ADTRAN INC. Value Stock - Dividend - Research Selection

ADTRAN, Inc. (ADTRAN) is a leading global provider of networking and communications equipment. Our solutions enable voice, data, video and Internet communications across a variety of network infrastructures. These solutions are deployed by many of the United States’ and the world’s largest communications service providers (CSPs), distributed enterprises and small and medium-sized businesses, public and private enterprises, and millions of individual users worldwide.

We were incorporated under the laws of Delaware in November 1985, and commenced operations in January 1986. We are headquartered in Cummings Research Park in Huntsville, Alabama. The mailing address at our headquarters is 901 Explorer Boulevard, Huntsville, Alabama, 35806. The telephone number at this location is (256) 963-8000.

Functional Organizational Structure

We realigned our organizational structure in 2015 to better match our market opportunities, technological development initiatives and improve efficiencies. As a result, our chief operating decision maker requested changes in the information that he regularly reviews for purposes of allocating resources and assessing the Company’s performance. Beginning with the quarter ended March 31, 2016, we now report our financial performance based on two segments – Network Solutions and Services & Support.

Network Solutions

Network Solutions includes software and hardware products that enable CSPs and enterprise customers to realize a fully connected world. CSPs are now being challenged to deliver Gigabit-enabled residential services, widely available high-bandwidth cloud connectivity services for enterprise customers, and scalable Ethernet and optical networking for mobile backhaul and data center connectivity. These needs are driving CSPs to transition their networks to a fiber-rich, cloud-controlled and software defined future state for large-scale converged service delivery.

ADTRAN is focused on being a top global supplier of Access infrastructure and related value-added solutions from the Cloud Edge to the Subscriber Edge. ADTRAN offers a broad portfolio of flexible hardware and software network solutions that enable CSPs to meet today’s service demands, while enabling them to transition to the fully converged, scalable, highly automated, cloud-controlled voice, data, Internet and video network of the future.

Our products and services provide solutions supporting fiber- and copper-based infrastructures and a growing number of wireless and coax-based solutions, lowering the overall cost to deploy advanced services across a wide range of applications. We are accelerating the industry’s transition to open, programmable, scalable networks. Complementing these solutions is the ADTRAN MosaicTM Software-Defined Access (SD-Access) architecture, which combines modern Web-scale technologies with open source platforms to facilitate rapid innovation in multi-technology, multi-vendor environments. The Mosaic cloud platform and Mosaic OS, combined with programmable network elements, provide operators with a highly agile, open-services architecture.

Services & Support

To complement our Network Solutions portfolio and to enable our customers to more quickly and cost-effectively expand their networks, we provide a full-range of network implementation, maintenance and managed services. We ensure that we are responsive to customers who deploy our networking and infrastructure solutions by offering a variety of services and support options. Our network implementation service offerings include engineering, site preparation, cabinet placement, installation, configuration, turn-up and test, training and project management services.

We also offer a complete portfolio of professional services within our ProServices® offering. ADTRAN ProServices is a comprehensive and flexible service program designed to offer complete networking lifecycle support. The ProServices portfolio consists of three distinct service offerings: ProStart® (Planning and Implementation), ProCare® (Maintenance and Support), and ProCloud® (Cloud-based Managed Services). Our maintenance services are specifically designed to protect customers' networks from unnecessary downtime through services such as managed spares, extended warranty, and remote or on-site technical support beyond our standard warranty coverage. These programs, which are available to all of our customers, guarantee priority access to technical support engineers and offer five different maintenance programs ranging from five days-a-week, eight hours-a-day and next business day equipment replacement to seven days-a-week, 24 hours-a-day and equipment replacement within four hours of notification.

ProCloud, a full suite of cloud-based managed services, offers a managed, business-class networking infrastructure supporting wireless LAN and other networking needs. We also offer the option for ADTRAN to provide monitoring and management of the Wi-Fi network, enabling customers to augment their in-house IT resources.

These services have enabled us to develop a true managed service offering with a channel of managed service providers (MSPs) that resell our services to their clients. Many of our former value-added reseller (VAR) partners are transitioning to becoming MSPs, using our ProCloud services to build a successful recurring revenue model with exceptional flexibility.

Access & Aggregation solutions are used by CSPs to connect their network infrastructure to their subscribers. This category includes software and hardware-based products and services that aggregate and/or originate access technologies. The portfolio of ADTRAN solutions within this category includes a wide array of modular or fixed physical form factors designed to deliver the best technology and economic fit based on the target subscriber density and environmental conditions.

The Access & Aggregation category includes product and service families such as:

• Total Access® 5000 Series Fiber to the Premises (FTTP) and Fiber to the Node (FTTN) Multi-Service Access Nodes (MSAN)

• hiX 5600 Series fiber aggregation and FTTN MSAN

• Fiber to the Distribution Point (FTTdp) Optical Network Units (ONU)

• GPON, EPON and 10G PON Optical Line Terminals (OLT)

• SDX Fiber Access network elements

• Optical Networking Edge (ONE) aggregation

• IP Digital Subscriber Line Access Multiplexers (DSLAMs)

• Cabinet and Outside-Plant (OSP) enclosures and services

• Network Management and Cloud-based software platforms and applications

• Pluggable optical transceivers (i.e., SFP, SFP+, XFP, QSFP), cables and other miscellaneous materials

• Planning, engineering, program management, maintenance, installation and commissioning services to implement customer network solutions

• Other products and services that are generally applicable to Access & Aggregation