ADTRAN, Inc. reports results for the fourth quarter 2012 and declares quarterly cash dividend

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HUNTSVILLE, Ala.--(BUSINESS WIRE)--Jan. 15, 2013-- 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,
2012

 

December 31,
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

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20130115006852r1&sid=acqr4&distro=nx

Source: ADTRAN, Inc.

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