ADTRAN, Inc. Reports Results for the First Quarter 2013 and Declares Quarterly Cash Dividend

ADTRAN, Inc. (NASDAQ:ADTN) reported results for the first quarter 2013. For the quarter, sales were $143,013,000 compared to $134,735,000 for the first quarter of 2012. Net income was $7,890,000 for the quarter compared to $12,960,000 for the first quarter of 2012. Earnings per share, assuming dilution, were $0.13 for the quarter compared to $0.20 for the first quarter of 2012. Non-GAAP earnings per share for the quarter were $0.17 compared to $0.25 for the first quarter of 2012. 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, “Operating results for the quarter came in as expected with our domestic carrier business continuing to solidify and our overall revenue positively impacted by sequential growth internationally and in our Enterprise business. We believe our company is well positioned for an improving spending environment in our markets and strategic investments by our carrier customers.”

The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2013. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on April 25, 2013. The ex-dividend date is April 23, 2013 and the payment date is May 9, 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 first quarter conference call will be held Wednesday, April 10, 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 http://www.adtran.com or http://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 http://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 http://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, 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)

	March 31, 2013		December 31, 2012
Assets
Cash and cash equivalents	$	58,640	$	68,457
Short-term investments		189,236		160,481
Accounts receivable, net		82,102		81,194
Other receivables		16,164		16,253
Inventory		95,767		102,583
Prepaid expenses		4,419		4,148
Deferred tax assets, net		12,972		13,055
Total Current Assets		459,300		446,171

Property, plant and equipment, net		77,781		80,246
Deferred tax assets, net		10,680		10,261
Goodwill		3,492		3,492
Other assets		12,599		13,482
Long-term investments		310,484		332,729

Total Assets	$	874,336	$	886,381

Liabilities and Stockholders' Equity
Accounts payable	$	48,933	$	42,173
Unearned revenue		33,563		38,051
Accrued expenses		11,117		10,309
Accrued wages and benefits		16,479		15,022
Income tax payable, net		1,585		1,211
Total Current Liabilities		111,677		106,766

Non-current unearned revenue		24,990		23,803
Other non-current liabilities		18,541		17,406
Bonds payable		46,000		46,000
Total Liabilities		201,208		193,975

Stockholders' Equity		673,128		692,406

Total Liabilities and Stockholders' Equity	$	874,336	$	886,381




Consolidated Statements of Income (Unaudited) (In thousands, except per share data)

	Three Months Ended
	March 31,
	2013			2012

Sales	$	143,013		$	134,735
Cost of sales		73,336			60,648

Gross Profit		69,677			74,087

Selling, general and administrative expenses		30,603			33,111
Research and development expenses		32,511			24,795

Operating Income		6,563			16,181

Interest and dividend income		1,768			1,861
Interest expense		(581	)		(588	)
Net realized investment gain		3,645			2,467
Other income (expense), net		(1,672	)		141

Income before provision for income taxes		9,723			20,062

Provision for income taxes		(1,833	)		(7,102	)

Net Income	$	7,890		$	12,960

Weighted average shares outstanding - basic		61,847			63,809
Weighted average shares outstanding - diluted ⁽¹⁾		62,030			64,849

Earnings per common share - basic	$	0.13		$	0.20
Earnings per common share - diluted ⁽¹⁾	$	0.13		$	0.20

⁽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,
	2013			2012

Net Income	$	7,890		$	12,960

Other Comprehensive Income (Loss), net of tax:

Unrealized gains (losses) on available-for-sale securities		(1,644	)		6,757
Foreign currency translation		323			153

Other Comprehensive Income (Loss), net of tax		(1,321	)		6,910

Comprehensive Income, net of tax	$	6,569		$	19,870




Consolidated Statements of Cash Flows (Unaudited) (In thousands)

	Three Months Ended
	March 31,
	2013			2012
Cash flows from operating activities:
Net income	$	7,890		$	12,960
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,663			3,095
Amortization of net premium on available-for-sale investments		1,754			2,171
Net realized gain on long-term investments		(3,645	)		(2,467	)
Net (gain) loss on disposal of property, plant and equipment		17			(214	)
Stock-based compensation expense		2,232			2,221
Deferred income taxes		715			(2,030	)
Tax benefit from stock option exercises		-			1,492
Excess tax benefits from stock-based compensation arrangements		-			(1,153	)
Change in operating assets and liabilities:
Accounts receivable, net		(1,306	)		1,334
Other receivables		(224	)		1,706
Inventory		6,540			(8,005	)
Prepaid expenses and other assets		(217	)		(710	)
Accounts payable		7,262			1,831
Accrued expenses and other liabilities		1,188			5,287
Income tax payable, net		379			7,017
Net cash provided by operating activities		26,248			24,535

Cash flows from investing activities:
Purchases of property, plant and equipment		(735	)		(4,086	)
Proceeds from disposals of property, plant and equipment		-			266
Proceeds from sales and maturities of available-for-sale investments		118,133			69,364
Purchases of available-for-sale investments		(125,411	)		(95,646	)
Net cash used in investing activities		(8,013	)		(30,102	)

Cash flows from financing activities:
Proceeds from stock option exercises		55			3,560
Purchases of treasury stock		(22,546	)		-
Dividend payments		(5,586	)		(5,739	)
Excess tax benefits from stock-based compensation arrangements		-			1,153
Net cash used in financing activities		(28,077	)		(1,026	)

Net decrease in cash and cash equivalents		(9,842	)		(6,593	)
Effect of exchange rate changes		25			153
Cash and cash equivalents, beginning of period		68,457			42,979

Cash and cash equivalents, end of period	$	58,640		$	36,539

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 months ended March 31, 2013 and 2012 for both transactions are as follows:

	Three Months Ended
	March 31,
	2013			2012
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments	$	293		$	484

NSN BBA acquisition
Amortization of acquired intangible assets		294			-
Amortization of other purchase accounting adjustments		410			-
Acquisition related professional fees, travel and other expenses		154			1,580

Subtotal		858			1,580

Total acquisition related expenses, amortizations and adjustments		1,151			2,064
Tax effect		(380	)		(803	)

Total acquisition related expenses, amortizations and adjustments, net of tax	$	771		$	1,261

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, 2013 and 2012:

	Three Months Ended
	March 31,
	2013			2012

Revenue (adjustments to deferred revenue recognized in the period)	$	262		$	146
Cost of goods sold		87			137

Subtotal		349			283

Selling, general and administrative expenses		161			1,561
Research and development expenses		641			220

Subtotal		802			1,781

Total acquisition related expenses, amortizations and adjustments		1,151			2,064
Tax effect		(380	)		(803	)

Total acquisition related expenses, amortizations and adjustments, net of tax	$	771		$	1,261




Supplemental Information Stock-based Compensation Expense (Unaudited) (In thousands)

	Three Months Ended
	March 31,
	2013			2012

Stock-based compensation expense included in cost of sales	$	106		$	101

Selling, general and administrative expense		1,063			1,051
Research and development expense		1,063			1,069

Stock-based compensation expense included in operating expenses		2,126			2,120

Total stock-based compensation expense		2,232			2,221
Tax benefit for expense associated with non-qualified options		(307	)		(301	)

Total stock-based compensation expense, net of tax	$	1,925		$	1,920




Reconciliation of GAAP net income per share, diluted, to Non-GAAP net income per share, diluted (Unaudited)

	Three Months Ended
	March 31,
	2013		2012

GAAP earnings per common share – diluted	$	0.13	$	0.20

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

Non-GAAP earnings per common share – diluted	$	0.17	$	0.25

Contact:

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

ADTRAN Inc ( ADTN )

ADTRAN, Inc. Reports Results for the First Quarter 2013 and Declares Quarterly Cash Dividend