ADTRAN, Inc. Reports Results for the Fourth Quarter 2012 and Declares Quarterly Cash Dividend

Tue Jan 15, 2013 8:17pm EST

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http://www.businesswire.com/news/home/20130115006852/en

HUNTSVILLE, Ala.--(Business Wire)--
ADTRAN, Inc. (NASDAQ:ADTN) reported results for the fourth quarter 2012. For the
quarter, sales were $139,756,000 compared to $175,286,000 for the fourth quarter
of 2011. Net income was $3,961,000 for the quarter compared to $31,163,000 for
the fourth quarter of 2011. Earnings per share, assuming dilution, were $0.06
for the quarter compared to $0.48 for the fourth quarter of 2011. Non-GAAP
earnings per share for the quarter were $0.11 compared to $0.54 for the fourth
quarter of 2011. 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 fourth quarter results
came in largely as expected with both our carrier and enterprise divisions
performing to forecast. Our focus remains on capitalizing on the significant
network upgrades that lie ahead of us while maintaining tight cost control as we
navigate through the current environment." 

The Company also announced that its Board of Directors declared a cash dividend
for the fourth quarter of 2012. The quarterly cash dividend is $0.09 per common
share to be paid to holders of record at the close of business on February 7,
2013. The ex-dividend date is February 5, 2013 and the payment date is February
21, 2013. 

Non-GAAP earnings per share exclude the effect of acquisition related expenses,
amortizations and adjustments, and stock compensation expense. 

The Company confirmed that its fourth quarter conference call will be held
Wednesday, January 16, 2013 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 info@adtran.com. 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, 2011 and on Form 10-Q for the quarter ended September
30, 2012. 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)                                                                   
                                                                                   
                                             December 31,        December 31,      
                                             2012                2011              
 Assets                                                                            
 Cash and cash equivalents                   $        68,457     $        42,979   
 Short-term investments                               160,481             159,347  
 Accounts receivable, net                             81,194              76,130   
 Other receivables                                    16,253              9,743    
 Inventory                                            102,583             87,800   
 Prepaid expenses                                     4,148               3,119    
 Deferred tax assets, net                             13,055              12,125   
 Total Current Assets                                 446,171             391,243  
                                                                                   
 Property, plant and equipment, net                   80,246              75,295   
 Deferred tax assets, net                             10,261              8,345    
 Goodwill                                             3,492               3,492    
 Other assets                                         13,482              7,131    
 Long-term investments                                332,729             332,008  
                                                                                   
 Total Assets                                $        886,381    $        817,514  
                                                                                   
 Liabilities and Stockholders' Equity                                              
 Accounts payable                            $        42,173     $        29,404   
 Unearned revenue                                     38,051              9,965    
 Accrued expenses                                     10,309              5,876    
 Accrued wages and benefits                           15,022              13,518   
 Income tax payable, net                              1,211               3,169    
 Total Current Liabilities                            106,766             61,932   
                                                                                   
 Non-current unearned revenue                         23,803              4,874    
 Other non-current liabilities                        17,406              12,077   
 Bonds payable                                        46,000              46,500   
 Total Liabilities                                    193,975             125,383  
                                                                                   
 Stockholders' Equity                                 692,406             692,131  
                                                                                   
 Total Liabilities and Stockholders' Equity  $        886,381    $        817,514  


 Consolidated Statements of Income                                                                                                                                                                
 
(Unaudited)                                                                                                                                                                                     
 
(In thousands, except per share data)                                                                                                                                                           
                                                                                                                                                                                                  
                                                       Three Months Ended                                                                              Twelve Months Ended                        
                                                       December 31,                                                                                    December 31,                               
                                                       2012                                            2011                                            2012                    2011               
                                                                                                                                                                                                  
 Sales                                                 $           139,756                             $           175,286                             $    620,614            $    717,229       
 Cost of sales                                                     72,373                                          76,066                                   303,971                 302,911       
                                                                                                                                                                                                  
 Gross Profit                                                      67,383                                          99,220                                   316,643                 414,318       
                                                                                                                                                                                                  
 Selling, general and administrative expenses                      31,393                                          32,954                                   134,523                 124,879       
 Research and development expenses                                 33,116                                          25,151                                   125,951                 100,301       
                                                                                                                                                                                                  
 Operating Income                                                  2,874                                           41,115                                   56,169                  189,138       
                                                                                                                                                                                                  
 Interest and dividend income                                      2,006                                           1,813                                    7,657                   7,642         
 Interest expense                                                  (591        )                                   (603        )                            (2,347   )              (2,398   )    
 Net realized investment gain                                      2,197                                           3,333                                    9,550                   12,454        
 Other income (expense), net                                       (82         )                                   (297        )                            183                     (694     )    
 Gain on bargain purchase of a business                            -                                               -                                        1,753                   -             
                                                                                                                                                                                                  
 Income before provision for income taxes                          6,404                                           45,361                                   72,965                  206,142       
                                                                                                                                                                                                  
 Provision for income taxes                                        (2,443      )                                   (14,198     )                            (25,702  )              (67,565  )    
                                                                                                                                                                                                  
 Net Income                                            $           3,961                               $           31,163                              $    47,263             $    138,577       
                                                                                                                                                                                                  
 Weighted average shares outstanding - basic                       62,542                                          63,685                                   63,259                  64,145        
 Weighted average shares outstanding - diluted (1)                 62,690                                          64,586                                   63,774                  65,416        
                                                                                                                                                                                                  
 Earnings per common share - basic                     $           0.06                                $           0.49                                $    0.75               $    2.16          
 Earnings per common share - diluted (1)               $           0.06                                $           0.48                                $    0.74               $    2.12          
                                                                                                                                                                                                  
 (1) Assumes exercise of dilutive stock options calculated under the treasury stock method.                                                                                                       


 Consolidated Statements of Comprehensive Income                                                                                                          
 
(Unaudited)                                                                                                                                             
 
(In thousands)                                                                                                                                          
                                                                                                                                                          
                                                                     Three Months Ended                         Twelve Months Ended                       
                                                                     December 31,                               December 31,                              
                                                                     2012                   2011                2012                   2011               
                                                                                                                                                          
 Net Income                                                          $    3,961             $    31,163         $    47,263            $    138,577       
                                                                                                                                                          
 Other Comprehensive Income (Loss), net of tax:                                                                                                           
                                                                                                                                                          
 Net change in unrealized gains (losses) on marketable securities         (2,042  )              (1,745  )           (187    )              (13,004  )    
 Reclassification adjustments for amounts included in net income          (29     )              (6      )           135                    (688     )    
 Defined benefit plan adjustments                                         (1,952  )              -                   (1,952  )              -             
 Foreign currency translation                                             (21     )              877                 170                    (154     )    
                                                                                                                                                          
 Other Comprehensive Income (Loss), net of tax                            (4,044  )              (874    )           (1,834  )              (13,846  )    
                                                                                                                                                          
 Comprehensive Income (Loss), net of tax                             $    (83     )         $    30,289         $    45,429            $    124,731       


 Consolidated Statements of Cash Flows                                                                                             
 
(Unaudited)                                                                                                                      
 
(In thousands)                                                                                                                   
                                                                                                                                   
                                                                                      Twelve Months Ended                          
                                                                                      December 31,                                 
                                                                                      2012                     2011                
 Cash flows from operating activities:                                                                                             
 Net income                                                                           $    47,263              $    138,577        
 Adjustments to reconcile net income to net cash provided by operating activities:                                                 
 Depreciation and amortization                                                             14,079                   11,499         
 Amortization of net premium on available-for-sale investments                             8,257                    6,617          
 Net realized gain on long-term investments                                                (9,550    )              (12,454   )    
 Net (gain) loss on disposal of property, plant and equipment                              (214      )              6              
 Gain on bargain purchase of a business                                                    (1,753    )              -              
 Stock-based compensation expense                                                          9,264                    9,169          
 Deferred income taxes                                                                     (3,785    )              575            
 Tax benefit from stock option exercises                                                   1,905                    10,525         
 Excess tax benefits from stock-based compensation arrangements                            (1,456    )              (9,373    )    
 Change in operating assets and liabilities:                                                                                       
 Accounts receivable, net                                                                  (4,365    )              (4,939    )    
 Other receivables                                                                         2,977                    (5,781    )    
 Income tax receivable, net                                                                -                        2,741          
 Inventory                                                                                 7,163                    (12,734   )    
 Prepaid expenses and other assets                                                         (1,045    )              522            
 Accounts payable                                                                          7,265                    6,178          
 Accrued expenses and other liabilities                                                    11,583                   6,309          
 Income tax payable, net                                                                   (1,960    )              3,169          
 Net cash provided by operating activities                                                 85,628                   150,606        
                                                                                                                                   
 Cash flows from investing activities:                                                                                             
 Purchases of property, plant and equipment                                                (12,075   )              (11,912   )    
 Proceeds from disposals of property, plant and equipment                                  266                      -              
 Proceeds from sales and maturities of available-for-sale investments                      282,039                  466,243        
 Purchases of available-for-sale investments                                               (282,740  )              (554,629  )    
 Acquisition of business                                                                   7,496                    (22,661   )    
 Net cash used in investing activities                                                     (5,014    )              (122,959  )    
                                                                                                                                   
 Cash flows from financing activities:                                                                                             
 Proceeds from stock option exercises                                                      6,049                    34,125         
 Purchases of treasury stock                                                               (39,362   )              (35,565   )    
 Dividend payments                                                                         (22,813   )              (23,124   )    
 Payments on long-term debt                                                                (500      )              (1,000    )    
 Excess tax benefits from stock-based compensation arrangements                            1,456                    9,373          
 Net cash used in financing activities                                                     (55,170   )              (16,191   )    
                                                                                                                                   
 Net increase in cash and cash equivalents                                                 25,444                   11,456         
 Effect of exchange rate changes                                                           34                       (154      )    
 Cash and cash equivalents, beginning of period                                            42,979                   31,677         
                                                                                                                                   
 Cash and cash equivalents, end of period                                             $    68,457              $    42,979         


 Supplemental Information                                                                                                                                         
 
Acquisition Related Expenses, Amortizations and Adjustments                                                                                                     
 
(Unaudited)                                                                                                                                                     
 
(In thousands)                                                                                                                                                  
                                                                                                                                                                  
 On August 4, 2011, we closed on the acquisition of Bluesocket, Inc. and on May 4, 2012, we closed on the acquisition of the Nokia Siemens Networks Broadband Access business (NSN BBA).  Acquisition related expenses, amortizations and adjustments for the three and twelve months ended December 31, 2012 and 2011 for both transactions are as follows: 
                                                                                                                                                                  
                                                                                Three Months Ended                       Twelve Months Ended                      
                                                                                December 31,                             December 31,                             
                                                                                2012                  2011               2012                   2011              
 Bluesocket, Inc. acquisition                                                                                                                                     
 Amortization of acquired intangible assets                                     $    267              $    297           $    1,020             $    495          
 Amortization of other purchase accounting adjustments                               29                    304                443                    521          
 Acquisition related professional fees, travel and other expenses                    -                     100                -                      730          
                                                                                                                                                                  
 Subtotal                                                                            296                   701                1,463                  1,746        
                                                                                                                                                                  
 NSN BBA acquisition                                                                                                                                              
 Amortization of acquired intangible assets                                          290                   -                  762                    -            
 Amortization of other purchase accounting adjustments                               587                   -                  2,305                  -            
 Acquisition related professional fees, travel and other expenses                    323                   1,035              4,860                  2,027        
                                                                                                                                                                  
 Subtotal                                                                            1,200                 1,035              7,927                  2,027        
                                                                                                                                                                  
 Total acquisition related expenses, amortizations and adjustments                   1,496                 1,736              9,390                  3,773        
 Tax effect                                                                          (488   )              (658   )           (3,148  )              (1,434  )    
                                                                                                                                                                  
 Total acquisition related expenses, amortizations and adjustments, net of tax  $    1,008            $    1,078         $    6,242             $    2,339        


 The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three and twelve months ended December 31, 2012 and 2011: 
                                                                                                                                                                  
                                                                                Three Months Ended                       Twelve Months Ended                      
                                                                                December 31,                             December 31,                             
                                                                                2012                  2011               2012                   2011              
                                                                                                                                                                  
 Revenue (adjustments to deferred revenue recognized in the period)             $    377              $    207           $    1,528             $    362          
 Cost of goods sold                                                                  154                   99                 1,086                  165          
                                                                                                                                                                  
 Subtotal                                                                            531                   306                2,614                  527          
                                                                                                                                                                  
 Selling, general and administrative expenses                                        330                   1,133              4,510                  2,557        
 Research and development expenses                                                   635                   297                2,266                  689          
                                                                                                                                                                  
 Subtotal                                                                            965                   1,430              6,776                  3,246        
                                                                                                                                                                  
 Total acquisition related expenses, amortizations and adjustments                   1,496                 1,736              9,390                  3,773        
 Tax effect                                                                          (488   )              (658   )           (3,148  )              (1,434  )    
                                                                                                                                                                  
 Total acquisition related expenses, amortizations and adjustments, net of tax  $    1,008            $    1,078         $    6,242             $    2,339        


 Supplemental Information                                                                                                                             
 
Stock-based Compensation Expense                                                                                                                    
 
(Unaudited)                                                                                                                                         
 
(In thousands)                                                                                                                                      
                                                                                                                                                      
                                                                    Three Months Ended                       Twelve Months Ended                      
                                                                    December 31,                             December 31,                             
                                                                    2012                  2011               2012                   2011              
                                                                                                                                                      
 Stock-based compensation expense included in cost of sales         $    118              $    132           $    422               $    412          
                                                                                                                                                      
 Selling, general and administrative expense                             1,146                 1,220              4,351                  4,316        
 Research and development expense                                        1,217                 1,362              4,491                  4,441        
                                                                                                                                                      
 Stock-based compensation expense included in operating expenses         2,363                 2,582              8,842                  8,757        
                                                                                                                                                      
 Total stock-based compensation expense                                  2,481                 2,714              9,264                  9,169        
 Tax benefit for expense associated with non-qualified options           (318   )              (303   )           (1,234  )              (1,321  )    
                                                                                                                                                      
 Total stock-based compensation expense, net of tax                 $    2,163            $    2,411         $    8,030             $    7,848        


 Reconciliation of GAAP net income per share, diluted, to                                                                            
 
Non-GAAP net income per share, diluted                                                                                             
 
(Unaudited)                                                                                                                        
                                                                                                                                     
                                                                Three Months Ended              Twelve Months Ended                  
                                                                December 31,                    December 31,                         
                                                                2012              2011          2012                     2011        
                                                                                                                                     
 GAAP earnings per common share - diluted                       $     0.06        $     0.48    $     0.74               $     2.12  
                                                                                                                                     
 Acquisition related expenses, amortizations and adjustments          0.02              0.02          0.10                     0.04  
 Stock-based compensation expense                                     0.03              0.04          0.13                     0.12  
 Bargain purchase gain - NSN BBA acquisition                    -                 -                   (0.03  )           -           
                                                                                                                                     
 Non-GAAP earnings per common share - diluted                   $     0.11        $     0.54    $     0.94               $     2.28  


ADTRAN, Inc.
Jim Matthews, 256-963-8775
Senior Vice President/CFO
or
INVESTOR SERVICES/ASSISTANCE:
Gayle Ellis, 256-963-8220 



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