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Press Release -- July 12th, 2011
Source: ADTRAN
Tags: Earnings, Equipment, Exchange, Video

ADTRAN, Inc. Reports Record Results for Second Quarter 2011 and Declares Quarterly Cash Dividend

HUNTSVILLE, Ala., Jul 12, 2011 (BUSINESS WIRE) --

ADTRAN, Inc. (NASDAQ:ADTN, news, filings) reported results for the second quarter of 2011. Sales increased 23% to an all time record level of $184,227,000 for the quarter, compared to $150,361,000 for the second quarter of 2010. Operating income increased 33% to an all time record level of $51,310,000 for the quarter compared to $38,617,000 for the second quarter of 2010. Net income increased 33% to $36,943,000 for the quarter, compared to $27,751,000 for the second quarter of 2010. Earnings per share, assuming dilution, increased 27% to $0.56 for the quarter, compared to $0.44 for the second quarter of 2010.

ADTRAN Chief Executive Officer Tom Stanton stated, "Our Company had an outstanding quarter reaching new highs on multiple fronts. The performance was led by our growth areas which combined grew 48% over the prior year, now representing 72% of our total company revenue. Moreover, every component of our growth areas, which include Broadband Access, Optical Access and Internetworking, individually attained new revenue highs. Broadband Access grew an impressive 71% over second quarter 2010, driven by the continued success of our Total Access 5000 and Fiber-to-the-Node platforms. Optical Access grew 36% and Internetworking grew 18%. These results allowed the company to achieve its fifth consecutive quarterly revenue record. As demonstrated by our results, we believe our highly differentiated solutions are exceptionally well positioned to take advantage of secular trends occurring in the markets we serve."

The Company reported that stock-based compensation expense for the second quarter of 2011 reduced diluted earnings per share by $0.03 compared to a reduction of $0.03 for the second quarter of 2010.

The Company also announced that its Board of Directors declared a cash dividend for the second 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 July 28, 2011. The ex-dividend date is July 26, 2011 and the payment date is August 11, 2011.

The Company confirmed that its second quarter conference call will be held Wednesday, July 13, 2011 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, 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 March 31, 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)

June 30,
2011
December 31,
2010
Assets
Cash and cash equivalents $ 23,787 $ 31,677
Short-term investments 138,690 157,479
Accounts receivable, net 83,266 70,893
Other receivables 10,425 3,962
Income tax receivable, net 805 2,741
Inventory 86,676 74,274
Prepaid expenses 3,362 3,270
Deferred tax assets, net 12,150 10,617
Total current assets 359,161 354,913
Property, plant and equipment, net 74,961 73,986
Other assets 1,825 1,915
Long-term investments 372,432 261,160
Total assets $ 808,379 $ 691,974
Liabilities and Stockholders' Equity
Accounts payable $ 38,488 $ 22,785
Unearned revenue 9,312 10,138
Accrued expenses 5,957 4,913
Accrued wages and benefits 10,551 12,125
Total current liabilities 64,308 49,961
Deferred tax liabilities, net 8,802 10,350
Other non-current liabilities 15,086 11,841
Bonds payable 46,500 47,500
Total liabilities 134,696 119,652
Stockholders' equity 673,683 572,322
Total liabilities and stockholders' equity $ 808,379 $ 691,974
Consolidated Statements of Income

Unaudited

(In thousands, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Sales $ 184,227 $ 150,361 $ 349,749 $ 277,388
Cost of sales 77,400 61,032 144,127 112,731
Gross Profit 106,827 89,329 205,622 164,657
Selling, general and administrative expenses 30,898 28,455 60,450 55,659
Research and development expenses 24,619 22,257 48,256 45,036
Operating Income 51,310 38,617 96,916 63,962
Interest and dividend income 2,003 1,654 3,792 3,181
Interest expense (594 ) (595 ) (1,196 ) (1,198 )
Net realized investment gain 3,372 2,464 6,139 4,656
Other expense, net (117 ) (188 ) (242 ) (375 )
Income before provision for income taxes 55,974 41,952 105,409 70,226
Provision for income taxes (19,031 ) (14,201 ) (34,208 ) (24,281 )
Net Income $ 36,943 $ 27,751 $ 71,201 $ 45,945
Weighted average shares outstanding - basic 64,690 62,172 64,441 62,086
Weighted average shares outstanding - diluted (1) 66,135 63,488 66,044 63,281
Earnings per common share - basic $ 0.57 $ 0.45 $ 1.10 $ 0.74
Earnings per common share - diluted (1) $ 0.56 $ 0.44 $ 1.08 $ 0.73
(1) Assumes exercise of dilutive stock options calculated under the treasury stock method.
Supplemental Information

Stock-based Compensation Expense

Unaudited

(In thousands)

Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Stock-based compensation expense included in cost of sales $ 89 $ 73 $ 180 $ 141
Selling, general and administrative expense 999 835 2,006 1,585
Research and development expense 988 900 1,979 1,771
Stock-based compensation expense included in operating expenses 1,987 1,735 3,985 3,356
Total stock-based compensation expense 2,076 1,808 4,165 3,497
Tax benefit for expense associated with non-qualified options (276 ) (195 ) (716 ) (372 )
Total stock-based compensation expense, net of tax $ 1,800 $ 1,613 $ 3,449 $ 3,125
Consolidated Statements of Cash Flow

Unaudited

(In thousands)

Six Months Ended
June 30,
2011 2010
Cash flows from operating activities:
Net income $ 71,201 $ 45,945
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,469 5,218
Amortization of net premium on available-for-sale investments 2,992 2,211
Net realized gain on long-term investments (6,139 ) (4,656 )
Net loss on disposal of property, plant and equipment 17 12
Stock-based compensation expense 4,165 3,497
Deferred income taxes (192 ) (2,183 )
Tax benefit from stock option exercises 10,318 1,757
Excess tax benefits from stock-based compensation arrangements (9,180 ) (1,579 )
Change in operating assets and liabilities:
Accounts receivable, net (12,373 ) (3,596 )
Other receivables (6,463 ) (3,929 )
Income tax receivable, net 1,936 -
Inventory (12,402 ) (18,273 )
Prepaid expenses and other assets (176 ) (647 )
Accounts payable 14,703 18,512
Accrued expenses and other liabilities 1,870 5,798
Income tax payable, net - 892
Net cash provided by operating activities 65,746 48,979
Cash flows from investing activities:
Purchases of property, plant and equipment (6,287 ) (4,789 )
Proceeds from sales and maturities of available-for-sale investments 237,459 111,985
Purchases of available-for-sale investments (335,870 ) (137,688 )
Net cash used in investing activities (104,698 ) (30,492 )
Cash flows from financing activities:
Proceeds from stock option exercises 33,022 7,409
Purchases of treasury stock - (10,330 )
Dividend payments (11,596 ) (11,171 )
Excess tax benefits from stock-based compensation arrangements 9,180 1,579
Net cash provided by (used in) financing activities 30,606 (12,513 )
Net increase (decrease) in cash and cash equivalents (8,346 ) 5,974
Effect of exchange rate changes 456 (602 )
Cash and cash equivalents, beginning of period 31,677 24,135
Cash and cash equivalents, end of period $ 23,787 $ 29,507

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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