SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 1998 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from ______ to ______ Commission File Number 0-24612 ADTRAN, INC. (Exact name of Registrant as specified in its charter) Delaware 63-0918200 (State of Incorporation) (I.R.S. Employer Identification No.) 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) _______________ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date: Class Outstanding at October 31, 1998 Common Stock, $.01 Par Value 38,415,879 shares Page 1 of 15
ADTRAN, INC. Quarterly Report on Form 10-Q For the Quarter Ended September 30, 1998 Table of Contents Item Page Number PART I. FINANCIAL INFORMATION Number 1 Financial Statements: (unaudited) Condensed Balance Sheets as of September 30, 1998 and December 31, 1997 3 Condensed Statements of Income for the three months and nine months ended September 30, 1998 and 1997 4 Condensed Statements of Cash Flows for the nine months ended September 30, 1998 and 1997 5 Notes to Condensed Financial Statements 6 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 and Results of Operations PART II. OTHER INFORMATION 5 Other Information 14 6 Exhibits and Reports on Form 8-K 14 SIGNATURE 15
<TABLE> <CAPTION> PART I. FINANCIAL INFORMATION Item 1. Financial Statements ADTRAN, INC. CONDENSED BALANCE SHEETS ASSETS September 30, December 31, 1998 1997 (Unaudited) <S> <C> <C> Current assets: Cash and cash equivalents $ 13,109,385 $ 45,340,961 Short-term investments 56,753,013 37,833,240 Accounts receivable, less allowance for doubtful accounts of $872,687 and $893,389 in 1998 and 1997, respectively 48,260,625 40,906,887 Other receivables 747,121 343,463 Inventory 60,655,793 39,369,103 Prepaid expenses 1,628,458 1,148,288 Deferred income taxes 2,458,136 2,458,136 ----------- ----------- Total current assets 183,612,531 167,400,078 Property, plant and equipment,less accumulated depreciation of $27,373,199 and $20,900,272 in 1998 and 1997, respectively 72,858,246 64,801,132 Other assets 220,000 200,000 Long-term investments 55,035,000 50,000,000 ----------- ------------ $311,725,777 $282,401,210 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 16,505,468 $ 9,121,270 Accrued salaries 2,311,439 1,927,364 Accrued income taxes 2,961,614 4,579,345 Accrued taxes other than income taxes 183,768 180,611 Warranty liability 1,510,259 1,435,259 Compensated absences 1,313,414 972,651 ----------- ------------ Total current liabilities 24,785,962 18,216,500 Long term liabilities: Bonds payable 50,000,000 50,000,000 Deferred income taxes 2,147,635 2,147,635 ----------- ---------- Total liabilities 76,933,597 70,364,135 Stockholders' equity: Common stock, par value $.01 per share 200,000,000 shares authorized: 39,414,479 and 39,381,264 shares issued in 1998 and 1997, respectively 394,145 393,813 Additional paid-in capital 90,621,208 90,582,615 Retained earnings 154,739,452 123,260,647 Less 492,500 and 100,000 shares treasury stock at cost in 1998 and 1997, respectively (10,962,625) (2,200,000) ------------ ------------ Total stockholders' equity 234,792,180 212,037,075 ------------ ------------ $311,725,777 $282,401,210 ============ ============ See notes to condensed financial statements </TABLE>
<TABLE> ADTRAN, INC. CONDENSED STATEMENTS OF INCOME Unaudited Three Months Ended Nine Months Ended September 30, September 30, 1998 1997 1998 1997 <S> <C> <C> <C> <C> Sales $77,043,635 $70,578,975 $213,526,321 $190,934,367 Cost of sales 34,734,064 34,486,972 96,364,654 94,418,912 ----------- ----------- ------------ ------------ Gross profit 42,309,571 36,092,003 117,161,667 96,515,455 Selling, general and administrative expenses 16,022,809 11,482,374 44,300,674 32,640,664 Research and development expenses 9,909,567 7,831,535 27,759,729 22,547,141 ----------- ---------- ----------- ----------- Income from operations 16,377,195 16,778,094 45,101,264 41,327,650 Interest expense (582,667) (521,449) (1,693,428) (1,272,649) Other income, net 1,426,290 1,150,447 4,287,323 3,137,314 ----------- ---------- ----------- ----------- Income before income taxes 17,220,818 17,407,092 47,695,159 43,192,315 Provision for income taxes (5,779,562) (6,266,553) (16,216,354) (15,549,233) ----------- ---------- ----------- ----------- Net income $11,441,256 $11,140,539 $31,478,805 $27,643,082 Weighted average shares outstanding assuming dilution (1) 39,138,763 39,693,383 39,276,989 39,611,783 ========== ========== ========== ========== Earnings per common share assuming assuming dilution(1) $0.29 $0.28 $0.80 $0.70 ===== ===== ===== ===== Earnings per common share - basic $0.29 $0.28 $0.81 $0.71 ===== ===== ===== ===== (1) Assumes exercise of dilutive stock options calculated under the treasury stock method. </TABLE> See notes to condensed financial statements
<TABLE> <CAPTION> ADTRAN, INC. CONDENSED STATEMENTS OF CASH FLOWS Unaudited Nine Months Ended September 30, 1998 1997 <S> <C> <C> Cash flows from operating activities: Net income $31,478,805 $27,643,082 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 6,459,220 5,398,219 Gain loss)on sale of property, plant and equipment 0 (14,074) Gain(loss) on short-term investments 32,810 55,930 Change in operating assets: Accounts receivable (7,353,738) (3,853,971) Inventory (21,286,690) (5,825,574) Other receivables and other asets (423,658) (257,829) Prepaid expenses (480,170) 338,137 Change in operating liabilities: Accounts payable 7,384,198 (1,322,772) Accrued salaries 384,075 (840,631) Accrued income taxes (1,617,731) (968,254) Accrued taxes other than income taxes 3,157 377 Compensated absences 340,763 218,019 Warranty payable 75,000 378,647 ---------- ---------- Net cash provided by operating activities 14,996,041 20,949,306 ---------- ---------- Cash flows from investing activities: Expenditures for property, plant and equipment (14,526,334) (15,843,465) Proceeds from the disposition of property, plant and equipment 10,000 39,797 Purchase of restricted investments 0 (50,000,000) (Purchase) redemption of short-term investments (18,952,583) (1,033,240) (Purchase) redemption of long-term investment (5,035,000) ----------- ----------- Net cash used in investing activities (38,503,917) (66,836,908) ----------- ----------- Cash flows from financing activities: Proceeds from issuance of bonds 0 50,000,000 Redemption of bonds payable 0 (20,000,000) Proceeds from issuance of common stock 38,925 331,035 Purchase of treasury stock (8,762,625) (2,200,000) ---------- ---------- Net cash (used in) provided by financing activities (8,723,700) 28,131,035 ---------- ----------- Net decrease in cash and cash equivalents (32,231,576) (17,756,567) Cash and cash equivalents, beginning of period 45,340,961 44,839,131 ---------- ----------- Cash and cash equivalents, end of period $13,109,385 $27,082,564 =========== =========== </TABLE> See notes to condensed financial statements
ADTRAN, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The condensed balance sheet of ADTRAN, Inc. (the "Company") at December 31, 1997 has been derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. The accompanying unaudited condensed financial statements of the Company have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by generally accepted accounting principles for complete financial statements are not included herein. In the opinion of management, all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature. Operating results for the nine months ended September 30, 1998 are not necessarily indicative of the results that may be expected to occur for the year ending December 31, 1998. The interim statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K. 2. INVENTORY At September 30, 1998 and December 31, 1997, inventory consisted of the following: September 30, December 31, 1998 1997 Raw materials $44,978,832 $24,199,720 Work in progress 3,353,760 2,565,179 Finished goods 12,323,201 12,604,204 ----------- ----------- $60,655,793 $39,369,103 =========== =========== 3. RECENT ACCOUNTING DEVELOPMENTS In June 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income, which requires the reporting and display of comprehensive income and its components in an entity's financial statements, and SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which specifies revised guidelines for determining an entity's operating segments and the type and level of financial information to be required. The Company is required to adopt these standards in 1998. The Company does not expect the impact of these pronouncements to be material. SFAS 130 has been adopted during the quarters of 1998 and for the nine months ended September 30, 1998 and 1997, there were no differences between net income and comprehensive income.
4. EARNINGS PER SHARE A summary of the calculation of basic and diluted earnings per share for the three months and nine months ended September 30, 1998 and September 30, 1997 is as follows: FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 Income Shares Per-Share (Numerator) (Denominator) Amount BASIC EPS Income available to common stockholders $11,441,256 38,985,629 $0.29 EFFECT OF DILUTIVE SECURITIES Stock Options 153,134 DILUTED EPS Income available to common stockholders + assumed conversions $11,441,256 9,138,763 $0.29 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 Income Shares Per-Share (Numerator) (Denominator) Amount BASIC EPS Income available to common stockholders $31,478,805 39,100,156 $0.81 EFFECT OF DILUTIVE SECURITIES Stock Options 176,833 $0.01 DILUTED EPS Income available to common stockholders + assumed conversions $31,478,805 39,276,989 $0.80
EARNINGS PER SHARE (Continued) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 Income Shares Per-Share Numerator) (Denominator) Amount BASIC EPS Income available to common stockholders $11,140,539 39,257,528 $0.28 EFFECT OF DILUTIVE SECURITIES Stock Options 435,855 DILUTED EPS Income available to common stockholders + assumed conversions $11,140,539 39,693,383 $0.28 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 Income Shares Per-Share (Numerator) (Denominator) Amount BASIC EPS Income available to common stockholders $27,643,082 39,188,559 $0.71 EFFECT OF DILUTIVE SECURITIES Stock Options 423,224 $0.01 DILUTED EPS Income available to common stockholders + assumed conversions $27,643,082 39,611,783 $0.70
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS Overview The Company designs, develops, manufactures, markets and services a broad range of high speed digital transmission products utilized by telephone companies ("Telcos") and corporate end-users to implement advanced digital data services over existing telephone networks. The Company currently sells its products to Telcos (including all of the Regional Bell Operating Companies), and private end-users in the Customer Premises Equipment ("CPE") market. The Company's sales have increased each year due primarily to increases in the number of units sold to both new and existing customers. These annual sales increases reflect the Company's strategy of increasing unit volume and market share through the introduction of succeeding generations of products having lower selling prices and increased functionality as compared to the prior generation of a product and to the products of competitors. An important part of the Company's strategy is to engineer the reduction of the product cost of each succeeding product generation and then to lower the product's price based on the cost savings achieved. As a part of this strategy, the Company seeks in most instances to be a low-cost, high-quality provider of products in its markets. The Company's success to date is attributable in large measure to its ability to initially design its products with a view to their subsequent re-design, allowing efficient enhancements of the product in each succeeding product generation. This strategy has enabled the Company to sell succeeding generations of products to existing customers as well as to increase its market share by selling these enhanced products to new customers. The Company intends to retain all earnings for use in the development of its business and does not anticipate paying any cash dividends in the foreseeable future. When used in this Form 10-Q, the words "believe," "anticipate," "think," "intend," "will be," and similar expressions identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those, projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Readers are also urged to carefully review and consider the various disclosures made by the Company which attempt to advise interested parties of the factors which affect the Company's business, including the disclosures made in other periodic reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission.
RESULTS OF OPERATIONS - THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 SALES The Company's sales increased 9.2% from $70,578,975 in the three months ended September 30, 1997 to $77,043,635 in the three months ended September 30, 1998. Sales increased 11.8% from $190,934,367 in the nine months ended September 30, 1997 to $213,526,321 in the nine months ended September 30, 1998. The increased sales resulted from an increase in sales volume to existing customers and from increased market penetration. Telco sales decreased slightly from $45,373,984 in the three months ended September 30, 1997 to $44,733,699 in the three months ended September 30, 1998. However, Telco sales increased 1.1% from $123,703,727 in the nine months ended September 30, 1997 to $125,110,869 in the nine months ended September 30, 1998. The increase in Telco sales in the 1998 period resulted primarily from increased sales of High bit-rate Digital Subscriber Line products and Digital Data Services products. Telco sales as a percentage of total sales decreased from 64.3% in the three months ended September 30, 1997 to 58.1% in the three months ended September 30, 1998 and decreased from 64.8% in the nine months ended September 30, 1997 to 58.6% in the nine months ended September 30, 1998. Sales of CPE products increased 28.2% from $25,204,991 in the three months ended September 30, 1997 to $32,309,935 in the three months ended September 30, 1998, as a result of increased sales of "T-1" products, (a digital transmission link with a capacity of 1.544 megabits per second used predominantly in North America). Sales of CPE products increased 31.5% from $67,230,641 in the nine months ended September 30,1997 to $88,415,452 in the nine months ended September 30, 1998. As a percentage of sales, CPE sales increased from 35.7% in the three months ended September 30, 1997 to 41.9% in the three months ended September 30, 1998 and increased from 35.2% in the nine months ended September 30, 1997 to 41.4% in the nine months ended September 30, 1998. The financial effect of the increase in overall unit volume was offset somewhat by lower unit selling prices for many of the Company's products. COST OF SALES Cost of sales increased slightly from $34,486,972 in the three months ended September 30, 1997 to $34,734,064 in the three months ended September 30, 1998 and increased 2.1% from $94,418,912 in the nine months ended September 30, 1997 to $96,364,654 in the nine months ended September 30, 1998. As a percentage of sales, cost of sales decreased from 48.9% in the three months ended September 30, 1997 to 45.1% in the three months ended September 30, 1998 and decreased from 49.5% in the nine months ended September 30, 1997 to 45.1% in the nine months ended September 30, 1998. An important part of the Company's strategy is to reduce the product cost of each succeeding product generation and then to lower the product's price based on the cost savings achieved. This strategy sometimes results in variations in the Company's gross profit margins due to timing differences between the recognition of cost reductions and the lowering of product selling prices. In view of the rapid pace of new product introductions by the Company, this strategy may result in variations in gross profit margins that, for any particular financial period, can be difficult to predict.
SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses increased 39.5% from $11,482,374 in the three months ended September 30, 1997 to $16,022,809 in the three months ended September 30, 1998 and increased 35.7% from $32,640,664 in the nine months ended September 30, 1997 to $44,300,674 in the nine months ended September 30, 1998. The increase was due to additional sales and support expenditures necessary as a result of the Company's expanded sales base. Selling, general and administrative expenses as a percentage of sales increased from 16.3% in the three months ended September 30, 1997 to 20.8% in the three months ended September 30, 1998 and increased from 17.1% in the nine months ended September 30, 1997 to 20.8% in the nine months ended September 30, 1998. Sales and support organization expansion, which resulted in increased costs during the quarter, will continue because they are necessary to position the Company to accumulate market share and maintain growth over the longer term. RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses increased 26.5% from $7,831,535 in the three months ended September 30, 1997 to $9,909,567 in the three months ended September 30, 1998 and increased 23.1% from $22,547,141 in the nine months ended September 30, 1997 to $27,759,729 in the nine months ended September 30, 1998. The increase was due to increased investment in product development and cost reduction through engineering. As a percentage of sales, research and development expenses increased from 11.1% in the three months ended September 30, 1997 to 12.9% in the three months ended September 30, 1998 and increased from 11.8% in the nine months ended September 30, 1997 to 13.0% in the nine months ended September 30, 1998. The Company will continue to invest in these product development activities because they are necessary to position the Company to accumulate market share and maintain growth over the longer term. INTEREST EXPENSE Interest expense increased 11.7% from $521,449 in the three months ended September 30, 1997 to $582,667 in the three months ended September 30, 1998 and increased 33.1% from $1,272,649 in the nine months ended September 30, 1997 to $1,693,428 in the nine months ended September 30, 1998. This increase was due primarily to interest being incurred on bonds payable for only $20,000,000 during the first quarter of 1997 versus interest being incurred on bonds payable of $50,000,000 in the first quarter of 1998. See "Liquidity and Capital Resources" below. NET INCOME As a result of the above factors, net income increased 2.7% from $11,140,539 in the three months ended September 30, 1997 to $11,441,256 in the three months ended September 30, 1998 and increased 13.9% from $27,643,082 in the nine months ended September 30, 1997 to $31,478,805 in the nine months ended September 30, 1998. As a percentage of sales, net income decreased from 15.8% in the three months ended September 30, 1997 to 14.9% in the three months ended September 30, 1998 and increased from 14.5% in the nine months ended September 30, 1997 to 14.7% in the nine months ended September 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES The Company is continuing a project to expand its facilities in Huntsville in several phases over the next four years at a cost of approximately $150,000,000, of which $55,455,000 had been incurred at September 30, 1998. The debt associated with $50,000,000 of this project was approved for participation in an incentive program offered by the Alabama State Industrial Development Authority (the "Authority"). During 1997, the Authority issued $30,000,000 of its taxable revenue bonds (the "Amended and Restated Bond"), pursuant to such program and loaned the proceeds from the sale of the Amended and Restated Bond to the Company, increasing the Company's long-term debt to $50,000,000 as of April 25, 1997. The Company will make payments to the Authority in amounts necessary to pay the principal of and interest on the Amended and Restated Bond, which matures on January 1, 2020. The Company's working capital position improved from $149,183,578 as of December 31, 1997 to $158,826,569 as of September 30, 1998. This improvement in the Company's working capital position was due primarily to increased earnings. The Company has used, and expects to continue to use, the remaining proceeds of prior public offerings for working capital and other general corporate purposes, including (i) product development activities to enhance its existing products and develop new products and (ii) expansion of sales and marketing activities. Inventory increased 54.1% from December 31, 1997 to September 30, 1998 as a result of the increase in sales and a desire by the Company to ship larger orders to customers from available stock. On March 31, 1997, the Board of Directors authorized the Company to repurchase up to 1,000,000 shares of the Company's outstanding common stock. During the nine month period ended September 30, 1998, the Company repurchased 392,500 shares at a cost of $8,762,625 and as of September 30, 1998, the Company had repurchased 492,500 shares at a total cost of $10,962,625. During the month of October, 1998 the Company repurchased an additional 507,500 shares at a total of $10,209,751. Capital expenditures totaling $18,220,850 for the year ended December 31, 1997 and $14,526,334 in the first nine months of 1998 were used to expand the Company's headquarters and to purchase equipment. At September 30, 1998, the Company's cash on hand of $13,109,385, short-term investments of $56,753,013 and $10,000,000 available under a $10,000,000 bank line of credit placed the Company's potential cash availability at $79,862,398 of which a portion is being used to expand the Company's facilities under the incentive program described above. The Company's $10,000,000 bank line of credit bears interest at the rate of 87.5 basis points over the 30 day London inter-bank offered rate. The Company expects to renew its $10,000,000 bank line of credit upon expiration in May 1999. The Company expects to finance its operations in the future with cash flow from operations, the remaining net proceeds of the public offerings, amounts available under the bank line of credit, borrowed taxable revenue bond proceeds, and possible additional public financings. These available sources of funds are expected to be adequate to meet the Company's operating and capital needs for the foreseeable future.
YEAR 2000 COMPLIANCE The Company is conducting a year 2000 program to assess and mitigate the impact of the year 2000 issue. The Company believes that all critical Information Technology and non-Information Technoloy hardware and software systems are, or will be year 2000 compliant before December 31, 1998. This includes, but is not limited to, business systems, network infrastructure, manufacturing equipment, engineering tools, customer products and plant facilities. The Company has completed the inventory and assessment phases of its year 2000 program. The Company's operations are not dependent upon older legacy source code or mainframe computers as is often the case with systems with significant year 2000 issues. Therefore, there is little or no date related code remediation or conversion necessary to maintain normal business activities. The primary remaining effort in the year 2000 program is to review and validate the conclusions reached by the Company's year 2000 assessment. The Company does not believe that costs associated with bringing the Company's computer systems into full compliance with year 2000 issue will result in material expense to the Company. In July of 1998 the Company completed the implementation of new business software and hardware which has been determined to be year 2000 compliant. Ongoing is the upgrade of some secondary systems which have been identified with minor year 2000 issues. Likewise, testing and year 2000 simulations will be performed on Company systems to verify date processing capabilities. The Company has also contacted and assessed its suppliers and subcontractors regarding the year 2000 issue and concluded that those suppliers which have a material relationship with the Company, are not expected to cause significant business interruptions to occur as a result of the year 2000 issue. The Company's assessment of suppliers has identified those most critical to Company operations and a worst case contingency plan will be prepared. The Company's primary external subcontractors are conducting their own independent internal year 2000 programs and are being assisted by the Company with their year 2000 preparations where appropriate. The Company's products are year 2000 compliant as well. Company engineers have confirmed product design specifications and have verified product date processing functionality. Customers are provided individual responses to product inquiries and the Company has posted detailed year 2000 information on its web site. The Company does not believe that it will have any material exposure to contingencies related to the year 2000 issue for products it has sold. Based on information presently available, the Company does not anticipate any material impact on its financial condition or results of operations from the effect of the year 2000 issue on its internal systems or on those of its major suppliers and customers. However, there can be no guarantee that the systems of other companies on which the Company relies will be timely converted, or that a failure to convert by another company would not have a material adverse impact on the Company. So far, the Company has spent approximately $100,000 in preparation for the year 2000 readiness. The Company expects to spend an additional $60,000 in 1999.
PART II. OTHER INFORMATION Item 5. Other Information The Securities and Exchange Commission has made recent changes to the proxy rules in Regulation 14A under the Securities Exchange Act of 1934, as amended, including Rule 14a-4 and Rule 14a-5. Stockholders are entitled to submit proposals on matters appropriate for stockholder action consistent with the rules and regulations of the Securities and Exchange Commission and the Company's Bylaws. In connection with a stockholder's proposal to be presented at the 1999 Annual Meeting of Stockholders where such stockholder has not sought inclusion of the proposal in the Company's proxy statement and form of proxy, a proxy granted to the Company's management will give management discretionary authority to vote on any such stockholder proposal at the 1999 Annual Meeting of Stockholders: (i) if the Company's Corporate Secretary, ADTRAN, Inc., 901 Explorer Boulevard, Huntsville, Alabama 35806, receives such proposal after February 2, 1999; or (ii) if the Company's Corporate Secretary receives such proposal on or before February 2, 1999 and management describes the proposal and how it intends to exercise its discretionary voting authority with respect to such proposal in its proxy statement relating to the 1999 Annual Meeting of Stockholders; provided that, even if the Company includes such information in its proxy statement, the Company's management may not exercise its discretionary voting authority if, among other things, the stockholder submitting the proposal provides the Company's Corporate Secretary with a written statement on or before February 2, 1999 that such stockholder intends to deliver a proxy statement and form of proxy to the number of stockholders required to carry the proposal. Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are being filed with this report. Exhibit No. Description 27 Financial Data Schedule (b) Reports on form 8-K. None
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ADTRAN, INC. (Registrant) Date: November 13, 1998 /s/ John R. Cooper John R. Cooper Vice President - Finance and Chief Financial Officer