ADTRAN, Inc. Reports Results For The Second Quarter 2012 And Declares Quarterly Cash Dividend

ADTRAN, Inc. (NASDAQ: ADTN) reported results for the second quarter 2012. For the quarter, sales were $183,998,000 compared to $184,227,000 for the second quarter of 2011. Net income was $21,070,000 for the quarter compared to $36,943,000 for the second quarter of 2011. Earnings per share, assuming dilution, were $0.33 for the quarter compared to $0.56 for the second quarter of 2011. Non-GAAP earnings per share for the quarter were $0.38 compared to $0.59 for the second quarter of 2011. Non-GAAP earnings per share exclude the effect of acquisition related expenses, amortizations and adjustments related to the acquisitions of the NSN Broadband Access business and Bluesocket, Inc. and stock compensation expense. 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 results for the second quarter reflect a tightening spending environment. Total quarterly revenues grew 37% sequentially, with organic revenues (excluding the recently acquired NSN BBA business) up 20%, representing a flat year over year performance. Our Broadband Access category grew 38% (8% organic) over the same period last year. Our Internetworking category grew 6% over the same period last year. Total core products which include Broadband Access, Optical and Internetworking, grew 17% (flat organically) over the same period last year and now represent 84% of total revenues. Decreasing visibility leaves us cautious for the near term but we are confident that our strong customer alignment and increasing global footprint will deliver long term growth for the company.”

The Company also announced that its Board of Directors declared a cash dividend for the second 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 July 26, 2012. The ex-dividend date is July 24, 2012 and the payment date is August 9, 2012.

The Company confirmed that its second quarter conference call will be held Wednesday, July 11, 2012 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://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://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, with a portfolio of more than 1,700 solutions. 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, contact the company at 800 9ADTRAN (800 923-8726) or via email at info@adtran.com. On the Web, visit www.adtran.com.

To supplement our consolidated financial statements presented on a GAAP basis, ADTRAN, Inc. uses non-GAAP measures of net income per share, which are adjusted to exclude certain costs and expenses we believe appropriate to enhance an overall understanding of our past financial performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for diluted net income per share prepared in accordance with generally accepted accounting principles in the United States.

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 Form 10-Q for the quarter ended March 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)
 
 
  June 30, 2012   December 31, 2011
Assets
Cash and cash equivalents $ 36,968 $ 42,979
Short-term investments 169,449 159,347
Accounts receivable, net 118,511 76,130
Other receivables 8,124 9,743
Inventory 103,776 87,800
Prepaid expenses 4,670 3,119
Deferred tax assets, net   12,803   12,125
Total Current Assets 454,301 391,243
 
Property, plant and equipment, net 81,981 75,295
Deferred tax assets, net 8,368 8,345
Goodwill 3,492 3,492
Other assets 14,323 7,131
Long-term investments   348,424   332,008
 
Total Assets $ 910,889 $ 817,514
 
Liabilities and Stockholders' Equity
Accounts payable $ 46,978 $ 29,404

Unearned revenue
27,251 9,965
Accrued expenses 12,577 5,876
Accrued wages and benefits 15,709 13,518
Income tax payable, net   10,677   3,169
Total Current Liabilities 113,192 61,932
 

Non-current unearned revenue

23,009

4,874

Other non-current liabilities

14,908

12,077
Bonds payable   46,500   46,500
Total Liabilities 197,609 125,383
 
Stockholders' Equity   713,280   692,131
 
Total Liabilities and Stockholders' Equity $ 910,889 $ 817,514

 
 
 

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)
 
 
    Three Months Ended   Six Months Ended
June 30, June 30,
2012   2011 2012   2011
 
Sales $ 183,998 $ 184,227 $ 318,733 $ 349,749
Cost of sales   88,797     77,400     149,445     144,127  
 
Gross Profit 95,201 106,827 169,288 205,622
 
Selling, general and administrative expenses 35,905 30,898 69,017 60,450
Research and development expenses   32,458     24,619     57,252     48,256  
 
Operating Income 26,838 51,310 43,019 96,916
 
Interest and dividend income 1,926 2,003 3,787 3,792
Interest expense (581 ) (594 ) (1,168 ) (1,196 )
Net realized investment gain 2,356 3,372 4,823 6,139
Other expense, net 492 (117 ) 633 (242 )
Gain on bargain purchase of a business   1,753     -     1,753     -  
 
Income before provision for income taxes 32,784 55,974 52,847 105,409
 
Provision for income taxes   (11,714 )   (19,031 )   (18,816 )   (34,208 )
 
Net Income $ 21,070   $ 36,943   $ 34,031   $ 71,201  
 
Weighted average shares outstanding - basic 63,619 64,690 63,720 64,441

Weighted average shares outstanding - diluted (1)
64,393 66,135 64,628 66,044
 
Earnings per common share - basic $ 0.33 $ 0.57 $ 0.53 $ 1.10

Earnings per common share - diluted (1)
$ 0.33 $ 0.56 $ 0.53 $ 1.08
 
(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,
2012   2011 2012   2011
 
Net Income $ 21,070   $ 36,943   $ 34,031   $ 71,201  
 
Other Comprehensive Income (Loss), net of tax:
 

Net change in unrealized gains (losses) on marketable securities
(5,054 ) (3,140 ) 1,701 (5,791 )

Reclassification adjustments for amounts Included in net income
(181 ) (236 ) (179 ) (395 )
Foreign currency translation   (96 )   369     58     456  
 
Other Comprehensive Income (Loss), net of tax   (5,331 )   (3,007 )   1,580     (5,730 )
 
Comprehensive Income, net of tax $ 15,739   $ 33,936   $ 35,611   $ 65,471  

 
 
 

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)
 
 
  Six Months Ended
June 30,
2012   2011
Cash flows from operating activities:
Net income $ 34,031 $ 71,201
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 6,615 5,469
Amortization of net premium on available-for-sale investments 4,330 2,992
Net realized gain on long-term investments (4,823 ) (6,139 )
Net (gain) loss on disposal of property, plant and equipment (204 ) 17
Gain on bargain purchase of a business (1,753 ) -
Stock-based compensation expense 4,432 4,165
Deferred income taxes (2,427 ) (192 )
Tax benefit from stock option exercises 1,701 10,318
Excess tax benefits from stock-based compensation arrangements (1,346 ) (9,180 )
Change in operating assets and liabilities:
Accounts receivable, net (43,062 ) (12,373 )
Other receivables 1,997 (6,463 )
Income tax receivable, net - 1,936
Inventory 5,548 (12,402 )
Prepaid expenses and other assets (1,527 ) (176 )
Accounts payable 12,877 14,703
Accrued expenses and other liabilities 13,099 1,870
Income tax payable, net   7,508     -  
Net cash provided by operating activities 36,996 65,746
 
Cash flows from investing activities:
Purchases of property, plant and equipment (7,787 ) (6,287 )
Proceeds from disposals of property, plant and equipment 266 -
Proceeds from sales and maturities of available-for-sale investments 138,307 237,459
Purchases of available-for-sale investments (161,849 ) (335,870 )
Acquisition of business   7,496     -  
Net cash used in investing activities (23,567 ) (104,698 )
 
Cash flows from financing activities:
Proceeds from stock option exercises 4,328 33,022
Purchases of treasury stock (13,432 ) -
Dividend payments (11,476 ) (11,596 )
Excess tax benefits from stock-based compensation arrangements   1,346     9,180  
Net cash provided by (used in) financing activities (19,234 ) 30,606
 
Net decrease in cash and cash equivalents (5,805 ) (8,346 )
Effect of exchange rate changes (206 ) 456
Cash and cash equivalents, beginning of period   42,979     31,677  
 
Cash and cash equivalents, end of period $ 36,968   $ 23,787  

 
 
 

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, 2012 for both transactions are as follows:
 
 

Three

Months Ended

June 30, 2012
 

Six

Months Ended

June 30, 2012
Bluesocket, Inc. acquisition  
Amortization of acquired intangible assets $ 267 $ 485
Amortization of other purchase accounting adjustments   111       377  
 
Subtotal   378       862  
 
NSN BBA acquisition
Amortization of acquired intangible assets 172 172
Amortization of other purchase accounting adjustments 1,052 1,052
Acquisition related professional fees, travel and other expenses   2,705       4,285  
 
Subtotal   3,929       5,509  
 
Total acquisition related expenses, amortizations and adjustments 4,307 6,371
Tax effect   (1,361 )     (2,039 )
 
Total acquisition related expenses, amortizations and adjustments, net of tax $ 2,946     $ 4,332  
 
 

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, 2012:
 

Three

Months Ended

June 30, 2012
 

Six

Months Ended

June 30, 2012
Revenue (adjustments to deferred revenue recognized in the period) $ 508 $ 654
Cost of goods sold   669       806  
 
Subtotal   1,177       1,460  
 
Selling, general and administrative expenses 2,361 3,922
Research and development expenses   769       989  
 
Subtotal   3,130       4,911  
 
Total acquisition related expenses, amortizations and adjustments 4,307 6,371
Tax effect   (1,361 )     (2,039 )
 
Total acquisition related expenses, amortizations and adjustments, net of tax $ 2,946     $ 4,332  

 
 
 

Supplemental Information

Stock-based Compensation Expense

(Unaudited)

(In thousands)
 
 
  Three Months Ended   Six Months Ended
June 30, June 30,
2012   2011 2012   2011
 
Stock-based compensation expense included in cost of sales $ 97   $ 89   $ 198   $ 180  
 
Selling, general and administrative expense 1,047 999 2,098 2,006
Research and development expense   1,067     988     2,136     1,979  
 
Stock-based compensation expense included in operating expenses   2,114     1,987     4,234     3,985  
 
Total stock-based compensation expense 2,211 2,076 4,432 4,165
Tax benefit for expense associated with non-qualified options   (302 )   (276 )   (603 )   (716 )
 
Total stock-based compensation expense, net of tax $ 1,909   $ 1,800   $ 3,829   $ 3,449  
 
 
 

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,
2012   2011 2012   2011
 
GAAP earnings per common share – diluted $ 0.33 $ 0.56 $ 0.53 $ 1.08
 
Acquisition related expenses, amortizations and adjustments 0.05

-
0.07

-
Stock-based compensation expense 0.03 0.03 0.06 0.05
Bargain purchase gain – NSN BBA acquisition   (0.03 )  

-
  (0.03 )  

-
 
Non-GAAP earnings per common share – diluted $ 0.38   $ 0.59 $ 0.63   $ 1.13
 
 

Copyright Business Wire 2010

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