HUNTSVILLE, Ala. -- ADTRAN, Inc. (NASDAQ:ADTN) reported results for the second quarter ended June 30, 2005. Sales were $118,873,000 for the quarter compared to $104,577,000 for the first quarter of 2005 and $120,601,000 for the second quarter of 2004.

   Net income was $20,719,000 for the quarter compared to $15,220,000 for the first quarter of 2005 and $21,398,000 for the second quarter of 2004.Earnings per share, assuming dilution, were $0.27 for the quarter compared to $0.20 for the first quarter of 2005 and $0.26 for the second quarter of 2004.

   Gross margin improved to 58.5% for the quarter compared to 57.5% for the second quarter of 2004. The increase in gross margin is principally the result of continuing improvements in manufacturing efficiencies and product cost reductions.

   Net cash provided by operating activities totaled $22 million for the quarter. Unrestricted cash and marketable securities totaled $308 million, at June 30, 2005.

   ADTRAN Chairman and Chief Executive Officer Mark Smith stated, "Revenues for the quarter were stronger than anticipated. Our results benefited from robust sequential revenue growth in DSLAM, optical access and NetVanta product categories accompanied by strength in HDSL revenues. We believe these results reflect continuing momentum and share gains in the markets we serve."

   The Company also announced that its Board of Directors declared an increased cash dividend for the second quarter of 2005. The quarterly cash dividend is$0.09 per common share to be paid to holders of record at the close of business on August 5, 2005. The ex-dividend date is August 3, 2005 and the payment date is August 19, 2005.

   Mark Smith, the Company's CEO since its founding, announced that he will retire as CEO effective on his 65th birthday of September 10, 2005. Mr.Smith will remain as the non-executive Chairman of the Board. Howard Thrailkill, the Company's President, COO and Director will also retire from each of these positions on September 10, 2005. Mr. Thrailkill has been with the Company and served as its COO for 13 years and also its President and Director for the past 10 years. The Company also announced that its Board of Directors has elected Tom Stanton as Chief Executive Officer and Director and Danny Windham as President, Chief Operating Officer and Secretary, both effective September 10, 2005. Mark Smith stated, "The elections of Tom Stanton and Danny Windham to their respective positions clearly demonstrate our Board's attention to perpetuating the unique and long standing culture at ADTRAN. Both individuals have served many years at ADTRAN. They bring immense levels of experience and respect as seasoned businessmen, entrepreneurs and technologists and we are very excited about ADTRAN's continuing growth opportunities under their leadership." Mark Smith also stated, "Our Board and employees are grateful to Howard Thrailkill for his service at ADTRAN. Howard helped to lead our Company through many years of growth and we wish him well."

Adtran Inc.