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What changed in ADTRAN Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ADTRAN Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+559 added−613 removedSource: 10-K (2026-02-26) vs 10-K (2025-03-03)

Top changes in ADTRAN Holdings, Inc.'s 2025 10-K

559 paragraphs added · 613 removed · 390 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

67 edited+17 added−34 removed48 unchanged
Biggest changeMore specifically, our corporate strategy consists of the following elements: • Leadership in fiber networking : Breadth of portfolio, open and advanced architecture, assured and secure connectivity. • Growth in focus markets: Increased turnkey solutions and in-region resources, especially North America and EMEA. • Investment in converged edge: Innovation in optics, security, AI-driven networking, virtualization, SaaS, etc. • Transformation through software: Open and cloud-centric systems, end-to-end programmability, simplification through software, and innovative SaaS offerings. • Diversification of customers: Cross-selling current portfolio, acquisition of new customers and partners based on larger portfolio and trusted supplier status. • Focus on sustainability: Science-based emissions targets, process-based product eco-design, optimization of operations, logistics and all packaging, circular-economy processes. 13 Business Efficiency Program On November 6, 2023, due to the uncertainty around the current macroeconomic environment and its impact on customer spending levels, the Company’s management decided to implement a business efficiency program (“Business Efficiency Program”) targeting the reduction of ongoing operating expenses and focusing on capital efficiency inclusive of certain salary reductions, an early retirement program, a site consolidation plan to include lease impairments and the sale of owned real estate (including the probable sale of our headquarters), inventory write downs from product discontinuances, and the suspension of the quarterly dividend.
Biggest changeMore specifically, our corporate strategy consists of the following elements: • Leadership in fiber networking : Breadth of portfolio, open and advanced architecture, assured and secure connectivity. • Growth in focus markets: Increased turnkey solutions and in-region resources, especially North America and EMEA. • Investment in converged edge: Innovation in optics, security, AI-driven networking, virtualization, SaaS, etc. • Transformation through software: Open and cloud-centric systems, end-to-end programmability, simplification through software, and innovative SaaS offerings. • Diversification of customers: Cross-selling current portfolio, acquisition of new customers and partners based on larger portfolio and trusted supplier status. • Focus on sustainability: Science-based emissions targets, process-based product eco-design, optimization of operations, logistics and all packaging, circular-economy processes. 14 Customers We have a diverse global customer base that includes large, medium and small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders; cable/MSOs; SMBs and distributed enterprises.
Across our markets and segments, the principal competitive factors can include, among others: • differentiated feature functionality of our products and solutions; • price performance of our solutions and lowest total cost of ownership for customers; • quality and reliability of our products; • financial stability and health of our company; • ability to manage supply chains and produce and deliver products in accordance with customer wish date; • ability to innovate and provide customers with differentiated solutions, advantageous to their business model; 16 • compelling technology roadmap and research and development power; • industry thought leadership and time to market with innovative solutions; • country of origin for products and solutions and trusted supplier status; • security of enterprise value chain, from design to product development, support processes, to products and solutions; • energy consumption of our products and commitment to sustainability, supporting customers in achieving their climate goals; • customer relationship and incumbency; • ability to deliver comprehensive solutions with a high degree of automation and ease-of-use, including hardware, software and services; and • broad range of services and support capabilities.
Across our markets and segments, the principal competitive factors can include, among others: • differentiated feature functionality of our products and solutions; • price performance of our solutions and lowest total cost of ownership for customers; • quality and reliability of our products; • financial stability and health of our company; • ability to manage supply chains to produce and deliver products in accordance with customer wish date; • ability to innovate and provide customers with differentiated solutions, advantageous to their business model; • compelling technology roadmap and research and development power; • industry thought leadership and time to market with innovative solutions; • country of origin for products and solutions and trusted supplier status; • security of enterprise value chain, from design to product development, support processes, to products and solutions; • energy consumption of our products and commitment to sustainability, supporting customers in achieving their climate goals; • customer relationship and incumbency; • ability to deliver comprehensive solutions with a high degree of automation and ease-of-use, including hardware, software and services; and • broad range of services and support capabilities.
For more information on the DPLTA, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Adtran Networks Domination and Profit and Loss Transfer Agreement” in Part II, Item 7 of this report. 9 Reportable Segments Our business operates under two reportable segments: (1) Network Solutions and (2) Services & Support.
For more information on the DPLTA, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Adtran Networks Domination and Profit and Loss Transfer Agreement” in Part II, Item 7 of this report. 9 Reportable Segments Our business operates two reportable segments: (1) Network Solutions and (2) Services & Support.
As we continue to create more software-based intellectual property, such as our SDN/Edge Cloud portfolio, our use of lean agile practices in research and development ensures we remain responsive and customer-focused. This enables us to deliver products faster, at higher quality and more economically to our customers and the market on a continuous basis.
As we continue to create more software-based intellectual property, such as our SDN/Edge Cloud portfolio, our use of lean agile practices in research and development ensures we remain responsive and customer-focused. We believe that this enables us to deliver products faster, at higher quality and more economically to our customers and the market on a continuous basis.
(“Adtran” or the “Company”) is a leading global provider of networking and communications platforms, software, systems and services focused on the metro optical transport, data center interconnect, and broadband access market, serving a diverse domestic and international customer base in multiple countries that includes large, medium and small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders, cable/MSOs, SMBs and distributed enterprises, including Fortune 500 companies with sophisticated business continuity applications; and federal, state and local government agencies.
(“Adtran” or the “Company”) is a leading global provider of networking and communications platforms, software, systems and services focused on the metro optical transport, data center interconnect, and broadband access market, serving a diverse domestic and international customer base in multiple countries that includes large, medium and small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders, cable/MSOs, SMBs and distributed enterprises, including Fortune 500 companies with sophisticated business continuity applications; hyper-scalers, neocloud and content providers and data center companies; and federal, state and local government agencies.
These solutions include 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. 10 The Subscriber Solutions category includes the following products, software and services: Residential Gateways ("RGs"): • Residential Gateways Optical Networking Terminals ("ONTs"): • EPON ONUs • GPON/XGS-PON ONTs Enterprise Connectivity: • Traditional SSE • Routers • Switches Edge Compute: • Edge Cloud (VEC) Carrier Ethernet Network Interface Devices ("CE NIDs"): • FSP 150-GE110 • FSP 150-XG100 • FSP 150-XG210 • FSP 150-XG300 • FSP 150-XG400-NIDs Software: • Mosaic One SaaS applications • n-Command • Procloud Service: • Build • Care • Training • Professional Services • Software Services • Managed Services Our Access & Aggregation Solutions are solutions that are used by communications Service Providers to connect residential subscribers, business subscribers and mobile radio networks to the Service Providers’ metro network, primarily through fiber-based connectivity.
These solutions include 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. 10 The Subscriber Solutions category includes the following products, software and services: Residential Gateways ("RGs"): • Residential Gateways Optical Networking Terminals ("ONTs"): • GPON/XGS-PON ONTs Enterprise Connectivity: • Routers • Switches Edge Compute: • Edge Cloud (VEC) Carrier Ethernet Network Interface Devices ("CE NIDs"): • FSP 150-GE110 • FSP 150-XG100 • FSP 150-XG210 • FSP 150-XG300 • FSP 150-XG400-NIDs Software: • Mosaic One SaaS applications • n-Command • Procloud Service: • Build • Care • Training • Professional Services • Software Services • Managed Services 11 Our Access & Aggregation Solutions category represents solutions that are used by communications Service Providers to connect residential subscribers, business subscribers and mobile radio networks to the Service Providers’ metro network, primarily through fiber-based connectivity.
As employees increase their competencies in these areas and master skills within their individual roles, this program offers a variety of career advancement paths. Intellectual Property We develop and own a significant amount of intellectual property. We hold over 1,000 patents worldwide related to our products and over 50 additional pending patent applications.
As employees increase their competencies in these areas and master skills within their individual roles, this program offers a variety of career advancement paths. Intellectual Property We develop and own a significant amount of intellectual property. We have approximately 1,000 patents worldwide related to our products and over 50 additional pending patent applications.
The Company backs these services with a global support organization that offers on-site and off-site support services with varying SLAs. Revenue Categories In addition to operating under two reportable segments, we also report revenue across three categories – Subscriber Solutions, Access & Aggregation Solutions and Optical Networking Solutions.
The Company backs these services with a global support organization that offers on-site and off-site support services with varying SLAs. Revenue Categories In addition to our two reportable segments, we also report revenue across three categories – Subscriber Solutions, Access & Aggregation Solutions and Optical Networking Solutions.
These services assist operators in the deployment of multi-vendor networks while reducing their cost to maintain these networks. The cloud-hosted services include a suite of SaaS applications under the Company's Mosaic One platform that manages end-to-end network and service optimization for both fiber access infrastructure and mesh Wi-Fi connectivity.
These services assist operators in the deployment of multi-vendor networks while reducing their cost to maintain these networks. The cloud-hosted services include a suite of SaaS applications under the Company's Mosaic One platform that manages end-to-end network and service optimization for both fiber access infrastructure and mesh Wi-Fi connectivity, featuring AI-driven operations.
Communications Service Providers' investment in their networks is being driven by the pursuit of growth in subscriber acquisition, retention, and average revenue per user, as well as by the aims of streamlining operations, lowering energy consumption and improving their overall ESG position.
Communications Service Providers' investment in their networks is being driven by the pursuit of growth in subscriber acquisition, retention, and average revenue per user, as well as by the aims of streamlining operations, lowering energy consumption and improving their overall sustainability.
As of December 31, 2024, Adtran Networks had 94 employees in Switzerland, France, Italy, Finland and Spain that were subject to collective bargaining agreements of different associations. None of our other employees are subject to collective bargaining agreements. Additionally, we continually work to recruit technical talent in diverse communities through our cooperative education program.
As of December 31, 2025, Adtran Networks had 98 employees in Switzerland, France, Italy, Finland and Spain that were subject to collective bargaining agreements of different associations. None of our other employees are subject to collective bargaining agreements. Additionally, we continually work to recruit technical talent in diverse communities through our cooperative education program.
The Optical Networking Solutions category includes the following products, software and services: Optical Transport: • FSP 3000 CC • FSP 3000 R7 Optical Engines: • AOE Coherent Pluggables • AOE MicroMax • AOE AccessWave Infrastructure Monitoring: • ALM Fiber Monitoring Software: • Mosaic Network Controller Services: • Build • Care • Training • Professional Services • Software Services • Managed Services 12 Industry Overview The global growth of the cloud and mobility (5G), home office and mobile working, industrial applications and AI are accelerating the demand for more bandwidth, requiring more flexible provisioning of telecommunications services and more precise network synchronization.
The Optical Networking Solutions category includes the following products, software and services: Optical Transport: • FSP 3000 Optical Engines: • AOE Coherent Pluggables • AOE MicroMux • AOE AccessWave Infrastructure Monitoring: • ALM Fiber Monitoring Software: • Mosaic Network Controller Services: • Build • Care • Training • Professional Services • Software Services • Managed Services 13 Industry Overview The global growth of the cloud and mobility (5G), industrial applications, AI, home office and mobile working are accelerating the demand for more bandwidth, requiring more flexible provisioning of telecommunications services and more precise network synchronization.
Marketing is complemented by product marketing and management teams that work with our engineering teams to develop and promote new products and services, as well as product enhancements. 14 Research and Development Rapidly changing technologies, evolving industry standards, changing customer requirements, supply constraints and continuing developments in communications service offerings characterize the markets for our products.
Our product marketing and management teams work with our engineering teams to develop and promote new products and services, as well as product enhancements. Research and Development Rapidly changing technologies, evolving industry standards, changing customer requirements, supply constraints and continuing developments in communications service offerings characterize the markets for our products.
During the years ended December 31, 2024, 2023 and 2022, research and development expenditures totaled $221.5 million, $258.3 million and $173.8 million, respectively. While we develop the majority of our products internally, we also leverage partners for some solutions. Additionally, we license intellectual property or acquire technologies.
During the years ended December 31, 2025, 2024 and 2023, research and development expenditures totaled $204.3 million, $221.5 million and $258.3 million, respectively. While we develop the majority of our products internally, we also leverage partners for some solutions. Additionally, we license intellectual property or acquire technologies.
During 2024, we had one customer who comprised greater than 10.0% of our revenue, which was an international Service Provider and our next five largest customers comprised 21.7% of our revenue. Additionally, our revenue in the U.S., U.K. and Germany each comprised more than 10% of our revenue in 2024.
During 2025, we had one customer who comprised greater than 10.0% of our revenue, which was an international Service Provider, and our next five largest customers comprised 20.4% of our revenue. Additionally, our revenue in the U.S., U.K. and Germany each comprised more than 10% of our revenue in 2025.
We are focused on being a top global supplier of fiber-based communications infrastructure and SaaS applications spanning from the network core to the cloud edge (data center) to the subscriber edge (customer premise) serving both the residential and enterprise connectivity markets including fiber-based infrastructure for mobile networks.
We are focused on being a top global supplier of fiber-based communications infrastructure and AI-driven operations including SaaS applications spanning from the network core to the cloud edge (data centers) to the subscriber edge (customer premises) serving both the residential and enterprise connectivity markets, including fiber-based infrastructure for mobile networks.
This information can also be found on our website at: www.adtran.com/en/about-us/esg/environmental . The information found on our website is not incorporated by reference in this report or any other report that we file or furnish to the SEC.
This information can also be found on our website at: www.adtran.com/en/about-us/esg/environmental. The information found on our website is not incorporated by reference in this report or any other report that we file or furnish to the SEC. Human Capital We believe that our most valuable asset is our people.
In addition to salaries, these programs, which vary by country/region, include long-term equity incentive awards with certain vesting requirements, deferred compensation plans (which are offered to certain members of executive management), a 401(k) plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, paid volunteer time off, employee assistance program and tuition assistance.
In addition to salaries, these programs, which vary by country/region, include long-term equity incentive awards with certain vesting requirements, a 401(k) plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, paid volunteer time off, employee assistance program and tuition assistance.
These two segments span across our three revenue categories: (1) Subscriber Solutions, (2) Access & Aggregation Solutions and (3) Optical Networking Solutions. See below for a detailed discussion of these reportable segments and revenue categories.
These two segments span across our three revenue categories: (1) Subscriber Solutions, (2) Access & Aggregation Solutions and (3) Optical Networking Solutions. See "Reportable Segments" below for a detailed discussion of these reportable segments and revenue categories. We began operations in January 1986.
As of December 31, 2024 approximately 90 employees (76%) of Adtran GmbH were subject to collective bargaining agreements of either the Association of Metal and Electrical Industry in Berlin and Brandenburg e.V. or NORDMETALL Association of Metal and Electrical Industry e.V.
As of December 31, 2025 approximately 88 employees (75%) of Adtran GmbH and Adtran Technology GmbH were subject to collective bargaining agreements of either the Association of Metal and Electrical Industry in Berlin and Brandenburg e.V. or NORDMETALL Association of Metal and Electrical Industry e.V.
We also continue to be involved in driving optical networking, synchronization and SDN standardization and participate in industry-wide interoperability, performance-testing and system-level projects related to those standards in BBF and ONF. We are also members of MEF, TIA, CableLabs and TIP.
We are involved in the evolution of optical access technologies on next-generation PON. We also continue to be involved in driving optical networking, synchronization and SDN standardization and participate in industry-wide interoperability, performance-testing and system-level projects related to those standards in BBF. We are also members of MEF, TIA, CableLabs and TIP.
Areas of focus in our environmental sustainability program include: • dedicated ESG Committee of the Board of Directors; • maintained our mature environmental management system certified to ISO 14001:2015; 18 • advanced our Energy Management program with ISO 50001 readiness for the Huntsville site for 2025; • submitted our Net Zero targets to SBTi in 2023 and got them approved in 2024; • continued purchase of Renewable Energy Credits, equaling ~20% of total Adtran energy consumption; • continued using IntegrityNext, a platform to engage suppliers to obtain an ESG assessment aligned with international standards, allowing us to monitor ESG risks in our supply chain; • established Eco-Design guidelines in the Technology organization; • continued with Life Cycle Assessments across the portfolio; • continued with packaging optimization to reduce related materials and waste; • increased visibility of our program internally and externally through customer engagement, joining peer sustainability groups, offering training to team members and web site enhancements; • continued with the external CDP and EcoVadis assessments.
Areas of focus in our environmental sustainability program include: • maintaining a dedicated Sustainability Committee of the Board of Directors; • maintaining our mature environmental management system certified to ISO 14001:2015; • advancing our Energy Management program with ISO 50001 readiness for the Huntsville site for 2025; • continuing the purchase of Renewable Energy Credits, equaling ~20% of total Adtran energy consumption; • continued use of IntegrityNext, a platform to engage suppliers to obtain an ESG assessment aligned with international standards, allowing us to monitor sustainability risks in our supply chain; • establishing Eco-Design guidelines in the Technology organization; • conducting Life Cycle Assessments across the portfolio; • optimizing packaging to reduce related materials and waste; • increasing visibility of our program internally and externally through customer engagement, joining peer sustainability groups, offering training to team members and web site enhancements; and • participating in external CDP and EcoVadis assessments.
We pride ourselves on a highly educated workforce, and the majority of our employees serve in engineering, information technology and technical roles within the organization.
We have a diverse employee base located in 34 countries. We pride ourselves on a highly educated workforce, and the majority of our employees serve in engineering, information technology and technical roles within the organization.
We operate under two reportable segments: (1) Network Solutions, which includes hardware and software products, and (2) Services & Support, which includes a portfolio of network design and implementation services, support services and cloud-hosted SaaS applications that complement our product portfolio and can be utilized to support other platforms as well.
We operate in two business segments: (1) Network Solutions, which includes hardware and software products, and (2) Services & Support, which includes a portfolio of network design and implementation services, support services and AI-driven operations including cloud-hosted SaaS applications that complement our product portfolio and can also be utilized to support other platforms.
Internal development on advanced technology products gives us more control over design and manufacturing issues, while for traditional designs, ODM and/or licensed intellectual property provides us with the ability to leverage the economies of scale of our technology partners. This balanced approach ensures we provide best-in-class solutions for our customers.
Internal development on advanced technology products gives us more control over design and manufacturing issues, while for traditional designs, ODM and/or licensed intellectual property provides us with the ability to leverage the economies of scale of our technology partners.
We are an active participant in several SDOs and have assisted with the development of worldwide standards in many technologies. Our SDO activities are primarily in the areas of broadband access, optical networking and synchronization. This includes involvement with the ITU-T, ATIS, ETSI, ONF and the BBF. We are involved in the evolution of optical access technologies on next-generation PON.
We are an active participant in several SDOs and have assisted with the development of worldwide standards in many technologies. Our SDO activities are primarily in the areas of broadband access, optical networking and synchronization. This includes involvement with standard-setting bodies such as the ITU-T, ATIS, ETSI and the BBF.
We attempt to manage these risks through developing alternative sources, by staging inventories at strategic locations, through engineering efforts designed to prevent the necessity of certain components and by maintaining close contact and building long-term relationships with our suppliers. See Inventory included in Part I, Item 1 of this report for additional information.
We attempt to manage these risks through developing alternative sources, by staging inventories at strategic locations, through engineering efforts designed to prevent the necessity of certain components and by maintaining close contact and building long-term relationships with our suppliers.
We will issue an ESG report for 2024 in early 2025, which will use the EU ESRS guidelines, in order to fulfill the reporting obligations set forth in the EU CSRD. Within the report is information on our environmental, social and governance programs, including quantitative and qualitative data for both Adtran Networks and the Company.
We expect to issue a sustainability report for 2025 in early 2026, which will use the EU ESRS guidelines, in order to fulfill the reporting obligations set forth in the EU CSRD. Within the report is information on our sustainability and governance programs, including quantitative and qualitative data for the entire Company.
We have received, and may continue to receive, notices of claims alleging that we are infringing upon patents or other intellectual property. We cannot predict whether we will prevail in any claims or litigation over alleged infringements, or whether we will be able to license any valid and infringed patents, or other intellectual property, on commercially reasonable terms.
We cannot predict whether we will prevail in any claims or litigation over alleged infringements, or whether we will be able to license any valid and infringed patents, or other intellectual property, on commercially reasonable terms.
The information found on our website is not incorporated by reference in this report or any other report that we file or furnish to the SEC.
Our telephone number at that location is (800) 923-8726. Our website is www.adtran.com. The information found on our website is not incorporated by reference in this report or any other report that we file or furnish to the SEC.
The Access & Aggregation category includes the following products, software and services: Optical Line Terminals ("OLTs"): • TA5000 OLT • SDX OLT • EPON OLT • Pluggable Optics Optical Networking Terminals ("ONTs"): • EPON ONUs Packet Aggregation: • FSF 150-XG400 Aggregators • SDX Aggregation • Activator Copper Access: • Gfast DPUs • hiX • Total Access FTTN • Traditional Broadband Oscilloquartz: • OSA AccessSync • OSA Edge Sync Software: • MCP • AOE and ACI-E 11 • OSA CoreSync • OSA Inside • Mosaic One SaaS Applications • Mosaic Network Controller Service: • Build • Care • Training • Professional Services • Software Services • Managed Services Our Optical Networking Solutions are used by communications Service Providers, internet content providers and large-scale enterprises to securely interconnect metro and regional networks over fiber.
The Access & Aggregation category includes the following products, software and services: Optical Line Terminals: • TA5000 OLT • SDX OLT • EPON OLT • Pluggable Optics Copper Access: • Gfast DPUs • hiX • Total Access FTTN • Traditional Broadband Packet Aggregation: • FSF 150-XG400 Aggregators • SDX Aggregation • Activator Software: • MCP • AOE and ACI-E • Ensemble Activator • Mosaic One SaaS Applications • Mosaic Network Controller Oscilloquartz: • Cesium clocks • GNSS and LEO clocks • Embedded timing solutions • PIP grandmasters and NTP server clocks • Time scale systems • Synchronization monitoring • PTP clients and boundary clocks • NTP network time servers • Network management systems Service: • Build • Care • Training • Professional Services • Software Services • Managed Services 12 Our Optical Networking Solutions are used by communications Service Providers, internet content providers and large-scale enterprises to securely interconnect metro and regional networks over fiber.
Our patents expire at various dates between 2025 and 2041. We continue to seek additional patents related to our research and development activities. We do not derive any material amount of revenue from the licensing of our patents.
Our patents expire at various dates between 2026 and 2044. We continue to seek additional patents related to our research and development activities. We do not derive any material amount of revenue from the licensing of our patents. The name "ADTRAN" is a registered trademark of ours and a number of our product identifiers and names.
This program provides access to qualified personnel to address various issues such as grief, financial stress, family and emotional issues. Compensation and Benefits We continually work to provide a competitive compensation and benefits program as this plays a key role in our ability to attract and retain a highly skilled workforce.
Compensation and Benefits We continually work to provide a competitive compensation and benefits program as this plays a key role in our ability to attract and retain a highly skilled workforce.
Availability of Information We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information as required with the SEC. The SEC maintains an internet website, http://www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers, including Adtran, that file electronically with them.
The SEC maintains an internet website, http://www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers, including Adtran, that file electronically with them.
These products and services enable Service Providers to transition to a common network supporting the simplified delivery of high-capacity services, regardless of subscriber density, network topology and infrastructure diversity. We began operations in January 1986.
These products and services enable Service Providers to transition to a common network supporting the simplified delivery of high-capacity services, regardless of subscriber density, network topology and infrastructure diversity. We support our customers through our direct global sales organization and our distribution networks.
We purchase parts and components for the assembly of some products from a large number of suppliers through a worldwide sourcing program. Additionally, we manage a process that identifies the components that are best purchased directly by contract manufacturers for use in the assembly of our products to achieve manufacturing efficiency, quality and cost objectives.
Additionally, we manage a process that identifies the components that are best purchased directly by contract manufacturers for use in the assembly of our products to achieve manufacturing efficiency, quality and cost objectives. Certain key components used in our products are currently available from a single source, and other key components are available from only a limited number of sources.
Government regulations are subject to change and, accordingly, we are unable to assess the possible effect of compliance with future requirements or whether our compliance with such regulations will materially impact our business in the future.
Government regulations are subject to change and, accordingly, we are unable to assess the possible effect of compliance with future requirements or whether our compliance with such regulations will materially impact our business in the future. 18 Sustainability We believe that as we follow our corporate vision to enable a fully connected world, we must continue to be responsible corporate citizens.
To service our customers and grow revenue, we are continually conducting research and developing new products addressing customer needs and testing those products for the specific requirements of the particular customers.
To service our customers and grow revenue, we are continually conducting research and developing new products addressing customer needs and testing those products for the specific requirements of the particular customers. We solely own ADTRAN, Inc. and are the majority shareholder of Adtran Networks. ADTRAN, Inc. is a leading global provider of open, disaggregated networking and communications solutions.
Furthermore, material changes in such laws, rules or regulations or the failure by us to comply with such laws, rules and regulations could limit our ability to conduct business globally.
Furthermore, material changes in such laws, rules or regulations or the failure by us to comply with such laws, rules and regulations could limit our ability to conduct business globally. Global trade policy continues to evolve and the ultimate impact of recent developments with respect to U.S. tariffs is unclear.
We compete with a number of companies in the markets we serve. In the Subscriber Solutions & Experience category, our primary competitors include Calix, Ciena, DZS, Nokia, eero, and a growing number of Asian based ODM's selling direct to carriers. In our Access & Aggregation solutions category, key competitors include Nokia, Calix, Huawei, ZTE Corporation, DZS, Vecima, Harmonic and Microchip.
In the Subscriber Solutions category, our primary competitors include Calix, Ciena, Nokia, eero, RAD, and a growing number of Asian based ODM's selling direct to carriers. In our Access & Aggregation solutions category, key competitors include Nokia, Calix, Vecima, Harmonic and Microchip. Main competitors of our Optical Networking solutions portfolio are Ciena, Cisco, Ekinops, Nokia, Smartoptics and Ribbon Communications.
Competition We compete in markets for networking and communications services and solutions for Service Providers, businesses, government agencies and other organizations worldwide. Our products and services provide solutions supporting voice, data and video communications across fiber-, copper-, and wireless-based infrastructure, as well as across wide area networks, local area networks and the internet.
Our products and services provide solutions supporting voice, data and video communications across fiber-, copper-, and wireless-based infrastructure, as well as across wide area networks, LANs and the internet. 16 We compete with a number of companies in the markets we serve.
This is supported by competitive compensation and benefits, along with strong community service and other programs that enable employees to build connections within the community.
This is supported by competitive compensation and benefits, along with strong community service and other programs that enable employees to build connections within the community. As of December 31, 2025 we had 3,338 total employees, of which 3,201 are full-time employees and 137 are part-time employees.
Additionally, we offer access to many programs that provide additional monetary support in the event of a qualifying incident, including accident insurance, life insurance and hospital indemnity insurance, among others. We understand that mental health is an essential aspect of our employees’ well-being and we offer an employee assistance program at no charge to employees and their family members.
We provide our employees with access to various health and wellness benefits designed to enable them and their family members to have affordable access to health, dental and vision insurance. Additionally, we offer access to many programs that provide additional monetary support in the event of a qualifying incident, including accident insurance, life insurance and hospital indemnity insurance, among others.
Our global headquarters are located at Cummings Research Park in Huntsville, Alabama, the second largest research park in the U.S. and fourth largest in the world. Our mailing address is 901 Explorer Boulevard, Huntsville, Alabama, 35806. Our telephone number at that location is (800) 923-8726. Our website is www.adtran.com.
Our global headquarters are located at Cummings Research Park in Huntsville, Alabama, the second largest research park in the U.S. and fourth largest in the world. Our European headquarters are located in Munich, Germany, and we have sales and research and development facilities in strategic global locations. Our mailing address is 901 Explorer Boulevard, Huntsville, Alabama, 35806.
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.
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. 17 Government Regulation Telecommunications Matters Our products that are incorporated into wireless communications systems must comply with various government regulations, including those of the FCC.
Once approved, product orders are typically placed under single or multi-year supply agreements that are generally not subject to minimum volume commitments. Service Providers generally prefer having two or more suppliers for most products. Therefore, individual orders are usually subject to competitive combinations of total value, service, price, delivery and other terms.
Before placing an order, Service Providers typically require lengthy product qualification and standardization processes that can extend for several months or even years. Once approved, product orders are typically placed under single or multi-year supply agreements that are generally not subject to minimum volume commitments. Service Providers generally prefer having two or more suppliers for most products.
The revenue from this Service Provider and these countries is reported in both our Network Solutions and Services & Support segments.
The revenue from this Service Provider and these countries is reported in both our Network Solutions and Services & Support segments. Distribution, Sales and Marketing We sell our products through our direct sales organization and our distribution network. Our direct sales organization supports major accounts and has offices in global locations.
This includes optical transport, packet demarcation and aggregation, synchronization and fiber-optic access, DSL, access routing, ethernet switching, wireless LANs, integrated access, converged services, VoIP, network management and professional services. In addition, we focus on vertical optical technologies like Silicon Photonics, as well as microelectronics in order to differentiate and fully control the vertical value stack of our solutions.
In addition, we focus on vertical optical technologies like Silicon Photonics, as well as microelectronics in order to differentiate and fully control the vertical value stack of our solutions.
Certain key components used in our products are currently available from a single source, and other key components are available from only a limited number of sources. In the past, we have experienced delays in the receipt of certain key components, which has resulted in delays in related product deliveries.
In the past, we have experienced delays in the receipt of certain key components, which has resulted in delays in related product deliveries.
The major aims of our program are reducing waste and emissions, maximizing energy efficiency and productivity and minimizing practices that can adversely affect utilization of natural resources by coming generations. Our ESG programs are important to us, consequently, ESG is a dedicated focus throughout the company.
We are committed to operating in full compliance with the laws, rules and regulations of all the countries in which we operate. The major aims of our program are reducing waste and emissions, maximizing energy efficiency and productivity and minimizing practices that can adversely affect utilization of natural resources by coming generations.
Our goal is to retain as many of these students as possible for full-time employment after graduation to build our organization's future. 19 Workplace Diversity We believe that maintaining a diverse and inclusive workforce is important to the success of our business.
Our goal is to retain as many of these students as possible for full-time employment after graduation to build our organization's future. 19 Health, Safety and Wellness The well-being of our employees is paramount to the continued success of our business. To this end, we are committed to each of our employees' health, safety and wellness.
We have established ESG and sustainability programs and policies that encompass the elements of Environmental, Health & Safety, Ethics, Labor, and the related management systems in alignment with the ISO 26000 Guidelines. We are committed to operating in full compliance with the laws, rules and regulations of all the countries in which we operate.
As more people are connected, work and life can be accomplished using fewer resources. We have established sustainability programs and policies that encompass the elements of Environmental, Health & Safety, Ethics, Labor, and the related management systems in alignment with the ISO 26000 Guidelines.
Stanton Age 60 2007 to present Chief Executive Officer and Chairman of the Board 2023 to present Chief Executive Officer and Management Board member of Adtran Networks Ulrich Dopfer Age 51 2023 to present Senior Vice President, Chief Financial Officer, Secretary and Treasurer Chief Financial Officer and Management Board member of Adtran Networks 2015 to 2023 Chief Financial Officer of Adtran Networks Christoph Glingener Age 56 2023 to present Chief Technology Officer Chief Technology Officer and Management Board member of Adtran Networks 2022 to 2023 Chief Executive Officer of Adtran Networks 2007 to 2022 Chief Technology Officer of Adtran Networks James D.
April 2023 to November 2023 Senior Vice President and Chief Accounting Officer, Conn's, Inc. 2018 to 2023 Senior Vice President and Global Controller of PRA Group Christoph Glingener Age 57 2023 to present Chief Technology Officer Chief Technology Officer and Management Board member of Adtran Networks 2022 to 2023 Chief Executive Officer of Adtran Networks 2007 to 2022 Chief Technology Officer of Adtran Networks James D.
We also utilized 240 contractors and numerous temporary employees domestically and internationally in various manufacturing, engineering, sales and general and administrative capacities. We believe that our relationship with our employees is good. We have a diverse employee base located in 37 countries.
We had 1,162 employees in the U.S. and 2,176 employees in our international subsidiaries located in North America, Latin America, EMEA and APAC regions. We also utilized 249 contractors and numerous temporary employees domestically and internationally in various manufacturing, engineering, sales and general and administrative capacities. We believe that our relationship with our employees is good.
It is possible that such litigation may result in significant legal costs and judgments and that intellectual property infringement claims, or related litigation against or by us could have a material adverse effect on our business and operating results.
It is possible that such litigation may result in significant legal costs and judgments and that intellectual property infringement claims, or related litigation against or by us could have a material adverse effect on our business and operating results. 20 Information about our Executive Officers Our executive officers as of February 26, 2026, are listed below, along with their ages on that date, positions and offices held with the Company, and principal occupations and employment, focused primarily on the past five years (and all positions within the Company).
Our marketing organization promotes all brands associated with us to key stakeholders, including customers, partners and prospects throughout the world.
Our field sales organizations, distributors and Service Provider customers receive support from regional-based marketing, sales and customer support groups. Our marketing organization promotes all brands associated with us to key stakeholders, including customers, partners and prospects worldwide.
Our ability to continually reduce product costs, while focusing on delivery and quality, are important parts of our overall business strategy. Our product development efforts are often centered on entering a market with improved technology, enabling us to offer products at competitive prices and compete for market share.
Our ability to continually reduce product costs, while focusing on delivery and quality, are important parts of our overall business strategy.
These seasonal effects may continue to vary and do not always correlate to our operating results. Accordingly, they should not be considered a reliable indicator of our future revenue or operating results. Additionally, the effects of the dynamic supply and demand environment we have experienced in recent periods may impact the traditional seasonality in our business.
These seasonal effects may continue to vary and do not always correlate to our operating results. Accordingly, they should not be considered a reliable indicator of our future revenue or operating results. Foreign Currency Transactions with customers that are denominated in foreign currencies are recorded using the appropriate exchange rates from throughout the year.
Orders for end-user products are fulfilled through a combination of direct sales and distributors. This is supported by a direct sales organization for major accounts and a channel-based sales organization to facilitate sales to our partners. MSPs, VARs and SIs may be affiliated with us as channel partners, or they may purchase from a distributor in an unaffiliated fashion.
Therefore, individual orders are usually subject to competitive combinations of total value, service, price, delivery and other terms. Orders for end-user products are fulfilled through a combination of direct sales and distributors. This is supported by a direct sales organization for major accounts and a channel-based sales organization to facilitate sales to our partners.
We believe, however, that our competitive success will not fully depend on the ownership of intellectual property, but instead will depend primarily on the innovative skills, technical competence and marketing abilities of our personnel. The communications industry is characterized by the existence of an ever-increasing volume of patent litigation and licensing activities.
We also claim rights to a number of unregistered trademarks. We protect our intellectual property and proprietary rights in accordance with good legal and business practices. We believe, however, that our competitive success will not fully depend on the ownership of intellectual property, but instead will depend primarily on the innovative skills, technical competence and marketing abilities of our personnel.
We have Board oversight including an ESG Committee, strong management support and engagement from our employees.
Our sustainability programs are important to us, consequently, sustainability is a dedicated focus throughout the company. We have Board oversight including a Sustainability Committee, strong management support and engagement from our employees.
Affiliated partners participate with us at various program levels, based on sales volume and other factors, to receive benefits such as product discounts, market development funds, technical support and training. Outside of the U.S., most Service Provider products are sold through our direct sales organization and end-user products are sold direct or through distribution arrangements customized for each region.
MSPs, VARs and SIs may be affiliated with us as channel partners, or they may purchase from a distributor in an unaffiliated fashion. Affiliated partners participate with us at various program levels, based on sales volume and other factors, to receive benefits such as product discounts, market development funds, technical support and training.
However, inflationary pressures on our supply chain have eased somewhat, which has led to reductions in cost premiums on raw material costs and freight. We continue to support our customer demand for our products by working with our suppliers, contract manufacturers, distributors, and customers to address and to limit the disruption to our operations and order fulfillment.
We maintain substantial inventories of raw materials for long lead time components to support this demand and avoid expedite fees. We support our customer demand for our products by working with our suppliers, contract manufacturers, distributors, and customers to address and to limit the disruption to our operations and order fulfillment.
Some regions are supported from a field office that offers sales and support functions, and in some cases, warehousing and manufacturing support. Our field sales organizations, distributors and Service Provider customers receive support from regional-based marketing, sales and customer support groups.
Outside of the U.S., most Service Provider products are sold through our direct sales organization and end-user products are sold direct or through distribution arrangements customized for each region. Some regions are supported from a field office that offers sales and support functions, and in some cases, warehousing and manufacturing support.
Development activities focus on solutions that support both existing and emerging communications industry technologies in segments that we consider viable revenue opportunities. We are actively engaged in developing and refining technologies to support data, voice and video transport primarily over IP/Ethernet and optical network architectures.
We are actively engaged in developing and refining technologies to support data, voice and video transport primarily over IP/Ethernet and optical network architectures. This includes optical transport, packet demarcation and aggregation, synchronization and fiber-optic access, DSL, access routing, ethernet switching, wireless LANs, integrated access, converged services, VoIP, network management and professional services.
Wilson, Jr. Age 54 2019 to present Chief Revenue Officer 2015 – 2019 Senior Vice President of Technology and Strategy 2006 – 2015 Senior Vice President and General Manager (Carrier Networks) There are no family relationships among our directors or executive officers. Adtran Networks is a majority-owned subsidiary of the Company.
Wilson, Jr. Age 55 2019 to present Chief Revenue Officer 2015 – 2019 Senior Vice President of Technology and Strategy 2006 – 2015 Senior Vice President and General Manager (Carrier Networks) * On July 23, 2024, Conn’s, Inc. and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code.
Distribution, Sales and Marketing We sell our products through our direct sales organization and our distribution network. Our direct sales organization supports major accounts and has offices in global locations. Sales to most smaller and independent telephone companies are fulfilled through a combination of direct sales and distributors.
Sales to most smaller and independent telecom companies are fulfilled through a combination of direct sales and distributors. Our service offerings can be purchased directly from us or through one of our Service Providers, channel partners or distribution partners.
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Our innovative solutions and services enable voice, data, video and internet-communications across a variety of network infrastructures and are currently in use by millions worldwide. We support our customers through our direct global sales organization and our distribution networks.
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Our product development efforts are often centered on entering a market with improved technology, which we believe enables us to offer products at competitive prices and compete for market share. 15 Development activities focus on solutions that support both existing and emerging communications industry technologies in segments that we consider viable revenue opportunities.
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We offer a broad portfolio of flexible software and hardware network solutions and services that enable Service Providers to meet today’s service demands, while enabling them to transition to the fully converged, scalable, highly-automated, cloud-controlled voice, data, internet and video network of the future.
Added
During 2025, we launched many new products, including an auto-tunable 50G C-band pluggable transceiver, expanded our Wi-Fi 7 portfolio with SDG 9000 Series for residential, small business and MDU connectivity, and launched the new FSP 3000 OLS solution. We also continued to advance our software and AI strategy through the Mosaic One platform.
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In addition to our global headquarters in Huntsville, Alabama, and our European headquarters in Munich, Germany, we have sales and research and development facilities in strategic global locations. The Company solely owns ADTRAN, Inc. and is the majority shareholder of Adtran Networks SE (“Adtran Networks”). ADTRAN, Inc. is a leading global provider of open, disaggregated networking and communications solutions.
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Manufacturing and Operations The principal steps in our manufacturing process include the purchase and management of materials, assembly, testing, final inspection, packing and shipping. We purchase parts and components for the assembly of some products from a large number of suppliers through a worldwide sourcing program.
Removed
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.
Added
Recently, the Company has experienced increased costs on imports of certain critical raw minerals and derivative products relevant to our business and products due to tariffs imposed by the U.S. government and other nations. The availability, timing and amount of any potential refunds of such tariffs remain unclear.
Removed
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”).
Added
Moreover, although the Company has been able to substantially mitigate the impact of tariffs that have been enacted to date, if additional tariffs and reciprocal tariffs are implemented (whether as currently proposed or otherwise), such actions could have a negative effect on our financial results, including our revenue and profitability.
Removed
On October 25, 2023, all employees were informed of certain personnel measures, which included the reduction of salary for select management, a reduction of approximately 5% of the workforce, an early retirement program and a hiring freeze. Additionally, on April 11, 2024, Management determined to close a facility in Greifswald, Germany which was completed in November 2024.
Added
Competition We compete in markets for networking and communications services and solutions for Service Providers, businesses, government agencies and other organizations worldwide.
Removed
As of December 31, 2024, the Company classified the Company's property, specifically the North and South Towers located on our Huntsville, Alabama campus, as assets held for sale, see Note 1 and Note 6 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBecause our supply chain is complex, we may face reputational challenges with our customers, stockholders and other stakeholders if we are unable to verify sufficiently the origins for the conflict minerals used in our products and cannot assert that our products are “conflict free.” Environmental or similar social initiatives may also make it difficult to obtain supply of compliant components or may require us to write off non-compliant inventory, which could have an adverse effect on our business and operating results. • the insider trading prohibitions and the respective directors' dealing rules, as well as disclosure and reporting obligations under the German Securities Trading Act ( Wertpapierhandelsgesetz ) and Regulation (EU) No. 596/2014 of the European Parliament and of the Council of April 16, 2014, and other applicable regulations.
Biggest changeBecause our supply chain is complex, we may face reputational challenges with our customers, stockholders and other stakeholders if we are unable to verify sufficiently the origins for the conflict minerals used in our products and cannot assert that our products are “conflict free.” Environmental or similar social initiatives may also make it difficult to obtain supply of compliant components or may require us to write off non-compliant inventory, which could have an adverse effect on our business and operating results. • the insider trading prohibitions and the respective directors' dealing rules, as well as disclosure and reporting obligations under the German Securities Trading Act ( Wertpapierhandelsgesetz ) and Regulation (EU) No. 596/2014 of the European Parliament and of the Council of April 16, 2014, and other applicable regulations. • article 17 of the Market Abuse Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014, which mandates that issuers such as us that are listed on the primary standard of the Frankfurt Stock Exchange provide real time disclosure in certain circumstances, including where management’s expected results materially deviate from previously announced guidance or analyst consensus.
However, due to the appraisal proceedings that were initiated in accordance with applicable German law in 2023, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act ( Aktiengesetz ) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal Gazette ( Bundesanzeiger ).
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 ).
Our dependence on a limited number of suppliers for certain raw materials, key components and ODM products, combined with supply shortages, have prevented and may continue to prevent us from delivering our products on a timely basis, which has had and may continue to have a material adverse effect on operating results and could have a material adverse effect on customer relations.
Our dependence on a limited number of suppliers for certain raw materials, key components and ODM products, combined with supply shortages, has prevented and may continue to prevent us from delivering our products on a timely basis, which has had and may continue to have a material adverse effect on operating results and could have a material adverse effect on customer relations.
If our assumptions and related estimates change in the future, or if we change our reporting unit structure or other events and circumstances change (e.g., a sustained decrease in the price of our common stock (considered on both absolute terms and relative to peers)), we may be required to record impairment charges when we perform these tests, or in other future periods.
If our assumptions and related estimates change in the future, or if we change our reporting unit structure or other events and circumstances change (e.g., a sustained decrease in the price of our common stock (considered on both absolute terms and relative to peers)), we may be required to record impairment charges when we perform these tests, or in future periods.
A reduction in our revenue would be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth. Risks related to our control environment We have had to restate our previously issued consolidated financial statements and, as part of that process, have identified material weaknesses in our internal control over financial reporting.
A reduction in our revenue would be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth. Risks related to our control environment We have had to restate our previously issued consolidated financial statements and, as part of that process, identified material weaknesses in our internal control over financial reporting.
We integrate third-party software into certain of our products. Licenses for this technology may not be available or continue to be available to us on commercially reasonable terms. Difficulties with third-party technology licensors could result in the termination of such licenses, which may result in increased costs or require us to purchase or develop a substitute technology.
We integrate third-party software into certain of our products. Licenses for this technology may not be available or may not continue to be available to us on commercially reasonable terms. Difficulties with third-party technology licensors could result in the termination of such licenses, which may result in increased costs or require us to purchase or develop a substitute technology.
As long as the major and larger independent communications companies represent such a substantial percentage of our total revenue, our future success will significantly depend upon certain factors which are not within our control, including: • the timing and size of future purchase orders, if any, from these customers; • changes in strategic plans and capital budgets of these customers; • the product requirements of these customers; • the subscriber take rate, including subscriber loss or churn, of our customers; • the financial and operational success of these customers; • the impact of legislative and regulatory changes on these customers; • consolidation, acquisition of, or corporate reorganization among these customers; • the success of these customers' services deployed using our products; and • the impact of work stoppages at these customers.
As long as the major and larger independent communications companies represent such a substantial percentage of our total revenue, our future success will significantly depend upon certain factors which are not within our control, including: • the timing and size of future purchase orders, if any, from these customers; • changes in strategic plans and capital budgets of these customers; • the product requirements of these customers; • the subscriber take rate, including subscriber loss or churn, of our customers; • the financial and operational success of these customers; • the impact of legislative and regulatory changes on these customers; 26 • consolidation, acquisition of, or corporate reorganization among these customers; • the success of these customers' services deployed using our products; and • the impact of work stoppages at these customers.
Further, the cost of complying with the evolving standards and regulations, including the cost of product re-design if necessary, or the failure to obtain timely domestic or foreign regulatory approvals or certification such that we may not be able to sell our products 38 where these standards or regulations apply, may adversely affect our revenue, results of operations, financial condition and cash flows. • compliance with a wide variety of provincial, state, national and international laws and regulations applicable to the collection, use, retention, protection, disclosure, transfer and other processing of data, including personal data.
Further, the cost of complying with the evolving standards and regulations, including the cost of product re-design if necessary, or the failure to obtain timely domestic or foreign regulatory approvals or certification such that we may not be able to sell our products where these standards or regulations apply, may adversely affect our revenue, results of operations, financial condition and cash flows. • compliance with a wide variety of provincial, state, national and international laws and regulations applicable to the collection, use, retention, protection, disclosure, transfer and other processing of data, including personal data.
Those countries and jurisdictions may have, currently or in the future, data protection or privacy laws or regulations with similar or additional requirements, resulting in increased compliance costs and regulatory risk. • the FCPA, which prohibits U.S. companies and their intermediaries from making corrupt payments to foreign officials for the purpose of directing, obtaining or keeping business, and requires companies to maintain reasonable books and records and a system of internal accounting controls.
Those countries and jurisdictions may have, currently or in the future, data protection or privacy laws or regulations with similar or additional requirements, resulting in increased compliance costs and regulatory risk. • the FCPA, which prohibits U.S. companies and their intermediaries from making corrupt payments to foreign officials for the purpose of directing, obtaining or keeping business, and requires companies to maintain reasonable books and records 41 and a system of internal accounting controls.
In the current inflationary environment, because certain of our customer contracts provide for fixed pricing and/or due to our competitor’s pricing strategies, we are not always been able to raise the sales prices of our products and services at or above the rate at which our costs increase, which has reduced our profit and operating margins and has and could continue 32 to have a material adverse effect on our financial results.
In the current inflationary environment, because certain of our customer contracts provide for fixed pricing and/or due to our competitor’s pricing strategies, we are not always been able to raise the sales prices of our products and services at or above the rate at which our costs increase, which has reduced our profit and operating margins and has and could continue to have a material adverse effect on our financial results.
At this time, it remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to international trade agreements, the imposition of tariffs on goods imported into the U.S. or exported to other countries, tax policy related to international commerce, increased export control, sanctions and investment restrictions, import or use of foreign communications equipment, or other trade matters.
At this time, it remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to international trade agreements, the imposition of or changes to tariffs on goods imported into the U.S. or exported to other countries, tax policy related to international commerce, increased export control, sanctions and investment restrictions, import or use of foreign communications equipment, or other trade matters.
Any failure by us to continue to anticipate or respond in a cost-effective and timely manner to changes in technology, industry standards, Service Provider offerings or new product announcements by our competitors, or any significant delays in product development or introduction, could 34 have a material adverse effect on our ability to competitively market our products and on our revenue, results of operations, financial condition and cash flows.
Any failure by us to continue to anticipate or respond in a cost-effective and timely manner to changes in technology, industry standards, Service Provider offerings or new product announcements by our competitors, or any significant delays in product development or introduction, could have a material adverse effect on our ability to competitively market our products and on our revenue, results of operations, financial condition and cash flows.
This may put us at a competitive disadvantage and we may be adversely affected by negative market perceptions, any of which may have a material adverse effect on our revenue, gross margin and profitability. 31 Integration and divestiture issues are complex, time-consuming and expensive and, without proper planning and implementation, could significantly disrupt our business.
This may put us at a competitive disadvantage and we may be adversely affected by negative market perceptions, any of which may have a material adverse effect on our revenue, gross margin and profitability. Integration and divestiture issues are complex, time-consuming and expensive and, without proper planning and implementation, could significantly disrupt our business.
Changes in domestic or international communications regulations, tariffs, potential changes in trade policies by the U.S. and other nations, application requirements, import/export controls or expansion of regulation to new areas, including access, communications or commerce over the internet, may affect customer demand for our products or slow the adoption of new technologies which may affect our revenue.
Changes in domestic or international communications regulations, tariffs, changes in trade policies by the U.S. and other nations, application requirements, import/export controls or expansion of regulation to new areas, including access, communications or commerce over the internet, may affect customer demand for our products or slow the adoption of new technologies which may affect our revenue.
In addition, a significant component of maintaining cost competitiveness is the ability of our subcontractors to adjust their costs to compensate for possible adverse exchange 35 rate movements. To the extent that the subcontractors are unable to do so, and we are unable to procure alternative product supplies, then our competitiveness and results of operations could be adversely impaired.
In addition, a significant component of maintaining cost competitiveness is the ability of our subcontractors to adjust their costs to compensate for possible adverse exchange rate movements. To the extent that the subcontractors are unable to do so, and we are unable to procure alternative product supplies, then our competitiveness and results of operations could be adversely impaired.
Current capital market conditions, including the impact of inflation, have increased borrowing rates and can be expected to significantly increase our cost of capital as compared to prior periods should we seek additional funding. The terms of the DPLTA may have a material adverse effect on our financial results and condition.
Current capital market conditions, including the impact of inflation, have increased borrowing rates and can be expected to significantly increase our cost of capital as compared to prior periods should we seek additional funding. 24 The terms of the DPLTA may have a material adverse effect on our financial results and condition.
For additional details regarding the Business Efficiency Program, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Efficiency Program” in Part II, Item 7 of this report. 29 Our international operations have and may continue to expose us to additional risks, increase our costs and adversely affect our operating results, financial condition and cash flows.
For additional details regarding the Business Efficiency Program, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Business Efficiency Program” in Part II, Item 7 of this report. Our international operations have and may continue to expose us to additional risks, increase our costs and adversely affect our operating results, financial condition and cash flows.
Further, once customer approval or certifications are met, our supply chain customers typically do not guarantee us a minimum, or any, volume of sales. We require a significant amount of cash to service our indebtedness, our payment obligations to Adtran Networks shareholders under the DPLTA, and other obligations.
Further, once customer approval or certifications are met, our supply chain customers typically do not guarantee us a minimum, or any, volume of sales. 23 We require a significant amount of cash to service our indebtedness, our payment obligations to Adtran Networks shareholders under the DPLTA, and other obligations.
Our cash flows, results of operations, and financial condition may be adversely affected by these and other industry-wide pricing pressures. 28 In addition, our present and future competitors may be able to enter our existing or future markets with products or technologies comparable or superior to those that we offer.
Our cash flows, results of operations, and financial condition may be adversely affected by these and other industry-wide pricing pressures. In addition, our present and future competitors may be able to enter our existing or future markets with products or technologies comparable or superior to those that we offer.
In addition, 26 particularly in the Service Provider market, rapid consolidation will lead to fewer customers, with the effect that a loss of a major customer could have a material impact on our results that we would not have anticipated in a marketplace composed of more numerous participants.
In addition, particularly in the Service Provider market, rapid consolidation will lead to fewer customers, with the effect that a loss of a major customer could have a material impact on our results that we would not have anticipated in a marketplace composed of more numerous participants.
Our estimates regarding future warranty obligations may change due to product failure rates, installation and shipment volumes, field service repair obligations and other rework costs incurred in correcting product failures. If our estimates change, our liability for warranty obligations may increase or decrease, impacting future cost of revenue.
Our estimates regarding future warranty obligations may change due to product failure rates, installation and shipment volumes, field service repair obligations and other rework costs incurred in correcting product failures. If our estimates materially change, our liability for warranty obligations may increase or decrease, impacting future cost of revenue.
Any of these consequences could adversely impact our results of operations by increasing our expenses and/or requiring us to alter our manufacturing processes. If our products do not interoperate with our customers’ networks, installations may be delayed or canceled, which could harm our business.
Any of these consequences could adversely impact our results of operations by increasing our expenses and/or requiring us to alter our manufacturing processes. 35 If our products do not interoperate with our customers’ networks, installations may be delayed or canceled, which could harm our business.
It is possible that the court in these appraisal proceedings may hold that we must pay higher Exit Compensation or Annual Recurring Compensation to such Adtran Networks SE shareholders than agreed upon in the DPLTA, the financial impact and timing of which is uncertain.
It is possible that the court in these appraisal proceedings may hold that we must pay higher Exit Compensation or Annual Recurring Compensation to such Adtran Networks shareholders than agreed upon in the DPLTA, the financial impact and timing of which is uncertain.
We compete in markets that have become increasingly competitive, which may result in reduced gross profit margins and market share. The markets for our products are intensely competitive. New manufacturers have entered the markets in recent years to offer products in competition with us.
We compete in markets that have become increasingly competitive, which may result in reduced gross profit margins and market share. 28 The markets for our products are intensely competitive. New manufacturers have entered the markets in recent years to offer products in competition with us.
Risks related to our financial results and Company success We are obligated to comply with covenants related to our Wells Fargo Credit Agreement that restrict our operating activities, and the failure to comply with such covenants could result in defaults that accelerate our debt.
Risks related to our financial results and Company success We are obligated to comply with covenants related to our Wells Fargo Credit Agreement that restrict our operating activities, and the failure to comply with such covenants could result in defaults that accelerate our debt obligations.
Such costs, and the demands 36 on management time during such an event, could harm our business, reputation and have a material adverse effect on our liquidity, results of operations, financial condition and cash flows.
Such costs, and the demands on management time during such an event, could harm our business, reputation and have a material adverse effect on our liquidity, results of operations, financial condition and cash flows.
We believe that we may be faced with the following challenges in the future: new markets in which we participate may grow quickly, which may make it difficult to quickly obtain significant raw materials and/or components; as we acquire companies and new technologies, we may be dependent on unfamiliar supply chains or relatively small supply partners; and we face competition for certain raw materials or components that are supply-constrained from existing competitors and companies in other markets.
We believe that we may be faced with the following challenges in the future: new markets in which we participate may grow quickly, which may make it difficult to quickly obtain sufficient raw materials and/or components; as we acquire companies and new technologies, we may be dependent on unfamiliar supply chains or relatively small supply partners; and we face competition for certain raw materials or components that are supply-constrained from existing competitors and companies in other markets.
In addition, as a result of the Business Combination with Adtran Networks SE, we continue to be exposed to litigation risk and uncertainty associated with the remaining minority shareholders of Adtran Networks.
In addition, as a result of the business combination with Adtran Networks, we continue to be exposed to litigation risk and uncertainty associated with the remaining minority shareholders of Adtran Networks.
Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC, the Federal Financial Supervisory Authority, or other regulatory authorities. In either case, there could be an adverse effect on our business, financial condition and results of operations.
Likewise, when our financial statements are not filed on a timely basis we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC, the Federal Financial Supervisory Authority, or other regulatory authorities. In either case, there could be an adverse effect on our business, financial condition and results of operations.
We can provide no assurance that the measures that we have taken, are taking, and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls.
We can provide no assurance that the measures that we have taken and are taking will remediate the material weaknesses identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement or maintain adequate internal control over financial reporting or circumvention of these controls.
Our level of gross margins may not be sustainable and has been and may continue to be adversely affected by numerous factors, including: • changes in customer, geographic or product or services mix, including software and the mix of configurations and professional services revenue within each product segment; • mix of domestic versus international revenue; • introduction of new products by competitors, including products with price-performance advantages; • our ability to reduce product cost; • increases in labor or material cost, including increases in material costs resulting from inflation or tariffs; • foreign currency exchange rate movements; • expediting costs incurred to meet customer delivery requirements; • excess inventory and inventory holding charges; • excess and obsolescence charges; • changes in shipment volume; • our ability to absorb fixed manufacturing costs during short-term fluctuations in customer demand; • loss of cost savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand; • lower than expected benefits from value engineering; • increased price competition, including competitors from Asia, specifically China; • changes in distribution channels; • increased warranty cost or quality issues; • liquidated damages costs relating to customer contractual terms; • our ability to manage the impact of foreign currency exchange rate fluctuations relating to our revenue or cost of revenue; • slowdowns, recessions, economic instability (such as the instability in the financial services sector), political unrest, armed conflicts (such as the ongoing military conflict in Ukraine and in Israel and surrounding regions), or outbreaks of disease around the world; and 27 • an extended government shutdown resulting from budgetary decisions or other potential delays or changes in the government appropriations or other funding authorization processes.
Our level of gross margins may not be sustainable and has been and may continue to be adversely affected by numerous factors, including: • changes in customer, geographic or product or services mix, including software and the mix of configurations and professional services revenue within each product segment; • mix of domestic versus international revenue; • introduction of new products by competitors, including products with price-performance advantages; • our ability to reduce product cost; • increases in labor or material cost, including increases in material costs resulting from inflation or tariffs; • foreign currency exchange rate movements; • expediting costs incurred to meet customer delivery requirements; • excess inventory and inventory holding charges; • excess and obsolescence charges; • changes in shipment volume; • our ability to absorb fixed manufacturing costs during short-term fluctuations in customer demand; • loss of cost savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand; 27 • lower than expected benefits from value engineering; • increased price competition, including competitors from Asia, specifically China; • changes in distribution channels; • increased warranty cost or quality issues; • liquidated damages costs relating to customer contractual terms; • our ability to manage the impact of foreign currency exchange rate fluctuations relating to our revenue or cost of revenue; • slowdowns, recessions, economic instability, political unrest, armed conflicts (such as the ongoing military conflict in Ukraine and the Middle East, or outbreaks of disease around the world; and • an extended government shutdown resulting from budgetary decisions or other potential delays or changes in the government appropriations or other funding authorization processes.
Any prior or future downgrades in our credit rating associated with a transaction could adversely affect our ability to borrow and our borrowing cost, and result in more restrictive borrowing terms. In addition, our effective tax rate on an ongoing basis is uncertain, and such transactions could impact our effective tax rate.
Any prior or future downgrades in our credit rating associated with a transaction could adversely affect our ability to borrow and our borrowing costs, and result in more restrictive borrowing terms. In addition, our effective tax rate on an ongoing basis is uncertain, and such transactions could impact our effective tax rate.
The FCPA applies to companies, individual directors, officers, employees and agents. Under the FCPA, U.S. companies may be held liable for the corrupt actions taken by employees, strategic or local partners or other representatives. On February 10, 2025, the U.S. government temporarily paused the enforcement of the FCPA.
The FCPA applies to companies, individual directors, officers, employees and agents. Under the FCPA, U.S. companies may be held liable for the corrupt actions taken by employees, strategic or local partners or other representatives. On February 10, 2025, the U.S. government temporarily paused the enforcement of the FCPA. On June 9, 2025, the U.S.
These transactions could result in significant costs and expenses and charges to earnings, including those related to severance pay, early retirement costs, employee benefit costs, asset impairment charges, charges from the elimination of duplicative facilities and contracts, in-process research and development charges, inventory adjustments, assumed litigation, regulatory compliance and other liabilities, legal, accounting and financial advisory fees and required payments to executive officers and key employees under retention plans.
These transactions have resulted and could result in the future in significant costs and expenses and charges to earnings, including those related to severance pay, early retirement costs, employee benefit costs, asset impairment charges, charges from the elimination of duplicative facilities and contracts, in-process research and development charges, inventory adjustments, assumed litigation, regulatory compliance and other liabilities, legal, accounting and financial advisory fees and required payments to executive officers and key employees under retention plans.
We had to restate our previously issued consolidated financial statements in August 2023 and March 2024 and, in connection with those restatements, we identified material weaknesses in our internal control over financial reporting, certain of which have continued as of the date hereof.
We had to restate our previously issued consolidated financial statements in August 2023, March 2024 and May 2025 and, in connection with those restatements, we identified material weaknesses in our internal control over financial reporting, certain of which have continued as of the date hereof.
Any failure, or perceived failure, by us to achieve our targets, further our initiatives, adhere to our public statements, comply with federal, state or international ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.
Any failure, or perceived failure, by us to achieve our targets, further our initiatives, adhere to our public statements, comply with federal, state or international sustainability and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.
A reduction or interruption in supply, including disruptions on our global supply chain, caused in part by public health emergencies, geopolitical tensions (including as a result of the ongoing conflict in Ukraine and in Israel and surrounding regions, as well as China-Taiwan relations); a significant natural disaster (including as a result of climate change); tariffs or other trade restrictions; a significant increase in the price of one or more components (including as a result of inflation); a failure to adequately authorize procurement of inventory by our contract manufacturers; a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs; or a decrease in demand for our products could materially adversely affect our business, operating results, and financial condition and could materially damage customer relationships.
A reduction or interruption in supply, including disruptions on our global supply chain, caused in part by public health emergencies, geopolitical tensions (including as a result of the ongoing conflict in Ukraine, the Middle East, as well as China-Taiwan relations; a significant natural disaster (including as a result of climate change); tariffs or other trade restrictions; a significant increase in the price of one or more components (including as a result of inflation); a failure to adequately authorize procurement of inventory by our contract manufacturers; a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs; or a decrease in demand for our products could materially adversely affect our business, operating results, and financial condition and could materially damage customer relationships.
We also may experience risks relating to the challenges and costs of closing a transaction and the risk that an announced transaction may not close. As a result, any completed, pending or future transactions may contribute to financial results that differ materially from the investment community’s expectations. Ongoing inflationary pressures have negatively impacted our revenues and profitability.
We also may experience risks relating to the challenges and costs of closing a transaction and the risk that an announced transaction may not close. As a result, any completed, pending or future transactions may contribute to financial results that differ materially from the investment community’s expectations. 32 Ongoing inflationary pressures have negatively impacted our revenue and profitability.
Furthermore, tariffs on our customers’ products may adversely affect our gross profit margins in the future due to the potential for increased pressure on our selling prices by customers seeking to offset the impact of tariffs on their own products.
Finally, tariffs on our customers’ products may adversely affect our gross profit margins in the future due to the potential for increased pressure on our selling prices by customers seeking to offset the impact of tariffs on their own products.
Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on ESG considerations relating to businesses, including climate change and greenhouse gas emissions, human and civil rights, and diversity, equity and inclusion. In addition, we may make statements about our ESG goals and initiatives through our website, press statements and other communications.
Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on sustainability and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human and civil rights, and diversity, equity and inclusion. In addition, we may make statements about our sustainability and governance goals and initiatives through our website, press statements and other communications.
Furthermore, international expansion may continue to increase our operational risks and impact our results of operations, including: • foreign currency exchange rate volatility has had and may continue to have an unfavorable impact on our cash flows, financial condition and results of operations; • exposure to unfavorable commercial terms in certain countries; • the time and cost to staff and manage foreign operations, including the time and cost to maintain good relationships with employee associations and work councils; • the time and cost to ensure adequate business interruption controls, processes and facilities; • the time and cost to manage and evolve financial reporting systems, maintain effective financial disclosure controls and procedures, and comply with corporate governance requirements in multiple jurisdictions; • the cost to collect accounts receivable and extension of collection periods; • the cost and potential disruption of facilities transitions required in some business acquisitions; • risks as a result of less regulation of patents or other safeguards of intellectual property in certain countries; • the potential impact of adverse tax, customs regulations and transfer-pricing issues; • exposure to increased price competition from additional competitors in some countries; • exposure to global social, political and economic instability, changes in economic conditions and foreign currency exchange rate movements; • potential exposure to liability or damage of reputation resulting from a higher incidence of corruption or unethical business practices in some countries; • potential regulations on data protection, regarding the collection, use, disclosure and security of data; • potential trade protection measures, export compliance issues, domestic preference procurement requirements, qualification to transact business and additional regulatory requirements; • potential exposure to natural disasters, epidemics and pandemics (and government regulations in response thereto) and acts of war or terrorism; and • potential exposure to ongoing military conflicts, including the conflict in Ukraine and in Israel and surrounding regions.
Furthermore, international expansion may continue to increase our operational risks and impact our results of operations, including: • foreign currency exchange rate volatility has had and may continue to have an unfavorable impact on our cash flows, financial condition and results of operations; • exposure to unfavorable commercial terms in certain countries; • the time and cost to staff and manage foreign operations, including the time and cost to maintain good relationships with employee associations and work councils; • the time and cost to ensure adequate business interruption controls, processes and facilities; • the time and cost to manage and evolve financial reporting systems, maintain effective financial disclosure controls and procedures, and comply with corporate governance requirements in multiple jurisdictions; • the cost to collect accounts receivable and extension of collection periods; • the cost and potential disruption of facilities transitions required in some business acquisitions; • risks as a result of less regulation of patents or other safeguards of intellectual property in certain countries; • the potential impact of adverse tax, customs regulations and transfer-pricing issues; • exposure to increased price competition from additional competitors in some countries; • exposure to global social, political and economic instability, changes in economic conditions and foreign currency exchange rate movements; • potential exposure to liability or damage of reputation resulting from a higher incidence of corruption or unethical business practices in some countries; • potential regulations on data protection, regarding the collection, use, disclosure and security of data; • potential trade protection measures, export compliance issues, domestic preference procurement requirements, qualification to transact business and additional regulatory requirements; • potential exposure to natural disasters, epidemics and pandemics (and government regulations in response thereto) and acts of war or terrorism; and • potential exposure to ongoing military conflicts, including the conflict in Ukraine and the Middle East, as well as recent developments in Venezuela and Latin America.
In addition to specialized technical expertise, SIs, Service Providers and VARs typically offer sophisticated service capabilities that are frequently desired by enterprise customers. To expand our distribution channel to include resellers with such capabilities, we must be able to provide effective support to these resellers.
In addition to specialized technical expertise, Systems Integrators, Service Providers and VARs typically offer sophisticated service capabilities that are frequently desired by enterprise customers. To expand our distribution channel to include resellers with such capabilities, we must be able to provide effective support to these resellers.
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 exchange rate as of December 31, 2024) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation.
Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately €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 lengthy sales and approval process required by Service Providers for new products has resulted in fluctuations in our revenue and may result in fluctuations of future revenue and financial results. In the industry in which we compete, sales and approval cycles are often lengthy.
The lengthy sales and approval process required by Service Providers for new products has resulted in fluctuations in our revenue and may result in future revenue fluctuations. In the industry in which we compete, sales and approval cycles are often lengthy.
Responding to these environmental, social and governance considerations and implementation of these goals and initiatives involves risks and uncertainties, requires investments, and depends in part on third-party performance or data that is outside of our control.
Responding to these sustainability and governance considerations and implementation of these goals and initiatives involves risks and uncertainties, requires investments, and depends in part on third-party performance or data that is outside of our control.
Any failure to maintain effective internal control over financial reporting could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors do not have a complete understanding of our operations.
The failure to maintain effective internal control over financial reporting could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. When our financial statements are not accurate, investors do not have a complete understanding of our operations.
Deterioration of relations between Taiwan and China and the United States, the resulting actions taken by any of these parties, and other factors affecting the political or economic conditions of Taiwan in the future, could adversely impact our supply chain, international sales, and operations.
Deterioration of relations between Taiwan and China and the U.S., the resulting actions taken by any of these parties, and other factors affecting the political or economic conditions of Taiwan in the future, could adversely impact our supply chain, international sales, and operations.
If our sales, marketing or service capabilities are not sufficient to provide effective support to such SIs, Service Providers and VARs, our revenue may be negatively affected, and current SI, Service Provider and VAR partners may terminate their relationships with us, which would adversely impact our revenue and overall results of operations.
If our sales, marketing or service capabilities are not sufficient to provide effective support 37 to such Systems Integrators, Service Providers and VARs, our revenue may be negatively affected, and current Systems Integrators, Service Provider and VAR partners may terminate their relationships with us, which would adversely impact our revenue and overall results of operations.
If we fail to implement these reductions or are unable to achieve sufficient operating results and resources, we could face substantial liquidity challenges and might be required to dispose of material assets or operations to meet our debt service and other obligations.
If we are unable to achieve sufficient operating results and resources, we could face substantial liquidity challenges and might be required to dispose of material assets or operations to meet our debt service and other obligations.
If we fail to pay interest on, or repay, our borrowings under the Wells Fargo credit facility when required, we will be in default under the applicable loans, and may also suffer an event of default under the terms of other borrowing arrangements that we may enter into from time to time.
If we fail to pay interest on, or repay, our borrowings under the Amended Credit Agreement when required, we will be in default under the applicable loans, and may also suffer an event of default under the terms of other borrowing arrangements that we may enter into from time to time.
Our failure to comply with the covenants set forth in the Credit Agreement could result in defaults that accelerate the payment under such debt which would likely have a material adverse impact on our financial condition and results of operations.
Our failure to comply with the covenants set forth in the Credit Agreement has resulted in events of default and could in the future result in defaults that accelerate the payment under such debt which would likely have a material adverse impact on our financial condition and results of operations.
International sales represented 56.8% and 59.8% of our net revenue for the years ended December 31, 2024 and 2023. We have a significant international presence, and our international presence may continue to grow. If we continue to expand our presence in international markets, we expect to continue to experience increased revenue and operating costs in these markets.
International sales represented 55.6% and 56.8% of our net revenue for the years ended December 31, 2025 and 2024. We have a significant international presence, and our international presence may continue to grow. If we continue to expand our presence in international markets, we expect to continue to experience increased revenue and operating costs in these markets.
If we cannot raise additional funds as needed, it could have a material adverse impact on our financial results and financial condition. Additionally, the payment of the Annual Recurring Compensation and Exit Compensation could have a material adverse impact on our financial results and financial condition.
If we cannot raise additional funds to the extent needed, it could adversely impact our financial results and financial condition. Additionally, the payment of the Annual Recurring Compensation and Exit Compensation could have a material adverse impact on our financial results and financial condition.
In August 2022, the Inflation Reduction Act was signed into law, which made a number of changes to the Internal Revenue Code, including adding a 1% excise tax on stock buybacks by publicly traded corporations and a 15% corporate minimum tax on adjusted financial statement income of certain large companies.
In August 2022, the Inflation Reduction Act was signed into law, making several changes to the Internal Revenue Code, including a 1% excise tax on stock buybacks by publicly traded corporations and a 15% corporate minimum tax on adjusted financial statement income of certain large companies.
Our level of indebtedness: • could make it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions because we may not have sufficient cash flows to make its scheduled debt payments; • has caused us and may continue to cause us to use a larger portion of our cash flow to fund interest and principal payments, reducing the availability of cash to fund working capital, capital expenditures, research and development and other business activities; 25 • has contributed to our decision to suspend quarterly dividend payments to the Company's stockholders; • limits our ability to assume debt in a future acquisitions.
Our level of indebtedness: • could make it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions because we may not have sufficient cash flows to make its scheduled debt payments; • has caused us and may continue to cause us to use a larger portion of our cash flow to fund interest and principal payments, reducing the availability of cash to fund working capital, capital expenditures, research and development and other business activities; • limits our ability to assume debt in a future acquisition.
The Company experienced revenue declines in 2024. There can be no assurance that the Company will be successful in effecting its plans to preserve cash liquidity and maintain compliance with the Company's covenants on commercially reasonable terms or at all.
There can be no assurance that revenue will continue to increase or that the Company will be successful in effecting its plans to preserve cash liquidity and maintain compliance with the Company's covenants on commercially reasonable terms or at all.
Any increased or unexpected costs, unanticipated delays or failure to achieve contractual obligations could make these agreements less profitable or unprofitable. Managing these types of transactions require varying levels of management resources, which may divert our attention from other business operations.
Any increased or unexpected costs, unanticipated delays or failure to achieve contractual obligations could make these agreements less profitable or unprofitable. Managing these types of transactions require varying levels of management resources, which has in the past and may in the future divert our attention from other business operations.
The Company will continue to monitor its stock price, operating results and other macroeconomic factors to determine if there is further indication of a sustained decline in fair value requiring an event driven assessment of the recoverability of its remaining goodwill.
While no impairment of goodwill was recognized in 2025, the Company will continue to monitor its stock price, operating results and other macroeconomic factors to determine if there is further indication of a sustained decline in fair value requiring an event driven assessment of the recoverability of its remaining goodwill.
Although we attempt to protect our proprietary technology by contract, trademark, copyright and patent registration and internal security, including trade secret protection, these protections may not be adequate. Furthermore, our competitors can develop similar technology independently without violating our proprietary rights.
Our future success depends in part upon our proprietary technology. Although we attempt to protect our proprietary technology by contract, trademark, copyright and patent registration and internal security, including trade secret protection, these protections may not be adequate. Furthermore, our competitors can develop similar technology independently without violating our proprietary rights.
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 that was 3.37% as of December 31, 2024.
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 that was 1.27% as of December 31, 2025.
Any such losses could be material and could materially and adversely affect our business, financial condition and results of operations. Expectations relating to ESG considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.
Any such losses could be material and could materially and adversely affect our business, financial condition and results of operations. 44 Expectations relating to sustainability and governance matters expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.
Such divergent, sometimes conflicting views on ESG-related matters increase the risk that any action or lack thereof by us on such matters will be perceived negatively by some stakeholders. Further downgrades of the U.S. credit rating, impending automatic spending cuts or a government shutdown could negatively impact our liquidity, financial condition and earnings.
Such divergent, sometimes conflicting views on sustainability and governance-related matters increase the risk that any action or lack thereof by us on such matters will be perceived negatively by some stakeholders. Further downgrades of the U.S. credit rating, automatic spending cuts, the current government shutdown or future government shutdowns could negatively impact our liquidity, financial condition and earnings.
The DPLTA between the Company, as the controlling company, and Adtran Networks, as the controlled company, which was executed on December 1, 2022, became effective on January 16, 2023, as a result of its registration with the commercial register ( Handelsregister ) of the local court ( Amtsgericht ) at the registered seat of Adtran Networks (Jena).
The DPLTA between the Company, as the controlling company, and Adtran Networks, as the controlled company, became effective on January 16, 2023, as a result of its registration with the commercial register ( Handelsregister ) of the local court ( Amtsgericht ) at the registered seat of Adtran Networks (Jena).
Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the first option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately €333.2 million or approximately $344.9 million, based on an exchange rate as of December 31, 2024.
Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the first option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately €303.9 million or approximately $357.0 million, based on an exchange rate as of December 31, 2025.
In addition, simultaneous, disparate and divergent sentiments on ESG-related matters from multiple stakeholder groups must be considered. For example, there is an increasing number of anti-ESG initiatives in the U.S. that may conflict with other regulatory requirements or our various stakeholders' expectations.
In addition, simultaneous, disparate and divergent sentiments on sustainability and governance-related matters from multiple stakeholder groups must be considered. For example, there is an increasing number of anti-sustainability and governance initiatives in the U.S., including with respect to diversity, equity and inclusion, that may conflict with other regulatory requirements or our various stakeholders' expectations.
The impact of these provisions on our effective tax rate will also depend on additional guidance to be issued by the Secretary of the U.S. Department of the Treasury. We are currently evaluating the impact of these provisions on our effective tax rate.
The impact of these provisions on our effective tax rate will depend on additional guidance to be issued by the Secretary of the U.S. Department of the Treasury.
Significant and unanticipated changes in our business could require additional charges for inventory write downs in a future period. Any future charges relating to such inventory write-downs could materially adversely affect our business, financial condition and results of operations in the periods recognized.
Significant and unanticipated changes in our business could require additional charges for inventory write downs in a future period. While there were 29 no write-downs for 2025, any future charges relating to inventory write-downs could materially adversely affect our business, financial condition and results of operations in the periods recognized.
If we are unable to successfully develop and maintain relationships with SIs, Service Providers and enterprise VARs, our revenue may be negatively affected. As part of our sales strategy, we are targeting SIs, Service Providers and enterprise VARs.
If we are unable to successfully develop and maintain relationships with Systems Integrators, Service Providers and enterprise value-added resellers, our revenue may be negatively affected. As part of our sales strategy, we are targeting Systems Integrators, Service Providers and enterprise VARs.
We may face litigation and other risks as a result our material weaknesses in our internal control over financial reporting and any resulting restatement of our previously issued consolidated financial statements.
We may face litigation and other risks as a result of the material weaknesses in our internal control over financial reporting, prior restatements of our financial statements, and any future restatement of our previously issued financial statements.
These risks, as well as the number and frequency of cybersecurity events globally, may also be heightened during times of geopolitical tension or instability between countries. For example, a number of recent cybersecurity events have been alleged to have originated from the ongoing military conflict in Ukraine and in Israel and its surrounding areas.
These risks, as well as the number and frequency of cybersecurity events globally, may also be heightened during times of geopolitical tension or instability between countries. For example, a number of recent cybersecurity events have been alleged to have originated from the ongoing conflicts in Ukraine and the Middle East.
Specifically, our sales volume in 2024 has been negatively impacted due to our channel partners focus on reducing inventory levels; • the potential for conflicts and competition involving our channel partners and large end-user customers and the potential for consolidation among our channel partners; 37 • variations in sales channels, product cost or mix of products and services sold; • delays in receiving acceptance, as defined under contract, from certain customers for shipments or services performed near the end of a reporting period; • our ability to maintain high levels of product support and professional services; • manufacturing and customer order lead times, and potential restrictions in the supply of key components; • fluctuations in our gross margin and the factors that contribute to this (as described above); • our ability to achieve cost reductions; • the ability of our customers, channel partners and suppliers to obtain financing or to fund capital expenditures; • our ability to execute on our strategy and operating plans; • benefits anticipated from our investments in engineering, sales and marketing activities; • the effects of climate change and other natural events; • the effect of political or economic conditions, including the effect of tariffs or so-called “trade wars” on us and our supply chain, acts of war, terrorist attacks or other unrest in certain international markets; and • changes in tax laws and regulations or accounting pronouncements.
For example, while we experienced an increased volume of sales activity in 2025 due to a return of normalized customer spending, our sales volume in 2024 was negatively impacted due to our channel partners focus on reducing inventory levels; • the potential for conflicts and competition involving our channel partners and large end-user customers and the potential for consolidation among our channel partners; • variations in sales channels, product cost or mix of products and services sold; • delays in receiving acceptance, as defined under contract, from certain customers for shipments or services performed near the end of a reporting period; • our ability to maintain high levels of product support and professional services; • manufacturing and customer order lead times, and potential restrictions in the supply of key components; • fluctuations in our gross margin and the factors that contribute to this (as described above); • our ability to achieve cost reductions; • the ability of our customers, channel partners and suppliers to obtain financing or to fund capital expenditures; • our ability to execute on our strategy and operating plans; 38 • benefits anticipated from our investments in engineering, sales and marketing activities; • the effects of climate change and other natural events; • the effect of political or economic conditions, including the effect of tariffs or so-called “trade wars” on us and our supply chain, acts of war, terrorist attacks or other unrest in certain international markets; and • changes in tax laws and regulations or accounting pronouncements. • short sales, hedging and other derivative transactions involving our capital stock, including by holders of our 2030 Notes that employ a convertible arbitrage strategy with respect to such notes.
Specifically, our Credit Agreement with Wells Fargo limits the amount of debt we can assume in an acquisition.
Specifically, our Amended Credit Agreement limits the amount of debt we can assume in an acquisition.
Typically, our customers request product delivery within a short period following our receipt of an order. Consequently, we do not typically carry a significant order backlog and are dependent upon obtaining orders and completing delivery in accordance with shipping terms that are predominantly within each quarter to achieve our targeted revenue.
Consequently, we do not typically carry a significant order backlog and are dependent upon obtaining orders and completing delivery in accordance with shipping terms that are predominantly within each quarter to achieve our targeted revenue.
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. 24 Additionally, and subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, the DPLTA provides that Adtran Networks shareholders (other than the Company) be offered, at their election, (i) to put their Adtran Networks shares to the Company in exchange for compensation in cash of €17.21 per share, plus guaranteed interest (the “Exit Compensation”), or (ii) to remain Adtran Networks shareholders and receive a recurring compensation in cash of €0.52 per share for each full fiscal year of Adtran Networks (the “Annual Recurring Compensation”).
Additionally, and subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, the DPLTA provides that Adtran Networks shareholders (other than the Company) be offered, at their election, (i) to put their Adtran Networks shares to the Company in exchange for compensation in cash of €17.21 per share, plus guaranteed interest (the “Exit Compensation”), or (ii) to remain Adtran Networks shareholders and receive a recurring compensation in cash of €0.52 per share for each full fiscal year of Adtran Networks (the “Annual Recurring Compensation”).
In connection with our material weaknesses in our internal control over financial reporting and any future restatement, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims. As of the date of this report, we have no knowledge of any such litigation or dispute.
In connection with our material weaknesses in our internal control over financial reporting, the prior restatements of our financial statements, and any future restatement, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims.
If our customers were to cancel or delay orders for extended periods, inventory could become obsolete, and we could be required to write off or write down the inventory associated with those orders.
Accordingly, our inventory needs for a particular period can fluctuate and be difficult to predict. If our customers were to cancel or delay orders for extended periods, inventory could become obsolete, and we could be required to write off or write down the inventory associated with those orders.
Such outages could adversely impact our business, reputation, financial condition and results of operations. Risks related to the Company’s stock price Our operating results historically have fluctuated and are likely to continue to fluctuate in future periods. Such fluctuations can adversely affect our stock price.
Such outages could adversely impact our business, reputation, financial condition and results of operations. Risks related to the Company’s stock price Our financial performance and operating results historically have fluctuated and could fluctuate in future periods, which has affected and may in the future affect our stock price.
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 occurred on June 27, 2025, and therefore, the Annual Recurring Compensation was paid on July 1, 2025.
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.
For the year ended December 31, 2025, approximately 2.0 million shares of Adtran Networks stock were tendered to the Company. This resulted in total Exit Compensation payments of approximately €40.2 million, or approximately $46.6 million, based on exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.
Our inability to identify and engage alternative subcontractors if and as required in the future, or the need to undertake required retraining and other activities related to establishing and developing a new subcontractor relationship, could result in delays or reductions in product shipments which, in turn, could have a negative effect on our customer relationships and operating results.
Our inability to identify and engage alternative subcontractors if and as required in the future, or the need to undertake required retraining and other activities related to establishing and developing a new subcontractor relationship, could result in delays or reductions in product shipments which, in turn, could have a negative effect on our customer relationships and operating results. 36 Our failure to maintain rights to intellectual property used in our business could adversely affect the development, functionality and commercial value of our products.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe are currently in the process of selling a portion of our headquarters facility and expect to sell it within the next twelve months, so it is classified as assets held for sale on our balance sheet.
Biggest changeWe are currently in the process of selling a portion of our headquarters facility and expect to sell it within the next twelve months, so it is classified as assets held for sale on our balance sheet. We own a production and development facility in Meiningen, Germany. We lease a facility for our European headquarters in Munich, Germany.
We lease engineering facilities in the U.S., EMEA and APAC that are used to develop products sold by our Network Solutions segment. In addition, we lease office space in North America, Latin America, EMEA and APAC, which provide sales and service support for both of our segments. These cancelable and non-cancelable leases expire at various times through 2039.
We lease engineering facilities in the U.S., EMEA and APAC that are used to develop products sold by our Network Solutions segment. In addition, we lease office space in North America, Latin America, EMEA and APAC, which provide sales and service support for both of our segments. These cancelable and non-cancelable leases expire at various times through 2038.
LEGAL PROCEEDINGS The information presented under the caption “DPLTA Appraisal Proceedings” in Note 18 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report is incorporated herein by reference. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 43 PART II
LEGAL PROCEEDINGS The information presented under the captions "Legal Matters" and “DPLTA Appraisal Proceedings” in Note 17 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report is incorporated herein by reference. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 47 PART II
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In order to facilitate this, we have relocated the associated operations located in our North and South Towers to our East Tower without any significant disruption to our operations. We lease a facility for our European headquarters in Munich, Germany.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2024 – October 31, 2024 5,477 $ 6.02 — — November 1, 2024 – November 30, 2024 62,046 $ 7.75 — — December 1, 2024 – December 31, 2024 86 $ 8.54 — — Total 67,609 — (1) During the year ended December 31, 2024, the Company did not repurchase any shares of Company common stock as part of a publicly announced plan or program and there is no current authorization to repurchase Company common stock.
Biggest changePurchases of Equity Securities During the year ended December 31, 2025, the Company did not repurchase any shares of Company common stock as part of a publicly announced plan or program and there is no current authorization to repurchase Company common stock. 49 ITEM 6. R E SERVED
The Company's cumulative total returns for the period December 31, 2019 through December 31, 2021 relate to Adtran, Inc. prior to the Business Combination and the Company's cumulative total returns for the period December 31, 2022 through December 31, 2024 relate to Adtran Holdings, Inc. subsequent to the Business Combination.
The Company's cumulative total returns for the period December 31, 2020 through December 31, 2021 relate to Adtran, Inc. prior to its business combination with Adtran Networks and the Company's cumulative total returns for the period December 31, 2022 through December 31, 2025 relate to Adtran Holdings, Inc. subsequent to the business combination with Adtran Networks. 48 Recent Sales of Unregistered Securities None.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2019 to December 31, 2024.
(the "Merger") and that of ADTRAN Holdings, Inc. following the Merger) with the cumulative total returns of the NASDAQ Telecommunications index and the NASDAQ Composite index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2020 to December 31, 2025.
Performance Graph The graph below matches our cumulative 5-Year total stockholder return on common stock (specifically, the total stockholder return on ADTRAN, Inc.’s common stock for all periods prior to the Merger and that of ADTRAN Holdings, Inc. following the Merger) with the cumulative total returns of the NASDAQ Telecommunications index and the NASDAQ Composite index.
Performance Graph The graph below matches our cumulative 5-Year total stockholder return on common stock (specifically, the total stockholder return on ADTRAN, Inc.’s common stock for all periods prior to the merger of Acorn MergeCo, Inc., a subsidiary of ADTRAN Holdings, Inc., with and into ADTRAN, Inc., on July 8, 2022, after which ADTRAN, Inc. became a wholly-owned direct subsidiary of ADTRAN Holdings, Inc.
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. In addition, the Wells Fargo Credit Agreement currently does not allow for the payment of dividends to stockholders.
As of February 9, 2026, we had 43 stockholders of record and approximately 19,352 beneficial owners of shares held in street name. Dividends The payment of any 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.
The Performance Graph, including its accompanying table and footnotes, is not deemed to be soliciting material or to be filed under the Exchange Act or the Securities Act. * $100 invested on 12/31/19 in stock or index-including reinvestment of dividends.
The Performance Graph, including its accompanying table and footnotes, is not deemed to be soliciting material or to be filed under the Exchange Act or the Securities Act. * Assumes that $100 was invested on December 31, 2020 in stock or index, including reinvestment of dividends through fiscal year ending December 31, 2025. 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 ADTRAN Holdings, Inc. $ 100.00 $ 157.43 $ 131.83 $ 52.87 $ 60.00 $ 62.59 NASDAQ Composite $ 100.00 $ 122.17 $ 82.42 $ 119.22 $ 154.79 $ 187.42 NASDAQ Telecommunications $ 100.00 $ 106.15 $ 80.59 $ 92.14 $ 104.62 $ 117.28 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
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As of January 24, 2025, we had 47 stockholders of record and approximately 15,860 beneficial owners of shares held in street name. Dividends We declared a quarterly dividend of $0.09 per share of common stock to record holders during each of the quarters through September 30, 2023.
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In addition, the Wells Fargo Credit Agreement currently does not allow for the payment of dividends to stockholders.
Removed
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 Business Efficiency Program.
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For additional information, see Note 18 of the Notes to Consolidated Financial Statements included in Part II, Item 8 and Liquidity & Capital Resources included in Part II, Item 7 of this report .
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Fiscal year ending December 31, 2024. 44 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 ADTRAN Holdings, Inc. $ 100.00 $ 154.37 $ 243.02 $ 203.51 $ 81.62 $ 92.62 NASDAQ Composite $ 100.00 $ 144.93 $ 177.06 $ 119.45 $ 172.78 $ 224.34 NASDAQ Telecommunications $ 100.00 $ 124.19 $ 131.83 $ 100.08 $ 114.43 $ 129.93 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
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Purchases of Equity Securities The following table sets forth repurchases of our common stock for the months indicated.
Removed
The shares purchased relate to shares withheld to cover taxes for vested stock awards. 45 ITEM 6. R E SERVED

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe 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; (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; (iv) the current guaranteed Annual Recurring Compensation payment; and (v) the current trading value of Adtran Networks shares.
Biggest changeWe 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 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. 58 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.
Goodwill Impairment 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.
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 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).
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).
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.
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.
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 an Annual Recurring Compensation payment, or (2) to receive Exit Compensation plus guaranteed interest.
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 an Annual Recurring Compensation payment, or (2) to receive Exit Compensation plus guaranteed interest.
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.
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 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).
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).
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.
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.
For a discussion of risks associated with our operating results, see Part I, Item 1A, Risk Factors of this report. 49 Results of Operations The following table presents selected financial information derived from our Consolidated Statements of Loss expressed as a percentage of revenue for the years indicated. Amounts may not foot due to rounding.
For a discussion of risks associated with our operating results, see Part I, Item 1A, Risk Factors of this report. Results of Operations The following table presents selected financial information derived from our Consolidated Statements of Loss expressed as a percentage of revenue for the years indicated. Amounts may not foot due to rounding.
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.
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.
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).
Domination and Profit and Loss Transfer Agreement 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).
We are exposed to changes in foreign currencies relative to the U.S. dollar, which are references to the differences between the foreign-exchanges rates we use to convert the financial results of our international operations from local currencies into U.S. dollars for financial reporting purposes.
Foreign Currency We are exposed to changes in foreign currencies relative to the U.S. dollar, which are references to the differences between the foreign-exchanges rates we use to convert the financial results of our international operations from local currencies into U.S. dollars for financial reporting purposes.
Our investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner 60 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.
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.
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.
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. Dollars.
(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. Dollars.
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.
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.
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.
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.
See Note 18 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for more information. (3) We have operating leases for office space, automobiles and various other equipment in the U.S. and in certain international locations.
See Note 17 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for more information. (3) We have operating leases for office space, automobiles and various other equipment in the U.S. and in certain international locations.
Off-Balance Sheet Arrangements We have exposure to credit losses from off-balance sheet exposures used 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.
Off-Balance Sheet Arrangements We have exposure to credit losses from off-balance sheet exposures used 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, 2025.
(2) We have purchase obligations related to open purchase orders to our contract manufacturers, ODMs, component suppliers, service partners and other vendors. The settlement of our purchase obligations will occur at various dates beginning in 2025 and going through 2028.
(2) We have purchase obligations related to open purchase orders to our contract manufacturers, ODMs, component suppliers, service partners and other vendors. The settlement of our purchase obligations will occur at various dates beginning in 2026 and going through 2028.
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).
Cash Requirements 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).
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 ).
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 ).
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 ).
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 ).
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 ).
However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act ( Aktiengesetz ) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal Gazette ( Bundesanzeiger ).
The components of net periodic pension cost and amounts recognized in other comprehensive income (loss) for the years ended December 31, 2024 and 2023 were $0.3 million and ($3.9) million, respectively. Actuarial gains and losses are recorded in accumulated other comprehensive loss.
The components of net periodic pension cost and amounts recognized in other comprehensive income (loss) for the years ended December 31, 2025 and 2024 were $3.3 million and $0.3 million, respectively. Actuarial gains and losses are recorded in accumulated other comprehensive loss.
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.
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. dollar forward contract arrangement (the “Forward”) with the Hedge Counterparty.
For the year ended December 31, 2024 as compared to the year ended December 31, 2023, changes in foreign currencies relative to the U.S. dollar increased our research and development expenses by approximately $1.4 million. Adtran Networks has arrangements with governmental entities for the purposes of obtaining funding for research and development activities.
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 research and development expenses by approximately $4.2 million. Adtran Networks has arrangements with governmental entities for the purposes of obtaining funding for research and development activities.
See Note 18 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information.
See Note 17 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information.
In addition to our global headquarters in Huntsville, Alabama, and our European headquarters in Munich, Germany, we have sales and research and development facilities in strategic global locations. The Company solely owns ADTRAN, Inc. and is the majority shareholder of Adtran Networks (formerly ADVA Optical Networking SE). Adtran is a leading global provider of open, disaggregated networking and communications solutions.
In addition to our global headquarters in Huntsville, Alabama, and our European headquarters in Munich, Germany, we have sales and research and development facilities in strategic global locations. The Company solely owns ADTRAN, Inc. and is the majority shareholder of Adtran Networks. Adtran is a leading global provider of open, disaggregated networking and communications solutions.
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 2023 fiscal year, Adtran Networks’ ordinary general shareholders’ meeting occurred on June 28, 2024; therefore, the Annual Recurring Compensation was paid on July 3, 2024. 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.
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.
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.
It is serving a diverse domestic and international customer base in multiple countries that includes Large, Medium and Small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders; cable/MSOs; SMBs; distributed enterprises, including Fortune 500 companies with sophisticated business continuity applications; and federal, state and local government agencies.
It is serving a diverse domestic and international customer base in multiple countries that includes Large, Medium and Small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders; cable/MSOs; SMBs; 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.
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 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.
Performance Bonds 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 December 31, 2024 and 2023, we had commitments related to these bonds totaling $15.7 million and $10.8 million, respectively, which expire at various dates through April 2029.
Performance Bonds 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 December 31, 2025 and 2024, we had commitments related to these bonds totaling $22.4 million and $15.7 million, respectively, which expire at various dates through April 2029.
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.
The emphasis of the discussion is a comparison of the years ended December 31, 2024 and December 31, 2023.
The emphasis of the discussion is a comparison of the years ended December 31, 2025 and December 31, 2024.
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.
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 December 31, 2025.
See Note 14 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.
See Notes 13 and 14 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information.
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.
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 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 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.
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.
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.
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.
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.
(48.9 )% (23.2 )% (0.2 )% The following discussion and financial information are presented to aid in an understanding of our current consolidated financial position, changes in financial position, results of operations and cash flows and should be read in conjunction with the audited consolidated financial statements and notes thereto included herein.
(4.2 )% (49.8 )% (23.4 )% The following discussion and financial information are presented to aid in an understanding of our current consolidated financial position, changes in financial position, results of operations and cash flows and should be read in conjunction with the audited consolidated financial statements and notes thereto included herein.
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.
The projected benefit obligation for our defined benefit pension plans was $63.3 million and $67.9 million as of December 31, 2024 and 2023, respectively. The components of net periodic pension cost, other than the service cost component, are included in other income, net in the Consolidated Statements of Loss.
The projected benefit obligation for our defined benefit pension plans was $68.7 million and $63.3 million as of December 31, 2025 and 2024, respectively. The components of net periodic pension cost, other than the service cost component, are included in other income, net in the Consolidated Statements of Loss.
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.
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 guaranteed interest component 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 that was 3.37% as of December 31, 2024.
The guaranteed interest component 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 that was 1.27% as of December 31, 2025.
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.
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.
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 64 discussed below.
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.
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.
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. 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.
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.
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. Additional details related to our working capital and its drivers are discussed below.
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.
For the year ended December 31, 2024, as compared to the year ended December 31, 2023, changes in foreign currencies relative to the U.S dollar increased our selling, general and administrative expenses by approximately $0.6 million.
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.
We expect to continue to see lower research and development expense as a percentage of revenue over time. Research and development expenses decreased 14.3% from $258.3 million for the year ended December 31, 2023, to $221.5 million for the year ended 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.
For the year ended December 31, 2024 as compared to the year ended December 31, 2023, changes in foreign currencies relative to the U.S dollar increased our net revenue by approximately $5.4 million.
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.
Our solutions within this category include open optical terminals, open line systems, optical subsystems and modules, network infrastructure assurance systems and automation platforms that are used to build high-scale, secure and assured optical networks.
This revenue category includes hardware and software based products and services. Our solutions within this category include open optical terminals, open line systems, optical subsystems and modules, network infrastructure assurance systems and automation platforms that are used to build high-scale, secure and assured optical networks.
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.
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.
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.
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. No impairment of goodwill was recognized during the year ended December 31, 2025.
Accounts payable will fluctuate due to variations in the timing of the receipt of inventory, supplies and services and our subsequent payments for these purchases. Investing Activities Capital expenditures, including intangibles totaled approximately $63.1 million and $43.1 million for the years ended December 31, 2024 and 2023, respectively.
Accounts payable will fluctuate due to variations in the timing of the receipt of inventory, supplies and services and our subsequent payments for these purchases. Investing Activities Capital expenditures, including intangibles totaled approximately $69.3 million and $65.2 million for the years ended December 31, 2025 and 2024, respectively.
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 occurred on June 28, 2025, and therefore, the Annual Recurring Compensation was paid on July 1, 2025.
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.
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.
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.
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. 66 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.
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.
Other Cash Requirements 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.
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.
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. We have completed implementation of our Business Efficiency Program as of December 31, 2024.
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.
See Note 2 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information.
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 .
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.
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.
Services & Support cost of revenue, as a percentage of that segment’s revenue, remained flat at 39.6% of revenue in 2023 and 2024. 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.
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.
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 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 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 decreased from $22.1 million for the year ended December 31, 2024 to $19.3 million for the year ended December 31, 2025.
For the year ended December 31, 2024, changes in foreign currencies relative to the U.S. dollar increased our cost of revenue by approximately $0.7 million. Network Solutions cost of revenue, as a percentage of that segment’s revenue, decreased from 76.7% of revenue in 2023 to 70.3% of revenue in 2024.
For the year ended December 31, 2025, changes in foreign currencies relative to the U.S. dollar increased our cost of revenue by approximately $8.9 million. 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.
Year Ended December 31, 2024 2023 2022 Revenue Network Solutions 80.1 % 84.8 % 89.4 % Services & Support 19.9 15.2 10.6 Total Revenue 100.0 100.0 100.0 Cost of Revenue Network Solutions 55.4 62.9 63.1 Network Solutions - other (credits), charges and inventory write-down 0.9 2.1 — Services & Support 7.9 6.0 5.0 Total Cost of Revenue 64.2 71.0 68.1 Gross Profit 35.8 29.0 31.9 Selling, general and administrative expenses 25.3 22.5 20.4 Research and development expenses 24.0 22.5 16.9 Asset impairment — — 1.7 Goodwill impairments 31.7 3.3 — Operating Loss (45.2 ) (19.3 ) (7.1 ) Interest and dividend income 0.3 0.2 0.2 Interest expense (2.4 ) (1.4 ) (0.3 ) Net investment gain (loss) 0.4 0.2 (1.1 ) Other income, net — 0.1 1.4 Loss Before Income Taxes (46.8 ) (20.1 ) (6.9 ) Income tax (expense) benefit (1.0 ) (2.4 ) 6.1 Net Loss (47.8 )% (22.6 )% (0.9 )% Net Income (loss) attributable to non-controlling interest 1.1 0.6 (0.7 ) Net Loss attributable to ADTRAN Holdings, Inc.
Year Ended December 31, 2025 2024 2023 Revenue Network Solutions 82.8 % 80.1 % 84.8 % Services & Support 17.2 19.9 15.2 Total Revenue 100.0 100.0 100.0 Cost of Revenue Network Solutions 54.6 56.1 63.1 Network Solutions - other (credits), charges and inventory write-down — 0.9 2.1 Services & Support 7.1 7.9 6.0 Total Cost of Revenue 61.7 64.9 71.2 Gross Profit 38.3 35.1 28.8 Selling, general and administrative expenses 20.9 25.2 22.5 Research and development expenses 18.8 24.0 22.5 Goodwill impairments — 32.2 3.3 Operating Loss (1.4 ) (46.3 ) (19.5 ) Interest and dividend income 0.2 0.3 0.2 Interest expense (1.8 ) (2.4 ) (1.4 ) Net investment gain 0.3 0.4 0.2 Other (expense) income, net (0.2 ) — 0.1 Loss Before Income Taxes (2.9 ) (48.0 ) (20.3 ) Income tax expense (0.5 ) (0.8 ) (2.5 ) Net Loss (3.3 )% (48.8 )% (22.8 )% Net Income attributable to non-controlling interest 0.9 1.1 0.6 Net Loss attributable to ADTRAN Holdings, Inc.
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.
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, 2024, approximately 0.8 million shares of Adtran Networks stock were tendered to the Company.
The plan is financed by contributions paid by the Company. • In India, 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.
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.
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 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.
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.
For the year ended December 31, 2025, approximately 2.0 million shares of Adtran Networks stock were tendered to the Company. This resulted in total Exit Compensation payments of approximately €40.2 million, or approximately $46.6 million, based on exchange rates at the time of the transactions, being paid to Adtran Networks shareholders.
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. 63 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.
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. 51 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 10.14 of this Annual Report on Form 10-K.
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.
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 .
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.
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 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.
We estimate that approximately $0.1 million of net 62 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+0 added−10 removed5 unchanged
Biggest changeAs of December 31, 2024, $74.0 million of our cash and cash equivalents, primarily foreign depository accounts, were in excess of government provided insured depository limits.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK We maintain depository investments with certain financial institutions. As of December 31, 2025, $92.0 million of our cash and cash equivalents, primarily foreign depository accounts, were in excess of government provided insured depository limits.
Actual future gains and losses associated with our foreign currency exposures and positions may differ materially from the sensitivity analyses performed as of December 31, 2024 due to the inherent limitations associated with predicting the foreign currency exchange rates, and our actual exposures and positions. We have certain customers and suppliers who are invoiced or pay in a non-functional currency.
Actual future gains and losses associated with our foreign currency exposures and positions may differ materially from the sensitivity analyses performed as of December 31, 2025 due to the inherent limitations associated with predicting the foreign currency exchange rates, and our actual exposures and positions. We have certain customers and suppliers who are invoiced or pay in a non-functional currency.
A hypothetical 50 basis point decline in interest rates as of December 31, 2024, assuming all other variables remain constant, would reduce annualized interest income on our cash and investments by less than $0.1 million.
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.
The analyses cover our debt and investments. The analyses use actual or approximate maturities for the debt and investments. The discount rates used were based on the market interest rates in effect at December 31, 2024.
The analyses cover our debt and investments. The analyses use actual or approximate maturities for the debt and investments. The discount rates used were based on the market interest rates in effect at December 31, 2025.
We do not hold or issue derivative instruments for trading or other speculative purposes. All non-functional currencies billed would result in a combined hypothetical gain or loss of $7.4 million if the U.S. dollar weakened or strengthened 10% against the billing currencies.
We do not hold or issue derivative instruments for trading or other speculative purposes. All non-functional currencies billed would result in a combined hypothetical gain or loss of $8.1 million if the U.S. dollar weakened or strengthened 10% against the billing currencies.
All non-functional currencies invoiced by suppliers would result in a combined hypothetical gain or loss of $7.1 million if the U.S. dollar weakened or strengthened 10% against the billing currencies.
All non-functional currencies invoiced by suppliers would result in a combined hypothetical gain or loss of $9.2 million if the U.S. dollar weakened or strengthened 10% against the billing currencies.
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.
As a result, changes in currency exchange rates could cause variations in our operating loss. A hypothetical 10% movement in foreign exchange rates would result in a before-tax positive or negative impact of approximately $7.1 million for the year ended December 31, 2024.
As a result, changes in currency exchange rates could cause variations in our operating loss. A hypothetical 10% movement in foreign exchange rates would result in a before-tax positive or negative impact of approximately $6.3 million for the year ended December 31, 2025.
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). Therefore, our revenue, gross margins, operating expenses and operating loss are all subject to foreign currency fluctuations.
The majority of our global supply chain predominately makes payments in U.S. 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.
Interest Rate Risk As of December 31, 2024, approximately $5.9 million of our cash and investments may be directly affected by changes in interest rates. As of December 31, 2024, we held $5.9 million of cash and variable-rate investments where a change in interest rates would impact our interest income.
Interest Rate Risk As of December 31, 2025, approximately $0.6 million of our cash and investments may be directly affected by changes in interest rates. As of December 31, 2025, we held $0.6 million of cash and variable-rate investments where a change in interest rates would impact our interest income.
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. A hypothetical 50 basis point increase in interest rates as of December 31, 2024, assuming all other variables remain constant, would increase our interest expense by $1.0 million.
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.
For further information about the fair value of our investments as of December 31, 2024, see Note 10 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report. 71
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. 68
As of December 31, 2024, 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.
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.
Removed
ITEM 7A. 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.
Removed
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. dollars.
Removed
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.
Removed
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.
Removed
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. 70 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.
Removed
(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. Dollars.
Removed
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.
Removed
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.
Removed
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.
Removed
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.

Other ADTN 10-K year-over-year comparisons