<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 30, 1998
Commission File No. 0-24612
ADTRAN, INC. 401(k) EMPLOYEE SAVINGS PLAN
ADTRAN, Inc.
(Exact name of Registrant as specified in its charter)
Delaware (63-0918200)
(State of incorporation) (I.R.S. Employer
Identification Number)
901 Explorer Boulevard, Huntsville, Alabama 35806-2807
(Address of principal executive offices, including zip code)
(256) 963-8000
(Registrant's telephone number, including area code)
Required Information: The Plan is subject to the Employee Retirement Income
Security Act of 1974 ("ERISA"). Therefore, in lieu of the requirements of Items
1-3 of Form 11-K, the financial statements and schedules of the Plan for the two
fiscal years ended December 31, 1998 and 1997, which have been prepared in
accordance with the financial reporting requirements of ERISA, and the consent
of Coopers and Lybrand, are filed as a part of this annual report:
Signatures: Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the Plan) have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
ADTRAN, Inc. 401(k) EMPLOYEE SAVINGS PLAN
/s/ John R. Cooper July 01, 1998
- ------------------ -------------
John R. Cooper Date
Vice President - Administration and Finance
and Chief Financial Officer
<PAGE>
ADTRAN, Inc.
401(k) Employee Savings Plan
Financial Statements and Supplemental Schedules
For The Years Ended December 31, 1998 and 1997
<PAGE>
ADTRAN, Inc. 401(k) Employee Savings Plan
Table of Contents
<TABLE>
<CAPTION>
Pages
<S> <C>
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997 2
Statement of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 1998 3
Notes to Financial Statements 4 - 13
Supplemental Schedules:
*Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1998 14
*Item 27d - Schedules of Reportable Transactions
for the year ended December 31, 1998 15 - 16
</TABLE>
* Refers to item number in Form 5500 (Annual Return/Report of Employee Benefit
Plan) for plan year ended December 31, 1998.
<PAGE>
Report of Independent Accountants
To the Board of Directors
ADTRAN, Inc. 401(k) Employee Savings Plan
Huntsville, Alabama
We have audited the accompanying statements of net assets available for plan
benefits of ADTRAN, Inc. 401(k) Employee Savings Plan (the Plan) as of December
31, 1998 and 1997, and the related statement of changes in net assets available
for plan benefits for the year ended December 31, 1998. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1998 and 1997, and the changes in net assets available for plan
benefits for the year ended December 31, 1998 in conformity with generally
accepted accounting principles.
Our audit of the Plan's financial statements as of and for the year ended
December 31, 1998 was performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of the
Plan are presented for the purpose of additional analysis and are not a required
part of the basic financial statements, but are supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
June 28, 1999
1
<PAGE>
ADTRAN, Inc. 401(k) Employee Savings Plan
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Investments $19,684,006 $14,486,481
Contributions receivable:
Employer 13,068 33,775
Employee 36,471 99,966
----------- -----------
Net assets available for plan benefits $19,733,545 $14,620,222
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
ADTRAN, Inc. 401(k) Employee Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 1998
<TABLE>
<S> <C>
Investment income:
Dividends and interest $ 241,858
Net appreciation in fair value of investments 1,568,869
-----------
Total investment income 1,810,727
-----------
Contributions:
Employee contributions 2,701,620
Rollover proceeds 665,407
Employer contributions 906,798
-----------
Total contributions 4,273,825
-----------
Total additions 6,084,552
-----------
Benefits paid 963,204
Administrative expenses 8,025
-----------
Total deductions 971,229
-----------
Net increase 5,113,323
Net assets available for plan benefits:
Beginning of year 14,620,222
-----------
End of year $19,733,545
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ADTRAN, Inc. 401(k) Employee Savings Plan
Notes to Financial Statements
1. Description of Plan
The following brief description of the ADTRAN, Inc. 401(k) Employee Savings
Plan (the Plan) is provided for general information only. Participants
should refer to the plan agreement for more complete information.
General - ADTRAN, Inc. (the Company and the Employer) formed the Plan
effective January 1, 1990 to provide certain retirement, death, and
disability benefits for its employees. The Plan is a defined contribution
plan subject to the provisions set forth in the Employee Retirement Income
Security Act of 1974 (ERISA) and is funded by discretionary employee and
employer contributions. The plan assets are held by The Mutual Life
Insurance Company of New York (the Custodian) which executes investment
transactions, receives the plan contributions, credits participants'
individual accounts, and pays benefits to participants and their
beneficiaries in accordance with the provisions of the Plan. The Plan was
amended, effective July 1, 1997, to allow the Company's common stock to be
purchased by the Plan. In conjunction with this amendment, the Company
filed a Form S-8 on June 30, 1997 registering 70,103 shares of the
Company's common stock. The shares are available for purchase by the Plan.
During 1998, the board of directors of the Employer elected to amend and
restate the Plan in order to terminate the relationship between the
Custodian and the Plan. As of July 1, 1998, Diversified Investment Advisors
held the plan assets, executed investment transactions, received the plan
contributions, and performed other custodial duties.
Eligibility - An employee is eligible to participate in the Plan following
the completion of six months of service and attainment of age twenty-one.
Contributions - Employees participating in the Plan elect to have 1% to 16%
of their salaries deferred and contributed to the Plan. For each employee
who participated in the Plan during 1998, the Company made matching
contributions equal to 50% of the first 5% of salary deferred by the
participants. At its discretion, the Company may contribute to the Plan a
discretionary profit-sharing contribution, which shall be in addition to
the company matching contribution. No discretionary contributions were made
in 1998.
Vesting - Employees are always 100% vested in their individual accounts.
Retirement Date - The normal retirement date is the first day of the
calendar month following the date a participant reaches age 62. Early
retirement is permitted after a participant reaches age 59-1/2.
Benefits - Benefits commence upon one of several dates: normal retirement,
early retirement, date of disability, pre-retirement death, and upon
termination other than described above.
4
<PAGE>
Notes to Financial Statements, Continued
Benefits are distributed under one of two options:
a. By lump sum payment, or
b. By one of various conventional annuity options.
Other - The Plan allows for participant hardship withdrawals at any time if
certain conditions are met.
Plan Termination - While it is the intention of the Company to permanently
continue the Plan, the Company has the right to terminate the Plan at any
time upon written notice to the Savings Committee and to the Custodian.
Participant Loans - Participants may borrow from their fund accounts a
minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of
their account balance. Loan transactions are treated as transfers between
the investment fund and the participant loan fund. Loan terms range from
one to five years unless such loan is used to acquire a principal
residence. The loans are collateralized by the balance in the participant's
account and bear interest at a rate commensurate with local prevailing
rates as determined quarterly by the plan administrator. Interest rates
range from 7% to 10%.
2. Summary of Significant Accounting Policies
The following is a summary of accounting policies utilized in the financial
statements which were prepared in accordance with generally accepted
accounting principles.
Method of Accounting - The accounting records of the Plan are maintained on
the accrual basis.
Investments - Investments in pooled separate accounts and unallocated
contracts with insurance companies are stated at contract value as
determined by the Custodian. Market value of equity securities which are
traded on a national exchange are valued at the last reported sales price
on the last business day of the Plan year. Purchases and sales of
investments are reflected as of the trade date. Dividend and interest
income is recorded when earned.
The Plan presents, in the statement of changes in net assets available for
plan benefits, the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
Contributions - Contributions from the Employer are accrued based on
amounts declared by the Company's Savings Committee. Contributions from
employees are recorded in the period in which the Company makes the
deductions from the participants' payroll.
Risks and Uncertainties - The Plan provides for various investment options
in any combination of stocks, bonds, fixed income securities, and other
investment securities. Investment securities are exposed to various risks,
such as interest rate, market, and credit. Due to the level of risk
associated with certain investment securities and the level of uncertainty
5
<PAGE>
Notes to Financial Statements, Continued
related to changes in the value of investment securities, it is at least
reasonably possible that changes in risks in the near term would materially
affect participants' account balances and the amounts reported in the
statement of net assets available for plan benefits and the statement of
changes in net assets available for plan benefits.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
dates of the financial statements and the reported amounts of additions and
deductions during the reporting periods. Actual results could differ from
those estimates.
3. Investment Programs
Each participant directs how contributions made by the participant and by
the Company on his/her behalf are to be invested among the investment
options available under the Plan. The following options were available at
December 31, 1998 and 1997:
Stable Fund - This fund is invested primarily in bonds and mortgages
and other long-term securities. Contributions to this fund will earn a
fixed rate of interest that is determined by the Custodian (6.0% for
contributions received between January 1, 1998 and December 31, 1998)
and may be changed within limits stated in the contract.
Money Market Fund - This fund is invested primarily in securities that
mature in one year or less without any guarantee of performance.
Equity Income Fund - This fund is invested primarily in common stock
which emphasizes relatively high current yields and capital
appreciation.
Growth and Income Fund - This fund is invested in a diversified
portfolio of common stocks with potential for above average growth in
earnings and dividends. Current income is a secondary objective.
Special Equity Fund - This fund is primarily invested in a diversified
portfolio of common stock issued by small to medium sized market
capitalization companies. The objective of this fund is to seek a high
level of capital appreciation.
Intermediate Government Bond Fund - The objective of this fund is to
seek high current income over the intermediate term, consistent with
preservation of capital, through investment in highly-rated debt
securities.
Balanced Fund - This fund is invested in stocks, bonds, and cash which
seek to offer diversification and reduced risk.
Government/Corporate Bond Fund - This fund is primarily invested in
U.S. Government, investment grade corporate, and mortgage-backed
securities with an average maturity of five to fifteen years.
6
<PAGE>
Notes to Financial Statements, Continued
Short Horizon Strategic Allocation Fund (SAF) - This fund is invested
primarily in fixed income securities. The investment objective is to
emphasize consistent returns and the preservation of capital while
outperforming Lehman Brothers Government/Corporate index.
Intermediate Horizon Strategic Allocation Fund (SAF) - This fund is
invested primarily in fixed income and equity securities. The
investment objective is to emphasize capital appreciation in the
equity market and stability in the fixed income market while
outperforming an investment mix of 50% S&P 500 and 50% Lehman Brothers
Government/Corporate Indices.
Intermediate/Long Horizon Strategic Allocation Fund (SAF) -This fund
is invested primarily in equity securities. The investment objective
is to emphasize greater long-term capital appreciation while
outperforming the S&P 500.
Government Fixed Fund - This fund is primarily invested in U.S.
Government obligations. Contributions to this fund will earn a fixed
rate of interest that is determined by the Custodian (5.25% for
contributions received between January 1, 1998 and December 31, 1998)
and may change within the limits stated in the contract.
Stock Index Fund - This fund seeks high long-term return by matching
the returns and volatility of the S&P 500 Equity Index. The Fund
emphasizes low cost investing through increased portfolio liquidity.
ADTRAN, Inc. Stock Fund - This fund primarily invests in ADTRAN, Inc.
common stock. The remaining portion of the fund is invested in money
market funds to allow for the payment of miscellaneous expenses
related to common stock transactions.
7
<PAGE>
Notes to Financial Statements, Continued
4. Investments
The Plan's investments, other than participant loans and the ADTRAN stock
fund, are in unallocated contracts or pooled separate accounts sponsored by
the Custodian. Investments as of December 31, 1998 and 1997 and investment
information for the year ended December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Contract Value Unit Value
at Units at at
December 31, December 31, December 31,
Description 1998 1998 1998
----------- -------------- ------------ ------------
<S> <C> <C> <C>
Unallocated contracts:
Stable fund $ 2,510,739
Pooled separate accounts:
Money market fund 366,562 14,082 $ 26
Equity income fund 2,757,748 33,591 $ 82
Growth and income fund 3,122,701 51,636 $ 60
Special equity fund 3,493,696 59,066 $ 59
Intermediate government bond fund 623,948 30,010 $ 21
Balanced fund 2,369,256 85,643 $ 28
Government/Corporate bond fund 137,543 7,538 $ 18
Short horizon SAF fund 76,207 5,088 $ 15
Intermediate horizon SAF fund 751,679 39,103 $ 19
Inter/Long horizon SAF fund 1,327,303 55,548 $ 24
Government fixed fund 783,243
Stock index fund 261,480 8,993 $ 29
ADTRAN stock fund 178,173 25,192 $ 7
Participant loans 923,728
--------------
Total investments $ 19,684,006
==============
</TABLE>
<TABLE>
<CAPTION>
Contract Value Unit Value
at Units at at
December 31, December 31, December 31,
Description 1997 1997 1997
----------- -------------- ------------ ------------
<S> <C> <C> <C>
Unallocated contracts:
Stable fund $ 2,057,596
Pooled separate accounts:
Money market fund 272,050 10,964.7 $ 25
Equity income fund 2,096,690 28,716.5 $ 73
Growth and income fund 1,675,383 37,283.2 $ 45
Special equity fund 2,823,717 49,178.3 $ 52
Intermediate government bond fund 364,010 18,638.4 $ 20
Balanced fund 1,930,278 77,999.2 $ 25
Short horizon SAF fund 47,958 3,399.3 $ 14
Intermediate horizon SAF fund 597,625 34,948.6 $ 17
Inter/Long horizon SAF fund 964,212 46,165.5 $ 21
ADTRAN stock fund 104,462
Government fixed fund 710,465
Participant loans 842,035
--------------
Total Investments $ 14,488,481
==============
</TABLE>
8
<PAGE>
Notes to Financial Statements, Continued
<TABLE>
<CAPTION>
1998
<S> <C>
Interest and dividend income $ 241,858
==========
Net appreciation in fair value of investments $1,568,869
==========
</TABLE>
The following is a summary of assets held in excess of 5% of the Plan's net
assets available for plan benefits at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Stable fund $2,510,739 $2,057,596
Equity Income fund $2,757,748 $2,096,690
Growth and Income fund $3,122,701 $1,675,383
Special Equity fund $3,493,696 $2,823,717
Balanced fund $2,369,256 $1,930,278
SAF Aggressive $1,327,303 $ 964,212
Participant loans $ 923,728 $ 842,035
</TABLE>
The Plan's investments (including bought and sold, as well as held, during the
year) appreciated in value by $1,568,869 during the year ended December 31,
1998, as follows:
<TABLE>
<S> <C>
Pooled separate accounts $1,542,671
ADTRAN stock fund 26,198
----------
$1,568,869
==========
</TABLE>
9
<PAGE>
Notes to Financial Statements, Continued
5. Allocation of Net Assets Available for Plan Benefits and Changes in Net
Assets Available for Plan Benefits
The allocation of net assets available for plan benefits and changes in net
assets available for plan benefits to the Plan's separate investment
programs as of December 31, 1998 and 1997 and for the year ended December
31, 1998 is as follows:
<TABLE>
<CAPTION>
Growth Intermediate Government/
Money Equity and Special Government Corporate
Stable Market Income Income Equity Bond Balanced Bond
1998 Fund Fund Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments $2,510,739 $ 366,562 $2,757,748 $3,122,701 $3,493,696 $ 623,948 $2,369,256 $ 137,543
Contributions receivable:
Employer 1,731 256 1,924 2,179 2,438 435 1,653 96
Employee 4,832 714 5,370 6,080 6,802 1,215 4,613 268
Net assets
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
available for
plan benefits $2,517,302 $ 367,532 $2,765,042 $3,130,960 $3,502,936 $ 625,598 $2,375,522 $ 137,907
========== ========== ========== ========== ========== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Short Intermediate Inter/Long
Horizon Horizon Horizon ADTRAN Stock Government
SAF SAF SAF Stock Index Fixed Participant
1998 Fund Fund Fund Fund Fund Fund Loans Total
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments $ 76,207 $ 751,679 $1,327,303 $ 178,173 $ 261,480 $ 783,243 $ 923,728 $19,684,006
Contributions receivable:
Employer 53 524 927 124 182 546 0 13,068
Employee 148 1,464 2,584 347 509 1,525 0 36,471
Net assets
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
available for
plan benefits $ 76,408 $ 753,667 $1,330,814 $ 178,644 $ 262,171 $ 785,314 $ 923,728 $19,733,545
========== ========== ========== ========== ========== ========== ========== ===========
</TABLE>
10
<PAGE>
Notes to Financial Statements, Continued
<TABLE>
<CAPTION>
Growth
Money Equity and Special
Stable Market Income Income Equity
1997 Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investments $ 2,057,596 $ 272,050 $ 2,096,690 $ 1,675,383 $ 2,823,717
Contributions receivable:
Employer 5,045 674 5,199 4,154 7,001
Employee 14,933 1,996 15,387 12,295 20,723
----------- ----------- ----------- ----------- -----------
Net assets
available for
plan benefits $ 2,077,574 $ 274,720 $ 2,117,276 $ 1,691,832 $ 2,851,441
=========== =========== =========== =========== ===========
<CAPTION>
Intermediate
Government
Bond Balanced SAF SAF SAF
Fund Fund Conservative Moderate Aggressive
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Investments $ 364,010 $ 1,930,278 $ 47,958 $ 597,625 $ 964,212
Contributions receivable:
Employer 903 4,786 119 1,482 2,391
Employee 2,671 14,166 352 4,386 7,076
----------- ----------- ------------ ----------- -----------
Net assets
available for
plan benefits $ 367,584 $ 1,949,230 $ 48,429 $ 603,493 $ 973,679
=========== =========== ============ =========== ===========
<CAPTION>
ADTRAN Government
Stock Fixed Participant
Fund Fund Loans Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investments $ 104,462 $ 710,465 $ 842,035 $14,486,481
Contributions receivable:
Employer 259 1,762 33,775
Employee 767 5,214 99,966
----------- ----------- ----------- -----------
Net assets
available for
plan benefits $ 105,488 $ 717,441 $ 842,035 $14,620,222
=========== =========== =========== ===========
</TABLE>
11
<PAGE>
Notes To Financial Statements, Continued
<TABLE>
<CAPTION>
Growth Intermediate Government
Money Equity and Special Government Corporate
Stable Market Income Income Equity Bond Balanced Bond
1998 Fund Fund Fund Fund Fund Fund Fund Fund
---------- -------- ---------- ---------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to assets attributed to:
Investment income:
Interest and dividends $ 130,656
Net appreciation (depreciation) in
fair market value of investments $ 15,059 $ 282,194 $ 705,487 $ 106,568 $ 27,234 $ 234,067 $ 4,272
Contributions & rollover proceeds 426,701 102,122 602,217 681,849 839,156 137,230 472,585 165,181
Transfers between funds, net 41,792 35,169 (111,236) 182,757 (123,228) 95,074 (152,268) (31,126)
---------- -------- ---------- ---------- ---------- -------- ---------- -----------
Total additions 599,149 152,350 773,175 1,570,093 822,496 259,538 554,384 138,327
Deductions from net assets attributed to:
Benefits paid 157,348 59,163 124,087 130,365 170,721 1,149 127,042 345
Administrative expenses 2,073 375 1,322 600 280 375 1,050 75
---------- -------- ---------- ---------- ---------- -------- ---------- -----------
Net additions 439,728 92,812 647,766 1,439,128 651,495 258,014 426,292 137,907
Net assets available for plan benefits,
beginning of year 2,077,574 274,720 2,117,276 1,691,832 2,851,441 367,584 1,949,230
Net assets available for plan benefits,
end of year $2,517,302 $367,532 $2,765,042 $3,130,960 $3,502,936 $625,598 $2,375,522 $ 137,907
========== ======== ========== ========== ========== ======== ========== ===========
Short Intermediate Inter/Long
Horizon Horizon Horizon ADTRAN Stock Government
SAF SAF SAF Stock Index Fixed Participant
1998 Fund Fund Fund Fund Fund Loans Loans Total
---------- -------- ---------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to assets attributed to:
Investment income: $ 36,700 $ 74,502 $ 241,858
Interest and dividends
Net appreciation (depreciation) in
fair market value of investments $ 3,611 $ 78,966 $ 153,195 $ (67,982) $ 26,198 1,568,869
Contributions & rollover proceeds 25,093 167,238 334,016 136,278 100,621 83,538 4,273,825
Transfers between funds, net 418 (76,343) (32,445) 7,287 137,772 (40,541) 66,918 0
---------- -------- ---------- ---------- ---------- -------- ---------- ----------
Total additions 29,122 169,861 454,766 75,583 264,591 79,697 141,420 6,084,552
Deductions from net assets attributed to:
Benefits paid 993 19,087 97,031 2,427 2,420 11,299 59,727 963,204
Administrative expenses 150 600 600 525 8,025
---------- -------- ---------- ---------- ---------- -------- ---------- ----------
Net additions 27,979 150,174 357,135 73,156 262,171 67,873 81,693 5,113,323
Net assets available for plan benefits,
beginning of year 48,429 603,493 973,679 105,488 717,441 842,035 14,620,222
Net assets available for plan benefits,
end of year $ 76,408 $753,667 $1,330,814 $ 178,644 $ 262,171 $785,314 $ 923,728 $19,733,545
========== ======== ========== ========== ========== ======== ========== ===========
</TABLE>
12
<PAGE>
Notes to Financial Statements, Continued
6. Income Tax Status
The Plan has received a favorable determination letter from the Internal
Revenue Service stating that the Plan, as then designed, was in compliance
with the applicable requirements of the Internal Revenue Code. Although the
Plan has since been amended, the Plan administrator and the Plan's tax
counsel believe that the Plan is operating in such a manner so as not to
jeopardize its favorable tax status. Therefore, no provision for income
taxes has been included in the Plan's financial statements.
7. Comparison of Financial Statements to Form 5500
Annually, the Company files, on behalf of the Plan, an information return
(Form 5500) that includes financial information prepared on the basis of
cash receipts and disbursements. The accompanying financial statements
differ from the Form 5500 primarily due to the accrual of contributions for
financial statement reporting purposes.
13
<PAGE>
ADTRAN, Inc. 401(k) Employee Savings Plan
Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1998
<TABLE>
<CAPTION>
c. Description of Investment Including
b. Identity of Issuer, Borrower, Maturity Date, Rate of Interest, e. Current
a. Lessor or Similar Party Collateral, Par, or Maturity Value d. Cost Value
- - ---------------------------------- ----------------------------------------------------- ------------ ----------------
<S> <C> <C> <C> <C>
The Mutual Life Insurance Company Unallocated contract with insurance company -
* of New York Stable fund $ 2,510,739 $ 2,510,739
The Mutual Life Insurance Company
* of New York Pooled separate account - Money market fund 335,051 366,562
The Mutual Life Insurance Company
* of New York Pooled separate account - Equity income fund 1,938,688 2,757,748
The Mutual Life Insurance Company
* of New York Pooled separate account - Growth and income fund 2,004,781 3,122,701
The Mutual Life Insurance Company
* of New York Pooled separate account - Special equity fund 2,591,402 3,493,696
The Mutual Life Insurance Company Pooled separate account - Intermediate
* of New York government bond fund 557,781 623,948
The Mutual Life Insurance Company
* of New York Pooled separate account - Balanced fund 1,709,393 2,369,256
The Mutual Life Insurance Company
* of New York Pooled separate account - Government/Corporate bond 134,298 137,543
The Mutual Life Insurance Company
* of New York Pooled separate account - Short horizon SAF 69,116 76,207
The Mutual Life Insurance Company
* of New York Pooled separate account - Intermediate horizon SAF 585,079 751,679
The Mutual Life Insurance Company
* of New York Pooled separate account - Inter/Long horizon SAF 1,023,983 1,327,303
* Diversified Investment Advisors Pooled separate account - Stock index 235,140 261,480
The Mutual Life Insurance Company
* of New York Common stock 260,099 178,173
The Mutual Life Insurance Company
* of New York Pooled separate account - Government fixed fund 783,243 783,243
* Diversified Investment Advisors Participant loans - rate of interest: 7%-10% 923,728 923,728
------------ ----------------
$ 15,662,521 $ 19,684,006
============ ================
</TABLE>
* Party-in-interest to the Plan.
14
<PAGE>
ADTRAN, Inc. 401(k) Employee Savings Plan
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1998
I. Single transactions exceeding 5% of assets.
NONE
II. Series of transactions involving property other than
securities.
NONE
III. Series of transactions of same issue exceeding 5% of
assets.
Schedule Attached
NOTE - Information required in columns e, f, and h is not applicable.
IV. Transactions in conjunction with same person involved in reportable single
transactions.
NONE
15
<PAGE>
ADTRAN, Inc. 401(k) Employee Savings Plan
Item 27d(III) - Schedule of Reportable Transactions
for the year ended December 31, 1998
<TABLE>
<CAPTION>
a. Identity of b. Description c. Purchases d. Sales g. Cost of i. Net Gain
------------------- -----------------
Party Involved of Asset Price Number Price Number Asset (Loss)
- -------------------------- ------------------- --------- ------ ------- ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
The Mutual Life Insurance
Company of New York Stable fund $ 828,936 101 $382,057 68 $382,057 $ -
The Mutual Life Insurance
Company of New York Equity income fund $ 737,187 64 $358,322 92 $256,784 $101,538
The Mutual Life Insurance Growth and income
Company of New York fund $1,013,207 76 $271,376 80 $187,807 $ 83,569
The Mutual Life Insurance
Company of New York Special equity fund $1,023,525 68 $460,114 97 $348,918 $111,196
The Mutual Life Insurance
Company of New York Balanced fund $ 537,937 40 $333,025 44 $246,812 $ 86,213
</TABLE>
16
<PAGE>
Consent of Independent Certified Public Accountants
We consent to the incorporation by reference in the registration statements of
ADTRAN, Inc. on Form S-8 (File No. 333-4206) of our report, dated June 18, 1998,
on our audit of the financial statements and financial statement schedules of
ADTRAN, Inc. 401(k) Employee Savings Plan as of December 31, 1997 and 1996, and
for the year ended December 31, 1997, which report is included in this Annual
Report on Form 11-K.
/s/ Coopers & Lybrand
- ---------------------
Coopers & Lybrand
Birmingham, Alabama
June 30, 1998
