Exhibit 99.1
ADTRAN, Inc. Reports First Quarter 2006 Results and Declares Quarterly
Cash Dividend
HUNTSVILLE, Ala.--(BUSINESS WIRE)--April 17, 2006--ADTRAN, Inc.
(NASDAQ:ADTN) reported results for the first quarter of 2006. Sales
increased to $108,648,000 for the quarter compared to $104,577,000 for
the first quarter of 2005. Non-GAAP net income increased 18% to
$17,966,000 for the quarter compared to GAAP net income of $15,220,000
for the first quarter of 2005. Non-GAAP earnings per share, assuming
dilution, were $0.23 for the quarter compared to GAAP earnings per
share, assuming dilution, of $0.20 for the first quarter of 2005. For
the quarter, GAAP net income increased to $16,255,000 and GAAP
earnings per share, assuming dilution, increased to $0.21, compared to
the first quarter of 2005. Non-GAAP net income and non-GAAP earnings
per share for the first quarter exclude the effect of stock
compensation expense resulting from the application of Statement of
Financial Accounting Standards No. 123R, Share-Based Payment ("SFAS
123R"). SFAS 123R was adopted on a prospective basis effective January
1, 2006. See the table below for reconciliation between non-GAAP and
GAAP net income and earnings per share.
For the quarter, gross margin increased to 59.4% compared to 57.6%
for the first quarter of 2005.
ADTRAN Chief Executive Officer Tom Stanton stated, "Although
shipments in the first quarter of 2006 were below our original
expectations, we saw strong revenue growth in our three primary growth
areas: Optical Access, Broadband Access, and NetVanta(R) Routers and
Switches. We anticipate this momentum will continue to increase as we
progress through the year."
The Company also announced that its Board of Directors declared a
cash dividend for the first quarter of 2006. The quarterly cash
dividend is $0.09 per common share to be paid to holders of record at
the close of business on May 4, 2006. The ex-dividend date is May 2,
2006 and the payment date is May 18, 2006.
The Company also confirmed that its first quarter conference call
will be held Tuesday, April 18 at 9:30 a.m. Central Time. Guidance for
the second quarter and year 2006 will be issued during this conference
call. 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 one of the world's most successful network access
equipment suppliers, with an 18-year history of profitability and a
portfolio of more than 1,400 solutions for use in the last mile of
today's telecommunications networks. Widely deployed by carriers and
enterprises alike, ADTRAN solutions enable voice, data, video, and
Internet communications across copper, fiber, and wireless network
infrastructures. ADTRAN solutions are currently in use by every major
U.S. service provider and many global ones, as well as by thousands of
public, private and governmental organizations worldwide.
For more information, contact the company at 800 9ADTRAN (800
923-8726) or via e-mail 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, 2005. These risks and uncertainties could cause actual
results to differ materially from those in the forward-looking
statements included in this press release.
This release includes non-GAAP net income, non-GAAP earnings per
share data, and other non-GAAP line items from the Non-GAAP
Information table in this release, including costs of sales, gross
profit, selling, general and administrative expenses, research and
development expenses, profit from operations, income before provision
for income taxes and provision for income taxes. These measures
exclude the effect of stock compensation expense for employee stock
options associated with the application of SFAS 123R, which ADTRAN
adopted effective January 1, 2006. These measures are not in
accordance with, or an alternative for, generally accepted accounting
principles and may be different from non-GAAP measures used by other
companies. ADTRAN believes that the presentation of the non-GAAP
measures, when shown in conjunction with the corresponding GAAP
measures, provides useful information to management and investors
regarding financial and business trends relating to its financial
condition and results of operations. ADTRAN further believes that
where adjustments used in calculating non-GAAP net income and non-GAAP
earnings per share are based on specific, identified charges that
impact different line items in the statements of income, it is useful
to investors to know how these specific line items are affected by
these adjustments. In particular, as ADTRAN begins to apply SFAS 123R,
it believes that it is useful to investors to understand how the
expenses associated with the application of SFAS 123R are reflected in
its results of operations. The presentation of these non-GAAP measures
permits both investors and management to more readily compare past
results, which do not include the impact of SFAS 123R, with future
results, and to better understand ADTRAN's performance over the
periods presented.
Condensed Balance Sheet
March 31, 2006
Unaudited
(In thousands)
March 31,
2006
-----------
Assets
Cash & cash equivalents $ 110,160
Short-term investments 160,031
Accounts receivable (net) 62,555
Other receivables 3,066
Inventory (net) 48,160
Prepaid expenses and other current assets 8,654
-----------
Total current assets 392,626
Equipment (net) 19,682
Land 4,263
Bldg. & land improvements (net) 59,771
Other assets 498
Long-term investments 185,132
-----------
Total long-term assets 269,346
-----------
Total assets $ 661,972
===========
Liabilities and stockholders' equity
Accounts payable $ 19,334
Accrued wages and benefits 6,982
Accrued liabilities 20,798
-----------
Total current liabilities 47,114
Deferred tax liabilities 3,615
Other non-current liabilities 4,671
Long term-debt 50,000
-----------
Total long-term liabilities 58,286
Total liabilities 105,400
Stockholders' equity 556,572
-----------
-----------
Total liabilities and stockholders' equity $ 661,972
===========
Condensed Statements of Income
For the three month periods ended March 31, 2006 and 2005
(In thousands, except per share data)
Unaudited
Three Months Three Months
Ended Ended
March 31, 2006 March 31, 2005
-------------- --------------
Sales $108,648 $104,577
Cost of Sales 44,140 44,349
-------------- --------------
Gross Profit 64,508 60,228
Selling, general and administrative
expenses 24,766 22,949
Research and development expenses 17,766 16,343
-------------- --------------
Profit from operations 21,976 20,936
Interest expense (634) (583)
Other income, net 4,116 2,848
-------------- --------------
Income before provision for income taxes 25,458 23,201
Provision for income taxes (9,203) (7,981)
-------------- --------------
Net income (1) $16,255 $15,220
============== ==============
Weighted average shares
Basic 76,655 75,755
Diluted (2) 78,909 77,318
Earnings per common share
Basic $0.21 $0.20
Diluted (2) $0.21 $0.20
(1) Net income for the first quarter of fiscal 2006 included stock-
based compensation expense recognized related to employee stock
options, net of tax, of $1.7 million under SFAS 123(R). There was no
stock-based compensation expense related to employee stock options
under SFAS 123 in fiscal 2005 because we did not adopt the
recognition provisions of SFAS 123.
(2) Assumes exercise of dilutive stock options calculated under the
treasury stock method.
Non-GAAP Information (1) (2)
For the three month periods ended March 31, 2006 and 2005
(In thousands, except per share data)
Unaudited
Non-GAAP
(excludes
effects
of SFAS
123R) GAAP GAAP
Three Three Three
Months Effects of Months Months
Ended SFAS 123R Ended Ended
March 31, March 31, March 31, March 31,
2006 2006 2006 2005
--------- --------- --------- ---------
Sales $108,648 $0 $108,648 $104,577
Cost of Sales (a) 44,057 83 44,140 44,349
--------- --------- --------- ---------
Gross Profit (a) 64,591 83 64,508 60,228
Selling, general and
administrative expenses (a) 23,809 957 24,766 22,949
Research and development
expenses (a) 16,839 927 17,766 16,343
--------- --------- --------- ---------
Profit from operations (a) 23,943 (1,967) 21,976 20,936
Interest expense (634) 0 (634) (583)
Other income, net 4,116 0 4,116 2,848
--------- --------- --------- ---------
Income before provision for
income taxes (a) 27,425 (1,967) 25,458 23,201
Provision for income taxes (b) (9,459) 256 (9,203) (7,981)
--------- --------- --------- ---------
Net income (a)(b) $17,966 ($1,711) $16,255 $15,220
========= ========= ========= =========
Weighted average shares
Basic 76,655 76,655 76,655 75,755
Diluted (3) 78,909 78,909 78,909 77,318
Earnings per common share
Basic $0.23 ($0.02) $0.21 $0.20
Diluted (3) $0.23 ($0.02) $0.21 $0.20
(1) A reconciliation between net income on a GAAP basis and non-GAAP
net income including items (a) through (b) is provided in the table
below.
(2) There was no stock-based compensation expense recorded in fiscal
2005, as we had adopted the footnote disclosure only provision of
SFAS 123.
(3) Assumes exercise of dilutive stock options calculated under the
treasury stock method.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME AND EARNINGS PER SHARE
(In thousands)
Quarter Ended Quarter Ended
March 31, 2006 March 31, 2005
GAAP Net Income $16,255 $15,220
(a) Stock-based compensation expense
related to employee stock options (1) 1,967 0
(b) Income tax effect of stock-based
compensation expense (256) 0
-------------- ---------------
Non-GAAP Net Income $17,966 $15,220
============== ===============
GAAP Earnings per common share - diluted $0.21 $0.20
Per share effect of stock-based
compensation expense $0.02 N/A
-------------- ---------------
Non-GAAP Earnings per common share -
diluted $0.23 $0.20
============== ===============
(1) For the first quarter of 2006, stock-based compensation expense
was allocated as follows: $83 to cost of sales expense, $957 to
selling, general and administrative expense, and $927 to research and
development expense.
COMPARISON OF NET INCOME INCLUDING THE EFFECT OF STOCK-BASED
COMPENSATION EXPENSE RELATED TO EMPLOYEE STOCK OPTIONS UNDER SFAS
123(R) and SFAS 123 (1)
(In thousands)
Quarter Ended Quarter Ended
March 31, 2006 March 31, 2005
Net Income - as reported for the prior
period N/A $15,220
Stock-based compensation expense related
to employee stock options $1,967 2,598
Tax benefit (256) (367)
-------------- --------------
Stock-based compensation expense related
to employee stock options, net of tax $1,711 2,231
==============
--------------
Net income, including the effect of
stock-based compensation expense $16,255 $12,989
============== ==============
Diluted net income per share - as
reported for the prior period N/A $0.20
Diluted net income per share, including
the effect of stock-based compensation
expense $0.21 $0.17
(1)Stock-based compensation expense prior to January 1, 2006 is based
on the pro forma application of SFAS 123. Net income and net income
per share prior to January 1, 2006 did not include stock-based
compensation for employee stock options because ADTRAN did not adopt
the recognition provisions of SFAS 123.
CONTACT: ADTRAN, Inc.
Jim Matthews, 256-963-8775
or
Investor Services/Assistance:
Gayle Ellis, 256-963-8220