Item 7.01
|
Regulation FD Disclosure.
|
In 2015, ADTRAN, Inc. (the Company) began a realignment of its
organizational structure to better match its market opportunities, technology development initiatives, and improve efficiencies. Beginning with the publication of its earnings report for the quarter ending March 31, 2016, the Company will
report its financial performance based on two new reportable segments Network Solutions and Services & Support. The Company is providing the revised financial reporting structure shown below to give visibility into the new reporting
model. In addition to the new reporting segments, the Company will also report revenue for the three categories described below. The Company will continue to evaluate selling, general and administrative expenses, research and development expenses,
interest and dividend income, interest expense, net realized investment gain/loss, other income/expense, and provision for income taxes, etc., on a company-wide, functional basis; therefore, these items will only be reported on a consolidated basis.
The performance of the Companys new operating segments will be evaluated primarily based on gross profit.
We are furnishing this Form
8-K
under Regulation FD to provide a description of our new reporting structure. Beginning with the quarter ending March 31, 2016, our financial statements will reflect the new reporting structure with prior
periods adjusted accordingly.
Operating Segments
ADTRANs new operating segments are
Network Solutions
and
Services & Support
.
Revenue Categories
ADTRAN will report revenue for
the following three categories
Access & Aggregation, Customer Devices, and Traditional & Other Products
.
Access &
Aggregation
solutions in general are used by communications service providers (CSPs) to connect their network infrastructure to their subscribers. This category includes software and hardware based products and services that aggregate and/or
originate access technologies. The portfolio of ADTRAN solutions within this category includes a wide array of modular or fixed physical form factors designed to deliver the best technology and economic fit based on the target subscriber density and
environmental conditions.
The Access & Aggregation category includes product and service families such as:
|
|
|
Total Access
®
5000 Series Fiber to the Premises (FTTP) and Fiber to the Node (FTTN) Multi-Service Access Nodes (MSAN)
|
|
|
|
hiX 5600 Series fiber aggregation and Fiber to the Node (FTTN) Multi-Service Access Nodes (MSAN)
|
|
|
|
Fiber to the Distribution Point (FTTdp) Optical Network Units (ONU)
|
|
|
|
Optical Line Terminals (OLT)
|
|
|
|
Optical Networking Edge (ONE) aggregation
|
|
|
|
Distribution Point Units (DPUs)
|
|
|
|
IP Digital Subscriber Line Access Multiplexers (DSLAMs)
|
|
|
|
Cabinet and outside-plant (OSP) enclosures and services
|
|
|
|
Network Management and Cloud based software platforms and applications
|
|
|
|
Pluggable optical transceivers (i.e., SFP, SFP+, XFP, QSFP), cables and other miscellaneous materials
|
|
|
|
Other products and services that are generally applicable to access & aggregation
|
Customer Devices
in general includes the products and services that provide end users access to the CSP
network. The Customer Devices portfolio includes a comprehensive array of hardware and software products and services.
The Customer Devices
category includes products and services such as:
|
|
|
Broadband customer premise solutions, including passive optical network (PON) and point-to-point Ethernet Optical Network Terminals (ONTs)
|
|
|
|
Residential and business gateways
|
|
|
|
Wi-Fi access points and associated powering and switching infrastructure
|
|
|
|
Enterprise session border controllers (eSBC)
|
|
|
|
Branch office and access routers
|
|
|
|
Carrier Ethernet services termination devices
|
|
|
|
Planning, engineering, program management, maintenance, installation and commissioning services to implement the customer devices solutions into consumer, small business and enterprise locations
|
|
|
|
Other products and services that are generally applicable to customer devices
|
Traditional & Other
Products
in general include a mix of prior generation technologies products and services as well as other products and services that do not fit within the Access & Aggregation or Customer Devices categories.
The Traditional & Other Products category includes products and services such as:
|
|
|
Time division multiplexed (TDM) and asynchronous transfer mode (ATM) based aggregation systems and customer devices
|
|
|
|
ADSL, HDSL and other mature technologies used to deliver business and residential services over the CSP access and customer networks
|
|
|
|
Other products and services that do not fit within the Access & Aggregation and Customer Devices categories
|
Recast Segment and Revenue Category Financial Results
The following tables provide the new format of the Companys quarterly segment revenue, segment gross profit, and product category revenue for the years
ended December 31, 2015 and 2014 that will be recast during the first quarter of 2016.
Segment Revenue
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
March 31,
2015
|
|
June 30,
2015
|
|
September 30,
2015
|
|
December 31,
2015
|
|
Full Year
2015
|
Network Solutions
|
|
|
|
|
|
|
|
|
|
|
Services & Support
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Revenue
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
March 31,
2014
|
|
June 30,
2014
|
|
September 30,
2014
|
|
December 31,
2014
|
|
Full Year
2014
|
Network Solutions
|
|
|
|
|
|
|
|
|
|
|
Services & Support
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Gross Profit
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
March 31,
2015
|
|
June 30,
2015
|
|
September 30,
2015
|
|
December 31,
2015
|
|
Full Year
2015
|
Network Solutions
|
|
|
|
|
|
|
|
|
|
|
Services & Support
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Gross Profit
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
March 31,
2014
|
|
June 30,
2014
|
|
September 30,
2014
|
|
December 31,
2014
|
|
Full Year
2014
|
Network Solutions
|
|
|
|
|
|
|
|
|
|
|
Services & Support
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Category Revenue
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
March 31,
2015
|
|
June 30,
2015
|
|
September 30,
2015
|
|
December 31,
2015
|
|
Full Year
2015
|
Access & Aggregation
|
|
|
|
|
|
|
|
|
|
|
Customer Devices
|
|
|
|
|
|
|
|
|
|
|
Traditional & Other Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Category Revenue
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
March 31,
2014
|
|
June 30,
2014
|
|
September 30,
2014
|
|
December 31,
2014
|
|
Full Year
2014
|
Access & Aggregation
|
|
|
|
|
|
|
|
|
|
|
Customer Devices
|
|
|
|
|
|
|
|
|
|
|
Traditional & Other Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|