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Item 1. Business

2026-02-26 compared with 2025-03-03 · 373 added, 307 removed, 878 unchanged (44% of the section changed)

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

hyper-scalers, neocloud and content providers and data center companies;

and federal, state and local government agencies.

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

We are focused on being a top global supplier of fiber-based communications infrastructure and AI-driven operations including SaaS applications spanning from the network core to the cloud edge (data centers) to the subscriber edge (customer premises) serving both the residential and enterprise connectivity markets, including fiber-based infrastructure for mobile networks.

We offer a broad portfolio of flexible network infrastructure solutions, customer premises equipment, software applications, and global services and support that enable Service Providers to meet their service demands now and in the future.

These products and services enable Service Providers to transition to a common network supporting the simplified delivery of high-capacity services, regardless of subscriber density, network topology and infrastructure diversity.

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

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To service our customers and grow revenue, we are continually conducting research and developing new products addressing customer needs and testing those products for the specific requirements of the particular customers.

We offer a broad portfolio of flexible software and hardware network solutions and services that enable Service Providers to meet today’s service demands, while enabling them to transition to the fully converged, scalable, highly-automated, cloud-controlled voice, data, internet and video network of the future.

In addition to our global headquarters in Huntsville, Alabama, and our European headquarters in Munich, Germany, we have sales and research and development facilities in strategic global locations.

The Company solely owns ADTRAN, Inc.

and is the majority shareholder of Adtran Networks SE (“Adtran Networks”).

We solely own ADTRAN, Inc.

and are the majority shareholder of Adtran Networks.

is a leading global provider of open, disaggregated networking and communications solutions.

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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.

We operate under two reportable segments:

(1) Network Solutions, which includes hardware and software products, and (2) Services & Support, which includes a portfolio of network design and implementation services, support services and cloud-hosted SaaS applications that complement our product portfolio and can be utilized to support other platforms as well.

We operate in two business segments:

(1) Network Solutions, which includes hardware and software products, and (2) Services & Support, which includes a portfolio of network design and implementation services, support services and AI-driven operations including cloud-hosted SaaS applications that complement our product portfolio and can also be utilized to support other platforms.

These two segments span across our three revenue categories:

(1) Subscriber Solutions, (2) Access & Aggregation Solutions and (3) Optical Networking Solutions.

See below for a detailed discussion of these reportable segments and revenue categories.

We are focused on being a top global supplier of fiber-based communications infrastructure and SaaS applications spanning from the network core to the cloud edge (data center) to the subscriber edge (customer premise) serving both the residential and enterprise connectivity markets including fiber-based infrastructure for mobile networks.

See "Reportable Segments" below for a detailed discussion of these reportable segments and revenue categories.

We began operations in January 1986.

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and fourth largest in the world.

Our European headquarters are located in Munich, Germany, and we have sales and research and development facilities in strategic global locations.

Our mailing address is 901 Explorer Boulevard, Huntsville, Alabama, 35806.

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Reportable Segments

Our business operates under two reportable segments:

Our business operates two reportable segments:

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

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These services assist operators in the deployment of multi-vendor networks while reducing their cost to maintain these networks.

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.

Revenue Categories

In addition to operating under two reportable segments, we also report revenue across three categories – Subscriber Solutions, Access & Aggregation Solutions and Optical Networking Solutions.

In addition to our two reportable segments, we also report revenue across three categories – Subscriber Solutions, Access & Aggregation Solutions and Optical Networking Solutions.

Our Subscriber Solutions portfolio is used by Service Providers to terminate their access services infrastructure at the customer's premises while providing an immersive and interactive experience for residential, business and wholesale subscribers.

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Enterprise Connectivity:

• Traditional SSE

Edge Compute:

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• Managed Services

Our Access & Aggregation Solutions are solutions that are used by communications Service Providers to connect residential subscribers, business subscribers and mobile radio networks to the Service Providers’ metro network, primarily through fiber-based connectivity.

Our Access & Aggregation Solutions category represents solutions that are used by communications Service Providers to connect residential subscribers, business subscribers and mobile radio networks to the Service Providers’ metro network, primarily through fiber-based connectivity.

This revenue category includes hardware- and software-based products and services.

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The Access & Aggregation category includes the following products, software and services:

Optical Line Terminals ("OLTs"):

Optical Line Terminals:

• Pluggable Optics

Optical Networking Terminals ("ONTs"):

Packet Aggregation:

• FSF 150-XG400 Aggregators

• SDX Aggregation

Copper Access:

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• Traditional Broadband

Oscilloquartz:

• OSA AccessSync

• OSA Edge Sync

Packet Aggregation:

• FSF 150-XG400 Aggregators

• SDX Aggregation

• AOE and ACI-E

• OSA CoreSync

• Ensemble Activator

• Mosaic One SaaS Applications

• Mosaic Network Controller

Oscilloquartz:

• Cesium clocks

• GNSS and LEO clocks

• Embedded timing solutions

• PIP grandmasters and NTP server clocks

• Time scale systems

• Synchronization monitoring

• PTP clients and boundary clocks

• NTP network time servers

• Network management systems

• Professional Services

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Optical Transport:

• FSP 3000 CC

• FSP 3000 R7

Optical Engines:

• AOE Coherent Pluggables

• AOE MicroMax

• AOE MicroMux

• AOE AccessWave

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Industry Overview

The global growth of the cloud and mobility (5G), home office and mobile working, industrial applications and AI are accelerating the demand for more bandwidth, requiring more flexible provisioning of telecommunications services and more precise network synchronization.

Communications Service Providers' investment in their networks is being driven by the pursuit of growth in subscriber acquisition, retention, and average revenue per user, as well as by the aims of streamlining operations, lowering energy consumption and improving their overall ESG position.

The global growth of the cloud and mobility (5G), industrial applications, AI, home office and mobile working are accelerating the demand for more bandwidth, requiring more flexible provisioning of telecommunications services and more precise network synchronization.

Drivers facilitating this network investment cycle include the evolution of government funding programs, private equity infrastructure investment appetite, regulatory broadband policies, competition and ever-increasing subscriber demand for higher-speed broadband.

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Science-based emissions targets, process-based product eco-design, optimization of operations, logistics and all packaging, circular-economy processes.

Business Efficiency Program

On November 6, 2023, due to the uncertainty around the current macroeconomic environment and its impact on customer spending levels, the Company’s management decided to implement a business efficiency program (“Business Efficiency Program”) targeting the reduction of ongoing operating expenses and focusing on capital efficiency inclusive of certain salary reductions, an early retirement program, a site consolidation plan to include lease impairments and the sale of owned real estate (including the probable sale of our headquarters), inventory write downs from product discontinuances, and the suspension of the quarterly dividend.

The Business Efficiency Program expanded upon other recently implemented restructuring efforts and synergy costs following the Business Combination.

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

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

On October 25, 2023, all employees were informed of certain personnel measures, which included the reduction of salary for select management, a reduction of approximately 5% of the workforce, an early retirement program and a hiring freeze.

Additionally, on April 11, 2024, Management determined to close a facility in Greifswald, Germany which was completed in November 2024.

As of December 31, 2024, the Company classified the Company's property, specifically the North and South Towers located on our Huntsville, Alabama campus, as assets held for sale, see Note 1 and Note 6 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information .

Other than our stated aim of selling our headquarters, the restructuring program was substantially complete as of December 31, 2024.

For additional information regarding the Business Efficiency Program, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 or Note 20 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.

We have a diverse global customer base that includes large, medium and small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders;

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The revenue from this Service Provider and these countries is reported in both our Network Solutions and Services & Support segments.

For a discussion of risks associated with customers, Service Providers and approval processes, see “Risk Factors – The lengthy sales and approval process required by Service Providers for new products could result in fluctuations in our revenue,” “Risk Factors – We depend heavily on sales to certain customers;

the loss of any of these customers would significantly reduce our revenue and net income,” in Part I, Item 1A of this report.

Distribution, Sales and Marketing

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Our direct sales organization supports major accounts and has offices in global locations.

Sales to most smaller and independent telephone companies are fulfilled through a combination of direct sales and distributors.

Our services offerings can be purchased directly from us or through one of our Service Providers, channel partners or distribution partners.

Sales to most smaller and independent telecom companies are fulfilled through a combination of direct sales and distributors.

Our service offerings can be purchased directly from us or through one of our Service Providers, channel partners or distribution partners.

Before placing an order, Service Providers typically require lengthy product qualification and standardization processes that can extend for several months or even years.

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Our field sales organizations, distributors and Service Provider customers receive support from regional-based marketing, sales and customer support groups.

Our marketing organization promotes all brands associated with us to key stakeholders, including customers, partners and prospects throughout the world.

Marketing is complemented by product marketing and management teams that work with our engineering teams to develop and promote new products and services, as well as product enhancements.

Our marketing organization promotes all brands associated with us to key stakeholders, including customers, partners and prospects worldwide.

Our product marketing and management teams work with our engineering teams to develop and promote new products and services, as well as product enhancements.

Research and Development

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Internal development on advanced technology products gives us more control over design and manufacturing issues, while for traditional designs, ODM and/or licensed intellectual property provides us with the ability to leverage the economies of scale of our technology partners.

This balanced approach ensures we provide best-in-class solutions for our customers.

As we continue to create more software-based intellectual property, such as our SDN/Edge Cloud portfolio, our use of lean agile practices in research and development ensures we remain responsive and customer-focused.

This enables us to deliver products faster, at higher quality and more economically to our customers and the market on a continuous basis.

We believe that this enables us to deliver products faster, at higher quality and more economically to our customers and the market on a continuous basis.

Our ability to continually reduce product costs, while focusing on delivery and quality, are important parts of our overall business strategy.

Our product development efforts are often centered on entering a market with improved technology, enabling us to offer products at competitive prices and compete for market share.

Our product development efforts are often centered on entering a market with improved technology, which we believe enables us to offer products at competitive prices and compete for market share.

Development activities focus on solutions that support both existing and emerging communications industry technologies in segments that we consider viable revenue opportunities.

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In addition, we focus on vertical optical technologies like Silicon Photonics, as well as microelectronics in order to differentiate and fully control the vertical value stack of our solutions.

In 2024, we released many market-leading products like additions to our SDX OLT series, new residential gateway and ONT families, outdoor packet demarcation devices, packet demarcation, encryption/security products, edge and core transport solutions.

We enhanced our market-leading synchronization & timing portfolio, as well as our SaaS delivery abilities and Mosaic One software.

During 2025, we launched many new products, including an auto-tunable 50G C-band pluggable transceiver, expanded our Wi-Fi 7 portfolio with SDG 9000 Series for residential, small business and MDU connectivity, and launched the new FSP 3000 OLS solution.

We also continued to advance our software and AI strategy through the Mosaic One platform.

Our research function and advanced technology team is driving many specific research projects in the fields of sustainable optical transmission, security, quantum communications, SDN and access technologies.

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Our SDO activities are primarily in the areas of broadband access, optical networking and synchronization.

This includes involvement with the ITU-T, ATIS, ETSI, ONF and the BBF.

This includes involvement with standard-setting bodies such as the ITU-T, ATIS, ETSI and the BBF.

We are involved in the evolution of optical access technologies on next-generation PON.

We also continue to be involved in driving optical networking, synchronization and SDN standardization and participate in industry-wide interoperability, performance-testing and system-level projects related to those standards in BBF and ONF.

We are also members of MEF, TIA, CableLabs and TIP.

For a discussion of risks associated with our research and development activities, see “Risk Factors – We must continue to update and improve our products and develop new products to compete and to keep pace with improvements in communications technology” and “Risk Factors – We engage in research and development activities to develop new, innovative solutions and to improve the application of developed technologies, and as a consequence may miss certain market opportunities enjoyed by larger companies with substantially greater research and development effort and which may focus on more leading edge development,” in Part I, Item 1A of this report.

Manufacturing and Operations

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We attempt to manage these risks through developing alternative sources, by staging inventories at strategic locations, through engineering efforts designed to prevent the necessity of certain components and by maintaining close contact and building long-term relationships with our suppliers.

See Inventory included in Part I, Item 1 of this report for additional information.

We rely on subcontractors for the assembly and testing of certain printed circuit board assemblies, sub-assemblies, chassis, enclosures and equipment shelves, and to purchase some of the raw materials used in such assemblies.

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Our dependence on a limited number of suppliers for certain raw materials, key components and ODM products, has prevented and may in the future prevent us from delivering our products on a timely basis, which has had and may continue to have a material adverse effect on operating results and could have a material adverse effect on customer relations.

For a discussion of risks associated with manufacturing activities, see “Risk Factors – Our strategy of outsourcing a portion of our manufacturing requirements to subcontractors located in various international regions may result in us not meeting our cost, quality or performance standards” and “Risk Factors – Our dependence on a limited number of suppliers for certain raw materials, key components and ODM products, combined with supply shortages, have prevented and may continue to prevent us from delivering our products on a timely basis, which has had and may continue to have a material adverse effect on operating results and could have a material adverse effect on customer relations,” in Part I, Item 1A of this report.

Recently, the Company has experienced increased costs on imports of certain critical raw minerals and derivative products relevant to our business and products due to tariffs imposed by the U.S.

government and other nations.

The availability, timing and amount of any potential refunds of such tariffs remain unclear.

Moreover, although the Company has been able to substantially mitigate the impact of tariffs that have been enacted to date, if additional tariffs and reciprocal tariffs are implemented (whether as currently proposed or otherwise), such actions could have a negative effect on our financial results, including our revenue and profitability.

We compete in markets for networking and communications services and solutions for Service Providers, businesses, government agencies and other organizations worldwide.

Our products and services provide solutions supporting voice, data and video communications across fiber-, copper-, and wireless-based infrastructure, as well as across wide area networks, local area networks and the internet.

We compete with a number of companies in the markets we serve.

In the Subscriber Solutions & Experience category, our primary competitors include Calix, Ciena, DZS, Nokia, eero, and a growing number of Asian based ODM's selling direct to carriers.

In our Access & Aggregation solutions category, key competitors include Nokia, Calix, Huawei, ZTE Corporation, DZS, Vecima, Harmonic and Microchip.

Main competitors of our Optical Networking solutions portfolio are Ciena, Cisco, Ekinops, Huawei, Infinera, Nokia, Ribbon Communications and ZTE Corporation.

In the Subscriber Solutions category, our primary competitors include Calix, Ciena, Nokia, eero, RAD, and a growing number of Asian based ODM's selling direct to carriers.

In our Access & Aggregation solutions category, key competitors include Nokia, Calix, Vecima, Harmonic and Microchip.

Main competitors of our Optical Networking solutions portfolio are Ciena, Cisco, Ekinops, Nokia, Smartoptics and Ribbon Communications.

Within our key target markets, we also compete less often with designated "high-risk vendors" such as Huawei and ZTE Corporation.

Across our markets and segments, the principal competitive factors can include, among others:

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• financial stability and health of our company;

• ability to manage supply chains and produce and deliver products in accordance with customer wish date;

• ability to manage supply chains to produce and deliver products in accordance with customer wish date;

• ability to innovate and provide customers with differentiated solutions, advantageous to their business model;

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• broad range of services and support capabilities.

For further discussion of risks associated with our competition, see “Risk Factors – We must continue to update and improve our products and develop new products to compete and to keep pace with improvements in communications technology” and “Risk Factors – We compete in markets that have become increasingly competitive, which may result in reduced gross profit margins and market share,” in Part I, Item 1A of this report.

We experience quarterly fluctuations in our revenue that occur due to many factors, including the varying budget cycles and seasonal buying patterns of our customers.

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Accordingly, they should not be considered a reliable indicator of our future revenue or operating results.

Additionally, the effects of the dynamic supply and demand environment we have experienced in recent periods may impact the traditional seasonality in our business.

Due to the stabilizing supply chain environment and the associated reduction in lead times, our customers began to optimize their inventories in the past fiscal year.

This has led to a slowdown in ordering behavior.

In addition, the continuing uncertain macroeconomic conditions related to inflationary pressures and elevated interest rates has impacted the spending behavior of our customers.

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

therefore, we expect order and billings to steadily increase in 2025.

Foreign Currency

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We maintain substantial inventories of raw materials for long lead time components to support this demand and avoid expedite fees.

In recent years, inflationary pressures on input costs, such as raw materials and labor, and distribution costs negatively impacted our operating results.

However, inflationary pressures on our supply chain have eased somewhat, which has led to reductions in cost premiums on raw material costs and freight.

We continue to support our customer demand for our products by working with our suppliers, contract manufacturers, distributors, and customers to address and to limit the disruption to our operations and order fulfillment.

We support our customer demand for our products by working with our suppliers, contract manufacturers, distributors, and customers to address and to limit the disruption to our operations and order fulfillment.

Additionally, maintaining sufficient inventory levels to assure prompt delivery of our products increases the amount of inventory that may become obsolete and increases the risk that the obsolescence of this inventory may have an adverse effect on our business and operating results.

Also, not maintaining sufficient inventory levels to ensure prompt delivery of our products may cause us to incur expediting costs to meet customer delivery requirements, which may negatively impact our operating results.

For further discussion of risks associated with managing our inventory, see “Risk Factors – Managing our inventory is complex and may include write-downs of excess or obsolete inventory,” in Part I, Item 1A of this report.

Government Regulation

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Furthermore, material changes in such laws, rules or regulations or the failure by us to comply with such laws, rules and regulations could limit our ability to conduct business globally.

For further discussion of risks associated with government regulation, see “Risk Factors – Changes in trade policy in the U.S.

and other countries, including the imposition of additional tariffs and the resulting consequences, may adversely impact our gross profits, gross margins, results of operations and financial condition,” in Part 1, Item 1A of this report.

Global trade policy continues to evolve and the ultimate impact of recent developments with respect to U.S.

tariffs is unclear.

On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA").

The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

Following the Supreme Court’s decision, the U.S.

presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs (including tariffs on semiconductors, which are expected to increase in June 2027).

Furthermore, recent U.S.

trade actions have triggered retaliatory actions by certain affected countries, and other foreign governments may impose further trade measures, including reciprocal tariffs, on certain U.S.

goods in the future.

There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business.

AI Regulations

In the U.S., proposed federal AI regulations, such as those under consideration by Congress or agencies like the Federal Trade Commission, may impose requirements for transparency, ethical use, and data sourcing, particularly if AI systems are trained on copyrighted materials.

Non-compliance could lead to restrictions on AI use, fines, or intellectual property disputes.

In Europe, the EU Artificial Intelligence Act, expected to be fully implemented by 2026, categorizes AI applications by risk level and could classify our content generation as high-risk, requiring stringent compliance with safety, transparency, and accountability standards.

Violations could result in fines of up to 7% of global annual revenue.

Other Regulations

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Government regulations are subject to change and, accordingly, we are unable to assess the possible effect of compliance with future requirements or whether our compliance with such regulations will materially impact our business in the future.

For further discussion of risks associated with government regulation, see “Risk Factors – We are subject to complex and evolving U.S.

and foreign laws, regulations and standards governing the conduct of our business.

Violations of these laws and regulations may harm our business, subject us to penalties and to other adverse consequences,” in Part 1, Item 1A of this report.

Environmental, Social, and Governance

Sustainability

We believe that as we follow our corporate vision to enable a fully connected world, we must continue to be responsible corporate citizens.

As more people are connected, work and life can be accomplished using fewer resources.

We have established ESG and sustainability programs and policies that encompass the elements of Environmental, Health & Safety, Ethics, Labor, and the related management systems in alignment with the ISO 26000 Guidelines.

We have established sustainability programs and policies that encompass the elements of Environmental, Health & Safety, Ethics, Labor, and the related management systems in alignment with the ISO 26000 Guidelines.

We are committed to operating in full compliance with the laws, rules and regulations of all the countries in which we operate.

The major aims of our program are reducing waste and emissions, maximizing energy efficiency and productivity and minimizing practices that can adversely affect utilization of natural resources by coming generations.

Our ESG programs are important to us, consequently, ESG is a dedicated focus throughout the company.

We have Board oversight including an ESG Committee, strong management support and engagement from our employees.

Our sustainability programs are important to us, consequently, sustainability is a dedicated focus throughout the company.

We have Board oversight including a Sustainability Committee, strong management support and engagement from our employees.

Areas of focus in our environmental sustainability program include:

• dedicated ESG Committee of the Board of Directors;

• maintained our mature environmental management system certified to ISO 14001:2015;

• advanced our Energy Management program with ISO 50001 readiness for the Huntsville site for 2025;

• submitted our Net Zero targets to SBTi in 2023 and got them approved in 2024;

• continued purchase of Renewable Energy Credits, equaling ~20% of total Adtran energy consumption;

• continued using IntegrityNext, a platform to engage suppliers to obtain an ESG assessment aligned with international standards, allowing us to monitor ESG risks in our supply chain;

• established Eco-Design guidelines in the Technology organization;

• continued with Life Cycle Assessments across the portfolio;

• continued with packaging optimization to reduce related materials and waste;

• increased visibility of our program internally and externally through customer engagement, joining peer sustainability groups, offering training to team members and web site enhancements;

• continued with the external CDP and EcoVadis assessments.

We will issue an ESG report for 2024 in early 2025, which will use the EU ESRS guidelines, in order to fulfill the reporting obligations set forth in the EU CSRD.

Within the report is information on our environmental, social and governance programs, including quantitative and qualitative data for both Adtran Networks and the Company.

• maintaining a dedicated Sustainability Committee of the Board of Directors;

• maintaining our mature environmental management system certified to ISO 14001:2015;

• advancing our Energy Management program with ISO 50001 readiness for the Huntsville site for 2025;

• continuing the purchase of Renewable Energy Credits, equaling ~20% of total Adtran energy consumption;

• continued use of IntegrityNext, a platform to engage suppliers to obtain an ESG assessment aligned with international standards, allowing us to monitor sustainability risks in our supply chain;

• establishing Eco-Design guidelines in the Technology organization;

• conducting Life Cycle Assessments across the portfolio;

• optimizing packaging to reduce related materials and waste;

• increasing visibility of our program internally and externally through customer engagement, joining peer sustainability groups, offering training to team members and web site enhancements;

• participating in external CDP and EcoVadis assessments.

We expect to issue a sustainability report for 2025 in early 2026, which will use the EU ESRS guidelines, in order to fulfill the reporting obligations set forth in the EU CSRD.

Within the report is information on our sustainability and governance programs, including quantitative and qualitative data for the entire Company.

This information can also be found on our website at:

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The information found on our website is not incorporated by reference in this report or any other report that we file or furnish to the SEC.

For further discussion of risks associated with government regulation, see “Risk Factors – Expectations relating to environmental, social and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business,” in Part 1, Item 1A of this report.

Human Capital

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This is supported by competitive compensation and benefits, along with strong community service and other programs that enable employees to build connections within the community.

As part of our Business Efficiency Program, on October 25, 2023, all employees were informed of certain personnel measures, which included the reduction of salary for select management, a reduction of approximately 5% of the workforce, an early retirement program and a hiring freeze.

The Company provided the employees subject to the salary reductions with stock option awards for retention purposes.

Our Chief Executive Officer voluntarily reduced his salary by 50% and did not receive any stock option awards under the Business Efficiency Program.

As of December 31, 2024, the Company had substantially completed the goals outlined in our Business Efficiency Program except for the Company's aim of selling its headquarters.

For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Efficiency Program” in Part II, Item 7 of this report.

As of December 31, 2024 we had 3,234 total employees, of which 3,091 full-time employees and 143 part-time employees.We had 1,133 employees in the U.S.

As of December 31, 2025 we had 3,338 total employees, of which 3,201 are full-time employees and 137 are part-time employees.

We had 1,162 employees in the U.S.

and 2,176 employees in our international subsidiaries located in North America, Latin America, EMEA and APAC regions.

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We pride ourselves on a highly educated workforce, and the majority of our employees serve in engineering, information technology and technical roles within the organization.

As of December 31, 2024 approximately 90 employees (76%) of Adtran GmbH were subject to collective bargaining agreements of either the Association of Metal and Electrical Industry in Berlin and Brandenburg e.V.

As of December 31, 2025 approximately 88 employees (75%) of Adtran GmbH and Adtran Technology GmbH were subject to collective bargaining agreements of either the Association of Metal and Electrical Industry in Berlin and Brandenburg e.V.

or NORDMETALL Association of Metal and Electrical Industry e.V.

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Our goal is to retain as many of these students as possible for full-time employment after graduation to build our organization's future.

Workplace Diversity

We believe that maintaining a diverse and inclusive workforce is important to the success of our business.

We encourage an environment where individuality is embraced regardless of age, gender, identity, race, sexual orientation, physical or mental ability, ethnicity and perspective and where each employee is accepted.

Our Board of Directors is comprised of seven members, two of which are females and three of which are ethnically diverse.

Additionally, the Board of Directors has a diversity of skills and experience with respect to accounting and finance, management and leadership, vision and strategy, business operations, business judgment, crisis management, risk assessment, industry knowledge, corporate governance and global markets.

Health, Safety and Wellness

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We continually work to provide a competitive compensation and benefits program as this plays a key role in our ability to attract and retain a highly skilled workforce.

In addition to salaries, these programs, which vary by country/region, include long-term equity incentive awards with certain vesting requirements, deferred compensation plans (which are offered to certain members of executive management), a 401(k) plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, paid volunteer time off, employee assistance program and tuition assistance.

In addition to salaries, these programs, which vary by country/region, include long-term equity incentive awards with certain vesting requirements, a 401(k) plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, paid volunteer time off, employee assistance program and tuition assistance.

Additionally, at our global headquarters in Alabama, we offer our employees certain on-site services, including nurse practitioner care and a fitness center, among others.

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We develop and own a significant amount of intellectual property.

We hold over 1,000 patents worldwide related to our products and over 50 additional pending patent applications.

We have approximately 1,000 patents worldwide related to our products and over 50 additional pending patent applications.

Our patents expire at various dates between 2026 and 2044.

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We do not derive any material amount of revenue from the licensing of our patents.

The name "Adtran" is a registered trademark of ours, as is the name “SmartRG” and a number of our product identifiers and names.

The name "ADTRAN" is a registered trademark of ours and a number of our product identifiers and names.

We also claim rights to a number of unregistered trademarks.

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It is possible that such litigation may result in significant legal costs and judgments and that intellectual property infringement claims, or related litigation against or by us could have a material adverse effect on our business and operating results.

For a discussion of risks associated with our intellectual property and proprietary rights, see “Risk Factors – Our failure to maintain rights to intellectual property used in our business could adversely affect the development, functionality, and commercial value of our products” in Part I, Item 1A of this report.

Information about our Executive Officers

Our executive officers as of March 3, 2025, are listed below, along with their ages on that date, positions and offices held with the Company, and principal occupations and employment, focused primarily on the past five years (and all positions within the Company).

Our executive officers as of February 26, 2026, are listed below, along with their ages on that date, positions and offices held with the Company, and principal occupations and employment, focused primarily on the past five years (and all positions within the Company).

2007 to present

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Chief Executive Officer and Management Board member of Adtran Networks

Ulrich Dopfer

Timothy Santo

2025 to present

Senior Vice President, Chief Financial Officer, Secretary and Treasurer

Senior Vice President of Finance and Chief Financial Officer

Chief Financial Officer and Management Board member of Adtran Networks

Chief Financial Officer of Adtran Networks

February 2024 to March 2025

Executive Vice President and Chief Financial Officer, Conn's, Inc.*

November 2023 to February 2024

Interim Chief Financial Officer, Conn's, Inc.

April 2023 to November 2023

Senior Vice President and Chief Accounting Officer, Conn's, Inc.

Senior Vice President and Global Controller of PRA Group

Christoph Glingener

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Senior Vice President and General Manager (Carrier Networks)

* On July 23, 2024, Conn’s, Inc.

and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code.

There are no family relationships among our directors or executive officers.

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Any of the risk factors described below or elsewhere in this report could significantly and adversely affect our business prospects, financial condition and results of operations.

The risks described below are not the only ones facing us.

Additional risks and uncertainties not presently known to us or that we currently deem to be immaterial may also adversely affect us.

Risks related to our financial results and Company success

We are obligated to comply with covenants related to our Wells Fargo Credit Agreement that restrict our operating activities, and the failure to comply with such covenants could result in defaults that accelerate our debt.

The Wells Fargo Credit Agreement governing our indebtedness contains restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest.

Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all its debt.

Our failure to comply with those covenants has resulted in events of default and may in the future result in an event of default that, if not cured or waived, results in the acceleration of all its debt.

Our Wells Fargo Credit Agreement along with the amendments thereto, contain various restrictive covenants which include, among others, provisions limiting our ability to:

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• unable to compete effectively or to take advantage of new business opportunities.

Our failure to comply with the covenants set forth in the Credit Agreement could result in defaults that accelerate the payment under such debt which would likely have a material adverse impact on our financial condition and results of operations.

In addition, an event of default under the Credit Agreement would permit the lenders to terminate all commitments to extend further credit under the applicable facility.

Our failure to comply with the covenants set forth in the Credit Agreement has resulted in events of default and could in the future result in defaults that accelerate the payment under such debt which would likely have a material adverse impact on our financial condition and results of operations.

In addition, an event of default under the Credit Agreement would, if not cured or waived, permit the lenders to terminate all commitments to extend further credit under the applicable facility.

Furthermore, if we were unable to repay the amounts due and payable under the Credit Agreement, the lenders could proceed against the collateral granted to them to secure that indebtedness.

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A shortfall in revenue has led and could again in the future lead to operating results being below expectations, partially due to an inability to quickly reduce these fixed expenses in response to short-term business changes.

Our customers in the subscriber solutions & experience technology category are increasingly focusing on working capital optimization and depletion of overstocked inventories, which has impacted and may continue to materially impact demand in that category.

Our future revenue growth will depend, in part, on securing increased orders from customers.

Accurately matching necessary inventory levels to customer demand within the current environment is challenging, and we may incur additional costs or be required to write off significant inventory that would adversely impact our results of operations.

In recent years, we received unprecedented orders for our products and services, during a period when the supply environment was constrained.

We took a number of steps to mitigate these challenges, including extending our purchase commitments and placing non-cancellable, advanced orders with or through suppliers, particularly for long lead-time components.

As a result of this strategy and the inclusion of Adtran Networks’ inventory following the closing of the Business Combination, our inventory increased to $427.5 million at the end of fiscal 2022.

However, our inventory reduced to $269.3 million at the end of fiscal 2024, which is more in line with historical levels.

These inventory practices and their associated costs have had, and could in the future continue to have, an adverse impact on our cash from operations.

Accurately matching necessary inventory levels to customer demand is challenging, and we may incur additional costs or be required to write off significant inventory that could adversely impact our results of operations.

Customer demand for our products can change rapidly in response to market, supply environment and technological developments.

We periodically evaluate our supplier purchase commitments to take steps to mitigate these challenges.

We have had and could in the future have to extend purchase commitments or place non-cancellable, advanced orders with or through suppliers, particularly for long lead-time components.

This has in the past and could in the future lead to increased inventory and adversely impact our results of operations and financial condition.

In addition, these inventory practices, particularly when considered in the context of our backlog, further introduce obsolescence risk that can impact our results of operations and financial condition.

During fiscal 2023 and fiscal 2024, certain customers that had earlier placed significant advanced orders, rescheduled deliveries for or cancelled a portion of such orders.

Accordingly, our inventory needs for a particular period can fluctuate and be difficult to predict.

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If we are required to write off or write down a significant amount of inventory, our results of operations for the applicable period would be materially adversely affected.

For example, we recorded charges for excess and obsolete inventory of $8.6 million and $24.3 million in fiscal 2024 and 2023, respectively, primarily related to a strategy shift which included discontinuance of certain product lines in connection with the Business Efficiency Program.

Our inability to effectively manage the matching of inventory with customer demand, particularly within any supply constrained environment, could adversely impact our results of operations and financial condition, and could result in loss of revenue, increased costs, or delays that could adversely impact customer satisfaction.

The lengthy sales and approval process required by Service Providers for new products has resulted in fluctuations in our revenue and may result in fluctuations of future revenue and financial results.

Our inability to effectively manage the matching of inventory with customer demand, particularly within any supply constrained environment, has had and could in the future have an adverse impact our results of operations and financial condition.

The lengthy sales and approval process required by Service Providers for new products has resulted in fluctuations in our revenue and may result in future revenue fluctuations.

In the industry in which we compete, sales and approval cycles are often lengthy.

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This process can last from six to eighteen months, or longer, depending on the technology, the Service Provider and the demand for the product from the Service Provider’s subscribers.

Consequently, we are involved in a constant process of submitting for approval succeeding generations of

products, as well as products that deploy new technology or respond to new technology demands from a major or other Service Provider.

Consequently, we are involved in a constant process of submitting for approval succeeding generations of products, as well as products that deploy new technology or respond to new technology demands from a major or other Service Provider.

We cannot be certain that we will obtain these approvals in the future or that sales of these products will continue to occur.

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Furthermore, we have entered into a DPLTA with Adtran Networks.

For the year ended December 31, 2024, approximately 831 thousand shares of Adtran Networks stock were tendered to the Company.

Additionally, 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 a recurring cash payment of €0.52 per share for each full fiscal year of Adtran Networks (the “Annual Recurring Compensation”) payment, 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”).

For the year ended December 31, 2025, approximately 2.0 million shares of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately €40.2 million, or approximately $46.6 million, based on exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.

Any failure to satisfy our payment obligations under the DPLTA could harm our business, financial condition and results of operations.

Our ability to make payments on and to refinance our indebtedness, to cover our payment obligations under the DPLTA, and to fund working capital needs and planned capital expenditures depends on our ability to generate cash in the future.

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

Our ability to make payments on and to refinance our indebtedness, to cover our payment obligations under the DPLTA and the 2030 Notes, and to fund working capital needs and planned capital expenditures depends on our ability to generate cash in the future.

This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control.

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The Company experienced revenue declines in 2024.

There can be no assurance that the Company will be successful in effecting its plans to preserve cash liquidity and maintain compliance with the Company's covenants on commercially reasonable terms or at all.

However, customers began replenishing their inventories to meet increasing demand, and revenue increased throughout fiscal 2025.

There can be no assurance that revenue will continue to increase or that the Company will be successful in effecting its plans to preserve cash liquidity and maintain compliance with the Company's covenants on commercially reasonable terms or at all.

We may need to further reduce capital expenditure and/or take other steps to preserve working capital in order to ensure that we can meet our needs and obligations and maintain compliance with our debt covenants.

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The terms of the DPLTA may have a material adverse effect on our financial results and condition.

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).

The DPLTA between the Company, as the controlling company, and Adtran Networks, as the controlled company, 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).

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 generally absorb the annual net loss incurred by Adtran Networks.

The Company’s payment obligation in satisfaction of the requirement that it absorb Adtran Networks’ annual net loss applied for the first time to the net loss generated in 2023.

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 2025, and it will apply to any net loss generated by Adtran Networks in 2026.

Additionally, and subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, the DPLTA provides that Adtran Networks shareholders (other than the Company) be offered, at their election, (i) to put their Adtran Networks shares to the Company in exchange for compensation in cash of €17.21 per share, plus guaranteed interest (the “Exit Compensation”), or (ii) to remain Adtran Networks shareholders and receive a recurring compensation in cash of €0.52 per share for each full fiscal year of Adtran Networks (the “Annual Recurring Compensation”).

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

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

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

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.

With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholder meeting is scheduled for the second quarter of 2026, and the Annual Recurring Compensation will be due on the third banking day following the meeting.

The adequacy of both forms of compensation has been challenged by minority shareholders of Adtran Networks via court-led appraisal proceedings under German law and it is possible that the courts in such appraisal proceedings may adjudicate a higher Exit Compensation (including interest thereon) or Annual Recurring Compensation than agreed upon in the DPLTA.

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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.

For the year ended December 31, 2024, a total of 831 thousand shares of Adtran Networks stock was tendered to the Company and Exit Compensation payments of approximately €15.7 million or approximately $17.4 million, based on exchange rates at the time of the transactions, were paid to Adtran Networks shareholders.

For the year ended December 31, 2025, a total of 2.0 million shares of Adtran Networks stock was tendered to the Company and Exit Compensation payments of approximately €40.2 million or approximately $46.6 million, based on exchange rates at the time of the transactions, were paid to Adtran Networks shareholders.

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the first option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately €303.9 million or approximately $357.0 million, based on an exchange rate as of December 31, 2025.

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There can be no assurances that we would be successful in effecting these actions at commercially reasonable terms or at all.

If we cannot raise additional funds as needed, it could have a material adverse impact on our financial results and financial condition.

If we cannot raise additional funds to the extent needed, it could adversely impact our financial results and financial condition.

Additionally, the payment of the Annual Recurring Compensation and Exit Compensation could have a material adverse impact on our financial results and financial condition.

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

The Company expects to receive a procedural decision during 2025 that will likely be appealed.

The date of a decision by the court on the merits of the case is uncertain, but it is unlikely that such decision will be rendered in 2025.

Thereafter an expected appeal process will take a further 12-24 months to resolve.

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 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.

The amount of this Annual Recurring Compensation payment obligation pursuant to the DPLTA could exceed the amount of dividends that otherwise might be distributed by Adtran Networks to minority shareholders and would even have to be paid if Adtran Networks incurs losses, which could have a material adverse impact on our financial results and financial condition.

Our significant indebtedness exposes us to various risks.

As of December 31, 2024, our borrowings under the revolving line of credit were $189.6 million, of which approximately $141.0 million was borrowed by ADTRAN, Inc.

and $48.6 million was borrowed by Adtran Networks.

The credit facilities provided under the Credit Agreement mature in July 2027, but ADTRAN, Inc.

may request extensions subject to customary conditions.

As of December 31, 2024, we had a total of $3.6 million in letters of credit under ADTRAN, Inc.

outstanding under the Credit Agreement, leaving a net amount (after giving effect to the $189.6 million of outstanding borrowings described above) of $180.8 million available for future borrowings;

however, as of December 31, 2024, the Company was limited to additional borrowings of $56.1 million based on debt covenant compliance metrics.

See "Cash Requirements" in Part II, Item 7 of this report for additional information.

As of December 31, 2025, the Company’s borrowings under the Wells Fargo revolving line of credit (the "Amended Credit Agreement") were $25.0 million.

As of December 31, 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 based on debt covenant compliance metrics.

The credit facilities provided under the Amended Credit Agreement mature in July 2027, but we may request extensions subject to customary conditions or we may seek to refinance the credit facilities prior to their maturity.

In addition, 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” or the “Notes”).

See "Cash Requirements" in Part I, Item 2 of this report for additional information.

Our indebtedness has and may continue to adversely affect our operations and liquidity.

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• has caused us and may continue to cause us to use a larger portion of our cash flow to fund interest and principal payments, reducing the availability of cash to fund working capital, capital expenditures, research and development and other business activities;

• has contributed to our decision to suspend quarterly dividend payments to the Company's stockholders;

• limits our ability to assume debt in a future acquisitions.

Specifically, our Credit Agreement with Wells Fargo limits the amount of debt we can assume in an acquisition.

• limits our ability to assume debt in a future acquisition.

Specifically, our Amended Credit Agreement limits the amount of debt we can assume in an acquisition.

This could limit our ability to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions;

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• limits our ability to borrow additional money.

Specifically, our Credit Agreement with Wells Fargo limits our ability to borrow additional money, which could limit our ability to fund working capital, capital expenditures, research and development and other general corporate needs in the future.

Specifically, our Amended Credit Agreement limits our ability to borrow additional money, which could limit our ability to fund working capital, capital expenditures, research and development and other general corporate needs in the future.

Our ability to satisfy our debt obligations and renew the credit facility is dependent upon our future performance and other risk factors discussed in this section.

We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If we fail to pay interest on, or repay, our borrowings under the Wells Fargo credit facility when required, we will be in default under the applicable loans, and may also suffer an event of default under the terms of other borrowing arrangements that we may enter into from time to time.

We are attempting to further reduce our operating expenses in order to fund our obligations, and we may be forced to further reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness.

If we fail to pay interest on, or repay, our borrowings under the Amended Credit Agreement when required, we will be in default under the applicable loans, and may also suffer an event of default under the terms of other borrowing arrangements that we may enter into from time to time.

In addition, our failure to repurchase the 2030 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the indenture.

We may be forced to further reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness.

We cannot assure you that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled obligations or that these actions would be permitted under the terms of our current or future debt agreements.

If we fail to implement these reductions or are unable to achieve sufficient operating results and resources, we could face substantial liquidity challenges and might be required to dispose of material assets or operations to meet our debt service and other obligations.

If we are unable to achieve sufficient operating results and resources, we could face substantial liquidity challenges and might be required to dispose of material assets or operations to meet our debt service and other obligations.

We may not be able to consummate those dispositions or obtain sufficient proceeds from those dispositions to meet our debt service and other obligations when due.

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This could lead to variability in our operating results and could have a material adverse effect on our business, operating results, financial condition and cash flow.

particularly in the Service Provider market, rapid consolidation will lead to fewer customers, with the effect that a loss of a major customer could have a material impact on our results that we would not have anticipated in a marketplace composed of more numerous participants.

In addition, particularly in the Service Provider market, rapid consolidation will lead to fewer customers, with the effect that a loss of a major customer could have a material impact on our results that we would not have anticipated in a marketplace composed of more numerous participants.

Our exposure to the credit risks of our customers and distributors may make it difficult to collect accounts receivable and could adversely affect our operating results, financial condition and cash flows.

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• our ability to manage the impact of foreign currency exchange rate fluctuations relating to our revenue or cost of revenue;

• slowdowns, recessions, economic instability (such as the instability in the financial services sector), political unrest, armed conflicts (such as the ongoing military conflict in Ukraine and in Israel and surrounding regions), or outbreaks of disease around the world;

• slowdowns, recessions, economic instability, political unrest, armed conflicts (such as the ongoing military conflict in Ukraine and the Middle East, or outbreaks of disease around the world;

• an extended government shutdown resulting from budgetary decisions or other potential delays or changes in the government appropriations or other funding authorization processes.

Our dependence on a limited number of suppliers for certain raw materials, key components and ODM products, combined with supply shortages, have prevented and may continue to prevent us from delivering our products on a timely basis, which has had and may continue to have a material adverse effect on operating results and could have a material adverse effect on customer relations.

Our dependence on a limited number of suppliers for certain raw materials, key components and ODM products, combined with supply shortages, has prevented and may continue to prevent us from delivering our products on a timely basis, which has had and may continue to have a material adverse effect on operating results and could have a material adverse effect on customer relations.

The fact that we are reliant on our extended supply chain could have an adverse impact on the supply of our products and on our business and operating results.

The financial problems of our suppliers and industry consolidation occurring within one or more component supplier markets, such as the semiconductor market, in each case, could either limit supply or increase costs.

A reduction or interruption in supply, including disruptions on our global supply chain, caused in part by public health emergencies, geopolitical tensions (including as a result of the ongoing conflict in Ukraine and in Israel and surrounding regions, as well as China-Taiwan relations);

A reduction or interruption in supply, including disruptions on our global supply chain, caused in part by public health emergencies, geopolitical tensions (including as a result of the ongoing conflict in Ukraine, the Middle East, as well as China-Taiwan relations;

a significant natural disaster (including as a result of climate change);

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We believe that we may be faced with the following challenges in the future:

new markets in which we participate may grow quickly, which may make it difficult to quickly obtain significant raw materials and/or components;

new markets in which we participate may grow quickly, which may make it difficult to quickly obtain sufficient raw materials and/or components;

as we acquire companies and new technologies, we may be dependent on unfamiliar supply chains or relatively small supply partners;

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Our estimates regarding future warranty obligations may change due to product failure rates, installation and shipment volumes, field service repair obligations and other rework costs incurred in correcting product failures.

If our estimates change, our liability for warranty obligations may increase or decrease, impacting future cost of revenue.

If our estimates materially change, our liability for warranty obligations may increase or decrease, impacting future cost of revenue.

Our products are highly complex, and we cannot ensure that our extensive product development, manufacturing and integration testing will be adequate to detect all defects, errors, failures and quality issues.

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Managing our inventory of components and finished products is complicated by a number of factors, including the need to maintain a significant inventory of certain components that are in short supply, that have been discontinued by the component manufacturer, that must be purchased in bulk to obtain favorable pricing or that require long lead times.

Economic growth, and the unprecedented nature of AI related demand, can make it more difficult for us and our suppliers to accurately forecast demand and to set optimized levels of manufacturing capacity and inventory.

These issues have and may continue to result in our purchasing and maintaining significant amounts of inventory, which if not used or expected to be used based on anticipated production requirements, may become excess or obsolete.

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Significant and unanticipated changes in our business could require additional charges for inventory write downs in a future period.

Any future charges relating to such inventory write-downs could materially adversely affect our business, financial condition and results of operations in the periods recognized.

While there were

no write-downs for 2025, any future charges relating to inventory write-downs could materially adversely affect our business, financial condition and results of operations in the periods recognized.

For additional details regarding the Business Efficiency Program, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Efficiency Program” in Part II, Item 7 of this report.

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• potential exposure to natural disasters, epidemics and pandemics (and government regulations in response thereto) and acts of war or terrorism;

• potential exposure to ongoing military conflicts, including the conflict in Ukraine and in Israel and surrounding regions.

• potential exposure to ongoing military conflicts, including the conflict in Ukraine and the Middle East, as well as recent developments in Venezuela and Latin America.

and certain other countries-imposed sanctions on Russia in connection with the conflict in Ukraine and could impose further sanctions against it, which could damage or disrupt international commerce and the global economy.

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Properly managing our continued growth, avoiding the problems often resulting from such growth and expansion and continuing to operate in the manner which has proven successful to us to date remains critical to the future success of our business.

We are exposed to adverse currency exchange rate fluctuations in jurisdictions where we transact in local currency, which could harm our financial results and cash flows.

We are exposed to changes in foreign currencies relative to the U.S.

dollar, which are references to the differences between the foreign-exchanges rates we use to convert the financial results of our international operations from local currencies into U.S.

dollars for financial reporting purposes.

This impact of foreign-exchange rate changes is calculated based on the difference between the current period’s currency exchange rates and that of the comparable prior period.

We are exposed to currency exchange rate fluctuations in jurisdictions where we transact in local currency, which could harm our financial results and cash flows.

Because a significant portion of our business is conducted outside the U.S., we face exposure to adverse movements in foreign currency exchange rates, including emerging market currencies which can have extreme currency volatility.

An increase in the value of the dollar increases the real cost to our customers of our products in those markets outside the U.S.

where we sell in dollars and a weakened dollar increases the cost of local operating expenses and procurement of raw materials to the extent that we must purchase components in foreign currencies.

These exposures change over time as business practices evolve, and they could materially harm our financial results and cash flows.

Our primary exposures to foreign currency exchange rate movements are the euro and the British pound sterling.

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We have recognized impairment charges related to goodwill and other intangible assets in the past and may be required to do so in the future.

The Business Combination added a significant amount of goodwill and other intangible assets to our consolidated balance sheets.

In accordance with U.S.

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During the year ended December 31, 2024, qualitative factors such as a decrease in the Company’s market capitalization, lower service provider spending and delayed holding patterns of inventory with respect to customers caused us to reduce our forecasts, triggering a quantitative impairment assessment for our reporting units.

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

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.

The Company will continue to monitor its stock price, operating results and other macroeconomic factors to determine if there is further indication of a sustained decline in fair value requiring an event driven assessment of the recoverability of its remaining goodwill.

If our assumptions and related estimates change in the future, or if we change our reporting unit structure or other events and circumstances change (e.g., a sustained decrease in the price of our common stock (considered on both absolute terms and relative to peers)), we may be required to record impairment charges when we perform these tests, or in other future periods.

While no impairment of goodwill was recognized in 2025, the Company will continue to monitor its stock price, operating results and other macroeconomic factors to determine if there is further indication of a sustained decline in fair value requiring an event driven assessment of the recoverability of its remaining goodwill.

A non-cash goodwill impairment charge would have the effect of decreasing earnings or increasing losses in such period.

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Any increased or unexpected costs, unanticipated delays or failure to achieve contractual obligations could make these agreements less profitable or unprofitable.

Managing these types of transactions require varying levels of management resources, which may divert our attention from other business operations.

These transactions could result in significant costs and expenses and charges to earnings, including those related to severance pay, early retirement costs, employee benefit costs, asset impairment charges, charges from the elimination of duplicative facilities and contracts, in-process research and development charges, inventory adjustments, assumed litigation, regulatory compliance and other liabilities, legal, accounting and financial advisory fees and required payments to executive officers and key employees under retention plans.

In the Business Combination with Adtran Networks, we have incurred significant restructuring and integration costs and we expect to incur additional restructuring and integration costs and such costs are expected to be material.

Moreover, we could incur additional depreciation and amortization expense over the useful lives of certain assets acquired in connection with these transactions, and, to the extent that the value of goodwill or intangible assets acquired in connection with a transaction becomes impaired, we may be required to incur additional material charges relating to the impairment of those assets.

For example, during the third quarter of 2023, we recognized a $37.9 million non-cash goodwill impairment charge related to the Business Combination with Adtran Networks.

In order to complete an acquisition, we may issue common shares, potentially creating dilution for existing stockholders, or borrow funds, which could affect our financial condition, results of operations and potentially our credit ratings.

Any prior or future downgrades in our credit rating associated with a transaction could adversely affect our ability to borrow and our borrowing cost, and result in more restrictive borrowing terms.

Managing these types of transactions require varying levels of management resources, which has in the past and may in the future divert our attention from other business operations.

These transactions have resulted and could result in the future in significant costs and expenses and charges to earnings, including those related to severance pay, early retirement costs, employee benefit costs, asset impairment charges, charges from the elimination of duplicative facilities and contracts, in-process research and development charges, inventory adjustments, assumed litigation, regulatory compliance and other liabilities, legal, accounting and financial advisory fees and required payments to executive officers and key employees under retention plans.

In order to complete a future acquisition, we may issue additional common shares, potentially creating dilution for existing stockholders, or borrow funds, which could affect our financial condition, results of operations and potentially our credit ratings.

Any prior or future downgrades in our credit rating associated with a transaction could adversely affect our ability to borrow and our borrowing costs, and result in more restrictive borrowing terms.

In addition, our effective tax rate on an ongoing basis is uncertain, and such transactions could impact our effective tax rate.

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As a result, any completed, pending or future transactions may contribute to financial results that differ materially from the investment community’s expectations.

Ongoing inflationary pressures have negatively impacted our revenues and profitability.

Ongoing inflationary pressures have negatively impacted our revenue and profitability.

Ongoing inflationary pressures have resulted and may continue to result in decreased demand for our products and services, increased manufacturing and operating costs (including our labor costs), reduced liquidity, and limitations on our ability to access credit or otherwise raise debt and equity capital.

In the current inflationary environment, because certain of our customer contracts provide for fixed pricing and/or due to our competitor’s pricing strategies, we are not always been able to raise the sales prices of our products and services at or above the rate at which our costs increase, which has reduced our profit and operating margins and has and could continue

to have a material adverse effect on our financial results.

We also may experience lower than expected sales and potential adverse impacts on our competitive position if there is a decrease in customer spending or a negative reaction to any price increases we are able to implement.

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Risks related to our control environment

We have had to restate our previously issued consolidated financial statements and, as part of that process, have identified material weaknesses in our internal control over financial reporting.

We have had to restate our previously issued consolidated financial statements and, as part of that process, identified material weaknesses in our internal control over financial reporting.

If we are unable to develop and maintain effective internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and may adversely affect our business, financial condition and results of operations.

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Effective internal control over financial reporting is necessary for us to provide reliable financial reporting and prevent fraud.

We have had to restate our previously issued consolidated financial statements and, as part of that process, have identified material weaknesses in our internal control over financial reporting.

We have implemented new controls with respect to one material weakness, and we plan to initiate remediation plans with respect to the other material weaknesses.

We have had to restate our previously issued consolidated financial statements in the past, including in August 2023, March 2024 and May 2025, and, as part of that process, have identified material weaknesses in our internal control over financial reporting, including two material weaknesses that continued to exist at December 31, 2025 and as of the date of this filing.

We have remediated certain material weaknesses, implemented several controls with respect to our remaining material weaknesses, and continue to test new and additional controls in order to successfully remediate the remaining material weaknesses.

These remediation measures have been time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

Any failure to maintain effective internal control over financial reporting could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis.

If our financial statements are not accurate, investors do not have a complete understanding of our operations.

Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC, the Federal Financial Supervisory Authority, or other regulatory authorities.

The failure to maintain effective internal control over financial reporting could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis.

When our financial statements are not accurate, investors do not have a complete understanding of our operations.

Likewise, when our financial statements are not filed on a timely basis we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC, the Federal Financial Supervisory Authority, or other regulatory authorities.

In either case, there could be an adverse effect on our business, financial condition and results of operations.

Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

We can provide no assurance that the measures that we have taken, are taking, and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls.

In addition, while we have strengthened our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements.

Furthermore, as a public company, we are required to comply with U.S.

GAAP, the Sarbanes-Oxley Act of 2002 ("SOX"), the Dodd-Frank Act and the rules and regulations subsequently implemented by the SEC and the Public Company Accounting Oversight Board.

As such, Adtran Networks, as a subsidiary of a public company, has established and is required to maintain effective disclosure controls, as well as internal control over financial reporting under U.S.

Current and ongoing compliance efforts have and may continue to be costly and require the attention of management.

There are a large number of processes, policies, procedures and functions that have been integrated, or enhanced at Adtran Networks, particularly those related to the implementation of internal controls for SOX compliance.

The maintenance of these plans may lead to additional unanticipated costs and time delays.

These incremental costs may exceed the savings we expect to achieve from the realization of efficiencies related to the combination of the businesses, particularly in the near term and in the event there are material unanticipated costs.

We may face litigation and other risks as a result our material weaknesses in our internal control over financial reporting and any resulting restatement of our previously issued consolidated financial statements.

We had to restate our previously issued consolidated financial statements in August 2023 and March 2024 and, in connection with those restatements, we identified material weaknesses in our internal control over financial reporting, certain of which have continued as of the date hereof.

We can provide no assurance that the measures that we have taken and are taking will remediate the material weaknesses identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement or maintain adequate internal control over financial reporting or circumvention of these controls.

In addition, our controls and procedures have not been and may not be adequate in the future to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements.

We may face litigation and other risks as a result of the material weaknesses in our internal control over financial reporting, prior restatements of our financial statements, and any future restatement of our previously issued financial statements.

We had to restate our previously issued consolidated financial statements in August 2023, March 2024 and May 2025 and, in connection with those restatements, we identified material weaknesses in our internal control over financial reporting, certain of which have continued as of the date hereof.

Until such time as we have remediated our material weaknesses or in the event that we experience an additional material weakness, there is a higher risk of there being an error in our financial statements, which error could be material, thereby resulting in a restatement of our financial statements.

In connection with our material weaknesses in our internal control over financial reporting and any future restatement, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims.

In connection with our material weaknesses in our internal control over financial reporting, the prior restatements of our financial statements, and any future restatement, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims.

As of the date of this report, we have no knowledge of any such litigation or dispute.

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These risks, as well as the number and frequency of cybersecurity events globally, may also be heightened during times of geopolitical tension or instability between countries.

For example, a number of recent cybersecurity events have been alleged to have originated from the ongoing military conflict in Ukraine and in Israel and its surrounding areas.

For example, a number of recent cybersecurity events have been alleged to have originated from the ongoing conflicts in Ukraine and the Middle East.

Further, we have incurred, and will continue to incur, expenses to comply with cybersecurity, privacy, and data protection standards and protocols imposed by law, regulation, industry standards and contractual obligations.

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For information on our cybersecurity risk management, strategy and governance, see Part I, Item 1C of this report .

Emerging issues related to the development and use of AI could give rise to legal or regulatory action, damage our reputation, or otherwise materially harm our business.

AI represents a new technology frontier.

While we are leveraging exciting possibilities in our products and organization, the novelty and incredible speed of change brings an associated set of risks.

Our development and use of AI technology in our products and operations remains in the early phases.

While we aim to develop and use AI responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise.

AI technologies are complex and rapidly evolving, and the technologies that we develop or use may ultimately be flawed.

Moreover, AI technology is subject to rapidly evolving domestic and international laws and regulations, including executive orders by the U.S.

government and the EU’s Artificial Intelligence Act, which could impose significant costs and obligations on the Company.

Emerging regulations may also pertain to data privacy, data protection, and the ethical use of AI, as well as clarifying intellectual property considerations.

Our use of AI could give rise to legal or regulatory action or increased scrutiny or liability, and may damage our reputation or otherwise materially harm our business.

Our competitors may incorporate AI technologies into their products and services more quickly or more successfully than us and could impair our ability to compete effectively and adversely affect our results of operations.

Further, the rapid evolution of AI may require the dedication of significant resources to develop, test and maintain AI technologies.

If our incorporation of AI technologies does not increase our operational efficiency in accordance with our expectations, or if competition increases for the technology and services provided by third parties, our business, results of operations and financial condition may be harmed.

Additionally, any sensitive information (including confidential, competitive, proprietary, or personal data) that we input into a third-party generative AI platform could be leaked or disclosed to others or otherwise result in an information- or cyber-security incident, including if sensitive information is used to train the third parties’ AI model.

Additionally, where an AI model ingests personal data and makes connections using such data, those technologies may reveal other personal or sensitive information generated by the model.

Moreover, AI models may create flawed, incomplete, or inaccurate outputs, some of which may appear correct.

This may happen if the

inputs that the model relied on were inaccurate, incomplete or flawed (including if a bad actor “poisons” the AI with bad inputs or logic), or if the logic of the AI is flawed (a so-called “hallucination”).

We may use AI outputs to make certain decisions.

Due to these potential inaccuracies or flaws, the model could be biased and could lead us to make decisions that could bias certain individuals (or classes of individuals), and adversely impact their rights, employment, and ability to obtain certain pricing, products, services, or benefits.

Further, we have and may continue to rely on AI models developed by third parties, and would be dependent in part on the manner in which those third parties develop, train and deploy their models, including risks arising from the inclusion of any unauthorized material in the training data for their models, the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models and other matters over which we may have limited visibility.

Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures.

We are also exposed to risks arising from the use of AI technologies by bad actors to commit fraud and misappropriate funds and to facilitate cyberattacks.

AI, if used to perpetrate fraud or launch cyberattacks, could harm our business, results of operations and financial condition.

Risks related to the telecommunications industry

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For more information, see Note 5 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.

While we did not discontinue any material product lines in 2025, future strategy shifts may result in the discontinuation of products and the write off of related inventory.

Moreover, the introduction of products embodying new technologies, the emergence of new industry standards, or changes in Service Provider offerings could adversely affect our ability to sell our products.

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We also may not have sufficient resources to make the technological advances necessary to be competitive and successful in the markets we serve.

have a material adverse effect on our ability to competitively market our products and on our revenue, results of operations, financial condition and cash flows.

Any failure by us to continue to anticipate or respond in a cost-effective and timely manner to changes in technology, industry standards, Service Provider offerings or new product announcements by our competitors, or any significant delays in product development or introduction, could have a material adverse effect on our ability to competitively market our products and on our revenue, results of operations, financial condition and cash flows.

Our failure or the failure of our contract manufacturers to comply with applicable environmental regulations could adversely impact our results of operations.

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Our attempts to offset these cost pressures, such as through increases in the selling prices of some of our products and services, may not be successful and could negatively affect our operating results.

In addition, a significant component of maintaining cost competitiveness is the ability of our subcontractors to adjust their costs to compensate for possible adverse exchange

rate movements.

In addition, a significant component of maintaining cost competitiveness is the ability of our subcontractors to adjust their costs to compensate for possible adverse exchange rate movements.

To the extent that the subcontractors are unable to do so, and we are unable to procure alternative product supplies, then our competitiveness and results of operations could be adversely impaired.

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In addition, a number of the components we use in our products are sourced directly or indirectly through Taiwan.

Deterioration of relations between Taiwan and China and the United States, the resulting actions taken by any of these parties, and other factors affecting the political or economic conditions of Taiwan in the future, could adversely impact our supply chain, international sales, and operations.

Deterioration of relations between Taiwan and China and the U.S., the resulting actions taken by any of these parties, and other factors affecting the political or economic conditions of Taiwan in the future, could adversely impact our supply chain, international sales, and operations.

We cannot be assured that delays in product deliveries will not occur in the future because of shortages resulting from this limited number of subcontractors or from the financial or other difficulties of these parties.

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We integrate third-party software into certain of our products.

Licenses for this technology may not be available or continue to be available to us on commercially reasonable terms.

Licenses for this technology may not be available or may not continue to be available to us on commercially reasonable terms.

Difficulties with third-party technology licensors could result in the termination of such licenses, which may result in increased costs or require us to purchase or develop a substitute technology.

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however, the cost of claims sustained in litigation, and costs associated with the litigation process, may not be covered by our insurance.

Such costs, and the demands

on management time during such an event, could harm our business, reputation and have a material adverse effect on our liquidity, results of operations, financial condition and cash flows.

In addition, as a result of the Business Combination with Adtran Networks SE, we continue to be exposed to litigation risk and uncertainty associated with the remaining minority shareholders of Adtran Networks.

Such costs, and the demands on management time during such an event, could harm our business, reputation and have a material adverse effect on our liquidity, results of operations, financial condition and cash flows.

In addition, as a result of the business combination with Adtran Networks, we continue to be exposed to litigation risk and uncertainty associated with the remaining minority shareholders of Adtran Networks.

The terms of the DPLTA, including the adequacy of compensation payments to minority Adtran Networks shareholders under the terms of the DPLTA, have been challenged by minority shareholders of Adtran Networks by initiating court-led appraisal proceedings under German law.

It is possible that the court in these appraisal proceedings may hold that we must pay higher Exit Compensation or Annual Recurring Compensation to such Adtran Networks SE shareholders than agreed upon in the DPLTA, the financial impact and timing of which is uncertain.

If we are unable to successfully develop and maintain relationships with SIs, Service Providers and enterprise VARs, our revenue may be negatively affected.

As part of our sales strategy, we are targeting SIs, Service Providers and enterprise VARs.

In addition to specialized technical expertise, SIs, Service Providers and VARs typically offer sophisticated service capabilities that are frequently desired by enterprise customers.

It is possible that the court in these appraisal proceedings may hold that we must pay higher Exit Compensation or Annual Recurring Compensation to such Adtran Networks shareholders than agreed upon in the DPLTA, the financial impact and timing of which is uncertain.

If we are unable to successfully develop and maintain relationships with Systems Integrators, Service Providers and enterprise value-added resellers, our revenue may be negatively affected.

As part of our sales strategy, we are targeting Systems Integrators, Service Providers and enterprise VARs.

In addition to specialized technical expertise, Systems Integrators, Service Providers and VARs typically offer sophisticated service capabilities that are frequently desired by enterprise customers.

To expand our distribution channel to include resellers with such capabilities, we must be able to provide effective support to these resellers.

If our sales, marketing or service capabilities are not sufficient to provide effective support to such SIs, Service Providers and VARs, our revenue may be negatively affected, and current SI, Service Provider and VAR partners may terminate their relationships with us, which would adversely impact our revenue and overall results of operations.

If our sales, marketing or service capabilities are not sufficient to provide effective support

to such Systems Integrators, Service Providers and VARs, our revenue may be negatively affected, and current Systems Integrators, Service Provider and VAR partners may terminate their relationships with us, which would adversely impact our revenue and overall results of operations.

Moreover, if our Systems Integrators, Service Providers or VARs cease doing business with us for any other reason or fail to successfully sell our products, our ability to sustain and grow our revenue could be materially adversely affected.

We depend on a third-party cloud platform provider to host our Mosaic One SaaS network and other operating platforms, and if we were to experience a material disruption or interference in service, our business and reputation could suffer.

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Risks related to the Company’s stock price

Our operating results historically have fluctuated and are likely to continue to fluctuate in future periods.

Such fluctuations can adversely affect our stock price.

Our financial performance and operating results historically have fluctuated and could fluctuate in future periods, which has affected and may in the future affect our stock price.

Our operating results have been, and will continue to be, subject to quarterly and annual fluctuations as a result of numerous factors.

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• our dependence on sales of our products by channel partners and the timing of their replenishment orders.

Specifically, our sales volume in 2024 has been negatively impacted due to our channel partners focus on reducing inventory levels;

For example, while we experienced an increased volume of sales activity in 2025 due to a return of normalized customer spending, our sales volume in 2024 was negatively impacted due to our channel partners focus on reducing inventory levels;

• the potential for conflicts and competition involving our channel partners and large end-user customers and the potential for consolidation among our channel partners;

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• changes in tax laws and regulations or accounting pronouncements.

• short sales, hedging and other derivative transactions involving our capital stock, including by holders of our 2030 Notes that employ a convertible arbitrage strategy with respect to such notes.

Moreover, shortfalls in our sales or earnings in any given period relative to our guidance or the levels expected by securities analysts have in the past and may in the future adversely affect the trading price of our common stock.

Future issuances of additional equity securities could result in dilution of existing stockholders’ equity ownership.

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Since our initial public offering in August 1994, there has been, and may continue to be, significant volatility in the market for our common stock, based on a variety of factors, including factors listed in this section, some of which are beyond our control.

Risks Related to our 2030 Notes and Capped Calls

Our indebtedness and liabilities could limit the cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operations.

In addition, if we are unable to raise additional capital and/or restructure some of our existing indebtedness, we may be unable to meet our obligations as they come due, including with respect to the 2030 Notes.

Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things:

• increasing our vulnerability to adverse economic and industry conditions;

• limiting our ability to obtain additional financing;

• making us unable to meet our obligations as they come due;

• requiring the dedication of a substantial portion of our cash flows from operations to service our indebtedness, which will reduce the amount of cash available for other purposes;

• limiting our flexibility to plan for, or react to, changes in our business;

• diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the 2030 Notes;

• placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.

Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the 2030 Notes and the Amended Credit Agreement, and our cash needs may increase in the future.

In addition, the Wells Fargo credit agreement contains, and any future indebtedness that we may incur may contain, financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness.

If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.

We may be unable to raise the funds necessary to repurchase the 2030 Notes for cash following a fundamental change or to pay any cash amounts due upon maturity or conversion of the 2030 Notes, and our other indebtedness may limit our ability to repurchase the 2030 Notes or to pay any cash amounts due upon their maturity or conversion.

Noteholders may, subject to a limited exception, require us to repurchase their 2030 Notes following a “fundamental change” (as defined in the Indenture) at a cash repurchase price generally equal to the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid interest, if any.

In addition, all conversions of the 2030 Notes will be settled partially or entirely in cash.

We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the 2030 Notes or pay the cash amounts due upon conversion.

In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the 2030 Notes or pay the cash amounts due upon conversion.

Our failure to repurchase the 2030 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the indenture.

A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full.

We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the 2030 Notes.

Provisions in the Indenture could delay or prevent an otherwise beneficial takeover of us.

Certain provisions in the 2030 Notes and the Indenture could make a third party attempt to acquire us more difficult or expensive.

For example, if a takeover constitutes a fundamental change, then, subject to a limited exception, noteholders will have the right to require us to repurchase their 2030 Notes for cash.

In addition, if a takeover constitutes a make-whole fundamental change, then we may be required to temporarily increase the conversion rate.

In either case, and in other cases, our obligations under the 2030 Notes and the Indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that noteholders or holders of our common stock may view as favorable.

The accounting method for the 2030 Notes has affected and may continue to adversely affect our reported financial condition and results.

The accounting method for reflecting the 2030 Notes on our balance sheet, accruing interest expense for the 2030 Notes and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

In accordance with applicable accounting standards, the 2030 Notes have been and may continue to be reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of the 2030 Notes, net of discount and issuance costs.

The issuance costs have been and may continue to be treated as a debt discount for accounting purposes, which are amortized into interest expense over the term of the 2030 Notes.

As a result of this amortization, the interest expense that we have recognized and expect to continue to recognize for the 2030 Notes for accounting purposes has been and may continue to be greater than the cash interest payments we will pay on the 2030 Notes, which has resulted and may continue to result in higher reported loss and which may result in lower reported income in the future.

In addition, the shares underlying the 2030 Notes have been reflected and may continue to be reflected in our diluted earnings per share using the “if converted” method, in accordance with ASU 2020-06.

Under that method, if the conversion value of the 2030 Notes exceeds their principal amount for a reporting period, then we calculate our diluted earnings per share assuming that all of the Notes were converted at the beginning of the reporting period and that we issued shares of our common stock to settle the excess.

However, if reflecting the Notes in diluted earnings per share in this manner is anti-dilutive, or if the conversion value of the Notes does not exceed their principal amount for a reporting period, then the shares underlying the Notes will not be reflected in our diluted earnings per share.

The application of the "if converted" method may reduce our reported diluted earnings per share, and accounting standards may change in the future in a manner that may adversely affect our diluted earnings per share.

Furthermore, if any of the conditions to the convertibility of the 2030 Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the 2030 Notes as a current, rather than a long-term, liability.

This reclassification could be required even if no noteholders convert their 2030 Notes and could materially reduce our reported working capital.

Transactions relating to our 2030 Notes may affect the value of our common stock.

Conversions of the 2030 Notes offered hereby may significantly dilute the ownership interests of our common stockholders and depress the market price of our common stock.

Furthermore, in connection with the 2030 Notes, we have entered into privately negotiated Capped Calls with one of the initial purchasers of the Notes or its affiliate and certain other financial institutions.

The Capped Calls are expected generally to reduce the potential dilution to our common stock upon any conversion of the 2030 Notes and/or offset any potential cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap.

In addition, the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes (and (x) are likely to do so following any repurchase of the Notes by us in connection with any fundamental change and (y) are likely to do so during any observation period related to a conversion of the Notes or following any repurchase or redemption of Notes by us, other than in connection with any fundamental change, if we elect to unwind a corresponding portion of the Capped Calls in connection with such conversion, repurchase or redemption).

This activity could also cause or avoid an increase or decrease in the market price of our common stock.

We are subject to counterparty risk with respect to the Capped Calls, and the Capped Calls may not operate as planned.

The option counterparties are, or are affiliates of, financial institutions, and we will be subject to the risk that one or more of such option counterparties might default under the Capped Calls.

Our exposure to the credit risk of the option counterparties is not secured by any collateral.

If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our Capped Calls with that option counterparty.

Our exposure will depend on many factors, but, generally, the increase in our exposure will be correlated with increases in the market price or the volatility of our common stock.

In addition, upon a default by an option counterparty, we may suffer more dilution than we currently anticipate with respect to our common stock.

We can provide no assurances as to the financial stability or viability of any option counterparty.

In addition, the Capped Calls are complex, and they may not operate as planned.

For example, the terms of the Capped Calls may be subject to adjustment, modification or, in some cases, renegotiation if certain corporate or other transactions occur.

Accordingly, these transactions may not operate as we intend if we are required to adjust their terms as a result of transactions in the future or upon unanticipated developments that may adversely affect the functioning of the Capped Calls.

Risks related to the regulatory environments in which we do business

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• various regulations and regional standards established by communications authorities and import/export control authorities that govern the manufacture, sale and use of our products.

Changes in domestic or international communications regulations, tariffs, potential changes in trade policies by the U.S.

Changes in domestic or international communications regulations, tariffs, changes in trade policies by the U.S.

and other nations, application requirements, import/export controls or expansion of regulation to new areas, including access, communications or commerce over the internet, may affect customer demand for our products or slow the adoption of new technologies which may affect our revenue.

where these standards or regulations apply, may adversely affect our revenue, results of operations, financial condition and cash flows.

Further, the cost of complying with the evolving standards and regulations, including the cost of product re-design if necessary, or the failure to obtain timely domestic or foreign regulatory approvals or certification such that we may not be able to sell our products where these standards or regulations apply, may adversely affect our revenue, results of operations, financial condition and cash flows.

• compliance with a wide variety of provincial, state, national and international laws and regulations applicable to the collection, use, retention, protection, disclosure, transfer and other processing of data, including personal data.

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For example, within the past three years, numerous states have adopted or are in the process of adopting various privacy-related laws and regulations.

In addition, on July 16, 2020, the Court of Justice of the European Union issued a decision that invalidated the EU-U.S.

Privacy Shield framework as a basis for transfers of personal data from the EU to the U.S., resulting in uncertainty and potential additional compliance obligations to ensure that a valid basis under the GDPR exists for these data transfers.

Since that time, the E.U.

have developed the successor E.U.-U.S.

Data Privacy Framework to address the 2020 decision, and on July 10, 2023, the European Commission issued an adequacy decision for the EU-US Data Privacy Framework, which entered in force on July 11, 2023;

however, there are indications there may be legal challenges to the decision.

Additionally, the European Commission published revised standard contractual clauses for data transfers from the European Economic Area in 2021, which were required to go into effect by December 2022.

Finally, the U.K.

has enacted a version of the GDPR the implementation of which occurred by way of the Data Protection Act 2018, collectively referred to as the "U.K.

GDPR." Uncertainty remains, however, regarding how aspects of data protection in the U.K.

will be handled in the medium to long term.

There is also a risk that we, directly or as the result of a third-party Service Provider we use, could be found to have failed to comply with the laws and regulations applicable in a jurisdiction regarding the collection, consent, handling, transfer or disposal of personal data.

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• the FCPA, which prohibits U.S.

companies and their intermediaries from making corrupt payments to foreign officials for the purpose of directing, obtaining or keeping business, and requires companies to maintain reasonable books and records and a system of internal accounting controls.

and a system of internal accounting controls.

The FCPA applies to companies, individual directors, officers, employees and agents.

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government temporarily paused the enforcement of the FCPA.

Whether FCPA enforcement will resume in the future and the extent to which it will be enforced remains uncertain.

On June 9, 2025, the U.S.

Department of Justice issued new guidelines for the enforcement of the FCPA, focusing on a narrower range of misconduct than prosecutors have previously targeted while prioritizing prosecution of individuals engaging in criminal misconduct.

• environmental, health and safety regulations governing the manufacture, assembly and testing of our products, including without limitation regulations governing the use of hazardous materials.

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596/2014 of the European Parliament and of the Council of April 16, 2014, and other applicable regulations.

• article 17 of the Market Abuse Regulation (EU) No.

596/2014 of the European Parliament and of the Council of 16 April 2014, which mandates that issuers such as us that are listed on the primary standard of the Frankfurt Stock Exchange provide real time disclosure in certain circumstances, including where management’s expected results materially deviate from previously announced guidance or analyst consensus.

Such requirements have in the past caused and may in the future cause us to release earnings results before they are final, which has affected and could in the future affect our stock price.

Moreover, changes in the U.S.

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The recent changes in the U.S.

government administration may result in substantial modifications to laws and regulations, including, but not limited to, those related to trade policies, tariffs, export controls and technology transfers.

New executive orders and legislative actions could alter the business environment in which we operate.

government administration have resulted in substantial modifications to laws and regulations, including, but not limited to, those related to trade policies, tariffs, export controls and technology transfers.

New executive orders and legislative actions have altered and may in the future further alter the business environment in which we operate.

Changes in trade policy in the U.S.

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In recent years, international market conditions and the international regulatory environment have been increasingly affected by competition among countries and geopolitical frictions.

government issued orders in February 2025 increasing tariffs on imports from certain countries, including Canada, China and Mexico, and it has discussed further tariffs, including plans to increase U.S.

tariffs to match the rates that other countries charge on imports and tariffs on semiconductors, automobiles and pharmaceuticals imported into the U.S.

While the implementation of tariffs on Canadian and Mexican imports was initially deferred, such tariffs are expected to go into effect in March 2025 and the U.S.

has increased tariffs on goods imported into the U.S.

from China by 10%.

In response, China imposed a 15% tariff on U.S.

coal and liquified natural gas products, along with a 10% tariff on crude oil.

government has indicated that an additional 10% duty on Chinese imports may be forthcoming, which may result in further tariffs on U.S.

products being imported into China.

The recent tariffs come on top of ongoing trade tensions and regulatory actions involving the governments of the U.S.

Moreover, on February 11, 2025, the U.S.

government ordered tariffs of 25% on imports of steel and aluminum regardless of where they originate.

During the year ended December 31, 2025, the U.S.

introduced trade policy actions that increased import tariffs across a wide range of countries at various rates, with certain exemptions.

On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the IEEPA.

The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

Following the Supreme Court’s decision, the U.S.

Furthermore, recent U.S.

trade actions have triggered retaliatory actions by certain affected countries, and other foreign governments may impose further trade measures, including reciprocal tariffs, on certain U.S.

goods in the future.

Because not all products can be sourced in all countries, we expect to experience increased costs in our supply chain as a result of such tariffs, which may lead to reduced margins or increased prices.

At this time, it remains unclear what additional actions, if any, will be taken by the U.S.

or other governments with respect to international trade agreements, the imposition of tariffs on goods imported into the U.S.

or other governments with respect to international trade agreements, the imposition of or changes to tariffs on goods imported into the U.S.

or exported to other countries, tax policy related to international commerce, increased export control, sanctions and investment restrictions, import or use of foreign communications equipment, or other trade matters.

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These impacts could have a negative effect on our financial results, including our revenue and profitability.

There can also be no assurance that further trade tensions between the U.S.

and China will not have an adverse impact on our business, operations and access to technology, or components thereof, sourced from China.

Furthermore, tariffs on our customers’ products may adversely affect our gross profit margins in the future due to the potential for increased pressure on our selling prices by customers seeking to offset the impact of tariffs on their own products.

In addition, the extent and duration of increased tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S.

and affected countries, the responses of other countries

or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and reduced demand for our and our customers’ products and services.

Such conditions could have a material adverse impact on our business, results of operations and cash flows.

Also, disruptions and volatility in the financial markets may lead to adverse changes in the availability, terms and cost of capital.

Such adverse changes could increase our costs of capital and limit our access to external financing sources to fund acquisitions, capital projects, or refinancing of debt maturities on similar terms, which could in turn reduce our cash flows and limit our ability to pursue growth opportunities.

Changes in tariffs and trade restrictions can be announced with little or no advance notice.

The adoption and expansion of tariffs or other trade restrictions, increasing trade tensions, or other changes in governmental policies related to taxes, tariffs, trade agreements or policies, are difficult to predict, which makes attendant risks difficult to anticipate and mitigate.

If we are unable to navigate further changes in U.S.

or international trade policy, it could have a material adverse impact on our business and results of operations.

The complexity of announced or future tariffs may also increase the risk that we or our customers or suppliers may be subject to enforcement actions in the U.S.

or foreign jurisdictions related to compliance with trade regulations.

In May 2025, the U.S.

Department of Justice announced that trade and customs fraud, including tariff evasion, is a high-impact area and designated it as an enforcement priority area.

Additionally, the imposition of tariffs is dependent upon the classification of items under the Harmonized Tariff System (“HTS”) and the country of origin of the item.

Determination of the HTS and the origin of the item is a technical matter that can be subjective in nature.

Accordingly, although we believe our classifications of both HTS and origin are appropriate, there is no certainty that the U.S.

government will agree with us.

government does not agree with our determinations, we could be required to pay additional amounts, including potential penalties, and our profitability would be adversely impacted.

Finally, tariffs on our customers’ products may adversely affect our gross profit margins in the future due to the potential for increased pressure on our selling prices by customers seeking to offset the impact of tariffs on their own products.

In addition, tariffs could make our products less attractive relative to products offered by competitors, which may not be subject to similar tariffs.

In reaction to the increased tariffs, customers may elect to reduce spending, renegotiate contracts, defer orders or delivery of existing orders, or shift purchases to other vendors, each of which would adversely impact our financial results and competitive position with customers.

Increases in tariffs on imported goods or the failure to resolve current international trade disputes could further decrease demand and have a material adverse effect on our business and operating results.

Recently, the Company has experienced increased costs on imports of certain critical raw minerals and derivative products relevant to our business and products due to tariffs imposed by the U.S.

government and other nations, and the availability, timing, and amount of any potential refunds of related U.S.

tariffs remains uncertain.

We have taken steps, and may take additional steps, to attempt to mitigate the impact of tariffs on our business, including by availing ourselves of certain exemptions to tariffs;

by making changes to our supply chain practices, sources of supply, or manufacturing locations;

and by passing the cost of tariffs to customers.

These changes could take considerable time to implement, result in significant costs, and cause supply chain delays or disruption.

New or revised tax regulations, changes in our effective tax rate, recognition of a valuation allowance or assessments arising from tax audits may have an adverse impact on our results.

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Should management determine that a valuation allowance is needed in the future due to not being able to absorb deferred tax assets, it would have a material impact on our consolidated financial statements.

In August 2022, the Inflation Reduction Act was signed into law, which made a number of changes to the Internal Revenue Code, including adding a 1% excise tax on stock buybacks by publicly traded corporations and a 15% corporate minimum tax on adjusted financial statement income of certain large companies.

The impact of these provisions on our effective tax rate will also depend on additional guidance to be issued by the Secretary of the U.S.

In August 2022, the Inflation Reduction Act was signed into law, making several changes to the Internal Revenue Code, including a 1% excise tax on stock buybacks by publicly traded corporations and a 15% corporate minimum tax on adjusted financial statement income of certain large companies.

The impact of these provisions on our effective tax rate will depend on additional guidance to be issued by the Secretary of the U.S.

Department of the Treasury.

We are currently evaluating the impact of these provisions on our effective tax rate.

Further, the Tax Act amended the Internal Revenue Code to require that specific research and experimental (“R&E”) expenditures be capitalized and amortized over five years (U.S.

R&E) or fifteen years (non-U.S.

R&E), which began in fiscal 2023.

Although the U.S.

Congress has considered legislation that would defer, modify, or repeal the capitalization and amortization requirement, there is no assurance that the provision will be deferred, repealed, or otherwise modified.

If the requirement is not repealed or otherwise modified, it may increase our effective tax rate.

Additionally, the Organization for Economic Co-operation and Development (the “OECD”), the G20, and other invited countries developed a global tax framework inclusive of a 15% global

minimum tax under the Pillar Two Global Anti-Base Erosion Rules (“Pillar Two”).

On December 15, 2022, the Council of the European Union (“EU”) formally adopted the OECD’s framework to achieve a coordinated implementation amongst EU Member States consistent with EU law.

The EU’s Pillar Two Directive effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive.

Various countries have enacted or are in the process of enacting legislation to adopt certain parts of the OECD’s proposals.

We have assessed the framework including OECD administrative guidance and expect, based upon available guidance, that these changes will not have a material impact to our results of operations;

however, any future changes in OECD guidance or interpretations, could impact our initial assessment.

Many aspects of the minimum tax directive will be effective beginning in fiscal 2025, with certain remaining impacts to be effective beginning in fiscal 2026.

While it is uncertain whether the U.S.

will enact legislation to adopt the minimum tax directive, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement the minimum tax directive.

We are currently evaluating the effect of these provisions in light of more recent legislation described below.

Additionally, in January 2026, the OECD Inclusive Framework released administrative guidance (the “Side-by-Side Package”) introducing a new Side-by-Side (“SbS”) Safe Harbor, an Ultimate Parent Entity (“UPE”) Safe Harbor, among other measures, effective for fiscal years beginning on or after January 1, 2026.

This elective SbS safe harbor deems top-up tax as zero for purposes of the Income Inclusion Rule (“IIR”) and Undertaxed Profits Rule (“UTPR”) for multinational enterprise groups with an ultimate parent entity in a qualifying jurisdiction, such as the United States (currently the only jurisdiction listed in the OECD Central Record as having a Qualified SbS Regime).

As a result, qualifying U.S.-headquartered groups that make a valid election will have top-up tax deemed zero for IIR and UTPR purposes across domestic and foreign operations, subject to specified eligibility criteria.

However, this relief does not eliminate Pillar Two obligations entirely, as qualified domestic minimum top-up taxes (“QDMTTs”) in implementing jurisdictions and GloBE (Global Anti-Base Erosion) Information Return (“GIR”) reporting requirements continue to apply.

The Side-by-Side Package also extends the transitional country-by-country reporting safe harbor (“CbCR”) through fiscal year 2027, introduces a permanent simplified effective tax rate safe harbor applicable to fiscal years beginning on or after January 1, 2027, and establishes a substance-based tax incentive safe harbor applicable to fiscal years beginning on or after January 1, 2026 to better accommodate certain tax incentives.

These developments have reconfigured key aspects of Pillar Two compliance, particularly for U.S.-based multinational groups, but require ongoing monitoring of jurisdictional implementations, potential future assessments of additional qualifying regimes, and a planned formal stocktake by 2029 that could identify and address risks to the global minimum tax framework.

As a result, the tax laws in the U.S.

and other countries in which we do business could change on a prospective or retroactive basis, including through refinements to these rules, new adoptions, or responses to evolving international developments, and any such changes could adversely affect our business, financial condition, and results of operations.

In July 2025, the U.S.

enacted significant tax legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”).

The OBBBA makes permanent certain provisions of the Tax Cuts and Jobs Act of 2017 and introduces additional changes affecting individuals and businesses.

Key business-related provisions include the continuation of the 21% federal corporate income tax rate;

enhancements to bonus depreciation and expensing rules, including 100% bonus depreciation for qualified property acquired after January 19, 2025, and full expensing of domestic research and experimental expenditures under Section 174A;

and modifications to certain international provisions, including Net CFC Tested Income (NCTI, formerly GILTI) and Foreign-Derived Deduction Eligible Income (FDDEI, formerly FDII), with permanent Section 250 deductions generally effective for taxable years beginning after December 31, 2025.

The OBBBA also includes other targeted measures, such as an excise tax on certain foreign remittances.

We have reviewed the OBBBA and continue to monitor and model its potential impact on our operations and effective tax rate.

Based on our current analysis of the Company’s operating profile, we do not expect material effects on our 2025 fiscal year results or on our results in the near term, considering our existing tax profile.

Many provisions that represent substantive changes to existing law, including adjustments to international tax regimes and certain deduction limitations, phase in in future years.

While the impact of the OBBBA is uncertain, any increase in our tax exposure could materially and adversely affect our business, financial condition, and results of operations.

Interest rate fluctuations could increase our costs of borrowing money and negatively impact our financial condition and future operations.

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Any such losses could be material and could materially and adversely affect our business, financial condition and results of operations.

Expectations relating to ESG considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.

Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on ESG considerations relating to businesses, including climate change and greenhouse gas emissions, human and civil rights, and diversity, equity and inclusion.

In addition, we may make statements about our ESG goals and initiatives through our website, press statements and other communications.

Responding to these environmental, social and governance considerations and implementation of these goals and initiatives involves risks and uncertainties, requires investments, and depends in part on third-party performance or data that is outside of our control.

Any failure, or perceived failure, by us to achieve our targets, further our initiatives, adhere to our public statements, comply with federal, state or international ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.

In addition, simultaneous, disparate and divergent sentiments on ESG-related matters from multiple stakeholder groups must be considered.

For example, there is an increasing number of anti-ESG initiatives in the U.S.

that may conflict with other regulatory requirements or our various stakeholders' expectations.

Such divergent, sometimes conflicting views on ESG-related matters increase the risk that any action or lack thereof by us on such matters will be perceived negatively by some stakeholders.

Expectations relating to sustainability and governance matters expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.

Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on sustainability and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human and civil rights, and diversity, equity and inclusion.

In addition, we may make statements about our sustainability and governance goals and initiatives through our website, press statements and other communications.

Responding to these sustainability and governance considerations and implementation of these goals and initiatives involves risks and uncertainties, requires investments, and depends in part on third-party performance or data that is outside of our control.

Any failure, or perceived failure, by us to achieve our targets, further our initiatives, adhere to our public statements, comply with federal, state or international sustainability and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.

In addition, simultaneous, disparate and divergent sentiments on sustainability and governance-related matters from multiple stakeholder groups must be considered.

For example, there is an increasing number of anti-sustainability and governance initiatives in the U.S., including with respect to diversity, equity and inclusion, that may conflict with other regulatory requirements or our various stakeholders' expectations.

Such divergent, sometimes conflicting views on sustainability and governance-related matters increase the risk that any action or lack thereof by us on such matters will be perceived negatively by some stakeholders.

Further downgrades of the U.S.

credit rating, impending automatic spending cuts or a government shutdown could negatively impact our liquidity, financial condition and earnings.

debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns, or a recession in the United States.

credit rating, automatic spending cuts, the current government shutdown or future government shutdowns could negatively impact our liquidity, financial condition and earnings.

debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns, or a recession in the U.S.

Although U.S.

lawmakers passed legislation to raise the federal debt ceiling on multiple occasions, including a suspension of the federal debt ceiling in June 2023, ratings agencies have lowered or threatened to lower the long-term sovereign credit rating on the United States.

On January 21, 2025, the U.S.

Treasury began taking extraordinary measures to prevent a default on U.S.

government debt, which measures are expected to continue until such time as the U.S.

Congress increases the debt ceiling.

However, it is unclear how long such extraordinary measures will forestall a default in the event of extended Congressional negotiations or inaction.

lawmakers passed legislation to raise the federal debt ceiling on multiple occasions, ratings agencies have lowered or threatened to lower the long-term sovereign credit rating on the U.S.

Most recently, on May 16, 2025, Moody’s downgraded the U.S.

long-term issuer and senior unsecured ratings to Aa1 from Aaa and changed its outlook from negative to stable.

This is in response to the increase in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.

On July 4, 2025, President Trump signed the OBBBA into law.

The bill increased the federal government’s debt limit by $5 trillion, making it unlikely that the limit will be reached in the immediate future.

The effects of the bill and the continued budget deficits enabled thereunder remain uncertain.

The impact of this or any further downgrades to the U.S.

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Absent further quantitative easing by the Federal Reserve, these developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.

On December 21, 2024, the previous administration signed a continuing resolution to extend federal spending and avert a government shutdown through March 14, 2025.

Accordingly, without a final agreement regarding the federal budget in place prior to the expiration of the continuing resolution, or another continuing resolution, it is still possible that a partial shutdown of the U.S.

government may occur.

Continued adverse political and economic conditions could have a material adverse effect on our business, financial condition and results of operations.

Moreover, the current government shutdown or any future government shutdowns, as well as adverse political and economic conditions relating to such shutdowns, could have a material adverse effect on our business, financial condition and results of operations.

UNRESOLV ED STAFF COMMENTS

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The governance of Adtran’s cybersecurity program is ultimately the responsibility of the Board of Directors, with the Audit Committee providing critical oversight through regular reviews and periodic updates at least quarterly, or more frequently as needed.

The Company’s cybersecurity leadership includes the Chief Information Officer "CIO"/Chief Information Security Officer "CISO", who is responsible for governing and protecting Adtran’s information assets, leading the cybersecurity strategy, and reporting directly to the Chief Executive Officer.

The CIO/CISO ensures compliance with ISO 27001, oversees annual external audits, and leads the monthly Information Technology Cybersecurity meetings and the Data Privacy Committee.

Since joining Adtran in November 2018, the CIO/CISO has leveraged extensive leadership experience to enhance the company’s security posture.

Additionally, the Chief Technology Officer ("CTO"), who joined the company in January 2023 following the Business Combination, plays a key role in product

security oversight, drawing on prior experience as Adtran Networks' CTO leading their product management and advanced technology teams.

The Company’s cybersecurity leadership includes the Chief Information Officer "CIO", who is responsible for governing and protecting Adtran’s information assets, leading the cybersecurity strategy, and reporting directly to the Chief Executive Officer.

The CIO is an accomplished engineering and security professional with extensive leadership experience in research and development and product security and holds a Ph.D.

in electrical engineering.

Additionally, the Chief Technology Officer ("CTO"), who joined the company in January 2023 following the Business Combination, plays a key role in product security oversight, drawing on prior experience as Adtran Networks' CTO leading their product management and advanced technology teams.

Our CTO helps oversee our product security programs.

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We are currently in the process of selling a portion of our headquarters facility and expect to sell it within the next twelve months, so it is classified as assets held for sale on our balance sheet.

In order to facilitate this, we have relocated the associated operations located in our North and South Towers to our East Tower without any significant disruption to our operations.

We own a production and development facility in Meiningen, Germany.

We lease a facility for our European headquarters in Munich, Germany.

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LEGAL PROCEEDINGS

The information presented under the caption “DPLTA Appraisal Proceedings” in Note 18 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report is incorporated herein by reference.

The information presented under the captions "Legal Matters" and “DPLTA Appraisal Proceedings” in Note 17 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report is incorporated herein by reference.

MINE SAF ETY DISCLOSURES

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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-K

Item 1. Business