ADTRAN INC - FORM 8-K - EX-99.1

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8-K - 8-K - ADTRAN INC	d377117d8k.htm
EX-99.2 - EX-99.2 - ADTRAN INC	d377117dex992.htm

EXHIBIT 99.1

ADTRAN, Inc. Reports Record Results for the First Quarter 2017

and Declares Quarterly Cash Dividend

HUNTSVILLE, Ala.—(BUSINESS WIRE)—Apr. 18, 2017— ADTRAN, Inc. (NASDAQ:ADTN) reported results for the first quarter 2017. For the quarter, sales were $170.3 million compared to $142.2 million for the first quarter of 2016. Net income was $6.7 million compared to $5 million for the first quarter of 2016. Earnings per share, assuming dilution, were $0.14 compared to $0.10 for the first quarter of 2016. Non-GAAP earnings per share were $0.18 compared to $0.14 for the first quarter of 2016. The reconciliation between GAAP earnings per share, diluted, and non-GAAP earnings per share, diluted, is in the table provided.

ADTRAN Chairman and Chief Executive Officer Tom Stanton stated, “We started 2017 setting a company record for first quarter revenue, driven by increasing momentum in our ultra-broadband product sales and continuing strength in our services area. Most notably, we had very strong performances in our fiber to the premises and vectoring products in both our domestic and international markets. ADTRAN continues to be at the forefront of enabling internet service providers of all types to meet increasing customer demand and decrease their time to market for next generation services.”

The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2017. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on May 4, 2017. The ex-dividend date is May 2, 2017, and the payment date is May 18, 2017.

The Company confirmed that its first quarter conference call will be held Wednesday, April 19, 2017, 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, 2016. 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)


	March 31, 2017		December 31, 2016
Assets
Cash and cash equivalents	$	72,558	$	79,895
Short-term investments		52,458		43,188
Accounts receivable, net		85,396		92,346
Other receivables		13,398		15,137
Income tax receivable, net		—		760
Inventory		112,774		105,117
Prepaid expenses and other current assets		17,816		16,459

Total Current Assets		354,400		352,902

Property, plant and equipment, net		83,514		84,469
Deferred tax assets, net		39,085		38,036
Goodwill		3,492		3,492
Other assets		12,274		12,234
Long-term investments		174,413		176,102


Total Assets	$	667,178	$	667,235


Liabilities and Stockholders’ Equity
Accounts payable	$	74,300	$	77,342
Unearned revenue		16,969		16,326
Accrued expenses		15,035		12,434
Accrued wages and benefits		12,199		20,433
Income tax payable, net		3,126		—

Total Current Liabilities		121,629		126,535

Non-current unearned revenue		5,675		6,333
Other non-current liabilities		30,861		28,050
Bonds payable		26,800		26,800

Total Liabilities		184,965		187,718

Stockholders’ Equity		482,213		479,517


Total Liabilities and Stockholders’ Equity	$	667,178	$	667,235

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)


	Three Months Ended
	March 31,
	2017			2016
Sales
Products	$	143,597		$	123,883
Services		26,682			18,321

Total Sales		170,279			142,204

Cost of Sales
Products		76,659			64,073
Services		19,905			12,337

Total Cost of Sales		96,564			76,410

Gross Profit		73,715			65,794

Selling, general and administrative expenses		34,767			30,785
Research and development expenses		31,916			29,488


Operating Income		7,032			5,521

Interest and dividend income		933			855
Interest expense		(141	)		(145	)
Net realized investment gain		470			1,728
Other income, net		51			119


Income before provision for income taxes		8,345			8,078

Provision for income taxes		(1,694	)		(3,064	)


Net Income	$	6,651		$	5,014


Weighted average shares outstanding - basic		48,430			49,220
Weighted average shares outstanding - diluted ⁽¹⁾		48,939			49,389

Earnings per common share - basic	$	0.14		$	0.10
Earnings per common share - diluted ⁽¹⁾	$	0.14		$	0.10

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

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)


	Three Months Ended
	March 31,
	2017		2016
Net Income	$	6,651	$	5,014


Other Comprehensive Income, net of tax:
Unrealized gains (losses) on available-for-sale securities		1,335		(255	)
Unrealized gains on cash flow hedges		79		—
Defined benefit plan adjustments		55		45
Foreign currency translation		1,242		1,228


Other Comprehensive Income, net of tax		2,711		1,018


Comprehensive Income, net of tax	$	9,362	$	6,032

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Three Months Ended
	March 31,
	2017			2016
Cash flows from operating activities:
Net income	$	6,651		$	5,014
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,323			3,347
Amortization of net premium on available-for-sale investments		124			220
Net realized gain on long-term investments		(470	)		(1,728	)
Net (gain) loss on disposal of property, plant and equipment		(16	)		3
Stock-based compensation expense		1,883			1,558
Deferred income taxes		(1,947	)		435
Change in operating assets and liabilities:
Accounts receivable, net		7,247			4,752
Other receivables		1,884			10,200
Inventory		(7,399	)		163
Prepaid expenses and other assets		(2,413	)		(3,083	)
Accounts payable		(1,713	)		(6,520	)
Accrued expenses and other liabilities		(3,166	)		902
Income tax payable/receivable, net		4,049			413

Net cash provided by operating activities		9,037			15,676


Cash flows from investing activities:
Purchases of property, plant and equipment		(3,872	)		(3,166	)
Proceeds from disposals of property, plant and equipment		16			—
Proceeds from sales and maturities of available-for-sale investments		24,471			60,586
Purchases of available-for-sale investments		(29,517	)		(52,053	)

Net cash provided by (used in) investing activities		(8,902	)		5,367


Cash flows from financing activities:
Proceeds from stock option exercises		1,377			247
Purchases of treasury stock		(5,559	)		(11,003	)
Dividend payments		(4,369	)		(4,453	)

Net cash used in financing activities		(8,551	)		(15,209	)


Net increase (decrease) in cash and cash equivalents		(8,416	)		5,834
Effect of exchange rate changes		1,079			1,225
Cash and cash equivalents, beginning of period		79,895			84,550


Cash and cash equivalents, end of period	$	72,558		$	91,609


Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts payable	$	509		$	485

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 months ended March 31, 2017 and 2016 for all three transactions are as follows:


	Three Months Ended
	March 31,
	2017			2016
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets	$	158		$	173


NSN BBA acquisition
Amortization of acquired intangible assets		208			227
Amortization of other purchase accounting adjustments		28			36

Subtotal NSN BBA acquisition		236			263


CommScope acquisition
Amortization of acquired intangible assets		686			—
Amortization of other purchase accounting adjustments		50			—
Acquisition related professional fees, travel and other expenses		8			—

Subtotal CommScope acquisition		744			—


Total acquisition related expenses, amortizations and adjustments		1,138			436
Provision for income taxes		(425	)		(149	)


Total acquisition related expenses, amortizations and adjustments, net of tax	$	713		$	287

The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three months ended March 31, 2017 and 2016:


	Three Months Ended
	March 31,
	2017			2016
Cost of goods sold	$	50		$	7

Selling, general and administrative expenses		62			3
Research and development expenses		1,026			426

Total acquisition related expenses, amortizations and adjustments included in operating expenses		1,088			429


Total acquisition related expenses, amortizations and adjustments		1,138			436
Provision for income taxes		(425	)		(149	)


Total acquisition related expenses, amortizations and adjustments, net of tax	$	713		$	287

Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)


	Three Months Ended
	March 31,
	2017			2016
Stock-based compensation expense included in cost of sales	$	91		$	99

Selling, general and administrative expense		1,016			769
Research and development expense		776			690


Stock-based compensation expense included in operating expenses		1,792			1,459


Total stock-based compensation expense		1,883			1,558
Tax benefit for expense associated with non-qualified options, restricted stock units and restricted stock		(380	)		(212	)


Total stock-based compensation expense, net of tax	$	1,503		$	1,346

Reconciliation of GAAP net income per share, diluted, to

Non-GAAP net income per share, diluted

(Unaudited)


	Three Months Ended
	March 31,
	2017		2016
GAAP earnings per common share – diluted	$	0.14	$	0.10

Acquisition related expenses, amortizations and adjustments		0.01		0.01
Stock-based compensation expense		0.03		0.03


Non-GAAP earnings per common share – diluted	$	0.18	$	0.14

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