What changed in this filing

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Item 1. Financial Statements

2025-11-04 compared with 2025-08-05 · 431 added, 298 removed, 793 unchanged (48% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

September 30,

Current Assets

Cash and cash equivalents

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

Restricted cash

Accounts receivable, less allowance for credit losses of $ 1,237 and $ 1,300 as of September 30, 2025

and December 31, 2024, respectively

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Non-current revolving credit agreement

Non-current convertible senior notes, net of debt issuance costs

Deferred tax liabilities

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200,000 shares authorized;

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

80,093 shares issued and 79,831 outstanding as of September 30, 2025 and

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

3 unchanged sentences

Less treasury stock at cost:

262 and 266 shares as of June 30, 2025

262 and 266 shares as of September 30, 2025

and December 31, 2024, respectively

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Network Solutions

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Net investment gain

Other (expense) income, net

Other income (expense), net

Loss Before Income Taxes

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Loss per common share attributable to ADTRAN Holdings, Inc.

(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.

– diluted (2)

(1) For the three and nine months ended September 30, 2025 we accrued $ 2.5 million and $ 7.5 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 nine months ended September 30, 2024, we accrued $ 2.4 million and $ 7.4 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 $ 1.5 million effect of redemption of RNCI for the three and six months ended June 30, 2025.

- basic and diluted - reflects a $ 0.5 million and a $ 2.0 million effect of redemption of RNCI for the three and nine months ended September 30, 2025, respectively, and a $ 3.0 million effect of redemption of RNCI for the three and nine months ended September 30, 2024.

See Note 16 for additional information.

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ADTRAN Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

Three Months Ended

Six Months Ended

Other Comprehensive Income (Loss), net of tax

Nine Months Ended

September 30,

Other Comprehensive (Loss) Income, net of tax

Defined benefit plan adjustments

Foreign currency translation gain (loss)

Other Comprehensive Income (Loss), net of tax

Comprehensive Income (Loss), net of tax

Foreign currency translation (loss) gain

Other Comprehensive (Loss) Income, net of tax

Comprehensive (Loss) Income, net of tax

Comprehensive Income attributable to non-controlling interest

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

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

See accompanying notes to condensed consolidated financial statements.

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Balance as of June 30, 2025

Annual recurring compensation earned

Other comprehensive loss, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock options exercised

ADTRAN stock-based compensation expense

Purchase of capped calls related to the convertible senior notes

Redemption of redeemable non-controlling interest

Balance as of September 30, 2025

See accompanying notes to condensed consolidated financial statements.

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Adtran Networks stock-based compensation expense

Balance as of June 30, 2024 (Restated)

Balance as of June 30, 2024

Annual recurring compensation earned

Other comprehensive loss, 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 September 30, 2024 (Restated)

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Cash flows from operating activities:

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Goodwill impairment

Amortization of debt issuance cost

Amortization of revolving credit facility issuance costs

Amortization of convertible notes issuance costs

Gain on investments, net

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Repayments on receivables purchase agreement

Proceeds from draw on revolving credit agreements

Repayment of revolving credit agreements

Proceeds from draw on revolving credit agreement

Repayment of revolving credit agreement

Proceeds from issuance of convertible notes

Payment for redemption of redeemable non-controlling interest

Payment of debt issuance cost

Payment of annual recurring compensation to non-controlling interest

Payments for capped call transactions related to convertible senior notes

Payment of debt issuance costs on revolving credit facility and convertible notes

Net cash used in financing activities

Net increase in cash and cash equivalents

Net increase in cash, cash equivalents and restricted cash

Effect of exchange rate changes

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Cash, cash equivalents and restricted cash, end of period

Supplemental disclosure of cash financing activities:

Cash paid for interest

Cash paid for interest expense

Cash paid for income taxes, net of refunds

Cash used in operating activities related to operating leases

Supplemental disclosure of non-cash investing activities:

Supplemental disclosure of non-cash investing and financing activities:

Redemption of redeemable non-controlling interest

1 unchanged sentence

Purchases of property, plant and equipment included in accounts payable

Purchases of property, plant and equipment included in other non-current liabilities

Debt issuance costs included in accrued expenses and other liabilities

See accompanying notes to condensed consolidated financial statements.

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We believe that the combined technology portfolio can best address current and future customer needs for high-speed connectivity from the network core to the end consumer, especially upon the convergence of solutions at the network edge.

Liquidity, Domination and Profit and Loss Transfer Agreement and Credit Facility

Liquidity, Domination and Profit and Loss Transfer Agreement, Notes Offering and Credit Facility

The DPLTA between the Company, as the controlling company, and Adtran Networks, as the controlled company, which was executed on December 1, 2022, became effective on January 16, 2023, as a result of its registration with the commercial register ( Handelsregister ) of the local court ( Amtsgericht ) at the registered seat of Adtran Networks (Jena).

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The Company’s payment obligation in satisfaction of the requirement that it absorb Adtran Networks’ annual net loss applies to the net loss generated by Adtran Networks in 2024 and it will apply to any net loss generated by Adtran Networks in 2025.

Pursuant to the terms of the DPLTA, each Adtran Networks shareholder (other than the Company) has received an offer to elect either (1) to remain an Adtran Networks shareholder and receive from us recurring compensation in cash of € 0.52 per share for each full fiscal year of Adtran Networks (the "Annual Recurring Compensation"), or (2) to put their Adtran Networks shares to the Company in exchange for compensation in cash of € 17.21 per share, plus guaranteed interest (the "Exit Compensation").

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 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.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that w as 1.27 % as o f September 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 € 322.7 million or $ 378.7 mi llion, based on an exchange rate as of September 30, 2025, and reflecting interest accrued through September 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 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.

Following the court's decision on a procedural matter in the DPLTA appraisal proceedings on July 14, 2025, the trial on the merits of the DPLTA has recommenced.

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 € 8.5 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.

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 September 30, 2025) per year assuming none of the minority Adtran Networks shareholders as of September 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 the German court.

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 m onths following expiration of the fiscal year).

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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.

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

During the nine months ended September 30, 2025 and 2024, we accrued $ 7.5 million and $ 7.4 million, respectively, in Annual Recurring Compensation.

The Annual Recurring Compensation is reflected as an increase to retained deficit.

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 five times.

The Company had access to $ 319.2 million on its Credit Facility for future borrowings;

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, 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.

however, as of September 30, 2 025, the Company was limited to additional borrowings of $ 232.0 million based on debt c ovenant compliance metrics.

In addition, during a Springing Covenant Period 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.

See Note 11, Credit Agreement 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 sh ares.

As of September 30, 2025, and as of the date of issuance of these financial statements, the Company has sufficient liquidity to meet a majority of its payment obligations under the DPLTA pertaining to Exit Compensation.

For the three and nine months ended September 30, 2025, less than one thousand shares and approximately 0.9 million shares, respectively, of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately € 16.9 million or $ 19.9 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.

For the three and nine months ended September 30, 2024, approximately 0.8 million shares of Adtran Networks stock were tendered to the Company.

This resulted in Exit Compensation payments of approximately € 15.7 million, or $ 17.4 million, 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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and (v) the current trading value of Adtran Networks shares.

Moreover, on September 19, 2025, the Company issued $ 201.3 million aggregate principal amount of convertible senior notes due 2030 (the “Notes”).

The Notes accrue interest at a rate of 3.75 % per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning March 15, 2026.

Unless repurchased earlier, redeemed, or converted, the Notes will mature on September 15, 2030 .

After deducting the initial purchasers’ discounts, commissions, and estimated offering expenses, the Company received net proceeds of $ 192.8 million.

As of September 30, 2025, and as of the date of issuance of these financial statements, management believes that the Company has sufficient liquidity to meet its payment obligations under the Notes through its operating cash flow and the borrowings available under the Credit Agreement.

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

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.

However, customers began replenishing their inventories to meet increasing demand, and revenue increased throughout the first three quarters of 2025.

In 2023, 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.

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.

The Company may need to further reduce capital expenditures and/or take other steps to preserve working capital in order to ensure that it can meet its needs and obligations and maintain compliance with its debt covenants.

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

In addition, the Company continues to assess the probability that the sale of its headquarters in Huntsville will occur and has determined it is probable of occurring in the next twelve months.

In summary, the Company believes that its cash, cash equivalents and restricted cash, 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 both the Notes and the DPLTA, including anticipated levels of Exit Compensation, as well as to support our ability to continue to comply with our debt covenants under the Credit Facility for at least the next twelve months,

from the issuance of these financial statements.

See Note 11, Credit Agreements, for additional information regarding the terms of the Amendments of the 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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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.

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:

The identified errors referenced above impacted the Condensed Consolidated Financial Statements as of and for the three and nine months ended September 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 nine months ended September 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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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 June 30, 2024 financial statements and therefore, we have restated those

financial statements herein.

Based on this assessment, we concluded that the errors, in the aggregate, are material to the September 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.

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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 June 30, 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 September 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.

The accounting matters assessed included, but were not limited to, the allowance for credit losses, stock-based compensation, carrying value of goodwill, intangibles and other long-lived assets, financial assets, valuation allowances for tax as sets, revenue recognition and costs of revenue.

Restricted Cash

Restricted cash consists of cash pledged as collateral, which is permitted to be withdrawn for the purpose of financing the purchase of additional outstanding shares of Equity Interests (as defined in the Credit Agreement) of Adtran Networks.

See Note 11 for additional information.

Convertible Senior Notes

We account for our convertible senior notes with embedded conversion features in accordance with ASC 470-20, under which convertible debt instruments would only be separated into multiple components if they were issued at a substantial premium or if embedded derivatives requiring bifurcation were identified.

The convertible senior notes (the "2030 Notes" or the “Notes”) were not issued at a substantial premium, and we analyzed the provisions of the 2030 Notes and did not identify any material embedded features which would require bifurcation from the host debt.

As such, the 2030 Notes are accounted for entirely as a liability, net of unamortized issuance costs.

The carrying amount of the liability is classified as long-term as the instrument does not mature within one year of the balance sheet date and the holder is not permitted to demand repayment of the principal within one year of the balance sheet date.

However, if conditions to convertibility are met and holders are expected to convert within one year as described further in Note 12, we may be required to reclassify the carrying amount of the liability to current.

Issuance costs are amortized to interest expense using the effective interest rate method.

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

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2024-03, "Disaggregation of Income Statement Expenses (DISE) (Topic 220):

Improvements to Income Statement Disclosures", which applies to all public business entities (PBEs) and is intended to enhance disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

In September 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-06, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software," which is intended to modernize the accounting for the costs of internal-use software given the evolution of software development to the incremental and iterative development method.

The amendments remove all references to prescriptive and sequential development stages and, instead, require an entity to start capitalizing software costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended.

The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.

Early adoption is permitted as of the beginning of an annual reporting period with the amendments to be applied using a prospective, modified or retrospective transition approach.

The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses (DISE) (Topic 220):

Improvements to Income Statement Disclosures", which applies to all public business entities and is intended to enhance disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The amendments are effective prospectively for annual periods beginning after December 15, 2026, and early adoption and retrospective application are permitted.

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The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted.

The Company is currently evaluating the effect that adoption of ASU 2023-09 will have on our disclosures.

The resulting new annual disclosure requirements will be reflected in our 2025 report on Form 10-K.

The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

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

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheet that agree to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows:

(In thousands)

September 30, 2025

December 31, 2024

Cash and cash equivalents

Restricted cash

Cash, cash equivalents and restricted cash

The Company did no t have any restricted cash as of December 31, 2024.

See Note 11 for additional information regarding restricted cash.

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

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Three Months Ended

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

(In thousands)

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Optical Networking Solutions

Six Months Ended

June 30, 2025

June 30, 2024

Nine Months Ended

September 30, 2025

September 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 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 aggregate amount of transaction price allocated to remaining performance obligations (“RPO”) that have not been satisfied as of September 30, 2025 related to non-cancellable contractual maintenance agreements, non-cancellable contractual SaaS and subscription services, and non-cancellable hardware contracts amounted to $ 174.0 million.

The Company identified an immaterial error in its 2024 RPO disclosure of $ 325.7 million where it incorrectly included cancellable contracts and inappropriately applied the practical expedient under ASC 606.

The Company has corrected the disclosure to remove the cancellable portion of RPO amounts and to reflect the impact of discontinuing the use of the practical expedient to exclude contracts with an original expected duration of one year or less.

The corrected amount of the RPO is $ 185.4 million as of December 31, 2024.

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)

June 30, 2025

September 30, 2025

December 31, 2024

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Non-current unearned revenue

(1) Included in other receivables on the Condensed Consolidated Balance Sheets.

(1) Included in other receivables.

Accounts Receivable

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

The allowance for credit losses wa s $ 1.2 m illion and $ 1.3 million as of September 30, 2025 and December 31, 2024, respectively.

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 June 30, 2025, totaled $ 18.4 million of which $ 3.7 million was retained pursuant to the Factoring Agreement in the reserve account.

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

Total accounts receivables factored as of the end of September 30, 2025, totaled $ 23.6 million net of $ 3.7 million retained pursuant to the Factoring Agreement in the reserve account.

Total accounts receivables factored as of the end of September 30, 2024, totaled $ 16.7 million net of $ 3.7 million 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 and $ 0.6 million for the three months and six months ended June 30, 2025, respectively.

The balance in the reserve account is included in other assets.

The Company at its own expense does have collection and administrative responsibilities for the sold receivables and that is its only continuing involvement with the factoring party.

The Company is not compensated for the servicing of the factoring program and deems the costs of servicing the receivables sold to be immaterial.

During the three and nine months ended September 30, 2025, the Company received $ 49.2 million and $ 119.4 million, in cash proceeds from the Factoring Agreement, respectively, and during the three and nine months ended September 30, 2024, the Company received $ 39.9 million, in cash proceeds from the Factoring Agreement, which are recorded as a component of accounts receivable in operating cash flows on the Condensed Consolidated Statement of Cash Flows.

The cost of the F actoring Agreement is included in interest expense in the Condensed Consolidated Statements of Loss and totaled $ 0.5 million and $ 0.3 million for the three months ended September, 30, 2025 and 2024, respectively, and $ 1.0 million and $ 0.3 million for the nine months ended September 30, 2025 and 2024, 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 and six months ended June 30, 2024, the Company incurred program fee expenses of $ 0.3 million and $ 0.6 million, respectively.

For the nine months ended September 30, 2024, the Company incurred program fee expenses of $ 0.6 million .

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.

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

Unearned Revenue

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.

Of the outstanding unearned revenue balances as of December 31, 2024, $ 9.3 m illion and $ 44.1 million were recognized as revenue during the three and nine months ended September 30, 2025 , respectively.

Of the $ 65.1 million of outstanding unearned revenue balances as of December 31, 2023, $ 10.03 million and $ 43.1 million were recognized as revenue during the three and nine months ended September 30, 2024, respectively.

The Company’s effective tax rate changed from an expense of 1.4 % of pre-tax loss for the three months ended September 30, 2024, to an expense of 18.3 % of pre-tax loss for the three months ended September 30, 2025, and changed from a benefit of 3.9 % of pre-tax loss for the nine months ended September 30, 2024, to an expense of 5.5 % of pre-tax loss for the nine months ended September 30, 2025.

The changes in the effective tax rate for the three and nine months ended September 30, 2025, were driven primarily by loss jurisdictions for which the recognition of tax benefits on pre-tax losses 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 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.

As of September 30, 2025, the Company had net deferred tax assets totaling $ 101.2 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.

On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) was signed into law, which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025.

In addition, the OBBBA makes changes to certain U.S.

corporate tax provisions, but many are generally not effective until 2026.

Due to the timing of enactment within our current period end, the Company has undergone efforts to reasonably estimate the impact of the Act on our condensed consolidated financial statements and there were no material impacts to the financial statements.

We will continue to evaluate the full impact of these legislative changes as more guidance becomes available.

STOCK-BASED COMPENSATION

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Stock options, restricted stock and RSUs granted under the 2024 Directors Plan reduce the shares authorized for issuance under the 2024 Directors Plan by one share of common stock for each share underlying the award.

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 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.

Forfeitures, cancellations and expirations of awards granted under the 2020 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 September 30, 2025 , 4.2 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 September 30, 2025 and 2024, stock-based compensation expense was $ 2.9 million and $ 3.7 million, respectively, and for the nine months ended September 30, 2025 and 2024 , stock-based compensation expense was $ 8.7 milli on and $ 11.5 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:

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

(in thousands)

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PSUs, RSUs and restricted stock forfeited

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

Unvested PSUs, RSUs and restricted stock outstanding, September 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 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.

As of September 30, 2025 , total unrecognized compensation expense related to the non-vested portion of market-based PSUs, RSUs and restricted stock was approximately $ 15.7 million, which will be recognized over the remaining weighted-average period of 2.6 years.

As of September 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 0.3 years if achievement of the performance obligation becomes probable.

Unrecognized compensation expense will be adjusted for actual forfeitures.

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:

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

Stock Options

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Stock options expired

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.

Stock options outstanding, September 30, 2025

Stock options exercisable, September 30, 2025

As of September 30, 2025 , there was $ 0.7 million of unrecognized compensation expense related to stock options which will be recognized over the remaining weighted-average period of 0.4 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.

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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 June 30, 2025 .

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.

The amount of aggregate intrinsic value was $ 4.6 million as of September 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 nine months ended September 30, 2025 , and 2024 was $ 0.7 million and $ 34 thousand , respectively.

During the three and nine months ended September 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 June 30, 2025 Using

Fair Value Measurements as of September 30, 2025 Using

(In thousands)

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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.

(1) The money market fund balances of $ 0.2 million and $ 5.5 million as of September 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.

11 unchanged sentences

(In thousands)

June 30, 2025

September 30, 2025

December 31, 2024

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Inventory reserves are established for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on estimated reserve percentages, which considers historical usage, known trends, inventory age and market conditions.

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, NET

1 unchanged sentence

(In thousands)

June 30, 2025

September 30, 2025

December 31, 2024

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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 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.

Depreciation and amortization expense was $ 7.9 million and $ 7.2 million for the three months ended September 30, 2025 and 2024 , respectively, and $ 22.3 million and $ 21.2 million fo r the nine months ended September 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

On December 31, 2024, the Company determined it met the held for sale criteria pursuant to ASC 360, "Impairment and Disposal of Long-Live Assets" on the Company's property located at the North and South Towers in its Huntsville, Alabama campus and ceased recording depreciation on the assets.

The Company expects to dispose of the property within the next twelve months.

The Company continues to assess the probability that the sale of its headquarters in Huntsville will occur and has determined it is probable of occurring in the next twelve months.

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 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:

The total carrying value of assets held for sale was $ 11.9 million as of September 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 nine months ended September 30, 2025 and the twelve months ended December 31, 2024, are as follows:

(In thousands)

Network Solutions

Services & Support

As of December 31, 2023

Goodwill impairment

Foreign currency translation adjustments

As of June 30, 2025

As of December 31, 2024

Foreign currency translation adjustments

As of September 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.

The Company performs its annual goodwill impairment test as of 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.

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 of our reporting units.

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

The significant inputs and assumptions used in the determination of the fair value of our reporting units, based on future cash flows for the reporting units, requires significant judgment and the use of estimates and assumptions related to cash flow projections, discount rate, peer group determination and market multiple selection.

The Company determined upon its quantitative impairment assessment to recognize a $ 297.4 million non-cash goodwill impairment charge for the Network Solutions reporting unit.

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 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.

No impairment of goodwill was recognized during the three and nine months ended September 30, 2025.

No impairment of goodwill was recognized during the three months ended September 30, 2024.

The Company determined upon its quantitative impairment assessment to recognize a goodwill impairment of $ 297.4 million, during the nine months ended September 30, 2024.

As of September 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

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

As of September 30, 2025

As of December 31, 2024

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Licensed agreements

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.

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

Amortization expense was $ 15.7 million and $ 16.1 million in the three months ended September 30, 2025 and 2024 , respectively, and $ 46.4 million and $ 46.5 million in the nine months ended September 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)

June 30, 2025

CREDIT AGREEMENTS

The carrying amounts of the Company's non-current revolving credit facility in its Condensed Consolidated Balance Sheets were as follows:

September 30, 2025

CREDIT AGREEMENT

The carrying value of the Company's non-current revolving credit facility was as follows:

(In thousands)

June 30, 2025

September 30, 2025

December 31, 2024

1 unchanged sentence

Total non-current revolving credit facility

Revolving Credit Agreement

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

Borrower"), and the Company 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 (the “Original Credit Agreement”), as amended by the First Amendment to the Credit Agreement, dated August 9, 2023 (“Amendment No.

1”), the Second Amendment to the Credit Agreement, dated January 16, 2024 (“Amendment No.

2”), the Third Amendment to the Credit Agreement, dated March 12, 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.

Borrower"), and the Company 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 (the “Original Credit Agreement”), as amended by the First Amendment to Credit Agreement, dated August 9, 2023 (“Amendment No.

1”), the Second Amendment to Credit Agreement, dated January 16, 2024 (“Amendment No.

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

3”), the Fourth Amendment to Credit Amendment, dated June 4, 2024 among Adtran Networks (the "German Borrower") and the parties set forth above ("Amendment No.

4") and the Fifth Amendment to Credit Agreement and Waiver, dated May 6, 2025, among the German Borrower and the parties set forth above (“Amendment No.

the Original Credit Agreement as amended by Amendment No.

1, Amendment No.

Amendment No.

3, Amendment No.

4 and Amendment No.

4, the “Credit Agreement Amendments”;

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

5, the “Existing Credit Agreement”).

On September 16, 2025, the U.S.

Borrower, the German Borrower, and the lenders party thereto, including the Administrative Agent, entered into the Sixth Amendment and Consent to Credit Agreement, dated September 16, 2025 (“Amendment No.

the Existing Credit Agreement as amended by Amendment No.

6, the “Amended Credit Agre ement”).

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.

6, among other things, (i) provides for a consent from the lenders to the issuance by the Company of new unsecured convertible indebtedness in an amount not to exceed $ 230.0 million, notwithstanding the cap on the amount of Permitted Convertible Indebtedness (as defined in the Amended Credit Agreement) the Company is permitted to incur, (ii) requires that the net cash proceeds of the new unsecured convertible indebtedness be used to (a) repay outstanding revolving credit loans under the Amended Credit Agreement, (b) pay fees, costs, and expenses related to Amendment No.

6 and the issuance of the new unsecured convertible indebtedness and (c) cash collateralize the obligations of the Company and its subsidiaries under the Amended Credit Agreement (with such cash only being permitted to be withdrawn for the purpose of financing the purchase of additional outstanding shares of Equity Interests (as defined in the Amended Credit Agreement) of the German Borrower that were not owned by the Company and its subsidiaries as of August 9, 2023 pursuant to Section 5, paragraph 1 of the DPLTA), and (iii) after the prepayment contemplated in the foregoing clause (ii)(a) and the provision of cash collateral contemplated in the foregoing clause (ii)(c), amends provisions governing the Subline (as defined below) to provide that future prepayments in respect of borrowings under the Subline will no longer permanently reduce the commitments in respect of the Subline.

As of September 30, 2025, the Company had $ 7.5 million of cash collateral which is permitted to be withdrawn for the purpose of financing the purchase of additional outstanding shares of Adtran Networks stock as defined in the Amended Credit Agreement.

As of September 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 the German Borrower.

As of September 30, 2025, the Company’s borrowings under the revolving line of credit were $ 25.0 million, of which all was borrowed under the Subline by the German Borrower.

The credit facilities provided under the Amended Credit Agreement mature in July 2027,

Borrower may request extensions subject to customary conditions.

1 unchanged sentence

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 June 30, 2025, the U.S.

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

Borrower had a total of $ 5.8 million in letters of credit under the Amended Credit Agreement, leaving a net amount (after giving effect to the $ 25.0 million of outstanding borrowings described above) of $ 319.2 million available for future borrowings;

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

however, as of September 30, 2025, the Company was limited to addit ional borrowings of $ 232.0 million based on debt covenant compliance metrics.

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

The proceeds of any loans are expected to be used for general corporate purposes and to pay a portion of the exchange offer consideration.

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 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 proceeds of any loans may be used as described above, as well as for working capital and other general corporate purposes.

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 th e German Borrower.

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

Borrower (and not to Adtran Networks).

Borrower (and not to the German Borrower).

Otherwise, the loans under the Subline are subject to substantially the same terms and conditions under the Amended Credit Agreement (including with respect to the interest rate and maturity date) as the other existing revolving commitments.

2 unchanged sentences

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

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

As of September 30, 2025, the weighted average interest rate on our revolving credit agreements was 9.50 %.

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 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.

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.

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

As of September 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).

6 unchanged sentences

Borrower has granted mortgages in favor of the Administrative Agent over certain owned real estate assets.

Certain of Adtran Networks' subsidiaries (the “Subline Guarantors”) have also provided a guarantee solely of the obligations in respect of the Subline.

Furthermore, to secure such guarantees, Adtran Networks and the Subline Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets.

Upon repayment in full and termination of the Subline, the guarantees by the Subline Guarantors and the liens granted by Adtran Networks and the Subline Guarantors to secure obligations under the Subline will be released.

Certain of the German Borrower's subsidiaries (the “Subline Guarantors”) have also provided a guarantee solely of the obligations in respect of the Subline.

Furthermore, to secure such guarantees, the German Borrower and the Subline Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets.

Upon repayment in full and termination of the Subline, the guarantees by the Subline Guarantors and the liens granted by the German Borrower and the Subline Guarantors to secure obligations under the Subline will be released.

CONVERTIBLE SENIOR NOTES AND CAPPED CALLS

The outstanding principal and carrying value of the convertible senior notes were as follows:

(In thousands)

September 30, 2025

Convertible senior notes

unamortized debt issuance costs

Non-current convertible senior notes

The estimated fair value of the 2030 Notes was $ 226.3 million as of September 30, 2025.

The estimated fair value of the 2030 Notes, Level 2 inputs of the valuation hierarchy, were determined based on the quoted bid prices of the 2030 Notes in an over-the-counter market on the last trading day of the reporting period.

The effective interest rate of the 2030 Notes over their expected life is 4.70 %.

The following is a summary of interest expense for the 2030 Notes:

Three and Nine Months Ended

(In thousands)

September 30, 2025

Contractual interest

Amortization of issuance costs

Total interest expense

On September 19, 2025, the Company issued $ 201.3 million principal amount of its 3.75 % convertible senior notes due September 15, 2030 .

The 2030 Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of September 19, 2025, between the Company and U.S.

Bank Trust Company, National Association, as trustee (the “Trustee”).

The 2030 Notes are the Company’s senior, unsecured obligations and bear interest at a rate of 3.75 % per year payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2026.

Each $ 1,000 principal amount of the 2030 Notes will be convertible into 86.8206 shares of the Company’s common stock, which is equivalent to a conversion price of approximately $ 11.52 per share, subject to adjustment upon the occurrence of specified events.

In addition, if certain corporate events that constitute a “make-whole fundamental change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The 2030 Notes are convertible at the option of the holders of the 2030 Notes before June 15, 2030, only under the following circumstances:

(1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2025, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) if the trading price per $ 1,000 principal amount of the 2030 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on the Company’s common stock;

or (4) if the Company calls (or is deemed to have called) the 2030 Notes for redemption.

From and after June 15, 2030, noteholders may convert their 2030 Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

The Company will settle conversions by paying cash up to the aggregate principal amount of the 2030 Notes to be converted and paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Notes being converted, based on the applicable conversion rate.

The 2030 Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after September 20, 2028 and on or before the 46th scheduled trading day immediately before the maturity date, but only if (i) the Notes are “Freely Tradable” (as defined in the Indenture) as of the date the Company sends the related redemption notice, and all accrued and unpaid additional interest, if any, has been paid in full as of the most recent interest payment date occurring on or before the date the Company sends the related redemption notice;

and (ii) the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

and (2) the trading day immediately before the date the Company sends such redemption notice.

However, the Company may not redeem less than all of the outstanding Notes unless at least $ 70.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time the Company sends, and after giving effect to, the related redemption notice.

The redemption price will be a cash amount equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, calling (or the deemed calling of) any Note for redemption will constitute a “make-whole fundamental change” with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted during the related redemption conversion period.

No sinking fund is provided for the 2030 Notes, which means the Company is not required to redeem or retire the 2030 Notes periodically.

If certain corporate events that constitute a “fundamental change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

The definition of “fundamental change” includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock.

In connection with th e pricing of the 2030 Notes and the exercise of the initial purchasers’ option to purchase additional 2030 Notes, the Company entered into privately negotiated capped call transactions with one of the initial purchasers of the 2030 Notes or its affiliate and certain other financial institutions pursuant to capped call confirmations (collectively, the “Capped Calls”).

The premiums paid for the purchases of the Capped Calls were approximately $ 17.6 million.

The Capped Calls have an initial strike price of app roximately $ 11.52 per share, subject to certain adjustments substantially similar to those applicable to the corresponding 2030 Notes.

Calls have an initial cap price of approximately $ 15.51 per share, subject to certain adjustments.

The Capped Calls cover, subject to anti-dilution adjustments, approximately 17.5 million shares of the Company’s common stock.

The Capped Calls are generally expected to reduce potential dilution to the Company’s common stock and/or offset any cash payments that the Company is required to make in excess of the principal amount of any converted 2030 Notes, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Calls.

The Capped Calls are separate transactions and are not part of the terms of the 2030 Notes.

The Capped Calls do not meet the criteria for separate accounting as a derivative as they are indexed to the Company's stock and meet the requirements to be classified in equity and, as such, are not remeasured each reporting period.

The premiums paid for the Capped Calls were included as a net reduction to additional paid-in capital within stockholders’ equity during the quarter ended September 30, 2025.

EMPLOYEE BENEFIT PLANS

1 unchanged sentence

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 June 30, 2025 and December 31, 2024 were as follows:

The net amounts of the unfunded pension liability as of September 30, 2025 and December 31, 2024 were as follows:

(In thousands)

Balance Sheet Location

June 30, 2025

September 30, 2025

December 31, 2024

5 unchanged sentences

Non-current pension liability

Net pension liability

The Company's defined benefit pension liability represents the projected benefit obligation, which is the actuarial present value of the vested benefits to which the employee is currently entitled based on the employee's expected date of retirement.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(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 (expense) 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 income (expense), 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 $ 2.0 million and $ 2.2 million during the six months ended June 30, 2025 and 2024, respectively.

The Company made cash contributions to the defined benefit pension plans totaling $ 3.0 million during the nine months ended September 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 $ 0.4 million.

1 unchanged sentence

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

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

(In thousands)

2 unchanged sentences

ASU 2018-02 Adoption

Balance as of March 31, 2025

Other comprehensive (loss) income before

Balance as of June 30, 2025

Other comprehensive income (loss) 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

comprehensive loss

Net current period other comprehensive loss

Balance as of September 30, 2025

Three Months Ended September 30, 2024

(In thousands)

1 unchanged sentence

ASU 2018-02 Adoption

Balance as of March 31, 2024

Other comprehensive loss before

Balance as of June 30, 2024

Other comprehensive (loss) income 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

comprehensive income

Net current period other comprehensive income

Balance as of September 30, 2024 (Restated)

Nine Months Ended September 30, 2025

(In thousands)

7 unchanged sentences

Net current period other comprehensive income

Balance as of June 30, 2025

Six Months Ended June 30, 2024

Balance as of September 30, 2025

Nine Months Ended September 30, 2024

(In thousands)

4 unchanged sentences

Amounts reclassified from accumulated other

comprehensive income (loss)

Net current period other comprehensive loss

Balance as of June 30, 2024 (Restated)

comprehensive income

Net current period other comprehensive income (loss)

Balance as of September 30, 2024 (Restated)

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

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

(In thousands)

4 unchanged sentences

Unrealized gain on available-for-sale securities:

Net realized gain on sales of securities

Net realized loss on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial gain

Defined benefit plan adjustments – actuarial loss

Other income (expense)

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.

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

(In thousands)

3 unchanged sentences

Loss Is Presented

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

Unrealized gain on available-for-sale securities:

Net realized gain on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial loss

Defined benefit plan adjustments – actuarial gain

Other income (expense)

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, 2025

Nine Months Ended September 30, 2025

(In thousands)

6 unchanged sentences

Defined benefit plan adjustments – actuarial gain

Other income (expense)

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

Nine Months Ended September 30, 2024

(In thousands)

3 unchanged sentences

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

Net realized gain on sales of securities

Net realized loss on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial loss

Other income (expense)

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):

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

Three Months Ended

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

(In thousands)

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)

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

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

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

Foreign currency translation adjustments

Total Other Comprehensive Income (Loss)

Six Months Ended

June 30, 2025

June 30, 2024

Total Other Comprehensive (Loss) Income

Nine Months Ended

September 30, 2025

September 30, 2024

(In thousands)

1 unchanged sentence

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

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

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

Foreign currency translation adjustments

1 unchanged sentence

REDEEMABLE NON-CONTROLLING INTEREST

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

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

The following table summarizes the RNCI activity for the nine months ended September 30, 2025 and for the year ended December 31, 2024:

Nine Months Ended

For the Year Ended

(In thousands)

June 30, 2025

September 30, 2025

December 31, 2024

5 unchanged sentences

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

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.

For the three and nine months ended September 30, 2025 , we have accrued $ 2.5 million and $ 7.5 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.

On July 1, 2025, the Company paid the Annual Recurring Compensation with respect to the 2024 fiscal year, which is paid annually after the ordinary general shareholders' meeting of Adtran Networks which was held on June 27, 2025.

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

LOSS PER SHARE

The calculation of basic and diluted loss per share is as follows:

Basic net loss per share is computed by dividing net income by basic weighted-average shares outstanding during the period.

Diluted net income per share is computed by dividing net income by diluted weighted-average shares outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive.

We compute the dilutive effect of shares issuable upon conversion of our 2030 notes using the if-converted method and equity awards under our employee equity incentive plans using the treasury stock method.

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

4 unchanged sentences

Weighted average number of shares – basic

Effect of dilutive securities

Stock options

PSUs, RSUs and restricted stock

Weighted average number of shares – diluted

1 unchanged sentence

Loss per share attributable to ADTRAN Holdings, Inc.

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.

The following potentially dilutive shares were excluded from the calculation of the diluted weighted average number of shares outstanding as the effect would have been anti-dilutive:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Convertible senior notes

Stock options

PSUs, RSUs and restricted stock

In connection with the offering of the 2030 Notes, the Company entered into Capped Calls which are intended to reduce or offset the potential dilution from shares of common stock issued upon conversion.

The impact of the Capped Calls is not included when calculating potentially dilutive shares since their effect is anti-dilutive.

See Note 12, Convertible Senior Notes and Capped Calls for additional information .

SEGMENT INFORMATION

8 unchanged sentences

The cloud-hosted services include a suite of SaaS applications under the Company's Mosaic One platform that manages end-to-end network and service optimization for both fiber access infrastructure and mesh Wi-Fi connectivity.

The Company backs these services with a global support organization that offers on-site and off-site support services with varying SLAs.

The Company backs these services with a global support organization that offers on-site and off-site support services with varying service level agreements.

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 gain, other income (expense), net and income tax benefit 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 (expense) income, net and income tax (expense) benefit are reported on a consolidated basis only.

There is no inter-segment revenue.

2 unchanged sentences

Three Months Ended

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

(In thousands)

3 unchanged sentences

Services & Support

Six Months Ended

June 30, 2025

June 30, 2024

Nine Months Ended

September 30, 2025

September 30, 2024

(In thousands)

3 unchanged sentences

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.

For the three months ended September 30, 2025 and 2024 , $ 4.0 million and $ 2.9 million, respectively, of depreciation and amortization expense was included in gross profit for our Network Solutions segment.

For the nine months ended September 30, 2025 and 2024 , $ 10.7 million and $ 7.4 million, respectively, of depreciation and amortization expense was included in gross profit for our Network Solutions segment.

For the three months ended September 30, 2025 and 2024 , $ 0.4 million and $ 0.1 million, respectively, of depreciation and amortization expense was included in gross profit for our Services & Support segment.

For the nine months ended September 30, 2025 and 2024 , $ 1.2 million and $ 0.2 million, respectively, of depreciation and amortization expense was included in gross profit for our Services & Support segment.

Revenue by Geographic Area

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

9 unchanged sentences

Although the ultimate disposition of asserted claims cannot be predicted with certainty, it is our belief that the outcome of any such claims, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position.

We intend to cooperate in response to the SEC’s inquiry.

We cannot predict the timing or outcome of the inquiry.

DPLTA Appraisal Proceedings

9 unchanged sentences

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 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.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 1.27 % as of September 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 € 322.7 million or $ 378.7 million, based on an exchan ge rate as of September 30, 2025, and reflecting interest accrued through September 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 .

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.

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).

Following the court's decision on a procedural matter in the DPLTA appraisal proceedings on July 14, 2025, the proceeding for the trial on the merits of the DPLTA has recommenced.

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 € 8.5 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.

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 September 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.

1 unchanged sentence

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.

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

During the nine months ended September 30, 2025 and 2024, we accrued $ 7.5 million and $ 7.4 million, r espectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit.

For the three and nine months ended September 30, 2025, less than one thousand shares and approximately 0.9 million shares, respectively, of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately € 16.9 million, or $ 19.9 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.

For the three and nine months ended September 30, 2024, 0.8 million shares of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately € 15.7 million, or approximately $ 17.4 million, respectively, based on the applicable exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.

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.

2 unchanged sentences

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 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 .

As of September 30, 2025 and December 31, 2024 , we had commitments related to these bonds totaling $ 18.0 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 June 30, 2025, purchase obligations totaled $ 192.7 mi llion.

As of September 30, 2025, purchase obligations totaled $ 211.2 mi llion.

RESTRUCTURING

2 unchanged sentences

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:

During the three and nine months ended September 30, 2024, we recognized $ 5.9 million and $ 40.6 million of costs related to the Business Efficiency Program, respectively.

The costs recognized during the nine months ended September 30, 2024, included total other renegotiated charges and inventory write-down of $ 8.6 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 $ 4.5 million relates to other charges, and are included in cost of revenue in the Condensed Consolidated Statements of Loss.

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

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

June 30, 2025

September 30, 2025

Balance at beginning of period

Adjusted accrued costs

Balance as of June 30, 2025

Balance as of September 30, 2025

For the Year Ended

4 unchanged sentences

Balance as of December 31, 2024

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

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

6 unchanged sentences

Total restructuring expenses

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

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

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;

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

(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

(d) Condensed Consolidated Statements of Cash Flows as of and for the nine months ended September 30, 2024.

As of September 30, 2024

Adj Reference

1 unchanged sentence

Cash and cash equivalents

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

Accounts receivable, less allowance for credit losses of $ 420 as of September 30, 2024

Other receivables

Inventory, net

Income tax receivable

Inventory, net

Prepaid expenses and other current assets

25 unchanged sentences

200,000 shares authorized;

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

79,233 shares issued and 78,967 outstanding as of September 30, 2024

Additional paid-in capital

2 unchanged sentences

Treasury stock at cost:

266 shares as of June 30, 2024

266 shares as of September 30, 2024

Total Liabilities, Redeemable Non-Controlling Interest and Equity

Three Months Ended June 30, 2024

Six Months Ended June 30, 2024

Three Months Ended September 30, 2024

Nine Months Ended September 30, 2024

Adj Reference

14 unchanged sentences

Net investment gain

Other (expense) income, net

Other (expense), net

Loss Before Income Taxes

6 unchanged sentences

Loss per common share attributable to ADTRAN Holdings, Inc.

Other Comprehensive Loss, net of tax

Other Comprehensive Income (Loss), net of tax

Defined benefit plan adjustments

Foreign currency translation loss

Other Comprehensive Loss, net of tax

Foreign currency translation gain (loss)

Other Comprehensive Income (Loss), net of tax

Comprehensive Loss, net of tax

5 unchanged sentences

(In thousands)

Balance as of December 31, 2023

Annual recurring compensation earned

Other comprehensive loss, net of tax

Deferred compensation adjustments, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock options exercised

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 March 31, 2024

Balance as of June 30, 2024

Annual recurring compensation earned

Other comprehensive loss, net of tax

Deferred compensation adjustments, net of tax

Other comprehensive income, net of tax

ADTRAN RSUs and restricted stock vested

1 unchanged sentence

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

Modification of stock options

Balance as of September 30, 2024

Nine Months Ended September 30, 2024

Adj Reference

4 unchanged sentences

Amortization of debt issuance cost

Gain on investments, net

Gain loss on investments

Net loss on disposal of property, plant and equipment

1 unchanged sentence

Deferred income taxes

Inventory write down - business efficiency program

Inventory write down

Inventory reserves

Changes in operating assets and liabilities:

Change in operating assets and liabilities:

Accounts receivable, net

Other receivables

Income taxes receivable, net

Income taxes receivable

Prepaid expenses, other current assets and other assets

1 unchanged sentence

Accrued expenses and other liabilities

Income taxes payable, net

Income taxes payable

Net cash provided by operating activities

4 unchanged sentences

Purchases of available-for-sale investments

Proceeds from beneficial interests in securitized accounts receivable

Net cash used in investing activities

6 unchanged sentences

Payment for redemption of redeemable non-controlling interest

Payment of annual recurring compensation to non-controlling interest

Payment of debt issuance cost

2 unchanged sentences

Effect of exchange rate changes

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Cash, cash equivalents and restricted cash, beginning of year

Cash, cash equivalents and restricted cash, end of year

Supplemental disclosure of cash financing activities

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

2 unchanged sentences

Purchases of property, plant and equipment included in accounts payable

Redemption of redeemable non-controlling interest

SUBSEQUENT EVENTS

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.

Termination of Deferred Compensation Plans

On November 3, 2025, in an effort to streamline the benefits offered to members of management and other key employees, the Company terminated its Deferred Compensation Program for Employees (the "Deferred Compensation Plan") and its Equity Deferral Program for Employees (together with the Deferred Compensation Plan, the "Plans").

The Plans are deferred compensation plans that have provided certain members of management or highly compensated employees, including certain of our named executive officers, with an opportunity to defer the receipt of a portion of their cash compensation, bonus, or other specified compensation.

Each of the Plans has been maintained as an unfunded, nonqualified plan providing benefits based on the participant’s notional account balance at the time of retirement or separation, death or (with respect to the Deferred Compensation Plan) a change in control.

The Company has also terminated its deferred compensation plans for its non-employee directors.

See Part II, Item 5(a) of this report for additional information regarding the terminated deferred compensation plans.

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