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Press Release -- January 17th, 2012
Source: ADTRAN
Tags: Earnings, Equipment, Exchange, Video

ADTRAN, Inc. Reports Results for the Fourth Quarter and Full Year 2011 and Declares Quarterly Cash Dividend

HUNTSVILLE, Ala.--(BUSINESS WIRE)--Jan. 17, 2012-- ADTRAN, Inc. (NASDAQ:ADTN, news, filings) reported results for the fourth quarter and full year of 2011. For the quarter, sales increased to $175,286,000 compared to $165,329,000 for the fourth quarter of 2010. Net income was $31,163,000 for the quarter compared to $35,960,000 for the fourth quarter of 2010. Earnings per share, assuming dilution, were $0.48 for the quarter compared to $0.56 for the fourth quarter of 2010. For the year, sales increased to a record $717,229,000 compared to $605,674,000 for the year 2010. Net income increased to $138,577,000 for the year compared to $113,989,000 for the year 2010. Earnings per share, assuming dilution, increased to $2.12 for the year compared to $1.78 for the year 2010.

ADTRAN Chief Executive Officer Tom Stanton stated, “Our Company had a solid fourth quarter which contributed to a record year in 2011. Our performance continued to be driven by our core product areas which include Broadband Access, Internetworking and Optical Access. Combined these areas grew 32% for the quarter compared to the same period in 2010. Growth was led by Broadband Access which grew 49% and Internetworking which grew 37% for the quarter. We believe that our strategic areas of focus are well aligned with global market trends and will provide our company long term growth.”

The Company reported that acquisition related expenses, amortizations and adjustments related to the acquisition of Bluesocket, Inc. and the planned acquisition of the NSN Broadband Access business reduced diluted earnings per share by $0.02 for the fourth quarter 2011 and $0.04 for the year 2011.

The Company also reported that stock-based compensation expense reduced diluted earnings per share by $0.04 for the fourth quarter of 2011 compared to a reduction of $0.03 for the fourth quarter of 2010 and reduced diluted earnings per share by $0.12 for the year 2011 compared to $0.11 for the year 2010.

The Company also announced that its Board of Directors declared a cash dividend for the fourth quarter of 2011. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on February 2, 2012. The ex-dividend date is January 31, 2012 and the payment date is February 16, 2012.

The Company confirmed that its fourth quarter conference call will be held Wednesday, January 18, 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.

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, 2010 and our quarterly report on Form 10Q for the quarter ended September 30, 2011. 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,
2011
December 31,
2010
Assets
Cash and cash equivalents $ 42,979 $ 31,677
Short-term investments 159,347 157,479
Accounts receivable, net 76,130 70,893
Other receivables 9,743 3,962
Income tax receivable, net - 2,741
Inventory 87,800 74,274
Prepaid expenses 3,119 3,270
Deferred tax assets, net 12,125 10,617
Total Current Assets 391,243 354,913
Property, plant and equipment, net 75,295 73,986
Deferred tax assets, net 7,494 -
Goodwill 4,770 -
Other assets 7,131 1,915
Long-term investments 332,008 261,160
Total Assets $ 817,941 $ 691,974
Liabilities and Stockholders' Equity
Accounts payable $ 29,404 $ 22,785
Unearned revenue 9,965 10,138
Accrued expenses 5,876 4,913
Accrued wages and benefits 13,518 12,125
Income tax payable, net 3,596 -
Total Current Liabilities 62,359 49,961
Deferred tax liabilities, net - 10,350
Other non-current liabilities 16,951 11,841
Bonds payable 46,500 47,500
Total Liabilities 125,810 119,652
Stockholders' Equity 692,131 572,322
Total Liabilities and Stockholders' Equity $ 817,941 $ 691,974
Consolidated Statements of Income

Unaudited

(In thousands, except per share data)

Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
Sales $ 175,286 $ 165,329 $ 717,229 $ 605,674
Cost of sales 76,066 68,422 302,911 246,811
Gross Profit 99,220 96,907 414,318 358,863
Selling, general and administrative expenses 32,954 29,588 124,879 114,699
Research and development expenses 25,151 22,462 100,301 90,300
Operating Income 41,115 44,857 189,138 153,864
Interest and dividend income 1,813 1,754 7,642 6,557
Interest expense (603 ) (608 ) (2,398 ) (2,436 )
Net realized investment gain 3,333 2,953 12,454 11,008
Other expense, net (297 ) (163 ) (694 ) (804 )
Income before provision for income taxes 45,361 48,793 206,142 168,189
Provision for income taxes (14,198 ) (12,833 ) (67,565 ) (54,200 )
Net Income $ 31,163 $ 35,960 $ 138,577 $ 113,989
Weighted average shares outstanding - basic 63,685 63,007 64,145 62,490
Weighted average shares outstanding - diluted (1) 64,586 64,660 65,416 63,879
Earnings per common share - basic $ 0.49 $ 0.57 $ 2.16 $ 1.82
Earnings per common share - diluted (1) $ 0.48 $ 0.56 $ 2.12 $ 1.78
(1) Assumes exercise of dilutive stock options calculated under the treasury stock method.
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 December 12, 2011, we announced the planned 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, 2011 for both transactions are as follows:
Three
Months Ended
December 31,
2011
Twelve
Months Ended
December 31,
2011
Bluesocket, Inc. acquisition
Acquisition related professional fees and travel expenses $ 100 $ 730
Amortization of acquired intangible assets 297 495
Amortization and adjustments of other acquisition related non-cash items 304 521
Subtotal $ 701 $ 1,746
Planned NSN BBA acquisition
Acquisition related professional fees, travel and other expenses 1,035 2,027
Total acquisition related expenses, amortizations and adjustments $ 1,736 $ 3,773
Tax effect (658 ) (1,434 )
Total acquisition related expenses, amortizations and adjustments, net of tax $ 1,078 $ 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, 2011:
Revenue (adjustments to deferred revenue recognized in the period) $ 207 $ 362
Cost of goods sold 99 165
Subtotal $ 306 $ 527
Selling, general and administrative expenses 1,133 2,557
Research and development expenses 297 689
Subtotal $ 1,430 $ 3,246
Total acquisition related expenses, amortizations and adjustments $ 1,736 $ 3,773
Tax effect (658 ) (1,434 )
Total acquisition related expenses, amortizations and adjustments, net of tax $ 1,078 $ 2,339
Supplemental Information

Stock-based Compensation Expense

Unaudited

(In thousands)

Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
Stock-based compensation expense included in cost of sales $ 132 $ 107 $ 412 $ 317
Selling, general and administrative expense 1,220 1,215 4,316 3,575
Research and development expense 1,362 1,168 4,441 3,825
Stock-based compensation expense included in operating expenses 2,582 2,383 8,757 7,400
Total stock-based compensation expense 2,714 2,490 9,169 7,717
Tax benefit for expense associated with non-qualified options (303 ) (235 ) (1,321 ) (650 )
Total stock-based compensation expense, net of tax $ 2,411 $ 2,255 $ 7,848 $ 7,067
Consolidated Statements of Cash Flows

Unaudited

(In thousands)

Twelve Months Ended
December 31,
2011 2010
Cash flows from operating activities:
Net income $ 138,577 $ 113,989
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 11,499 10,545
Amortization of net premium on available-for-sale investments 6,617 4,380
Net realized gain on long-term investments (12,454 ) (11,008 )
Net loss on disposal of property, plant and equipment 6 2
Stock-based compensation expense 9,169 7,717
Deferred income taxes 148 (1,324 )
Tax benefit from stock option exercises 10,525 4,909
Excess tax benefits from stock-based compensation arrangements (9,373 ) (4,404 )
Change in operating assets and liabilities:
Accounts receivable, net (4,939 ) (2,849 )
Other receivables (5,781 ) 135
Income tax receivable, net 2,741 (2,741 )
Inventory (12,734 ) (28,600 )
Prepaid expenses and other assets 522 (574 )
Accounts payable 6,178 (2,997 )
Accrued expenses and other liabilities 6,309 8,626
Income tax payable, net 3,596 (3,017 )
Net cash provided by operating activities 150,606 92,789
Cash flows from investing activities:
Purchases of property, plant and equipment (11,912 ) (9,872 )
Proceeds from sales and maturities of available-for-sale investments 466,243 275,442
Purchases of available-for-sale investments (554,629 ) (340,489 )
Acquisition of business, net of cash acquired (22,661 ) -
Net cash used in investing activities (122,959 ) (74,919 )
Cash flows from financing activities:
Proceeds from stock option exercises 34,125 24,942
Purchases of treasury stock (35,565 ) (18,316 )
Dividend payments (23,124 ) (22,502 )
Payments on long-term debt (1,000 ) (250 )
Excess tax benefits from stock-based compensation arrangements 9,373 4,404
Net cash used in financing activities (16,191 ) (11,722 )
Net increase in cash and cash equivalents 11,456 6,148
Effect of exchange rate changes (154 ) 1,394
Cash and cash equivalents, beginning of period 31,677 24,135
Cash and cash equivalents, end of period $ 42,979 $ 31,677

Source: ADTRAN, Inc.

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

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