What changed in this filing

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Item 1. Financial Statements

2025-08-05 compared with 2025-05-20 · 349 added, 221 removed, 742 unchanged (43% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, less allowance for credit losses of $ 1,212 and $ 1,300 as of March 31, 2025

Accounts receivable, less allowance for credit losses of $ 1,258 and $ 1,300 as of June 30, 2025

and December 31, 2024, respectively

Other receivables

Income tax receivable

Inventory, net

Assets held for sale

Income tax receivable

Prepaid expenses and other current assets

Assets held for sale

Total Current Assets

Property, plant and equipment, net

Intangible assets, net

Deferred tax assets

Intangibles, net

Other non-current assets

8 unchanged sentences

Total Current Liabilities

Non-current revolving credit agreement outstanding

Non-current revolving credit agreement

Deferred tax liabilities

9 unchanged sentences

200,000 shares authorized;

79,969 shares issued and 79,707 outstanding as of March 31, 2025 and

80,041 shares issued and 79,779 outstanding as of June 30, 2025 and

79,483 shares issued and 79,218 outstanding as of December 31, 2024

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Less treasury stock at cost:

262 and 266 shares as of March 31, 2025

262 and 266 shares as of June 30, 2025

and December 31, 2024, respectively

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Three Months Ended

Six Months Ended

Network Solutions

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Interest expense

Net investment (loss) gain

Other income, net

Net investment gain

Other (expense) income, net

Loss Before Income Taxes

Income tax benefit

Income tax (expense) benefit

Net Income attributable to non-controlling interest (1)

4 unchanged sentences

Loss per common share attributable to ADTRAN Holdings, Inc.

(1) For the three months ended March 31, 2025, we accrued $ 2.4 million net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

For the three months ended March 31, 2024, we recognized $ 2.5 million of net gain attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post DPTLA.

(1) For the three and six months ended June 30, 2025 we accrued $ 2.4 million and $ 4.8 million, respectively, net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

For the three and six months ended June 30, 2024, we accrued $ 2.5 million and $ 5.0 million, respectively, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

(2) Loss per common share attributable to ADTRAN Holdings, Inc.

- basic and diluted - reflects a $( 3 ) thousand effect of redemption of RNCI for the three months ended March 31, 2025.

- basic and diluted - reflects a $ 1.5 million effect of redemption of RNCI for the three and six months ended June 30, 2025.

See Note 14 for additional information.

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Three Months Ended

Six Months Ended

Other Comprehensive Income (Loss), net of tax

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Balance as of March 31, 2025

Annual recurring compensation earned

Other comprehensive income, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock options exercised

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Balance as of June 30, 2025

See accompanying notes to condensed consolidated financial statements.

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(In thousands, except per share amounts)

Accumulated Other Comprehensive Income (Loss)

Non-controlling interest

Accumulated Other Comprehensive Income

Balance as of December 31, 2023

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Adtran Networks stock-based compensation expense

Balance as of March 31, 2024 (Restated)

Balance as of March 31, 2024

Annual recurring compensation earned

Other comprehensive loss, net of tax

Deferred compensation adjustments, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Adtran Networks stock-based compensation expense

Balance as of June 30, 2024 (Restated)

See accompanying notes to condensed consolidated financial statements.

7 unchanged sentences

Amortization of debt issuance cost

Loss (gain) on investments, net

Gain on investments, net

Net loss on disposal of property, plant and equipment

6 unchanged sentences

Other receivables

Income taxes receivable, net

Income taxes receivable

Prepaid expenses, other current assets and other assets

5 unchanged sentences

Purchases of property, plant and equipment

Purchases of intangibles - developed technologies

Purchases of intangibles - developed technology

Proceeds from sales and maturities of available-for-sale investments

Payments for beneficial interests in securitized accounts receivable

Purchases of available-for-sale investments

Payments for beneficial interest in securitized accounts receivable

Net cash used in investing activities

4 unchanged sentences

Repayments on receivables purchase agreement

Proceeds from draw on revolving credit agreements

Repayment of revolving credit agreements

Payment for redemption of redeemable non-controlling interest

Payment of debt issuance cost

Net cash provided by (used in) financing activities

Net cash used in financing activities

Net increase in cash and cash equivalents

4 unchanged sentences

Cash paid for interest

Cash paid for income taxes

Cash paid for income taxes, net of refunds

Cash used in operating activities related to operating leases

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ADTRAN Holdings, Inc.

(“Adtran” or the “Company”) is a leading global provider of networking and communications platforms, software, systems and services focused on the broadband access market, serving a diverse domestic and international customer base in multiple countries that includes large, medium and small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders, cable/MSOs, SMBs and distributed enterprises, including Fortune 500 companies with sophisticated business continuity applications;

and federal, state and local government agencies.

(“ADTRAN” or the “Company”) is a leading global provider of networking and communications platforms, software, systems and services focused on the broadband access market, serving a diverse domestic and international customer base in multiple countries that includes large, medium and small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders, cable/MSOs, SMBs and distributed enterprises, including Fortune 500 companies with sophisticated business continuity applications, and federal, state and local government agencies.

Our innovative solutions and services enable voice, data, video and internet-communications across a variety of network infrastructures and are currently in use by millions worldwide.

We support our customers through our direct global sales organization and distribution networks.

We support our customers through our direct global sales organization and our distribution networks.

Our success depends upon our ability to increase unit volume and market share through the introduction of new products and succeeding generations of products having optimal selling prices and increased functionality as compared to both the prior generation of a product and to the products of competitors in order to gain market share.

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The guaranteed interest under the Exit Compensation is calculated from the effective date of the DPLTA to the date the shares are tendered, less any Annual Recurring Compensation paid.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 2.27 % as of March 31, 2025.

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 338.5 million or approximately $ 366.1 million, b ased on an exchange rate as of March 31, 2025, and reflecting interest accrued through March 31, 2025 during the pendency of the appraisal proceedings discussed below.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 2.27 % as of June 30, 2025.

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 326.8 million or $ 385.2 million, based on an exchange rate as of June 30, 2025, and reflecting interest accrued through June 30, 2025 during the pendency of the appraisal proceedings discussed below.

Shareholders electing the first option of Annual Recurring Compensation may later elect the second option.

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However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act ( Aktiengesetz ) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal Gazette ( Bundesanzeiger ).

The Company expects to receive a ruling on a procedural matter in the DPLTA appraisal proceedings during the latter half of 2025 or 2026, which ruling, depending on outcome, will likely be appealed and may take 6-12 months to be decided on appeal.

The Company does not expect that a trial on the merits of the DPLTA appraisal proceedings will commence until the procedural matter has been resolved.

The proceeding for the trial on the merits of the DPLTA will likely take a minimum of 12 months for a ruling and such ruling may likewise be appealed, which would be expected to take an additional 12-24 months to be resolved.

The court has decided a procedural matter in the DPLTA appraisal proceedings;

the parties may or may not choose to appeal such decision, if able, and the proceeding for the trial on the merits of the DPLTA will continue.

It is expected to take a minimum of 12 months for a ruling of the court on the merits and such ruling will most likely be appealed, which would be expected to take an additional 12-24 months to be resolved.

Accordingly, the Company does not expect a final decision on the DPLTA appraisal proceedings to be rendered and published prior to 2027, and most likely not until 2028 or beyond.

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 8.9 million (or $ 9.7 million based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders as of March 31, 2025 were to elect Exit Compensation.

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 8.5 million (or $ 10.0 million based on the exchange rate as of June 30, 2025) per year assuming none of the minority Adtran Networks shareholders as of June 30, 2025 were to elect Exit Compensation.

The foregoing amounts do not reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in Germany.

The Annual Recurring Compensation is due on the third banking day following the ordinary general shareholders’ meeting of Adtran Networks for the respective preceding fiscal year (but in any event within eight months following expiration of the fiscal year).

With respect to the 2023 fiscal year, Adtran Networks’ ordinary general shareholders’ meeting occurred on June 28, 2024 and, therefore, the Annual Recurring Compensation was paid on July 3, 2024.

With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholder meeting is scheduled for June 27, 2025 and, therefore, the Annual Recurring Compensation will be due on July 2, 2025.

During the three months ended March 31, 2025 and 2024, we accrued $ 2.4 million and $ 2.5 million, respectively, in Annual Recurring Compensation.

With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholder meeting occurred on June 27, 2025 and, therefore, the Annual Recurring Compensation was paid on July 1, 2025.

During the three months ended June 30, 2025 and 2024, we accrued $ 2.4 million and $ 2.5 million, respectively, in Annual Recurring Compensation.

During the six months ended June 30, 2025 and 2024, we accrued $ 4.8 million and $ 5.0 million, respectively, in Annual Recurring Compensation.

The Annual Recurring Compensation is reflected as an increase to retained deficit in the Condensed Consolidated Balance Sheets.

On October 18, 2022, the Company's Board of Directors authorized the Company to purchase additional shares of Adtran Networks through open market purchases not to exceed 15,346,544 shares.

On July 18, 2022, ADTRAN, Inc., as the borrower, and ADTRAN Holdings, Inc.

entered into a credit agreement with a syndicate of banks, including Wells Fargo Bank, National Association, as administrative agent (“Administrative Agent”), and the other lenders named therein (“Credit Agreement”), which has since been amended four times.

The Company had access to $ 156.5 million on its Credit Facility for future borrowings;

however, as of March 31, 2025 and the date of this filing the Company was limited t o additional borrowings of $ 25.8 million based on debt covenant compliance metrics.

however, as of June 30, 2 025, the Company was limited to additional borrowings of $ 66.8 million based on debt c ovenant compliance metrics.

The financial covenants under the Credit Agreement, as amended, require the Company to maintain a Consolidated Total Net Leverage Ratio of 5.00 x, a Consolidated Senior Secured Net Leverage Ratio of 3.25 x ( 4.0 x to 3.5 x during a Springing Covenant Period) and a Consolidated Fixed Charge Coverage Ratio of 1.25 x.

See Note 10, Revolving Credit Agreements for additional information regarding the terms of the Wells Fargo Credit Agreement.

As of March 31, 2025 , and as of the date of issuance of these financial statements, the Company does not have sufficient liquidity to meet the substantial majority of its payment obligations under the DPLTA pertaining to Exit Compensation.

For the three months ended March 31, 2025 and 2024, less than one thousand shares of Adtran Networks stock were tendered to the Company and Exit Compensation payments of approximately € 12 thousand and € 4 thousand, respectively, or approximately $ 13 thousand and $ 5 thousand based on the applicable exchange rates at the time of the transaction, were paid to Adtran Networks shareholders.

On April 14, 2025, 0.4 million shares of Adtran Networks stock were tendered to the Company and Exit Compensation payments of approximately € 7.0 million or approximately $ 7.5 million, based on the applicable exchange rate at the time of the transaction, will be paid to Adtran Networks shareholders.

See Note 10, Credit Agreements for additional information regarding the terms of the Wells Fargo Credit Agreement.

On October 18, 2022, the Company's Board of Directors authorized the Company to purchase additional shares of Adtran Networks through open market purchases not to exceed 15,346,544 shares.

As of June 30, 2025, and as of the date of issuance of these financial statements, the Company does not have sufficient liquidity to meet the substantial majority of its payment obligations under the DPLTA pertaining to Exit Compensation.

For the three and six months ended June 30, 2025, approximately 0.9 million shares, of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately € 16.9 million or $ 19.4 million based on the applicable exchange rates at the time of the transactions being paid to Adtran Networks shareholders.

For the three and six months ended June 30, 2024, approximately one thousand shares of Adtran Networks stock were tendered to the Company.

This resulted in Exit Compensation payments of approximately € 19 thousand and € 23 thousand, respectively, or $ 20 thousand and $ 25 thousand, respectively, based on the applicable exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.

We believe the probability that more than a small minority of Adtran Networks shareholders elect to receive Exit Compensation in the next twelve months is remote based on the following factors:

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(ii) the diverse base of shareholders that must make this election on an individual shareholder basis;

(iii) the fact that the Company expects to receive a procedural decision during 2025 or 2026 that will likely be appealed and, while the date of a decision by the court on the merits of the case is uncertain, it will likely take a minimum of 12 months for a ruling and, thereafter, an expected appeal process will take a further 12-24 months to resolve;

(iii) the fact the date of a decision by the court on the merits of the case is uncertain, it will most likely take a minimum of 12 months for a ruling and, thereafter, an expected appeal process will take a further 12-24 months to resolve;

(iv) the current guaranteed Annual Recurring Compensation payment;

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The Company experienced revenue declines in the year ended December 31, 2024.

However, customers have started to replenish their inventories to meet increasing demand and management expects orders and billings to increase during the remainder of 2025.

However, customers have started to replenish their inventories to meet increasing demand.

Revenue began to increase in the first half of 2025 and management expects orders and billings to continue to increase during the remainder of 2025.

The Company continues to implement plans to preserve cash liquidity to maintain compliance with the Company’s covenants in case of further impacts related to customer inventory reduction initiatives and uncertain macroeconomic conditions.

Additionally, the Company suspended dividend payments and effectuated a business efficiency program (the "Business Efficiency Program"), which targeted the reduction of ongoing operating expenses and focused on enhancing capital efficiency.

The Business Efficiency Program was completed as of December 31, 2024, other than the Company's aim of selling its headquarters.

The Business Efficiency Program was completed as of December 31, 2024.

The Company has determined that it is probable that the sale of its headquarters in Huntsville will occur within the next twelve months after December 31, 2024.

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In summary, the Company believes that its cash and cash equivalents, investments, working capital management initiatives and availability to access cash under the Wells Fargo credit facility will be adequate to meet our business operating requirements, our capital expenditures and our expected obligations under the DPLTA, including anticipated levels of Exit Compensation and to support our ability to continue to comply with our debt covenants under the Credit Facility and continue as a going concern, for at least the next twelve months, from the issuance of these financial statements.

See Note 10, Revolving Credit Agreements, for additional information regarding the terms of the Wells Fargo Credit agreement.

See Note 10, Credit Agreements, for additional information regarding the terms of the Amendments of the Wells Fargo Credit agreement.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

During the six months ended June 30, 2025, there were no significant changes to our critical accounting policies as described in the financial statements contained in the 2024 Form 10-K/A.

Basis of Presentation

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Amendment No.

1 to the Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 20, 2025 (the "2024 Form 10-K/A").

1 to the Annual Report on Form 10-K for the year ended December 31, 2024 , filed with the SEC on May 20, 2025 ("2024 Form 10-K/A").

Restatement of Previously Issued Financial Statements

As discussed in the financial statements as of and for the year ended December 31, 2024 included in our amended 2024 Annual Report on Form 10-K/A, we identified errors in our previously issued financial statements.

In addition, on May 13, 2025, the Company announced that it needed additional time to complete its quarterly reporting process as a result of the restatements to the annual periods ended December 31, 2023 and 2024 and for the interim periods ended March 31, 2024, June 30, 2024 and September 30, 2024, as well as to complete its evaluation of internal control over financial reporting as of December 31, 2024 as a result of errors related to the historical accounting for certain inventory and cost of goods sold transactions in its Adtran Networks SE subsidiary (the “Adjustment”).

As a result, the Company filed a Form 12b-25 with the SEC and delayed the filing of this report.

In connection with the identification of the Adjustment, the Audit Committee has overseen an internal investigation into the circumstances surrounding the Adjustment and its impact on the Company’s historical financial statements.

Based on the findings of the internal investigation, which is substantially complete, it has been determined that the underlying errors giving rise to the Adjustment were not properly addressed in the Company’s previously filed financial statements as of and for the years ended December 31, 2024 and 2023 and was not communicated to the Audit Committee or the independent auditors prior to the filing of the initial 2024 Annual Report on Form 10-K.

As discussed in the financial statements as of and for the year ended December 31, 2024 included in our 2024 Form 10-K/A, we identified errors in our previously issued financial statements related to the historical accounting for certain inventory and cost of goods sold transactions (“Adjustment”).

The affected periods included the annual periods ended December 31, 2023 and 2024 and the interim periods ended March 31, 2024, June 30, 2024 and September 30, 2024.

In connection with the identification of the Adjustment, the Audit Committee oversaw an internal investigation into the circumstances surrounding the Adjustment and its impact on the Company’s historical financial statements.

Based on the findings of the internal investigation, it was determined that the underlying errors giving rise to the Adjustment were not properly addressed in the Company’s previously filed financial statements as of and for the years ended December 31, 2024 and 2023 and were not communicated to the Audit Committee or the independent auditors prior to the filing of the initial 2024 Annual Report on Form 10-K.

As described in Part I, Item 4 of this report, the Company is taking certain remedial actions to address the material weaknesses in its internal controls associated with these findings.

The identified errors impacted the Condensed Consolidated Financial Statements as of and for the three months ended March 31, 2024, among other periods as previously disclosed.

Below is a summary description of the significant errors in the Company's Condensed Consolidated Financial Statements as of and for the quarter ended March 31, 2024:

On August 4, 2025, we received a letter from the Atlanta regional office of the SEC in connection with a non-public, fact-finding inquiry, requesting that we voluntarily provide information regarding the internal investigation, which we will respond to accordingly.

The identified errors referenced above impacted the Condensed Consolidated Financial Statements as of and for the three and six months ended June 30, 2024, among other periods as previously disclosed.

Below is a summary description of the significant errors in the Company's Condensed Consolidated Financial Statements as of and for the three and six months ended June 30, 2024:

ADJ 1 - Pursuant to the terms of the DPLTA, each Adtran Networks shareholder (other than the Company) is entitled to receive from us an Annual Recurring Compensation payment of € 0.52 per share.

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for fiscal periods beginning with the quarter ended March 31, 2023 through the quarter ended June 30, 2024.

ADJ 2 - For the periods beginning with the quarter ended March 31, 2023 through the quarter ended June 30, 2024 the Company remeasured the redeemable non-controlling interest each quarter-end at the current exchange rate of euros to U.S.

The Company treated the redeemable non-controlling interest as a monetary mezzanine equity instrument but should have treated it as a non-monetary mezzanine equity instrument not subject to remeasurement.

ADJ 2 - For the periods beginning with the quarter ended March 31, 2023 through the quarter ended June 30, 2024, the Company remeasured the RNCI each quarter-end at the current exchange rate of euros to U.S.

The Company treated the RNCI as a monetary mezzanine equity instrument but should have treated it as a non-monetary mezzanine equity instrument not subject to remeasurement.

ADJ 3 - For the year ended December 31, 2023 through the year ended December 31, 2024, the Company understated cost of revenue and overstated inventory in the Company's Adtran Networks subsidiary due to a system error.

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99, “Materiality,” codified in ASC Topic 250, Accounting Changes and Error Corrections.

Based on this assessment, we concluded that the errors, in the aggregate, are material to the March 31, 2024 financial statements and therefore, we are restating those financial statements herein.

Based on this assessment, we concluded that the errors, in the aggregate, are material to the June 30, 2024 financial statements and therefore, we have restated those

financial statements herein.

Furthermore, we made adjustments to correct for other previously identified immaterial errors.

Company has also restated impacted amounts within the accompanying footnotes to the Condensed Consolidated Financial Statements.

The Company has also restated impacted amounts within the accompanying footnotes to the Condensed Consolidated Financial Statements.

See Note 18 for further information about the restatement.

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Actual amounts could differ significantly from these estimates.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of ongoing inflationary pressures, continued elevated interest rates, currency fluctuations and political tensions as of March 31, 2025, and through the date of this report.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of ongoing inflationary pressures, continued elevated interest rates, currency fluctuations and political tensions as of June 30, 2025, and through the date of this report.

These conditions could result in further impacts to the Company's consolidated financial statements in future reporting periods.

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The Company is currently evaluating the effect that adoption of ASU 2024-03 will have on our disclosures.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740):

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures", which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures.

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There are currently no recently adopted accounting pronouncements that are expected to have a material effect on the Condensed Consolidated Financial Statements.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with current year presentation.

These reclassifications had no effect on reported results of operations.

An adjustment has been made to the Consolidated Statement of Cash Flows for the quarter ended March 31, 2024, to reclassify between Property, Plant and Equipment and Intangible Assets.

The following is a description of the principal activities from which revenue is generated by reportable segment:

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Three Months Ended

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

(In thousands)

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Optical Networking Solutions

The aggregate amount of transaction price allocated to remaining performance obligations that have not been satisfied as of March 31, 2025 and December 31, 2024 related to contractual main tenance agreements, contractual SaaS and subscription services, and hardware contracts that exceed one year in duration amounted to $ 274.3 million and $ 325.7 million, respectively.

As of March 31, 2025 , approximately 69 % is expected to be recognized over the next 12 months and the remainder recognized thereafter.

The majority of the Company's remaining performance obligations as of March 31, 2025, are related to contracts or orders that have an original expected duration of one year or less and are excluded from the transaction price related to these future obligations.

Six Months Ended

June 30, 2025

June 30, 2024

(In thousands)

Network Solutions

Services & Support

Network Solutions

Services & Support

Subscriber Solutions

Access & Aggregation Solutions

Optical Networking Solutions

The aggregate amount of transaction price allocated to remaining performance obligations that have not been satisfied as of June 30, 2025 and December 31, 2024 related to contractual maintenance agreements, contractual SaaS and subscription services, and hardware contracts that exceed one year in duration amounted to $ 264.9 million and $ 325.7 million, respectively.

As of June 30, 2025 , approximately 62.8 % is expected to be recognized over the next 12 months and the remainder recognized thereafter.

The majority of the Company's remaining performance obligations as of June 30, 2025, are related to contracts or orders that have an original expected duration of one year or less and are excluded from the transaction price related to these future obligations.

The Company will generally satisfy the remaining performance obligations as we transfer control of the products ordered or services to our customers, excluding maintenance services, which are satisfied over time.

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(In thousands)

March 31, 2025

June 30, 2025

December 31, 2024

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Accounts Receivable

The allowance for credit losses was $ 1.2 million and $ 1.3 million as of March 31, 2025, and December 31, 2024, respectively, related to accounts receivable.

Receivables Purchase Agreements

The allowance for credit losses was $ 1.3 m illion as of June 30, 2025, and December 31, 2024, related to accounts receivable.

Receivables Purchase Agreement

On July 1, 2024, the Company entered into a receivables purchase agreement (the “Factoring Agreement”) with a third-party financial institution (the “Factor”), which accelerates receivable collection and helps to better manage cash flow.

Total accounts receivables factored as of the end of March 3 1, 2025, totaled $ 11.2 million of which $ 3.7 million was retained pursuant to the Factoring Agreement in the reserve account.

Total accounts receivables factored as of the end of June 30, 2025, totaled $ 18.4 million of which $ 3.7 million was retained pursuant to the Factoring Agreement in the reserve account.

The Factoring Agreement provides for up to $ 40.0 million in factoring capacity, subject to eligible receivables and reserve requirements, secured by the receivables.

The balance in the reserve account is included in other assets on the Condensed Consolidated Balance Sheets.

The cost of the Factoring Agreement is included in interest expense in the Condensed Consolidated Statements of Loss and totaled $ 0.3 million for the three mont hs ended March 31, 2025.

The cost of the Factoring Agreement is included in interest expense in the Condensed Consolidated Statements of Loss and totaled $ 0.3 million and $ 0.6 million for the three months and six months ended June 30, 2025, respectively.

On December 19, 2023, the Company entered into a receivables purchase agreement (the "Prior Factoring Agreement") with a third-party financial institution which qualified for treatment as a secured borrowing with a pledge of collateral under Accounting Standards Codification ("ASC") Topic 810, Consolidation.

The Prior Factoring Agreement was terminated on July 1, 2024.

For the three months ended March 31, 2024, the Company incurred program fee expenses of $ 0.3 million.

For the three and six months ended June 30, 2024, the Company incurred program fee expenses of $ 0.3 million and $ 0.6 million, respectively.

Contract Assets

No allowance for credit losses was recorded for the three months ended March 31, 2025 and 2024, respectively, related to contract assets.

No allowance for credit losses was recorded for the three and six months ended June 30, 2025 and 2024, respectively, related to contract assets.

Unearned Revenue

Of the outstanding unearned revenue balances as of December 31, 2024 , $ 21.9 million were recognized as revenue during the three months ended March 31, 2025.

Of the $ 65.1 million of outstanding unearned revenue balances as of December 31, 2023, $ 19.7 million were recognized as revenue during the three months ended March 31, 2024 .

The Company’s effective tax rate changed from a benefit of 5.4 % of pre-tax loss for the three months ended March 31, 2024, to a benefit of 4.2 % of pre-tax loss for the three months ended March 31, 2025.

The change in the effective tax rate for the three months ended March 31, 2025, was driven primarily by loss jurisdictions for which the recognition of tax benefits on pre-tax losses incurred during the first quarter of 2025 were limited due to valuation allowance.

Of the outstanding unearned revenue balances as of December 31, 2024, $ 12.8 m illion and $ 34.7 million were recognized as revenue during the three and six months ended June 30, 2025 , respectively.

Of the $ 65.1 million of outstanding unearned revenue balances as of December 31, 2023, $ 13.7 million and $ 33.1 million were recognized as revenue during the three and six months ended June 30, 2024, respectively.

The Company’s effective tax rate changed from an expense of 4.7 % of pre-tax loss for the three months ended June 30, 2024, to an expense of 5.9 % of pre-tax loss for the three months ended June 30, 2025, and changed from a benefit of 4.2 % of pre-tax loss for the six months ended June 30, 2024, to an expense of 2.3 % of pre-tax loss for the six months ended June 30, 2025.

The changes in the effective tax rate for the three and six months ended June 30, 2025, were driven primarily by loss jurisdictions for which the recognition of tax benefits on pre-tax losses incurred during the three and six months ended June 30, 2025 were limited due to a valuation allowance.

The Company continually reviews the adequacy of its valuation allowance and recognizes the benefits of deferred tax assets only as the assessment indicates that it is more likely than not that the deferred tax assets will be recognized in accordance with ASC 740, Income Taxes.

As of March 31, 2025 , the Company had net deferred tax assets totaling $ 102.8 million, and a valuation allowance totaling $ 115.7 million against those deferred tax assets.

Our assessment of the realizability of our deferred tax assets includes the evaluation of historical operating results, as well as the evaluatio n of evidence which requires significant judgment, including the evaluation of our three-year cumulative income position, future taxable income projections and tax planning strategies.

As of June 30, 2025, the Company had net deferred tax assets totaling $ 100.7 million, and a valuation allowance totaling $ 115.7 million against those deferred tax assets.

Our assessment of the realizability of our deferred tax assets includes the evaluation of historical operating results, as well as the evaluation of evidence which requires significant judgment, including the evaluation of our three-year cumulative income position, future taxable income projections and tax planning strategies.

Should management’s conclusion change in the future and an additional valuation allowance, or a partial or full release of the valuation allowance becomes necessary, it may have a material effect on our consolidated financial statements.

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Outstanding awards granted under the Company's prior equity incentive plans will remain subject to the terms of such applicable plans, and shares under such plans that are cancelled or forfeited will be available for issuance under the 2024 Employee Plan or the 2024 Directors Plan, as applicable.

Under the 2024 Employee Plan, the Company is authorized to is sue 4.0 million sh ares of common stock to certain employees, key service providers and advisors through incentive stock options and non-qualified stock options, stock appreciation rights, RSUs and restricted stock, any of which may be subject to performance-based conditions.

Under the 2024 Employee Plan, the Company is authorized to issue 4.0 million shares of common stock to certain employees, key service providers and advisors through incentive stock options and non-qualified stock options, stock appreciation rights, RSUs and restricted stock, any of which may be subject to performance-based conditions.

RSUs and restricted stock granted under the 2024 Employee Plan will typically vest pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date.

7 unchanged sentences

Forfeitures, cancellations and expirations of awards granted under the prior directors stock plan increase the shares authorized for issuance under the 2024 Directors Plan by one share of common stock for each share underlying the award.

As of March 31, 2025 , 3.9 m illion shares were available for issuance pursuant to awards that may be made in the future under shareholder-approved equity plans.

For the three months ended March 31, 2025 and 2024, stock-based compensation expense was $ 3.2 million and $ 4.0 million, respectively.

PSUs, RSUs and Restricted Stock

The following table summarizes the PSUs, RSUs and restricted stock outstanding as of December 31, 2024, and March 31, 2025 and the changes that occurred during the three months ended March 31, 2025:

As of June 30, 2025 , 4.1 million shares were available for issuance pursuant to awards that may be made in the future under shareholder-approved equity plans.

For the three months ended June 30, 2025 and 2024, stock-based compensation expense was $ 2.7 million and $ 3.8 million, respectively, and for the six months ended June 30, 2025 and 2024 , stock-based compensation expense was $ 5.9 milli on and $ 7.8 million, respectively.

PSUs, RSUs and Restricted Stock - ADTRAN Holdings, Inc.

The following table summarizes the changes of the PSUs, RSUs and restricted stock outstanding during the six months ended June 30, 2025:

(in thousands)

5 unchanged sentences

PSUs, RSUs and restricted stock forfeited

Unvested PSUs, RSUs and restricted stock outstanding, March 31, 2025

Unvested PSUs, RSUs and restricted stock outstanding, June 30, 2025

The fair value of PSUs with performance conditions, RSUs and restricted stock is equal to the closing price of the Company's stock on the date of grant.

The fair value of PSUs with market conditions is calculated using a Monte Carlo simulation valuation method.

As of March 31, 2025 , total unrecognized compensation expense related to non-vested portion of performance-based PSUs (considered probable), market-based PSUs, RSUs and restricted stock was approximately $ 20.9 million, which will be recognized over the remaining weighted-average period of 2.1 years.

As of March 31, 2025 , there was $ 11.0 million of unrecognized compensation expense related to unvested performance-based PSUs (not-considered probable), which will be recognized over the remaining requisite service period of 0.8 years if achievement of the performance obligation becomes probable.

As of June 30, 2025 , total unrecognized compensation expense related to the non-vested portion of market-based PSUs, RSUs and restricted stock was approximately $ 17.8 million, which will be recognized over the remaining weighted-average period of 2.7 years.

As of June 30, 2025 , there was $ 9.9 million of unrecognized compensation expense related to unvested performance-based PSUs (not-considered probable), which will be recognized over the remaining requisite service period of 0.5 years if achievement of the performance obligation becomes probable.

Unrecognized compensation expense will be adjusted for actual forfeitures.

Stock Options

The following table summarizes the ADTRAN Holdings, Inc.

stock options outstanding as of December 31, 2024, and March 31, 2025, and the changes that occurred during the three months ended March 31, 2025:

Stock Options - ADTRAN Holdings, Inc.

The following table summarizes the changes of the stock options outstanding that occurred during the six months ended June 30, 2025:

Stock Options

9 unchanged sentences

Stock options expired

Stock options outstanding, March 31, 2025

Stock options exercisable, March 31, 2025

As of March 31, 2025 , there was $ 2.1 million of unrecognized compensation expense related to stock options which will be recognized over the remaining weighted-average period of 0.8 years.

Stock options outstanding, June 30, 2025

Stock options exercisable, June 30, 2025

As of June 30, 2025 , there was $ 1.3 million of unrecognized compensation expense related to stock options which will be recognized over the remaining weighted-average period of 0.6 years.

The determination of the fair value of stock options assumed or granted by ADTRAN was estimated using the Monte Carlo method and is affected by its stock price, as well as assumptions regarding a number of complex and subjective variables that may have a significant impact on the fair value estimate.

2 unchanged sentences

All of the options were previously issued at exercise prices that approximated fair market value at the date of grant.

The aggregate intrinsic value of stock options represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2025 .

The amount of aggregate intrinsic value was $ 4.0 million as of March 31, 2025, which will change based on the fair market value of the Company's stock.

The total pre-tax intrinsic value of options exercised during the three months ended March 31, 2025 , and 2024 was $ 0.4 million and $ 34 thousand , respectively.

During the three months ended March 31, 2025 and 2024, no stock options vested.

The amount of aggregate intrinsic value was $ 4.2 million as of June 30, 2025, which will change based on the fair market value of the Company's stock.

The total pre-tax intrinsic value of options exercised during the six months ended June 30, 2025 , and 2024 was $ 0.5 million and $ 34 thousand , respectively.

During the three and six months ended June 30, 2025 and 2024, 0.5 million and 0.1 million stock options vested, respectively.

LONG TERM INVESTMENTS

The Company has cash equivalents and investments which are held at fair value as follows:

Fair Value Measurements as of March 31, 2025 Using

Fair Value Measurements as of June 30, 2025 Using

(In thousands)

4 unchanged sentences

Marketable equity securities

Marketable equity securities – various industries

Marketable equity securities

Deferred compensation plan assets

6 unchanged sentences

Marketable equity securities

Marketable equity securities – various industries

Marketable equity securities

Deferred compensation plan assets

(1) The money market fund balances of $0.2 million and $ 5.5 million as of June 30, 2025 and December 31, 2024, respectively, are included in cash and cash equivalents on the balance sheet.

Market prices are obtained from a variety of industry standard data providers, large financial institutions and other third-party sources.

4 unchanged sentences

Level 2 – Significant inputs that are observable;

values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly and

values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly;

Level 3 – Significant unobservable inputs;

1 unchanged sentence

These inputs could include information supplied by investees.

INVENTORY, NET

Inventory consisted of the following:

(In thousands)

March 31, 2025

June 30, 2025

December 31, 2024

5 unchanged sentences

During the twelve months ended December 31, 2024, the Company recorded an inventory write-down of $ 8.6 million, as a result of a strategy shift which included discontinuance of certain product lines in connection with the Business Efficiency Program of which $ 4.1 million relates to inventory write-downs and $ 4.5 million relates to other charges, all of which are included in cost of revenue in the Condensed Consolidated Statements of Loss.

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following:

(In thousands)

March 31, 2025

June 30, 2025

December 31, 2024

4 unchanged sentences

Total property, plant and equipment

accumulated depreciation

accumulated depreciation and amortization

Total property, plant and equipment, net

Long-lived assets used in operations are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by the asset are less than the asset’s carrying value.

Depreciation expense was $ 6.9 million and $ 7.1 million for the three months ended March 31, 2025 and 2024, respectively, which is recorded in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

Depreciation and amortization expense was $ 7.6 million and $ 7.0 million for the three months ended June 30, 2025 and 2024 , respectively, and $ 14.5 million and $ 14.1 million fo r the six months ended June 30, 2025 and 2024, respectively, which is recorded in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

Assets Held For Sale

2 unchanged sentences

The Company records assets held for sale at the lower of their carrying value or fair value.

The total carrying value of assets held for sale was $ 11.9 million as of March 31, 2025 and December 31, 2024, respectively, and is separately recorded on the balance sheet.

The changes in the carrying amount of goodwill for the three months ended March 31, 2025, are as follows:

The total carrying value of assets held for sale was $ 11.9 million as of June 30, 2025 and December 31, 2024, respectively, and is separately recorded on the balance sheet.

The changes in the carrying amount of goodwill for the six months ended June 30, 2025, are as follows:

(In thousands)

2 unchanged sentences

Foreign currency translation adjustments

As of March 31, 2025

During the first quarter of 2024, qualitative factors such as a decrease in the Company’s market capitalization, lower service provider spending and delayed holding patterns of inventory with respect to customers caused us to reduce our forecasts, triggering a quantitative impairment assessment for our reporting units.

As of June 30, 2025

Goodwill represents the excess purchase price over the fair value of net assets acquired.

The Company performs its annual goodwill impairment assessment on the first day of the fourth quarter.

In addition, the Company performs an interim impairment assessment prior to our annual measurement date whenever events or changes in circumstances indicate that the carrying amount of such assets (or group of assets) may not be recoverable.

The Company determined the fair value of each reporting unit using a combination of an income approach and a market-based peer group analysis.

2 unchanged sentences

The quantitative impairment analysis indicated there was no impairment of the Services & Support goodwill during the first quarter of 2024.

No impairment of goodwill was recognized during the three months ended March 31, 2025.

As of March 31, 2025, accumulated goodwill impairment losses tot aled $ 335.3 millio n.

INTANGIBLE ASSETS

Intangible assets as of March 31, 2025 and December 31, 2024, consisted of the following:

As of March 31, 2025

No impairment of goodwill was recognized during the three and six months ended June 30, 2025 and the three months ended June 30, 2024.

As of June 30, 2025, accumulated goodwill impairment losses totaled $ 335.3 million.

INTANGIBLE ASSETS, NET

Intangible assets, net as of June 30, 2025, and December 31, 2024, consisted of the following:

As of June 30, 2025

As of December 31, 2024

(In thousands)

(In thousands excluding years)

Weighted Average Useful Life

9 unchanged sentences

Licensed agreements

No impairment losses of intangible assets were recorded during the three months ended March 31, 2025 and 2024.

Amortization expense was $ 14.9 million and $ 14.6 million in the three months ended March 31, 2025 and 2024, respectively, and was included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

No impairment losses related to intangible assets were recorded during the three and six months ended June 30, 2025 and 2024.

Amortization expense was $ 15.7 million and $ 15.3 million in the three months ended June 30, 2025 and 2024 , respectively, and $ 30.6 million and $ 30.4 million in the six months ended June 30, 2025 and 2024, respectively and was included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

Estimated future amortization expense of intangible assets is as follows:

(In thousands)

March 31, 2025

June 30, 2025

CREDIT AGREEMENTS

1 unchanged sentence

(In thousands)

March 31, 2025

June 30, 2025

December 31, 2024

1 unchanged sentence

Total non-current revolving credit facility

Wells Fargo Credit Facility

On July 18, 2022, ADTRAN, Inc., as the borrower ("U.S.

2 unchanged sentences

2”), the Third Amendment to the Credit Agreement, dated March 12, 2024 (“Amendment No.

3”), and the Fourth Amendment to the Credit Amendment, dated June 4, 2024 (“Amendment No.

3”), the Fourth Amendment to the Credit Amendment, dated June 4, 2024 ("Amendment No.

4"), and the Fifth Amendment to the Credit Agreement, dated May 6, 2025 (“Amendment No.

5” and, collectively with Amendment No.

1, Amendment No.

2, Amendment No.

3, and Amendment No.

1 unchanged sentence

and the Original Credit Agreement, as amended by the Credit Agreement Amendments, the “Amended Credit Agreement”).

As of the date of this filing, the Amended Credit Agreement provided for a secured revolving credit facility of up to $ 374.0 million of borrowings, $ 74.0 million of which is solely available to Adtran Networks as borrower pursuant to the Subline (as defined and further described below.

As of March 31, 2025, the Company’s borrowings under the revolving line of credit were $ 190.1 million, of which approximately $ 141.0 million were borrowed by the U.S.

Borrower and $ 49.1 million were borrowed under the Subline by Adtran Networks (as defined below), who became a party to the Amended Credit Agreement in June 2024.

Amendment No.

5, together with a substantially concurrent prepayment by Adtran Networks of outstanding revolving loans under the German Borrower Sublimit (as defined in the Amended Credit Agreement, which term includes Amendment No.

5 for the purposes of this note) in the amount of $ 24.0 million, among other things, resulted in (i) a permanent partial reduction in the total commitments under the Amended Credit Agreement from $ 374.0 million to $ 350.0 million, (ii) a reduction of the German Borrower Sublimit from $ 74.0 million to $ 50.0 million, and (iii) a reduction of the German Commitment Reduction Threshold (as defined in the Amended Credit Agreement) to $ 25.0 million.

The lenders also waived certain events of default related to among others, inaccuracies in the financial statements that were previously delivered to the lenders by the Company with respect to the fiscal quarters ended June 30, 2024 and September 30, 2024, and breaches of the Consolidated Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement) financial covenant for the fiscal quarters ended June 30, 2024 and September 30, 2024.

As of June 30, 2025, the Amended Credit Agreement provided for a secured revolving credit facility of up to $ 350.0 million of borrowings, $ 50.0 million of which is solely available to Adtran Networks as borrower pursuant to the Subline (as defined and further described below).

As of June 30, 2025, the Company’s borrowings under the revolving line of credit were $ 190.2 million, of which approximately $ 165.0 million were borrowed by the U.S.

Borrower and $ 25.2 million were borrowed under the Subline by Adtran Networks, who became a party to the Amended Credit Agreement in June 2024.

The credit facilities provided under the Amended Credit Agreement mature in July 2027, but the U.S.

2 unchanged sentences

Borrower may utilize up to $ 50.0 million of the $ 350.0 million total revolving facility for the issuance of letters of credit.

As of March 31, 2025, the U.S.

As of June 30, 2025, the U.S.

Borrower had a total of $ 3.3 million in letters of credit under the Amended Credit Agreement, leaving a net amount (after giving effect to the $ 190.2 million of outstanding borrowings described above) of $ 156.5 million available for future borrowings;

however, as of March 31, 2025 and the date of this filing the Company was limited to additional borrowings of $ 25.8 million based on debt covenant compliance metrics.

however, as of June 30, 2025, the Company was limited to additional borrowings of $ 66.8 mi llion based on debt covenant compliance metrics.

Any future credit extensions under the Amended Credit Agreement are subject to customary conditions precedent.

1 unchanged sentence

Moreover, the Amended Credit Agreement provides for a sublimit under the existing $ 350.0 million revolving commitments in an aggregate amount of $ 50.0 million (“Subline ”), which Subline is available for borrowings by Adtran Networks.

Prepayments of outstanding loans under the Subline that result in the remaining outstanding loans under the Subline being less than the German Commitment Reduction Threshold (as defined below) will result in a permanent partial reduction of the commitments in respect of the Subline.

The German Commitment Reduction Threshold was initially $ 75.0 million and may be lowered from time to time pursuant to the terms of the Amended Credit Agreement.

Prepayments of outstanding loans under the Subline that result in the remaining outstanding loans under the Subline being less than the German Commitment Reduction Threshold will result in a permanent partial reduction of the commitments in respect of the Subline.

The German Commitment Reduction Threshold of $ 50.0 million may be lowered from time to time pursuant to the terms of the Amended Credit Agreement.

The existing swing line sublimit and letter of credit sublimit under the Amended Credit Agreement remain available to the U.S.

4 unchanged sentences

Default interest is 2.00 % per annum in excess of the rate otherwise applicable.

As of March 31, 2025, the weighted average interest rate on our revolving credit agreements was 8.55 %.

As of June 30, 2025, the weighted average interest rate on our revolving credit agreements was 8.55 %.

The Company made certain representations and warranties to the lenders in the Amended Credit Agreement that are customary for credit arrangements of this type.

1 unchanged sentence

A “Springing Covenant Event” occurs when at least sixty percent ( 60.0 %) of the outstanding shares of Adtran Networks that were not owned by the Company and its subsidiaries as of August 9, 2023 have been tendered and purchased by the Company.

Upon the occurrence of a Springing Covenant Event, the Company will enter a “Springing Covenant Period”, defined as the fiscal quarter in which a Springing Covenant Event occurs and the three (3) consecutive fiscal quarters thereafter.

Upon the occurrence of a Springing Covenant Event, the Com pany will enter a “Springing Covenant Period”, defined as the fiscal quarter in which a Springing Covenant Event occurs and the three (3) consecutive fiscal quarters thereafter.

During a Springing Covenant Period, the Company’s leverage ratios are increased.

In addition, the cash and cash equivalents of the credit parties must be at least $ 50.0 million and the cash and cash equivalents of the Company and its subsidiaries must be at least $ 70.0 million.

As of March 31, 2025, the Company was in compliance with all covenants.

As of June 30, 2025, the Company was in compliance with all covenants.

The Amended Credit Agreement also contains customary events of default, such as misrepresentation and a default in the performance or observance of any covenant (subject to customary cure periods and materiality thresholds).

12 unchanged sentences

We maintain a defined benefit pension plan covering employees in certain foreign countries.

The net amounts recognized in the Condensed Consolidated Balance Sheets for the unfunded pension liability as of March 31, 2025 and December 31, 2024 were as follows:

The net amounts recognized in the Condensed Consolidated Balance Sheets for the unfunded pension liability as of June 30, 2025 and December 31, 2024 were as follows:

(In thousands)

Balance Sheet Location

March 31, 2025

June 30, 2025

December 31, 2024

8 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

3 unchanged sentences

Net periodic pension cost

The components of net periodic pension cost, other than the service cost component, are included in other income, net in the Condensed Consolidated Statements of Loss.

The components of net periodic pension cost, other than the service cost component, are included in other (expense) income, net in the Condensed Consolidated Statements of Loss.

Service cost is included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

The Company made contributions to the defined benefit pension plans totaling $ 1.1 million and $ 1.2 million during the three months ended March 31, 2025 and 2024, respectively.

The Company made contributions to the defined benefit pension plans totaling $ 2.0 million and $ 2.2 million during the six months ended June 30, 2025 and 2024, respectively.

Contributions to the defined benefit pension plans for the remainder of 2025 will be limited to benefit payments to retirees which are paid out of the operating cash flows of the Company and are expected to be approximately $ 1.5 million.

1 unchanged sentence

The following tables present the changes in accumulated other comprehensive income, net of tax, by component:

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

(In thousands)

(Losses) Gains

Currency Translation

ASU 2018-02 Adoption

Balance as of March 31, 2025

Other comprehensive (loss) income before

reclassifications

Amounts reclassified from accumulated other

comprehensive income

Net current period other comprehensive income

Balance as of June 30, 2025

Three Months Ended June 30, 2024

(In thousands)

Currency Translation

ASU 2018-02 Adoption

Balance as of March 31, 2024

Other comprehensive loss before

reclassifications

Amounts reclassified from accumulated other

comprehensive income (loss)

Net current period other comprehensive loss

Balance as of June 30, 2024 (Restated)

Six Months Ended June 30, 2025

(In thousands)

Currency Translation

ASU 2018-02 Adoption

Balance as of December 31, 2024

4 unchanged sentences

Net current period other comprehensive income

Balance as of March 31, 2025

Three Months Ended March 31, 2024

Balance as of June 30, 2025

Six Months Ended June 30, 2024

(In thousands)

Currency Translation

ASU 2018-02 Adoption

Balance as of December 31, 2023

Other comprehensive (loss) income before

reclassifications

Other comprehensive loss before reclassifications

Amounts reclassified from accumulated other

1 unchanged sentence

Net current period other comprehensive loss

Balance as of March 31, 2024 (restated)

Balance as of June 30, 2024 (Restated)

The following tables present the details of reclassifications out of accumulated other comprehensive income:

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

(In thousands)

3 unchanged sentences

Loss Is Presented

Unrealized gain (loss) on available-for-sale securities:

Net realized loss on sales of securities

Net investment (loss) gain

Unrealized gain on available-for-sale securities:

Net realized gain on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial gain

1 unchanged sentence

Total reclassifications for the period, net of tax

(1) A part of the computation of net periodic pension cost, which is included in other income, net in the Condensed Consolidated Statements of Loss.

Three Months Ended March 31, 2024

(1) A part of the computation of net periodic pension cost, which is included in other (expense) income, net in the Condensed Consolidated Statements of Loss.

Three Months Ended June 30, 2024

(In thousands)

5 unchanged sentences

Net realized gain on sales of securities

Net investment (loss) gain

Net investment gain

Defined benefit plan adjustments – actuarial loss

1 unchanged sentence

Total reclassifications for the period, net of tax

(1) A part of the computation of net periodic pension cost, which is included in other income, net in the Condensed Consolidated Statements of Loss.

(1) A part of the computation of net periodic pension cost, which is included in other (expense) income, net in the Condensed Consolidated Statements of Loss.

Six Months Ended June 30, 2025

(In thousands)

Comprehensive

Affected Line Item in the

Statement Where Net Loss

Unrealized gain (loss) on available-for-sale securities:

Net realized loss on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial gain

Total reclassifications for the period, before tax

Total reclassifications for the period, net of tax

(1) A part of the computation of net periodic pension cost, which is included in other (expense) income, net in the Condensed Consolidated Statements of Loss.

Six Months Ended June 30, 2024

(In thousands)

Comprehensive

Affected Line Item in the

Statement Where Net Loss

Unrealized gain (loss) on available-for-sale securities:

Net realized gain on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial loss

Total reclassifications for the period, before tax

Total reclassifications for the period, net of tax

(1) A part of the computation of net periodic pension cost, which is included in other (expense) income, net in the Condensed Consolidated Statements of Loss.

The following table presents the tax effects related to the change in each component of other comprehensive income (loss):

1 unchanged sentence

Three Months Ended

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

(In thousands)

Unrealized gain (loss) on available-for-sale

Unrealized loss on available-for-sale securities

Reclassification adjustment for amounts related to available-for-sale investments included in net gain

Reclassification adjustment for amounts related to defined benefit plan adjustments included in net gain (loss)

Foreign currency translation adjustments

Total Other Comprehensive Income (Loss)

Six Months Ended

June 30, 2025

June 30, 2024

(In thousands)

Unrealized gain (loss) on available-for-sale securities

Reclassification adjustment for amounts related to available-for-sale investments included in net (loss) gain

3 unchanged sentences

REDEEMABLE NON-CONTROLLING INTEREST

As of March 31, 2025 and December 31, 2024, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 33.0 %.

The following table summarizes the redeemable non-controlling interest activity for the three months ended March 31, 2025 and for the year ended December 31, 2024:

Three Months Ended

As of June 30, 2025 , the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 31.4 %.

The following table summarizes the redeemable non-controlling interest activity for the six months ended June 30, 2025 and for the year ended December 31, 2024:

Six Months Ended

For the Year Ended

(In thousands)

March 31, 2025

June 30, 2025

December 31, 2024

4 unchanged sentences

Balance at end of period

(1) During the third quarter of 2024, the Company identified errors primarily impacting the carrying values of the redeemable non-controlling interest, retained deficit, the net income attributable to the non-controlling interest and the net loss attributable to the Company and, as a consequence, of the loss per common share attributable to the Company.

Annual Recurring Compensation payable on untendered outstanding shares under the DPLTA must be recognized as it is accrued.

For the three months ended March 31, 2025, we accrued $ 2.4 million and for the year ended December 31, 2024, the Company accrued $ 9.8 million, representing the portion of the annual recurring cash compensation to the non-controlling shareholders du ring such periods.

The 2024 Annual Recurring Compensation accrual will be paid after the ordinary general shareholders' meeting of Adtran Networks in 2025.

For the three and six months ended June 30, 2025 , we have accrued $ 2.4 million and $ 4.8 million, respectively, and for the year ended December 31, 2024, the Company accrued $ 9.8 million, representing the portion of the annual recurring cash compensation to the non-controlling shareholders during such periods.

The 2024 Annual Recurring Compensation was paid on July 1, 2025, after the ordinary general shareholders' meeting of Adtran Networks on June 27, 2025.

The 2025 Annual Recurring Compensation accrual will be paid after the ordinary general shareholders' meeting of Adtran Networks in 2026.

2 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except per share amounts)

10 unchanged sentences

Loss per share attributable to ADTRAN Holdings, Inc.

For the three months ended March 31, 2025 and 2024 , 0.2 million and 1.1 million shares, respectively, of unvested PSUs, RSUs and restricted stock were excluded from the calculation of diluted earnings per share due to their anti-dilutive effect.

For the three months ended March 31, 2025 and 2024 , 0.7 million and 3.5 million stock options, respectively, were outstanding but were not included in the computation of diluted earnings per share.

Thes e stock options were excluded because their exercise prices were greater than the average market price of the common shares during the applicable period, making them anti-dilutive under the treasury stock method.

For the three months ended June 30, 2025 and 2024 , 0.5 million and 1.4 million, respectively, and for the six months ended June 30, 2025 and 2024 , 0.3 million and 1.3 million, respectively, of unvested PSUs, RSUs and restricted stock were excluded from the calculation of diluted earnings per share due to their anti-dilutive effect.

For the three months ended June 30, 2025 and 2024 , 1.2 million and 5.0 million outstanding stock options, respectively, and for the six months ended June 30, 2025 and 2024 , 0.9 million and 4.2 million outstanding stock options, respectively, were anti-dilutive and excluded from the calculation of loss per share under the treasury stock method.

SEGMENT INFORMATION

The chief operating decision maker is the Company's Chief Executive Officer who regularly reviews the Company’s financial performance based on two reportable segments:

The chief operating decision maker, the Company's CEO , regularly reviews the Company’s financial performance based on two reportable segments:

(1) Network Solutions and (2) Services & Support.

8 unchanged sentences

The performance of these segments is evaluated based on revenue, gross profit and gross margin;

therefore, selling, general and administrative expenses, research and development expenses, interest and dividend income, interest expense, net investment (loss) gain, other income, net and income tax are reported on a consolidated basis only.

therefore, selling, general and administrative expenses, research and development expenses, interest and dividend income, interest expense, net investment gain, other income (expense), net and income tax benefit are reported on a consolidated basis only.

There is no inter-segment revenue.

2 unchanged sentences

Three Months Ended

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

(In thousands)

3 unchanged sentences

Services & Support

For the three months ended March 31, 2025 and 2024 , $ 1.3 million and $ 1.6 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment.

For the three months ended March 31, 2025 and 2024 , $ 19 thousand and $ 8 thousand, respectively, of depreciation expense was included in gross profit for our Services & Support segment.

Six Months Ended

June 30, 2025

June 30, 2024

(In thousands)

Cost of Revenue

Network Solutions

Services & Support

For the three months ended June 30, 2025 and 2024 , $ 1.3 million and $ 1.5 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment.

For the six months ended June 30, 2025 and 2024 , $ 2.6 million and $ 3.1 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment.

For the three months ended June 30, 2025 and 2024 , $ 0.1 million and $ 0.1 million, respectively, of depreciation expense was included in gross profit for our Services & Support segment.

For the six months ended June 30, 2025 and 2024 , $ 0.1 million and $ 0.1 million, respectively, of depreciation expense was included in gross profit for our Services & Support segment.

Revenue by Geographic Area

1 unchanged sentence

Three Months Ended

Six Months Ended

(In thousands)

10 unchanged sentences

DPLTA Appraisal Proceedings

In addition to such Legal Matters, the Company is a party to appraisal proceedings relating to the DPLTA which were originally filed with the Landgericht Meiningen (Meiningen District Court) on February 3, 2023.

In addition to such Legal Matters, the Company is a party to appraisal proceedings relating to the DPLTA which were originally filed with the Landgericht Meiningen (Meiningen Regional Court) on February 3, 2023.

The DPLTA provides that Adtran Networks shareholders (other than the Company) be offered, at their election, (i) to put their Adtran Networks shares to the Company in exchange for compensation in cash of € 17.21 per share, plus guaranteed interest or (ii) to remain Adtran Networks shareholders and receive recurring cash compensation of € 0.52 per share for each full fiscal year of Adtran Networks.

1 unchanged sentence

While the Company believes that the compensation offered in connection with the DPLTA is fair, it notes that German courts often adjudicate increases of the cash compensation to plaintiffs in varying amounts in connection with German appraisal proceedings.

Therefore, the Company cannot rule out that the first instance court or an appellate court may increase the cash compensation owed to the minority Adtran Networks shareholders.

Therefore, the Company cannot rule out that the court or an appellate court may increase the cash compensation owed to the minority Adtran Networks shareholders.

Given the stage of the appraisal proceedings, the Company is currently unable to predict the likely outcome or estimate the potential financial impact, if any, of the appraisal proceedings.

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The guaranteed interest under the Exit Compensation is calculated from the effective date of the DPLTA to the date the shares are tendered, less any Annual Recurring Compensation paid.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 2.27 % as of March 31, 2025 .

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, the Company would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 338.5 million or approximately $ 366.1 million, based on an exchange rate as of March 31, 2025, and reflecting interest accrued through March 31, 2025 , during the pendency of the appraisal proceedings discussed below.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 2.27 % as of June 30, 2025 .

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, the Company would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 326.8 million or $ 385.2 million, based on an exchan ge rate as of June 30, 2025, and reflecting interest accrued through June 30, 2025 , during the pendency of the appraisal proceedings discussed below.

Shareholders electing the first option of Annual Recurring Compensation may later elect the second option.

The opportunity for outside Adtran Networks shareholders to tender Adtran Networks shares in exchange for Exit Compensation had been scheduled to expire on March 16, 2023 .

The Company does not expect that a trial on the merits of the DPLTA appraisal proceedings will commence until the procedural matter has been resolved.

However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act (Aktiengesetz) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal G azette (Bundesanzeiger).

The court has decided a procedural matter in the DPLTA appraisal proceedings;

the parties may or may not choose to appeal such decision, if able, and the proceeding for the trial on the merits of the DPLTA will continue.

It is expected to take a minimum of 12 months for a ruling of the court on the merits and such ruling will most likely be appealed, which would be expected to

take an additional 12-24 months to be resolved.

Accordingly, the Company does not expect a final decision on the DPLTA appraisal proceedings to be rendered and published prior to 2027, and most likely not until 2028 or beyond.

Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 8.9 million (or $ 9.7 million based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.

Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 8.5 million (or $ 10.0 million based on the exchange rate as of June 30, 2025) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.

The foregoing amounts do not reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in Germany.

With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholders meeting is scheduled for June 27, 2025 and, therefore, the Annual Recurring Compensation will be due on July 2, 2025.

During the three months ended March 31, 2025 and 2024, we accrued $ 2.4 million and $ 2.5 million, respectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit.

With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholders meeting occurred on June 27, 2025 and, therefore, the Annual Recurring Compensation was paid on July 1, 2025.

During the three months ended June 30, 2025 and 2024, we accrued $ 2.4 million and $ 2.5 million, respectively, in Annual Recurring Compensation.

During the six months ended June 30, 2025 and 2024, we accrued $ 4.8 million and $ 5.0 million, r espectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit.

For the three and six months ended June 30, 2025, approximately 0.9 million shares, of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately € 16.9 million, or $ 19.4 million based on the applicable exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.

For the three and six months ended June 30, 2024, approximately one thousand shares of Adtran Networks stock were tendered to the Company.

In addition, under the DPLTA, subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, (i) the Company is entitled to issue binding instructions to the management board of Adtran Networks, (ii) Adtran Networks will transfer its annual profit to the Company, subject to, among other things, the creation or dissolution of certain reserves, and (iii) the Company will absorb the annual net loss incurred by Adtran Networks.

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Certain contracts, customers and jurisdictions in which we do business require us to provide various guarantees of performance such as bid bonds, performance bonds and customs bonds.

As of March 31, 2025 and December 31, 2024, we had commitments related to these bonds totaling $ 15.2 milli on and $ 15.7 million, respectively, which expire at various dates through April 2029 .

As of June 30, 2025 and December 31, 2024, we had commitments related to these bonds totaling $ 16.9 million and $ 15.7 million, respectively, which expire at various dates throug h April 2029 .

In general, we would only be liable for the amount of these guarantees in the event of default under each contract, the probability of which we believe is remote.

3 unchanged sentences

Certain of our inventory purchase obligations with contract manufacturers and suppliers relate to arrangements to secure supply and pricing for certain product components for multi-year periods.

As of March 31, 2025, purchase obligations totale d $ 203.9 mi llion.

As of June 30, 2025, purchase obligations totaled $ 192.7 mi llion.

RESTRUCTURING

1 unchanged sentence

This included certain salary reductions, an early retirement program, a site consolidation plan to include lease impairments and the sale of owned real estate (including the sale of our headquarters in Huntsville), inventory write downs from product discontinuances, and the suspension of the quarterly dividend.

Other than the Company's aim of selling its headquarters, the Business Efficiency Program was completed as of December 31, 2024.

During the three months ended March 31, 2024, we recognized $ 17.1 million of costs related to the Business Efficiency Program.

The costs recognized during the three months ended March 31, 2024, included total other renegotiated charges and inventory write-down of $ 8.8 million as a result of a strategy shift which included discontinuance of certain items in connection with the Business Efficiency Program, of which, $ 4.0 million relates to inventory write-downs and $ 4.8 million relates to other charges, and are included in cost of revenue in the Condensed Consolidated Statements of Loss.

We did no t incur any Business Efficiency Program costs during the three months ended March 31, 2025.

A reconciliation of the beginning and ending restructuring liabilities, which is included in accrued wages and benefits and accounts payable in the Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024, is as follows:

The Business Efficiency Program was completed as of December 31, 2024.

During the three and six months ended June 30, 2024, we recognized $ 17.5 million and $ 34.6 million of costs related to the Business Efficiency Program, respectively.

The costs recognized during the six months ended June 30, 2024, included charges of $ 8.9 million as a result of a strategy shift which included discontinuance of certain items in connection with the Business Efficiency Program, of which, $ 4.1 million relates to inventory write-downs and $ 4.8 million relates to other charges, and are included in cost of revenue in the Condensed Consolidated Statements of Loss.

Although the Company did no t incur any additional Business Efficiency Program costs during the three and six months ended June 30, 2025, the Company reduced previously accrued costs by $ 0.3 million during the three and six months ended June 30, 2025.

A reconciliation of the beginning and ending restructuring liabilities, which is included in accrued wages and benefits and accounts payable in the Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024, is as follows:

Three Months Ended

Six Months Ended

(In thousands)

March 31, 2025

Balance as of December 31, 2024

Amounts charged to cost and expense

Balance as of March 31, 2025

The Year Ended

June 30, 2025

Balance at beginning of period

Adjusted accrued costs

Balance as of June 30, 2025

For the Year Ended

(In thousands)

3 unchanged sentences

Balance as of December 31, 2024

Restructuring expenses included in the Condensed Consolidated Statements of Loss are for the three months ended March 31, 2025 and 2024:

Restructuring expenses included in the Condensed Consolidated Statements of Loss are for the three and six months ended June 30, 2025 and 2024:

Three Months Ended

Six Months Ended

(In thousands)

6 unchanged sentences

Total restructuring expenses

The following table represents the components of restructuring expenses by geographic area for the three months ended March 31, 2025 and 2024:

The following table represents the components of restructuring expenses by geographic area for the three and six months ended June 30, 2025 and 2024:

Three Months Ended

Six Months Ended

(In thousands)

3 unchanged sentences

RESTATEMENT OF QUARTERLY FINANCIAL INFORMATION

As previously disclosed in our Annual Report on Form 10-K/A and as discussed in Note 1 “Summary of Significant Accounting Policies”, the following tables reflect the impact of errors and other previously identified immaterial errors to the specific line items presented in our previously reported (a) Condensed Consolidated Balance Sheet;

(b) Condensed Consolidated Statement of Loss and Condensed Consolidated Statement of Comprehensive Loss;

As previously disclosed in our Form 10-K/A and as discussed in Note 1 “Summary of Significant Accounting Policies”, the following tables reflect the impact of errors and other previously identified immaterial errors to the specific line items presented in our previously reported (a) Condensed Consolidated Balance Sheets;

(b) Condensed Consolidated Statements of Loss and Condensed Consolidated Statements of Comprehensive Loss;

(d) Condensed Consolidated Statement of Cash Flows for the quarterly period ended March 31, 2024.

As of March 31, 2024

(d) Condensed Consolidated Statements of Cash Flows as of and for the three and six months ended June 30, 2024.

As of June 30, 2024

Adj Reference

1 unchanged sentence

Cash and cash equivalents

Accounts receivable, less allowance for credit losses of $ 367 as of March 31, 2024

Accounts receivable, less allowance for credit losses of $ 191 as of June 30, 2024

Other receivables

Income tax receivable

Inventory, net

Income tax receivable

Prepaid expenses and other current assets

1 unchanged sentence

Property, plant and equipment, net

Deferred tax assets

Intangibles, net

Deferred tax assets

Other non-current assets

20 unchanged sentences

200,000 shares authorized;

79,116 shares issued and 78,850 outstanding as of March 31, 2024

79,121 shares issued and 78,855 outstanding as of June 30, 2024

Additional paid-in capital

2 unchanged sentences

Treasury stock at cost:

265 as of March 31, 2024

266 shares as of June 30, 2024

Total Liabilities, Redeemable Non-Controlling Interest and Equity

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Six Months Ended June 30, 2024

Adj Reference

4 unchanged sentences

Network Solutions

Network Solutions - inventory write-down and other charges

Network Solutions - Inventory Write Down

Services & Support

7 unchanged sentences

Net investment gain

Other income, net

Other (expense) income, net

Loss Before Income Taxes

Income tax benefit

Income tax (expense) benefit

Net Income attributable to non-controlling interest

9 unchanged sentences

Comprehensive Loss, net of tax

Comprehensive Income attributable to non-controlling interest, net of tax

Comprehensive Income attributable to non-controlling interest

Comprehensive Loss attributable to ADTRAN Holdings, Inc., net of tax

14 unchanged sentences

Balance as of March 31, 2024

Three Months Ended March 31, 2024

Annual recurring compensation earned

Other comprehensive loss, net of tax

Deferred compensation adjustments, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Foreign currency remeasurement of redeemable non-controlling interest

Adtran Networks stock-based compensation expense

Balance as of June 30, 2024

Six Months Ended June 30, 2024

Adj Reference

8 unchanged sentences

Deferred income taxes

Inventory write down

Inventory write down - business efficiency program

Inventory reserves

19 unchanged sentences

Repayments on receivables purchase agreement

Repayment of revolving credit agreements

Payment for redemption of redeemable non-controlling interest

13 unchanged sentences

SUBSEQUENT EVENTS

Exit Compensation Payments

Fifth Amendment to Wells Fargo Credit Agreement

On May 6, 2025, the Company, ADTRAN, Inc., and Adtran Networks entered into a fifth amendment to the Credit Agreement ("Amendment No.

Amendment No.

5, together with a substantially concurrent prepayment by the German Borrower of outstanding revolving loans under the German Borrower Sublimit (as defined in the Amended Credit Agreement, which term includes Amendment No.

Annual Recurring Compensation Payment in accordance with the DPLTA

On July 1, 2025, the Company paid $ 10.1 million with respect to the 2024 fiscal year Annual Recurring Compensation.

See Note 13 for additional information on the Annual Recurring Compensation payment.

Enactment of the “One Big Beautiful Bill Act”

On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) was signed into law, which constitutes the enactment date of the tax reconciliation bill under U.S.

Key corporate tax provisions include the restoration of 100% bonus depreciation, expensing of domestic research and experimental expenditures under Section 174A, modifications to Section 163(j) interest expense limitations, updates to the rules governing global intangible low-taxed income and foreign-derived intangible income, amendments to energy credits, and expanded Section 162(m) aggregation requirements.

In accordance with ASC 740, the effects of the new tax law will be recognized in the period of enactment.

The Company is currently evaluating the impact of the OBBBA, and an estimate of the financial effect is not yet available.

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 1. Financial Statements