements:
Risks related to the Business Combination Agreement with ADVA
Risks related to our financial results and Company success
3
Risks related to COVID-19
Risks related to our control environment
Risks related to the telecommunications industry
4
Risks related to the regulatory environments in which we do business
The foregoing list of risks is not exclusive. For a more detailed description of the risk factors associated with our business, see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022 (the “2021 Form 10-K”), as well as the risk factors set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q. We caution investors that other factors may prove to be important in the future in affecting our operating results. New factors emerge from time to time, and it is not possible for us to predict all of these factors, nor can we assess the impact each factor, or a combination of factors, may have on our business.
You are further cautioned not to place undue reliance on these forward-looking statements because they speak only of our views as of the date that the statements were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
5
GLOSSARY OF SELECTED TERMS
Below are certain acronyms, concepts and defined terms commonly used in our industry and in this Quarterly Report on Form 10-Q, along with their meanings:
Acronym/Concept/ |
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Defined Term |
Meaning |
CPE |
Customer-Premises Equipment |
CSP |
Communication Service Provider |
DSO |
Days Sales Outstanding |
ERP |
Enterprise Resource Planning Software |
FCC |
Federal Communications Commission |
LAN |
Local Area Network |
RDOF |
Rural Digital Opportunity Fund |
SEC |
Securities and Exchange Commission |
Service Provider |
Entity that provides voice, data or video services to consumers and businesses |
System Integrator or SI |
Person or company that specializes in bringing together component subsystems into a whole and ensuring that those subsystems function together |
U.K. |
United Kingdom |
U.S. |
United States of America |
VAR |
Value-Added Reseller |
WAN |
Wide Area Network |
6
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ADTRAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
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March 31, |
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December 31, |
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2022 |
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2021 |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Short-term investments (includes $ |
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Accounts receivable, less allowance for credit losses of $ |
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Other receivables |
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Inventory, net |
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Prepaid expenses and other current assets |
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Total Current Assets |
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Property, plant and equipment, net |
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Deferred tax assets, net |
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Goodwill |
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Intangibles, net |
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Other non-current assets |
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Long-term investments (includes $ |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities |
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Accounts payable |
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$ |
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Unearned revenue |
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Accrued expenses and other liabilities |
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Accrued wages and benefits |
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Income tax payable, net |
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Total Current Liabilities |
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Non-current unearned revenue |
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Pension liability |
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Deferred compensation liability |
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Other non-current liabilities |
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Total Liabilities |
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Stockholders' Equity |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained earnings |
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Treasury stock at cost: |
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Total Stockholders' Equity |
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Total Liabilities and Stockholders' Equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
7
ADTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(Unaudited)
(In thousands, except per share amounts)
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Three Months Ended |
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2021 |
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Revenue |
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Network Solutions |
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$ |
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$ |
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Services & Support |
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Total Revenue |
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Cost of Revenue |
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Network Solutions |
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Services & Support |
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Total Cost of Revenue |
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Gross Profit |
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Selling, general and administrative expenses |
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Research and development expenses |
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Operating Loss |
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Interest and dividend income |
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Interest expense |
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Net investment (loss) gain |
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Other (expense) income, net |
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( |
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(Loss) Income Before Income Taxes |
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( |
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Income tax benefit (expense) |
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( |
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Net (Loss) Income |
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$ |
( |
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$ |
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Weighted average shares outstanding – basic |
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Weighted average shares outstanding – diluted |
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(Loss) earnings per common share – basic |
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$ |
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$ |
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(Loss) earnings per common share – diluted |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
8
ADTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands)
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Net (Loss) Income |
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$ |
( |
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$ |
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Other Comprehensive (Loss) Income, net of tax |
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Net unrealized loss on available-for-sale securities |
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Defined benefit plan adjustments |
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Foreign currency translation loss |
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( |
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Other Comprehensive (Loss) Income, net of tax |
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( |
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Comprehensive Loss, net of tax |
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$ |
( |
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$ |
( |
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See accompanying notes to condensed consolidated financial statements.
9
ADTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except per share amounts)
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Common |
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Common |
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Additional |
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Retained |
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Treasury |
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Accumulated Other Comprehensive Loss |
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Total |
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Balance as of December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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Other comprehensive loss, net of tax |
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Dividend payments ($ |
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( |
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Dividends accrued on unvested RSUs |
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Deferred compensation adjustments, net of tax |
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( |
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PSUs, RSUs and restricted stock vested |
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( |
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Stock options exercised |
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Stock-based compensation expense |
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Balance as of March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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See accompanying notes to condensed consolidated financial statements.
10
ADTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except per share amounts)
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Common |
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Common |
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Additional |
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Retained |
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Treasury |
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Accumulated Other Comprehensive Loss |
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Total |
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Balance as of December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Dividend payments ($ |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Dividends accrued on unvested RSUs |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Deferred compensation adjustments, net of tax |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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PSUs, RSUs and restricted stock vested |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Stock options exercised |
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— |
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— |
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— |
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( |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Balance as of March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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See accompanying notes to condensed consolidated financial statements.
11
ADTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net (loss) income |
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$ |
( |
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$ |
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Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
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Depreciation and amortization |
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Loss (gain) on investments |
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Stock-based compensation expense |
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Other, net |
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( |
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Inventory reserves |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
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( |
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Other receivables |
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( |
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( |
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Inventory |
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( |
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Prepaid expenses, other current assets and other assets |
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( |
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Accounts payable |
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Accrued expenses and other liabilities |
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Income taxes payable, net |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchases of property, plant and equipment |
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( |
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Proceeds from sales and maturities of available-for-sale investments |
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Purchases of available-for-sale investments |
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( |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Tax withholdings related to stock-based compensation settlements |
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