OREANDA-NEWS. January 21, 2016.  ADTRAN, Inc. (NASDAQ:ADTN) reported results for the fourth quarter 2015. For the quarter, sales were \\$139,013,000 compared to \\$143,982,000 for the fourth quarter of 2014. Net income was \\$5,718,000 compared to \\$9,292,000 for the fourth quarter of 2014. Earnings per share, assuming dilution, were \\$0.12 compared to \\$0.17 for the fourth quarter of 2014. Non-GAAP earnings per share were \\$0.16 compared to \\$0.19 for the fourth quarter of 2014. 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, “Revenue in the quarter came in better than expected, driven by growth in our U.S. Tier 1 and Tier 2 carrier business. Compared to the same period last year, Q4 domestic revenue was up over 20% due to a significant increase in our broadband sales. Additionally, improved gross margins and lower operating expenses helped us achieve better than expected operating income. We expect further improvement in the carrier environment as customers accelerate investments in upgrading their network infrastructure.”

The Company also announced that its Board of Directors declared a cash dividend for the fourth quarter of 2015. The quarterly cash dividend is \\$0.09 per common share to be paid to holders of record at the close of business on February 4, 2016. The ex-dividend date is February 2, 2016 and the payment date is February 18, 2016.

The Company confirmed that its fourth quarter conference call will be held Wednesday, January 20, 2016 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, 2014 and on Form 10-Q for the quarter ended September 30, 2015. 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,
2015

December 31,
2014

Assets
Cash and cash equivalents \\$ 84,550 \\$ 73,439
Short-term investments 34,396 46,919
Accounts receivable, net 71,917 88,502
Other receivables 19,321 33,295
Inventory 96,735 86,710
Prepaid expenses 4,943 5,129
Deferred tax assets, net 18,924 17,095
Total Current Assets 330,786 351,089
Property, plant and equipment, net 73,233 74,828
Deferred tax assets, net 18,091 17,694
Goodwill 3,492 3,492
Other assets 9,276 10,942
Long-term investments 198,026 280,649
Total Assets \\$ 632,904 \\$ 738,694
Liabilities and Stockholders' Equity
Accounts payable \\$ 48,668 \\$ 56,414
Unearned revenue 16,615 22,762
Accrued expenses 12,108 11,077
Accrued wages and benefits 12,857 13,855
Income tax payable, net 2,395 14,901
Total Current Liabilities 92,643 119,009
Non-current unearned revenue 7,965 10,948
Other non-current liabilities 24,236 30,924
Bonds payable 27,900 28,800
Total Liabilities 152,744 189,681
Stockholders' Equity 480,160 549,013
Total Liabilities and Stockholders' Equity \\$ 632,904 \\$ 738,694
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2015 2014 2015 2014
Sales \\$ 139,013 \\$ 143,982 \\$ 600,064 \\$ 630,007
Cost of sales 76,574 75,499 333,167 318,680
Gross Profit 62,439 68,483 266,897 311,327
Selling, general and administrative expenses 30,339 31,793 123,542 131,958
Research and development expenses 29,300 32,711 129,876 132,258
Operating Income 2,800 3,979 13,479 47,111
Interest and dividend income 1,273 1,679 3,953 5,019
Interest expense (148 ) (152 ) (596 ) (677 )
Net realized investment gain 1,907 59 10,337 7,278
Other income (expense), net (1) (617 ) 2,790 (1,465 ) 1,175
Income before provision for income taxes 5,215 8,355 25,708 59,906
Provision for income taxes 503 937 (7,062 ) (15,286 )
Net Income \\$ 5,718 \\$ 9,292 \\$ 18,646 \\$ 44,620
Weighted average shares outstanding - basic 49,552 53,835 51,145 55,120

Weighted average shares outstanding - diluted (2)

 49,643 54,085 51,267 55,482
Earnings per common share - basic \\$ 0.12 \\$ 0.17 \\$ 0.36 \\$ 0.81
Earnings per common share - diluted (2) \\$ 0.12 \\$ 0.17 \\$ 0.36 \\$ 0.80
(1) Results for the three and twelve months ended December 31, 2014 include a \\$2.4 million gain related to the settlement of working capital items from an acquisition that closed in 2012.
(2) 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,
2015 2014 2015 2014
Net Income \\$ 5,718 \\$ 9,292 \\$ 18,646 \\$ 44,620
Other Comprehensive Income (Loss), net of tax:
Unrealized gains (losses) on available-for-sale securities (455 ) 1,077 (7,032 ) (1,773 )
Defined benefit plan adjustments 1,651 (4,866 ) 1,862 (4,866 )
Foreign currency translation 73 (2,007 ) (3,724 ) (4,189 )
Other Comprehensive Income (Loss), net of tax 1,269 (5,796 ) (8,894 ) (10,828 )
Comprehensive Income, net of tax \\$ 6,987 \\$ 3,496 \\$ 9,752 \\$ 33,792
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Twelve Months Ended
December 31,
2015 2014
Cash flows from operating activities:
Net income \\$ 18,646 \\$ 44,620

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 14,245 14,845
Amortization of net premium on available-for-sale investments 2,402 4,360
Net realized gain on long-term investments (10,336 ) (7,278 )
Net loss on disposal of property, plant and equipment 644 142
Stock-based compensation expense 6,712 8,563
Deferred income taxes (692 ) (5,526 )
Tax impact from stock option exercises (40 ) 81
Excess tax benefits from stock-based compensation arrangements (3 ) (63 )
Change in operating assets and liabilities:
Accounts receivable, net 14,918 (3,910 )
Other receivables 11,704 (19,298 )
Inventory (11,323 ) 1,953
Prepaid expenses and other assets (625 ) (3,627 )
Accounts payable (5,826 ) 9,973
Accrued expenses and other liabilities (10,289 ) (166 )
Income tax payable, net (11,590 ) 11,168
Net cash provided by operating activities 18,547 55,837
Cash flows from investing activities:
Purchases of property, plant and equipment (11,753 ) (11,256 )
Proceeds from disposals of property, plant and equipment 183 1
Proceeds from sales and maturities of available-for-sale investments 280,435 230,019
Purchases of available-for-sale investments (188,921 ) (142,695 )
Net cash provided by investing activities 79,944 76,069
Cash flows from financing activities:
Proceeds from stock option exercises 961 2,839
Purchases of treasury stock (66,160 ) (80,576 )
Dividend payments (18,449 ) (19,947 )
Payments on long-term debt (1,100 ) (16,500 )
Excess tax benefits from stock-based compensation arrangements 3 63
Net cash used in financing activities (84,745 ) (114,121 )
Net increase in cash and cash equivalents 13,746 17,785
Effect of exchange rate changes (2,635 ) (2,644 )
Cash and cash equivalents, beginning of period 73,439 58,298
Cash and cash equivalents, end of period \\$ 84,550 \\$ 73,439
Supplemental disclosure of non-cash investing activities
Purchases of property, plant and equipment included in accounts payable \\$ 598 \\$ 467

Supplemental Information
Restructuring Expenses
(Unaudited)
(In thousands)

Restructuring expenses were recorded in the following Consolidated Statements of Income categories for the three and twelve months ended December 31, 2015 and 2014:

Three Months Ended Twelve Months Ended
December 31, December 31,
2015 2014 2015 2014
Restructuring expense included in cost of sales \\$ 5 \\$ - \\$ 112 \\$ -
Selling, general and administrative expense 8 - 846 -
Research and development expense 13 - 2,108 -
Restructuring expense included in operating expenses 21 - 2,954 -
Total restructuring expense 26 - 3,066 -
Provision for income taxes (10 ) - (1,196 ) -
Total restructuring expense, net of tax \\$ 16 \\$ - \\$ 1,870 \\$ -

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, 2015 and 2014 for both transactions are as follows:

Three Months Ended Twelve Months Ended
December 31, December 31,
2015 2014 2015 2014
Bluesocket, Inc. acquisition
Amortization of acquired intangible assets and other purchase accounting adjustments \\$ 174 \\$ 226 \\$ 817 \\$ 925
NSN BBA acquisition
Amortization of acquired intangible assets 227 269 928 1,153
Amortization of other purchase accounting adjustments 48 222 443 1,117
Acquisition related professional fees, travel and other expenses 14 193 75 282
Subtotal 289 684 1,446 2,552
Total acquisition related expenses, amortizations and adjustments 463 910 2,263 3,477
Provision for income taxes (158 ) (300 ) (767 ) (1,151 )
Total acquisition related expenses, amortizations and adjustments, net of tax \\$ 305 \\$ 610 \\$ 1,496 \\$ 2,326

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, 2015 and 2014:

Three Months Ended Twelve Months Ended
December 31, December 31,
2015 2014 2015 2014
Revenue (adjustments to deferred revenue recognized in the period) \\$ 16 \\$ 73 \\$ 212 \\$ 601
Cost of goods sold 3 67 55 171
Subtotal 19 140 267 772
Selling, general and administrative expenses 18 200 92 310
Research and development expenses 426 570 1,904 2,395
Subtotal 444 770 1,996 2,705
Total acquisition related expenses, amortizations and adjustments 463 910 2,263 3,477
Provision for income taxes (158 ) (300 ) (767 ) (1,151 )
Total acquisition related expenses, amortizations and adjustments, net of tax \\$ 305 \\$ 610 \\$ 1,496 \\$ 2,326
Supplemental Information
Stock-based Compensation Expense
(Unaudited)
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2015 2014 2015 2014
Stock-based compensation expense included in cost of sales \\$ 78 \\$ 120 \\$ 280 \\$ 479
Selling, general and administrative expense 1,035 1,096 3,261 4,185
Research and development expense 811 1,051 3,171 3,899
Stock-based compensation expense included in operating expenses 1,846 2,147 6,432 8,084
Total stock-based compensation expense 1,924 2,267 6,712 8,563
Tax benefit for expense associated with non-qualified options (242 ) (279 ) (862 ) (1,157 )
Total stock-based compensation expense, net of tax \\$ 1,682 \\$ 1,988 \\$ 5,850 \\$ 7,406
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,
2015 2014 2015 2014
GAAP earnings per common share – diluted \\$ 0.12 \\$ 0.17 \\$ 0.36 \\$ 0.80
Restructuring expense - - 0.04 -
Acquisition related expenses, amortizations and adjustments 0.01 0.01 0.03 0.04
Settlement of acquisition related working capital items - (0.03 ) - (0.03 )
Stock-based compensation expense 0.03 0.04 0.11 0.13
Non-GAAP earnings per common share – diluted \\$ 0.16 \\$ 0.19 \\$ 0.54 \\$ 0.94