ADTRAN INC - FORM 8-K - EX-99.1

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EX-99.2 - EX-99.2 - ADTRAN INC	d194802dex992.htm
8-K - FORM 8-K - ADTRAN INC	d194802d8k.htm

EXHIBIT 99.1

ADTRAN, Inc.

REPORTS RESULTS for the SECOND QUARTER 2016

and DECLARES QUARTERLY CASH DIVIDEND

HUNTSVILLE, AL.—July 12, 2016—ADTRAN, Inc. (NASDAQ:ADTN) reported results for the second quarter 2016. For the quarter, sales were $162,701,000 compared to $160,138,000 for the second quarter of 2015. Net income was $10,228,000 compared to $2,544,000 for the second quarter of 2015. Earnings per share, assuming dilution, were $0.21 compared to $0.05 for the second quarter of 2015. Non-GAAP earnings per share were $0.25 compared to $0.10 for the second 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, “ADTRAN delivered solid revenue and earnings results for the quarter due to strength in our domestic market and gross margin improvement. Growth in the U.S. market was led by our FTTP and 100 megabit portfolios, along with continued growth in our CAF II and Ethernet solutions. Our Services business also continued its strong growth with a 51% revenue increase year-over-year. Customers around the world are increasingly recognizing the benefits of deploying ultra-high speed broadband and are leveraging ADTRAN’s unique domain leadership and expertise in planning, developing and deploying business and residential services.”

The Company also announced that its Board of Directors declared a cash dividend for the second 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 July 28, 2016. The ex-dividend date is July 26, 2016 and the payment date is August 11, 2016.

The Company confirmed that its second quarter conference call will be held Wednesday, July 13, 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 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, 2015 and Form 10-Q for the quarter ended March 31, 2016. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.

CONTACT:

Roger Shannon

Senior Vice President & CFO

256-963-8775

INVESTOR SERVICES/ASSISTANCE:

Gayle Ellis

Investor Services

256-963-8220

Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)


	June 30, 2016		December 31, 2015
Assets
Cash and cash equivalents	$	70,914	$	84,550
Short-term investments		50,867		34,396
Accounts receivable, net		89,386		71,917
Other receivables		11,676		19,321
Income tax receivable, net		2,405		—
Inventory		86,936		91,533
Prepaid expenses and other current assets		13,563		10,145
Deferred tax assets, net		18,488		18,924

Total Current Assets		344,235		330,786

Property, plant and equipment, net		74,115		73,233
Deferred tax assets, net		19,127		18,091
Goodwill		3,492		3,492
Other assets		9,340		9,276
Long-term investments		186,249		198,026

Total Assets	$	636,558	$	632,904


Liabilities and Stockholders’ Equity
Accounts payable	$	59,211	$	48,668
Unearned revenue		15,982		16,615
Accrued expenses		12,126		12,108
Accrued wages and benefits		15,702		12,857
Income tax payable, net		—		2,395

Total Current Liabilities		103,021		92,643

Non-current unearned revenue		6,437		7,965
Other non-current liabilities		25,476		24,236
Bonds payable		27,900		27,900

Total Liabilities		162,834		152,744

Stockholders’ Equity		473,724		480,160

Total Liabilities and Stockholders’ Equity	$	636,558	$	632,904

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Sales
Products	$	138,549		$	144,098		$	262,432		$	273,603
Services		24,152			16,040			42,473			29,370

Total Sales		162,701			160,138			304,905			302,973

Cost of Sales
Products		67,844			84,210			131,917			155,770
Services		15,902			7,682			28,239			13,394

Total Cost of Sales		83,746			91,892			160,156			169,164

Gross Profit		78,955			68,246			144,749			133,809

Selling, general and administrative expenses		32,866			32,123			63,651			63,187
Research and development expenses		31,277			35,479			60,765			68,015


Operating Income		14,812			644			20,333			2,607

Interest and dividend income		927			908			1,782			1,841
Interest expense		(142	)		(149	)		(287	)		(297	)
Net realized investment gain		1,110			3,255			2,838			6,370
Other expense, net		(251	)		(547	)		(132	)		(900	)


Income before provision for income taxes		16,456			4,111			24,534			9,621

Provision for income taxes		(6,228	)		(1,567	)		(9,292	)		(3,760	)


Net Income	$	10,228		$	2,544		$	15,242		$	5,861


Weighted average shares outstanding - basic		48,831			51,822			49,026			52,607
Weighted average shares outstanding - diluted ⁽¹⁾		49,048			51,917			49,218			52,742

Earnings per common share - basic	$	0.21		$	0.05		$	0.31		$	0.11
Earnings per common share - diluted ⁽¹⁾	$	0.21		$	0.05		$	0.31		$	0.11

⁽¹⁾	Assumes exercise of dilutive stock options calculated under the treasury stock method.

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net Income	$	10,228		$	2,544		$	15,242		$	5,861


Other Comprehensive Income (Loss), net of tax:
Unrealized losses on available-for-sale securities		(165	)		(1,783	)		(420	)		(2,286	)
Defined benefit plan adjustments		22			72			67			140
Foreign currency translation		(601	)		872			627			(2,446	)


Other Comprehensive Income (Loss), net of tax		(744	)		(839	)		274			(4,592	)


Comprehensive Income, net of tax	$	9,484		$	1,705		$	15,516		$	1,269

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended
	June 30,
	2016			2015
Cash flows from operating activities:
Net income	$	15,242		$	5,861
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,689			7,256
Amortization of net premium on available-for-sale investments		376			1,578
Net realized gain on long-term investments		(2,838	)		(6,370	)
Net loss on disposal of property, plant and equipment		5			160
Stock-based compensation expense		3,109			3,114
Deferred income taxes		(354	)		(1,743	)
Tax impact from stock option exercises		—			(23	)
Excess tax benefits from stock-based compensation arrangements		—			38
Change in operating assets and liabilities:
Accounts receivable, net		(17,192	)		(2,003	)
Other receivables		7,876			(119	)
Inventory		4,938			(14,254	)
Prepaid expenses and other assets		(4,263	)		(1,433	)
Accounts payable		10,354			30,938
Accrued expenses and other liabilities		1,474			2,175
Income tax payable/receivable, net		(4,799	)		(3,961	)

Net cash provided by operating activities		20,617			21,214


Cash flows from investing activities:
Purchases of property, plant and equipment		(6,679	)		(5,392	)
Proceeds from disposals of property, plant and equipment		—			8
Proceeds from sales and maturities of available-for-sale investments		109,993			120,422
Purchases of available-for-sale investments		(112,903	)		(62,626	)

Net cash provided by (used in) investing activities		(9,589	)		52,412


Cash flows from financing activities:
Proceeds from stock option exercises		541			833
Purchases of treasury stock		(16,579	)		(49,307	)
Dividend payments		(8,860	)		(9,509	)
Excess tax benefits from stock-based compensation arrangements		—			(38	)

Net cash used in financing activities		(24,898	)		(58,021	)


Net increase (decrease) in cash and cash equivalents		(13,870	)		15,605
Effect of exchange rate changes		234			(1,829	)
Cash and cash equivalents, beginning of period		84,550			73,439


Cash and cash equivalents, end of period	$	70,914		$	87,215

Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts payable	$	554		$	270

Supplemental Information

Restructuring Expenses

(Unaudited)

(In thousands)

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


	Three and Six Months Ended
	June 30,
	2016		2015
Restructuring expense included in cost of sales	$	—	$	98

Selling, general and administrative expense		—		644
Research and development expense		—		1,383


Restructuring expense included in operating expenses		—		2,027


Total restructuring expense		—		2,125
Provision for income taxes		—		(829	)


Total restructuring expense, net of tax	$	—	$	1,296

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 six months ended June 30, 2016 and 2015 for both transactions are as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments	$	173		$	226		$	346		$	452


NSN BBA acquisition
Amortization of acquired intangible assets		228			229			455			470
Amortization of other purchase accounting adjustments		44			140			80			294
Acquisition related professional fees, travel and other expenses		—			35			—			41


Subtotal		272			404			535			805


Total acquisition related expenses, amortizations and adjustments		445			630			881			1,257
Provision for income taxes		(152	)		(213	)		(301	)		(426	)


Total acquisition related expenses, amortizations and adjustments, net of tax	$	293		$	417		$	580		$	831

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


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Revenue (adjustments to deferred revenue recognized in the period)	$	—		$	64		$	—		$	131
Cost of goods sold		13			33			20			45


Subtotal		13			97			20			176


Selling, general and administrative expenses		4			39			7			51
Research and development expenses		428			494			854			1,030


Subtotal		432			533			861			1,081


Total acquisition related expenses, amortizations and adjustments		445			630			881			1,257
Provision for income taxes		(152	)		(213	)		(301	)		(426	)


Total acquisition related expenses, amortizations and adjustments, net of tax	$	293		$	417		$	580		$	831

Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Stock-based compensation expense included in cost of sales	$	95		$	53		$	194		$	143

Selling, general and administrative expense		788			723			1,557			1,414
Research and development expense		668			699			1,358			1,557


Stock-based compensation expense included in operating expenses		1,456			1,422			2,915			2,971


Total stock-based compensation expense		1,551			1,475			3,109			3,114
Tax benefit for expense associated with non-qualified options		(213	)		(222	)		(425	)		(402	)


Total stock-based compensation expense, net of tax	$	1,338		$	1,253		$	2,684		$	2,712

Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
GAAP earnings per common share – diluted	$	0.21	$	0.05	$	0.31	$	0.11

Restructuring expense		—		0.02		—		0.02
Acquisition related expenses, amortizations and adjustments		0.01		0.01		0.01		0.02
Stock-based compensation expense		0.03		0.02		0.05		0.05


Non-GAAP earnings per common share – diluted	$	0.25	$	0.10	$	0.37	$	0.20

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