ADTRAN, Inc. (NASDAQ:ADTN) reported results for the fourth quarter 2016. For the quarter, sales were $162,986,000 compared to $139,013,000 for the fourth quarter of 2015. Net income was $7,572,000 compared to $5,718,000 for the fourth quarter of 2015. Earnings per share, assuming dilution, were $0.16 compared to $0.12 for the fourth quarter of 2015. Non-GAAP earnings per share were $0.21 compared to $0.16 for the fourth quarter of 2015. 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 revenue and EPS performance for the quarter exceeded expectations with total revenue increasing 17% over the same period last year. The solid fourth quarter and full year performance was a result of strong growth in our domestic business, driven by our leading market positions in CAF II and ultra-broadband solutions, continued growth in our services business, and the rebound of our international business. Our services and international businesses grew 55% and 46% respectively over the same period last year. Global demand for broadband continued to grow as we bolstered our market positions in the U.S and Europe. We continue to be encouraged by the positive momentum we are experiencing as service providers seek transformation to grow revenue, reduce costs, and accelerate service delivery and deployment.”

The Company also announced that its Board of Directors declared a cash dividend for the fourth quarter of 2016. 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, 2017. The ex-dividend date is January 31, 2017, and the payment date is February 16, 2017.

The Company confirmed that its fourth quarter conference call will be held Wednesday, January 18, 2017, 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, 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, 2016

December 31, 2015

Assets Cash and cash equivalents $ 79,895 $ 84,550 Short-term investments 43,188 34,396 Accounts receivable, net 92,346 71,917 Other receivables 15,137 19,321 Income tax receivable, net 760 - Inventory 105,117 91,533 Prepaid expenses and other current assets   16,459   10,145 Total Current Assets 352,902 311,862   Property, plant and equipment, net 84,469 73,233 Deferred tax assets, net 38,036 37,015 Goodwill 3,492 3,492 Other assets 12,234 9,276 Long-term investments   176,102   198,026   Total Assets $ 667,235 $ 632,904   Liabilities and Stockholders' Equity Accounts payable $ 77,342 $ 48,668 Unearned revenue 16,326 16,615 Accrued expenses 12,434 12,108 Accrued wages and benefits 20,433 12,857 Income tax payable, net   -   2,395 Total Current Liabilities 126,535 92,643   Non-current unearned revenue 6,333 7,965 Other non-current liabilities 28,050 24,236 Bonds payable   26,800   27,900 Total Liabilities 187,718 152,744   Stockholders' Equity   479,517   480,160   Total Liabilities and Stockholders' Equity $ 667,235 $ 632,904     Consolidated Statements of Income (Unaudited) (In thousands, except per share data)           Three Months Ended Twelve Months Ended December 31, December 31, 2016     2015 2016     2015   Sales Products $ 126,793 $ 115,699 $ 525,502 $ 527,422 Services   36,193     23,314     111,279     72,642     Total Sales 162,986 139,013 636,781 600,064   Cost of Sales Products 67,790 62,104 270,695 293,843 Services   24,409     14,470     74,742     39,324     Total Cost of Sales 92,199 76,574 345,437 333,167   Gross Profit 70,787 62,439 291,344 266,897   Selling, general and administrative expenses 34,438 30,339 131,805 123,542 Research and development expenses   32,077     29,300     124,804     129,876     Operating Income 4,272 2,800 34,735 13,479   Interest and dividend income 1,226 1,273 3,918 3,953 Interest expense (142 ) (148 ) (572 ) (596 ) Net realized investment gain 1,769 1,907 5,923 10,337 Other expense, net (273 ) (617 ) (651 ) (1,465 ) Gain on bargain purchase of a business   (8 )   -     3,542     -     Income before provision for income taxes 6,844 5,215 46,895 25,708   Provision for income taxes   728     503     (11,666 )   (7,062 )   Net Income $ 7,572   $ 5,718   $ 35,229   $ 18,646     Weighted average shares outstanding - basic 48,383 49,552 48,724 51,145 Weighted average shares outstanding - diluted (1) 48,757 49,643 48,949 51,267   Earnings per common share - basic $ 0.16 $ 0.12 $ 0.72 $ 0.36 Earnings per common share - diluted (1) $ 0.16 $ 0.12 $ 0.72 $ 0.36   (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, 2016     2015 2016     2015   Net Income $ 7,572   $ 5,718   $ 35,229   $ 18,646     Other Comprehensive Income (Loss), net of tax:   Unrealized losses on available-for-sale securities (1,366 ) (455 ) (1,528 ) (7,032 ) Defined benefit plan adjustments (1,225 ) 1,651 (1,122 ) 1,862 Foreign currency translation   (1,771 )   73     (569 )   (3,724 )   Other Comprehensive Income (Loss), net of tax   (4,362 )   1,269     (3,219 )   (8,894 )   Comprehensive Income, net of tax $ 3,210   $ 6,987   $ 32,010   $ 9,752       Consolidated Statements of Cash Flows (Unaudited) (In thousands)       Twelve Months Ended December 31, 2016     2015 Cash flows from operating activities: Net income $ 35,229 $ 18,646 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,407 14,245 Amortization of net premium on available-for-sale investments 643 2,402 Net realized gain on long-term investments (5,923 ) (10,337 ) Net loss on disposal of property, plant and equipment 22 644 Gain on bargain purchase of a business (3,542 ) - Stock-based compensation expense 6,695 6,712 Deferred income taxes (2,685 ) (692 ) Tax impact from stock option exercises - (40 ) Excess tax benefits from stock-based compensation arrangements (2 ) (3 ) Change in operating assets and liabilities: Accounts receivable, net (21,302 ) 14,918 Other receivables 4,101 11,704 Inventory (10,887 ) (6,877 ) Prepaid expenses and other assets (7,108 ) (5,070 ) Accounts payable 26,722 (5,826 ) Accrued expenses and other liabilities 8,792 (10,289 ) Income tax payable/receivable, net   (3,162 )   (11,590 ) Net cash provided by operating activities   42,000     18,547     Cash flows from investing activities: Purchases of property, plant and equipment (21,441 ) (11,753 ) Proceeds from disposals of property, plant and equipment - 183 Proceeds from sales and maturities of available-for-sale investments 225,075 280,435 Purchases of available-for-sale investments (209,172 ) (188,921 ) Acquisition of business   (943 )   -   Net cash provided by (used in) investing activities   (6,481 )   79,944     Cash flows from financing activities: Proceeds from stock option exercises 4,717 961 Purchases of treasury stock (25,817 ) (66,160 ) Dividend payments (17,583 ) (18,449 ) Payments on long-term debt (1,100 ) (1,100 ) Excess tax benefits from stock-based compensation arrangements   2     3   Net cash used in financing activities   (39,781 )   (84,745 )   Net increase (decrease) in cash and cash equivalents (4,262 ) 13,746 Effect of exchange rate changes (393 ) (2,635 ) Cash and cash equivalents, beginning of period   84,550     73,439     Cash and cash equivalents, end of period $ 79,895   $ 84,550     Supplemental disclosure of non-cash investing activities Purchases of property, plant and equipment included in accounts payable $ 2,103 $ 598  

Supplemental InformationRestructuring 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, 2016 and 2015:

          Three Months Ended Twelve Months Ended December 31, December 31, 2016     2015 2016     2015   Restructuring expense included in cost of sales $ 14   $ 5   $ 1,321   $ 112     Selling, general and administrative expense - 8 637 846 Research and development expense   -     13     -     2,108     Restructuring expense included in operating expenses   -     21     637     2,954     Total restructuring expense 14 26 1,958 3,066 Provision for income taxes   (4 )   (10 )   (607 )   (1,196 )   Total restructuring expense, net of tax $ 10   $ 16   $ 1,351   $ 1,870    

Supplemental InformationAcquisition Related Expenses, Amortizations and Adjustments(Unaudited)(In thousands)

On August 4, 2011, we closed on the acquisition of Bluesocket, Inc., on May 4, 2012, we closed on the acquisition of the Nokia Siemens Networks Broadband Access business (NSN BBA), and on September 13, 2016, we closed on the acquisition of CommScope’s active fiber business (CommScope). Acquisition related expenses, amortizations and adjustments for the three and twelve months ended December 31, 2016 and 2015 for all three transactions are as follows:

        Three Months Ended     Twelve Months Ended December 31, December 31, 2016     2015 2016     2015 Bluesocket, Inc. acquisition Amortization of acquired intangible assets $ 158   $ 174   $ 662   $ 817     NSN BBA acquisition Amortization of acquired intangible assets 221 227 901 928 Amortization of other purchase accounting adjustments 30 48 224 443 Acquisition related professional fees, travel and other expenses   -     14     -     75   Subtotal NSN BBA acquisition   251     289     1,125     1,446     CommScope acquisition Amortization of acquired intangible assets 673 - 785 - Amortization of other purchase accounting adjustments 42 - 126 - Acquisition related professional fees, travel and other expenses   29     -     74     -   Subtotal CommScope acquisition   744     -     985     -     Total acquisition related expenses, amortizations and adjustments 1,153 463 2,772 2,263 Provision for income taxes   (429 )   (158 )   (991 )   (767 )   Total acquisition related expenses, amortizations and adjustments, net of tax $ 724   $ 305   $ 1,781   $ 1,496    

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, 2016 and 2015:

          Three Months Ended Twelve Months Ended December 31, December 31, 2016     2015 2016     2015   Revenue (adjustments to deferred revenue recognized in the period) $ - $ 16 $ - $ 212 Cost of goods sold   43     3     232     55   Subtotal   43     19     232     267     Selling, general and administrative expenses 70 18 131 92 Research and development expenses   1,040     426     2,409     1,904   Subtotal   1,110     444     2,540     1,996     Total acquisition related expenses, amortizations and adjustments 1,153 463 2,772 2,263 Provision for income taxes   (429 )   (158 )   (991 )   (767 )   Total acquisition related expenses, amortizations and adjustments, net of tax $ 724   $ 305   $ 1,781   $ 1,496       Supplemental Information Stock-based Compensation Expense (Unaudited) (In thousands)           Three Months Ended Twelve Months Ended December 31, December 31, 2016     2015 2016     2015   Stock-based compensation expense included in cost of sales $ 107   $ 78   $ 389   $ 280     Selling, general and administrative expense 1,019 1,035 3,341 3,261 Research and development expense   968     811     2,965     3,171     Stock-based compensation expense included in operating expenses   1,987     1,846     6,306     6,432     Total stock-based compensation expense 2,094 1,924 6,695 6,712 Tax benefit for expense associated with non-qualified options   (320 )   (242 )   (963 )   (862 )   Total stock-based compensation expense, net of tax $ 1,774   $ 1,682   $ 5,732   $ 5,850       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, 2016     2015 2016     2015   GAAP earnings per common share – diluted $ 0.16 $ 0.12 $ 0.72 $ 0.36   Restructuring expense - - 0.03 0.04 Acquisition related expenses, amortizations and adjustments 0.01 0.01 0.04 0.03 Stock-based compensation expense 0.04 0.03 0.12 0.11 Gain on bargain purchase of a business   -   -   (0.07 )   -   Non-GAAP earnings per common share – diluted $ 0.21 $ 0.16 $ 0.84   $ 0.54  

ADTRAN, Inc.Roger Shannon, 256-963-8775Senior Vice President & CFOorInvestor Services/Assistance:Gayle Ellis, 256-963-8220

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