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
________________________________
(Mark One)
( x ) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the fiscal year ended December 31, 2000
or
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from _________________ to ____________________
Commission File No. 0-24612
A. Full title and address of the plan, if different from that of the
issuer named below:
ADTRAN, INC.
401(K) EMPLOYEE SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
ADTRAN, INC.
901 Explorer Boulevard
Huntsville, Alabama 35806-2807
ADTRAN, Inc. 401(k) Employee Savings Plan
Table of Contents
_______________________________________________________________________________
Pages
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
December 31, 2000 and 1999 2
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 2000 3
Notes to Financial Statements 4 - 10
*Supplemental Schedule:
Schedule of Assets Held For Investment Purposes as of December 31, 2000 11
*Other schedules required by 29 CFR 2520.130-10 of the Department of Labor's
Rules and Regulations for Disclosure under the Employee Retirement Income
Security Act of 1974 have been omitted because they are not applicable.
Report of Independent Accountants
To the Participants and Administrator of the
ADTRAN, Inc. 401(k) Employee Savings Plan
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of ADTRAN, Inc. 401(k) Employee Savings Plan (the "Plan") at
December 31, 2000 and 1999, and the changes in net assets available for plan
benefits for the year ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. 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 of these statements in accordance with auditing standards
generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule, as listed on
the accompanying table of contents, is presented for the purpose of additional
analysis and is not a required part of the basic financial statements but is
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. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
June 29, 2001
1
ADTRAN, Inc. 401(k) Employee Savings Plan
Statements of Net Assets Available for Plan Benefits
December 31, 2000 and 1999
________________________________________________________________________________
2000 1999
ASSETS
Investments, at market value:
Pooled separate accounts $24,452,424 $21,838,714
Participant loans 1,142,093 1,108,256
ADTRAN stock fund 414,021 773,910
Investments, at contract value:
Guaranteed investment contracts 3,299,540 3,850,166
----------- -----------
Total investments 29,308,078 27,571,046
----------- -----------
Contributions receivable:
Employer 39,185 15,215
Employee 90,345 43,792
----------- -----------
129,530 59,007
----------- -----------
Net assets available for plan benefits $29,437,608 $27,630,053
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
ADTRAN, Inc. 401(k) Employee Savings Plan
Statements of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 2000
________________________________________________________________________________
Investment loss:
Interest and dividend income $ 274,239
Net depreciation in market value of investments (2,070,242)
-----------
Total investment loss (1,796,003)
-----------
Contributions:
Employee contributions 3,941,698
Rollover contributions 616,042
Employer contributions 1,302,676
-----------
Total contributions 5,860,416
-----------
Total additions 4,064,413
-----------
Benefits payments 2,248,608
Administrative expenses 8,250
-----------
Total deductions 2,256,858
-----------
Net increase 1,807,555
Net assets available for plan benefits:
Beginning of year 27,630,053
-----------
End of year $29,437,608
===========
The accompanying notes are an integral part of these financial statements.
3
ADTRAN, Inc. 401(k) Employee Savings Plan
Notes to Financial Statements
For the Years Ended December 31, 2000 and 1999
________________________________________________________________________________
1. Description of the Plan
The following description of the ADTRAN, Inc. 401(k) Employee Savings Plan
(the Plan) provides only general information. Participants should refer to
the Plan for a more complete description of the Plan's provisions.
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
contributions as well as discretionary and nondiscretionary employer
contributions. The plan assets are held by AUSA Life Insurance Company, Inc.
(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.
Eligibility - All regular employees are 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 compensation (as defined in the Plan) deferred and contributed to
the Plan on their behalf, subject to the maximum allowed by the Internal
Revenue Code ($10,500 per participant in 2000). For each employee who
participated in the Plan during 2000, the Company made matching
contributions equal to 50% of the first 5% of annual compensation deferred
by each employee. At its discretion, the Company may contribute to the Plan
a discretionary profit-sharing contribution, which shall be in addition to
the Company's matching contribution. No discretionary contributions were
made in 2000.
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 Plan currently offers fourteen pooled
separate accounts, two guaranteed investment contracts and a company stock
fund.
Participant Accounts - Each participant's account is credited with the
employee's contribution and the Company's matching contribution plus an
allocation of Company discretionary contributions and plan earnings.
Allocations of earnings are based on account balances, as defined more fully
in the Plan. Allocations of company discretionary contributions are based on
each participant's compensation, as defined in the Plan. The benefit to
which a participant is entitled is the benefit that can be provided from the
participant's account.
Vesting - Employees are always 100% vested in their individual account
balances.
4
ADTRAN, Inc. 401(k) Employee Savings Plan
Notes to Financial Statements
For the Years Ended December 31, 2000 and 1999
________________________________________________________________________________
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.
Distribution of 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. Benefits are distributed by
means of either a lump sum payment or by one of various conventional annuity
options.
Other - The Plan allows for participant hardship withdrawals at any time if
certain conditions are met.
Participant Loans - Participants may borrow a minimum of $1,000 from their
fund accounts 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
outstanding loans at December 31, 2000 are collateralized by the balances in
the participants' accounts and bear interest at rates commensurate with local
prevailing rates as determined quarterly by the plan administrator. Interest
rates range from 8.75% to 9.50% for loans that were outstanding as of
December 31, 2000.
Plan Termination - While it is the intention of the Company to permanently
continue the Plan, the Company has the right to amend or terminate the Plan
at any time upon written notice to the plan administrator and Custodian. No
amendment may permit any plan assets to revert to the Employer or be used for
any purpose other than to provide benefits to participants and their
beneficiaries or eliminate an optional form of benefit payment. Upon
termination of the Plan, plan assets will be distributed to participants and
their beneficiaries in accordance with the Plan and subject to ERISA
guidelines.
Administrative Expenses - All expenses incident to the functioning of the
Plan may be paid out of plan assets unless paid by the Employer. Accrued
expenses constitute a liability of the Plan until paid, and may be reimbursed
by the Employer. Any such reimbursement is not considered an Employer
contribution.
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 accounting principles
generally accepted in the United States of America.
Basis of Accounting - The accompanying financial statements of the Plan are
maintained on the accrual basis of accounting.
5
ADTRAN, Inc. 401(k) Employee Savings Plan
Notes to Financial Statements
For the Years Ended December 31, 2000 and 1999
________________________________________________________________________________
Valuation of Investments - Except for the guaranteed investment contracts,
the Plan's investments are stated at market value. The shares of pooled
separate accounts are valued at quoted market prices, which represent the net
asset value of shares held by the Plan at year-end. Guaranteed investment
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. Participant loans are valued at their outstanding balances, which
approximate market value.
The investments in the guaranteed investment contracts have fully benefit-
responsive features and are recorded at contract value, which represents
contributions and reinvested income, less any withdrawals plus accrued
interest. As of December 31, 2000, the average yields of the guaranteed
investment contracts were approximately 6.40% for the Stable Fund and 5.65%
for the Government Fixed Fund. The crediting interest rate for the Stable
Fund cannot be less than 5.40% and was approximately 6.40% for the year ended
December 31, 2000. The crediting interest rate for the Government Fixed Fund
cannot be less than 5.60% and was approximately 5.65% for the year ended
December 31, 2000.
The Plan presents, in the statement of changes in net assets available for
plan benefits, the net appreciation (depreciation) in the market 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. 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
which in turn invest in any combination of stocks, bonds and other investment
securities. Investment securities are exposed to various risks such as
interest rate, market and credit risks. Due to the level of risk associated
with certain investment securities and the level of uncertainty related to
changes in the value of investment securities, it is at least reasonably
possible that changes in risks in the near term could 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.
6
ADTRAN, Inc. 401(k) Employee Savings Plan
Notes to Financial Statements
For the Years Ended December 31, 2000 and 1999
________________________________________________________________________________
New Accounting Pronouncements - In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS No. 133). SFAS No. 133 requires that an entity
recognize all derivatives and measure those instruments at fair value.
SFAS No. 133 is effective for fiscal years beginning after June 15, 2000.
Pursuant to SFAS No. 137, the Plan is required to adopt SFAS No. 133
effective January 1, 2001. Management has not yet been able to determine the
impact of SFAS No. 133 on the plan's financial statements as a result of the
inconsistency in accounting literature between SFAS No. 133, requiring
derivatives to be measured at fair value, and the AICPA Audit and Accounting
Guide on Audits of Employee Benefit Plans and Statement of Position 94-4,
Reporting of Investment Contracts Held by Health and Welfare Benefit Plans
and Defined-Contribution Pension Plans, requiring benefit responsive
investment contracts (including synthetic GICs) to be measured at contract
value. Until this discrepancy is resolved, management is unable to determine
the impact that SFAS No. 133 will have on the plan's financial statements.
The Plan held no such investments at December 31, 2000.
The actual impact on the Plan's net assets available for plan benefits of
adopting SFAS No. 133 will be made based on the derivative positions and
hedging relationships at the date of adoption.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
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 date of the financial statements and the
reported amounts of additions and deductions during the reporting periods.
Actual results could differ from those estimates.
Reclassifications - Certain reclassifications have been made to the 1999
financial statements in order to conform to the 2000 presentation. These
reclassifications had no effect on previously reported net assets available
for plan benefits.
7
ADTRAN, Inc. 401(k) Employee Savings Plan
Notes to Financial Statements
For the Years Ended December 31, 2000 and 1999
________________________________________________________________________________
3. Investments
The Plan's investments, other than participant loans and the ADTRAN stock
fund, are held in unallocated contracts or pooled separate accounts sponsored
by the Custodian. Investments as of December 31, 2000 and 1999 and investment
information for the year ended December 31, 2000 are as follows:
December 31, December 31,
Description 2000 1999
------------- ------------ ------------
Guaranteed investment contracts:
Stable fund $ 2,608,057 $ 3,027,543
Government fixed fund 691,483 822,623
Pooled separate accounts:
Money market fund 517,806 468,676
Value and income fund 3,811,365 3,351,984
Growth and income fund 5,252,928 5,602,578
Special equity fund 4,867,055 4,658,887
Intermediate government bond fund 944,768 800,615
Balanced fund 2,649,548 2,731,463
Government/Corporate bond fund 370,390 281,212
Short horizon SAF fund 128,594 98,885
Intermediate horizon SAF fund 1,031,946 956,735
Inter/Long horizon SAF fund 1,681,815 1,715,704
Stock index fund 1,613,428 1,171,975
Aggressive equity fund 997,278
Equity growth fund 386,185
International fund 199,318
ADTRAN stock fund 414,021 773,910
Participant loans 1,142,093 1,108,256
----------- -----------
Total investments $29,308,078 $27,571,046
=========== ===========
Interest and divide and income $ 274,239
===========
Net depreiation in market value of investments $(2,070,242)
===========
8
ADTRAN, Inc. 401(k) Employee Savings Plan
Notes to Financial Statements
For the Years Ended December 31, 2000 and 1999
________________________________________________________________________________
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, 2000 and 1999:
2000 1999
Stable fund $2,608,057 $3,027,543
Value and income fund $3,811,365 $3,351,984
Growth and income fund $5,252,928 $5,602,578
Special equity fund $4,867,055 $4,658,887
Balanced fund $2,649,548 $2,731,463
Inter/Long horizon SAF fund $1,681,815 $1,715,704
Stock Index Fund $1,613,428
The Plan's investments (including investments bought and sold, as well as
held, during the year) depreciated in value by $2,070,242 during the year
ended December 31, 2000, as follows:
Pooled separate accounts $(1,563,130)
ADTRAN stock fund (507,112)
-----------
$(2,070,242)
===========
4. Income Tax Status
The Plan has received a favorable determination letter from the Internal
Revenue Service (IRS) stating that the Plan, as then designed, was in
compliance with the applicable requirements of the IRS. Although the Plan has
since been amended, the Plan administrator and the Plan's tax advisors
believe that the Plan is operating in such a manner so as not to jeopardize
its favorable tax status. Accordingly, no provision for income taxes has been
included in the Plan's financial statements.
5. 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 2000 Form 5500 primarily due to the accrual of employer and employee
contributions for financial statement reporting purposes.
6. Subsequent Events
Effective January 1, 2001, the Company's Board of Directors adopted various
revisions to the Plan. The revisions included changing the name of the Plan
to the ADTRAN, Inc. 401(k) Retirement Plan and adopting various amendments to
bring the Plan into compliance with the provisions of Code Section
401(k)(12)(c) as a "designed-based safe harbor" plan for nondiscrimination
purposes. The amended plan provides that the Company will make
9
ADTRAN, Inc. 401(k) Employee Savings Plan
Notes to Financial Statements
For the Years Ended December 31, 2000 and 1999
________________________________________________________________________________
nonelective contributions of 3% of each participant's annual compensation and
provides for 100% immediate vesting of company contributions. Participants
will also be eligible for such nonelective contributions only upon separation
from service, disability or death. In addition, the Plan no longer requires
the Company to make matching contributions for employee elective deferrals.
Under the Plan as amended, there is no longer a minimum age requirement for
employees to be eligible to participate, and there is no longer a minimum
service required for employees to be eligible to make elective deferrals
under the Plan. However, employees must complete one year of service to be
eligible for the "safe harbor" contribution of 3% of their compensation.
Effective March 1, 2001, an amendment was made to the ADTRAN, Inc. 401(k)
Retirement Plan to comply with the safe harbor provisions which will affect
participant eligibility for the "safe harbor" contribution. Such amendment
requires for employees hired on or after January 1, 2001, to meet a one year
eligibility service requirement and employees hired prior to January 1, 2001,
to meet a six month eligibility service requirement.
Also, effective March 1, 2001, the Board of Directors appointed Fidelity
Management Trust Company (Fidelity) as trustee and recordkeeper of the Plan.
The plan assets were transferred to Fidelity on March 1, 2001.
10
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 June 29, 2001
- ------------------ -------------
John R. Cooper Date
Vice President - Administration and Finance
and Chief Financial Officer
Supplemental Schedule
ADTRAN, Inc. 401(k) Employee Savings Plan
Schedule of Assets Held for Investment Purposes
As of Ended December 31, 2000
___________________________________________________________________________________________________________________
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 Value
- -- -------------------------------- ------------------------------------------------------------------------------
* AUSA Life Insurance Company Guaranteed investment contract with insurance
company - Stable fund, interest rate of 6.4%;
maturity date of December 31, 2004 $ 2,608,057
* AUSA Life Insurance Company Guaranteed investment contract - Government fixed fund,
interest rate of 5.65%; various maturities 691,483
* AUSA Life Insurance Company Pooled separate account - Money market fund 517,806
* AUSA Life Insurance Company Pooled separate account - Value and income fund 3,811,365
* AUSA Life Insurance Company Pooled separate account - Growth and income fund 5,252,928
* AUSA Life Insurance Company Pooled separate account - Special equity fund 4,867,055
* AUSA Life Insurance Company Pooled separate account - Intermediate government
bond fund 944,768
* AUSA Life Insurance Company Pooled separate account - Balanced fund 2,649,548
* AUSA Life Insurance Company Pooled separate account - Government/Corporate bond fund 370,390
* AUSA Life Insurance Company Pooled separate account - Short horizon SAF fund 128,594
* AUSA Life Insurance Company Pooled separate account - Intermediate horizon SAF fund 1,031,946
* AUSA Life Insurance Company Pooled separate account - Inter/Long horizon SAF fund 1,681,815
* Diversified Investment Advisors Pooled separate account - Stock index fund 1,613,428
* Diversified Investment Advisors Pooled separate account - Agress equity fund 997,278
* Diversified Investment Advisors Pooled separate account - Equity growth fund 386,185
* Diversified Investment Advisors Pooled separate account - International fund 199,318
* AUSA Life Insurance Company ADTRAN stock fund 414,021
* Diversified Investment Advisors Participant loans - rate of interest: 8.75% - 9.50%;
various maturities 1,142,093
------------
$ 29,308,078
============
* Party-in-interest to the Plan.