ADTRAN, Inc. Reports Results for the Fourth Quarter 2012 and Declares Quarterly Cash Dividend

  ADTRAN, Inc. Reports Results for the Fourth Quarter 2012 and Declares
  Quarterly Cash Dividend

Business Wire

HUNTSVILLE, Ala. -- January 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,   December 31,
                                           2012           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    31,393            32,954         134,523       124,879
expenses
Research and
development          33,116          25,151       125,951     100,301 
expenses
                                                                   
Operating Income      2,874             41,115         56,169        189,138
                                                                   
Interest and          2,006             1,813          7,657         7,642
dividend income
Interest expense      (591     )        (603     )     (2,347  )     (2,398  )
Net realized          2,197             3,333          9,550         12,454
investment gain
Other income          (82      )        (297     )     183           (694    )
(expense), net
Gain on bargain
purchase of a        -               -            1,753       -       
business
                                                                   
Income before
provision for         6,404             45,361         72,965        206,142
income taxes
                                                                   
Provision for        (2,443   )       (14,198  )    (25,702 )    (67,565 )
income taxes
                                                                   
Net Income         $  3,961         $  31,163      $ 47,263     $ 138,577 
                                                                   
Weighted average
shares outstanding    62,542            63,685         63,259        64,145
- basic
Weighted average
shares outstanding    62,690            64,586         63,774        65,416
- diluted ^(1)
                                                                   
Earnings per
common share -     $  0.06           $  0.49         $ 0.75        $ 2.16
basic
Earnings per
common share -     $  0.06           $  0.48         $ 0.74        $ 2.12
diluted ^(1)
                                                                   
^(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             (2,042 )     (1,745 )     (187   )     (13,004 )
marketable securities
Reclassification
adjustments for amounts       (29    )     (6     )     135          (688    )
included in net income
Defined benefit plan          (1,952 )     -            (1,952 )     -
adjustments
Foreign currency             (21    )    877        170        (154    )
translation
                                                                   
Other Comprehensive          (4,044 )    (874   )    (1,834 )    (13,846 )
Income (Loss), net of tax
                                                                   
Comprehensive Income        $ (83    )   $ 30,289    $ 45,429    $ 124,731 
(Loss), net of tax

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                       8,257          6,617
available-for-sale investments
Net realized gain on long-term investments           (9,550   )     (12,454  )
Net (gain) loss on disposal of property, plant       (214     )     6
and equipment
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                 (1,456   )     (9,373   )
compensation arrangements
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       266            -
equipment
Proceeds from sales and maturities of                282,039        466,243
available-for-sale investments
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                1,456        9,373    
compensation arrangements
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        $  267          $  297          $  1,020         $  495
intangible
assets
Amortization of
other purchase     29              304             443              521
accounting
adjustments
Acquisition
related
professional      -             100           -              730     
fees, travel
and other
expenses
                                                                 
Subtotal          296           701           1,463          1,746   
                                                                 
NSN BBA
acquisition
Amortization of
acquired           290             -               762              -
intangible
assets
Amortization of
other purchase     587             -               2,305            -
accounting
adjustments
Acquisition
related
professional      323           1,035         4,860          2,027   
fees, travel
and other
expenses
                                                                 
Subtotal          1,200         1,035         7,927          2,027   
                                                                 
Total
acquisition
related            1,496           1,736           9,390            3,773
expenses,
amortizations
and adjustments
Tax effect        (488   )       (658   )       (3,148  )       (1,434  )
                                                                 
Total
acquisition
related
expenses,       $  1,008       $  1,078       $  6,242        $  2,339   
amortizations
and
adjustments,
net of tax

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 $  377          $  207          $  1,528         $  362
recognized in
the period)
Cost of goods      154           99            1,086          165     
sold
                                                                  
Subtotal           531           306           2,614          527     
                                                                  
Selling, general
and                 330             1,133           4,510            2,557
administrative
expenses
Research and
development        635           297           2,266          689     
expenses
                                                                  
Subtotal           965           1,430         6,776          3,246   
                                                                  
Total
acquisition
related             1,496           1,736           9,390            3,773
expenses,
amortizations
and adjustments
Tax effect         (488   )       (658   )       (3,148  )       (1,434  )
                                                                  
Total
acquisition
related
expenses,        $  1,008       $  1,078       $  6,242        $  2,339   
amortizations
and adjustments,
net of tax

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    $ 118      $ 132      $ 422       $ 412    
sales
                                                                    
Selling, general and             1,146       1,220       4,351        4,316
administrative expense
Research and development        1,217     1,362     4,491      4,441  
expense
                                                                    
Stock-based compensation
expense included in             2,363     2,582     8,842      8,757  
operating expenses
                                                                    
Total stock-based                2,481       2,714       9,264        9,169
compensation expense
Tax benefit for expense
associated with                 (318  )    (303  )    (1,234 )    (1,321 )
non-qualified options
                                                                    
Total stock-based
compensation expense, net of   $ 2,163    $ 2,411    $ 8,030     $ 7,848  
tax

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 –      $  0.06     $ 0.48   $  0.74      $ 2.12
diluted
                                                                        
Acquisition related expenses,            0.02       0.02      0.10        0.04
amortizations and adjustments
Stock-based compensation expense         0.03       0.04      0.13        0.12
Bargain purchase gain – NSN BBA       -           -          (0.03 )   -
acquisition
                                                                        
Non-GAAP earnings per common share    $  0.11     $ 0.54   $  0.94     $ 2.28
– diluted

Contact:

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