Pertinent information regarding ADTRAN’s stock option plans is as follows: The following table summarizes information about stock options outstanding at December 31, 2002: The options above were issued at exercise prices which approximate fair market value at the date of grant. At December 31, 2002, 2,725,484 options were available for grant under the plans. ADTRAN applies APB Opinion No. 25 and related interpretations in accounting for our stock option plans. Had compensation cost for ADTRAN’s stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method prescribed in SFAS No. 123, net income and earnings per share would have been reduced to the pro forma amounts indicated below: Pro Forma Net Income (Loss) & Earnings (Loss) Per Share Options Outstanding at December 31, 2002 Weighted Number Range of Average of Exercise Exercise Vesting Options Prices Price Provisions Options outstanding, December 31, 1999 3,092,485 ) $1.50 - $65.75 $30.88 Various Options granted 779,415) $39.00 - $69.81 $67.82 Various Options granted 616,185) $21.25 - $69.81 $67.12 Various Options cancelled/forfeited (155,710) $18.13 - $69.81 $37.36 Various Options exercised (315,314) $1.50 - $65.75 $21.47 Various Options outstanding, December 31, 2000 4,017,061 ) $1.67 - $69.81 $44.02 Various Options granted 1,442,890) $19.23 - $28.08 $25.54 Various Options cancelled/forfeited (266,746) $21.31 - $69.81 $44.04 Various Options exercised (36,670) $1.67 - $25.38 $12.36 Various Options outstanding, December 31, 2001 5,156,535 ) $1.67 - $69.81 $27.31 Various Options granted 2,156,021) $17.37 - $32.90 $19.63 Various Options cancelled/forfeited (1,617,309) $17.39 - $69.81 $63.50 Various Options exercised (198,931) $2.50 - $30.36 $19.94 Various Options outstanding, December 31, 2002 5,496,316 ) $3.33 - $69.81 $24.85 Various Weighted Average Weighted Weighted Range of Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life Price Exercisable Price $3.33 6,570 0.98 $3.33 6,570 $3.33 $17.37 - $21.31 2,637,884 7.86 $19.77 1,002,370 $19.31 $21.81 - $27.50 1,737,282 7.54 $25.41 757,739 $25.33 $28.06 - $42.72 1,092,880 6.71 $35.50 609,996 $36.05 $49.56 - $69.81 21,700 7.25 $68.68 11,496 $68.60 Total 5,496,316 2,388,171 2002 2001 2000 Net income - as reported $24,775,962) $17,328,529) $120,802,261) Less: stock-based compensation expense, net of tax (21,997,535) (17,868,767) (12,277,142) Net income (loss) - pro forma $2,778,427) ($540,238) $108,525,119) Earnings per share Basic - as reported $0.65) $0.45) $3.13) Basic - pro forma $0.07) ($0.01) $2.81) Diluted - as reported $0.65) $0.45) $3.04) Diluted - pro forma $0.07) ($0.01) $2.73) 31 Financial Results