ADTRAN, INC. Consolidated Statements of Cash Flows  Years ended December 31, 2013, 2012 and 2011  (In thousands) 2013 2012 2011 Cash flows from operating activities Net income $45,794 $47,263 $138,577 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,628 14,079 11,499 Amortization of net premium on available-for-sale investments  5,956 8,257 6,617 Net realized gain on long-term investments (8,614) (9,550) (12,454) Net (gain) loss on disposal of property, plant, and equipment 3 (214) 6 Gain on bargain purchase of a business — (1,753) — Stock-based compensation expense 9,073 9,264 9,169 Deferred income taxes (4,058) (3,785) 575 Tax benefit from stock option exercises 169 1,905 10,525 Excess tax benefits from stock-based compensation arrangements (158) (1,456) (9,373) Change in operating assets and liabilities: Accounts receivable, net (5,541) (2,847) (4,939) Other receivables (1,549) 2,977 (5,781) Income tax receivable, net — — 2,741 Inventory 10,265 8,333 (12,734) Prepaid expenses and other assets (11) (1,045) 522 Accounts payable 5,206 7,510 6,044 Accrued expenses and other liabilities (15,146) 8,895 6,309 Income taxes payable, net 3,747 (1,960) 3,169 Net cash provided by operating activities 59,764 85,873 150,472 Cash flows from investing activities Purchases of property, plant, and equipment (8,173) (12,320) (11,778) Proceeds from disposals of property, plant and equipment — 266 — Proceeds from sales and maturities of available-for-sale investments 343,567 282,039 466,243 Purchases of available-for-sale investments (261,625) (282,740) (554,629) Acquisition of business, net of cash acquired — 7,496 (22,661) Net cash provided by (used in) investing activities 73,769 (5,259) (122,825) Cash flows from financing activities Proceeds from stock option exercises 3,629 6,049 34,125 Purchases of treasury stock (124,267) (39,362) (35,565) Dividend payments (21,412) (22,813) (23,124) Payments on long-term debt  — (500) (1,000) Excess tax benefits from stock-based compensation arrangements 158 1,456 9,373 Net cash used in financing activities (141,892) (55,170) (16,191) Net increase (decrease) in cash and cash equivalents (8,359) 25,444 11,456 Effect of exchange rate changes (1,800) 34 (154) Cash and cash equivalents, beginning of year 68,457 42,979 31,677 Cash and cash equivalents, end of year $58,298 $68,457 $42,979 Supplemental disclosure of cash flow information Cash paid during the year for interest $2,325 $2,348 $2,396 Cash paid during the year for income taxes $15,431 $31,021 $51,402 Supplemental disclosure of non-cash investing activities Purchases of property, plant and equipment included in accounts payable $444 $108 $353 See notes to consolidated financial statements. Financial Results 39