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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-03-03 · 952 added, 1143 removed, 1537 unchanged (58% of the section changed)

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The following discussion should be read in conjunction with our audited consolidated financial statements and the related notes included in Part II, Item 8 of this report.

We have omitted discussion of the earliest of the three years of financial condition and results of operations and this information can be found in Part I, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Part I, Item 1A, Risk Factors, included in Amendment No.

1 to our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 15, 2024 (the “2023 Form 10-K”), as well as Part I, Item 1, Business, included in our Annual Report on Form 10-K filed with the SEC on March 15, 2024, which is available free of charge on the SEC's website at http://www.sec.gov and on our website at www.adtran.com.

We have omitted discussion of the earliest of the three years of financial condition and results of operations and this information can be found in Part I, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations”, Part I, Item 1A, “Risk Factors”, and Part I, Item 1, “Business”, included in Amendment No.

1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on May 20, 2025 (the "2024 Form 10-K/A"), which is available free of charge on the SEC's website at http://www.sec.gov and on our website at www.adtran.com .

This discussion is designed to provide the reader with information that will assist in understanding our consolidated financial statements, the changes in certain key items in those financial statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our consolidated financial statements.

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See also Part I, Item 1A, Risk Factors, of this Form 10-K.

Unless the context otherwise indicates or requires, references in this Annual Report on Form 10-K to "Adtran", the “Company,” “we”, “us” and “our” refer to ADTRAN Holdings, Inc.

and its consolidated subsidiaries for periods subsequent to the Merger and to ADTRAN, Inc.

and its consolidated subsidiaries for periods prior to the Merger.

The prior period results do not include the results of Adtran Networks prior to the Business Combination which occurred on July 15, 2022.

Furthermore, unless the context otherwise indicates or requires, references in this Annual Report on Form 10-K to “Adtran Networks” refer to Adtran Networks SE (formerly ADVA Optical Networking SE).

The Company is a leading global provider of networking and communications platforms, software, systems and services focused on carrier networks, data center interconnect for private enterprise networks and mission critical infrastructure.

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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.

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The Company solely owns ADTRAN, Inc.

and is the majority shareholder of Adtran Networks (formerly ADVA Optical Networking SE).

and is the majority shareholder of Adtran Networks.

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

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

These solutions include our Mosaic One SaaS applications, fiber termination solutions for residential, business and wholesale subscribers, Wi-Fi access solutions for residential and business subscribers, Ethernet switching and network edge virtualization solutions for business subscribers and cloud software solutions covering a mix of subscriber types.

These solutions include our Mosaic One SaaS applications featuring AI driven operations, fiber termination solutions for residential, business and wholesale subscribers, Wi-Fi access solutions for residential and business subscribers, Ethernet switching and network edge virtualization solutions for business subscribers and cloud software solutions covering a mix of subscriber types.

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.

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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 us) 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 28, 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.

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

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

The Company expects to receive a 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.

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

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.

For the year ended December 31, 2025, 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.

For the year ended December 31, 2023, 67 thousand shares of Adtran Networks stock were tendered to the Company and Exit Compensation payments of approximately €1.2 million or approximately $1.3 million based on an exchange rate as of December 31, 2023, were paid to Adtran Networks' shareholders.

In addition to our cash and cash equivalents and the credit facility, we may fund a portion or all of the Exit Compensation through the sale of securities or additional alternative funding sources, if available.

There can be no assurances that we would be successful in effecting these actions on 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.

For the year ended December 31, 2024, approximately 0.8 million shares of Adtran Networks stock were tendered to the Company.

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

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

See Note 10, Credit Agreement, for additional information regarding the terms of the Amendments of the Credit Agreement.

We currently hold 36,871,784 no-par value bearer shares of Adtran Networks, representing 70.8% of Adtran Networks outstanding shares as of December 31, 2025.

The foregoing description of the DPLTA does not purport to be complete and is qualified in its entirety by reference to the DPLTA, a non-binding English translation of which is incorporated by reference to Exhibit 10.7 included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Business Efficiency Program

During the fourth quarter of 2023, the Company initiated a Business Efficiency Program designed to optimize the assets, business processes, and information technology systems of the Company in relation to the Business Combination with Adtran Networks.

The Business Efficiency Program included expenses specifically associated with achieving run-rate synergies as well as Business Efficiency Program expenses described below.

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

See Note 20 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information.

During the years ended December 31, 2024 and 2023, we recognized $44.7 million and $25.1 million of costs relating to the Business Efficiency Program, respectively.

Future cash payments include severance costs, outplacement fees and site consolidation that are anticipated to be approximately $10.3 million.

Business Combination Integration Costs

During the years ended December 31, 2024 and 2023, we recognized $1.9 million and $4.9 million, respectively, of integration costs related to the Business Combination were incurred.

These transaction costs are included in selling, general and administrative expenses, research & development expenses and cost of revenue in the Consolidated Statement of Loss.

The Company does not anticipate additional material expenses to be incurred in connection with this integration program.

Financial Performance and Trends

We ended 2024 with a year-over-year revenue decrease of 19.7%, driven by decreased volume of sales activity due to customers' focus on reducing inventory levels and continuing uncertain macroeconomic conditions related to elevated inflation, elevated interest rates and currency fluctuation which impacted the spending behavior of our customers.

During 2024, we had one customer with revenues greater than 10.0% which was an international Service Provider customer and our next five largest customers comprised 21.7% of our revenue.

Our year-over-year domestic revenue decreased by 13.6% and continued to be impacted by elevated customer inventory levels, continuing effects of uncertain macroeconomic conditions and decreased shipments to distributor customers.

Internationally, our year-over-year revenue decreased by 23.8%, primarily driven by decreased shipments to network operators in Europe and the unfavorable impact of foreign exchange on revenue as a result of the strengthened U.S.

Access & Aggregation and Optical Networking revenue categories experienced a general slowdown in revenue as a result of reduced spending by our Service Provider customers as they continue to reduce excess inventory levels and monitor the uncertain macroeconomic conditions.

Despite these challenges, we have maintained our emphasis on product development to enable us to respond to rapidly changing technology and evolving industry standards.

For example, we expect public funding through projects such as IPCEI ME/CT to further our research and development for new communication technologies.

Additionally, public funding through the Broadband Equity, Access and Deployment Program is expected to commence in 2025, which provides a positive outlook for the future.

Nevertheless, these government-supported loan programs and grants generally include conditions such as deployment criteria, domestic preference provisions and other requirements that apply to the project and selected equipment as conditions for funding, which we expect will influence the extent to which such programs will have an impact on our revenue.

In Europe, we continue to see increased activity from high-risk vendor replacement and broadband subsidy programs.

While our 2023 and 2024 revenues have fluctuated and may continue to fluctuate on a quarterly basis, during the fourth quarter of 2024, our operating results have improved due to slowly stabilizing revenues, improving margins and tight operational cost controls.

Nevertheless, a significant percentage of orders require delivery within a few days, requiring us to maintain higher inventory levels.

These factors may result in limited order flow visibility.

We have taken decisive steps to transform our business into a leaner, more efficient and more profitable company, including the substantial completion of our Business Efficiency Program (other than the Company’s aim of selling its headquarters), which included a significant cost efficiency program targeting a reduction of ongoing operating expenses and a capital efficiency program inclusive of certain salary reductions, an early retirement program, a site consolidation plan to include lease impairments and the partial sale of owned real estate (including the potential sale of portions of our headquarters), inventory write downs from product discontinuances, and the suspension of the quarterly dividend.

Our operating expenses are relatively fixed in the short term, therefore, a shortfall in quarterly revenues has and may again in the future significantly impact our financial results in a given quarter.

Our operating results have significantly fluctuated and may do so in the future as a result of a number of other factors, including a decline in general economic and market conditions, foreign currency exchange rate movements, inflation, increased competition, customer order patterns, changes in product and services mix, trade policies, timing differences between price decreases and product cost reductions, product warranty returns, expediting costs, tariffs and announcements of new products by us or our competitors.

In recent years, inflationary pressures on input costs, such as raw materials and labor, and distribution costs had a negative impact on our operating

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.

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 additional adverse effect on our business and operating results beyond the effects of the most recent inventory write-downs.

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.

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.

We ended 2025 with a year-over-year revenue increase of 17.5%, driven by increased volume of sales activity due to a return of normalized customer spending, increased growth due to fiber expansion brought about by higher service provider spending, vendor consolidation, a continuing shift away from high-risk vendors, increased demand for modernizing and upgrading critical infrastructure within governments, utilities, large enterprises, and bandwidth hungry applications including, AI.

During 2025, we had one customer with revenues greater than 10.0% which was an international Service Provider, and our next five largest customers comprised 20.4% of our revenue.

Our year-over-year U.S.

revenue increased by 20.7% due to a return to normalized customer spending and fiber expansion.

Internationally, our year-over-year revenue increased by 15.0%, primarily driven by fiber expansion.

For 2025 our Access & Aggregation, Subscriber Solutions and Optical Networking revenue categories all experienced increased volume of sales activity year-over-year due to growth across geographies, most product lines, and the continued expansion of our customer base.

Our revenues have fluctuated in recent years and they may continue to fluctuate going forward.

However, during the year ended December 31, 2025, our operating results improved due to recovery in end markets, including a decrease in inventories held by customers, improving margins and tight operational cost controls.

Additionally, public funding through the Broadband Equity, Access and Deployment Program ("BEAD") is expected to commence in 2026, which provides a positive outlook for the future.

We have also taken steps to transform our business into a leaner, more efficient and more profitable company, including the completion of our business efficiency program (the "Business Efficiency Program").

Nevertheless, our operating expenses are relatively fixed in the short term.

Our operating results improved due to slowly stabilizing revenues, improving margins and tight operational cost controls.

In addition, 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 potential disruptions to our operations and order fulfillment.

Moreover, 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 additional adverse effect on our business and operating results beyond the effects of the most recent inventory write-downs.

On the other hand, 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.

Trade Policy/Tariffs

During the year ended December 31, 2025 and continuing to the date of this filing, the U.S.

introduced trade policy actions that have 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.

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.

These changes in U.S.

trade policy and subsequent retaliatory actions have the potential to materially alter various input costs for the Company.

Moreover, related costs and the uncertainty arising from such changes in trade policy may result in shifts in customer behavior, such as decreased demand.

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

To help mitigate this, we have taken steps to diversify our supply chain, manufacturing locations and relationships with suppliers to give us added flexibility.

For example, beginning in the first quarter of 2026 our suppliers will be able to ship products directly to a free trade zone which is set to open at our Huntsville, Alabama facility, which we expect to further mitigate the impact of tariffs.

See “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 I, Item 1A “Risk Factors” of this report for further discussion of the risks associated with the changes to U.S.

and foreign trade policies.

Enactment of the “One Big Beautiful Bill Act”

On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) was signed into law in the U.S.

Key corporate tax provisions include the restoration of 100% bonus depreciation under Section 168(k) for qualified property acquired after January 19, 2025;

immediate expensing of domestic research and experimental (R&E) expenditures under new Section 174A (with foreign R&E continuing to be capitalized and amortized over 15 years), effective for tax years beginning after December 31, 2024;

restoration of the EBITDA-based limitation on business interest expense under Section 163(j) for taxable years beginning after December 31, 2024;

updates 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 effective for tax years beginning after December 31, 2025;

amendments to energy credits, including accelerated phase outs or modifications for certain clean energy incentives;

and expanded Section 162(m) aggregation requirements that apply the $1 million deduction limitation on an aggregate basis across controlled group members.

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

The Company is currently evaluating the impact of the OBBBA;

however, it does not currently expect the law to have a material impact on its effective tax rate or cash flows in the current fiscal year.

Issuance of Convertible Senior Notes

On September 19, 2025, the Company issued $201.3 million principal amount of its 3.75% convertible senior notes due 2030 (the “2030 Notes” or “Notes”).

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

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

Pursuant to the purchase agreement between the Company and Evercore Group, L.L.C., as representative of the several initial purchasers of the Notes, the Company granted the initial purchasers an option to purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional approximately $26.3 million principal amount of Notes.

The Notes issued on September 19, 2025 include approximately $26.3 million principal amount of Notes issued pursuant to the full exercise by the initial purchasers of such option.

See Note 11 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for more details.

Capped Call Transactions

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

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

See Note 11 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for more details.

Foreign Currency

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

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

As a result of our global operations, our revenue, gross margins, operating expense and operating loss in some international markets have been and may continue to be affected by foreign currency fluctuations.

As a result of our global operations, our revenue, gross margin, operating expense and operating loss in some international markets has been and may continue to be affected by foreign currency fluctuations.

Goodwill Impairment

The Company’s policy is to assess the realizability of assets (long-lived assets, intangibles and goodwill) held within our reporting units and to evaluate such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

During the third quarter of 2023, the Company identified a triggering event due to a decrease in its market capitalization and changes in projections (decrease in estimated cash flows).

While the quantitative impairment analysis indicated that there was no impairment of Network Solutions goodwill, the Company determined a $37.9 million non-cash impairment charge for goodwill was warranted for the Services & Support reporting unit.

During the fourth quarter of 2023, the Company completed its annual impairment test.

There were no significant market changes or changes to cash flow projections, as such no triggering event was identified during the fourth quarter of 2023.

No impairment of goodwill was recognized during the year ended December 31, 2025.

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

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

The Company determined upon its quantitative impairment assessment to recognize a $292.6 million non-cash goodwill impairment charge for the Network Solutions reporting unit during the three months ended March 31, 2024.

The quantitative impairment analysis indicated there was no impairment of the Services & Support goodwill during the three months ended March 31, 2024.

There have been no triggering events identified affecting the valuation of goodwill in our Services & Support reporting unit during the remainder of 2024.

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 during the year ended December 31, 2024.

The quantitative impairment analysis indicated there was no impairment of the Services & Support goodwill during the year ended December 31, 2024.

Business Efficiency Program

The Business Efficiency Program included expenses specifically associated with achieving run-rate synergies as well as Business Efficiency Program expenses described below.

See Note 19 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information.

We did not incur any Business Efficiency Program costs during the year ended December 31, 2025.

The Company reduced previously accrued costs related to the Business Efficiency Program by $0.3 million during the year ended December 31, 2025.

During the years ended December 31, 2024 and 2023, respectively, we recognized $44.7 million and $25.1 million, respectively, of costs relating to the Business Efficiency Program, respectively.

As of December 31, 2025, all expenses related to the Business Efficiency Program have been paid.

Our historical financial performance is not necessarily a meaningful indicator of future results, and in general, management expects that our financial results may vary from period to period.

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Research and development expenses

Asset impairment

Goodwill impairments

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Interest expense

Net investment gain (loss)

Other income, net

Net investment gain

Other (expense) income, net

Loss Before Income Taxes

Income tax (expense) benefit

Net Income (loss) attributable to non-controlling interest

Income tax expense

Net Income attributable to non-controlling interest

Net Loss attributable to ADTRAN Holdings, Inc.

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The emphasis of the discussion is a comparison of the years ended December 31, 2025 and December 31, 2024.

For a discussion of a comparison of the years ended December 31, 2023 and December 31, 2022, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 15, 2024.

For a discussion of a comparison of the years ended December 31, 2024 and December 31, 2023, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K/A for the year ended December 31, 2024, filed with the SEC on May 20, 2025.

Comparison of Years Ended December 31, 2025 and December 31, 2024

Our revenue decreased 19.7% from $1,149.1 million for the year ended December 31, 2023 to $922.7 million for the year ended December 31, 2024.

The decrease in revenue for the year ended December 31, 2024 is primarily driven by a decrease in volume of sales activity due to customers’ focus on reducing inventory levels and the completion of significant customer projects.

The decrease in revenue by category for the year ended December 31, 2024 was primarily attributable to $192.0 million decrease in Optical Networking Solutions products and a $67.4 million decrease in Access & Aggregation Solutions partially offset by a $33.1 million increase in Subscriber Solutions category.

Continued customer concerns over inventory stocking levels have affected our revenue year-to-date in our Optical Networking Solutions category, Access & Aggregation category and our Subscriber Solutions category.

This includes our two largest Optical Networking Solutions customers, which we believe are focused on reducing existing inventory.

Network Solutions segment revenue decreased 24.2% from $974.4 million in 2023 to $739.0 million in 2024, primarily attributable to $196.6 million decrease in Optical Networking Solutions products and a $71.1 million decrease in Access & Aggregation Solutions partially offset by a $32.3 million increase in Subscriber Solutions category.

More specifically, for the year ended December 31, 2024, the decrease in revenue for our Subscriber Solutions products was primarily due to lower volume of sales of our residential solutions products as a result of customers focus on reducing inventory levels.

Our revenue increased 17.5% from $922.7 million for the year ended December 31, 2024 to $1,083.8 million for the year ended December 31, 2025.

The increase in revenue for the year ended December 31, 2025 was driven by increased volume of sales activity due to a return of normalized customer spending, increased growth due to fiber expansion brought about by higher service provider spending, vendor consolidation, a continuing shift away from high-risk vendors, increased demand for modernizing and upgrading critical infrastructure within governments, utilities, large enterprises, and bandwidth-hungry applications, including AI, partially offset by a decrease in revenue related to installation/system integration services.

The increase in revenue by category for the year ended

December 31, 2025, was primarily attributable to a $79.4 million increase in Optical Networking Solutions products and services, a $38.3 million increase in Subscriber Solutions products and services and a $43.4 million increase in Access & Aggregation products and services.

All revenue categories for the year ended December 31, 2025 experienced increased volume of sales activity due to growth across geographies, most product lines, and the continued expansion of our customer base.

Network Solutions segment revenue increased 21.4% from $739.0 million in 2024 to $896.9 million in 2025, primarily attributable to $71.3 million increase in Optical Networking Solutions products, a $45.9 million increase in Access & Aggregation Solutions and a $40.8 million increase in Subscriber Solutions category.

Services & Support revenue increased 1.7% from $183.8 million in 2024 to $186.9 million in 2025.

The increase in revenue for 2024 was primarily attributable to $4.6 million increase in revenue for Optical Networking Solutions products, a $3.7 million increase in revenue for Access & Aggregation Solutions revenue and a $0.7 million increase in revenue for Subscriber Solutions services.

More specifically, the increase in revenue for the year ended December 31, 2024 of our ADTRAN, Inc.

operations was primarily due to higher volume of sales of our software services and business solutions services.

Domestic revenue decreased 13.6% from $461.0 million in 2023 to $398.2 million in 2024, driven by lower volume of sales of our residential solutions products as a result of customers' focus on reducing inventory levels in our Subscriber Solutions segment, partially offset by an increase in volume of sales activity during the first half of 2024 from the Business Combination with Adtran Networks.

International revenue, which is defined as revenue generated from the Network Solutions and Services & Support segments provided to a customer outside of the U.S., decreased 23.8% from $688.1 million for the year ended December 31, 2023 to $524.6 million for the year ended December 31, 2024.

The increase in revenue for 2025 was primarily attributable to $8.1 million increase in revenue for Optical Networking Solutions products partially offset by a $2.5 million decrease in revenue for Access & Aggregation Solutions revenue and a $2.5 million decrease in revenue for Subscriber Solutions services.

Domestic revenue increased 20.7% from $398.2 million in 2024 to $480.8 million in 2025, was primarily due to an increase in volume of sales activity due to a return of normalized customer spending and increased growth due to fiber expansion.

International revenue, which is defined as revenue generated from the Network Solutions and Services & Support segments provided to a customer outside of the U.S., increased 15.0% from $524.6 million for the year ended December 31, 2024 to $603.1 million for the year ended December 31, 2025.

The increase in international revenue in 2025 was primarily due to increased volume of sales activity due to a return of normalized customer spending and, increased growth due to fiber expansion.

International revenue, as a percentage of total revenue, decreased from 56.8% for the year ended December 31, 2024 to 55.6% for the year ended December 31, 2025.

The decrease in international revenue in 2024 was primarily due to the conclusion of specific customer projects and customer concerns over inventory levels.

For the year ended December 31, 2025 as compared to the year ended December 31, 2024, changes in foreign currencies relative to the U.S dollar increased our net revenue by approximately $17.8 million.

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As a percentage of revenue, cost of revenue decreased from 64.9% for the year ended December 31, 2024 to 61.7% for the year ended December 31, 2025.

The decrease for the twelve months ended December 31, 2024 was attributable to (1) a 2.6% decrease in expense as a percentage of revenue related to decreased amortization of intangible backlog, developed technology and fair value adjustments to inventory costs that flow through to cost of revenue as a result of the Business Combination with Adtran Networks, (2) a 2.7% decrease in expense as a percentage of revenue related to decreased acquisition costs, (3) a 1.4% decrease in expense as a percentage of revenue in connection with our Business Efficiency Program (primarily a decrease in inventory write-offs related to our strategy shift which included discontinuance of certain product lines, partially offset by increases in severance and employee related costs), (4) a 0.1% decrease in expense as a percentage of revenue attributable to changes in customer and product mix.

The decrease in cost of revenue as a percentage of revenue for the twelve months ended December 31, 2025, was attributable to a 2.6% decrease in restructuring expense and labor cost expense as a percentage of revenue as a result of our previous Business Efficiency Program, which was completed as of December 31, 2024 and a 1.3% decrease in expense as a percentage of revenue attributable to changes in customer and product mix, partially offset by a 0.7% increase in expense as a percentage of revenue attributable to changes in foreign currencies relative to the U.S.

For the year ended December 31, 2025, changes in foreign currencies relative to the U.S.

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Network Solutions cost of revenue, as a percentage of that segment’s revenue, decreased from 71.2% of revenue in 2024 to 66.0% of revenue in 2025.

The decrease in cost of revenue as a percentage of revenue for the twelve months ended December 31, 2024 was attributable to (1) a 3.3% decrease in expense as a percentage of revenue related to decreased amortization of intangible backlog, developed technology and fair value adjustments to inventory costs that flow through to cost of revenue as a result of the Business Combination with Adtran Networks, (2) a 3.4% decrease in expense as a percentage of revenue related to decreased acquisition costs, and (3) a 1.9% decrease in expense as a percentage of revenue in connection with our Business Efficiency Program, which resulted in an inventory write down and other charges of $8.6 million incurred as a result of a strategy shift including discontinuance of certain product lines, partially offset by (4) a 2.2% increase in expense as a percentage of revenue attributable to changes in customer and product mix.

Services & Support cost of revenue, as a percentage of that segment’s revenue, remained flat at 39.6% of revenue in 2023 and 2024.

The decrease in Network Solutions cost of revenue as a percentage of revenue for the twelve months ended December 31, 2025, was attributable to a 3.2% decrease in expense as a percentage of revenue attributable to changes in customer and product mix, and a 2.7% decrease in restructuring expense and labor cost expense as a percentage of revenue as a result of our previous Business Efficiency Program, partially offset by a 0.8% increase in expense as a percentage of revenue attributable to changes in foreign currencies relative to the U.S.

Services & Support cost of revenue, as a percentage of that segment’s revenue, increased from 39.6% of revenue in 2024 to 41.0% of revenue in 2025.

Services & Support revenue is comprised of network planning and implementation, maintenance, support and cloud-based management services, with network planning and implementation being the largest and fastest growing component in the long-term.

Compared to our other services, such as maintenance, support and cloud-based management services, our network planning and implementation services typically utilize a higher percentage of internal and subcontracted engineers, professionals and contractors to perform the work for customers.

The additional costs incurred to perform these infrastructure and labor-intensive services inherently result in lower average gross margins as compared to maintenance and support services.

The additional costs incurred to perform these infrastructure and labor-intensive services inherently result in lower

average gross margins as compared to maintenance and support services.

Within the Services & Support segment, we do expect variability in gross margins from quarter-to-quarter based on the mix of the services recognized.

As a percentage of revenue, gross profit increased from 35.1% for the year ended December 31, 2024 to 38.3% for the year ended December 31, 2025.

The increase for the twelve months ended December 31, 2024 was attributable to (1) a 2.6% increase in gross profit as a percentage of revenue related to decreased amortization of intangible backlog, developed technology and fair value adjustments to inventory costs that flow through to cost of revenue as a result of the Business Combination with Adtran Networks, (2) a 2.7% increase in gross profit as a percentage of revenue related to decreased acquisition costs, (3) a 1.4% increase in gross profit as a percentage of revenue in connection with decreased expenses with our Business Efficiency Program (primarily a decrease in inventory write-offs related to our strategy shift which included discontinuance of certain product lines, partially offset by increases in severance and employee related costs), (4) a 0.1% increase in gross profit as a percentage of revenue attributable to changes in customer and product mix.

The increase in gross profit for the twelve months ended December 31, 2025, was attributable to 2.6% increase in gross profit as a percentage of revenue due to a decrease in restructuring expense and labor cost as a result of our previous Business Efficiency Program, and a 0.5% increase in gross profit as a percentage of revenue due to changes in customer and product mix.

As a percentage of that segment's revenue, Network Solutions gross profit increased from 28.8% for the year ended December 31, 2024 to 34.0% for the year ended December 31, 2025.

The increase for the twelve months ended December 31, 2024 was attributable to (1) a 3.3% increase in gross profit as a percentage of revenue related to decreased amortization of intangible backlog, developed technology and fair value adjustments to inventory costs that flow through to cost of revenue as a result of the Business Combination with Adtran Networks, (2) a 3.4% increase in gross profit as a percentage of revenue related to decreased acquisition costs, and (3) a 1.9% increase in gross profit as a percentage of revenue in connection with decreased expenses with our Business Efficiency Program, which resulted in an inventory write down and other charges of $8.6 million incurred as a result of a strategy shift including discontinuance of certain product lines, (4) partially offset by a 2.2% decrease in gross profit as a percentage of revenue attributable to changes in customer and product mix.

As a percentage of that segment's revenue, Services & Support gross profit remained flat at 60.4% for the years ended December 31, 2023 and 2024.

The increase in gross profit for the twelve months ended December 31, 2025, was attributable to a 2.3% increase in gross profit as a percentage of revenue due to changes in customer and product mix and a 2.7% increase in gross profit as a percentage of revenue due to a decrease in restructuring expense and labor cost as a result of our previous Business Efficiency Program.

As a percentage of that segment's revenue, Services & Support gross profit decreased from 60.4% for the year ended December 31, 2024 to 59.0% for the year ended December 31, 2025.

Selling, General and Administrative Expenses

As a percentage of revenue, selling, general and administrative expenses increased from 22.5% for the year ended December 31, 2023, to 25.3% for the year ended December 31, 2024.

As a percentage of revenue, selling, general and administrative expenses decreased from 25.2% for the year ended December 31, 2024, to 20.9% for the year ended December 31, 2025.

Selling, general and administrative expenses as a percentage of revenue will generally fluctuate whenever there is a significant fluctuation in revenue for the periods being compared.

Other than our stated aim of selling our headquarters, we have substantially completed implementation of our Business Efficiency Program.

We have completed implementation of our Business Efficiency Program as of December 31, 2024.

We expect to continue to see lower selling, general and administrative expenses as a percentage of revenue over time.

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Selling, general and administrative expenses include personnel costs for management, accounting, information technology, human resources, sales and marketing, as well as independent auditor, tax and other professional fees, contract services and legal and litigation related costs.

The decrease in selling, general and administrative expenses for the twelve months ended December 31, 2024, compared to the twelve months ended December 31, 2023, was primarily attributable to the impact of the Company's Business Efficiency Program and integration programs.

Specifically, the Company reduced its employee-related costs by $20.4 million.

The decrease in selling, general and administrative expenses for the twelve months ended December 31, 2025, compared to the twelve months ended December 31, 2024, was primarily attributable to decreases of $14.7 million for acquisition/integration related expenses, $1.9 million for restructuring expense, and $1.4 million for employee-related costs partially offset by increases of $8.4 million for professional fees and other costs, $2.2 million for travel related costs and $1.4 million for depreciation expense.

For the year ended December 31, 2025, as compared to the year ended December 31, 2024, changes in foreign currencies relative to the U.S dollar increased our selling, general and administrative expenses by approximately $3.8 million.

Research and Development Expenses

As a percentage of revenue, research and development expenses increased from 22.5% for the year ended December 31, 2023, to 24.0% for the year ended December 31, 2024.

As a percentage of revenue, research and development expense decreased from 24.0% for the year ended December 31, 2024, to 18.8% for the year ended December 31, 2025.

Research and development expenses as a percentage of revenue will generally fluctuate whenever there are incremental product development activities or significant fluctuations in revenue for the periods being compared.

Other than our stated aim of selling our headquarters, we have substantially completed implementation of our Business Efficiency Program.

We have completed implementation of our Business Efficiency Program as of December 31, 2024.

We expect to continue to see lower research and development expense as a percentage of revenue over time.

Research and development expenses decreased 7.8% from $221.5 million for the year ended December 31, 2024, to $204.3 million for the year ended December 31, 2025.

The decrease in research and development expenses for the twelve months ended December 31, 2024, was primarily attributable to the impact of the Company's Business Efficiency Program and integration programs.

Specifically, the Company reduced its employee-related costs by $16.7 million and contract services by $7.9 million.

The decrease in research and development expenses for the twelve months ended December 31, 2025, was primarily attributable to decreases of $6.2 million for employee-related costs, $6.1 million for restructuring expense, $0.8 million for professional services, $0.6 million for contract services and $2.1 million of additional research and development subsidies.

For the year ended December 31, 2025 as compared to the year ended December 31, 2024, changes in foreign currencies relative to the U.S.

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We may incur significant research and development expenses prior to the receipt of revenue from a major new product group.

Asset Impairments

In connection with the planned integration of information technology following the Business Combination, we determined that certain projects no longer fit our needs.

As a result, the Company recognized impairment charges of $17.4 million during the year ended December 31, 2022, primarily attributable to capitalized implementation costs for a cloud computing arrangement.

There were no asset impairments recognized during the years ended December 31, 2024 and 2023.

See Note 9 of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.

Goodwill Impairment

There was no goodwill impairment recognized during the year ended December 31, 2025.

During the first quarter of 2024, qualitative factors such as a decrease in the Company’s market capitalization, cautious service provider spending due to economic uncertainty and continued customer focus on inventory adjustments, triggered a quantitative impairment assessment for our reporting units for goodwill and long-lived assets.

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.

During the third quarter of 2023, qualitative factors, such as a decrease in the Company's market capitalization and long-term projections, triggered a quantitative impairment assessment for our reporting units.

The Company determined upon its quantitative impairment assessment to recognize a $37.9 million non-cash goodwill impairment charge for the Services & Support reporting unit.

There were no goodwill impairments recognized during the year ended December 31, 2022.

See Note 8 of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.

Interest and Dividend Income

Interest and dividend income increased by 30.7% from $2.3 million for the year ended December 31, 2023 to $3.1 million for the year ended December 31, 2024.

The increase in interest and dividend income is primarily attributable to fluctuations in investment balances and an increase in the rate of return on those investments due to interest rate movements.

Interest and dividend income decreased from $3.1 million for the year ended December 31, 2024 to $2.3 million for the year ended December 31, 2025.

The decrease in interest and dividend income is primarily attributable to fluctuations in investment balances and a decrease in the rate of return on those investments due to interest rate movements.

Interest Expense

Interest expense increased from $16.3 million for the year ended December 31, 2023 to $22.1 million for the year ended December 31, 2024.

The increase in interest expense was primarily driven by higher amortization of debt issuance costs, as well as higher interest rates associated with the amendments of the Credit Agreement and higher average borrowings outstanding versus the twelve months ending December 31, 2023.

See Note 11 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report and “Financing Activities” in “Liquidity and Capital Resources” below.

Net Investment Gain (Loss)

We recognized a net investment gain of $2.8 million and a gain of $3.6 million for the years ended December 31, 2023 and 2024, respectively.

Interest expense decreased from $22.1 million for the year ended December 31, 2024 to $19.3 million for the year ended December 31, 2025.

The decrease in interest expense was primarily driven by the issuance of the 2030 Notes which accrues interest at 4.7% and the repayment of the majority of the Credit Agreement which accrued interest at 9.0% in 2025 versus the twelve months ending December 31, 2024.

See Notes 10 and 11 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report and “Financing Activities” in “Liquidity and Capital Resources” below.

Net Investment Gain

We recognized a net investment gain of $3.6 million and $3.0 million for the years ended December 31, 2024 and 2025, respectively.

The fluctuations in our net investments were primarily attributable to market driven changes in the fair value of our securities recognized during the period.

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See “Investing Activities” in “Liquidity and Capital Resources” of this report and Note 1 and Note 4 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.

Other Income, net

Other income, net, which primarily consisted of gains and losses on foreign currency transactions and income from excess material sales, decreased from income of $1.3 million for the year ended December 31, 2023 to income of $0.2 million for the year ended December 31, 2024.

See Note 10 of Notes to Consolidated Financial Statements included in Part II, Item 8 of the report for additional information on foreign exchange contracts.

Income Tax (Expense) Benefit

Other (Expense) Income, net

Other (expense) income, net, which primarily consisted of gains and losses on foreign currency transactions and income from excess material sales, decreased from income of $0.2 million for the year ended December 31, 2024 to expense of $1.6 million for the year ended December 31, 2025.

Income Tax Expense

Our effective tax rate changed from an expense of 1.7%, for the year ended December 31, 2024 to an expense of 16.0% for the year ended December 31, 2025.

The change in the effective tax rate for the year ended December 31, 2024, was driven primarily by non-deductible impairment charges and changes in our valuation allowance.

The change in the effective tax rate for the year ended December 31, 2025, was driven primarily by changes in the mix of earnings between jurisdictions with different statutory tax rates and changes in our valuation allowance.

See Note 12 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.

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As a result of the above factors, our net loss attributable to ADTRAN Holdings, Inc.

increased from $266.3 million for the year ended December 31, 2023 to a net loss of $450.9 million for the year ended December 31, 2024.

decreased from a net loss of $459.9 million for the year ended December 31, 2024 to a net loss of $45.7 million for the year ended December 31, 2025.

As a percentage of revenue, net loss was 49.8% for the year ended December 31, 2024 and net loss was 4.2% for the year ended December 31, 2025.

Liquidity and Capital Resources

We have historically financed our ongoing business with existing cash, investments and cash flow from operations;

however, we have increasingly relied upon our credit arrangements to manage our working capital needs.

We generally finance our ongoing business with existing cash, investments, credit arrangements and cash flow from operations to manage our working capital needs.

We had a positive cash flow from operating activities of $129.8 million in the twelve months ended December 31, 2025.

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As of December 31, 2025, our cash on hand was $95.7 million of which $87.5 million was held by our foreign subsidiaries.

The Company had access to $180.8 million on its Credit Facility 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.

The Company had access to $319.2 million on its Credit Facility for future borrowings, based on debt covenant compliance metrics.

Generally, we intend to permanently reinvest funds held outside the U.S., except to the extent that any of these funds can be repatriated without withholding tax.

As of December 31, 2024, our cash on hand was $76.0 million, of which $52.6 million was held by our foreign subsidiaries.

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.

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

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.

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

The Company 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.

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

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

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately €7.9 million or $9.3 million (based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.

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therefore, the Annual Recurring Compensation was paid on July 3, 2024.

During the twelve months ended December 31, 2024 and 2023, we accrued $9.8 million and $10.1 million, respectively, in Annual Recurring Compensation which is reflected as an increase to retained deficit.

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

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

The Company had access to $180.8 million on its Credit Facility 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.

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

As of December 31, 2024, and as of the date of issuance of these financial statements, the Company does not have sufficient liquidity to meet the substantial majority of its payment obligations under the DPLTA pertaining to Exit Compensation.

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

With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholder meeting occurred on June 28, 2025, and therefore, the Annual Recurring Compensation was paid on July 1, 2025.

During the years ended December 31, 2025 and 2024, we accrued $9.3 million and $9.8 million, respectively, in Annual Recurring Compensation which is reflected as an increase to retained deficit.

As of December 31, 2025, and as of the date of issuance of these financial statements, the Company has sufficient liquidity through its operating cash flow and the borrowings available under the Credit Facility to meet a majority of its payment obligations under the DPLTA pertaining to Exit Compensation.

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

For the year ended December 31, 2023, a total of 67 thousand shares of Adtran Networks stock was tendered to the Company and Exit Compensation payments of approximately €1.2 million or approximately $1.3 million based on an exchange rate as of December 31, 2023, were paid to Adtran Networks shareholders.

For the year ended December 31, 2024, a total of 0.8 million 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 an exchange rate as of December 31, 2024, were paid to Adtran Networks shareholders.

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

(i) the shareholders can exercise their right to receive the Exit Compensation until two months after publication of the final decision in the appraisal proceedings and we do not expect the publication of the final decision for at least another 12 months;

(i) the shareholders can exercise their right to receive the Exit Compensation until two months after publication of the final decision in the appraisal proceedings and we do not expect the final decision to be published within the next 12 months;

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

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

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

(iv) the current guaranteed Annual Recurring Compensation payment;

and (v) the current trading value of Adtran Networks shares.

The Company experienced revenue declines in 2024.

However, customers have started to replenish their inventories to meet increasing demand and we expect orders and billings to steadily increase in 2025.

The Company is implementing plans to preserve cash liquidity to maintain compliance with the Company’s covenants in case of further we are impacted by customer inventory reduction initiatives and uncertain macroeconomic conditions.

Additionally, the Company suspended dividend payments and effectuated a Business Efficiency Program.

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

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

We expect to use the proceeds of the sale to repay indebtedness.

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.

In summary, the Company believes that its cash and cash equivalents, investments, working capital management initiatives and availability to access cash under the Wells Fargo Credit Facility (described below), will be adequate to meet our business operating requirements, our capital expenditures and our expected obligations under the DPLTA, including anticipated levels of Exit Compensation and ability to continue to comply with our debt covenants under the Credit Facility for at least the next twelve months, from the issuance of these Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K .

See Note 11 of Notes to Consolidated Financial Statements included in Part I, Item 8 of this report for additional information regarding the terms of the Wells Fargo Credit Agreement as amended.

In summary, the Company believes that its cash and cash equivalents, working capital management initiatives and availability to access cash under the Wells Fargo Credit Facility or other future sources of capital, will be adequate to meet our business operating requirements, our capital expenditures and our expected obligations under both the Notes and the DPLTA, including anticipated levels of Exit Compensation, as well as to support our ability to continue to comply with our debt covenants under the Credit Facility for at least the next twelve months, from the issuance of these Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K See Note 10 of Notes to Consolidated Financial Statements included in Part I, Item 8 of this report for additional information regarding the terms of the Wells Fargo Credit Agreement as amended.

Debt Obligations

Wells Fargo Credit Facility

On July 18, 2022, ADTRAN, Inc., as the borrower ("US Borrower"), and the Company entered into a credit agreement with a syndicate of banks, including Wells Fargo Bank, National Association, as administrative agent (“Administrative Agent”), and the other lenders named therein (as amended from time to time, the “Credit Agreement”).

Initially, the Credit Agreement allowed for revolving credit borrowings of up to $400.0 million in aggregate principal amount ($100.0 million of which is, subject to the restrictive covenants described below, available to Adtran Networks as borrower pursuant to the Subline (as defined and further described below), as well as the $50.0 million delayed draw term loan facility described below.

As of December 31, 2024, the aggregate principal amount was reduced to $374.0 million ($74.0 million of which is available to Adtran Networks as borrower pursuant to the Subline) due to a $26.0 million reduction on the Subline.

The term of the delayed draw term loan facility expired on August 9, 2024.

On August 9, 2023, ("First Amendment Effective Date") the Company and ADTRAN, Inc.

entered into a First Amendment to Credit Agreement (“First Amendment”).

The First Amendment, among other things, increased the available funding from $100.0 million to $400.0 million.

In addition, a new $50.0 million delayed draw term loan facility (“DDTL”) was introduced, which (subject to certain conditions) was available for borrowing in the event that at least sixty percent (60.0%) of the outstanding shares of Adtran Networks that were not owned by the Company and its subsidiaries as of the First Amendment Effective Date was tendered (such event, a “Springing Covenant Event”).

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

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

Although the ability to borrow under the DDTL expired on August 9, 2024, the Springing Covenant Event and Springing Covenant Period remain in effect.

The First Amendment further added additional financial flexibility by permitting, subject to certain requirements, the incurrence of convertible indebtedness by the Company in an aggregate principal amount of up to $172.5 million.

Any such convertible indebtedness must, among other things, be incurred in pro forma compliance with the financial covenants in the Credit Agreement, be unsecured, and otherwise rank junior to borrowings under the Credit Agreement, and have a stated maturity date of at least 91 days after the latest scheduled maturity date of loans and commitments under the Credit Agreement.

Net cash proceeds from any incurrence of convertible indebtedness must be used to repurchase minority shares of Adtran Networks or repay revolver borrowings under the Credit Agreement.

On January 16, 2024 ("Second Amendment Effective Date"), the Company and ADTRAN, Inc.

entered into a Second Amendment to Credit Agreement and First Amendment to Collateral Agreement ("Second Amendment").

The Second Amendment, among other things, introduced the Covenant Relief Period, which provided the Company with additional covenant headroom while imposing a minimum liquidity financial covenant from the end of the fourth quarter of 2023 to the end of the third quarter of 2024.

The Covenant Relief Period ended on November 7, 2024.

On March 12, 2024, the Company and ADTRAN, Inc.

entered into a Third Amendment to Credit Agreement ("Third Amendment").

The Third Amendment, among other things, amended the definition of “Consolidated Funded Indebtedness” (which is used in the calculation of the Consolidated Total Net Leverage Ratio and the Consolidated Senior Secured Net Leverage Ratio) to exclude obligations of the Company and its subsidiaries under certain factoring arrangements when calculated for the fiscal quarters ending March 31, 2024, and June 30, 2024.

On June 4, 2024, the Company, ADTRAN, Inc., and Adtran Networks entered into a Fourth Amendment to Credit Agreement ("Fourth Amendment").

The Fourth Amendment, among other things, created a new sublimit under the existing $400.0 million revolving commitments, in an aggregate amount of $100.0 million (“Subline”), which Subline is available for borrowings by Adtran Networks.

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

The German Commitment Reduction Threshold is initially $75.0 million and may be lowered from time to time pursuant to the terms of the Fourth Amendment.

The existing swing line sublimit and letter of credit sublimit under the Credit Agreement remained available to the US Borrower (and not to Adtran Networks) after giving effect to the Fourth Amendment.

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

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

and $48.6 million were borrowed under the Subline by Adtran Networks.

The credit facilities provided under the Credit Agreement mature in July 2027, but the US Borrower may request extensions subject to customary conditions.

In addition, the US Borrower may utilize up to $50.0 million of the $374.0 million total revolving facility for the issuance of letters of credit.

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.

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

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

As of December 31, 2024, the Company was in compliance with all covenants.

Revolving Line of Credit Interest Rate

dollar borrowings under the revolving line of credit other than swingline loans, which bear interest at the Base Rate (as defined below plus the applicable margin), at the Company’s option, at a rate per annum equal to either (a) the Base Rate plus an applicable margin ranging from 0.65% to 1.65% per annum based on the Company’s Consolidated Total Net Leverage Ratio (or, during the Applicable Margin Increase Period (as defined below), an applicable margin of 2.15% per annum), or (b) Adjusted Term SOFR (as defined below) plus an applicable margin ranging from 1.65% to 2.65% per annum based on the Company’s Consolidated Total Net Leverage Ratio (or, during the Applicable Margin Increase Period, an applicable margin of 3.15% per annum).

“Base Rate” means the highest of (a) the federal funds rate (i.e., for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the business day next succeeding such day) plus ½ of 1.0%, (b) the prime commercial lending rate of the Administrative Agent, as established from time to time at its principal U.S.

office (which such rate is an index or base rate and will not necessarily be its lowest or best rate charged to its customers or other banks), and (c) the daily Adjusted Term SOFR (as defined in the Credit Agreement) for a one-month tenor plus 1.0%.

The Base Rate is subject to a floor of 1.00% per annum.

“Adjusted Term SOFR” means Term SOFR for the applicable interest period plus 0.10% per annum.

Adjusted Term SOFR is subject to a floor of 0.00% per annum.

All euro borrowings under the revolving line of credit bear interest at a rate per annum equal to EURIBOR (as defined in the Credit Agreement and subject to a 0.00% per annum floor) plus an applicable margin ranging from 1.75% to 2.75% per annum based on the Company’s Consolidated Total Net Leverage Ratio (or, during the Covenant Relief Period, an applicable margin of 3.25% per annum).

In addition, (x) if on or prior to December 31, 2024 we have not reduced the aggregate revolving credit commitment to $340.0 million or less, the applicable margin for all loans shall be increased by 1.00% per annum, and (y) if on or prior to June 30, 2025 we have not reduced the aggregate revolving credit commitment to $300.0 million or less, the applicable margin for all loans shall be increased by 1.00% per annum.

In addition to paying interest on outstanding principal under the Credit Agreement, the Company is required to pay a quarterly commitment fee to the lenders under the Credit Agreement in respect of unutilized revolving loan commitments on the average daily unused portion of the revolving credit commitment of each lender, which commitment fee ranges from 0.20% to 0.25% per annum based on the Company’s Consolidated Total Net Leverage Ratio (or, during the Applicable Margin Increase Period, is equal to 0.25%per annum).

The Company is also required to pay a participation fee to the Administrative Agent for the account of each lender with respect to the Company’s participation in letters of credit at the then applicable rate for Adjusted Term SOFR Loans or EURIBOR Loans, and other customary fronting, issuance and administration fees with respect to letters of credit.

The “Applicable Margin Interest Period” means the period commencing on the Second Amendment Effective Date and ending on the first date when each of the following conditions have been met:

(a) the Covenant Relief Period has ended (b) since the Second Amendment Effective Date, the borrowers have repaid the revolving credit outstanding borrowings by a principal amount of at least $75.0 million (c) the borrowers have reduced the aggregate revolving credit commitment to an amount no greater than $300.0 million, and (d) the borrowers are in compliance with all financial covenants based on the financial statements for the most recently completed reference period.

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

Borrower"), and the Company entered into a credit agreement with a syndicate of banks, including Wells Fargo Bank, National Association, as administrative agent (“Administrative Agent”), and the other lenders named therein (the “Original Credit Agreement”), as amended by the First Amendment to Credit Agreement, dated August 9, 2023 (“Amendment No.

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

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

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

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

the Original Credit Agreement as amended by Amendment No.

1, Amendment No.

Amendment No.

3, Amendment No.

4 and Amendment No.

5, the “Existing Credit Agreement”).

On September 16, 2025, the U.S.

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

the Existing Credit Agreement as amended by Amendment No.

6, the “Amended Credit Agreement”).

Amendment No.

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

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

As of December 31, 2025, the Amended Credit Agreement provided for a secured revolving credit facility of up to $350.0 million of borrowings, $50.0 million of which is solely available to the German Borrower.

As of December 31, 2025, the Company’s borrowings under the revolving line of credit were $25.0 million.

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

Borrower may request extensions subject to customary conditions.

In addition, the U.S.

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

As of 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.

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

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

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

The Company had no borrowings under the Subline as of December 31, 2025.

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

Borrower (and not to the German Borrower).

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

borrowings under the Amended Credit Agreement bear interest at a rate tied to the Base Rate (as defined in the Amended Credit Agreement) or SOFR, at the Company’s option, and all E.U.

borrowings bear interest at a rate tied to the Euro Interbank Offered Rate as administered by the European Money Markets Institute (or a comparable or successor administrator approved by the Administrative Agent), in each case plus applicable margins which vary based on the consolidated net leverage ratio of the Company and its subsidiaries

as determined pursuant to the terms of the Amended Credit Agreement.

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

Covenants Under the Credit Agreement

The financial covenants under the Credit Agreement, as amended, include the following (capitalized terms used in this subsection and not otherwise defined herein have the meanings assigned to them in the Credit Agreement or its amendments, as applicable):

• As of the last day of any fiscal quarter, commencing with the fiscal quarter ended December 31, 2023, the Consolidated Total Net Leverage Ratio may not exceed 5.00x.

• As of the last day of any fiscal quarter, commencing with the fiscal quarter ended December 31, 2023, the Consolidated Senior Secured Net Leverage Ratio may not exceed:

• In the fiscal quarter in which a Springing Covenant Event occurs and the three consecutive quarterly test periods thereafter, (“Springing Covenant Period”), the following covenant levels:

• First fiscal quarter ending after a Springing Covenant Event:

• Second fiscal quarter ending after a Springing Covenant Event:

• Third and fourth fiscal quarters ending after a Springing Covenant Event:

• If the Company or any of its subsidiaries incurs certain unsecured indebtedness in excess of $50.0 million in connection with a transaction that is a Springing Covenant Event or during a Springing Covenant Period, the Consolidated Senor Secured Net Leverage Ratio covenant will step down to 3.50x at the time of such incurrence.

• If a Springing Covenant Period is not in effect, the Consolidated Senior Secured Net Leverage Ratio may not exceed 3.25x .

• As of the last day of any fiscal quarter, commencing with the fiscal quarter ended December 31, 2023, the Consolidated Fixed Charge Coverage Ratio may not exceed 1.25x.

• During a Springing Covenant Period, as of the last day of any fiscal quarter (i) cash and cash equivalents of the Credit Parties must be at least $50.0 million and (ii) cash and cash equivalents of the Company and its subsidiaries must be at least $70.0 million.

All obligations under the Credit Agreement (including under the Subline) are guaranteed by ADTRAN, Inc., and certain subsidiaries of ADTRAN, Inc.

(“Full Facility Guarantors”).

To secure such guarantees, ADTRAN, Inc.

and the Full Facility Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets, and ADTRAN, Inc.

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

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

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

Adtran Networks has also granted security interests in favor of the Administrative Agent over substantially all of its tangible and intangible assets, to secure solely its obligations under the Subline.

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

The Credit Agreement, as amended, contains customary affirmative and negative covenants, including incurrence covenants and certain other limitations on the ability of the Company and the Company’s subsidiaries to incur additional debt, guarantee other obligations, grant liens on assets, make investments, dispose of assets, make restricted payments, engage in mergers or consolidations, engage in transactions with affiliates, modify its organizational documents, and enter into certain restrictive agreements.

The negative covenants are subject to various exceptions and carveouts.

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

Upon the occurrence and during the continuance of an event of default, the Administrative Agent is entitled to take various actions, including the acceleration of all amounts due under the Credit Agreement.

As of December 31, 2025, the weighted average interest rate on our revolving credit agreement was 8.98%.

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

The Company also agreed to maintain a Consolidated Total Net Leverage Ratio of 5.00x, a Consolidated Senior Secured Net Leverage Ratio of 3.25x (4.0x to 3.5x during a “Springing Covenant Period,” as defined below) and a Consolidated Fixed Charge Coverage Ratio of 1.25x (as such ratios are defined in the Amended Credit Agreement).

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

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

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

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

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

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

All obligations under the Amended Credit Agreement (including under the Subline) are guaranteed by the U.S.

Borrower and certain subsidiaries of the U.S.

Borrower (“Full Facility Guarantors”).

To secure such guarantees, the U.S.

Borrower and the Full Facility Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets, and the U.S.

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

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

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

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

Convertible Senior Notes

On September 19, 2025, the Company issued $201.3 million principal amount of 2030 Notes.

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

Bank Trust Company, National Association, as trustee.

The proceeds were primarily used to, among other items, pay down certain outstanding indebtedness under the Credit Facility.

In connection with the 2030 Notes, the Company has entered into privately negotiated Capped Calls.

Interest expense related to the 2030 Notes was $2.6 million for the year ended December 31, 2025.

In conjunction with the issuance of the 2030 Notes, the Company recognized $201.3 million of principal and debt issuance costs of $8.7 million, which were capitalized as components of the carrying amount and included in convertible senior notes, net within the Consolidated Balance Sheets.

See Note 11 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for more information.

Unamortized Discounts and Debt Issuance Costs

Unamortized discounts and debt issuance costs totaled $8.2 million as of December 31, 2025.

Amortization expense related to unamortized discounts and debt issuance costs (included in interest expense within the consolidated statements of operations) totaled $0.4 million for the year ended December 31, 2025.

Operating Activities

Net cash provided by operating activities of $103.1 million during the year ended December 31, 2024 increased by $148.7 million compared to $45.6 million of net cash used in during the year ended December 31, 2023.

The increase was primarily due to the declining net loss for the twelve months ended December 31, 2024 and 2023, excluding the goodwill impairment charge of $292.6 million, as adjusted primarily for decreased depreciation and amortization, decreased deferred taxes and increased net cash inflows from working capital.

Net cash provided by operating activities of $129.8 million during the year ended December 31, 2025 increased by $26.2 million compared to $103.6 million of net cash provided by the year ended December 31, 2024.

The increase was primarily due to the declining net loss for the years ended December 31, 2025 and 2024, excluding the goodwill impairment charge of $297.4 million, as adjusted primarily for decreased depreciation and amortization, decreased deferred taxes and increased net cash inflows from working capital.

Additional details related to our working capital and its drivers are discussed below.

Net accounts receivable decreased 17.8% from $216.4 million as of December 31, 2023 to $178.0 million as of December 31, 2024.

There was an allowance for credit losses of $1.3 million and $0.4 million as of December 31, 2024 and December 31, 2023, respectively.

The decrease in net accounts receivable was due primarily to a reduction in DSO.

Net accounts receivable increased 18.3% from $178.0 million as of December 31, 2024 to $210.7 million as of December 31, 2025.

There was an allowance for credit losses of $1.3 million as of December 31, 2025 and December 31, 2024.

The increase in net accounts receivable was primarily due to increased revenues.

Quarterly accounts receivable DSO decreased from 67 days as of December 31, 2024 to 66 days as of December 31, 2025.

The decrease in DSO was primarily driven by customer and geographical mix of commercial terms.

Other receivables decreased from $9.8 million as of December 31, 2024 to $7.0 million as of December 31, 2025.

The decrease in other receivables was primarily attributable to a decrease in sales of raw materials.

Annual inventory turnover decreased from 2.07 turns as of December 31, 2023 to 1.88 turns as of December 31, 2024.

Annual inventory turnover increased from 1.92 turns as of December 31, 2024 to 2.80 turns as of December 31, 2025.

Inventory decreased 17.5% from $261.6 million as of December 31, 2024 to $215.7 million as of December 31, 2025.

The decrease in inventory was primarily due to steps taken in with our Business Efficiency Program to improve working capital, a reduction in component purchases due to improved lead time, utilization of buffer stock and a $4.1 million write down of inventory due to a restructuring discontinuation of certain product lines within our Network Solutions segment.

The decrease in inventory was primarily due to steps taken in connection with our Business Efficiency Program to improve working capital, a reduction in component purchases due to improved lead time and utilization of buffer stock.

We expect inventory levels to fluctuate as we attempt to maintain sufficient inventory for customer demand and improve working capital.

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The increase in capital expenditures is primarily attributable to an increase in expenditures related to developed technology.

Our long-term investments increased 15.6% from $27.7 million as of December 31, 2023 to $32.1 million as of December 31, 2024.

Our investments include various marketable equity securities classified as long-term investments with a fair market value of $1.1 million and $0.9 million, as of December 31, 2024 and 2023, respectively.

Long-term investments as of December 31, 2024 and 2023 also included $31.0 million and $26.8 million, respectively, related to our deferred compensation plan.

Our deferred compensation plan assets increased 13.5% from $31.0 million as of December 31, 2024 to $35.2 million as of December 31, 2025.

See Notes 4 and 13 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.

Our investments include various marketable equity securities with a fair market value of $1.0 million and $1.1 million, as of December 31, 2025 and 2024, respectively.

See Note 4 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.

Financing Activities

During 2023 we paid stockholder dividends totaling $21.2 million.

On November 6, 2023, the Board of Directors suspended the Company’s quarterly cash dividend in order to reduce debt and interest expense and support the Company's capital efficiency program.

We consequently did not pay any dividends during the twelve months ended December 31, 2024.

The payment of any future dividends will be at the discretion of the Board of Directors and will depend on the Company’s financial condition, results of operations, capital requirements, and any other factors deemed relevant by the Board of Directors;

however, the Wells Fargo Credit Agreement currently does not allow for the payment of dividends to stockholders.

For addition information, see Note 18 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report and Liquidity & Capital Resources above .

The following table shows dividends per common share paid to our stockholders in each quarter of 2024 and 2023:

Dividends per Common Share

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Stock Repurchase Program

The Company did not repurchase any stock during the years ended December 31, 2024 and 2023, and there currently is no authorized stock repurchase plan.

Stock Option Exercises

To accommodate employee stock option exercises, the Company issued 0.1 million and 23 thousand shares of common stock which resulted in proceeds of $0.8 million and $0.2 million during the years ended December 31, 2024 and 2023, respectively.

Additionally, to accommodate Adtran Networks stock option exercises, Adtran Networks issued 0.1 million of Adtran Networks common stock which resulted in proceeds of $0.4 million, during the year ended December 31, 2023.

No Adtran Networks stock options were exercised during the year ended December 31, 2024.

To accommodate employee stock option exercises, the Company issued 0.3 million and 0.1 million shares of common stock which resulted in proceeds of $1.8 million and $0.8 million during the years ended December 31, 2025 and 2024, respectively.

Employee Pension Plan

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The plan is financed directly by the Company on a pay-as-you-go basis.

• In Poland, the post-employment benefit plan is required due to statutory provisions.

The plan is financed directly by the Company on a pay as you go basis.

Our defined benefit plan assets consist of a balanced portfolio of equity funds, bond funds, emerging market funds, real estate funds and balanced funds.

Our investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner

necessary to meet expected future benefits earned by participants and consider a broad range of economic conditions.

Our investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner necessary to meet expected future benefits earned by participants and consider a broad range of economic conditions.

The objectives of our investment policy are to maintain investment portfolios that diversify risk through prudent asset allocation parameters, achieve asset returns that meet or exceed the plans’ actuarial assumptions and achieve asset returns that are competitive with like institutions employing similar investment strategies.

The investment policy is periodically reviewed by us and a designated third-party fiduciary for investment matters.

At December 31, 2024, the estimated fair market value of our defined benefit pension plans' assets decreased to $54.5 million from $55.2 million at December 31, 2023.

At December 31, 2025, the estimated fair market value of our defined benefit pension plans' assets increased to $64.3 million from $54.5 million at December 31, 2024.

The defined benefit pension plan is accounted for on an actuarial basis, which requires the use of various assumptions, including an expected rate of return on plan assets and a discount rate.

7 unchanged sentences

To the extent unamortized gains and losses exceed 10% of the higher of the market-related value of assets or the projected benefit obligation, the excess is amortized as a component of net periodic pension cost over the remaining service period of active participants.

We estimate that less than $0.1 million will be amortized from accumulated other comprehensive income into net periodic pension cost in 2025 for the net actuarial loss.

The net actuarial loss recognized in accumulated other comprehensive loss as of December 31, 2024 and 2023 was $1.0 million and $2.5 million, respectively.

See Note 14 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.

We estimate that approximately $0.1 million of net

actuarial gains and approximately $0.1 million of net actuarial losses will be amortized from accumulated other comprehensive income into net periodic pension cost in 2026.

The net actuarial gain and (loss) recognized in accumulated other comprehensive income as of December 31, 2025 and 2024 was $3.1 million and ($1.0) million, respectively.

See Notes 13 and 14 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.

Off-Balance Sheet Arrangements

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Cash Requirements

The following table summarizes the Company’s material short- and long-term cash requirements from known obligations pursuant to certain contracts and commitments as of December 31, 2024, as well as an estimate of the timing in which such obligations and payments are expected to be satisfied (but excluding payments that may be made pursuant to the DPLTA and currency hedging arrangements, which are discussed below).

The following table summarizes the Company’s short- and long-term cash requirements from known obligations pursuant to certain contracts and commitments as of December 31, 2025, as well as an estimate of the timing in which such obligations and payments are expected to be satisfied (but excluding payments that may be made pursuant to the DPLTA and currency hedging arrangements, which are discussed below).

Other than operating lease obligations, the cash requirements table excludes interest payments.

1 unchanged sentence

Wells Fargo credit agreement (1)

Convertible Senior Notes (1)

Purchase obligations (2)

7 unchanged sentences

Our operating leases had remaining lease terms ranging from 1 month to 155 months as of December 31, 2025.

Stock Repurchase Program

There were no stock repurchases during the years ended December 31, 2024 and 2023, and there currently is no authorized stock repurchase plan.

Wells Fargo Credit Agreement

1 unchanged sentence

and ADTRAN, Inc., as the borrower, entered into the Credit Agreement with the Administrative Agent and the other lenders named therein.

The Credit Agreement was subsequently amended on August 9, 2023, January 16, 2024, March 12, 2024, and June 4, 2024.

As of December 31, 2024, ADTRAN, Inc.’s borrowings under the revolving line of credit were $189.6 million.

The Credit Agreement was subsequently amended six times.

As of December 31, 2025, the Company's borrowings under the revolving line of credit were $25.0 million.

As of December 31 2025, the Company had access to $319.2 million on its Credit Facility for future borrowings based on debt covenant compliance metrics.

The Credit Facility matures in July 2027;

however, the Company has an option to request extensions subject to customary conditions.

See Note 11 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report and “Liquidity and Capital Resources” in Part I, Item 2 of this report for additional information.

Nord/LB Revolving Line of Credit

On March 29, 2023, Adtran Networks entered into a $16.1 million unsecured revolving line of credit with Norddeutsche Landesbark - Girozentrale (Nord/LB) that bore interest of Euro Short Term Rate plus 1.94%.

The line of credit had a perpetual term that could be terminated by the Company or Nord/LB at any time.

As of December 31, 2023, Adtran Networks repaid the outstanding borrowings and terminated the Nord/LB Revolving Line of Credit.

Prior Nord/LB Revolving Line of Credit

On August 8, 2022, Adtran Networks entered into a $16.1 million revolving line of credit with Norddeutsche Landesbark - Girozentrale (Nord/LB) that bore interest of Euro Short Term Rate plus 1.4% and matured in August 2023.

On January 31, 2023, the Company repaid the outstanding borrowings and terminated the Nord/LB revolving line of credit.

Syndicated Credit Agreement Working Capital Line of Credit

In September 2018, Adtran Networks entered into a syndicated credit agreement with Bayerische Landesbank and Deutsche Bank AG Branch German Business to borrow up to $10.7 million as part of a working capital line of credit.

On January 31, 2023, the Company repaid the outstanding borrowings and terminated the syndicated credit agreement working capital line of credit.

DZ Bank Revolving Line of Credit

In the fourth quarter of 2022, Adtran Networks entered into a revolving line of credit with DZ Bank to borrow up to $9.1 million.

Interest on the line of credit reset monthly based on renewal of the loan and was 2.8% at the time the loan was repaid.

On March 12, 2023, the Company repaid the outstanding borrowings and terminated the DZ Bank revolving line of credit.

Syndicated Credit Agreement Note Payable

In September 2018, Adtran Networks entered into a syndicated credit agreement with Bayerische Landesbank and Deutsche Bank AG Branch German Business to borrow $63.7 million.

On January 31, 2023, the Company repaid the outstanding borrowings and terminated the syndicated credit agreement note payable.

however, the Company may request extensions subject to customary conditions.

See Note 10 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report and “Liquidity and Capital Resources” in Part II, Item 7 of this report for additional information.

Convertible Senior Notes

On September 19, 2025, the Company issued $201.3 million aggregate principal amount of 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 earlier repurchased, redeemed, or converted, the Notes will mature on September 15, 2030.

See Note 11 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report and “Liquidity and Capital Resources - Convertible Senior Notes” in Part II, Item 7 of this report for additional information.

Currency Hedging Arrangements

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The aggregate amount of €160.0 million was divided into eight quarterly tranches of €20.0 million, which commenced in the fourth quarter of 2022.

During the twelve months ended December 31, 2024, the Company settled four €20.0 million forward contract tranches.

During the year ended December 31, 2024, the Company settled four €20.0 million forward contract tranches.

On March 21, 2023, the Company entered into a euro/U.S.

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dollars at an average rate of EUR/USD 1.085.

During the twelve months ended December 31, 2024, the Company settled four $20.0 million forward contract tranches.

During the year ended December 31, 2024, the Company settled four $20.0 million forward contract tranches.

As of December 31, 2024, both the Initial Forward and Forward have fully matured and are no longer outstanding.

The Company has no outstanding hedges as of December 31, 2025.

Receivables Purchase Arrangements

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

Total accounts receivables factored as of the end of December 31, 2024, totaled $18.3 million of which $3.7 million was retained pursuant to the Factoring Agreement in the reserve account.

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

Total accounts receivables factored as of the end of December 31, 2025, totaled $25.3 million net of $3.8 million retained pursuant to the Factoring Agreement in the reserve account.

Total accounts receivables factored as of the end of December 31, 2024, totaled $18.3 million net of $3.7 million retained pursuant to the Factoring Agreement in the reserve account.

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

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

The cost of the Factoring Agreement is included in interest expense in the Consolidated Statements of Loss and totaled $0.6 million for the year ended December 31, 2024.

Costs of a previous receivables purchase agreement, which are included in interest expense in the Consolidated Statements of Loss totaled $0.9 million for the year ended December 31, 2023.

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

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

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

During the years ended, December 31, 2025 and 2024, the Company received $169.1 million and $78.4 million, in cash proceeds from the Factoring Agreement, respectively, which are recorded as a component of accounts receivable in operating cash flows on the Consolidated Statement of Cash Flows.

The cost of the Factoring Agreement is included in interest expense in the Consolidated Statements of Loss and totaled $1.4 million and $0.6 million for the years ended December 31, 2025 and 2024, respectively.

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

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

See Note 2 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information.

Domination and Profit and Loss Transfer Agreement

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

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

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The guaranteed interest rate is 5.0% plus a variable component (according to the German Civil Code) that was 1.27% as of December 31, 2025.

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately €333.2 million or approximately $344.9 million, based on an exchange rate as of December 31, 2024 and reflecting interest accrued through December 31, 2024 during the pendency of the appraisal proceedings discussed below.

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

discussed below.

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

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

The Company 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.

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately €8.9 million or $9.3 million (based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.

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

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

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

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately €7.9 million (or $9.3 million based on the exchange rate as of December 31, 2025) per year assuming none of the minority Adtran Networks shareholders as of December 31, 2025 were to elect Exit Compensation.

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

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.

During the year ended December 31, 2024 and 2023, we accrued $9.8 million and $10.1 million, respectively, in Annual Recurring Compensation.

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

During the years ended December 31, 2025 and 2024, we accrued $9.3 million and $9.8 million, respectively, in Annual Recurring Compensation.

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

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

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

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

We currently hold 34,856,559 no-par value bearer shares of Adtran Networks, representing 67.0% of Adtran Networks outstanding shares as of February 27, 2025.

The foregoing description of the DPLTA does not purport to be complete and is qualified in its entirety by reference to the DPLTA, a non-binding English translation of which incorporated by reference to Exhibit 10.5 of this Annual Report on Form 10-K.

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

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

For the year ended December 31, 2024, approximately 0.8 million shares of Adtran Networks stock was tendered to the Company and Exit Compensation payments of €15.7 million or approximately $17.4 million based on an exchange rate as of December 31, 2024, were paid to Adtran Networks shareholders.

We currently hold 36,871,784 no-par value bearer shares of Adtran Networks, representing 70.8% of Adtran Networks outstanding shares as of December 31, 2025.

Business Efficiency Program

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The Business Efficiency Program included expenses specifically associated with achieving run-rate synergies as well as Business Efficiency Program expenses described below.

Other than the Company's stated air of selling its headquarters, the Business Efficiency Program was substantially complete as of December 31, 2024.

See Note 19 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information.

During the years ended December 31, 2024 and 2023, we recognized $44.7 million and $25.1 million of costs relating to the Business Efficiency Program, respectively.

Future cash payments include severance costs, outplacement fees and site consolidation that are anticipated to be approximately $10.3 million.

Business Combination Integration Costs

During the years ended December 31, 2024 and 2023, we recognized $1.9 million and $4.9 million of integration costs related to the Business Combination, respectively, that are included in selling, general and administrative expenses, research & development expenses and cost of revenue in the Condensed Consolidated Statement of Loss.

We did not incur any Business Efficiency Program costs during the year ended December 31, 2025.

The Company reduced previously accrued costs by $0.3 million during the year ended December 31, 2025.

During the years ended December 31, 2024 and 2023, we recognized $44.7 million and $25.1 million, respectively, of costs relating to the Business Efficiency Program, respectively.

As of December 31, 2025, all expenses related to the Business Efficiency Program have been paid.

Other Cash Requirements

During the year ended December 31, 2024, other than the Exit Compensation payments, Annual Recurring Compensation under the DPLTA, restructuring costs and increased debt service costs, there have been no other material changes in cash requirements from those discussed in the 2023 Form 10-K and our cash requirements table shown in Liquidity and Capital Resources above.

During the year ended December 31, 2025, other than the Exit Compensation payments, Annual Recurring Compensation under the DPLTA, and receivables purchase arrangements there have been no other material changes in cash requirements from those discussed in the 2024 Form 10-K/A and our cash requirements table shown in Liquidity and Capital Resources above.

Performance Bonds

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Critical Accounting Policies and Estimates

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made if different estimates reasonably could have been used or if changes in the accounting estimate that are reasonably likely to occur could materially impact the results of financial operations.

Several accounting policies, as described in Note 1 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report, require material subjective or complex judgment and have a significant impact on our financial condition and results of operations, as applicable.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements:

Revenue is measured based on the consideration expected to be received in exchange for transferring goods or providing services to a customer and as performance obligations under the terms of the contract are satisfied.

Generally, this occurs with the transfer of control of a product to the customer.

Accounting Policies

An accounting policy is deemed to be critical if it requires significant judgment, relies on key assumptions, and materially affects our reported financial condition and results of operations.

These areas involve complex and subjective assessments, and changes in the underlying estimates or assumptions may have a material impact on our financial statements.

Management reviews these policies regularly in light of evolving business conditions, market trends, and regulatory developments.

The policies described below represent the accounting areas that we believe require the most significant use of judgment and estimation.

Revenue is recognized upon transfer of control to the customer.

For transactions where there are multiple performance obligations, individual products and services are accounted for separately if they are distinct (if a product or service is separately identifiable from other items and if a customer can benefit from it on its own or with other resources that are readily available to the customer).

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Stand-alone selling prices are determined based on the prices at which the separate products and services are sold and are allocated based on each item’s relative value to the total value of the products and services in the arrangement.

For items that are not sold separately, we estimate stand-alone selling prices primarily using the “expected cost plus a margin” approach.

Payment terms are generally 30 days in the U.S.

and typically longer in many geographic markets outside the U.S.

Shipping fees collected are recorded as revenue and the related cost is included in cost of revenue.

Revenue, value-added and other taxes collected concurrently with revenue-producing activities are excluded from revenue.

Incremental costs of obtaining a contract, that are recoverable, are capitalized and amortized over the period that the related revenue is recognized if greater than one year.

We have elected to account for shipping fees paid as a cost of fulfilling the related contract.

We have also elected to apply the practical expedient related to the incremental costs of obtaining contracts and recognize those costs as an expense when incurred if the amortization period of the assets is one year or less.

These costs are included in selling, general and administrative expenses.

Capitalized costs with an amortization period greater than one year were immaterial.

Revenue is generated by two reportable segments:

Network Solutions and Services & Support.

Network Solutions Segment - Includes hardware products and software defined next-generation virtualized solutions used in Service Provider or business networks, as well as prior generation products.

The majority of the revenue from this segment is from hardware revenue.

Hardware and Software Revenue

Revenue from hardware sales is recognized when control is transferred to the customer, which is generally when the products are shipped.

Shipping terms are generally FOB shipping point.

Revenue from software license sales is recognized at delivery and transfer of control to the customer.

Revenue is recorded net of estimated discounts and rebates using historical trends.

Customers are typically invoiced when control is transferred and revenue is recognized.

Our products generally include assurance-based warranties of 90 days to five years for product defects, which are accrued at the time products are delivered.

Services & Support Segment - Includes a complete portfolio of maintenance, network implementation and solutions integration and managed services, which include hosted cloud services and subscription services to complement our Network Solutions segment.

Maintenance Revenue

Our maintenance service periods range from one month to five years.

Customers are typically invoiced and pay for maintenance services at the beginning of the maintenance period.

We recognize revenue for maintenance services on a straight-line basis over the maintenance period as our customers benefit evenly throughout the contract term and deferred revenue, when applicable, is recorded in unearned revenue and non-current unearned revenue.

The total balance of our unearned revenue was $74.8 million and $71.8 million as of December 31, 2024 and 2023, respectively.

Network Implementation Revenue

We recognize revenue for network implementation, which primarily consists of engineering, execution and enablement services at a point in time when each performance obligation is complete.

If we have recognized revenue but have not billed the customer, the right to consideration is recognized as a contract asset that is included in other receivables on the Consolidated Balance Sheets.

The contract asset is transferred to accounts receivable when the completed performance obligation is invoiced to the customer.

Receivables Purchase Agreement

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

These transactions are accounted for in accordance with ASC Topic 860 and result in a reduction in accounts receivable because the Factoring Agreement transfers effective control over, and risk related to the receivables to the buyers.

Trade accounts receivables balances sold are removed from the Consolidated Balance Sheets and cash received is reflected as cash flows provided by (used in) operating activities in the Consolidated Statements of Cash Flow.

Factoring related interest expense is recorded to interest expense on the Consolidated Statements of Loss.

On each sale date, the Factor retains from the sale price a default reserve, up to a required balance, which is held by the Factor in a reserve account and pledged to the Company.

The Factor is entitled to withdraw from the reserve account the sale price of a defaulted receivable.

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

Previous Receivables Purchase Agreement

On December 19, 2023, the Company entered into a factoring agreement with a third-party financial institution to sell, on a revolving basis, undivided interests in the Company’s accounts receivable.

The factoring agreement qualified for treatment as a secured borrowing with a pledge of collateral under Accounting Standards Codification ("ASC") Topic 810, Consolidations, as the Company was considered the primary beneficiary in a variable interest entity created to hold the factored receivables and the Company retained a residual claim on reserves related to the factored receivables .

The receivables factored were carried in accounts receivable, less allowance for credit losses on the Consolidated Balance Sheets, the secured borrowings were carried on the Company’s Consolidated Balance Sheets as a current liability, in accounts payable, proceeds and repayments of the secured borrowings are reflected as cash flows (used in) provided by financing activities in the Consolidated Statements of Cash Flows and program fees are recorded in interest expense in the Company’s Consolidated Statements of Loss.

The short-term liability classification of the secured borrowings was based on the estimated timing of the collection of the accounts receivable which were expected to be received within 12 months.

The receivables purchase agreement was terminated on July 1, 2024 and there were no secured borrowings under this agreement as of December 31, 2024.

See Note 2 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.

For items not sold separately, we apply an “expected cost plus margin” approach.

Judgments include:

• identifying distinct performance obligations;

• estimating stand‑alone selling prices;

• assessing material rights and contract modifications;

• determining the pattern and timing of revenue recognition for service‑based deliverables.

We closely monitor customer buying behavior, discounting patterns, and regional economic conditions that may change pricing or delivery cycles.

As our product mix changes and begins to shift toward next‑generation virtualized platforms and cloud‑based services, we expect the complexity of revenue arrangements to increase, which may require refinements to our estimation methodologies.

Inventory Valuation

We carry our inventory at the lower of cost and net realizable value, with cost being determined using the first-in, first-out method.

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If actual trends and market conditions are less favorable than those projected by management, we may be required to make additional inventory write-downs.

Stock-Based Compensation

For purposes of determining the estimated fair value of market-based PSU awards on the date of grant, the Monte Carlo Simulation valuation method is used.

These PSUs are subject to a market condition based on the relative total stockholder return of Adtran against all of the companies in the NASDAQ Telecommunications Index and vest at the end of a three-year performance period.

The fair value of performance-based PSUs, RSUs and restricted stock is equal to the closing price of our stock on the business day immediately preceding the grant date.

Compensation expense related to unvested performance-based PSUs is recognized over the requisite service period of two to three years as the achievement of the performance obligation becomes probable.

For purposes of determining the estimated fair value of our stock option awards on the date of grant, we use the Black-Scholes Model.

This model requires the input of certain assumptions that require subjective judgment.

These assumptions include, but are not limited to, expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors.

Because our stock option awards have characteristics significantly different from those of traded options, and because changes in the input assumptions can materially affect the fair value estimate, the existing model may not provide a reliable, single measure of the fair value of our stock option awards.

Management will continue to assess the assumptions and methodologies used to calculate the estimated fair value of stock-based compensation.

Circumstances may change and additional data may become available over time, which could result in changes to these assumptions and methodologies and thereby materially impact our fair value determination.

If factors change in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period.

As of December 31, 2024, total unrecognized compensation expense related to the non-vested portion of market-based PSUs, RSUs and restricted stock was approximately $10.7 million.

Pursuant to the Business Combination, which closed on July 15, 2022, Adtran Networks stock option holders were entitled to have their Adtran Networks stock options assumed by ADTRAN Holdings (applying the exchange ratio in the Business Combination Agreement), thereafter representing options to acquire stock of ADTRAN Holdings.

The maximum number of shares of ADTRAN Holdings stock potentially issuable upon such assumption was 2.3 million shares.

The period in which such options could be assumed ended July 22, 2022.

A total of 2.1 million shares of ADTRAN Holdings stock were subject to assumed Adtran Networks options.

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

The stock option pricing model requires the use of several assumptions that impact the fair value estimate.

These variables include, but are not limited to, the volatility of the Company's stock price and employee exercise behaviors.

As of December 31, 2024, total unrecognized compensation expense related to the non-vested portion of stock options was approximately $3.2 million.

Assets Held for Sale

An asset is considered to be held for sale when all the following criteria are met:

(i) management commits to a plan to sell the asset;

(ii) the asset is available for immediate sale in its present condition;

(iii) actions required to complete the sale of the asset have been initiated;

(iv) sale of the asset is probable and the completed sale is expected to occur within one year;

(v) it is unlikely that the disposal plan will be significantly modified;

and (vi) the asset is actively being marketed for sale at a price that is reasonable given its current market value.

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

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

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

The Company’s annual impairment assessment is done at the reporting unit level, which we determined are generally the same as our operating segments, which are identified in Note 16 to the Consolidated Financial Statements.

The Company’s annual impairment assessment is done at the reporting unit level, which we determined are generally the same as our operating segments.

We review goodwill for impairment annually during the fourth quarter and also test for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of our reporting units below their carrying amount.

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Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on our consolidated financial statements.

The Company determined the fair value of each reporting unit using a combination of an income approach and a market approach.

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

The Company determined upon its quantitative impairment assessment to recognize a $292.6 million non-cash goodwill impairment charge for the Network Solutions reporting unit.

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

The Company’s annual impairment test date is October 1, 2024.

Based on our analysis, management concluded that there was no impairment of goodwill as of that date.

Between the annual impairment date of October 1, 2024 and year-end December 31, 2024, there were no additional triggering events.

During 2023, the Company experienced decreased market capitalization and long-term projections.

Therefore, an interim impairment test over goodwill was performed as of September 30, 2023.

The Company determined the fair value of each reporting unit using a combination of an income approach and a market approach.

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

It was determined that the decreases in projected future cash flows, discount rates, overall macroeconomic conditions, as well as the decrease in our market capitalization applied in the valuation, were required to align with market-based assumptions and company-specific risk, which resulted in lower fair values of the Services & Support reporting unit.

As a result of the interim assessment, the Company recorded a goodwill impairment charge of $37.9 million as its estimated fair value was less than its book value on that date.

No other goodwill impairment charges were recorded during 2023.

No goodwill impairment charge was recorded in 2022 as a result of the Company’s internal assessment.

The balance of our goodwill was $52.9 million and $353.4 million as of December 31, 2024 and 2023, respectively.

Intangible Assets

Purchased intangible assets with finite lives are carried at cost less accumulated amortization.

Amortization is recorded over the estimated useful lives of the respective assets.

The balance of our intangible assets was $306.1 million and $337.4 million as of December 31, 2024 and 2023, respectively.

Management updates these estimates based on the most recent market data, customer demand expectations, and strategic initiatives.

Impairment of Long-Lived Assets and Intangibles

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Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset or asset group.

Forecasting future cash flows for asset groups involves uncertainties related to technology adoption rates, product roadmaps, and cost‑efficiency initiatives.

If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset or asset group.

During the first quarter of 2024, factors triggered a quantitative impairment assessment for the Network Solutions asset group.

The long-lived assets associated with the Network Solutions asset group was $358.6 million as of December 31, 2024

There were no impairment losses for long-lived assets and intangible assets during the years ended December 31, 2024, 2023 and 2022.

An asset is considered to be held for sale when all the following criteria are met:

(i) management commits to a plan to sell the asset;

(ii) the asset is available for immediate sale in its present condition;

(iii) actions required to complete the sale of the asset have been initiated;

(iv) sale of the asset is probable and the completed sale is expected to occur within one year;

(v) it is unlikely that the disposal plan will be significantly modified;

and (vi) the asset is actively being marketed for sale at a price that is reasonable given its current market value.

Making this determination is subject to management judgment regarding the facts and circumstances of the assets.

Management reviews these factors on at least an annual basis to determine if an asset remains or now should be classified as held for sale.

We estimate our income tax provision or benefit in each of the jurisdictions in which we operate, including estimating exposures related to examinations by taxing authorities.

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We continually review the adequacy of our valuation allowance and recognize the benefits of deferred tax assets only as the reassessment indicates that it is more likely than not that the deferred tax assets will be realized in accordance with ASC 740, Income Taxes.

During the fourth quarter of 2023, after considering all quantitative and qualitative evidence, including our cumulative loss position, we have determined that the negative evidence outweighs the positive evidence and have concluded that it is not more likely than not that our U.S.

federal and certain other state deferred tax assets were realizable for one of the consolidated filing groups.

As a result, we recorded a valuation allowance against those assets and continue to maintain the valuation allowance through 2024.

Additional valuation allowance was recorded against certain deferred tax assets on our foreign entities as not more likely than not realizable.

However, the amount of deferred tax assets considered realizable could be adjusted and valuation allowance released in future periods in the event that sufficient positive evidence is present to support a conclusion that it is more likely than not that all or a portion of our domestic and foreign deferred tax assets will be realized.

In determining whether an uncertain tax position exists, the Company determines, based solely on its technical merits, whether the tax position is more likely than not to be sustained upon examination, and if so, a tax benefit is measured on a cumulative probability basis that is more likely than not to be realized upon the ultimate settlement.

The Company recognizes interest and penalties related to unrecognized tax benefits through interest expense and income tax expense, respectively.

Pension Benefit Plan Obligations

Pension benefit plan obligations are based on various assumptions used by our actuaries in calculating these amounts.

These assumptions include discount rates, compensation rate increases, expected return on plan assets, retirement rates and mortality rates.

Actual results that differ from the assumptions and changes in assumptions could affect future expenses and obligations.

Our net pension liability totaled $8.8 million and $12.7 million at December 31, 2024 and December 31, 2023, respectively.

This liability is included in non-current pension liability, accrued wages and benefits and other non-current assets in the accompanying Consolidated Balance Sheets.

Lease Obligations

We have operating leases for office space, automobiles and various other equipment in the U.S.

and in certain international locations.

Other contracts, such as manufacturing agreements and service agreements, are reviewed to determine if they contain potential embedded leases.

These other contracts are specifically reviewed to determine whether we have the right to substantially all of the economic benefit from the use of any specified assets or the right to direct the use of any specified assets, either of which would indicate the existence of a lease.

Some of our leases include options to renew.

For those leases that are reasonably assured to be renewed, we have included the option to extend as part of our right of use asset and lease liability.

The exercise of lease renewal options is at our sole discretion.

The depreciable life of leased assets and leasehold improvements are limited by the expected lease term.

Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the

For lease agreements entered into or reassessed after the adoption of Topic 842, we elected to not separate lease and non-lease components.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Business Combinations

The Company records assets acquired, liabilities assumed, contractual contingencies, when applicable, and intangible assets recognized as part of business combinations based on their fair values on the date of acquisition subject to purchase accounting adjustments.

The excess of the purchase price over the estimated fair values of the net tangible and intangible assets and liabilities assumed or acquired is recorded as goodwill.

If the estimated fair values of net tangible and intangible assets acquired and liabilities assumed exceed the purchase price, a bargain purchase gain is recorded.

The Company’s estimates of fair value are based on historical experience, industry knowledge, certain information obtained from the management of the acquired company and, in some cases, valuations performed by independent third-party firms.

The results of operations of acquired companies are included in the accompanying Consolidated Statements of Loss since their dates of acquisition.

Costs incurred to complete the Business Combination, such as legal, accounting or other professional fees, are charged to selling, general and administrative expenses as incurred.

Recently Issued Accounting Pronouncements

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QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, including changes in foreign currency rates, prices of marketable equity and fixed-income securities.

In addition, the ongoing global pandemic raises the possibility of an extended economic downturn and has caused volatility in financial markets.

The primary objective of the large majority of our investment activities is to preserve principal while at the same time achieve appropriate yields without significantly increasing risk.

To achieve this objective, a majority of our marketable securities are investment grade, fixed-rate bonds and municipal money market instruments denominated in U.S.

Our investment policy provides limitations for issuer concentration, by restricting, at the time of purchase, the concentration in any one issuer to 5% of the market value of our total investment portfolio.

We maintain depository investments with certain financial institutions.

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A hypothetical 50 basis point decline in interest rates as of December 31, 2025, assuming all other variables remain constant, would reduce annualized interest income on our cash and investments by less than $0.1 million.

As of December 31, 2024, the carrying amounts of our revolving credit agreements totaled $189.6 million where a change in interest rates would impact our interest expense.

As of December 31, 2025, the carrying amounts of our revolving credit agreement totaled $25.0 million where a change in interest rates would impact our interest expense.

A hypothetical 50 basis point increase in interest rates as of December 31, 2025, assuming all other variables remain constant, would increase our interest expense by $0.1 million.

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The discount rates used were based on the market interest rates in effect at December 31, 2025.

As of December 31, 2024 we have not entered into any derivative instruments to hedge the impact of the changes in variable interest rates under our revolving credit agreements.

As of December 31, 2025 we have not entered into any derivative instruments to hedge the impact of the changes in variable interest rates under our revolving credit agreement.

Foreign Currency Exchange Rate Risk

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The majority of our global supply chain predominately makes payments in U.S.

dollars and some of our operating expenses are paid in certain local currencies (approximately 45.2% of total operating expense for the year ended December 31, 2024, respectively).

dollars and some of our operating expenses are paid in certain non-USD local currencies (approximately 44.0% of total operating expense for the year ended December 31, 2025, respectively).

Therefore, our revenue, gross margins, operating expenses and operating loss are all subject to foreign currency fluctuations.

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As of December 31, 2025, we had certain material contracts subject to currency revaluation, including accounts receivable, accounts payable and lease liabilities denominated in foreign currencies.

As of December 31, 2024, we had 39 forward contracts outstanding with a fair value of $0.6 million.

The objective of these foreign currency forward contracts is to reduce the impact of currency exchange rate movements on our operating results by offsetting gains and losses on the forward contracts with increases or decreases in foreign currency transactions.

We do not use foreign currency contracts for speculative or trading purposes.

Hedging of our currency exposures may not always be effective to protect us against currency exchange rate fluctuations.

See Note 10 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.

On November 3, 2022, the Company entered into a euro/U.S.

dollar forward contract arrangement (the "Initial Forward") with Wells Fargo Bank, N.A.

(the “Hedge Counterparty”).

The Initial Forward, which was governed by the provisions of an ISDA Master Agreement (including schedules thereto and transaction confirmations that supplement such agreement) entered into between the Company and the Hedge Counterparty, enabling the Company to convert a portion of its euro denominated payment obligations under the proposed DPLTA into U.S.

Under the Initial Forward, the Company agreed to exchange an aggregate notional amount of €160.0 million for U.S.

dollars at a daily fixed forward rate ranging from EUR/USD 0.98286 to 1.03290.

The aggregate amount of €160.0 million was divided into eight quarterly tranches of €20.0 million, which commenced in the fourth quarter of 2022.

During the twelve months ended December 31, 2024, the Company settled four €20.0 million forward contract tranches.

On March 21, 2023, the Company entered into a euro/U.S.

dollar forward contract arrangement (the “Forward”) with the Hedge Counterparty.

Under the Forward, which was governed by the provisions of an ISDA Master Agreement (including schedules thereto and transaction confirmations that supplement such agreement) entered into between the Company and the Hedge Counterparty, the Company exchanged an aggregate notional amount of €160.0 million for U.S.

dollars at an average rate of EUR/USD 1.085.

During the twelve months ended December 31, 2024, the Company settled four $20.0 million forward contract tranches.

As of December 31, 2024, both the Initial Forward and Forward have fully matured and are no longer outstanding.

For further information about the fair value of our investments as of December 31, 2025, see Note 4 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report.

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Years Ended December 31, 2025, 2024 and 2023

Consolidated Statements of Comprehensive (Loss) Income,

Consolidated Statements of Comprehensive Income (Loss),

Years Ended December 31, 2025, 2024 and 2023

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Years Ended December 31, 2025, 2024 and 2023

Notes To Consolidated Financial Statements

Schedule II - Valuation and Qualifying Accounts,

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We have audited the accompanying consolidated balance sheets of ADTRAN Holdings, Inc.

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of loss, of comprehensive (loss) income, of changes in equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the "consolidated financial statements").

and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of loss, of comprehensive income (loss), of changes in equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to the Company not (i) designing and maintaining effective controls in response to the risks of material misstatement;

(ii) designing and maintaining effective controls over financial statement preparation, presentation and disclosure commensurate with its financial reporting requirements;

and (iii) designing and maintaining effective controls to address the initial application of complex accounting standards and accounting of non-routine, unusual or complex events and transactions.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date as the Company did not design and maintain effective controls (i) in response to the risks of material misstatement and (ii) over financial statement preparation, presentation and disclosure commensurate with its financial reporting requirements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (iii) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Inventory – Estimate of Certain Excess and Obsolete Reserves

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and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.

Accounts Receivable Factoring

As described in Notes 1 and 2 to the consolidated financial statements, on July 1, 2024, the Company entered into a receivables purchase agreement (the “Factoring Agreement”) with a third-party financial institution (the “Factor”), which accelerates receivable collection.

Total accounts receivables factored as of December 31, 2024 totaled $18.3 million, of which $3.7 million was retained pursuant to the Factoring Agreement in the reserve account.

These transactions result in a reduction in accounts receivable because the Factoring Agreement transfers effective control and risk related to the receivables to the buyers.

On each sale date, the Factor retains from the sale price a default reserve, up to a required balance, which is held by the Factor in a reserve account and pledged to the Company.

The Factor is entitled to withdraw from the reserve account the sale price of a defaulted receivable.

The principal considerations for our determination that performing procedures relating to the accounts receivable factoring is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to evaluating the Factoring Agreement.

As described in the “Opinions on the Financial Statements and Internal Control over Financial Reporting” section, a material weakness was identified related to this matter.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others (i) reading the Factoring Agreement;

(ii) evaluating management’s assessment that the transactions under the Factoring Agreement were appropriately accounted for;

(iii) confirming the accounts receivables factored as of December 31, 2024 with the Factor;

(iv) testing the classification of accounts receivable factored, including whether balances have been properly excluded from the accounts receivable balance as of December 31, 2024;

and (v) evaluating the sufficiency of the disclosures in the consolidated financial statements.

Interim Goodwill and Asset Group Impairment Assessments – Network Solutions Reporting Unit and Asset Group

As described in Notes 1, 8, and 9 to the consolidated financial statements, the Company’s goodwill balance was $52.9 million as of December 31, 2024, and the goodwill associated with the Network Solutions reporting unit was $0 million.

The Company’s long-lived assets, such as property, plant and equipment, right of use lease assets, and purchased intangibles subject to amortization were $418.2 million as of December 31, 2024, and the long-lived assets associated with the Network Solutions asset group were $358.6 million.

Goodwill is tested by management for impairment annually during the fourth quarter and reviewed for impairment if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting units below their carrying amount.

Long lived assets are reviewed by management for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

During the first quarter of 2024, management identified factors triggering a quantitative impairment assessment for the Company’s reporting units and Network Solutions asset group, resulting in a $292.6 million goodwill impairment charge for the Network Solutions reporting unit.

Management determined the fair value of the Network Solutions reporting unit using a combination of an income approach and a market approach.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset group.

The significant inputs and assumptions used in the determination of the fair value of the reporting unit requires significant judgment and the use of estimates and assumptions related to revenue growth rates, earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, discount rate, peer group determination, and revenue and EBITDA market multiples.

The significant inputs and assumptions used in the determination of the cash flows expected to be generated by the asset group requires significant judgment and the use of estimates and assumptions related to revenue growth rates, EBITDA margins, peer group determination, and disposition exit multiple.

The principal considerations for our determination that performing procedures relating to the interim goodwill and asset group impairment assessments of the Network Solution reporting unit and asset group is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Network Solutions reporting unit and when developing the cash flows expected to be generated by the Network Solutions asset group;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to (a) revenue growth rates and EBITDA margins for the Network Solutions reporting unit and asset group, (b) revenue and EBITDA market multiples for the Network Solutions reporting unit, and (c) disposition exit multiple for the Network Solutions asset group (collectively, the “aforementioned assumptions”);

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill and asset group impairment assessments, including controls over the valuation of the Network Solutions reporting unit and asset group.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Network Solutions reporting unit and for developing the cash flows expected to be generated by the Network Solutions asset group;

(ii) evaluating the appropriateness of the income approach, market approach, and undiscounted future cash flows approach used by management;

(iii) testing the completeness and accuracy of underlying data used by management in the income approach, market approach, and undiscounted future cash flows approach;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to the aforementioned assumptions.

Evaluating management’s assumptions related to revenue growth rates and EBITDA margins for the Network Solutions reporting unit and asset group involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Network Solutions reporting unit and asset group;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income approach, market approach, and undiscounted future cash flows approach and (ii) the reasonableness of the revenue and EBITDA market multiples assumptions for the Network Solutions reporting unit and disposition exit multiple assumption for the Network Solutions asset group.

/s/PricewaterhouseCoopers LLP

Birmingham, Alabama

March 3, 2025

February 26, 2026

We have served as the Company’s auditor since 1986.

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Other receivables

Income tax receivable

Inventory, net

Assets held for sale

Income tax receivable

Prepaid expenses and other current assets

Short-term investments - deferred compensation

Assets held for sale

Total Current Assets

Property, plant and equipment, net

Deferred tax assets, net

Intangibles, net

Deferred tax assets

Other non-current assets

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Accrued wages and benefits

Deferred compensation liability

Income tax payable

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Non-current revolving credit agreement outstanding

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

Deferred tax liabilities

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Non-current pension liability

Deferred compensation liability

Non-current deferred compensation liability

Non-current lease obligations

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80,188 shares issued and 79,926 outstanding as of December 31, 2025 and

78,970 shares issued and 78,674 shares outstanding as of December 31, 2023

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

Additional paid-in capital

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Research and development expenses

Asset impairment

Goodwill impairment

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Interest expense

Net investment gain (loss)

Other income, net

Net investment gain

Other (expense) income, net

Loss Before Income Taxes

Income tax (expense) benefit

Net Income (Loss) attributable to non-controlling interest (1)

Income tax expense

Net Income attributable to non-controlling interest (1)

Net Loss attributable to ADTRAN Holdings, Inc.

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Loss per common share attributable to ADTRAN Holdings, Inc.

(1) For the year ended December 31, 2024 we accrued $ 9.8 million of net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

– diluted (2)

(1) For the years ended December 31, 2025 and 2024 we accrued $ 9.3 million and $ 9.8 million, respectively, of net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

For the year ended December 31, 2023, we accrued $ 10.1 million, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA, partially offset by a $ 3.2 million net loss attributable to non-controlling interests pre-DPLTA.12-24

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

- basic and diluted - reflects a $ 3.0 million effect of redemption of RNCI for the year ended December 31, 2024.

- basic and diluted - reflects a $ 4.1 million, $ 3.0 million and $ 0 effect of redemption of RNCI for the years ended December 31, 2025, 2024 and 2023, respectively.

See Note 18 for additional information.

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ADTRAN Holdings, Inc.

Consolidated Statements of Compr ehensive (Loss) Income

Consolidated Statements of Compr ehensive Income (Loss)

(In thousands)

Years ended December 31, 2025, 2024 and 2023

Other Comprehensive (Loss) Income, net of tax

Net unrealized gain (loss) on available-for-sale securities

Other Comprehensive Income (Loss), net of tax

Net unrealized gain on available-for-sale securities

Defined benefit plan adjustments

Foreign currency translation (loss) gain

Other Comprehensive (Loss) Income, net of tax

Comprehensive (Loss) Income, net of tax

Foreign currency translation gain (loss)

Other Comprehensive Income (Loss), net of tax

Comprehensive Income (Loss), net of tax

Comprehensive Income attributable to non-controlling interest

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

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

See accompanying notes to consolidated financial statements.

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Earnings (Deficit)

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income

Non-controlling interest

Balance as of December 31, 2022

Annual recurring compensation earned

Acquisition of Adtran Networks

Retirement of treasury stock

Reclassification and remeasurement from equity to mezzanine equity for non-controlling interests in Adtran Networks

Mezzanine equity for non-controlling interest in Adtran Networks for Adtran Networks stock options exercised

Other comprehensive income, net of tax

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Adtran stock options exercised

Reclassification of Adtran Networks stock options

Redemption of redeemable non-controlling interest

Adtran Networks stock options exercised

Modification of stock options

Adtran stock-based compensation expense

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Reclassification and remeasurement from equity to mezzanine equity for non-controlling interests in Adtran Networks

Other comprehensive income, net of tax

Dividend payments ($ 0.09 per share)

Dividends accrued on unvested restricted stock units

Other comprehensive loss, net of tax

Deferred compensation adjustments, net of tax

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Redemption of redeemable non-controlling interest

Adtran Networks stock options exercised

Modification of stock options

Adtran stock-based compensation expense

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Annual recurring compensation earned

Remeasurement of redeemable non-controlling interest

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

Dividends accrued on unvested restricted stock units

Deferred compensation adjustments, net of tax

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Adtran stock options exercised

Modification of Stock Options

Purchase of capped calls related to the convertible senior notes

Redemption of redeemable non-controlling interest

Adtran stock-based compensation expense

Adtran Networks stock-based compensation expense

Balance as of December 31, 2025

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Depreciation and amortization

Asset impairment

Goodwill impairment

Amortization of debt issuance cost

(Accretion) amortization on available-for-sale investments, net

(Gain) loss on investments

Amortization of revolving credit facility issuance costs

Amortization of convertible notes issuance costs

Accretion on available-for-sale investments, net

Gain on investments

Net loss on disposal of property, plant and equipment

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Purchases of available-for-sale investments

(Payments) for and proceeds from beneficial interests in securitized accounts receivable

Proceeds from disposals of property, plant and equipment

Acquisition of business, net of cash acquired

Net cash (used in) provided by investing activities

(Payments for) proceeds from beneficial interests in securitized accounts receivable

Net cash used in investing activities

Cash flows from financing activities:

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Repayments on receivables purchase agreement

Proceeds from draw on revolving credit agreements

Repayment of revolving credit agreements

Proceeds from draw on revolving credit agreement

Repayment of revolving credit agreement

Redemption of redeemable non-controlling interest

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Payment of debt issuance cost

Proceeds from issuance of senior convertible notes

Payments for capped call transactions related to convertible senior notes

Repayment of notes payable

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Effect of exchange rate changes

Cash, cash equivalents and restricted cash, beginning of year

Cash, cash equivalents and restricted cash, end of year

Supplemental disclosure of cash flow information:

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Supplemental disclosure of cash financing activities:

Cash paid for interest

Cash paid for income taxes, net of refunds

Cash used in operating activities related to operating leases

Supplemental disclosure of non-cash investing activities:

Supplemental disclosure of non-cash investing and financing activities:

Right-of-use assets obtained in exchange for lease obligations

Purchases of property, plant and equipment included in accounts payable

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

Redemption of redeemable non-controlling interest

Adtran Networks common shares exchanged in acquisition

Adtran Networks options assumed in acquisition

Non-controlling interest related to Adtran Networks

See accompanying notes to consolidated financial statements.

ADTRAN Holdings, Inc.

oADTRAN Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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).

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

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

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

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 3.37 % as of December 31, 2024.

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 333.2 million or approximately $ 344.9 million, based on an exchange rate as of December 31, 2024 and reflecting interest accrued through December 31, 2024 during the pendency of the appraisal proceedings discussed below.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that w as 1.27 % as o f December 31, 2025.

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approx imately € 303.9 million or $ 357.0 million, based on an exchange rate as of December 31, 2025 and reflecting interest accrued through December 31, 2025 during the pendency of the appraisal proceedings discussed below.

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

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

The Company 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.

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 8.9 million (or $ 9.3 millio n based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders as of December 31, 2024 were to elect Exit Compensation.

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

The Annual Recurring Compensation is due on the third banking day following the ordinary general shareholders’ meeting of Adtran

Networks for the respective preceding fiscal year (but in any event within eight months following expiration of the fiscal year).

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.

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

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 7.9 million (or $ 9.3 million based on the exchange rate as of December 31, 2025) per year assuming none of the minority Adtran Networks shareholders as of December 31, 2025 were to elect Exit Compensation.

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

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

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

During the year ended December 31, 2024 and 2023, we accrued $ 9.8 million and $ 10.1 million, respectively, in Annual Recurring Compensation.

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

During the years ended December 31, 2025 and 2024, we accrued $ 9.3 million and $ 9.8 million, respectively, in Annual Recurring Compensation.

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

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

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

The Company had access to $ 319.2 million on its Credit Facility for future borrowings based on debt c ovenant compliance metrics.

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

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

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

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

As of December 31, 2025, and as of the date of issuance of these financial statements, the Company has sufficient liquidity to meet the majority of its payment obligations under the DPLTA pertaining to Exit Compensation.

For th e year ended December 31, 2025, 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.

For the year ended December 31, 2023, a total of 67 thousand shares of Adtran Networks stock was tendered to the Company and Exit Compensation payments of approximately € 1.2 million or approximately $ 1.3 million based on an exchange rate as of December 31, 2023, were paid to Adtran Networks shareholders.

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

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

The Company had access to $ 180.8 million on its Credit Facility 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.

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

See Note 11, Credit Agreements for additional information regarding the terms of the Wells Fargo Credit Agreement and its amendments.

As of December 31, 2024, and as of the date of issuance of these financial statements, the Company does not have sufficient liquidity to meet payment obligations under the DPLTA pertaining to Exit Compensation.

While the Company did experience $ 17.4 million of redemptions during 2024, we believe the probability that more than a small minority of Adtran Networks shareholders elect to receive Exit Compensation in the next twelve months is remote based on the following factors:

For the year ended December 31, 2024, approximately 0.8 million shares o f Adtran Networks stock were tendered to the Company and Exit Compensation payments of approximately € 15.7 million or approximately $ 17.4 million based on an exchange rate as of December 31, 2024, were paid to Adtran Networks shareholders.

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

(i) the shareholders can exercise their right to receive the Exit Compensation until two months after publication of the final decision in the appraisal proceedings and we do not expect the final decision to be published within the next 12 months;

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

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

(iv) the current guaranteed Annual Recurring Compensation payment;

and (v) the current trading value of Adtran Networks shares.

The Company experienced revenue declines in 2024.

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

Additionally, the Company suspended dividend payments and effectuated a Business Efficiency Program.

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

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

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

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

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

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

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

After deducting the initial purchasers’ discounts, commissions, and estimated offering expenses, the Company received net proceeds of $ 192.6 million.

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

However, customers began replenishing their inventories to meet increasing demand, and revenue increased throughout the year ended December 31, 2025.

In 2023, the Company suspended dividend payments and effectuated a business efficiency program (the "Business Efficiency Program"), which targeted the reduction of ongoing operating expenses and focused on enhancing capital efficiency.

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

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

next twelve months, from the issuance of these financial statements.

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

Note 1 - Summary Of Significant Accounting Policies

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All intercompany accounts and transactions have been eliminated in consolidation.

Revision of Previously Issued Consolidated Financial Statements

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

The Company has evaluated the errors and determined that the related impacts were not material to the previously issued consolidated financial statements for any prior period.

A summary of the corrections to the Company's Consolidated Financial Statements for the periods ended March 31, 2023, June 30, 2023, September 30, 2023, December 31, 2023, March 31, 2024 and June 30, 2024, are as follows:

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

The Company erroneously accrued this liability every quarter at € 0.59 per share, overstating the associated accrual, the net income attributable to non-controlling interest and the net loss attributable to ADTRAN Holdings, Inc.

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

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

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

The following tables reflect the impact of the revisions to the specific line items presented in the Company’s previously reported Consolidated Balance Sheet as of December 31, 2023, the Consolidated Statement of Loss and the Consolidated Statement of Comprehensive Loss for the year ended December 31, 2023.

December 31, 2023

(In thousands)

As Previously Reported

Accrued Expenses and Other Liabilities

Total Current Liabilities

Total Liabilities

Redeemable Non-Controlling Interest

Accumulated Other Comprehensive Income

Retained Deficit

Total Liabilities, Redeemable Non-Controlling Interest and Equity

For the Year Ended December 31, 2023

(In thousands)

As Previously Reported

Net Income attributable to non-controlling interest

Net Loss attributable to ADTRAN Holdings, Inc.

Loss per common share attributable to ADTRAN Holdings, Inc.

Foreign currency translation gain

Other Comprehensive Income, net of tax

Comprehensive Loss, net of tax

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

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

Use of Estimates

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period.

Significant estimates include allowance for credit losses on accounts receivable and contract assets, excess and obsolete inventory reserves, warranty reserves, customer rebates,

determination and accrual of the deferred revenue related to performance obligations under contracts with customers, estimated costs to complete obligations associated with deferred and accrued revenue and network installations, estimated income tax provision and income tax contingencies, fair value of stock-based compensation, assessment of goodwill and other intangibles for impairment, estimated lives of intangible assets, estimates of intangible assets upon measurement, estimated pension liability and fair value of investments and estimated contingent liabilities.

Significant estimates include allowance for credit losses on accounts receivable and contract assets, excess and obsolete inventory reserves, determination and accrual of the deferred revenue related to performance obligations under contracts with customers, estimated costs to complete obligations associated with deferred and accrued revenue and network installations, estimated income tax provision and income tax contingencies, fair value of stock-based compensation, assessment of goodwill and other intangibles for impairment, estimated lives of intangible assets, estimates of intangible assets upon measurement, estimated pension liability and fair value of investments and estimated contingent liabilities.

Actual amounts could differ significantly from these estimates.

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The fair value measurements of our derivative instruments are determined using models that maximize the use of the observable market inputs including interest rate curves and both forward and spot prices for currencies, and are classified as Level II under the fair value hierarchy.

The fair values of our derivatives are included in Note 10.

Investments with contractual maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

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We have not recorded any losses relating to variable rate demand notes.

Long-term investments is comprised of our deferred compensation plan assets, marketable equity securities and other equity investments.

Short-term investments is comprised of our deferred compensation plan assets.

Long-term investments is comprised of our marketable equity securities and other equity investments.

Marketable equity securities are reported at fair value as determined by the most recently traded price of the securities at the balance sheet date, although the securities may not be readily marketable due to the size of the available market.

Any changes in fair value are recognized in net investment gain (loss).

Realized gains and losses on sales of debt securities are computed under the specific identification method and are included in other income, net.

See Note 4 for additional information.

Any changes in fair value are recognized in net investment gain.

Realized gains and losses on sales of debt securities are computed under the specific identification method and are included in other (expense) income, net.

See Note 4 fo r additional information.

Accounts Receivable

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As of December 31, 2025, no customer comprised more than 10% of our total accounts receivable balance.

As of December 31, 2023, a single customer comprised more than 10% of our total accounts receivable balance, which accounted for 11.9 % of our total accounts receivable.

As of December 31, 2024, no customer comprised more than 10% of our total accounts receivable balance.

Accounts receivable balances are considered past due when payment has not been received by the date indicated on the relevant invoice or based on agreed upon terms between the customer and the Company.

The Company regularly reviews the need for an allowance for credit losses related to our outstanding accounts receivable balances using the historical loss-rate method, as well as assessing asset-specific risks.

The assessment of asset-specific risks included the evaluation of relevant available information, from internal and external sources, relating to current conditions that may affect a customer’s ability to pay, such as the customer’s current financial condition or credit rating by geographic location, as provided by a third party and/or by

customer, if needed, and overall macro-economic conditions in which the customer operates.

Based on this assessment, an allowance for credit losses would be recorded if the Company determined that, based on our historical write-offs, which have been immaterial, and such asset specific risks, there was risk in collectability of the full amount of any accounts receivable.

The Company pools assets by geographic location to determine if an allowance should be applied to its accounts receivable balance, assessing the specific country risk rating and overall economics of that particular country.

If elevated risk existed, or customer specific risk indicated the accounts receivable balance was at risk, the Company would further analyze the need for an allowance related to specific accounts receivable balances.

Additionally, the Company would determine if significant changes to customer country risk rating from period-to-period and from the end of the prior year to the end of the current quarter would require further review and analysis by the Company.

Based on these assessments, an allowance for credit losses would be recorded if the Company determined that, based on our historical write-offs, which have been immaterial, and such asset specific risks, there was risk in collectability of the full amount of any accounts receivable.

Accounts Receivable Factoring

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

Previous Receivables Purchase Agreement

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

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

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Property, plant and equipment, which is stated at cost, is depreciated using the straight-line method over the estimated useful lives of the assets.

We depreciate building and land improvements from 5 to 39 years, office machinery and equipment from three to seven years , engineering machinery and equipment from three to seven years , and computer software from three to five years .

Generally, we depreciate building and land improvements from 5 to 39 years, office machinery and equipment from three to seven years , engineering machinery and equipment from three to seven years , and computer software from 3 to 5 years .

Expenditures for repairs and maintenance are charged to expense as incurred.

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

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

Intangible Assets

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During the first quarter of 2024, factors triggered a quantitative impairment assessment for the Network Solutions asset group.

The long-lived assets associated with the Network Solutions asset group was approximately $ 358.6 million as of December 31, 2024

There were no impairment losses for long-lived assets and intangible assets during the years ended December 31, 2025, 2024 and 2023.

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Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on our consolidated financial statements.

The Company’s annual impairment test date is October 1, 2024.

Based on our analysis, management concluded that there was no impairment of goodwill as of that date.

Between the annual impairment date of October 1, 2024 and year-end December 31, 2024, there were no additional triggering events.

The Company recognized impairments of $ 292.6 million and $ 37.9 million during the years ended December 31, 2024 and 2023, respectively.

No goodwill impairment charge was recorded during the year ended December 31, 2022.

See Note 8 for additional information.

Other Non-Current Assets

Implementation costs incurred for hosting arrangements that are related to service contracts are capitalized and amortized over the term of the arrangement.

Capitalized implementation costs totaled $ 0.1 million and $ 0.3 million as of December 31, 2024 and 2023, respectively, and are included in other non-current assets on the Consolidated Balance Sheets.

In connection with the planned integration of information technology following the Business Combination, we determined that certain projects no longer fit our needs.

The Company recognized impairment charges of $ 16.9 million during the year ended December 31, 2022 primarily related to capitalized implementation costs for a cloud computing arrangement.

The impairment charges were determined based on actual costs incurred.

During the year ended December 31, 2024 and 20 23, no impairment charges were recognized.

We depreciate capitalized implementation costs over various lives.

Amortization expense was $ 0.1 million, $ 5.9 million and $ 3.9 million for the years ended December 31, 2024, 2023 and 2022, respectively, which is recorded almost entirely in selling, general and a dministrative expenses in the Consolidated Statements of Loss.

Convertible Senior Notes

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

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

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

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

However, if conditions to convertibility are met and holders are expected to convert within one year as described further in Note 11, we may be required to reclassify the carrying amount of the liability to current.

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

Pension Benefit Plan Obligations

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These assumptions include discount rates, compensation rate increases, expected return on plan assets, retirement rates and mortality rates.

The pension benefit plan obligation is calculated based on the actuarial present value of expected future payments as of the balance sheet date required to settle the obligation resulting from employee service rendered prior to that date.

This amount is known as the projected benefit obligation.

Actual results that differ from the assumptions and changes in assumptions could affect future expenses and obligations.

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Other contracts, such as manufacturing agreements and service agreements, are reviewed to determine if they contain potential embedded leases.

These other contracts are specifically reviewed to determine whether we have the right to substantially all of the

economic benefit from the use of any specified assets or the right to direct the use of any specified assets, either of which would indicate the existence of a lease.

Some of our leases include options to renew.

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Costs related to these awards are recognized over their vesting periods.

Stock-based compensation expense recognized for the years ended December 31, 2024, 2023 and 2022 was approximately $ 15.3 million, $ 16.0 million and $ 28.3 million, respectively.

See Note 3 for additional information.

See Note 3 fo r additional information.

Research and Development Costs

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For the years ended December 31, 2025, 2024 and 2023, the Company recognized $ 11.8 million, $ 9.2 million and $ 5.2 million, respectively, as a reduction of research and development expense.

Advertising Costs

The Company expenses all advertising costs as incurred.

Advertising expenses for the years ended December 31, 2025, 2024 and 2023, totaled $ 0.2 million, $ 0.1 million and $ 0.2 million, respectively.

The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes.

Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid.

Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are

recovered or paid.

The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year.

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Assets and liabilities denominated in foreign currencies are remeasured at the balance sheet dates using the closing rates of exchange between those foreign currencies and the functional currency with any transaction gains or losses reported in other income, net.

Our primary exposures to foreign currency exchange rate movements are with our German and United Kingdom subsidiaries, whose functional currencies are the euro and the British pound sterling.

Our primary exposures to foreign currency exchange rate movements are with our German and U.K.

subsidiaries, whose functional currencies are the euro and the British pound sterling.

Adjustments resulting from translating financial statements of international subsidiaries are recorded as a component of accumulated other comprehensive income.

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For items that are not sold separately, we estimate stand-alone selling prices

primarily using the “expected cost plus a margin” approach.

For items that are not sold separately, we estimate stand-alone selling prices primarily using the “expected cost plus a margin” approach.

Payment terms are generally 30 days in the U.S.

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Revenue attributable to maintenance contracts is recognized on a straight-line basis over the related contract term.

In addition, we provide software maintenance and a variety of hardware maintenance services to customers under contracts with terms up to ten years.

We currently provide software maintenance and a variety of hardware maintenance services to customers ranging from one month to five years .

When we defer revenue related to multiple performance obligations where we still have contractual obligations, we also defer the related costs.

Current deferred costs are included in prepaid expenses and other current assets on the accompanying Consolidated Balance Sheets and totaled $ 2.0 million and $ 2.2 million as of December 31, 2025 and 2024, respectively.

Non-current deferred costs included in other non-current assets on the accompanying Consolidated Balance Sheets were less than $ 0.1 million as of December 31, 2024 and December 31, 2023.

Non-current deferred costs included in other non-current assets on the accompanying Consolidated Balance Sheets were less than $ 0.1 million as of December 31, 2025 and 2024.

Redeemable Non-Controlling Interest

As of December 31, 2024 and 2023, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 33.0 % and 34.7 %, respectively.

As of December 31, 2025 and 2024, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approxi mately 29.2 % and 33.0 %, respectively.

As a result of the effectiveness of the DPLTA on January 16, 2023, the Adtran Networks shares, representing the equity interest in Adtran Networks held by holders other than the Company, can be tendered at any time and are, therefore, redeemable and must be classified outside stockholders’ equity.

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Loss per common share attributable to ADTRAN Holdings, Inc.

- basic and diluted - reflects a $3.0 million effect of redemption of RNCI for the year ended December 31, 2024.

- basic and diluted - reflects a $ 4.1 mil lion and $ 3.0 million effect of redemption of RNCI for the years ended December 31, 2025 and 2024, respectively.

There was no effect of redemption during the year ended December 31, 2023.

See Note 18 for additional information.

Recent Accounting Pronouncements Not Yet Adopted

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

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

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

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

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

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

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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

Recently Adopted Accounting Pronouncements

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

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

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

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-7, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures", which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole.

The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted the new standard on January 1, 2024 .

T he Company adopted the new standard with prospective application on January 1, 2025 .

The adoption of this standard resulted in additional footnote disclosures.

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

Reclassification of Prior Year Presentation

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

These reclassifications had no effect on reported results of operations.

An adjustment has been made to the Consolidated Balance Sheet and Consolidated Statement of Cash Flows for the fiscal year ended December 31, 2023, to reclassify between Property, Plant and Equipment and Intangible Assets.

Note 2 - Revenue

Note 2 - Revenue and Receivables

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

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Services & Support

Optical Networking Solutions

Subscriber Solutions

Access & Aggregation Solutions

Optical Networking Solutions

The following table disaggregates revenue by reportable segment and revenue category for the year ended December 31, 2024:

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Services & Support

Optical Networking Solutions

Subscriber Solutions

Access & Aggregation Solutions

Optical Networking Solutions

The following table disaggregates revenue by reportable segment and revenue category for the year ended December 31, 2023:

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Services & Support

Optical Networking Solutions

Subscriber Solutions

Access & Aggregation Solutions

Optical Networking Solutions

The aggregate amount of transaction price allocated to remaining performance obligations that have not been satisfied as of December 31, 2024 and December 31, 2023 related to contractual maintenance agreements, contractual SaaS and subscription services, and hardware contracts that exceed one year in duration amounted to $ 325.7 million and 314.8 million, respectively.

As of December 31, 2024, approximately 73.0 % is expected to be recognized over the next 12 months , and the remainder recognized thereafter.

The majority of the Company's remaining performance obligations as of December 31, 2024, are related to contracts or orders that have an original expected duration of one year or less and are excluded from the transaction price related to these future obligations.

The aggregate amount of transaction price allocated to remaining performance obligations ("RPO") that have not been satisfied as of December 31, 2025 related to non-cancellable contractual maintenance agreements, non-cancellable contractual SaaS and subscription services, and non-cancellable hardware contracts amounted to $ 209.7 million.

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

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Accounts Receivable

The allowance for credit losses were $ 1.3 million and, $ 0.4 million as of December 31, 2024, and December 31, 2023, respectively, related to accounts receivable.

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

Receivables Purchase Agreement

Total accounts receivables factored as of the end of December 31 2024, totaled $ 18.3 million of which $ 3.7 million was retained pursuant to the Factoring Agreement in the reserve account.

Total accounts receivables factored as of the end of December 31, 2025, totaled $ 25.3 million net of $ 3.8 million retained pursuant to the Factoring Agreement in the reserve account.

Total accounts receivables factored as of the end of December 31, 2024, totaled $ 18.3 million net of $ 3.7 million retained pursuant to the Factoring Agreement in the reserve account.

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

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

The cost of the Factoring Agreement is included in interest expense in the Consolidated Statements of Loss and totaled $ 0.6 million for the year ended December 31, 2024.

Costs of a previous receivables purchase agreement which are included in interest expense in the Consolidated Statements of Loss totaled $ 0.9 million for the year ended December 31, 2023.

Previous Receivable Purchase Agreement

On December 19, 2023, the Company entered into a receivables purchase agreement (the “Prior Factoring Agreement”) with a third-party financial institution (the "Prior Factoring Agreement") to replace a prior accounts receivable purchase agreement and to sell, on a revolving basis, undivided interests in the Company’s accounts receivable.

During the years ended, December 31, 2025 and 2024, the Company received $ 169.1 million and $ 78.4 million, in cash proceeds from the Factoring Agreement, respectively.

The cost of the F actoring Agreement totaled $ 1.4 million and $ 0.6 million for the years ended December 31, 2025 and 2024, respectively.

The Company received $ 103.6 million in cash proceeds and incurred costs of $ 0.9 million from a previous receivables purchase agreement for the year ended December 31, 2023.

On December 19, 2023, the Company entered into a receivables purchase agreement (the “Prior Factoring Agreement”) with a third-party financial institution to replace a prior accounts receivable purchase agreement and to sell, on a revolving basis, undivided interests in the Company’s accounts receivable.

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

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The receivables purchase agreement was terminated on July 1, 2024 and there were no secured borrowings under this agreement as of December 31, 2024.

Total secured borrowings under the agreement were $ 14.3 million as of December 31, 2023, which left $ 25.4 million available for future borrowings as of December 31, 2023.

Accounts receivable pledged as collateral related to the secured borrowings were $ 16.8 million as of December 31, 2023.

For the year ended December 31, 2024, the Company incurred program fee expenses of $ 0.6 million.

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2024 Directors Stock Plan (“2024 Directors Plan”).

No additional awards will be granted under the Company’s previous stock incentive plans, including the 2020 Employee Stock Incentive Plan, the 2020 Directors Stock Plan, or the 2015 Employee Stock Incentive Plan.

No additional awards may be granted under the Company’s previous stock incentive plans, including the 2020 Employee Stock Incentive Plan, the 2020 Directors Stock Plan, or the 2015 Employee Stock Incentive Plan.

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

Under the 2024 Employee Plan, the Company is authorized to issue 4.5 million shares of common stock to certain employees, key service providers and advisors through incentive stock options and non-qualified stock options, stock appreciation rights, RSUs and restricted stock, any of which may be subject to performance-based conditions.

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

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

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

As of December 31, 2024, 5.1 million shares were available for issuance pursuant to awards that may be made in the future under stockholder-approved equity plans.

For the years ended December 31, 2024, 2023 and 2022, stock-based compensation expense was $ 15.3 million, $ 16.0 million and $ 28.3 million respectively.

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

As of December 3 1, 2025, 4.7 millio n shares were available for issuance pursuant to awards that may be made in the future under stockholder-approved equity plans.

For the years ended December 31, 2025, 2024 and 2023, stock-based compensation expense was $ 10.1 milli on, $ 16.0 million and $ 16.4 million respectively.

The following table summarizes stock-based compensation expense related to stock options, PSUs, RSUs and restricted stock for the years ended December 31, 2025, 2024 and 2023:

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Total stock-based compensation expense

Tax benefit for expense associated with non-qualified stock options, PSUs, RSUs and restricted stock

Tax benefit for expense associated with stock based compensation

Total stock-based compensation expense, net of tax

PSUs, RSUs and restricted stock - ADTRAN Holdings, Inc.

The following table is a summary of our PSUs, RSUs and restricted stock outstanding as of December 31, 2023 and 2024 and the changes that occurred during 2024:

PSUs, RSUs and Restricted stock

The following table summarizes the activity related to our PSUs, RSUs and restricted stock for the year ended December 31, 2025:

shares (In thousands)

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The dividend credits vest and are earned in the same manner as the PSUs and are paid in cash upon the issuance of common stock for the PSUs.

During the year ended December 31, 2024, and 2023, the Company granted 0.1 and 0.9 million performance-based PSUs to its executive officers and certain employees, respectively.

The grant-date fair value of these performance-based awards was based on the closing price of the Company’s stock on the date of grant.

These awards vest over either a two or three-year period, subject to the grantee’s continued employment, with the ability to earn shares in a range of 0 % to either 100 % or 150 % of the awarded number of PSUs based on the achievement of defined performance targets.

Equity-based compensation expense and liabilities with respect to these awards may be adjusted over the vesting period to reflect the probability of achievement of performance targets defined in the award agreements.

During each of the years ended December 2023 and 2022, the Company granted 0.9 and 0.3 million performance-based PSUs to its executive officers and certain employees.

The grant-date fair value of these performance-based awards was based on the closing price of the Company’s stock on the date of grant.

These awards vested over one-year and two-year periods, respectively, subject to the grantee’s continued employment, with the ability to earn shares in a range of 0 % to 142.8 % of the awarded number of PSUs based on the achievement of defined performance targets.

Equity-based compensation expense with respect to these awards may be adjusted over the vesting period to reflect the probability of achievement of performance targets defined in the award agreements.

Pursuant to the Business Combination, the unearned performance-based PSUs converted to time-based RSUs which were treated as an award modification during the third quarter of 2022.

This resulted in incremental compensation expense totaling $ 17.8 million being recognized during the twelve months ended December 31, 2022.

These awards were fully vested as of December 31, 2022.

Pursuant to the Business Combination, 0.3 million shares of market-based PSU awards converted to time-based RSU awards which were treated as an award modification during the third quarter of 2022.

Given that the fair value of these awards after the modification was less than the fair value of the awards immediately before the modification, no incremental compensation expense was recognized.

The Company continued to recognize compensation expense based on the award's original grant date fair value.

The fair value of RSUs and restricted stock is equal to the closing price of our stock on the grant date.

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As of December 31, 2025 , total unrecognized compensation expense related to the non-vested portion of market-based PSUs, RSUs and restricted stock was approximately $ 13.1 million, which is expected to be recognized over an average remaining recognition period of 2.4 years.

There was $ 10.9 million of unrecognized compensation expense related to unvested 2024 performance-based PSUs, which will be recognized over the remaining requisite service period of 1 years if achievement of the performance obligation becomes probable.

Unrecognized compensation expense will be adjusted for actual forfeitures as they occur.

Stock Options - ADTRAN Holdings, Inc.

The following table is a summary of stock options outstanding as of December 31, 2024 and 2023 and the changes that occurred during 2024:

Stock Options

The following table summarizes the activity related to our stock options for the year ended December 31, 2025:

(In thousands)

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No stock options were granted during 2025.

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

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

The stock option pricing model requires the use of several assumptions that impact the fair value estimate.

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The amount of aggregate intrinsic value was $ 3.6 million as of December 31, 2025, which will change based on the fair market value of the Company's stock.

The total pre-tax intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $ 0.3 million and $ 0.1 million , respectively.

The total pre-tax intrin sic value of options exercised during the years ended De cember 31, 2025 and 2024 was $ 0.8 million and $ 0.3 million, respectively.

The following table further describes our stock options outstanding as of December 31, 2025:

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$ 12.18 – $ 19.08

$ 15.34 – $ 19.08

The Black-Scholes option pricing model (the “Black-Scholes Model”) is used to determine the estimated fair value of stock option awards on the date of grant.

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Because our stock options have characteristics significantly different from those of traded options, and because changes in the input assumptions can materially affect the fair value estimate, existing models may not provide reliable measures of fair value of our stock options.

option pricing model requires the use of several assumptions that impact the fair value estimate.

The stock option pricing model requires the use of several assumptions that impact the fair value estimate.

These variables include, but are not limited to, the volatility of our stock price and employee exercise behaviors.

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These variables include, but are not limited to, the volatility of our stock price and employee exercise behaviors.

The weighted-average estimated fair value of stock options granted to employees during the years ended December 31, 2023 was $ 2.99 per share with the following weighted-average assumptions:

Expected volatility

Risk-free interest rate

Expected dividend yield

Expected life (in years)

Note 4 – Investments

Debt Securities and Other Investments

The Company did no t have any debt securities and other investments as of December 31, 2024.

Realized gains and losses on sales of securities are computed under the specific identification method.

The following table presents gross realized gains and losses related to our debt securities for the years ended December 31, 2024, 2023 and 2022:

For the year ended December 31,

(In thousands)

Gross realized gains on debt securities

Gross realized losses on debt securities

Total (loss) gain recognized, net

The Company’s investment policy provides limitations for issuer concentration, which limits, at the time of purchase, the concentration in any one issuer to 5 % of the market value of the total investment portfolio.

The Company did no t purchase any available-for-sale debt with credit deterioration during the years ended December 31, 2024, 2023 and 2022.

Marketable Equity Securities

Marketable equity securities consist of publicly traded stock, funds and certain other investments measured at fair value or cost, where appropriate.

Re alized and unrealized gains and losses for our marketable equity securities for the year ended December 31, 2024, 2023 and 2022 were as follows:

For the year ended December 31,

(In thousands)

Realized gains (losses) on equity securities sold

Unrealized gains (losses) on equity securities held

Total gain (loss) recognized, net

As of December 31, 2024, gross unrealized losses related to individual investments in a continuous loss position for twelve months or longer were not material.

GAAP establishes a three-level valuation hierarchy based upon observable and unobservable inputs for fair value measurement of financial instruments:

• Level 1 – Observable outputs;

values based on unadjusted quoted prices for identical assets or liabilities in an active market;

• Level 2 – Significant inputs that are observable;

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

• Level 3 – Significant unobservable inputs;

values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement;

inputs could include information supplied by investees.

The Company’s cash equivalents and investments held at fair value are categorized into this hierarchy as follows:

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(In thousands)

Classification

Quoted Prices

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Money market funds

Cash and cash equivalents

Marketable equity securities

Marketable equity securities - various industries

Long-term investments

Deferred compensation plan assets

Short-term investments - deferred compensation

Fair Value Measurements as of December 31, 2024 Using

(In thousands)

Classification

Quoted Prices

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Money market funds

Cash and cash equivalents

Marketable equity securities

Marketable equity securities - various industries

Long-term investments

Deferred compensation plan assets

Long-term investments

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

These multiple market prices are used as inputs into a distribution-curve-based algorithm to determine the daily market value of each security.

GAAP establishes a three-level valuation hierarchy based upon observable and unobservable inputs for fair value measurement of financial instruments:

• Level 1 – Observable outputs;

values based on unadjusted quoted prices for identical assets or liabilities in an active market;

• Level 2 – Significant inputs that are observable;

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

• Level 3 – Significant unobservable inputs;

values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement;

inputs could include information supplied by investees.

Note 5 – Inventory

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

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

In connection with the Company’s restructuring efforts, during the twelve months ended December 31, 2023 , management determined that there would be a discontinuation of product lines in the Network solutions segment and, as a result, wrote-down related inventories of $ 24.3 million, which is included in cost of revenue in the Consolidated Statements of Loss.

Note 6 – Property, Plant and Equipment

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

In connection with the Company’s restructuring efforts, during the year ended December 31, 2023, management determined that there would be a discontinuation of product lines in the Network solutions segment and, as a result, wrote-down related inventories of $ 24.3 million, which is included in cost of revenue in the Consolidated Statements of Loss.

Note 6 – Property, Plant and Equipment, net

As of December 31, 2025 and 2024, property, plant and equipment, net was comprised of the following:

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

In connection with the planned integration of information technology following the Business Combination, we determined that certain projects no longer fit our needs or strategic plan.

As a result, the Company recognized impairment charges of $ 0.5 million during the year ended December 31, 2022 related to software and web site development.

The impairment charges were determined based on actual costs incurred.

During the years ended December 31, 2025 and 2024, no impairment charges were recognized.

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Assets Held For Sale

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

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

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

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

On December 31, 2025, the Company determined that it continues to meet the held for sale criteria pursuant to ASC 360, "Impairment and Disposal of Long-Live Assets" on a portion of the Company's property located at its Huntsville, Alabama campus and ceased recording depreciation on the assets.

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

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

Note 7 – Leases

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and in certain international locations.

As of December 31, 2024, our operating leases had remaining lease terms of 1 month to 167 months , some of which included options to extend the leases for up to one year , and some of which included options to terminate the leases within three months .

As of December 31, 2025, our operating leases had remaining lease t erms of 1 month to 155 months , some of which included options to extend the leases for up to one year , and some of which included options to terminate the lease s within three months .

Supplemental balance sheet information related to operating leases is as follows:

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Total lease liability

Lease expense related to short-term leases was less th an $ 0.2 million for the twelve months ended December 31, 2024 and $ 0.1 million for the twelve months ended December 31, 2023 and 2022, and is included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Consolidated Statements of Loss.

Lease expense related to variable lease payments that do not depend on an index or rate, such as real estate taxes and insurance reimbursements, was $ 0.3 million, $ 0.7 million and $ 0.6 million for the twelve months ended December 31, 2024, 2023 and 2022, respectively.

Lease expense related to short-term leases was approximately $ 0.1 million, $ 0.2 million and $ 0.1 million for the years ended December 31, 2025, 2024 and 2023, respectively, and is included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Consolidated Statements of Loss.

Lease expense related to variable lease payments that do not depend on an index or rate, such as real estate taxes and insurance reimbursements, was $ 0.1 million, $ 0.3 million and $ 0.7 million for the year ended December 31, 2025, 2024 and 2023, respectively.

The components of lease expense included in the Consolidated Statements of Loss were as follows:

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Total operating lease expense

As of December 31, 2024, operating lease liabilities included on the Consolidated Balance Sheet by future maturity were as follows:

As of December 31, 2025, operating lease liabilities by future maturity, included on the Consolidated Balance Sheet were as follows:

(In thousands)

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Note 8 – Goodwill

The changes in the carrying amount of goodwill for the year ended December 31, 2024 are as follows:

The changes in the carrying amount of goodwill for the year ended December 31, 2025 and December 31, 2024 are as follows:

(In thousands)

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As of December 31, 2024

The Company’s annual impairment test date is October 1, 2024.

Foreign currency translation adjustments

As of December 31, 2025

The Company’s annual impairment test date was October 1, 2025.

Based on our analysis, management concluded that there was no impairment of goodwill as of that date.

Between the annual impairment date of October 1, 2024 and year-end December 31, 2024, there were no additional triggering events.

Between the annual impairment date of October 1, 2025 and year-end December 31, 2025, there were no triggering events.

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

During 2023, the Company experienced decreased market capitalization and long-term projections.

Therefore, an interim impairment test over goodwill was performed as of September 30, 2023.

The Company determined the fair value of each reporting unit using a combination of an income approach and a market approach.

As a result of the interim assessment, the Company recorded a goodwill impairment charge of $ 37.9 million as its estimated fair value was less than its book value on that date.

No other goodwill impairment charges were recorded during 2023.

As of December 31, 2024, accumulated goodwill impairment losses in total were $ 330.5 million.

Note 9 – Intangible Assets

The gross amount of accumulated goodwill impairment losses as of December 31, 2025 and 2024 total $ 297.4 million for our Network Solutions reporting unit and $ 37.9 million for our Services & Support reporting unit .

Note 9 – Intangible Assets, net

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

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No impairment losses of intangible assets were recorded during the years ended December 31, 2025, 2024 and 2023.

During the year ended December 31, 2025, the Company acquired $ 38.8 million of developed technology assets with a weighted average amortization period of three years and with no expected residual value.

Amortization expense was $ 62.9 million, $ 63.0 million and $ 82.8 million for the years ended December 31, 2025, 2024 and 2023, respectively, and was included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Consolidated Statements of Loss.

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December 31, 2025

Note 10 - Hedging

The Company has certain forward rate agreements to hedge foreign currency exposure of expected future cash flows in foreign currency.

The Company does not hold or issue derivative instruments for trading or other speculative purposes.

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.

All changes in the fair value of derivative instruments are recognized as other income, net in the Consolidated Statements of Loss.

The derivative instruments are not subject to master netting agreements and are not offset in the Consolidated Balance Sheets.

We are exposed to risk from credit-related losses resulting from nonperformance by counterparties to our financial instruments.

We perform credit evaluations of our counterparties under forward exchange contracts and expect all counterparties to meet their obligations.

We have not experienced credit losses from our counterparties.

As of December 31, 2024, the Company had 39 forward rate contracts outstanding.

Foreign Currency Hedging Agreement

On November 3, 2022, the Company entered into a euro/U.S.

dollar forward contract arrangement (the "Initial Forward") with Wells Fargo Bank, N.A.

(the “Hedge Counterparty”).

Under the Initial Forward, the Company agreed to exchange an aggregate notional amount of € 160.0 million for U.S.

dollars at a daily fixed forward rate ranging from EUR/USD 0.98286 to 1.03290 .

The aggregate amount of € 160.0 million was divided into eight quarterly tranches of € 20.0 million, which commenced in the fourth quarter of 2022.

During the twelve months ended December 31, 2024, the Company settled four € 20.0 million forward contract tranches.

On March 21, 2023, the Company entered into a euro/U.S.

dollar forward contract arrangement (the “Forward”) with the Hedge Counterparty.

dollars at an average rate of EUR/USD 1.085 .

During the twelve months ended December 31, 2024, the Company settled four $ 20.0 million forward contract tranches.

As of December 31, 2024, both the Initial Forward and Forward have fully matured and are no longer outstanding.

The fair values of the Company's derivative instruments recorded in the Consolidated Balance Sheet as of December 31, 2024 were as follows:

(In thousands)

Balance Sheet Location

December 31, 2024

December 31, 2023

Derivatives Not Designated as Hedging Instruments (Level 2):

Foreign exchange contracts – derivative assets

Other receivables

Foreign exchange contracts – derivative liabilities

Accounts payable

Total derivatives

The change in the fair values of the Company's derivative instruments recorded in the Consolidated Statements of Loss during the years ended December 31, 2024, 2023 and 2022 were as follows:

(In thousands)

Income Statement

Derivatives Not Designated as Hedging Instruments:

Foreign exchange contracts

Other income, net

Note 11 – Credit Agreements

The carrying amounts of the Company's revolving credit agreements in its Consolidated Balance Sheets were as follows:

Note 10 – Credit Agreement

The carrying amounts of the Company's revolving credit agreement in its Consolidated Balance Sheets were as follows:

As of December 31,

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Total non-current revolving credit facility

As of December 31, 2024 and 2023, the estimated fair value of our revolving credit agreements, approximates the carrying value.

As of December 31, 2024 and 2023, the weighted average interest rate on our revolving credit agreements was 8.64 % and 7.45 %, respectively.

Wells Fargo Credit Agreement

As of December 31, 2025 and 2024, the estimated fair value of our revolving credit agreement, approximates the carrying value.

As of December 31, 2025 and 2024, the weighted average interest rate on our revolving credit agreement was 8.98 % and 8.64 %, respectively.

Revolving Credit Agreement

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

Borrower"), and the Company entered into a credit agreement with a syndicate of banks, including Wells Fargo Bank, National Association, as administrative agent (“Administrative Agent”), and the other lenders named therein (as amended from time to time, the “Credit Agreement”).

Initially, the Credit Agreement allowed for revolving credit borrowings of up to $ 400.0 million in aggregate principal amount ($ 100.0 million of which is, subject to the covenants described below, available to Adtran Networks as borrower pursuant to the Subline (as defined and further described below).

As of December 31, 2024, the aggregate principal amount was reduced to $ 374.0 million ($ 74.0 million of which is available to Adtran Networks as borrower pursuant to the Subline) due to a $ 26.0 million reduction on the Subline.

On August 9, 2023, ("First Amendment Effective Date") the Company and ADTRAN, Inc.

entered into a First Amendment to Credit Agreement (“First Amendment”).

The First Amendment, among other things, increased the available funding from $ 100.0 million to $ 400.0 million.

In addition, a new $ 50.0 million delayed draw term loan facility (“DDTL”) was introduced, which (subject to certain conditions) was available for borrowing in the event that at least sixty percent ( 60.0 %) of the outstanding shares of Adtran Networks that were not owned by the Company and its subsidiaries as of the First Amendment Effective Date was tendered (such event, a “Springing Covenant Event”).

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

Although the ability to borrow under the DDTL expired on August 9, 2024, the Springing Covenant Event and Springing Covenant Period remain in effect.

Net cash proceeds from any incurrence of convertible indebtedness must be used to repurchase minority shares of Adtran Networks or repay revolver borrowings under the Credit Agreement.

On January 16, 2024 ("Second Amendment Effective Date"), the Company and ADTRAN, Inc.

entered into a Second Amendment to Credit Agreement and First Amendment to Collateral Agreement ("Second Amendment").

The Covenant Relief Period ended on November 7, 2024.

On March 12, 2024, the Company and ADTRAN, Inc.

entered into a Third Amendment to Credit Agreement ("Third Amendment").

On June 4, 2024, the Company, ADTRAN, Inc., and Adtran Networks entered into a Fourth Amendment to Credit Agreement ("Fourth Amendment").

The Fourth Amendment, among other things, created a new sublimit under the existing $ 400.0 million revolving commitments, in an aggregate amount of $ 100.0 million (“Subline”), which Subline is available for borrowings by Adtran Networks.

The German Commitment Reduction Threshold is initially $ 75.0 million and may be lowered from time to time pursuant to the terms of the Fourth Amendment.

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

and $ 48.6 million were borrowed under the Subline by Adtran Networks.

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

Borrower may request extensions subject to custo mary conditions.

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

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

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

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

the Original Credit Agreement as amended by Amendment No.

1, Amendment No.

Amendment No.

3, Amendment No.

4 and Amendment No.

5, the “Existing Credit Agreement”).

On September 16, 2025, the U.S.

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

the Existing Credit Agreement as amended by Amendment No.

6, the “Amended Credit Agre ement”).

Amendment No.

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

As of December 31, 2025, the Amended Credit Agreement provided for a secured revolving credit facility of up to $ 350.0 million of borrowings, $ 50.0 million of which is solely available to the German Borrower.

As of December 31, 2025, the Company’s borrowings under the revolving line of credit were $ 25.0 million.

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

Borrower may request extensions subject to customary conditions.

In addition, the U.S.

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

As of 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.

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

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

As of December 31, 2024, the Company was in compliance with all covenants.

Revolving Line of Credit Interest Rate

dollar borrowings under the revolving line of credit (other than swingline loans, which bear interest at the Base Rate (as defined below plus the applicable margin) bear interest, at the Company’s option, at a rate per annum equal to either (A) the Base Rate plus an applicable margin ranging from 0.65 % to 1.65 % per annum based on the Company’s Consolidated Total Net Leverage Ratio (or, during the Covenant Relief Period, an applicable margin of 2.15 % per annum), or (B) Adjusted Term SOFR (as defined below) plus an applicable margin ranging from 1.65 % to 2.65 % per annum based on the Company’s Consolidated Total Net Leverage Ratio (or, during the Covenant Relief Period, an applicable margin of 3.15 % per annum).

“Base Rate” means the highest of (a) the federal funds rate (i.e., for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the business day next succeeding such day) plus ½ of 1.0 %, (b) the prime commercial lending rate of the Administrative Agent, as established from time to time at its principal U.S.

The Base Rate is subject to a floor of 1.00 % per annum.

“Adjusted Term SOFR” means Term SOFR for the applicable interest period plus 0.10 % per annum.

Adjusted Term SOFR is subject to a floor of 0.00 % per annum.

All euro borrowings under the revolving line of credit bear interest at a rate per annum equal to EURIBOR (as defined in the Credit Agreement and subject to a 0.00 % per annum floor) plus an applicable margin ranging from 1.75 % to 2.75 % per annum based on the Company’s Consolidated Total Net Leverage Ratio (or, during the Applicable Margin Increase Period, an applicable margin of 3.25 % per annum).

In addition, if on or prior to December 31, 2024 we have not reduced the aggregate revolving credit commitment to $ 340.0 million or less, the applicable margin for all loans shall be increased by 1.00 % per annum, and if on or prior to June 30, 2025 we have not reduced the aggregate revolving credit commitment to $ 300.0 million or less, the applicable margin for all loans shall be increased by 1.00 % per annum.

In addition to paying interest on outstanding principal under the Credit Agreement, the Company is required to pay a quarterly commitment fee to the lenders under the Credit Agreement in respect of unutilized revolving loan commitments on the average daily unused portion of the revolving credit commitment of each lender, which commitment fee ranges from 0.20 % to 0.25 % per annum based on the Company’s Consolidated Total Net Leverage Ratio (or, during the Covenant Relief Period, is equal to 0.25 % per annum).

The “Applicable Margin Increase Period” means the period commencing on the Second Amendment Effective Date and ending on the first date when each of the following conditions have been met:

(a) the Covenant Relief Period has ended, (b) since the Second Amendment Effective Date, the borrowers have repaid the revolving credit outstanding borrowings by a principal amount of at least $ 75.0 million, (c) the borrowers have reduced the aggregate revolving credit commitment to an amount no greater than $ 300.0 million, and (d) the borrowers are in compliance with all financial covenants based on the financial statements for the most recently completed reference period.

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.

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

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

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

The Company had no borrowings under the Subline as of December 31, 2025.

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

Borrower (and not to the German Borrower).

borrowings under the Amended Credit Agreement bear interest at a rate tied to the Base Rate (as defined in the Amended Credit Agreement) or SOFR, at the Company’s option, and all E.U.

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

Covenants Under the Credit Agreement

• As of the last day of any fiscal quarter, commencing with the fiscal quarter ended December 31, 2023, the Consolidated Total Net Leverage Ratio may not exceed 5.00 x.

• As of the last day of any fiscal quarter, commencing with the fiscal quarter ended December 31, 2023, the Consolidated Senior Secured Net Leverage Ratio may not exceed:

• In the fiscal quarter in which a Springing Covenant Event occurs and the three consecutive quarterly test periods thereafter, (“Springing Covenant Period”), the following covenant levels:

• First fiscal quarter ending after a Springing Covenant Event:

• Second fiscal quarter ending after a Springing Covenant Event:

• Third and fourth fiscal quarters ending after a Springing Covenant Event:

• If the Company or any of its subsidiaries incurs certain unsecured indebtedness in excess of $ 50.0 million in connection with a transaction that is a Springing Covenant Event or during a Springing Covenant Period, the Consolidated Senor Secured Net Leverage Ratio covenant will step down to 3.50 x at the time of such incurrence.

• If a Springing Covenant Period is not in effect, the Consolidated Senior Secured Net Leverage Ratio may not exceed 3.25 x.

• As of the last day of any fiscal quarter, commencing with the fiscal quarter ended December 31, 2023, the Consolidated Fixed Charge Coverage Ratio may not be less than 1.25 x.

• During a Springing Covenant Period, as of the last day of any fiscal quarter (i) cash and cash equivalents of the Credit Parties must be at least $ 50.0 million and (ii) cash and cash equivalents of the Company and its subsidiaries must be at least $ 70.0 million.

All obligations under the Credit Agreement (including under the Subline) are guaranteed by ADTRAN, Inc., and certain subsidiaries of ADTRAN, Inc.

(“Full Facility Guarantors”).

To secure such guarantees, ADTRAN, Inc.

and the Full Facility Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets, and ADTRAN, Inc.

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

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

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

The negative covenants are subject to various exceptions and carveouts.

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

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

The Company also agreed to maintain a Consolidated Total Net Leverage Ratio of 5.00 x, a Consolidated Senior Secured Net Leverage Ratio of 3.25 x ( 4.0 x to 3.5 x during a “Springing Covenant Period,” as defined below) and a Consolidated Fixed Charge Coverage Ratio of 1.25 x (as such ratios are defined in the Amended Credit Agreement).

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

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

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

As of December 31, 2025, the Company was in compliance with all covenants under the Credit Agreement.

All obligations under the Amended Credit Agreement (including under the Subline) are guaranteed by the U.S.

Borrower and certain subsidiaries of the U.S.

Borrower (“Full Facility Guarantors”).

To secure such guarantees, the U.S.

Borrower and the Full Facility Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets, and the U.S.

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

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

Note 11 – Convertible Senior Notes and Capped Calls

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

(In thousands)

December 31, 2025

Convertible senior notes

unamortized debt issuance costs

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

The estimated fair value of the 2030 Notes was $ 217.5 million as of December 31, 2025.

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

The effective interest rate of the 2030 Notes over their expected life is 4.7 %.

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

For the Year Ended

(In thousands)

December 31, 2025

Contractual interest

Amortization of issuance costs

Total interest expense

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

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

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

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

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

In addition, if certain corporate events that constitute a “make-whole fundamental

change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The premiums paid for the Capped Calls were included as a net reduction to additional paid-in capital within stockholders’ equity during the year ended December 31, 2025.

Note 12 – Income Taxes

The components of income tax expense (benefit) for the years ended December 31, 2024, 2023 and 2022 are as follows:

The components of income tax expense for the years ended December 31, 2025, 2024 and 2023 are as follows:

(In thousands)

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Total Deferred

Total Income Tax Expense (Benefit)

The effective income tax rate differs from the federal statutory rate due to the following:

Total Income Tax Expense

As further described in Note 1, Summary of Significant Accounting Policies, the Company has elected to prospectively adopt the guidance in ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Taxes Disclosures, or ASU 2023-09.

The following table presents the income taxes paid disaggregated by domestic, state and international taxes, with further disaggregation by jurisdiction in accordance with the guidance under ASU 2023-09.

(In thousands)

International

United Kingdom

Total cash paid for income taxes, (net of refunds)

During the years ended, December 31, 2024 and 2023, the Company paid cash for income taxes, net of refunds, of $ 6.7 million and $ 18.6 million, respectively.

The following table is a reconciliation of the U.S.

federal statutory rate of 21 % to the Company's effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09.

United States statutory tax rate

State and local income taxes, net of federal income tax effect (1)

Foreign tax effects:

Change in valuation allowance

Foreign rate differential

Adjustment of NOL deferred tax assets

Adjustment of deferred tax liabilities

Tax rate change

Withholding tax

United Kingdom

Audit assessment

Other foreign jurisdictions

Effect of cross-border tax laws:

Gross GILTI inclusion

Subpart F income

Changes in valuation allowances

Nontaxable or nondeductible items:

Section 162(m) limitation

Other adjustments:

Transfer pricing

Effective Tax Rate

(1) State taxes in Texas and Colorado made up the majority (greater than 50%) of the tax effect in this category.

The following table is a reconciliation of the U.S.

federal statutory tax rate of 21 % to the Company's effective rate for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09.

Tax provision computed at the federal statutory rate

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Change in valuation allowance

Non-deductible transaction costs

Foreign tax credits

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Effective Tax Rate

Loss before expense (benefit) for income taxes for the years ended December 31, 2024, 2023 and 2022 is as follows:

Loss before income taxes for the years ended December 31, 2025, 2024 and 2023 is as follows:

(In thousands)

International entities

Loss before expense (benefit) for income taxes for international entities reflects loss based on statutory transfer pricing agreements.

This amount does not correlate to consolidated international revenue, which occurs from our U.S.

Loss before income taxes for international entities reflects loss based on statutory transfer pricing agreements.

This amount does not correlate to consolidated international revenue, which occurs in our U.S.

Deferred income taxes on t he Consolidated Balance Sheets result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.

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Net Deferred Tax Liabilities

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law.

Subsequently, the Internal Revenue Service (“IRS”) released its final GILTI regulations on July 9, 2020.

The passage of the CARES Act and subsequent issuance of the GILTI final regulations together resulted in the Company’s recognition of a tax benefit in the amount of $ 10.8 million during 2020, $ 7.9 million of which related to the utilization of deferred tax assets which had previously been offset with a valuation allowance and $ 2.9 million primarily related to the tax rate differential on carrying back losses from 2018 and 2019 tax years to prior years in which the U.S.

Corporate tax rate was 35 % versus the current 21 % federal tax rate.

On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15 %.

The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax.

Many non-U.S.

tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 (including the European Union Member States) with the adoption of additional components in later years or announced their plans to enact legislation in future years.

The Pillar Two Model Rules did not have a material impact on the Company’s financial statements for the 2024 tax year.

We are still closely monitoring developments and evaluating the potential impact on future periods.

On August 16, 2022, the Inflation Reduction Act of 2022 (“Inflation Reduction Act”) was signed into law, with tax provisions primarily focused on implementing a 15 % minimum tax on global adjusted financial statement income (“AFSI”) for corporations with average AFSI exceeding $ 1 billion over a three-year period, a 1 % excise tax on share repurchases and various climate and clean energy tax incentives.

The Inflation Reduction Act did not have a material impact on the Company’s financial statements for the 2024 tax year.

As of December 31, 2025 and 2024, non-current deferred taxes reflected deferred taxes on net unrealized gains and losses on available-for-sale investments and deferred taxes on unrealized losses in our pension plan.

The net change in non-current deferred taxes associated with these items, which resulted in a deferred tax benefit of $ 0.2 million and $ 0.3 million in 2024 and 2023, respectively, was recorded as an adjustment to other comprehensive (loss) income, presented in the Consolidated Statements of Comprehensive (Loss) Income.

The net change in non-current deferred taxes associated with these items, which resulted in a deferred tax benefit of $ 0.3 million and $ 0.2 million in 2025 and 2024, respectively, was recorded as an adjustment to other comprehensive income (loss), presented in the Consolidated Statements of Comprehensive Income (Loss).

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

Due to the decrease in revenue and profitability for 2023 and 2024 and all other positive and negative objective evidence considered as part of our analysis, our ability to consider other subjective evidence such as projections for future growth continues to be limited when evaluating whether our deferred tax assets will be realized.

Due to the decrease in revenue and profitability in 2023 and 2024 and all other positive and negative objective evidence considered as part of our analysis, our ability to consider other subjective evidence such as projections for future growth continues to be limited when evaluating whether our deferred tax assets will be realized.

As such, the Company maintains its conclusion from 2024 that it is not more likely than not that our domestic deferred tax assets will be realized and a valuation allowance against certain domestic deferred tax assets remains through 2025.

Additional valuation allowance was recorded against certain deferred tax assets on our foreign entities as not more likely than not realizable in the fourth quarter of 2024.

Additional valuation allowance was recorded against certain deferred tax assets on our foreign entities as not more likely than not realizable in the fourth quarter of 2024 and remains through 2025.

The amount of the deferred tax assets considered realizable, however, could be adjusted in future periods in the event sufficient evidence is present to support a conclusion that it is more likely than not that all or a portion of our deferred tax assets will be realized.

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As of December 31, 2025 and 2024, the deferred tax assets for foreign and domestic loss carry-forwards, research and development tax credits, unamortized research and development costs and state credit carry-forwards totaled $ 141.2 million and $ 142.5 million, respectively.

As of December 31, 2024, $ 27.7 million of these deferred tax assets will expire at various times between 2025 and 2045 .

As of December 31, 2025, $ 30.1 million of these deferred tax assets will expire at various times betwee n 2026 and 2041 .

The remaining deferred tax assets will either amortize through 2040 or carryforward indefinitely.

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As part of our restructuring plan, the Company’s assertion on being indefinitely reinvested changed in a particular jurisdiction in a previous year.

The Company has a withholding tax liability of $ 0.4 million as of December 31, 2024 and 2023.

The Company has a hypothetical withholding tax liability of $ 0.4 million as of December 31, 2025 and 2024.

The Company maintains its assertion in all other jurisdictions that it is indefinitely reinvesting its funds held in foreign jurisdictions outside of the U.S., except to the extent any of these funds can be repatriated without withholding tax.

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We classify interest and penalties recognized on the liability for unrecognized tax benefits as income tax expense.

As of December 31, 2023 and 2022, the balances of accrued interest and penalties $ 0.1 million and $ 0.1 million, respectively.

There was no accrued interest and penalties as of December 31, 2024.

There were no accrued interest and penalties as of December 31, 2025 and 2024, and $ 0.1 million in accrued interest and penalties as of December 31, 2023.

We do not anticipate a single tax position generating a significant increase or decrease in our liability for unrecognized tax benefits within 12 months of this reporting date.

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for federal and various state jurisdictions and several foreign jurisdictions.

We are not currently under audit by the Internal Revenue Service.

The Company's 2023 tax return is currently under audit by the Internal Revenue Service.

Generally, we are not subject to changes in income taxes by any taxing jurisdiction for the years prior to 2019.

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Pension Benefit Plan

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

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

Pension benefit plan obligations are based on various assumptions used by our actuaries in calculating these amounts.

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The plan is financed directly by the Company on a pay as you go basis.

• In Poland, the post-employment benefit plan is required due to statutory provisions.

The plan is financed directly by the Company on a pay as you go basis.

The pension benefit plan obligations and funded status as of December 31, 2025 and 2024, were as follows:

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Interest cost

Actuarial (gain) loss - experience

Actuarial loss - assumptions

Actuarial gain - experience

Actuarial (gain) loss - assumptions

Benefit payments

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The accumulated benefit obligation was $ 67.9 million and $ 62.8 million as of December 31, 2025 and 2024, respectively.

The decrease in the accumulated benefit obligation, projected benefit obligation and the actuarial loss was primarily attributable to benefit payments to retirees and the effect of exchange rates during the year.

The increase in the accumulated benefit obligation, projected benefit obligation and the actuarial (gain)/loss was primarily attributable to the effect of exchange rates during the year partially offset by benefit payments to retirees.

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

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comprehensive (income) loss

The amounts recognized in accumulated other comprehensive loss as of December 31, 2024 and 2023 were as follows:

The amounts recognized in accumulated other comprehensive income as of December 31, 2025 and 2024 were as follows:

(In thousands)

Net actuarial loss

Net actuarial gain (loss)

The defined benefit pension plans are accounted for on an actuarial basis, which requires the use of various assumptions, including an expected rate of return on plan assets and a discount rate.

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Available-for-sale securities

Insurance contracts

Real estate funds

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We maintain the Adtran, Inc.

401(k) Retirement Plan and the Adtran Networks SE 401(k) Retirement Plan (the “Savings Plans”) for the benefit of eligible employees.

401(k) Retirement plan and the Adtran Networks 401(k) Retirement Plan (the “Savings Plans”) for the benefit of eligible employees.

The Savings Plans are intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), and is intended to be a “safe harbor” 401(k) plan under Code Section 401(k)(12).

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In calculating our matching contributions, compensation up to the statutory maximum under the Code is used ($ 350,000 for 2025).

Em ployer contribution expense and plan administration costs for both Savings Plan amounted to approximately $ 3.5 million, $ 4.2 million and $ 4.1 million in 2024, 2023 and 2022, respectively.

Em ployer contribution expense and plan administration costs for both Savings Plans amounted to approximately $ 3.6 million, $ 3.5 million and $ 4.2 million in 2025, 2024 and 2023, respectively.

In June 2024, the Company identified that within our Adtran, Inc.

401(k) plan for the year ended December 31, 2023, that deferrals and matching contributions should have been applied to vested equity award amounts in accordance with the plan documents.

As such, we filed a voluntary correction program (“VCP”) application with the IRS and the Company is still in negotiations with the IRS regarding the appropriate corrective actions for this failure.

Nonetheless, based on the current facts and circumstances surrounding the VCP negotiations, it appears likely that any corrective action to be approved by the IRS are reasonably estimated to total $ 1.4 million and have been accrued during the period ended December 31, 2025.

Deferred Compensation Plans

We maintain two deferred compensation programs for certain executive management employees.

The ADTRAN, Inc.

Deferred Compensation Program for Employees is offered as a supplement to our tax-qualified 401(k) plan and is available to certain executive management employees who have been designated by our Board of Directors.

This deferred compensation plan allows participants to defer all or a portion of certain specified bonuses and up to 25 % of remaining cash compensation and permits us to make matching contributions on a discretionary basis without the limitations that apply to the 401(k) plan.

To date, we have not made any matching contributions under this plan.

We also maintain the ADTRAN, Inc.

Equity Deferral Program for Employees.

Under this plan, participants may elect to defer all or a portion of their vested PSUs and RSUs to the plan.

Such deferrals shall continue to be held and deemed to be invested in shares of Adtran stock unless and until the amounts are distributed or such deferrals are moved to another deemed investment pursuant to an election made by the participant.

We have set aside the plan assets for all plans in a rabbi trust (the “Trust”) and all contributions are credited to bookkeeping accounts for the participants.

We have maintained two deferred compensation programs for certain executive management employees.

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

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

The payment of all benefits to each Plan’s participants and beneficiaries will be in the form of lump sum or installment distributions which are expected to occur prior to December 31, 2026, but can occur no earlier than twelve (12) months and no later than twenty-four (24) months following the Termination Date (the “Liquidation Date”).

Distributions of amounts that are set to occur prior to the Liquidation Date will be made as scheduled under the terms of each Plan.

Until the Liquidation Date, each of the Plans will continue to operate in the ordinary course, except that no new deferrals will be credited to the participants for compensation earned after the Termination Date.

The Deferred Compensation Plan was offered as a supplement to our tax-qualified 401(k) plan and was available to certain executive management employees who have been designated by our Board of Directors.

The Equity Deferral Program allowed participants to elect to defer all or a portion of their vested PSUs and RSUs to the plan.

Such deferrals continue to be held and deemed to be invested in shares of Adtran stock unless and until the amounts are distributed or such deferrals are moved to another deemed investment pursuant to an election made by the participant.

The Company has set aside the plan assets for all plans in a rabbi trust (the “Trust”) and all contributions are credited to bookkeeping accounts for the participants.

The Trust assets are subject to the claims of our creditors in the event of bankruptcy or insolvency.

The assets of the Trust are deemed to be invested in pre-approved mutual funds as directed by each participant and the participant’s bookkeeping account is credited with the earnings and losses attributable to those investments.

Benefits are scheduled to be distributed six months after termination of employment in a single lump sum payment or annual installments paid over a three or ten-year term based on the participant’s election .

Distributions will be made on a pro-rata basis from each of the hypothetical investments of the participant’s account in cash.

Any whole shares of ADTRAN, Inc.

common stock that are distributed will be distributed in-kind.

Assets of the Trust are deemed invested in mutual funds that cover an investment spectrum ranging from equities to money market instruments.

These mutual funds are publicly quoted and reported at fair value.

The fair value of the assets held by the Trust and the amounts payable to the plan participants as of December 31, 2025 and 2024 were as follows:

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Fair Value of Plan Assets

Short term investments - deferred compensation plans

Long-term investments

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Deferred compensation liability

Non-current deferred compensation liability

Total Amounts Payable to Plan Participants

Because the plans have been terminated and all assets will be liquidated or distributed to the plan participants within one year, the plan assets and liabilities have been reclassified to short-term as of December 31, 2025.

The Trust held $ 2.3 million of common stock in the Company as of December 31, 2025 and 2024.

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Balance as of December 31, 2024

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive (loss) income

Net current period other comprehensive income

Balance as of December 31, 2025

(1) With the adoption of ASU 2018-02 on January 1, 2019, stranded tax effects related to the Tax Cuts and Jobs Act of 2017- were reclassified to retained earnings.

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

Net realized gain (loss) on sales of securities

Net realized (loss) gain on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial (loss) gain

Defined benefit plan adjustments – actuarial gain (loss)

Other (expense) income

Total reclassifications for the period, before tax

Total reclassifications for the period, net of tax

(1) Included in the computation of net periodic pension cost.

See Note 13 for additional information.

The following tables present the tax effects related to the change in each component of other comprehensive income (loss) for the years ended December 31, 2025, 2024 and 2023:

(In thousands)

Unrealized (losses) gains on available-for-sale securities

Unrealized gains on available-for-sale securities

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

Defined benefit plan adjustments

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

Foreign currency translation adjustment

Total Other Comprehensive Income

(In thousands)

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

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

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(In thousands)

Unrealized gains (losses) on available-for-sale securities

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

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

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Total Other Comprehensive Income

(In thousands)

Unrealized (losses) gains on available-for-sale securities

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

Defined benefit plan adjustments

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

Foreign currency translation adjustment

Total Other Comprehensive Income (Loss)

Note 15 – Redeemable Non-Controlling Interest

As of December 31, 2024 and 2023, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 33.0 % and 34.7 %, respectively.

As of Decembe r 31, 2025 and 2024, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 29.2 % and 33.0 %, respectively.

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

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Balance at beginning of period

Reclassification of non-controlling interests

Redemption of redeemable non-controlling interests

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Annual recurring compensation earned

Adtran Networks stock option exercises

Balance at end of period

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

We have revised our previously issued Consolidated Financial Statements for the year ended December 31, 2023.

See Note 1 for additional information.

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

For the years ended December 31, 2024 and 2023, we accrued $ 9.8 million and $ 10.1 million, respectively, representing the portion of the annual recurring cash compensation cash to the non-controlling shareholders du ring such periods.

For the years ended December 31, 2025 and 2024, we a ccrued $ 9.3 million and $ 9.8 million, respectively, representing the portion of the annual recurring cash compensation cash to the non-controlling shar eholders during such periods.

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

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

For the year ended December 31, 2023, w e paid $ 10.1 mi llion representing the portion of the annual recurring cash compensation to the non-controlling shareholders during such period.

See Note 1 for additional information on RNCI and the Annual Recurring Compensation .

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

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

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

There is no inter-segment revenue.

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Services & Support

For the years ended December 31, 2024, 2023 and 2022, $ 6.1 million, $ 6.5 million and $ 3.2 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment.

For the years ended December 31, 2024, 2023 and 2022, $ 0.1 million, $ 20 thousand and $ 10 thousand, respectively, of depreciation expense was included in gross profit for our Services & Support segment.

For the yea rs ended December 31, 2025, 2024 and 2023, $ 5.7 million, $ 6.1 million and $ 6.5 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment.

For the years ended December 31, 2025, 2024 and 2023, $ 0.1 million, $ 0.1 mill ion and $ 20 thousand, respectively, of depreciation expense was included in gross profit for our Services & Support segment.

Revenue by Category

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

Prior to the Business Combination with Adtran Networks on July 15, 2022, ADTRAN, Inc.

reported revenue across the following three categories:

(1) Access & Aggregation, (2) Subscriber Solutions & Experience and (3) Traditional & Other Products.

Following the Business Combination with Adtran Networks, the Company has recast these revenues such that ADTRAN, Inc’s former Access & Aggregation revenue is combined with a portion of the applicable Adtran Networks solutions to create Access & Aggregation Solutions, Adtran’s former Subscriber Solutions & Experience revenue is combined with a portion of the applicable Adtran Networks solutions to create Subscriber Solutions, and the revenue from Traditional & Other products is now included in the applicable Access & Aggregation Solutions or Subscriber Solutions category.

Optical Networking Solutions was added as a new revenue category to represent a meaningful portion of Adtran Networks' portfolio.

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

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Services & Support

Optical Networking Solutions

Subscriber Solutions

Access & Aggregation Solutions

Optical Networking Solutions

(In thousands)

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Services & Support

Optical Networking Solutions

Subscriber Solutions

Access & Aggregation Solutions

Optical Networking Solutions

(In thousands)

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Services & Support

Optical Networking Solutions

Subscriber Solutions

Access & Aggregation Solutions

Optical Networking Solutions

Additional Information

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Customers comprising more than 10% of revenue can change from year to year.

The Company had one customer comprising more than 10% of revenue in 2024 at 12.1 % and was included in both our Network Solutions and Services & Support segments.

The Company h ad one cust omer comprising more than 10% of revenue in 2025 , 2024 and 2023, respectively, at 14.2 %, 12.1 % and 10.4 % and was included in both our Network Solutions and Services & Support segments.

This customer accounted for $ 153.7 million, $ 111.8 million and $ 126.0 million in revenues for the years ended December 31, 2025, 2024 and 2023, respectively.

Single customers comprising more than 10% of revenue in 2023 included one customer at 10.4 % and was included in both our Network Solutions and Services & Support segments.

Single customers comprising more than 10% of revenue in 2022 included one customer at 18 % and was included in both our Network Solutions and Services & Support segments.

Other than those with more than 10% of revenue disclosed above, our next five largest customers can change, and have historically changed, from year-to-year.

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and $ 75.1 million held outside the U.S.

As of December 31, 2023, property, plant and equipm ent, net totaled $ 113.6 million, which included

$ 55.1 million held in the U.S.

As of December 31, 2024, property, plant and equipm ent, net totaled $ 106.5 million, which included $ 46.3 million held in the U.S.

and $ 60.2 million held outside the U.S.

Property, plant and equipment, net is reported on a Company-wide, functional basis only.

Note 17 – Liability for Warranty Returns

The liability for warranty obligations totaled $ 4.5 million and $ 6.4 million as of December 31, 2024 and 2023, respectively.

These liabilities are included in accrued expenses and other liabilities and other non-current liabilities in the accompanying Consolidated Balance Sheets.

A summary of warranty expense and write-off activity for the years ended December 31, 2024, 2023 and 2022 is as follows:

Year Ended December 31,

(In thousands)

Balance at beginning of period

Adtran Networks acquisition

Amounts charged to cost and expenses

Foreign currency translation adjustments

Balance at end of period

Note 17 – Commitments and Contingencies

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

As disclosed in Amendment No.

1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on May 20, 2025, we identified errors in our previously issued financial statements related to the historical accounting for certain inventory and cost of goods sold transactions (“Adjustment”).

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

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

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

The Company has taken certain remedial actions to address the material weaknesses in its internal controls associated with these findings.

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

The Company is cooperating in response to the SEC’s inquiry and cannot predict the timing or outcome of the inquiry.

DPLTA Appraisal Proceedings

In addition to such Legal Matters, the Company is a party to appraisal proceedings relating to the DPLTA.

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

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

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

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

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

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

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DPLTA Exit and Recurring Compensation Costs and the Absorption of Adtran Network's Annual Net Loss

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

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Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 303.9 million or approximately $ 357.0 million, based on an exchange rate as of December 31, 2025 and reflecting interest accrued through December 31, 2025 during the pendency of the appraisal proceedings discussed below.

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

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

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

Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 8.9 million (or $ 9.3 million based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.

The foregoing amounts do n ot reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in Germany.

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

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

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

Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 7.9 million (or $ 9.3 million based on the exchange rate as of December 31, 2025) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.

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

With respect to the 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 shareholders meeting is scheduled for June 27, 2025 and, therefore, the Annual Recurring Compensation will be due on July 2, 2025.

During the year ended December 31, 2024 and 2023, we accrued $ 9.8 million and $ 10.1 million, r espectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit.

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

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

For the year ended December 31, 2023, 67 thousand shares, respectively, of Adtran Networks shares were tendered to the Company.

This resulted in Exit Compensation payments of approximately € 1.2 million, respectively, or approximately $ 1.3 million, based on an exchange rate as of December 31, 2023, being paid to Adtran Networks shareholders.

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

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

During the years ended December 31, 2025 and 2024, we accrued $ 9.3 million and $ 9.8 million, respectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit.

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

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

For the year ended December 31, 2024, 0.8 million shares of Adtran Networks shares were tendered to the Company.

This resulted in Exit Compensation payments of € 15.7 million or $ 17.4 million, based on an exchange rate as of December 31, 2024, being paid to Adtran Networks shareholders.

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

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.

Performance Bonds

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

Certain contracts, customers and jurisdictions in which the Company operates require us to provide various guarantees of performance such as bid bonds, performance bonds and customs bonds.

As of December 31, 2025 and December 31, 2024, the Company had commitments related to these bonds totaling $ 22.4 million and $ 15.7 million, respectively, which expire at various dates through April 2029 .

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

In ge neral the Company would only be liable for the amount of these guarantees in the event of default under each contract, the probability of which the Company believes is remote.

Purchase Obligations

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Loss per share attributable to ADTRAN Holdings, Inc.

For each of the years ended December 31, 2024, 2023 and 2022, less than 0.8 million, 0.5 million and 0.1 million shares of unvested or unearned, as applicable, PSUs, RSUs and restricted stock were excluded from the calculation of diluted loss per share due to their anti-dilutive effect.

For the years ended December 31, 2024, 2023 and 2022, 3.4 million, 1.8 million and 0.2 million stock options, respectively, were outstanding but were not included in the computation of diluted loss per share due to their exercise prices being greater than the average market price of the common shares during the quarter, making them anti-dilutive u nder t he treasury stock method.

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

(In thousands)

Convertible senior notes

Stock options

PSUs, RSUs and restricted stock

Note 19 – Restructuring

During the fourth quarter of 2022, the Company initiated a restructuring program designed to optimize the assets, business processes, and information technology systems of the Company in relation to the Business Combination with Adtran Networks.

The restructuring program included expenses specifically associated with achieving run-rate synergies as well as Business Efficiency Program expenses described below.

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 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 occurred 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, s ee Note 1 and Note 6 of this report for additional information .

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

During the years ended December 31, 2024 and 2023, we recognized $ 44.7 million and $ 25.1 of costs related to the Business Efficiency Program.

Efficiency Program, of which, $ 4.1 million relates to inventory write-downs and $ 4.5 million relates to other charges, and are included in cost of revenue in the Consolidated Statements of Loss.

For the years ended December 31, 2023 and 2022, we recognized $ 21.5 million and $ 1.6 million of restructuring costs relating to the Business Combination under the multi-year integration program and synergy realization, respectively, that are included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Consolidated Statement of Loss.

On November 6, 2023, due to the uncertainty around the then-current macroeconomic environment and its impact on customer spending levels, the Company’s management decided to implement a Business Efficiency Program targeting the reduction of ongoing operating expenses and focusing on capital efficiency.

This included certain salary reductions, an early retirement program, a site consolidation plan to include lease impairments, inventory write downs from product discontinuances, and the suspension of the quarterly dividend.

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

During the years ended December 31, 2024 and 2023, we recognized $ 44.7 million and $ 25.1 million, respectively, of costs related to the Business Efficiency Program.

The costs recognized during the year ended December 31, 2024, included total other renegotiated charges and inventory write-down of $ 8.6 million as a result of a strategy shift which included discontinuance of certain items in connection with the Business Efficiency Program, of which, $ 4.1 million relates to inventory write-downs and $ 4.5 million relates to other charges, and are included in cost of revenue in the Consolidated Statements of Loss.

For the year ended December 31, 2023, we recognized $ 21.5 million of restructuring costs relating to the Business Combination under the multi-year integration program and synergy realization, respectively, that are included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Consolidated Statement of Loss.

A reconciliation of the beginning and ending restructuring liability, which is included in accrued wages and benefits and accrued expenses and other liabilities in the Consolidated Balance Sheets as of December 31, 2025 and 2024, is as follows:

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Total restructuring expenses

Note 21 – Current Expected Credit Losses

Under ASC 326 – Financial Instruments – Credit Losses, the Company estimates credit losses for the contractual life of assets that are measured at amortized cost and are within the scope of this guidance, which includes accounts receivable, net investment in sales-type leases, contract assets under the revenue recognition model and outstanding notes receivable.

Where appropriate, the Company pools assets if similar risk characteristics exist.

Additionally, the Company analyzes its available-for-sale debt securities for impairment and records a credit loss allowance as needed.

Assets Measured at Amortized Cost

Accounts Receivable

The Company records accounts receivable in the normal course of business as products are shipped or services are performed and invoiced, but payment has not yet been remitted by the customer.

As of December 31, 2024 and 2023, the Company’s net outstanding accounts receivable balance was $ 178.0 million and $ 216.4 million, respectively.

The Company assessed the need for an allowance for credit losses related to its outstanding accounts receivable using the historical loss-rate method as well as assessing asset-specific risks.

The Company’s historical losses related to accounts receivable have been immaterial as evidenced by its historical allowance and write-offs due to collectability.

The assessment of asset-specific risks included the evaluation of relevant available information, from internal and external sources, relating to current conditions that may affect a customer’s ability to pay, such as the customer’s current financial condition, credit rating by geographic location, as provided by a third party and/or by customer, if needed, and the overall macro-economic conditions in which the customer operates.

The Company pooled assets by geographic location to determine if an allowance should be applied to its accounts receivable balance, assessing the specific country risk rating and overall economics of that particular country.

If elevated risk existed, or customer

specific risk indicated the accounts receivable balance was at risk, the Company further analyzed the need for an allowance related to specific accounts receivable balances.

Additionally, the Company determined that significant changes to customer country risk rating from period-to-period and from the end of the prior year to the end of the current quarter would require further review and analysis by the Company.

Credit losses totaling $ 1.3 million and $ 0.4 million were recorded for the years ended December 31, 2024 and 2023, respectively, related to accounts receivable.

Contract Assets

The Company records contract assets when it has recognized revenue but has not yet billed the customer.

As of December 31, 2024 and 2023, the Company’s outstanding contract asset balance was $ 0.6 million and $ 0.7 million, respectively, which is included in other receivables on the Consolidated Balance Sheets.

The Company assessed the need for an allowance for credit losses related to its outstanding contract assets using the historical loss-rate method as well as asset-specific risks.

The Company’s historical losses related to contract assets receivable have been immaterial as evidenced by historical write-offs due to collectability.

Asset-specific risk included the evaluation of relevant available information, from internal and external sources, relating to current conditions that may affect a customer’s ability to pay once invoiced, such as the customer’s financial condition, credit rating by geographic location as provided by a third party and/or by customer, if needed, and the overall macro-economic conditions in which the customer operates.

The Company pooled assets by geographic location to determine if an allowance should be applied to its contract asset balance, assessing the specific country risk rating and the overall economics of that particular country.

If elevated risk existed, or customer specific risk indicated the contract balance was at risk, the Company further analyzed the need for an allowance related to specific customer balances.

Additionally, the Company determined that significant changes to customer country risk rating from period-to-period and from the end of the prior year to the end of the current quarter would be subject to further review and analysis by the Company.

No allowance for credit losses was recorded for the years ended December 31, 2024 and 2023 related to contract assets.

O ff-Balance Sheet Arrangements

We have exposure to credit losses from off-balance sheet exposures, to provide various guarantees of performance such as bid bonds, performance bonds and customs bonds, where we believe the risk of loss is immaterial to our financial statements as of December 31, 2024 and 2023, respectively.

Otherwise, we do not have off-balance sheet financing arrangements and have not engaged in any related party transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity or the availability of or requirements for capital resources.

See Note 18 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information .

Available-for-Sale Debt Securities

As of December 31, 2024 and 2023 the Company had sold all available-for-sale debt securities.

Note 20 – Subsequent Events

Tariff Update

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.

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

The Company continues to monitor and evaluate these developments and assess their potential impact on the Company’s business, financial condition, and results of operations.

CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2024, management determined that there were deficiencies in Adtran’s internal control over financial reporting that constituted material weaknesses that existed as of December 31, 2024.

Such material weaknesses were as follows:

Management determined the following material weaknesses existed as of December 31, 2025:

• Adtran did not design and maintain effective controls in response to the risks of material misstatement.

Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting.

This material weakness contributed to the following additional material weaknesses:

This material weakness contributed to the following additional material weakness.

• Adtran did not design and maintain effective controls over financial statement preparation, presentation and disclosure commensurate with its financial reporting requirements.

Specifically, Adtran did not design and maintain effective controls over the presentation and disclosure of transactions, including non-controlling interest.

• Adtran did not design and maintain effective controls to address the initial application of complex accounting standards and accounting of non-routine, unusual or complex events and transactions.

Specifically, Adtran did not design and maintain

effective controls to timely analyze and account for (i) non-controlling interest and (ii) the receivable purchase and servicing agreement.

The material weaknesses resulted in the restatements and revisions of immaterial adjustments to our consolidated financial statements for the years ended December 31, 2022, and December 31, 2023, as well as the condensed consolidated financial statements for the quarterly and year-to-date periods ended September 30, 2022, March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, and June 30, 2024.

The material weaknesses also resulted in material adjustments to our consolidated financial statements for the year ended December 31, 2023.

The material weaknesses also resulted in immaterial adjustments to our consolidated financial statements for the years ended December 31, 2023 and December 31, 2024, as well as the condensed consolidated financial statements for the quarterly and year-to-date periods ended March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, June 30, 2024, and September 30, 2024.

The material weaknesses resulted in the restatements and revisions to our consolidated financial statements for the years ended December 31, 2022, 2023, and 2024, as well as the condensed consolidated financial statements for the quarterly and year-to-date periods ended September 30, 2022, March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, June 30, 2024, and September 30, 2024.

The material weaknesses also resulted in material adjustments that were corrected prior to the issuance of the condensed consolidated

financial statements for the quarterly period ended March 31, 2025.

Additionally, these material weaknesses could result in misstatements of Adtran’s accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Because of these material weaknesses, management has concluded that Adtran did not maintain effective internal control over financial reporting as of December 31, 2025.

The effectiveness of Adtran's internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Item 8.

Management’s Remediation Efforts

To remediate the material weaknesses in Adtran’s internal control over financial reporting related to the risks of material misstatement, including financial statement preparation, presentation and disclosure of transactions and the non-controlling interest, Adtran has implemented a remediation plan that involves introducing new or enhanced controls over the review of Adtran's consolidated financial statements, global identification and reassessment of all key process and controls, increased training and awareness of control activities, and increased scrutiny on control performance and documentation standards.

Adtran believes that the foregoing actions will support the improvement of the Company’s internal control over financial reporting, and, through our efforts to identify, design, and implement the necessary control activities, will be effective in remediating such material weaknesses.

To remediate the material weaknesses in Adtran’s internal control over financial reporting relating to accounting of non-routine, unusual or complex events and transactions for non-controlling interest and the receivable purchase and servicing agreement, Adtran has prepared a remediation plan that included designing and implementing new controls over the identification and review of contracts, transactions or arrangements that may result in a financial obligation including the use of an accounting third-party consultant as needed to ensure proper presentation of these items within our financial statements.

These controls have been in place since the third quarter of 2024.

We have implemented the above-referenced controls and are in the process of testing their effectiveness.

We will continue to devote significant time and attention to these remediation efforts.

Adtran continues to evaluate and work to improve our internal control over financial reporting, management may decide to take additional measures to address the material weaknesses or determine to modify the remediation plans described above.

Until the remediation steps set forth above, including the implementation of all necessary control activities that we identify, are fully completed, and there has been time for us to conclude through testing that the control activities are operating effectively, the material weaknesses described above will not be considered remediated.

The effectiveness of Adtran's internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Part II, Item 8 of this report.

Remediation of Previously Identified Material Weaknesses

As previously reported in our 2024 Form 10-K/A, management identified the following material weaknesses in our internal control over financial reporting, which have been remediated as of December 31, 2025:

• Adtran did not design and maintain effective controls relating to communicating accurate information internally and with those charged with governance.

This includes providing information pursuant to objectives, responsibilities and functions of internal control.

• Adtran did not design and maintain effective controls to address the initial application of complex accounting standards and accounting of non-routine, unusual or complex events and transactions.

Specifically, Adtran did not design and maintain effective controls to timely analyze and account for (i) non-controlling interest and (ii) a receivable purchase and servicing agreement.

• Adtran did not design and maintain effective controls over an inventory suspense account.

Specifically, certain inventory activity was not reviewed at a sufficient level of precision to identify the nature and aging of the individual inventory suspense account activity.

Following the identification of the material weaknesses and continuing throughout the year ended December 31, 2025, management executed its remediation plan through the following actions:

• Adtran implemented and enhanced key internal controls and communication policies, training sessions for personnel on internal control expectations, a quarterly sub-certification process, and redesigned controls over the identification and review of contracts, transactions or arrangements that may result in a financial obligation to remediate the material weakness relating to the communication of accurate information internally and with those charged with governance.

• Adtran implemented redesigned controls over the identification and review of contracts, transactions or arrangements that may result in a financial obligation including the use of an accounting or reporting third-party advisor as needed to ensure proper presentation of these items within its consolidated financial statements to remediate the material weaknesses relating to accounting for non-routine, unusual or complex events and transactions for non-controlling interest and the receivable purchase and servicing agreement.

• Adtran redesigned the reconciliation control specific to the inventory suspense account and enhanced its review procedures (including review of aged items and training sessions for personnel on reconciliation procedures) to remediate the material weakness relating to maintaining effective controls over that account.

As a result of the actions taken above, management has determined that the controls were effectively designed and demonstrated effective operation for a sufficient period of time to enable the Company to conclude that these material weaknesses in internal control over financial reporting have been remediated as of December 31, 2025.

Management’s On-Going Remediation Efforts

As previously reported in our 2024 Form 10-K/A, management identified material weaknesses in our internal control over financial reporting, two of which continue to exist as of December 31, 2025, as disclosed above.

Management has made and continues to make progress towards remediating these material weaknesses.

Remediation of the material weaknesses and strengthening our internal control environment is a top priority.

To remediate the material weaknesses in Adtran’s internal control over financial reporting related to the risks of material misstatement and financial statement preparation, presentation and disclosure of transactions, including non-controlling interest, Adtran completed the following activities during the second half of 2025:

• The global identification and reassessment of all key risks, processes and controls.

• Increased training and awareness of control activities, and increased scrutiny of control performance and documentation standards.

• Hired additional resources, enhancing global leadership in the Accounting function, and strengthening the overall technical skill set and capacity.

• Adtran enhanced existing controls over the review of Adtran’s consolidated financial statements, and in the fourth quarter of 2025 completed the implementation of additional financial statement review controls.

Adtran’s management believes that the continued operation of the activities outlined above in subsequent reporting periods will be effective in remediating such material weaknesses.

The material weaknesses cannot be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded that, through testing, these controls are operating effectively.

Changes in Internal Control over Financial Reporting

There were no changes in Adtran’s internal control over financial reporting that occurred during the most recent fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

The fourth quarter remediation activities described above are the only changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTH ER INFORMATION

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

Christoph Glingener , our Chief Technology Officer , adopted a Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K) on December 12, 2025 .

Glingener’s trading arrangement covers the exercise of 148,392 stock options and the sale of the underlying shares of the Company’s common stock, and it is scheduled to terminate on the earlier of (i) December 31, 2026 and (ii) the date that all such options are exercised and the underlying shares are sold.

Other than as disclosed above, during the fiscal quarter ended December 31, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408 of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

10 unchanged sentences

We have adopted the ADTRAN Holdings, Inc.

Insider Trading Policy (the “Insider Trading Policy”), which applies to all directors, officers, employees, independent contractors, and consultants of the Company and its subsidiaries, as well as certain other persons.

Insider Trading Policy (the “Insider Trading Policy”), which governs the purchase, sale and other disposition of our securities by our directors, officers, managers, employees, independent contractors, and consultants, and by the Company.

The Insider Trading Policy is designed to promote compliance with U.S.

6 unchanged sentences

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL O WNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table provides information about our common stock that may be issued under all of our existing equity compensation plans as of December 31, 2024, , which include the 2006 Employee Plan, the 2010 Directors Plan, the 2015 Employee Plan, the 2020 Employee Plan and the 2020 Directors Plan (collectively, the “Prior Plans”), the 2024 Employee Stock Incentive Plan (“2024 Employee Plan”) and the 2024 Directors Stock Plan (“2024 Directors Plan”) (collectively, the “Plans”).

The following table provides information about our common stock that may be issued under all of our existing equity compensation plans as of December 31, 2025, including the 2015 Employee Plan and the 2020 Employee Plan (collectively, the “Prior Plans”), the 2024 Employee Stock Incentive Plan (“2024 Employee Plan”) and the 2024 Directors Stock Plan (“2024 Directors Plan”) (collectively, the “Plans”).

Each of the Plans has been approved by our stockholders.

17 unchanged sentences

Equity compensation plans not approved by stockholders

(1) Excludes 1.0 million of target PSUs and 2.2 million of time-based RSUs outstanding under our 2024 Employee Stock Incentive Plan and 0.1 million shares of time-based restricted stock outstanding under our 2024 Directors Plan.

(1) Excludes 0.4 million of target PSUs and 1.5 million of time-based RSUs outstanding under our 2024 Employee Plan.

The outstanding stock options have a weighted average remaining term of 4.8 years.

3 unchanged sentences

CERTAIN RELATIONSHIPS AND RELAT ED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from the 2025 Proxy Statement to be filed with the SEC pursuant to Regulation 14A.

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from the 2026 Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A.

PRINCIPAL ACCOU NTANT FEES AND SERVICES

The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from the 2025 Proxy Statement to be filed with the SEC pursuant to Regulation 14A.

EXHIBITS AND FINA NCIAL STATEMENT SCHEDULES

4 unchanged sentences

Consolidated Statements of Loss for the years ended December 31, 2025, 2024 and 2023

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2025, 2024 and 2023

Consolidated Statements of Changes in Equity for the years ended December 31, 2025, 2024 and 2023

15 unchanged sentences

Business Combination Agreement, dated August 30, 2021, by and among ADTRAN Holdings, Inc., Acorn HoldCo, Inc., Acorn MergeCo, Inc.

and Adtran Networks SE (incorporated by reference to Exhibit 2.1 to Adtran’s Form 8-K filed August 30, 2021)

and Adtran Networks SE (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed August 30, 2021)

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

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

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

Second Amended and Restated Bylaws of ADTRAN Holdings, Inc.

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

Description of Securities

Description of Securities (incorporated by reference to Exhibit 4.1 to the Company’s Form 10-K filed March 3, 2025)

Indenture, dated as of September 19, 2025, between ADTRAN Holdings, Inc.

Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed September 22, 2025)

Form of certificate representing the 3.75% convertible senior notes due 2030 (included as Exhibit A to Exhibit 4.2, which is incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed September 22, 2025)

Management Contracts and Compensatory Plans:

ADTRAN Holdings, Inc.

2006 Employee Stock Incentive Plan (incorporated by reference to Exhibit 4.1 to Adtran’s Registration Statement on Form S-8 (File No.

333-133927) filed May 9, 2006)

First Amendment to the ADTRAN Holdings, Inc.

2006 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.3(h) to Adtran’s 2007 Form 10-K filed February 28, 2008)

Form of Nonqualified Stock Option Agreement under the 2006 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed June 8, 2006)

Form of Incentive Stock Option Agreement under the 2006 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed June 8, 2006)

2015 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed May 15, 2015)

Summary of Terms of Assumed Options (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 filed July 11, 2022)

ADTRAN Holdings, Inc.

Deferred Compensation Program for Employees, as amended and restated, effective as of July 15, 2022

ADTRAN Holdings, Inc.

Deferred Compensation Program for Directors, as amended and restated, effective as of July 15, 2022

ADTRAN Holdings, Inc.

Equity Deferral Program for Employees, as amended and restated, effective as of July 15, 2022

ADTRAN Holdings, Inc.

Equity Deferral Program for Directors, as amended and restated, effective as of July 15, 2022

Amended and Restated ADTRAN Holdings, Inc.

2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1(t) to the Company's Form 10-K filed March 1, 2023)

Form of Notice Letter with respect to RSU and PSU awards under the ADTRAN Holdings, Inc.

2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.3 (ae) to the Company's Form 10-K filed February 26, 2021)

Form of Stock Option Award Agreement under the ADTRAN, Inc.

2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed December 5, 2023)

Form of Market-Based Performance Stock Unit Agreement under the ADTRAN Holdings, Inc.

2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed May 6, 2021)

Form of Restricted Stock Unit Agreement under the ADTRAN Holdings, Inc.

2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q filed May 6, 2021)

ADTRAN Holdings, Inc.

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

Form of Option Award Agreement under the ADTRAN Holdings, Inc.

2015 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.3(p) to the Company's Form 10-K filed February 25, 2020)

ADTRAN Holdings, Inc.

Deferred Compensation Program for Employees, as amended and restated as of June 1, 2010 (incorporated by reference to Exhibit 10.3(n) to the Company's Form 10-K filed February 24, 2016)

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

Form of Market-Based Performance Stock Unit Agreement under the ADTRAN Holdings, Inc.

2024 Employee Stock Incentive Plan incorporated by reference to Exhibit 10.1(y) to the Company's Form 10-K filed March 3, 2025)

Form of Restricted Stock Unit Agreement under the ADTRAN Holdings, Inc.

2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1(z) to the Company's Form 10-K/A filed May 20, 2025)

Form of Restricted Stock Unit Agreement for CEO under the ADTRAN Holdings, Inc.

2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q filed on August 5, 2025)

Form of Market-Based Performance Stock Unit Agreement for CEO under the ADTRAN Holdings, Inc.

2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed August 5, 2025)

Form of Performance Share Agreement for CEO under the ADTRAN Holdings, Inc.

2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q filed August 5, 2025)

Form of Adtran Sales Incentive Compensation Program – General Terms (participants include James D.

Wilson) (incorporated by reference to Exhibit 10.3(ad) to the Company’s Form 10-K filed February 26, 2021)

Amended and Restated Variable Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed January 26, 2023)

Form of 2025 Variable Incentive Compensation Plan Award Letter (incorporated by reference to Exhibit 10.1(u) to the Company's Form 10-K filed March 3, 2025)

Form of 2026 Variable Incentive Compensation Plan Award Letter

Employment Agreement, dated July 13, 2022, by and between Thomas R.

Stanton and ADTRAN Holdings, Inc.

(incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed July 15, 2022) (“CEO Employment Agreement”)

First Amendment to the CEO Employment Agreement dated March 29, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed April 3, 2023).

Employment Agreement, dated January 28, 2015, and Amendment Nos.

1-9, by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed March 30, 2023)

Eighth Amendment, dated May 26, 2023 including Exhibit 1 thereto, to the Employment Agreement by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed June 1, 2023)

Ninth Amendment, dated December 4, 2023, to the Employment Agreement by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed December 5, 2023)

Tenth Amendment Employment Agreement, dated August 27, 2024, by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed August 30, 2024)

Settlement Agreement, dated May 12, 2025, by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed August 5, 2025)

Service Agreement, dated September 29, 2006 and Amendment Nos.

1-16, by and between Adtran Networks and Christoph Glingener (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed April 3, 2023)

Seventeenth Amendment, dated March 28, 2023, to Service Agreement by and between Adtran Networks SE and Christoph Glingener (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed April 3, 2023)

Exhibit 1 to the Seventeenth Amendment, dated March 28, 2023 and executed May 31, 2023, to the Service Agreement by and between Adtran Networks SE and Christoph Glingener (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed June 1, 2023)

Eighteenth Amendment, dated December 4, 2023, to the Service Agreement by and between Adtran Networks SE and Christoph Glingener (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed December 5, 2023

Nineteenth Amendment to Service Agreement, dated August 27, 2024, by and between Adtran Networks SE and Christoph Glingener (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed August 30, 2024)

Twentieth Amendment to Employment Agreement, dated December 9, 2025, by and between Adtran Networks SE and Christoph Glingener

Offer Letter, dated February 28, 2025, by and between ADTRAN Holdings, Inc.

and Timothy Santo (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed March 7, 2025)

ADTRAN Holdings, Inc.

Deferred Compensation Program for Directors, as amended and restated as of June 1, 2010 (incorporated by reference to Exhibit 10.3(o) to the Company's Form 10-K filed February 24, 2016)

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

Form of Confirmation for Capped Call Transactions (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed September 22, 2025)

Credit Agreement dated July 18, 2022, by and among ADTRAN Holdings, Inc.

and ADTRAN, Inc.

as borrowers, in favor of Wells Fargo Bank, National Association as lender (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed July 22, 2022)

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

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

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

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

Fourth Amendment to Credit Agreement, dated as of June 4, 2024, by and among ADTRAN Holdings, Inc., ADTRAN, Inc., Adtran Networks SE, Wells Fargo Bank, National Association, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed June 10, 2024)

Fifth Amendment to Credit Agreement and Waiver, by and between ADTRAN, Inc., Adtran Networks, SE and Wells Fargo Bank, National Association, dated May 6, 2025 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed May 12, 2025)

Sixth Amendment and Consent to Credit Agreement, dated as of September 16, 2025 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed September 17, 2025)

Collateral Agreement dated July 18, 2022, by and among ADTRAN Holdings, Inc., ADTRAN, Inc., and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed July 22, 2022)

ADVA Domestic Collateral Agreement, dated as of June 4, 2024, by and among ADVA NA Holdings, Inc., Adtran Networks North America, Inc., and Adtran Networks SE, in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.6 to the Company's Form 8-K filed June 10, 2024)

Guaranty Agreement dated July 18, 2022, by and between ADTRAN Holdings, Inc.

and ADTRAN, Inc.

in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed July 22, 2022)

ADVA Guaranty Agreement, dated as of June 4, 2024 by and between ADVA NA Holdings, Inc., Adtran Networks North America, Inc., Adtran Networks (UK) Limited, in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed June 10, 2024)

Domination and Profit and Loss Transfer Agreement between ADTRAN Holdings, Inc.

and Adtran Networks SE, dated November 30, 2022 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed December 5, 2022)

ADTRAN Holdings, Inc.

Insider Trading Policy

Subsidiaries of Adtran Holdings, Inc.

Consent of PricewaterhouseCoopers LLP.

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Section 1350 Certifications.

ADTRAN Holdings, Inc.

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

The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2025, formatted in inline eXtensible Business Reporting Language (iXBRL):

(i) Consolidated Balance Sheets, (ii) Consolidated Statements of Loss, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Changes in Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements, and (vii) Schedule II – Valuation and Qualifying Accounts

Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)

* Furnished or filed herewith, as applicable

+ Schedules and exhibits omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Company agrees to furnish a copy of any omitted schedule or exhibit to the SEC upon request.

Certain identified information has been excluded from these exhibits because it is not material and is the type of information that the Company customarily and actually treats as private and confidential.

Redacted information is indicated by [ ] or [***].

FORM 10-K SUMMARY

ADTRAN has elected not to provide a summary of the information contained in this report at this time.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 26th day of February 2026.

ADTRAN Holdings, Inc.

/s/ Timothy Santo

Timothy Santo

Senior Vice President of Finance and Chief Financial Officer

(Principal Financial Officer and Duly Authorized Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 26, 2026.

/s/ Thomas R.

Chief Executive Officer and Chairman of the Board (Principal Executive Officer)

/s/ Timothy Santo

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Timothy Santo

/s/ Gregory McCray

Gregory McCray

/s/ Balan Nair

/s/ Jacqueline H.

Jacqueline H.

/s/ Nikos Theodosopoulos

Nikos Theodosopoulos

/s/ Kathryn A.

ADTRAN Holdings, Inc.

VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

Year ended December 31, 2025

Allowance for Credit Losses

Deferred Tax Asset Valuation Allowance

Year ended December 31, 2024

Allowance for Credit Losses

Deferred Tax Asset Valuation Allowance

Year ended December 31, 2023

Allowance for Credit Losses

Deferred Tax Asset Valuation Allowance

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 7. Management’s Discussion and Analysis