What changed in this filing

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Item 1. Financial Statements

2026-08-04 compared with 2026-05-05 · 286 added, 189 removed, 574 unchanged (45% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, less allowance for credit losses of $ 1,652 and $ 1,318 as of March 31, 2026

Accounts receivable, less allowance for credit losses of $ 1,560 and $ 1,318 as of June 30, 2026

and December 31, 2025, respectively

32 unchanged sentences

200,000 shares authorized;

80,803 shares issued and 80,546 outstanding as of March 31, 2026 and

81,453 shares issued and 81,195 outstanding as of June 30, 2026 and

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

3 unchanged sentences

Less treasury stock at cost:

257 and 262 shares as of March 31, 2026

258 and 262 shares as of June 30, 2026

and December 31, 2025, respectively

5 unchanged sentences

Three Months Ended

Six Months Ended

Network Solutions

7 unchanged sentences

Research and development expenses

Operating Income (Loss)

Operating Loss

Interest and dividend income

Interest expense

Net investment loss

Other income, net

Income (Loss) Before Income Taxes

Income tax (expense) benefit

Net Income (Loss)

Net investment gain

Other income (expense), net

Loss Before Income Taxes

Income tax expense

Net Income attributable to non-controlling interest (1)

5 unchanged sentences

– diluted (2)

(1) For the three months ended March 31, 2026 and 2025 we accrued $ 2.2 million and $ 2.4 million, respectively, of net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

(1) For the three and six months ended June 30, 2026 we accrued $ 2.1 million and $ 4.3 million, respectively, net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA.

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

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

- basic and diluted - reflects a $ 0.3 million and a $( 3 ) thousand effect of redemption of RNCI for the three months ended March 31, 2026 and 2025.

- basic and diluted - reflects a $ 0.6 million and $ 0.9 million effect of redemption of RNCI for the three and six months ended June 30, 2026, respectively, and a $ 1.5 million effect of redemption of RNCI for the three and six months ended June 30, 2025.

See Note 15 for additional information.

4 unchanged sentences

Three Months Ended

Net Income (Loss)

Six Months Ended

Other Comprehensive (Loss) Income, net of tax

17 unchanged sentences

ADTRAN stock options exercised

Redemption of redeemable non-controlling interest

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Balance as of March 31, 2026

Annual recurring compensation earned

Other comprehensive loss, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock options exercised

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Balance as of June 30, 2026

See accompanying notes to condensed consolidated financial statements.

13 unchanged sentences

Balance as of March 31, 2025

Annual recurring compensation earned

Other comprehensive income, net of tax

ADTRAN RSUs and restricted stock vested

ADTRAN stock options exercised

ADTRAN stock-based compensation expense

Redemption of redeemable non-controlling interest

Balance as of June 30, 2025

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

1 unchanged sentence

Amortization of convertible notes issuance costs

Loss on investments, net

Gain on investments, net

Net loss on disposal of property, plant and equipment

13 unchanged sentences

Purchases of property, plant and equipment

Purchases of intangibles - developed technology

Intangibles - internally developed technology

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

7 unchanged sentences

Redemption of redeemable non-controlling interest

Net cash (used in) provided by financing activities

Payment of annual recurring compensation to non-controlling interest

Proceeds from draw on revolving credit agreements

Repayment of revolving credit agreements

Payment of debt issuance cost

Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents

4 unchanged sentences

Cash paid for interest

Cash (refund) paid for income taxes, net

Cash paid for income taxes, net

Cash used in operating activities related to operating leases

26 unchanged sentences

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

The guaranteed interest ra te is 5.0 % plus a variable component (according to the German Civil Code) that was 1.27 % as of March 31, 2026.

Assuming all the minority holders of currently outstanding Adtran Networks shares w ere to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 304.4 million or approximately $ 351.7 million, based on an exchange rate as of March 31, 2026, and reflecting interest accrued through March 31, 2026 during the pendency of the appraisal proceedings discussed below.

The guaranteed interest ra te is 5.0 % plus a variable component (according to the German Civil Code) that was 1.27 % as of June 30, 2026.

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 € 292.6 million or approximately $ 334.2 million, based on an exchange rate as of June 30, 2026, and reflecting interest accrued through June 30, 2026 during the pendency of the appraisal proceedings discussed below.

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

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

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

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

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

Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximat ely € 7.8 million (or $ 9.0 million based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders as of March 31, 2026 were to elect Exit Compensation.

Following the effective date of the DPLTA on January 16, 2023, certain Adtran Networks shareholders filed lawsuits against the Company in the Regional Court Meiningen, Germany challenging the Exit Compensation offered under the DPLTA.

The Regional Court Meiningen has not yet ruled on the shareholders' claims.

After the Regional Court Meiningen issues an opinion, an appeal is likely to follow, and thus the Company does not anticipate a final decision on the shareholders' claims until late 2027 or 2028.

Additionall y, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 7.6 million (or $ 8.7 million based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders as of June 30, 2026 were to elect Exit Compensation.

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

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

With respect to the 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.

During the three months ended March 31, 2026 and 2025, we a ccrued $ 2.2 million and $ 2.4 million, respectively, in Annual Recurring Compensation.

With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholder meeting occurred on June 15, 2026 and, therefore, the Annual Recurring Compensation was paid after the ordinary general shareholders' meeting in the amount of $ 8.9 million.

During the three months ended June 30, 2026 and 2025, we accrued $ 2.1 million and $ 2.4 million, respectively, in Annual Recurring Compensation.

During the six months ended June 30, 2026 and 2025, we accrued $ 4.3 million and $ 4.8 million, respectively, in Annual Recurring Compensation.

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

On 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.

The Credit Agreement matures in July 2027.

The Company intends to refinance or replace the existing Credit Agreement with a new credit facility during the second quarter of 2026.

There can be no assurances that this renewal will occur on terms acceptable to the Company, or at all.

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 “Former Credit Agreement”), which was subsequently amended six times.

The Company had access to $ 318.2 million on its Former Credit Agreement for future borrowings based on debt covenant compliance metrics.

On July 21, 2026, the Company terminated the credit agreement with Wells Fargo, repaid all principal amounts under the Former Credit Agreement and entered into a new five-year , $ 350.0 million credit agreement with J.P.

Morgan Chase Bank, N.A.

(the "New Credit Agreement") See Note 18, Subsequent Events for additional information regarding the terms of the New Credit Agreement.

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

As of March 31, 2026, 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 the three months ended March 31, 2026, approximately 0.2 million shares of Adtran Networks stock were tendered to the Company and Exit Compensation of € 3.6 million or approximately $ 4.1 million are to be settled in cash in April 2026.

For the three months ended March 31, 2025, less than one thousand shares of Adtran Networks stock were tendered to the Company and exit compensation payments of € 12 thousand or $ 13 thousand based on the applicable exchange rates at the time of the transactio n were paid to Adtran Networks shareholders.

For the three and six months ended June 30, 2026, approximately 0.4 million shares and 0.6 million shares, respectively, of Adtran Networks stock were tendered to the Company.

This resulted in total Exit Compensation payments of approximately € 11.7 million, or $ 13.8 million based on the applicable exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.

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

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

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;

(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 the Company does not anticipate a final decision on shareholder's challenges to Exit Compensation until late 2027 or 2028;

(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.

(iii) the current guaranteed Annual Recurring Compensation payment;

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

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

2 unchanged sentences

After deducting the initial purchasers’ discounts, commissions, and estimated offering expenses, the Company received net proceeds of $ 192.6 million.

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

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

See Note 10, Credit Agreements, and Note 18, Subsequent Events for additional information regarding the terms of the Former Credit Agreement and the New Credit Agreement, respectively.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

8 unchanged sentences

The results of operations for an interim period are not necessarily indicative of the results for the full year.

The interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in ADTRAN Holdings, Inc.

The interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto includ ed in ADTRAN Holdings, Inc.

Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026.

4 unchanged sentences

Actual amounts could differ significantly from these estimates.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of ongoing inflationary pressures, continued elevated interest rates, instability in the financial services industry, currency fluctuations and political tensions as of March 31, 2026, and through the date of this report.

We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of ongoing inflationary pressures, continued elevated interest rates, currency fluctuations and political tensions as of June 30, 2026, and through the date of this report.

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

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

During the three months ended March 31, 2026, there were no other significant changes to our critical accounting policies or estimates from those described in the financial statements contained in the 2025 Form 10-K.

During the six months ended June 30, 2026, there were no other significant changes to our critical accounting policies or estimates from those described in the financial statements contained in the 2025 Form 10-K.

Recent Accounting Pronouncements Not Yet Adopted

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Three Months Ended

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

(In thousands)

3 unchanged sentences

Services & Support

Access & Aggregation Solutions

Subscriber Solutions

Optical Networking Solutions

Six Months Ended

June 30, 2026

June 30, 2025

(In thousands)

Network Solutions

Services & Support

Network Solutions

Services & Support

Access & Aggregation Solutions

The aggregate amount of transaction price allocated to remaining performance obligations ("RPO") that have not been satisfied as of March 31, 2026 related to non-cancellable contractual maintenance agreements, non-cancellable contractual SaaS and subscription services, and non-cancellable hardware contracts amounted to $ 159.2 million.

Subscriber Solutions

Optical Networking Solutions

The aggregate amount of transaction price allocated to remaining performance obligations ("RPO") that have not been satisfied as of June 30, 2026 related to non-cancellable contractua l maintenance agreements, non-cancellable contractual SaaS and subscription services, and non-cancellable hardware contracts amounted to $ 214.2 million.

The majority of the Company's performance obligations will generally be satisfied within a year and any remaining performance obligations are typically recognized over one to three years .

1 unchanged sentence

(In thousands)

March 31, 2026

June 30, 2026

December 31, 2025

5 unchanged sentences

Accounts Receivable

The allowance for credit losses was $ 1.7 million and $ 1.3 million as of March 31, 2026, and December 31, 2025, respectively, related to accounts receivable.

Receivables Purchase Agreements

The allowance for credit losses was $ 1.6 m illion and $ 1.3 million as of June 30, 2026, and December 31, 2025, respectively, related to accounts receivable.

Receivables Purchase Agreement

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

Total accounts receivables factored as of the end of March 3 1, 2026, totaled $ 26.1 million of which $ 3.9 million was retained pursuant to the Factoring Agreement in the reserve account.

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

Total accounts receivables factored as of the end of June 30, 2026, 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 June 30 , 2025, totaled $ 18.4 million of which $ 3.7 million was retained pursuant to the Factoring Agreement in the reserve account.

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

During the three months ended March 31, 2026 and 2025, the Company received $ 51.8 million and $ 31.8 million, in cash proceeds from the Factoring Agreement, respectively.

The cost of the Factoring Agreement is included in interest expense in the Condensed Consolidated Statements of Loss and totaled $ 0.5 million and $ 0.3 million for the three mont hs ended March 31, 2026 and 2025, respectively.

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

During the three and six months ended June 30, 2026, the Company received $ 43.0 million and $ 94.8 million, in cash proceeds from the Factoring Agreement, respectively, and during the three and six months ended June 30, 2025, the Company received $ 38.5 million and $ 70.3 million from the Factoring Agreement, respectively, which are recorded as a component of accounts receivable in operating cash flows on the Condensed Consolidated Statement of Cash Flows.

The cost of the Factoring Agreement is included in interest expense in the Condensed Consolidated Statements of Loss and totaled $ 0.4 million and $ 0.9 million for the three and six months ended June 30, 2026 and $ 0.3 million and $ 0.6 million for the three and six months ended June 30, 2025.

Contract Assets

No allowance for credit losses was recorded for the three months ended March 31, 2026 and 2025, respectively, related to contract assets.

No allowance for credit losses was recorded for the three and six months ended June 30, 2026 and 2025, respectively, related to contract assets.

Unearned Revenue

Of the outstanding unearned revenue balances as of December 31, 2025 , $ 23.1 million were recognized as revenue during the three months ended March 31, 2026.

Of the $ 52.7 outstanding unearned revenue balances as of December 31, 2024, $ 21.9 million were recognized as revenue during the three months ended March 31, 2025 .

The Company’s effective tax rate changed from a benefit o f 4.2 % of pre-tax loss for the three months ended March 31, 2025, to an expense of 67.3 % of pre-tax income for the three months ended March 31, 2026.

The change in the effective tax rate for the three months ended March 31, 2026, was driven primarily by loss jurisdictions for which the recognition of tax benefits on pre-tax losses incurred during the first quarter of 2026 were limited due to valuation allowance.

Of the outstanding unearned revenue balances as of December 31, 2025 , $ 19.2 million and $ 42.4 million were recognized as revenue during the three and six months ended June 30, 2026 , respectively.

Of the $ 52.7 million of outstanding unearned revenue b alances as of December 31, 2024, $ 12.8 million and $ 34.7 million were recognized as revenue during the three and six months ended June 30, 2025, respectively.

The Company’s effective tax rate changed from an expense of 5.9 % of pre-tax loss for the three months ended June 30, 2025, to an expense of 10.0 % of pre-tax loss for the three months ended June 30, 2026, and changed from an expense of 2.3 % of pre-tax loss for the six months ended June 30, 2025, to an expense of 53.4 % of pre-tax loss for the six months ended June 30, 2026.

The changes in the effective tax rate for the three and six months ended June 30, 2026, were driven primarily by loss jurisdictions for which the recognition of tax benefits on pre-tax losses incurred during the three and six months ended June 30, 2026 were limited due to a valuation allowance.

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

As of March 31, 2026 , the Company had net deferred tax assets totaling $ 113.9 million, and a valuation allowance totaling $ 124.5 million against those deferred tax assets.

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

As of June 30, 2026, the Company had net deferred tax assets totaling $ 114.2 million, and a valuation allowance totaling $ 124.5 million against those deferred tax assets.

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

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

5 unchanged sentences

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.

As of March 31, 2026 , 5.5 m illion shares were available for issuance pursuant to awards that may be made in the future under stockholder-approved equity plans.

For the three months ended March 31, 2026 and 2025, stock-based compensation expense was $ 1.8 million and $ 3.2 million, respectively.

As of June 30, 2026 , 4.4 million shares were available for issuance pursuant to awards that may be made in the future under shareholder-approved equity plans.

For the three months ended June 30, 2026 and 2025, stock-based compensat ion expense was $ 2.9 million and $ 2.7 million, respectively, and for the six months ended June 30, 2026 and 2025 , stock-based compensation expense was $ 4.7 million and $ 5.9 million, respectively.

PSUs, RSUs and Restricted Stock

The following table summarizes the PSUs, RSUs and restricted stock outstanding as of December 31, 2025, and March 31, 2026 and the changes that occurred during the three months ended March 31, 2026:

The following table summarizes the changes of the PSUs, RSUs and restricted stock outstanding as of December 31, 2025 and June 30, 2026 and the changes that occurred during the six months ended June 30, 2026:

(in thousands)

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PSUs, RSUs and restricted stock forfeited

Unvested PSUs, RSUs and restricted stock outstanding, March 31, 2026

Unvested PSUs, RSUs and restricted stock outstanding, June 30, 2026

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

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

As of March 31, 2026 , total unrecognized compensation expense related to non-vested portion of performance-based PSUs, market-based PSUs, RSUs and restricted stock was approximately $ 12.1 million, which will be recognized over the remaining weighted-average period of 2.2 years.

As of June 30, 2026, total unrecognized compensation expense related to the non-vested portion of market-based PSUs, RSUs and restricted stock was approx imately $ 24.9 million, wh ich will be recognized over the remaining weighted-average period of 2.8 years.

Unrecognized compensation expense will be adjusted for actual forfeitures.

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

Fair Value Measurements as of March 31, 2026 Using

Fair Value Measurements as of June 30, 2026 Using

(In thousands)

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Deferred compensation plan assets

(1) The money market fund balances of $ 0.2 million as of March 31, 2026 and December 31, 2025, are included in cash and cash equivalents on the balance sheet.

(1) The money market fund balances of $ 0.2 million as of June 30, 2026 and December 31, 2025, respectively, are included in cash and cash equivalents on the balance sheet.

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

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 and

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.

These inputs could include information supplied by investees.

As of March 31, 2026 and December 31, 2025, inventory, net was comprised of the following:

As of June 30, 2026 and December 31, 2025, inventory, net was comprised of the following:

(In thousands)

March 31, 2026

June 30, 2026

December 31, 2025

7 unchanged sentences

(In thousands)

March 31, 2026

June 30, 2026

December 31, 2025

7 unchanged sentences

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

Depreciation expense was $ 8.1 million and $ 6.9 million for the three months ended March 31, 2026 and 2025, respectively, which is recorded in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

Depreciation and amortization expense was $ 8.1 million and $ 7.6 million for the three months ended June 30, 2026 and 2025 , respectively, and $ 16.2 million and $ 14.5 million fo r the six months ended June 30, 2026 and 2025, respectively, which is recorded in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

Assets Held For Sale

2 unchanged sentences

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

The total carrying value of assets held for sale was $ 11.9 million as of March 31, 2026 and December 31, 2025, respectively, and is separately recorded on the balance sheet.

The changes in the carrying amount of goodwill for the three months ended March 31, 2026 and the twelve months ended December 31, 2025, are as follows:

The total carrying value of assets held for sale was $ 11.9 million as of June 30, 2026 and December 31, 2025, respectively, and is separately recorded on the balance sheet.

The changes in the carrying amount of goodwill for the six months ended June 30, 2026, and the twelve months ended December 31, 2025, are as follows:

(In thousands)

4 unchanged sentences

Foreign currency translation adjustments

As of March 31, 2026

As of June 30, 2026

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

The Company performs its annual goodwill impairment test as of the first day of the fourth quarter.

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

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

No impairment of goodwill was recognized during the three months ended March 31, 2026 and 2025.

As of March 31, 2026 , accumulated goodwill impairment losses totaled $ 335.3 million.

No impairment of goodwill was recognized during the three and six months ended June 30, 2026 and the three and six months ended June 30, 2025.

As of June 30, 2026, accumulated goodwill impairment losses totaled $ 335.3 million.

INTANGIBLE ASSETS

Intangible assets as of March 31, 2026 and December 31, 2025, consisted of the following:

As of March 31, 2026

Intangible assets as of June 30, 2026, and December 31, 2025, consisted of the following:

As of June 30, 2026

As of December 31, 2025

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Licensed agreements

No impairment losses of intangible assets were recorded during the three months ended March 31, 2026 and 2025.

Amortization expense was $ 16.9 million and $ 14.9 million in the three months ended March 31, 2026 and 2025, respectively, and was included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

During the three months ended March 31, 2026, the Company had development costs of $ 8.4 million for developed technology assets with a weighted average amortization period of three years with no expected residual value.

No impairment losses related to intangible assets were recorded during the three and six months ended June 30, 2026 and 2025.

Amortization expense was $ 17.5 million and $ 15.7 million in the three months ended June 30, 2026 and 2025 , respectively, and $ 34.4 million and $ 30.6 million in the six months ended June 30, 2026 and 2025, respectively and was included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Condensed Consolidated Statements of Loss.

During the six months ended June 30, 2026, the Company had development costs of $ 16.7 million for developed technology assets with a weighted average amortization period of three years with no expected residual value.

Estimated future amortization expense of intangible assets is as follows:

(In thousands)

March 31, 2026

June 30, 2026

CREDIT AGREEMENTS

1 unchanged sentence

(In thousands)

March 31, 2026

June 30, 2026

December 31, 2025

1 unchanged sentence

Total non-current revolving credit facility

As of March 31, 2026 and December 31, 2025, the estimated fair value of our revolving credit agreement approximates the carrying value.

As of March 31, 2026, the weighted average interest rate on our revolving credit agreement was 8.92 %.

As of June 30, 2026 and December 31, 2025, the estimated fair value of our revolving credit agreement approximates the carrying value.

As of June 30, 2026, the weighted average interest rate on our revolving credit agreement was 8.89 %.

Revolving Credit Agreement

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5”), and the Sixth Amendment and Consent Credit Agreement, dated September 16, 2025, among the U.S.

the German Borrower and the lenders party thereto ("Amendment No.

Borrower, the German Borrower and the lenders party thereto ("Amendment No.

(the Original Credit Agreement as amended by Amendment No.

2 unchanged sentences

3, Amendment No.

4, Amendment No.

5 and Amendment No.

5, the “Existing Credit Agreement”).

As of March 31, 2026, 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 March 31, 2026, 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 March 31, 2026, 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 March 31, 2026.

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.

6, the “Former Credit Agreement”).

As of June 30, 2026, the Former Credit Agreement provided for a secured revolving credit facility of up to $ 350.0 million of borrowings, $ 50.0 million of which was solely available to the German Borrower.

As of June 30, 2026, the Company’s borrowings under the revolving line of credit were $ 25.0 million.

As of June 30, 2026, the U.S.

Borrower had a total of $ 6.8 million in letters of credit under the Former Credit Agreement, leaving a net amount (after giving effect to the $ 25.0 million of outstanding borrowings described above) of $ 318.2 million available for future borrowings, based on debt covenant compliance metrics.

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

The Company had no borrowings under the Subline as of June 30, 2026.

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

Borrower (and not to the German Borrower) as of such date.

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

On July 21, 2026, the Company terminated the Former Credit Agreement with Wells Fargo, repaid all principal amounts under the Former Credit Agreement and entered into the New Credit Agreement, which is a five-year , $ 350.0 million credit agreement with J.P.

Morgan Chase Bank, N.A.

See Note 18, Subsequent Events of this report for additional information regarding the terms of the new J.P.

Morgan Chase Bank credit agreement.

CONVERTIBLE SENIOR NOTES AND CAPPED CALLS

1 unchanged sentence

(In thousands)

March 31, 2026

June 30, 2026

December 31, 2025

2 unchanged sentences

Non-current convertible senior notes

The estimated fair value of the 2030 Notes was $ 273.9 million and $ 217.5 million as of March 31, 2026 and December 31, 2025, respectively.

The estimated fair value of the 2030 Notes was $ 307.0 million and $ 217.5 million as of June 30, 2026 and December 31, 2025, respectively.

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.

2 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

March 31, 2026

June 30, 2026

Contractual interest

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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.

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 consecu tive, during the last 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 last 30 consecutive trading days ending on, and includi ng, 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.

For additional information regarding the terms of the 2030 Notes, refer to the Consolidated Financial Statements and related footnotes in the Company's fiscal 2025 Annual Report on Form 10-K.

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”).

9 unchanged sentences

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

The net amounts recognized in the Condensed Consolidated Balance Sheets for the unfunded pension liability as of March 31, 2026 and December 31, 2025 were as follows:

The net amounts recognized in the Condensed Consolidated Balance Sheets for the unfunded pension liability as of June 30, 2026 and December 31, 2025 were as follows:

(In thousands)

Balance Sheet Location

March 31, 2026

June 30, 2026

December 31, 2025

9 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

3 unchanged sentences

Net periodic pension cost

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

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

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

The Company made contributions to the defined benefit pension plans totaling $ 1.1 million during the three months ended March 31, 2026 and 2025.

The Company made contributions to the defined benefit pension plans totaling $ 1.4 million and $ 2.0 million during the six months ended June 30, 2026 and 2025, respectively.

Contributions to the defined benefit pension plans for the remainder of 2026 will be limited to benefit payments to retirees which are paid out of the operating cash flows of the Company and are expected to be approximately $ 1.2 million .

1 unchanged sentence

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

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

(In thousands)

2 unchanged sentences

ASU 2018-02 Adoption

Balance as of March 31, 2026

Other comprehensive loss before

reclassifications

Amounts reclassified from accumulated other

comprehensive income (loss)

Net current period other comprehensive loss

Balance as of June 30, 2026

Three Months Ended June 30, 2025

(In thousands)

Currency Translation

ASU 2018-02 Adoption

Balance as of March 31, 2025

Other comprehensive (loss) income before

reclassifications

Amounts reclassified from accumulated other

comprehensive income

Net current period other comprehensive income

Balance as of June 30, 2025

Six Months Ended June 30, 2026

(In thousands)

Currency Translation

ASU 2018-02 Adoption

Balance as of December 31, 2025

4 unchanged sentences

Net current period other comprehensive loss

Balance as of March 31, 2026

Three Months Ended March 31, 2025

Balance as of June 30, 2026

Six Months Ended June 30, 2025

(In thousands)

2 unchanged sentences

Balance as of December 31, 2024

Other comprehensive income before

reclassifications

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other

1 unchanged sentence

Net current period other comprehensive income

Balance as of March 31, 2025

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

Three Months Ended March 31, 2026

Balance as of June 30, 2025

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

Three Months Ended June 30, 2026

(In thousands)

3 unchanged sentences

Unrealized gain on available-for-sale securities:

Net realized loss on sales of securities

Net investment loss

Net realized gain on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial loss

Other (expense) income

Other income (expense)

Total reclassifications for the period, before tax

Total reclassifications for the period, net of tax

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

(In thousands)

2 unchanged sentences

Unrealized gain on available-for-sale securities:

Net realized loss on sales of securities

Net investment loss

Net realized gain on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial gain

Other (expense) income

Other income (expense)

Total reclassifications for the period, before tax

1 unchanged sentence

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

Six Months Ended June 30, 2026

(In thousands)

Comprehensive

Affected Line Item

Unrealized loss on available-for-sale securities:

Net realized loss on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial loss

Other income (expense)

Total reclassifications for the period, before tax

Total reclassifications for the period, net of tax

Six Months Ended June 30, 2025

(In thousands)

Comprehensive

Affected Line Item

Unrealized loss on available-for-sale securities:

Net realized loss on sales of securities

Net investment gain

Defined benefit plan adjustments – actuarial loss

Other income (expense)

Total reclassifications for the period, before tax

Total reclassifications for the period, net of tax

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

Three Months Ended

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

(In thousands)

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

Unrealized loss on available-for-sale securities

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

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

Foreign currency translation adjustments

Total Other Comprehensive (Loss) Income

Six Months Ended

June 30, 2026

June 30, 2025

(In thousands)

Unrealized gain on available-for-sale securities

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

3 unchanged sentences

REDEEMABLE NON-CONTROLLING INTEREST

As of March 31, 2026 and December 31, 2025, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 28.8 % and 29.2 %, respectively.

The following table summarizes the redeemable non-controlling interest activity for the three months ended March 31, 2026 and for the year ended December 31, 2025:

Three Months Ended

As of June 30, 2026 and December 31, 2025, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 28.1 % and 29.2 %, respectively.

The following table summarizes the redeemable non-controlling interest activity for the six months ended June 30, 2026 and for the year ended December 31, 2025:

Six Months Ended

For the Year Ended

(In thousands)

March 31, 2026

June 30, 2026

December 31, 2025

5 unchanged sentences

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

For the three months ended March 31, 2026, we accrued $ 2.2 m illion and for the year ended December 31, 2025, the Company accrued $ 9.3 million, representing the portion of the annual recurring cash compensation to the non-controlling shareholders du ring such periods.

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

For the three and six months ended June 30, 2026 , we have accrued $ 2.1 million and $ 4.3 million, respectively, and for the year ended December 31, 2025, the Company accrued $ 9.3 million, representing the portion of the annual recurring cash compensation to the non-controlling shareholders during such periods.

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

The 2026 Annual Recurring Compensation accrual will be paid after the ordinary general shareholders' meeting of Adtran Networks in 2027.

LOSS PER SHARE

The calculation of basic and diluted loss per share for the quarters ended March 31, 2026 and 2025 are as follows:

The calculation of basic and diluted loss per share for the three and six months ended June 30, 2026 and 2025 are as follows:

Three Months Ended

Six Months Ended

(In thousands, except per share amounts)

9 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

3 unchanged sentences

SEGMENT INFORMATION

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

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

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

8 unchanged sentences

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

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

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

There is no inter-segment revenue.

2 unchanged sentences

Three Months Ended

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

(In thousands)

3 unchanged sentences

Services & Support

For the three months ended March 31, 2026 and 2025 , $ 1.7 million and $ 1.3 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment.

For the three months ended March 31, 2026 and 2025 , less than $ 0.1 million of depreciation expense was included in gross profit for our Services & Support segment.

Six Months Ended

June 30, 2026

June 30, 2025

(In thousands)

Cost of Revenue

Network Solutions

Services & Support

For the three months ended June 30, 2026 and 2025 , $ 1.7 million and $ 1.3 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment.

For the six months ended June 30, 2026 and 2025 , $ 3.4 million and $ 2.6 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment.

For the three months ended June 30, 2026 and 2025 , less than $ 0.1 million of depreciation expense was included in gross profit for our Services & Support segment.

For the six months ended June 30, 2026 and 2025 , $ 0.1 million of depreciation expense was included in gross profit for our Services & Support segment.

Revenue by Geographic Area

1 unchanged sentence

Three Months Ended

Six Months Ended

(In thousands)

15 unchanged sentences

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.

As previously disclosed, 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 responded to the SEC and, on June 22, 2026, the SEC staff sent a letter to the Company stating that the SEC staff had concluded its investigation as to the Company and based on the information to date, the SEC staff did not intend to move forward with an enforcement action against the Company.

DPLTA Appraisal Proceedings

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

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 1.27 % as of March 31, 2026.

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, the Company would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 304.4 million or approximately $ 351.7 million, based on an exchange rate as of March 31, 2026, and reflecting interest accrued through March 31, 2026 , during the pendency of the appraisal proceedings discussed below.

The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 1.27 % as of June 30, 2026 .

Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, the Company would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 292.6 million or $ 334.2 million, based on an exchange rate as of June 30, 2026, and reflecting interest accrued through June 30, 2026 , during the pendency of the appraisal proceedings discussed below.

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

1 unchanged sentence

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.

It is expected to take a minimum of 12 months for

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

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

Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximat ely € 7.8 million (or $ 9.0 million based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.

The Regional Court Meiningen has not yet ruled on the shareholders' claims.

After the Regional Court Meiningen issues an opinion, an appeal is likely to follow, and thus the Company does not anticipate a final decision on the shareholders' claims until late 2027 or 2028.

Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 7.6 million (or $ 8.7 million based on the 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.

With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholders 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 .

During the three months ended March 31, 2026 and 2025, we accrued $ 2.2 million and $ 2.4 million, respectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit.

With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholders’ meeting occurred on June 15, 2026 and, therefore, the Annual Recurring Compensation was paid after the ordinary general shareholders’ meeting in the amount of $ 8.9 million.

During the three months ended June 30, 2026 and 2025, we accrued $ 2.1 million and $ 2.4 million, respectively, in Annual Recurring Compensation.

During the six months ended June 30, 2026 and 2025, we accrued $ 4.3 million and $ 4.8 million, respectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit.

For the three and six months ended June 30, 2026, approximately 0.4 million shares and 0.6 million shares, respectively, of Adtran Networks stock were tendered to the Company.

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

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

2 unchanged sentences

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

As of March 31, 2026 and December 31, 2025, we had commitments related to these bonds totaling $ 22.2 mil li on and $ 22.4 million, respectively, which expire at various dates through April 2029 .

As of June 30, 2026 and December 31, 2025, we had commitments related to these bonds totaling $ 23.3 million and $ 22.4 million, respectively, which expire at various dates throug h October 2029 .

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

3 unchanged sentences

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

As of March 31, 2026, purchase obligations totale d $ 223.7 mi llion.

As of June 30, 2026, purchase obligations tot aled $ 232.0 millio n.

Tariff Refund

2 unchanged sentences

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).

Moreover, following the Supreme Court’s decision, the U.S.

presidential administration invoked Section 122 of the Trade Act of 1974 to impose new tariffs of 10 % 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), and also amended tariffs on imports of copper, steel and aluminum previously imposed under Section 232 of the Trade Expansion Act of 1962, effective April 6, 2026, to apply differentiated tariff rates based on metal content and the use of U.S.-origin metal inputs.

By its terms, the Section 122 tariff expired on July 24, 2026.

On July 23, 2026, the Office of the U.S.

Trade Representative ("USTR") announced a final action under Section 301 of the Trade Act of 1974 imposing additional ad valorem tariffs of 10 % or 12.5 % on most goods imported from approximately 60 foreign trading partners, which together account for nearly all U.S.

import trade.

The Company has concluded that the potential refund of IEEPA tariffs should be evaluated under a loss recovery model pursuant to Accounting Standards Codification ("ASC") 410‑30.

12 unchanged sentences

401(k) plan for the year ended 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, the Company accrued $ 1.4 million during the year ended December 31, 2025.

As such, we filed a voluntary correction program (“VCP”) application with the IRS and in May 2026, the Company received a compliance statement from the IRS approving a retroactive amendment to correct the matter and modify administrative procedures, and in June 2026, the Company executed the retroactive amendment.

Based on this resolution, the Company reversed $ 1.4 million of amounts previously accrued related to the VCP in June 2026.

SUBSEQUENT EVENTS

New Credit Agreement

On July 21, 2026, ADTRAN Holdings, Inc.

as guarantor, ADTRAN, Inc., a Delaware corporation, and Adtran Networks SE, a European stock corporation (the “German Borrower” and together with the US Borrower, collectively, the “ Borrowers”), entered into a credit agreement with J.P.

Morgan Chase Bank, N.A., as administrative agent for the US Borrower and J.P.

Morgan SE, as administrative agent for the German Borrower, and the financial institutions party thereto, as lenders.

The New Credit Agreement allows for borrowings of up to $ 350.0 million in aggregate principal amount, with borrowings by the German Borrower limited to $ 50.0 millio n.

The New Credit Agreement matures in July 2031 and provides for borrowings bearing interest, at the Company’s election, at either the Term Benchmark Rate or the Base Rate, in each case subject to a 0.00 % floor, plus an applicable margin based on the consolidated total net leverage ratio.

The applicable margin ranges from 2.25 % to 3.25 % for Term Benchmark Rate loans and from 1.25 % to 2.25 % for Base Rate loans.

The Borrowers are also required to pay a commitment fee of 0.25 % on unused revolving commitments.

The New Credit Agreement replaces the Borrowers’ Former Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, entered into on July 18, 2022.

The proceeds of any loans are expected to be used for general corporate purposes not prohibited under the New Credit Agreement.

Under the New Credit Agreement, the Company agreed to maintain certain leverage ratios and certain fixed charge coverage ratios commencing with the fiscal quarter ending December 31, 2026.

In connection with entering into the New Credit Agreement, on July 21, 2026, the Company terminated the Former Credit Agreement with Wells Fargo, the collateral agreement dated July 18, 2022, the ADVA domestic collateral agreement dated June 4, 2024, the

guaranty agreement dated July 18, 2022 and the ADVA guaranty agreement dated June 4, 2024 and all principal amounts under the Former Credit Agreement were repaid.

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

What changed 10-Q

Item 1. Financial Statements