What changed in this filing

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Item 5. Other Information

2024-05-10 compared with 2023-11-09 · 15 added, 44 removed, 19 unchanged (76% of the section changed)

OTHER INFORMATION

(a) Costs Associated with Exit or Disposal Activities

On November 6, 2023, due to the uncertainty around the current macroeconomic environment and its impact on customer spending levels, the Company’s management determined to implement a comprehensive business efficiency program (the “Business Efficiency Program”), which includes (i) a cost efficiency program targeting the reduction of ongoing operating expenses, and (ii) a capital efficiency program, which includes a site consolidation plan exploring the partial sale of owned real estate and the suspension of the quarterly dividend.

The Business Efficiency Program expands upon other recently implemented restructuring efforts following the Business Combination.

For instance, on August 17, 2023, the Company’s management determined to discontinue its copper-based Digital Subscriber Line broadband access technology products and its fixed wireless access products in its Network Solutions segment.

Furthermore, on September 29, 2023, the Company’s management determined to exit the internet of things (“IoT”) gateway market (indoor and outdoor), a subset of the broader IoT market (together with the other product discontinuations, the “Discontinuations”).

As a result of the Discontinuations, the Company recognized a write down of inventory of $21.0 million during the third quarter of 2023.

The Discontinuations are expected to be substantially completed in 2024.

Additionally, on October 25, 2023, all employees of Adtran Holdings were informed of certain personnel measures, which included the reduction of salary for select management, a reduction of approximately 5% of the workforce, and a hiring freeze.

We expect the cost of the Business Efficiency Program to be in the range of $35.5 million to $45.5 million over the life of the program.

Management expects these planned costs to include severance costs ranging from $11.7 million to $18.0 million in connection with the personnel measures discussed above;

inventory write-offs of $21.0 million relating to the aforementioned Discontinuations;

leased asset impairments totaling $0.4 million, site consolidation transaction expenses (primarily brokers fees) ranging from $2.4 million to $6.0 million;

and potential recurring leaseback expenses of up to $12.0 million annually.

Future cash payments include:

severance costs that are anticipated to be in the range of $6.6 million to $6.7 million, payments relating to the site consolidation transaction expenses that are anticipated to be in the range of $2.4 million to $6.0 million, and potential future cash payments of up to $12.0 million annually relating to the possible leaseback expense.

We may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the Business Efficiency Program, including potential impairment charges related to the discontinuance of additional product lines and regulatory requirements related to personnel measures.

However, we are not able to estimate the amount or range of amounts of such potential incremental charges as of the date of this filing.

If required, we will amend this disclosure at such time as management is able in good faith to estimate the amount, or range of amounts, of these charges.

The Business Efficiency Program is expected to be substantially completed in 2024.

Departure of Directors or Certain Officers

On November 3, 2023, Ronald D.

Centis, Senior Vice President of Services, and the Company jointly agreed on Mr.

Centis’

departure without cause, effective December 15, 2023.

The Company intends for Mr.

Centis’

responsibilities to be assumed by Jay Wilson, the Company’s Chief Revenue Officer.

(a) Not applicable

(b) Not applicable

During the fiscal quarter ended September 30, 2023, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

Effective June 8, 2023, ADVA Optical Networking SE, a subsidiary of the Company (“ADVA”), changed its name to Adtran Networks SE.

During the fiscal quarter ended March 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

Effective June 8, 2023, ADVA Optical Networking SE, a subsidiary of the Company (“ADVA”), changed its name to Adtran Networks SE.

By operation of law, any reference to ADVA Optical Networking SE in these exhibits should be read as Adtran Networks SE as set forth in the Exhibit List below.

Amended and Restated Certificate of Incorporation of ADTRAN Holdings, Inc.

(incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed July 8, 2022)

(incorporated by reference to Exhibit 3.1 to ADTRAN's Form 8-K filed July 8, 2022)

Second Amended and Restated Bylaws of ADTRAN Holdings, Inc.

(incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed October 24, 2023)

Description of Securities (incorporated by reference to Exhibit 4.1 to the Company's Form 10-Q filed May 10, 2023)

First Amendment to Credit Agreement, dated August 9, 2023, by and between ADTRAN Holdings, Inc.

and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.7 to the Company's Form 10-Q filed August 14, 2023).

Second Amendment to Credit Agreement and First Amendment to Collateral Agreement, dated as of January 16, 2024, by and among ADTRAN Holdings, Inc., ADTRAN, Inc., Wells Fargo Bank, National Association, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 22, 2024)

Third Amendment to Credit Agreement, dated as of March 12, 2024, by and among ADTRAN Holdings, Inc., ADTRAN, Inc., Wells Fargo Bank, National Association, and the lenders party thereto (incorporated by reference to exhibit 10.5 to the Company's Form 10-K filed March 15, 2024)

ADTRAN Holdings, Inc.

Policy for the Recovery of Erroneously Awarded Incentive Based Compensation (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed October 24, 2023)

2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed May 9, 2024)

ADTRAN Holdings, Inc.

Amended and Restated Clawback Policy (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed October 24, 2023)

2024 Directors Stock Plan (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed May 9, 2024)

Rule 13a-14(a)/15d-14(a) Certifications

Section 1350 Certifications

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL:

(i) Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022;

(ii) Condensed Consolidated Statements of Loss for the three and nine months ended September 30, 2023 and 2022;

(iii) Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022;

(iv) Condensed Consolidated Statements of Changes in Stockholders’

Equity for the three and nine months ended September 30, 2023 and 2022;

(v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022;

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL:

(i) Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023;

(ii) Condensed Consolidated Statements of Loss for the three months ended March 31, 2024 and 2023;

(iii) Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2024 and 2023;

(iv) Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2024 and 2023;

(v) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023;

and (vi) Notes to Condensed Consolidated Financial Statements

3 unchanged sentences

ADTRAN Holdings, Inc.

November 9, 2023

/s/ Ulrich Dopfer

1 unchanged sentence

Chief Financial Officer

(Duly Authorized Officer and Principal Financial

(Principal Accounting Officer)

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 5. Other Information