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Simplify Service Delivery and Grow Business


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HUNTSVILLE, Ala.--(BUSINESS WIRE)--Oct. 18, 2016-- ADTRAN, Inc. (NASDAQ:ADTN) reported results for the third quarter 2016. For the quarter, sales were $168,890,000 compared to $158,078,000 for the third quarter of 2015. Net income was $12,415,000 compared to $7,067,000 for the third quarter of 2015. Earnings per share, assuming dilution, were $0.26 compared to $0.14 for the third quarter of 2015. Non-GAAP earnings per share were $0.26 compared to $0.19 for the third quarter of 2015. The reconciliation between GAAP earnings per share, diluted, and non-GAAP earnings per share, diluted, is in the table provided.

ADTRAN Chief Executive Officer Tom Stanton stated, “Our revenue performance for the quarter exceeded expectations with total revenue increasing 7% over the same period last year. I am particularly pleased to see our international business grow 42 percent over the previous quarter and 7 percent year-over-year, driven by stronger broadband access sales in Europe. I am also pleased with the continued growth in our services business which increased 35 percent over the previous quarter and grew 63 percent year-over-year as we execute on our leading market position in CAF II and vectoring solutions and services. We continue to believe that ADTRAN's ability to help service providers grow revenue, reduce costs, accelerate buildout and transition to a software-defined access network is proving to be a catalyst for change within the industry."

The Company also announced that its Board of Directors declared a cash dividend for the third quarter of 2016. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on November 3, 2016. The ex-dividend date is November 1, 2016, and the payment date is November 17, 2016.

The Company confirmed that its third quarter conference call will be held Wednesday, October 19, 2016, at 9:30 a.m. Central Time. This conference call will be web cast live through StreetEvents.com. To listen, simply visit the Investor Relations site at www.adtran.com or www.streetevents.com approximately 10 minutes prior to the start of the call and click on the conference call link provided.

An online replay of the conference call will be available for seven days at www.streetevents.com. In addition, an online replay of the conference call, as well as the text of the Company's earnings release, will be available on the Investor Relations site at www.adtran.com for at least 12 months following the call.

ADTRAN, Inc. is a leading global provider of networking and communications equipment. ADTRAN’s products enable voice, data, video and Internet communications across a variety of network infrastructures. ADTRAN solutions are currently in use by service providers, private enterprises, government organizations, and millions of individual users worldwide. For more information, please visit www.adtran.com.

For more information, contact the company at 800 9ADTRAN (800 923-8726) or via email at This email address is being protected from spambots. You need JavaScript enabled to view it.. On the Web, visit www.adtran.com.

This press release contains forward-looking statements which reflect management’s best judgment based on factors currently known. However, these statements involve risks and uncertainties, including the successful development and market acceptance of new products, the degree of competition in the market for such products, the product and channel mix, component costs, manufacturing efficiencies, and other risks detailed in our annual report on Form 10-K for the year ended December 31, 2015. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.

Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)

September 30,
2016

December 31,
2015

Assets
Cash and cash equivalents $ 66,292 $ 84,550
Short-term investments 55,516 34,396
Accounts receivable, net 101,822 71,917
Other receivables 12,159 19,321
Income tax receivable, net 540 -
Inventory 96,034 91,533
Prepaid expenses and other current assets 14,477 10,145
Deferred tax assets, net 17,963 18,924
Total Current Assets 364,803 330,786
Property, plant and equipment, net 78,078 73,233
Deferred tax assets, net 17,263 18,091
Goodwill 3,492 3,492
Other assets 13,548 9,276
Long-term investments 178,379 198,026
Total Assets $ 655,563 $ 632,904
Liabilities and Stockholders' Equity
Accounts payable $ 67,399 $ 48,668
Unearned revenue 15,744 16,615
Accrued expenses 16,010 12,108
Accrued wages and benefits 16,468 12,857
Income tax payable, net - 2,395
Total Current Liabilities 115,621 92,643
Non-current unearned revenue 7,105 7,965
Other non-current liabilities 26,740 24,236
Bonds payable 27,900 27,900
Total Liabilities 177,366 152,744
Stockholders' Equity 478,197 480,160
Total Liabilities and Stockholders' Equity $ 655,563 $ 632,904

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Sales
Products $ 136,277 $ 138,120 $ 398,709 $ 411,723
Services 32,613 19,958 75,086 49,328
Total Sales 168,890 158,078 473,795 461,051
Cost of Sales
Products 70,988 75,969 202,905 231,739
Services 22,094 11,460 50,333 24,854
Total Cost of Sales 93,082 87,429 253,238 256,593
Gross Profit 75,808 70,649 220,557 204,458
Selling, general and administrative expenses 33,716 30,016 97,367 93,203
Research and development expenses 31,962 32,561 92,727 100,576
Operating Income 10,130 8,072 30,463 10,679
Interest and dividend income 910 839 2,692 2,680
Interest expense (143 ) (151 ) (430 ) (448 )
Net realized investment gain 1,316 2,060 4,154 8,430
Other income (expense), net (246 ) 52 (378 ) (848 )
Gain on bargain purchase of a business 3,550 - 3,550 -
Income before provision for income taxes 15,517 10,872 40,051 20,493
Provision for income taxes (3,102 ) (3,805 ) (12,394 ) (7,565 )
Net Income $ 12,415 $ 7,067 $ 27,657 $ 12,928
Weighted average shares outstanding - basic 48,470 49,862 48,839 51,682
Weighted average shares outstanding - diluted (1) 48,678 49,927 49,036 51,792
Earnings per common share - basic $ 0.26 $ 0.14 $ 0.57 $ 0.25
Earnings per common share - diluted (1) $ 0.26 $ 0.14 $ 0.56 $ 0.25
(1) Assumes exercise of dilutive stock options calculated under the treasury stock method.

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Net Income $ 12,415 $ 7,067 $ 27,657 $ 12,928
Other Comprehensive Income (Loss), net of tax:
Unrealized gains (losses) on available-for-sale securities 258 (4,291 ) (162 ) (6,577 )
Defined benefit plan adjustments 36 71 103 211
Foreign currency translation 575 (1,351 ) 1,202 (3,797 )
Other Comprehensive Income (Loss), net of tax 869 (5,571 ) 1,143 (10,163 )
Comprehensive Income, net of tax $ 13,284 $ 1,496 $ 28,800 $ 2,765

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Nine Months Ended
September 30,
2016 2015
Cash flows from operating activities:
Net income $ 27,657 $ 12,928
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 10,260 10,765
Amortization of net premium on available-for-sale investments 489 2,085
Net realized gain on long-term investments (4,154 ) (8,430 )
Net loss on disposal of property, plant and equipment 21 189
Gain on bargain purchase of a business (3,550 ) -
Stock-based compensation expense 4,601 4,788
Deferred income taxes (447 ) (2,332 )
Tax impact from stock option exercises (16 ) (40 )
Excess tax benefits from stock-based compensation arrangements - (3 )
Change in operating assets and liabilities:
Accounts receivable, net (29,370 ) 843
Other receivables 7,475 10,532
Inventory (683 ) (14,945 )
Prepaid expenses and other assets (5,180 ) (1,665 )
Accounts payable 16,363 13,687
Accrued expenses and other liabilities 7,307 (3,996 )
Income tax payable/receivable, net (2,941 ) (1,137 )
Net cash provided by operating activities 27,832 23,269
Cash flows from investing activities:
Purchases of property, plant and equipment (12,684 ) (7,843 )
Proceeds from disposals of property, plant and equipment - 122
Proceeds from sales and maturities of available-for-sale investments 141,103 189,728
Purchases of available-for-sale investments (139,181 ) (113,227 )
Acquisition of business (943 ) -
Net cash provided by (used in) investing activities (11,705 ) 68,780
Cash flows from financing activities:
Proceeds from stock option exercises 1,076 907
Purchases of treasury stock (22,917 ) (65,808 )
Dividend payments (13,230 ) (13,989 )
Excess tax benefits from stock-based compensation arrangements - 3
Net cash used in financing activities (35,071 ) (78,887 )
Net increase (decrease) in cash and cash equivalents (18,944 ) 13,162
Effect of exchange rate changes 686 (2,914 )
Cash and cash equivalents, beginning of period 84,550 73,439
Cash and cash equivalents, end of period $ 66,292 $ 83,687
Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts payable $ 1,174 $ 1,303

Supplemental Information

Restructuring Expenses

(Unaudited)

(In thousands)

Restructuring expenses were recorded in the following Consolidated Statements of Income categories for the three and nine months ended September 30, 2016 and 2015:

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Restructuring expense included in cost of sales $ 1,307 $ 9 $ 1,307 $ 107
Selling, general and administrative expense 637 194 637 838
Research and development expense - 712 - 2,095
Restructuring expense included in operating expenses 637 906 637 2,933
Total restructuring expense 1,944 915 1,944 3,040
Provision for income taxes (603 ) (357 ) (603 ) (1,186 )
Total restructuring expense, net of tax $ 1,341 $ 558 $ 1,341 $ 1,854

Supplemental Information

Acquisition Related Expenses, Amortizations and Adjustments

(Unaudited)

(In thousands)

On August 4, 2011, we closed on the acquisition of Bluesocket, Inc., on May 4, 2012, we closed on the acquisition of the Nokia Siemens Networks Broadband Access business (NSN BBA), and on September 13, 2016, we closed on the acquisition of CommScope’s active fiber business (CommScope). Acquisition related expenses, amortizations and adjustments for the three and nine months ended September 30, 2016 and 2015 for all three transactions are as follows:

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets $ 158 $ 191 $ 504 $ 643
NSN BBA acquisition
Amortization of acquired intangible assets 225 231 680 701
Amortization of other purchase accounting adjustments 114 101 194 395
Acquisition related professional fees, travel and other expenses - 20 - 61
Subtotal NSN BBA acquisition 339 352 874 1,157
CommScope acquisition
Amortization of acquired intangible assets 112 - 112 -
Amortization of other purchase accounting adjustments 84 - 84 -
Acquisition related professional fees, travel and other expenses 45 - 45 -
Subtotal CommScope acquisition 241 - 241 -
Total acquisition related expenses, amortizations and adjustments 738 543 1,619 1,800
Provision for income taxes (261 ) (183 ) (562 ) (609 )
Total acquisition related expenses, amortizations and adjustments, net of tax $ 477 $ 360 $ 1,057 $ 1,191

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three and nine months ended September 30, 2016 and 2015:

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Revenue (adjustments to deferred revenue recognized in the period) $ - $ 65 $ - $ 196
Cost of goods sold 169 7 189 52
Subtotal 169 72 189 248
Selling, general and administrative expenses 54 23 61 74
Research and development expenses 515 448 1,369 1,478
Subtotal 569 471 1,430 1,552
Total acquisition related expenses, amortizations and adjustments 738 543 1,619 1,800
Provision for income taxes (261 ) (183 ) (562 ) (609 )
Total acquisition related expenses, amortizations and adjustments, net of tax $ 477 $ 360 $ 1,057 $ 1,191

Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Stock-based compensation expense included in cost of sales $ 88 $ 59 $ 282 $ 202
Selling, general and administrative expense 765 812 2,322 2,226
Research and development expense 639 803 1,997 2,360
Stock-based compensation expense included in operating expenses 1,404 1,615 4,319 4,586
Total stock-based compensation expense 1,492 1,674 4,601 4,788
Tax benefit for expense associated with non-qualified options (218 ) (218 ) (643 ) (620 )
Total stock-based compensation expense, net of tax $ 1,274 $ 1,456 $ 3,958 $ 4,168

Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
GAAP earnings per common share – diluted $ 0.26 $ 0.14 $ 0.56 $ 0.25
Restructuring expense 0.03 0.01 0.03 0.04
Acquisition related expenses, amortizations and adjustments 0.01 0.01 0.02 0.02
Stock-based compensation expense 0.03 0.03 0.08 0.08
Gain on bargain purchase of a business (0.07 ) - (0.07 ) -
Non-GAAP earnings per common share – diluted $ 0.26 $ 0.19 $ 0.62 $ 0.39

Source: ADTRAN, Inc.

ADTRAN, Inc.
Roger Shannon, 256-963-8775
Senior Vice President & CFO
or
Investor Services/Assistance:
Gayle Ellis, 256-963-8220
Investor Services

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JOIN OUR TEAM


ADTRAN is a name trusted by those we connect with and to build that trust you have to have a solid and collaborative workforce. We have been bringing the world together since 1986. Share ideas. Be creative. Work as a team. Make the connection.

LET'S GET STARTED

ADTRAN

JOIN OUR TEAM

ADTRAN is a name trusted by those we connect with and to build that trust you have to have a solid and collaborative workforce. We have been bringing the world together since 1986. Share ideas. Be creative. Work as a team. Make the connection.

LETS GET STARTED