UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549‌
‌
FORM 8-K‌
‌
CURRENT REPORT‌
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934‌
Date of Report (Date of earliest event reported): May 8, 2023‌
‌
ADTRAN Holdings, Inc.‌
(Exact name of Registrant as Specified in Its Charter)‌
‌
‌
			
Delaware	001-41446	87-2164282	
(State or Other Jurisdiction
of Incorporation)	(Commission File Number)	(IRS Employer
Identification No.)	
 	 	 	
901 Explorer Boulevard
Huntsville, Alabama	‌	35806-2807	
(Address of Principal Executive Offices)	‌	(Zip Code)	
Registrant’s Telephone Number, Including Area Code: (256) 963-8000‌
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)‌
‌
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):‌
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)‌
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)‌
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))‌
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))‌
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	 	Trading Symbol	 	Name of exchange on which registered	
Common Stock, Par Value $0.01	 	ADTN	 	The NASDAQ Global Select Market	
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
‌
‌

 

Item 2.02 Results of Operations and Financial Condition.

On May 8, 2023, ADTRAN Holdings, Inc. (“ADTRAN”) announced its financial results for the fiscal quarter ended March 31, 2023.
 
ADTRAN also announced that its Board of Directors declared a quarterly cash dividend of $0.09 per common share, to be paid to ADTRAN’s stockholders of record as of the close of business on May 23, 2023. The ex-dividend date is May 22, 2023 and the payment date is June 6, 2023.
 
A copy of ADTRAN’s press release announcing its financial results and the declaration of the quarterly cash dividend is attached as Exhibit 99.1 hereto and incorporated by reference herein.
 
The information included in, or furnished with, Item 2.02 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
 
Item 9.01 Financial Statements and Exhibits.

Exhibit Number	Description	
99.1	Press Release dated May 8, 2023	
104	Cover Page Interactive Data File – the cover page iXBRL tags are embedded within the Inline XBRL document	

 

 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		
Date: May 9, 2023	ADTRAN Holdings, Inc.
 
By: /s/ Ulrich Dopfer 
Ulrich Dopfer
Chief Financial Officer	

 

 
EXHIBIT 99.1
ADTRAN Holdings, Inc. Reports Earnings for the First Quarter of 2023 and Declares Quarterly Cash Dividend
HUNTSVILLE, Ala. — (May 8, 2023) — ADTRAN Holdings, Inc., (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” or the “Company”), today announced its financial results for the first quarter of 2023. For the quarter, revenue was $323.9 million. Net loss inclusive of the non-controlling interest for the first quarter of 2023 was $40.5 million. Net loss attributable to the Company for the first quarter of 2023 was $34.5 million and diluted loss per share attributable to the Company was $0.44. Inclusive of non-controlling interest, non-GAAP net loss was $9.5 million. Non-GAAP net loss attributable to the Company was $5.0 million and non-GAAP diluted loss per share attributable to the Company was $0.06. Non-GAAP net (loss) income and non-GAAP diluted (loss) earnings per share exclude acquisition related expenses, amortizations, adjustments (consisting of intangible amortization of backlog, developed technology, customer relationships, and trade names acquired in connection with business combinations and amortization of inventory fair value adjustments), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, asset impairments, integration expenses, restructuring expenses, changes in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net (loss) income. The reconciliations between the non-GAAP net (loss) income measures presented herein and the respective equivalent GAAP financial measures are set forth in the tables provided below.
ADTRAN Holdings Chairman and Chief Executive Officer Tom Stanton stated, “As mentioned in our pre-release, the results of the quarter were impacted by slowing sales predominately in our Subscriber Solutions category. Although we expect customer inventory management efforts to continue to affect our near-term results, the underlying demand to upgrade and deploy fiber networks is at an unprecedented high and we are ideally positioned to capitalize on this opportunity.”
The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2023. The quarterly cash dividend of $0.09 per common share is to be paid to the Company’s stockholders of record as of the close of business on May 23, 2023. The ex-dividend date is May 22, 2023, and the payment date will be June 6, 2023.
The Company confirmed that it will hold a conference call to discuss its first quarter results on Tuesday, May 9, 2023, at 9:30 a.m. Central Time, or 4:30 p.m. Central European Time. ADTRAN Holdings will webcast this conference call. To listen, simply visit our Investor Relations site at investors.adtran.com approximately 10 minutes prior to the start of the call, click on the event “ADTRAN Holdings Releases 1st Quarter 2023 Financial Results and Earnings Call”, and click on the webcast link.
An online replay of the Company’s conference call, as well as the transcript of the Company's conference call, will be available on the Investor Relations site approximately 24 hours following the call and will remain available for at least 12 months. For more information, visit investors.adtran.com or email investor.relations@adtran.com.
Cautionary Note Regarding Forward-Looking Statements
Statements contained in this press release which are not historical facts, such as those relating to strategy, outlook and financial guidance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can also generally be identified by the use of words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could” and similar expressions. In addition, ADTRAN Holdings, through its senior management, may from time to time make forward-looking public statements concerning the matters described herein. All such projections and other forward-looking information speak only as of the date hereof, and ADTRAN Holdings undertakes no duty to publicly update or revise such forward-looking information, whether as a result of new information, future events, or otherwise, except to the extent as may be required by law. All such forward-looking statements are necessarily estimates and reflect management’s best judgment based upon current information. Actual events or results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors which could cause actual events or results to differ materially from those estimated by ADTRAN Holdings include, but are not limited to: (i) risks and uncertainties related to manufacturing and supply chain constraints, including as a result of the continued impact of the COVID-19 global pandemic; (ii) risks and uncertainties related to the completed business combination between the Company, ADTRAN and ADVA, including risks related to the ability to successfully integrate the ADTRAN’s and ADVA’s businesses, the disruption of management time from ongoing business operations due to integration efforts following the business combination, and the risk that ADTRAN Holdings may be unable to achieve expected synergies or that it may take longer or be more costly than expected to achieve those synergies; (iii) the risk of fluctuations in revenue, including due to lengthy sales and approval processes required by major and other service providers for new products and changes in customer demand; (iv) the risk posed by potential breaches of information systems and cyber-attacks; (v) the risks that ADTRAN may not be able to effectively compete, including through product improvements and development; and (vi) other risks set forth in ADTRAN Holdings’ public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2022, as well as its Form 10-Q for the quarter ended March 31, 2023 to be filed with the SEC.
Explanation of Use of Non-GAAP Financial Measures
Set forth in the tables below are reconciliations of gross profit, gross margin, operating expenses, operating loss, other income (expense), net (loss) income inclusive of the non-controlling interest, net (loss) income attributable to the Company, net loss attributable to the non-controlling interest, and (loss) earnings per share - basic and diluted, attributable to the Company, in each case as reported based on generally accepted accounting principles in the United States (“GAAP”), to non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating (loss) income, non-GAAP other (expense) income, non-GAAP net (loss) income inclusive of the non-controlling interest, non-GAAP net (loss) income attributable to the Company, non-GAAP net (loss) income attributable to the non-controlling interest, and non-GAAP (loss) earnings per share - basic and diluted, attributable to the Company, respectively. Such non-GAAP measures exclude acquisition related expenses, amortizations and adjustments (consisting of intangible amortization of backlog, developed technology, customer relationships, and trade names acquired in connection with business combinations and amortization of inventory fair value adjustments), stock-based compensation expense, amortization of pension actuarial losses, deferred compensation adjustments, asset impairments, integration expenses, restructuring expenses, changes in valuation allowance related to our deferred tax assets, and the tax effect of these adjustments to net income. These measures are used by management in our ongoing planning and annual budgeting processes. Additionally, we believe the presentation of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating (loss) income, non-GAAP other (expense) income, non-GAAP net (loss) income inclusive of the non-controlling interest, non-GAAP net (loss) income attributable to the Company, non-GAAP net (loss) income attributable to the non-controlling interest, and non-GAAP (loss) earnings per share - basic and diluted, attributable to the Company, when combined with the presentation of the most directly comparable GAAP financial measure, is beneficial to the overall understanding of ongoing operating performance of the Company.
These non-GAAP financial measures are not prepared in accordance with, or an alternative for, GAAP and therefore should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP. Additionally, our calculation of non-GAAP measures may not be comparable to similar measures calculated by other companies.
About Adtran

 
ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) is the parent company of Adtran, Inc., a leading global provider of open, disaggregated networking and communications solutions that enable voice, data, video and internet communications across any network infrastructure. From the cloud edge to the subscriber edge, Adtran empowers communications service providers around the world to manage and scale services that connect people, places and things. Adtran solutions are used by service providers, private enterprises, government organizations and millions of individual users worldwide. ADTRAN Holdings, Inc. is also the largest shareholder of ADVA. Find more at Adtran, LinkedIn and Twitter.
Published by
ADTRAN Holdings, Inc.
www.adtran.com
 
For media
Gareth Spence
+44 1904 699 358
public-relations@adva.com

For investors
Steven Williams
+49 89 890 665 918
investor.relations@adtran.com

 
 

 

Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

								
 	March 31,	 	 	December 31,	 	
 	2023	 	 	2022	 	
Assets	 	 	 	 	 	
Current Assets	 	 	 	 	 	
Cash and cash equivalents	$	136,457	 	 	$	108,644	 	
Short-term investments	 	1,058	 	 	 	340	 	
Accounts receivable, net	 	262,043	 	 	 	279,435	 	
Other receivables	 	30,938	 	 	 	32,831	 	
Inventory, net	 	416,291	 	 	 	427,531	 	
Prepaid expenses and other current assets	 	37,021	 	 	 	33,577	 	
Total Current Assets	 	883,808	 	 	 	882,358	 	
Property, plant and equipment, net	 	111,969	 	 	 	110,699	 	
Deferred tax assets	 	81,631	 	 	 	67,839	 	
Goodwill	 	385,755	 	 	 	381,724	 	
Intangibles, net	 	379,286	 	 	 	401,211	 	
Other non-current assets	 	63,152	 	 	 	66,998	 	
Long-term investments	 	32,994	 	 	 	32,665	 	
Total Assets	$	1,938,595	 	 	$	1,943,494	 	
 	 	 	 	 	 	
Liabilities, Redeemable Non-Controlling Interest and Equity	 	 	 	 	 	
Current Liabilities	 	 	 	 	 	
Accounts payable	$	198,596	 	 	$	237,699	 	
Revolving credit agreements outstanding	 	190,843	 	 	 	95,936	 	
Notes payable	 	—	 	 	 	24,598	 	
Unearned revenue	 	55,611	 	 	 	41,193	 	
Accrued expenses and other liabilities	 	27,424	 	 	 	35,235	 	
Accrued wages and benefits	 	30,333	 	 	 	44,882	 	
Income tax payable, net	 	19,397	 	 	 	9,032	 	
Total Current Liabilities	 	522,204	 	 	 	488,575	 	
Deferred tax liabilities	 	51,850	 	 	 	61,629	 	
Non-current unearned revenue	 	24,907	 	 	 	19,239	 	
Pension liability	 	10,698	 	 	 	10,624	 	
Deferred compensation liability	 	28,674	 	 	 	26,668	 	
Non-current lease obligations	 	21,446	 	 	 	22,807	 	
Other non-current liabilities	 	15,986	 	 	 	10,339	 	
Total Liabilities	 	675,765	 	 	 	639,881	 	
Redeemable Non-Controlling Interest	 	442,668	 	 	 	—	 	
Equity	 	 	 	 	 	
Common stock	 	787	 	 	 	781	 	
Additional paid-in capital	 	762,035	 	 	 	895,834	 	
Accumulated other comprehensive income	 	55,251	 	 	 	46,713	 	
Retained earnings	 	8,006	 	 	 	55,338	 	
Treasury stock	 	(5,917	)	 	 	(4,125	)	
Non-controlling interest	 	—	 	 	 	309,072	 	
Total Equity	 	820,162	 	 	 	1,303,613	 	
Total Liabilities, Redeemable Non-Controlling Interest and Equity	$	1,938,595	 	 	$	1,943,494	 	

 

 
Condensed Consolidated Statements of Loss
(Unaudited)
(In thousands, except per share amounts)

										
 	 	Three Months Ended	 	 	
 	 	March 31,	 	 	
 	 	2023	 	 	2022	 	 	
Revenue	 	 	 	 	 	 	 	
Network Solutions	 	$	282,418	 	 	$	138,374	 	 	
Services & Support	 	 	41,494	 	 	 	16,144	 	 	
Total Revenue	 	 	323,912	 	 	 	154,518	 	 	
Cost of Revenue	 	 	 	 	 	 	 	
Network Solutions	 	 	219,130	 	 	 	90,653	 	 	
Services & Support	 	 	16,974	 	 	 	9,549	 	 	
Total Cost of Revenue	 	 	236,104	 	 	 	100,202	 	 	
Gross Profit	 	 	87,808	 	 	 	54,316	 	 	
Selling, general and administrative expenses	 	 	67,397	 	 	 	27,893	 	 	
Research and development expenses	 	 	70,143	 	 	 	26,491	 	 	
Operating Loss	 	 	(49,732	)	 	 	(68	)	 	
Interest and dividend income	 	 	304	 	 	 	204	 	 	
Interest expense	 	 	(3,287	)	 	 	(30	)	 	
Net investment gain (loss)	 	 	1,252	 	 	 	(3,415	)	 	
Other expense, net	 	 	(303	)	 	 	(226	)	 	
Loss Before Income Taxes	 	 	(51,766	)	 	 	(3,535	)	 	
Income tax benefit	 	 	11,313	 	 	 	2,408	 	 	
Net Loss	 	$	(40,453	)	 	$	(1,127	)	 	
Less: Net Loss attributable to non-controlling interest(1)	 	 	(5,989	)	 	 	—	 	 	
Net Loss attributable to ADTRAN Holdings, Inc.	 	$	(34,464	)	 	$	(1,127	)	 	
 	 	 	 	 	 	 	 	
Weighted average shares outstanding – basic	 	 	78,358	 	 	 	49,113	 	 	
Weighted average shares outstanding – diluted	 	 	78,358	 	 	 	49,113	 	 	
 	 	 	 	 	 	 	 	
Loss per common share attributable to ADTRAN Holdings, Inc. – basic	 	$	(0.44	)	 	$	(0.02	)	 	
Loss per common share attributable to ADTRAN Holdings, Inc. – diluted	 	$	(0.44	)	 	$	(0.02	)	 	
 
(1) Includes $3.2 million of net loss attributable to non-controlling interests pre-DPLTA and $2.8 million of annual recurring compensation earned by redeemable non-controlling interests and accrued by the Company post-DPLTA.

 

Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

 	 	Three Months Ended	 	
 	 	March 31,	 	
 	 	2023	 	 	2022	 	
Cash flows from operating activities:	 	 	 	 	 	 	
Net loss	 	$	(40,453	)	 	$	(1,127	)	
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:	 	 	 	 	 	 	
Depreciation and amortization	 	 	33,402	 	 	 	3,661	 	
Amortization of debt issuance cost	 	 	146	 	 	 	—	 	
(Gain) loss on investments	 	 	(3,154	)	 	 	3,304	 	
Stock-based compensation expense	 	 	3,812	 	 	 	1,893	 	
Deferred income taxes	 	 	(24,019	)	 	 	—	 	
Other, net	 	 	(1	)	 	 	(62	)	
Inventory reserves	 	 	16,051	 	 	 	(1,754	)	
Changes in operating assets and liabilities:	 	 	 	 	 	 	
Accounts receivable, net	 	 	17,658	 	 	 	8,697	 	
Other receivables	 	 	1,980	 	 	 	(6,205	)	
Inventory	 	 	(2,764	)	 	 	(29,685	)	
Prepaid expenses, other current assets and other assets	 	 	1,118	 	 	 	(1,170	)	
Accounts payable	 	 	(40,367	)	 	 	24,818	 	
Accrued expenses and other liabilities	 	 	6,349	 	 	 	3,803	 	
Income taxes payable, net	 	 	10,316	 	 	 	(1,304	)	
Net cash (used in) provided by operating activities	 	 	(19,926	)	 	 	4,869	 	
 	 	 	 	 	 	 	
Cash flows from investing activities:	 	 	 	 	 	 	
Purchases of property, plant and equipment	 	 	(8,439	)	 	 	(1,461	)	
Proceeds from sales and maturities of available-for-sale investments	 	 	930	 	 	 	10,265	 	
Purchases of available-for-sale investments	 	 	(516	)	 	 	(11,504	)	
Proceeds from beneficial interests in securitized accounts receivable	 	 	1,231	 	 	 	—	 	
Net cash used in investing activities	 	 	(6,794	)	 	 	(2,700	)	
 	 	 	 	 	 	 	
Cash flows from financing activities:	 	 	 	 	 	 	
Tax withholdings related to stock-based compensation settlements	 	 	(6,258	)	 	 	(54	)	
Proceeds from stock option exercises	 	 	58	 	 	 	568	 	
Dividend payments	 	 	(7,076	)	 	 	(4,438	)	
Proceeds from draw on revolving credit agreements	 	 	138,236	 	 	 	8,000	 	
Repayment of revolving credit agreements	 	 	(43,464	)	 	 	(8,000	)	
Non-controlling interest put option buyback	 	 	(1,176	)	 	 	—	 	
Repayment of notes payable	 	 	(24,692	)	 	 	—	 	
Net cash provided by (used in) financing activities	 	 	55,628	 	 	 	(3,924	)	
 	 	 	 	 	 	 	
Net increase (decrease) in cash, cash equivalents and restricted cash	 	 	28,908	 	 	 	(1,755	)	
Effect of exchange rate changes	 	 	(1,095	)	 	 	(1,032	)	
Cash and cash equivalents, beginning of period	 	 	108,644	 	 	 	56,818	 	
Cash and cash equivalents, end of period	 	$	136,457	 	 	$	54,031	 	
 	 	 	 	 	 	 	
Supplemental disclosure of cash financing activities:	 	 	 	 	 	 	
Cash paid for interest	 	$	1,610	 	 	$	30	 	
Cash used in operating activities related to operating leases	 	$	4,057	 	 	$	482	 	
Supplemental disclosure of non-cash investing activities:	 	 	 	 	 	 	
Right-of-use assets obtained in exchange for lease obligations	 	$	486	 	 	$	332	 	
Purchases of property, plant and equipment included in accounts payable	 	$	4,354	 	 	$	392	 	

 

 
Supplemental Information
Reconciliation of Gross Profit and Gross Margin to
Non-GAAP Gross Profit and Non-GAAP Gross Margin
(Unaudited)
(In thousands)

 	 	Three Months Ended	 	
 	 	March 31,
 2023	 	 	December 31, 2022	 	 	March 31,
 2022	 	
Total Revenue	 	$	323,912	 	 	$	358,271	 	 	$	154,518	 	
 	 	 	 	 	 	 	 	 	 	
Cost of Revenue	 	$	236,104	 	 	$	250,868	 	 	$	100,202	 	
Acquisition-related expenses, amortizations and adjustments	 	 	(32,578	)	(1)	 	(31,577	)	(3)	 	—	 	
Stock-based compensation expense	 	 	(240	)	(2)	 	(1,287	)	(4)	 	(159	)	
Pension adjustments	 	 	—	 	 	 	144	 	 	 	—	 	
Restructuring expenses	 	 	(76	)	 	 	(8	)	 	 	—	 	
Non-GAAP Cost of Revenue	 	$	203,210	 	 	$	218,140	 	 	$	100,043	 	
 	 	 	 	 	 	 	 	 	 	
Gross Profit	 	$	87,808	 	 	$	107,403	 	 	$	54,316	 	
Non-GAAP Gross Profit	 	$	120,702	 	 	$	140,131	 	 	$	54,475	 	
 	 	 	 	 	 	 	 	 	 	
Gross Margin	 	 	27.1	%	 	 	30.0	%	 	 	35.2	%	
Non-GAAP Gross Margin	 	 	37.3	%	 	 	39.1	%	 	 	35.3	%	
 
(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $32.6 million is included in total cost of revenue, on the condensed consolidated statements of loss.

(2) Includes $0.2 million in cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of loss.

(3) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $31.6 million is included in total cost of revenue, on the condensed consolidated statements of loss.

(4) Includes $1.3 million in cost of revenue expenses incremental stock-based award modification expense related to the business combination on the condensed consolidated statements of loss.

 

 

 
Supplemental Information
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
(Unaudited)
(In thousands)

 	 	Three Months Ended	 	 	
 	 	March 31,	 	 	December 31,	 	 	March 31,	 	 	
 	 	2023	 	 	2022	 	 	2022	 	 	
Operating Expenses	 	$	137,540	 	 	$	139,813	 	 	$	54,384	 	 	
Acquisition-related expenses, amortizations and adjustments	 	 	(4,584	)	(1)	 	(8,328	)	(6)	 	(2,330	)	(10)	
Stock-based compensation expense	 	 	(3,458	)	(2)	 	(11,095	)	(7)	 	(1,734	)	(11)	
Restructuring expenses	 	 	(2,361	)	(3)	 	(1,618	)	(8)	 	(2	)	(12)	
Integration expenses	 	 	(849	)	(4)	 	—	 	 	 	—	 	 	
Pension adjustments	 	 	—	 	 	 	43	 	(9)	 	—	 	 	
Deferred compensation adjustments	 	 	(394	)	(5)	 	(168	)	(5)	 	2,696	 	(5)	
Non-GAAP Operating Expenses	 	$	125,894	 	 	$	118,647	 	 	$	53,014	 	 	
 
(1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $4.1 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of loss.
(2) $2.5 million is included in selling, general and administrative expenses and $1.0 million is included in research and development expenses on the condensed consolidated statements of loss.
(3) $2.2 million is included in selling, general and administrative expenses and $0.2 million is included in research and development expenses on the condensed consolidated statements of loss.
(4) $0.8 million is included in selling, general and administrative expenses on the condensed consolidated statements of loss. Includes fees relating to the expansion of internal controls at ADVA and the implementation of the DPLTA.
(5) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss.
(6) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations, and certain one-time transaction expenses of which $7.8 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of loss.
(7) $9.4 million is included in selling, general and administrative expenses and $1.7 million is included in research and development expenses on the condensed consolidated statements of loss. Includes $7.3 million of in selling, general and administrative expenses and $0.6 million is included in research and development expenses incremental stock-based award modification expense related to the business combination.
(8) $0.1 is included in selling, general and administrative expenses and $1.5 million is included in research and development expenses on the condensed consolidated statements of loss.
(9) $0.2 million is included in selling, general and administrative expenses and ($0.3) million is included in research and development expenses on the condensed consolidated statements of loss.
(10) $0.5 million is included in selling, general and administrative expenses and $1.8 million is included in research and development expenses on the condensed consolidated statements of loss .
(11) $0.6 million is included in selling, general and administrative expenses and $1.1 million is included in research and development expenses on the condensed consolidated statements of loss.
(12) Less than $0.1 million is included in selling, general and administrative expenses on the condensed consolidated statements of loss.

 

 
Supplemental Information
Reconciliation of Operating Loss to Non-GAAP Operating (Loss) Income
(Unaudited)
(In thousands)

 	 	Three Months Ended	 	 	
 	 	March 31,	 	 	December 31,	 	 	March 31,	 	 	
 	 	2023	 	 	2022	 	 	2022	 	 	
Operating Loss	 	$	(49,732	)	 	$	(32,874	)	 	$	(68	)	 	
Acquisition related expenses, amortizations and adjustments	 	 	37,162	 	 	 	39,904	 	 	 	2,330	 	 	
Asset impairments	 	 	—	 	 	 	463	 	 	 	—	 	 	
Stock-based compensation expense	 	 	3,698	 	 	 	12,383	 	 	 	1,893	 	 	
Pension adjustments	 	 	—	 	 	 	(187	)	 	 	—	 	 	
Restructuring expenses	 	 	2,437	 	 	 	1,627	 	 	 	2	 	 	
Integration expenses	 	 	849	 	 	 	—	 	 	 	—	 	 	
Deferred compensation adjustments(1)	 	 	394	 	 	 	168	 	 	 	(2,696	)	 	
Non-GAAP Operating (Loss) Income	 	$	(5,192	)	 	$	21,484	 	 	$	1,461	 	 	
 
(1) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss.

 

Supplemental Information
Reconciliation of Other (Expense) Income to Non-GAAP Other (Expense) Income
(Unaudited)
(In thousands)

 	 	Three Months Ended	 	 	
 	 	March 31, 2023	 	 	December 31, 2022	 	 	March 31, 2022	 	 	
Interest and dividend income	 	$	304	 	 	$	1,355	 	 	$	204	 	 	
Interest expense	 	 	(3,287	)	 	 	(2,010	)	 	 	(30	)	 	
Net investment gain (loss)	 	 	1,252	 	 	 	(587	)	 	 	(3,415	)	 	
Other (expense) income, net	 	 	(303	)	 	 	11,568	 	 	 	(226	)	 	
Total Other (Expense) Income	 	$	(2,034	)	 	$	10,326	 	 	$	(3,467	)	 	
Deferred compensation adjustments (1)	 	 	(1,250	)	 	 	(349	)	 	 	1,841	 	 	
Pension expense (2)	 	 	7	 	 	 	77	 	 	 	89	 	 	
Non-GAAP Other (Expense) Income	 	$	(3,277	)	 	$	10,054	 	 	$	(1,537	)	 	
 
(1) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees.
(2) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.

 

Supplemental Information
 
Reconciliation of Net (Loss) Income inclusive of Non-Controlling Interest to
Non-GAAP Net (Loss) Income inclusive of Non-Controlling Interest
(Unaudited)
 
and
 
Reconciliation of Net Loss attributable to Non-Controlling Interest to
Non-GAAP Net (Loss) Income attributable to Non-Controlling Interest
(Unaudited)
 
and
 
Reconciliation of Net (Loss) Income attributable to ADTRAN Holdings, Inc. and
(Loss) Earnings per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to
Non-GAAP Net (Loss) Income attributable to ADTRAN Holdings, Inc. and
Non-GAAP (Loss) Earnings per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted
(Unaudited)
(In thousands, except per share amounts)

 	 	Three Months Ended	 	 	
 	 	March 31,
2023	 	 	December 31,
2022	 	 	March 31,
2022	 	 	
Net (Loss) Income attributable to ADTRAN Holdings, Inc.	 	$	(34,464	)	 	$	38,881	 	 	$	(1,127	)	 	
Plus: Net Loss attributable to non-controlling interest (1)	 	 	(5,989	)	 	 	(3,926	)	 	 	—	 	 	
Net (Loss) Income inclusive of non-controlling interest	 	$	(40,453	)	 	$	34,955	 	 	$	(1,127	)	 	
Acquisition related expenses, amortizations and adjustments	 	 	37,162	 	 	 	39,904	 	 	 	2,330	 	 	
Asset impairments	 	 	—	 	 	 	463	 	 	 	—	 	 	
Stock-based compensation expense	 	 	3,698	 	 	 	12,383	 	 	 	1,893	 	 	
Valuation allowance	 	 	—	 	 	 	(60,908	)	 	 	8,079	 	 	
Deferred compensation adjustments (2)	 	 	(856	)	 	 	(182	)	 	 	(855	)	 	
Pension adjustments (3)	 	 	7	 	 	 	(109	)	 	 	89	 	 	
Restructuring expenses	 	 	2,437	 	 	 	1,627	 	 	 	2	 	 	
Integration expenses	 	 	849	 	 	 	—	 	 	 	—	 	 	
Tax effect of adjustments to net income (loss)	 	 	(12,307	)	 	 	(12,463	)	 	 	(505	)	 	
Non-GAAP Net (Loss) Income inclusive of non-controlling interest	 	$	(9,463	)	 	$	15,670	 	 	$	9,906	 	 	
Less: Non-GAAP Net (Loss) Income attributable to non-controlling interest (1)	 	 	(4,460	)	 	 	5,769	 	 	 	—	 	 	
Non-GAAP Net (Loss) Income attributable to ADTRAN Holdings, Inc.	 	$	(5,003	)	 	$	9,901	 	 	$	9,906	 	 	
 	 	 	 	 	 	 	 	 	 	 	
GAAP Net Loss attributable to non-controlling interest (1)	 	$	(5,989	)	 	$	(3,926	)	 	$	—	 	 	
Acquisition related expenses, amortizations and adjustments	 	 	1,457	 	 	 	9,039	 	 	 	—	 	 	
Restructuring expenses	 	 	29	 	 	 	402	 	 	 	—	 	 	
Integration expenses	 	 	6	 	 	 	—	 	 	 	—	 	 	
Stock-based compensation expense	 	 	37	 	 	 	300	 	 	 	—	 	 	
Pension adjustments (3)	 	 	—	 	 	 	(46	)	 	 	—	 	 	
Non-GAAP Net (Loss) Income attributable to non-controlling interest (1)	 	$	(4,460	)	 	$	5,769	 	 	$	—	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding – basic	 	 	78,358	 	 	 	77,659	 	 	 	49,113	 	 	
Weighted average shares outstanding – diluted	 	 	78,358	 	 	 	79,243	 	 	 	49,113	 	 	
 	 	 	 	 	 	 	 	 	 	 	
(Loss) Earnings per common share attributable to ADTRAN Holdings, Inc. – basic	 	$	(0.44	)	 	$	0.50	 	 	$	(0.02	)	 	
(Loss) Earnings per common share attributable to ADTRAN Holdings, Inc. – diluted	 	$	(0.44	)	 	$	0.49	 	 	$	(0.02	)	 	
 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP (Loss) Earnings per common share attributable to ADTRAN – basic	 	$	(0.06	)	 	$	0.13	 	 	$	0.20	 	 	
Non-GAAP (Loss) Earnings per common share attributable to ADTRAN – diluted	 	$	(0.06	)	 	$	0.12	 	 	$	0.20	 	 	
 
(1) Represents the non-controlling interest portion of the Company's ownership of ADVA pre-DPLTA and the annual recurring compensation earned by redeemable non-controlling interests and accrued by the Company post-DPLTA.
(2) Includes non-cash change in fair value of equity investments held in deferred compensation plans offered to certain employees.
(3) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.