Business Wire | Nov 2, 2020 08:05PM EST

ADTRAN, Inc. Reports Earnings for the Third Quarter of 2020 and Declares Quarterly Cash Dividend

Nov. 03, 2020

HUNTSVILLE, Ala.--(BUSINESS WIRE)--Nov. 03, 2020--ADTRAN, Inc. (NASDAQ:ADTN) ("ADTRAN" or the "Company") today announced financial results for the third quarter of 2020. For the quarter, revenue was $133.1 million. Net income for the third quarter of 2020 was $5.5 million and earnings per share, assuming dilution, was $0.11 per share. Non-GAAP net income was $7.9 million and non-GAAP earnings per share, assuming dilution, was $0.16 per share. Non-GAAP net income and non-GAAP earnings per share exclude stock-based compensation expense, acquisition-related expenses, amortizations and adjustments, restructuring expenses, amortization of pension actuarial losses, valuation allowance related to our deferred tax assets, non-cash deferred compensation, and other one-time adjustments. The reconciliations between GAAP net income and earnings per share to non-GAAP net income and non-GAAP earnings per share are set forth in the table provided below.

ADTRAN Chairman and Chief Executive Officer Tom Stanton stated, "We had a solid quarter with outstanding customer traction, securing 38 new service provider customers, ranging from global Tier-1 operators to electric co-operatives and utilities, municipalities, cable MSOs and regional broadband providers. We are also making great progress with the Tier 1 fiber access projects we announced earlier this year and we continue to have very strong momentum on new customer acquisition across a broad base of market segments. We continue to introduce new fiber access and software innovations that have been well timed as we enter the early stages of a generational communications infrastructure network upgrade cycle driven by confluence of favorable government, regulatory, technology and competitive factors."

The Company also announced that its Board of Directors declared a cash dividend for the third quarter of 2020. The quarterly cash dividend of $0.09 per common share is to be paid to the Company's stockholders of record as of the close of business on November 17, 2020. The payment date will be December 1, 2020.

The Company confirmed that it will hold a conference call to discuss its third quarter results on Tuesday, November 3, 2020, at 9:30 a.m. Central Time. ADTRAN will webcast this conference call. To listen, simply visit ADTRAN's Investor Relations site at www.adtran.com/investor approximately 10 minutes prior to the start of the call, click on the event "ADTRAN releases 3rd Quarter Financial Results and Conference Call", and click on the Webcast link.

An online replay of the Company's conference call, as well as the text of the Company's conference call, will be available on the Investor Relations site approximately 24 hours following the call and will remain available for at least 12 months. For more information, visit www.investors.adtran.com or email at investor.relations@adtran.com.

At ADTRAN, we believe amazing things happen when people connect. From the cloud edge to the subscriber edge, we help communications service providers around the world manage and scale services that connect people, places and things to advance human progress. Whether rural or urban, domestic or international, telco or cable, enterprise or residential-ADTRAN solutions optimize existing technology infrastructures and create new, multi-gigabit platforms that leverage cloud economics, data analytics, machine learning and open ecosystems-the future of global networking. Find more at ADTRAN.com, LinkedIn and Twitter.

This press release contains forward-looking statements, generally identified by the use of words such as "believe," "expect," "intend," "estimate," "anticipate," "will," "may," "could" and similar expressions, which forward-looking statements reflect management's best judgment based on factors currently known. However, these statements involve risks and uncertainties, including: (i) those risks and uncertainties related to the continued spread and extent of the impact of the COVID-19 global pandemic, including the speed, depth, geographic reach and duration of the spread, which could lead to a decrease in demand for the Company's products and services, and which has disrupted, and could lead to further disruptions in, the Company's supply chain, adversely impacting the operations and financial condition of the Company and its customers; actions that have been taken and that may be taken by the Company, its customers, suppliers and counterparties in response to the pandemic, including the implementation of alternative work arrangements for employees, which may delay the timing of some orders and expected deliveries and which may impact the Company's ability to mitigate inefficiencies, delays and additional costs in the Company's product development, sales, marketing and customer service efforts; the legal, regulatory and administrative developments that occur at the federal, state and local levels and in foreign jurisdictions in response to the pandemic, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns; potential disruptions, breaches, or other incidents affecting the proper operation, availability or security of the Company's or its partners' information systems; declines in revenues due to declining customer demand and deteriorating macroeconomic conditions; potential increased expenses related to labor, raw materials, freight or other expenditures; the impact of the COVID-19 pandemic on the Company's liquidity, as well as risks associated with disruptions in the financial markets and the business of financial institutions as a result of the COVID-19 pandemic which could impact the Company from a financial perspective; (ii) those risks and uncertainties related to evolving U.S. and foreign laws and regulations regarding privacy, data protection and other matters, including uncertainty and potential additional compliance obligations arising from the Court of Justice of the European Union's recent issuance of a decision that invalidated the EU-U.S. Privacy Shield framework as a basis for transfers of personal data from the EU to the U.S.; and (iii) the other risks detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.

To provide additional transparency, we have disclosed in the table below non-GAAP operating income (loss), which has been reconciled to operating income (loss), and non-GAAP net income (loss) and non-GAAP earnings (loss) per share - basic and diluted, which have been reconciled to net income (loss) and earnings (loss) per share - basic and diluted, in each case as reported based on Generally Accepted Accounting Principles in the United States ("U.S. GAAP"). These non-GAAP financial measures exclude certain items which management believes are not reflective of the ongoing operating performance of the business. We believe this information is useful in providing period-to-period comparisons of the results of our ongoing operations. Additionally, these measures are used by management in our ongoing planning and annual budgeting processes. The presentation of non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP earnings (loss) per share - basic and diluted, when combined with the U.S. GAAP presentation of operating income (loss), net income (loss) and earnings (loss) per share - basic and diluted, is beneficial to the overall understanding of ongoing operating performance of the Company.

These non-GAAP financial measures are not prepared in accordance with, or an alternative for, U.S. GAAP and therefore should not be considered in isolation or as a substitution for analysis of our results as reported under U.S. GAAP. Additionally, our calculation of non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP earnings (loss) per share - basic and diluted, may not be comparable to similar measures calculated by other companies.?

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

September 30, December 31,

2020 2019

Assets

Cash and cash equivalents $ 71,081 $ 73,773

Restricted cash 322 -

Short-term investments 6,180 33,243

Accounts receivable, net 100,223 90,531

Other receivables 22,899 16,566

Inventory 120,260 98,305

Prepaid expenses and other current assets 8,374 7,892

Total Current Assets 329,339 320,310



Property, plant and equipment, net 64,353 68,086

Deferred tax assets, net 7,865 7,561

Goodwill 6,968 6,968

Intangibles, net 24,465 27,821

Other assets 20,409 19,883

Long-term investments 78,016 94,489

Total Assets $ 531,415 $ 545,118



Liabilities and Stockholders' Equity

Accounts payable $ 59,886 $ 44,870

Bonds payable - 24,600

Unearned revenue 13,379 11,963

Accrued expenses and other liabilities 13,173 13,876

Accrued wages and benefits 17,228 13,890

Income tax payable, net 3,346 3,512

Total Current Liabilities 107,012 112,711



Non-current unearned revenue 6,694 6,012

Pension liability 16,282 15,886

Deferred compensation liability 22,957 21,698

Other non-current liabilities 8,877 8,385

Total Liabilities 161,822 164,692



Stockholders' Equity 369,593 380,426



Total Liabilities and Stockholders' Equity $ 531,415 $ 545,118

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

(In thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Sales

Network Solutions

$

115,229

$

94,018

$

323,924

$

359,007

Services & Support

17,914

20,074

52,457

55,267

Total Sales

133,143

114,092

376,381

414,274

Cost of Sales

Network Solutions

62,795

56,444

178,492

207,353

Services & Support

11,386

11,317

33,855

34,963

Total Cost of Sales

74,181

67,761

212,347

242,316

Gross Profit

58,962

46,331

164,034

171,958

Selling, general and administrative expenses

27,205

30,912

84,624

99,663

Research and development expenses

27,223

31,835

85,794

95,546

Asset impairments

-

3,872

65

3,872

Gain on contingency

-

-

-

(1,230

)

Operating Income (Loss)

4,534

(20,288

)

(6,449

)

(25,893

)

Interest and dividend income

344

610

1,031

1,893

Interest expense

-

(128

)

(1

)

(382

)

Net investment gain (loss)

2,844

(216

)

1,819

8,195

Other income (expense), net

(1,679

)

1,616

(2,307

)

2,266

Income (Loss) Before Income Taxes

6,043

(18,406

)

(5,907

)

(13,921

)

Income tax (expense) benefit

(562

)

(27,717

)

2,171

(27,437

)

Net Income (Loss)

$

5,481

$

(46,123

)

$

(3,736

)

$

(41,358

)

Weighted average shares outstanding - basic

47,957

47,824

47,957

47,803

Weighted average shares outstanding - diluted

48,424

(1)

47,824

47,957

47,803

Earnings (loss) per common share - basic

$

0.11

$

(0.96

)

$

(0.08

)

$

(0.87

)

Earnings (loss) per common share - diluted

$

0.11

(1)

$

(0.96

)

$

(0.08

)

$

(0.87

)

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

(In thousands, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Sales

Network Solutions $ 115,229 $ 94,018 $ 323,924 $ 359,007

Services & Support 17,914 20,074 52,457 55,267

Total Sales 133,143 114,092 376,381 414,274

Cost of Sales

Network Solutions 62,795 56,444 178,492 207,353

Services & Support 11,386 11,317 33,855 34,963

Total Cost of Sales 74,181 67,761 212,347 242,316

Gross Profit 58,962 46,331 164,034 171,958

Selling, general andadministrative 27,205 30,912 84,624 99,663 expenses

Research and 27,223 31,835 85,794 95,546 development expenses

Asset impairments - 3,872 65 3,872

Gain on contingency - - - (1,230 )

Operating Income 4,534 (20,288 ) (6,449 ) (25,893 )(Loss)

Interest and dividend 344 610 1,031 1,893 income

Interest expense - (128 ) (1 ) (382 )

Net investment gain 2,844 (216 ) 1,819 8,195 (loss)

Other income (1,679 ) 1,616 (2,307 ) 2,266 (expense), net

Income (Loss) Before 6,043 (18,406 ) (5,907 ) (13,921 )Income Taxes

Income tax (expense) (562 ) (27,717 ) 2,171 (27,437 )benefit

Net Income (Loss) $ 5,481 $ (46,123 ) $ (3,736 ) $ (41,358 )



Weighted averageshares outstanding - 47,957 47,824 47,957 47,803 basic

Weighted average ^shares outstanding - 48,424 (1) 47,824 47,957 47,803 diluted



Earnings (loss) per $ 0.11 $ (0.96 ) $ (0.08 ) $ (0.87 )common share - basic

Earnings (loss) per ^common share - $ 0.11 (1) $ (0.96 ) $ (0.08 ) $ (0.87 )diluted

(1) Assumes exercise of dilutive stock options calculated under the treasury stock method.

^(1) Assumes exercise of dilutive stock options calculated under the treasurystock method.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Nine Months Ended

September 30,

2020

2019

Cash flows from operating activities:

Net loss

$

(3,736

)

$

(41,358

)

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

Depreciation and amortization

12,525

13,315

Asset impairments

65

3,872

Amortization of net premium on available-for-sale investments

90

(86

)

Net gain on long-term investments

(1,819

)

(8,195

)

Net loss on disposal of property, plant and equipment

105

58

Gain on contingency

-

(1,230

)

Gain on life insurance proceeds

-

(1,000

)

Stock-based compensation expense

5,056

5,184

Deferred income taxes

(1

)

30,421

Changes in operating assets and liabilities:

Accounts receivable, net

(9,131

)

7,603

Other receivables

(6,224

)

17,645

Inventory

(21,170

)

(5,998

)

Prepaid expenses and other assets

(672

)

(10,071

)

Accounts payable, net

14,204

(5,569

)

Accrued expenses and other liabilities

5,618

10,564

Income taxes payable

(227

)

(5,073

)

Net cash provided by (used in) operating activities

(5,317

)

10,082

Cash flows from investing activities:

Purchases of property, plant and equipment

(5,082

)

(6,008

)

Proceeds from sales and maturities of available-for-sale investments

86,145

38,561

Purchases of available-for-sale investments

(42,641

)

(37,223

)

Acquisition of note receivable

(523

)

-

Life insurance proceeds received

-

1,000

Acquisition of business

-

13

Net cash provided by (used in) investing activities

37,899

(3,657

)

Cash flows from financing activities:

Dividend payments

(12,993

)

(12,908

)

Repayment of bonds payable

(24,600

)

-

Proceeds from stock option exercises

-

526

Purchases of treasury stock

-

(184

)

Net cash used in financing activities

(37,593

)

(12,566

)

Net decrease in cash and cash equivalents

(5,011

)

(6,141

)

Effect of exchange rate changes

2,641

(2,956

)

Cash, cash equivalents and restricted cash, beginning of period

73,773

105,504

Cash, cash equivalents and restricted cash, end of period

$

71,403

$

96,407

Supplemental disclosure of non-cash investing activities:

Purchases of property, plant and equipment included in accounts payable

$

442

$

135

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Nine Months Ended

September 30,

2020 2019

Cash flows from operating activities:

Net loss $ (3,736 ) $ (41,358 )

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

Depreciation and amortization 12,525 13,315

Asset impairments 65 3,872

Amortization of net premium on available-for-sale 90 (86 )investments

Net gain on long-term investments (1,819 ) (8,195 )

Net loss on disposal of property, plant and equipment 105 58

Gain on contingency - (1,230 )

Gain on life insurance proceeds - (1,000 )

Stock-based compensation expense 5,056 5,184

Deferred income taxes (1 ) 30,421

Changes in operating assets and liabilities:

Accounts receivable, net (9,131 ) 7,603

Other receivables (6,224 ) 17,645

Inventory (21,170 ) (5,998 )

Prepaid expenses and other assets (672 ) (10,071 )

Accounts payable, net 14,204 (5,569 )

Accrued expenses and other liabilities 5,618 10,564

Income taxes payable (227 ) (5,073 )

Net cash provided by (used in) operating activities (5,317 ) 10,082



Cash flows from investing activities:

Purchases of property, plant and equipment (5,082 ) (6,008 )

Proceeds from sales and maturities of 86,145 38,561 available-for-sale investments

Purchases of available-for-sale investments (42,641 ) (37,223 )

Acquisition of note receivable (523 ) -

Life insurance proceeds received - 1,000

Acquisition of business - 13

Net cash provided by (used in) investing activities 37,899 (3,657 )



Cash flows from financing activities:

Dividend payments (12,993 ) (12,908 )

Repayment of bonds payable (24,600 ) -

Proceeds from stock option exercises - 526

Purchases of treasury stock - (184 )

Net cash used in financing activities (37,593 ) (12,566 )



Net decrease in cash and cash equivalents (5,011 ) (6,141 )

Effect of exchange rate changes 2,641 (2,956 )

Cash, cash equivalents and restricted cash, beginning 73,773 105,504 of period



Cash, cash equivalents and restricted cash, end of $ 71,403 $ 96,407 period



Supplemental disclosure of non-cash investing activities:

Purchases of property, plant and equipment included $ 442 $ 135 in accounts payable



Supplemental Information

Reconciliation of Operating Income (Loss) to Non-GAAP Operating Income (Loss)

(Unaudited)

Three Months Ended

September 30,

Nine Months ended

September 30,

2020

2019

2020

2019

Operating Income (Loss)

$

4,534

$

(20,288

)

$

(6,449

)

$

(25,893

)

Acquisition related expenses, amortizations and adjustments

1,042

(1)

1,343

(6)

3,499

(10)

4,346

(13)

Stock-based compensation expense

1,610

(2)

1,871

(7)

5,056

(11)

5,184

(14)

Restructuring expenses

1,903

(3)

1,195

(8)

3,648

(12)

4,658

(15)

Deferred compensation adjustments

791

(4)

(576

)

(4)

765

(4)

2,231

(4)

Asset impairments

-

3,872

(9)

65

(9)

3,872

(9)

Gain on contingency

-

-

-

(1,230

)

(16)

Settlement income

(28

)

(5)

-

(28

)

(5)

(746

)

(5)

Non-GAAP Operating Income (Loss)

$

9,852

$

(12,583

)

$

6,556

$

(7,578

)

Supplemental Information

Reconciliation of Operating Income (Loss) to Non-GAAP Operating Income (Loss)

(Unaudited)

Three Months Ended Nine Months ended September 30, September 30,

2020 2019 2020 2019

Operating $ 4,534 $ (20,288 ) $ (6,449 ) $ (25,893 ) Income (Loss)

Acquisitionrelatedexpenses, 1,042 ^ 1,343 ^ 3,499 ^ 4,346 ^amortizations (1) (6) (10) (13)andadjustments

Stock-based ^ ^ ^ ^compensation 1,610 (2) 1,871 (7) 5,056 (11) 5,184 (14)expense

Restructuring 1,903 ^ 1,195 ^ 3,648 ^ 4,658 ^expenses (3) (8) (12) (15)

Deferred ^ ^compensation 791 (4) (576 ) (4) 765 ^(4) 2,231 ^(4)adjustments

Asset - 3,872 ^ 65 ^(9) 3,872 ^(9)impairments (9)

Gain on - - - (1,230 ) ^contingency (16)

Settlement (28 ) ^ - (28 ) ^(5) (746 ) ^(5)income (5)

Non-GAAPOperating $ 9,852 $ (12,583 ) $ 6,556 $ (7,578 ) Income (Loss)

(1) $0.6 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of income.

(2) $0.1 million is included in total cost of sales, $0.9 million is included in selling, general and administrative expenses and $0.6 million is included in research and development expenses on the condensed consolidated statements of income.

(3) $0.2 million is included in total cost of sales, $1.1 million is included in selling, general and administrative expenses and $0.6 million is included in research and development expenses on the condensed consolidated statements of income.

(4) Includes non-cash change in fair value of equity investments held in the ADTRAN, Inc. Deferred Compensation Program for Employees per ASU 2016-01, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of income.

(5) Includes income related to certain freight forwarder claim settlements, all of which is included in total cost of sales on the condensed consolidated statements of income.

(6) $0.3 million is included in total cost of sales, $0.5 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of income.

(7) $0.1 million is included in total cost of sales, $1.1 million is included in selling, general and administrative expenses and $0.7 million is included in research and development expenses on the condensed consolidated statements of income.

(8) $0.1 million is included in total cost of sales, $0.5 million is included in selling, general and administrative expenses and $0.6 million is included in research and development expenses on the condensed consolidated statements of income.

(9) Includes abandonment of certain information technology projects.

(10) $0.3 million is included in total cost of sales, $1.7 million is included in selling, general and administrative expenses and $1.5 million is included in research and development expenses on the condensed consolidated statements of income.

(11) $0.3 million is included in total cost of sales, $3.0 million is included in selling, general and administrative expenses and $1.8 million is included in research and development expenses on the condensed consolidated statements of income.

(12) $0.3 million is included in total cost of sales, $1.6 million is included in selling, general and administrative expenses and $1.7 million is included in research and development expenses on the condensed consolidated statements of income.

(13) $1.3 million is included in total cost of sales, $1.6 million is included in selling, general and administrative expenses and $1.4 million is included in research and development expenses on the condensed consolidated statements of income.

(14) $0.3 million is included in total cost of sales, $2.9 million is included in selling, general and administrative expenses and $2.0 million is included in research and development expenses on the condensed consolidated statements of income.

(15) $0.8 million is included in total cost of sales, $2.1 million is included in selling, general and administrative expenses and $1.8 million is included in research and development expenses on the condensed consolidated statements of income.

(16) Includes gain related to unearned contingent liabilities recognized upon the acquisition of a business in November 2018.

^(1) $0.6 million is included in selling, general and administrative expensesand $0.5 million is included in research and development expenses on thecondensed consolidated statements of income.

^(2) $0.1 million is included in total cost of sales, $0.9 million is includedin selling, general and administrative expenses and $0.6 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(3) $0.2 million is included in total cost of sales, $1.1 million is includedin selling, general and administrative expenses and $0.6 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(4) Includes non-cash change in fair value of equity investments held in theADTRAN, Inc. Deferred Compensation Program for Employees per ASU 2016-01, allof which is included in selling, general and administrative expenses on thecondensed consolidated statement of income.

^(5) Includes income related to certain freight forwarder claim settlements,all of which is included in total cost of sales on the condensed consolidatedstatements of income.

^(6) $0.3 million is included in total cost of sales, $0.5 million is includedin selling, general and administrative expenses and $0.5 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(7) $0.1 million is included in total cost of sales, $1.1 million is includedin selling, general and administrative expenses and $0.7 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(8) $0.1 million is included in total cost of sales, $0.5 million is includedin selling, general and administrative expenses and $0.6 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(9) Includes abandonment of certain information technology projects.

^(10) $0.3 million is included in total cost of sales, $1.7 million is includedin selling, general and administrative expenses and $1.5 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(11) $0.3 million is included in total cost of sales, $3.0 million is includedin selling, general and administrative expenses and $1.8 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(12) $0.3 million is included in total cost of sales, $1.6 million is includedin selling, general and administrative expenses and $1.7 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(13) $1.3 million is included in total cost of sales, $1.6 million is includedin selling, general and administrative expenses and $1.4 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(14) $0.3 million is included in total cost of sales, $2.9 million is includedin selling, general and administrative expenses and $2.0 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(15) $0.8 million is included in total cost of sales, $2.1 million is includedin selling, general and administrative expenses and $1.8 million is included inresearch and development expenses on the condensed consolidated statements ofincome.

^(16) Includes gain related to unearned contingent liabilities recognized uponthe acquisition of a business in November 2018.

Supplemental Information

Reconciliation of Net Income (Loss) and Earnings (Loss) per Common Share - Basic and Diluted to Non-GAAP

Net Income (Loss) and Non-GAAP Earnings (Loss) per Common Share - Basic and Diluted

(Unaudited)

Three Months Ended

September 30,

Nine Months ended

September 30,

2020

2019

2020

2019

Net Income (Loss)

$

5,481

$

(46,123

)

$

(3,736

)

$

(41,358

)

Acquisition related expenses, amortizations and adjustments

1,042

1,343

3,499

4,346

Stock-based compensation expense

1,610

1,871

5,056

5,184

Restructuring expenses

1,903

1,195

3,648

4,658

Pension expense (1)

248

198

720

600

Deferred compensation adjustments (2)

(90

)

-

(1,432

)

(3)

-

Valuation allowance

(956

)

37,055

2,622

37,055

Asset impairments

-

3,872

65

3,872

Gain on contingency

-

-

-

(1,230

)

Settlement income

(28

)

-

(28

)

(746

)

Tax effect of adjustments to net income (loss)

(1,279

)

(2,186

)

(3,089

)

(4,424

)

Non-GAAP Net Income (Loss)

$

7,931

$

(2,775

)

$

7,325

$

7,957

Weighted average shares outstanding - basic

47,957

47,824

47,957

47,803

Weighted average shares outstanding - diluted

48,424

47,824

47,957

47,803

Earnings (loss) per common share - basic

$

0.11

$

(0.96

)

$

(0.08

)

$

(0.87

)

Earnings (loss) per common share - diluted

$

0.11

$

(0.96

)

$

(0.08

)

$

(0.87

)

Non-GAAP earnings (loss) per common share - basic

$

0.17

$

(0.06

)

$

0.15

$

0.17

Non-GAAP earnings (loss) per common share - diluted

$

0.16

$

(0.06

)

$

0.15

$

0.17

Supplemental Information

Reconciliation of Net Income (Loss) and Earnings (Loss) per Common Share -Basic and Diluted to Non-GAAP

Net Income (Loss) and Non-GAAP Earnings (Loss) per Common Share - Basic andDiluted

(Unaudited)

Three Months Ended Nine Months ended September 30, September 30,

2020 2019 2020 2019

Net Income (Loss) $ 5,481 $ (46,123 ) $ (3,736 ) $ (41,358 )

Acquisition relatedexpenses, 1,042 1,343 3,499 4,346 amortizations andadjustments

Stock-based 1,610 1,871 5,056 5,184 compensation expense

Restructuring 1,903 1,195 3,648 4,658 expenses

Pension expense ^(1) 248 198 720 600

Deferred compensation (90 ) - (1,432 ) ^ - adjustments ^(2) (3)

Valuation allowance (956 ) 37,055 2,622 37,055

Asset impairments - 3,872 65 3,872

Gain on contingency - - - (1,230 )

Settlement income (28 ) - (28 ) (746 )

Tax effect ofadjustments to net (1,279 ) (2,186 ) (3,089 ) (4,424 )income (loss)

Non-GAAP Net Income $ 7,931 $ (2,775 ) $ 7,325 $ 7,957 (Loss)



Weighted averageshares outstanding - 47,957 47,824 47,957 47,803 basic

Weighted averageshares outstanding - 48,424 47,824 47,957 47,803 diluted



Earnings (loss) per $ 0.11 $ (0.96 ) $ (0.08 ) $ (0.87 )common share - basic

Earnings (loss) percommon share - $ 0.11 $ (0.96 ) $ (0.08 ) $ (0.87 )diluted



Non-GAAP earnings(loss) per common $ 0.17 $ (0.06 ) $ 0.15 $ 0.17 share - basic

Non-GAAP earnings(loss) per common $ 0.16 $ (0.06 ) $ 0.15 $ 0.17 share - diluted

(1) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.

(2) Includes non-cash change in fair value of equity investments held in deferred compensation plans offered to certain employees.

(3) Includes net investment gain of $1.5 million related to the out of period remeasurement to historical cost basis of certain long-term investments held in the Company's stock as part of one of these deferred compensation plans.

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