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Business Combination (Tables)

9 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Summary of Purchase Price for Business Combination

The following table summarizes the purchase price for the ADVA business combination:

(In thousands, except shares, share price and exchange ratio)		Purchase Price
ADVA shares exchanged			33,957,538
Exchange ratio			0.8244
ADTRAN Holdings, Inc. shares issued			27,994,595
ADTRAN Holdings, Inc. share price on July 15, 2022		$	20.20
Purchase price paid for ADVA shares		$	565,491
Equity compensation (1)		$	12,769
Total purchase price		$	578,260

(1) Represents the portion of replacement share-based payment awards that relates to pre-combination vesting.

Summary of Purchase Price Allocation of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary purchase price allocation for each major class of assets acquired and liabilities assumed in the acquisition of ADVA (in thousands):

(In thousands)
Total purchase price		$	578,260
Non-controlling interest		$	316,415
Net Assets:
Cash and cash equivalents		$	44,003
Accounts receivable			114,659
Other receivables			1,457
Inventory			200,532
Prepaid expenses and other current assets			29,474
Property plant and equipment			52,796
Deferred tax assets			1,599
Intangibles			405,385
Other non-current assets			30,588
Accounts payable			(98,587	)
Current unearned revenue			(26,047	)
Accrued expenses and other liabilities			(59,600	)
Current portion of notes payable			(25,254	)
Income tax payable			(1,400	)
Non-current unearned revenue			(11,498	)
Pension liability			(6,820	)
Other non-current liabilities			(6,094	)
Non-current portion of revolving credit agreements and notes payable			(15,250	)
Non-current lease obligations			(20,046	)
Deferred tax liabilities			(74,379	)
Total net assets acquired		$	535,518
Goodwill		$	359,157

Summary of Fair Value of Intangible Assets Acquired

The fair value of the intangible assets acquired as of the acquisition date:

(In thousands)	Estimated-average useful life (in years) (1)				Fair value				Income Statement Amortization Classification
Developed technology		8.5			$	293,530			Cost of revenue - Network Solutions
Backlog		1.4				52,165			Cost of revenue - Network Solutions and Services & Support
Customer relationships		10.5				32,704			Selling, general and administrative expenses
Trade name		2.8				26,986			Selling, general and administrative expenses
Total					$	405,385

(1) Determination of the weighted average period of the individual categories of intangible assets was based on the nature of the applicable intangible asset and the expected future cash flows to be derived from the intangible asset. Amortization of intangible assets with definite lives is recognized over the period of time the assets are expected to contribute to future cash flows.

Summary of Unaudited Pro Forma Financial Information

The unaudited pro forma financial information in the table below summarizes the combined results of operations for ADTRAN and ADVA as though the Business Combination had occurred on January 1, 2021.

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
(In thousands)	2022				2021				2022				2021
Revenue	$	368,192			$	317,067			$	1,053,510			$	942,003
Net income (loss)	$	(48,084	)		$	(44,154	)		$	(60,494	)		$	(133,321	)

X

- Definition

Tabular disclosure of pro forma results of operations for a material business acquisition or series of individually immaterial business acquisitions that are material in the aggregate.

+ References

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Tabular disclosure of a material business combination completed during the period, including background, timing, and recognized assets and liabilities. This table does not include leveraged buyouts.

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Tabular disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. May include but not limited to the following: (a) acquired receivables; (b) contingencies recognized at the acquisition date; and (c) the fair value of noncontrolling interests in the acquiree.

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