XML 36 R26.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Employee Benefit Plans | 12 Months Ended
--- | ---
Dec. 31, 2023
Retirement Benefits [Abstract] |
Employee Benefit Plans | Note 15 – Employee Benefit Plans Pension Benefit Plan We maintain a defined benefit pension plan covering employees in certain foreign countries. Pension benefit plan obligations are based on various assumptions used by our actuaries in calculating these amounts. These assumptions include discount rates, compensation rate increases, expected return on plan assets, retirement rates and mortality rates. Actual results that differ from the assumptions and changes in assumptions could affect future expenses and obligations. Details regarding the pension plans are set forth below. • In Germany, there is one defined benefit pension plan and one defined contribution plan. Both plans provide benefits in the event of retirement, death or disability. The plan's benefits are based on age, years of service and salary. The defined benefit plan is financed by contributions paid by the Company and the defined contribution plan is financed by contributions paid by the participants. • In Switzerland, there are two defined benefit pension plans. Both plans provide benefits in the event of retirement, death or disability. The plan's benefits are based on age, years of service, salary and on a participant's old age account. The plans are financed by contributions paid by the participants and by the Company. • In Italy, 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. Employees receive their pension payments as a function of salary, inflation and a notional account. • In Israel, there is a defined benefit pension plan that provides benefits in the event of a participant being dismissed involuntarily, retirement or death. The plan's benefits are based on the higher of the severance benefit required by law or the cash surrender value of the severance benefit component of any qualifying insurance policy or long-term employee benefit fund that is registered in the participants name. 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. The pension benefit plan obligations and funded status as of December 31, 2023 and 2022, were as follows:
(In thousands) |  | 2023 |  |  | 2022 |  |
Change in projected benefit obligation: |  |  |  |  |  |  |
Projected benefit obligation at beginning of period |  | $ | 59,344 |  |  | $ | 73,779 |  | (1)
Service cost |  |  | 1,579 |  |  |  | 1,426 |  |
Interest cost |  |  | 1,851 |  |  |  | 1,168 |  |
Actuarial loss (gain) - experience |  |  | 1,181 |  |  |  | (2,039 | ) |
Actuarial loss (gain) - assumptions |  |  | 1,791 |  |  |  | (11,128 | ) |
Benefit payments |  |  | (1,966 | ) |  |  | (1,400 | ) |
Plan amendments |  |  | 966 |  |  |  | — |  |
Effects of foreign currency exchange rate changes |  |  | 3,151 |  |  |  | (2,462 | ) |
Projected benefit obligation at end of period |  |  | 67,897 |  |  |  | 59,344 |  |
Change in plan assets: |  |  |  |  |  |  |
Fair value of plan assets at beginning of period |  |  | 48,720 |  |  |  | 55,084 |  | (1)
Actual gain (loss) on plan assets |  |  | 3,125 |  |  |  | (4,372 | ) |
Contributions |  |  | 1,215 |  |  |  | 382 |  |
Benefit payments |  |  | (231 | ) |  |  | — |  |
Effects of foreign currency exchange rate changes |  |  | 2,389 |  |  |  | (2,374 | ) |
Fair value of plan assets at end of period |  |  | 55,218 |  |  |  | 48,720 |  |
Unfunded status at end of period |  | $ | (12,679 | ) |  | $ | (10,624 | ) |
(1) In connection with the Business Combination, we acquired $29.6 million of additional projected benefit obligations and $22.3 million of plan assets whose beginning of period measurement date is July 15, 2022. The accumulated benefit obligation was $67.1 million and $56.8 million as of December 31, 2023 and 2022, respectively. The decrease in the accumulated benefit obligation, projected benefit obligation and the actuarial loss was primarily attributable to an increase in the discount rate during 2023. The net amounts recognized in the Consolidated Balance Sheets for the unfunded pension liability as of December 31, 2023 and 2022 were as follows:
(In thousands) |  | 2023 |  |  | 2022 |
Current pension liability |  | $ | 136 |  |  | $ | — |
Non-current pension liability |  |  | 12,543 |  |  |  | 10,624 |
Total |  | $ | 12,679 |  |  | $ | 10,624 |
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 components of net periodic pension cost and amounts recognized in other comprehensive (loss) income for the years ended December 31, 2023, 2022 and 2021 were as follows:
(In thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
Net periodic benefit cost: |  |  |  |  |  |  |  |  |
Service cost |  | $ | 1,579 |  |  | $ | 1,426 |  |  | $ | 1,229 |
Interest cost |  |  | 1,851 |  |  |  | 1,168 |  |  |  | 339 |
Expected return on plan assets |  |  | (1,750 | ) |  |  | (2,129 | ) |  |  | (1,842 | )
Amortization of actuarial losses |  |  | 26 |  |  |  | 355 |  |  |  | 1,088 |
Net periodic benefit cost |  |  | 1,706 |  |  |  | 820 |  |  |  | 814 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss): |  |  |  |  |  |  |  |  |
Net actuarial loss (gain) |  |  | 2,304 |  |  |  | (6,549 | ) |  |  | (4,984 | )
Amortization of actuarial losses |  |  | (145 | ) |  |  | (113 | ) |  |  | (825 | )
Amount recognized in other comprehensive income (loss) |  |  | 2,159 |  |  |  | (6,662 | ) |  |  | (5,809 | )
Total recognized in net periodic benefit cost and other comprehensive income (loss) |  | $ | 3,865 |  |  | $ | (5,842 | ) |  | $ | (4,995 | )
The amounts recognized in accumulated other comprehensive income as of December 31, 2023 and 2022 were as follows:
(In thousands) |  | 2023 |  |  | 2022 |
Net actuarial loss |  | $ | (3,231 | ) |  | $ | (1,073 | )
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 expected return on our plan's assets is utilized in determining the benefit obligation and net periodic benefit cost is derived from periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks using standard deviations and correlations of returns among the asset classes that comprise the plans' asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. The discount rate has been derived from the returns of high-quality, corporate bonds denominated in euro currency with durations close to the duration of our pension obligations. The weighted-average assumptions that were used to determine the net periodic benefit cost for the years ended December 31, 2023, 2022 and 2021 were as follows:
|  | 2023 |  |  | 2022 |  |  | 2021 |
Discount rate |  |  | 2.84 | % |  |  | 3.24 | % |  |  | 1.16 | %
Rate of compensation increase |  |  | 2.22 | % |  |  | 2.17 | % |  |  | 2.00 | %
Expected long-term rates of return |  |  | 4.83 | % |  |  | 4.65 | % |  |  | 5.90 | %
The weighted-average assumptions that were used to determine the benefit obligation as of December 31, 2023 and 2022:
|  | 2023 |  |  | 2022 |  |  | 2021 |
Discount rate |  |  | 3.17 | % |  |  | 3.10 | % |  |  | 1.16 | %
Rate of compensation increase |  |  | 2.22 | % |  |  | 2.17 | % |  |  | 2.00 | %
Actuarial gains and losses are recorded in accumulated other comprehensive income. To the extent unamortized gains and losses exceed 10% of the higher of the market-related value of assets or the projected benefit obligation, the excess is amortized as a component of net periodic pension cost over the remaining service period of active participants. The Company anticipates making approximately $2.2 million in contributions to the pension plans in 2024. The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid to participants:
(In thousands) |  |  |
2024 |  | $ | 2,851 |
2025 |  |  | 3,725 |
2026 |  |  | 3,183 |
2027 |  |  | 3,683 |
2028 |  |  | 3,313 |
2029 - 2032 |  |  | 18,498 |
Total |  | $ | 35,253 |
U.S. GAAP establishes a three-level valuation hierarchy based upon observable and unobservable inputs for fair value measurement of financial instruments: • Level 1 – Observable outputs; values based on unadjusted quoted prices for identical assets or liabilities in an active market; • Level 2 – Significant inputs that are observable; values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly; • Level 3 – Significant unobservable inputs; values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs could include information supplied by investees. We have categorized our cash equivalents and our investments held at fair value into this hierarchy as follows:
|  | Fair Value Measurements at December 31, 2023 Using |
(In thousands) |  | Fair Value |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Cash and cash equivalents |  | $ | 987 |  |  | $ | 987 |  |  | $ | — |  |  | $ | — |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |
Bond funds |  |  | 20,155 |  |  |  | 18,840 |  |  |  | 1,315 |  |  |  | — |
Equity funds |  |  | 21,525 |  |  |  | 21,288 |  |  |  | 237 |  |  |  | — |
Other funds |  |  | 6,054 |  |  |  | 5,343 |  |  |  | 711 |  |  |  | — |
Insuarance contracts |  |  | 353 |  |  |  | — |  |  |  | 353 |  |  |  | — |
Real estate funds |  |  | 6,144 |  |  |  | 546 |  |  |  | 2,326 |  |  |  | 3,272 |
Available-for-sale securities |  |  | 54,231 |  |  |  | 46,017 |  |  |  | 4,942 |  |  |  | 3,272 |
Total |  | $ | 55,218 |  |  | $ | 47,004 |  |  | $ | 4,942 |  |  | $ | 3,272 |
|  | Fair Value Measurements at December 31, 2022 Using |
(In thousands) |  | Fair Value |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Cash and cash equivalents |  | $ | 1,423 |  |  | $ | 1,423 |  |  | $ | — |  |  | $ | — |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |
Bond funds: |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | 13,256 |  |  |  | 11,667 |  |  |  | 1,590 |  |  |  | — |
Government bonds |  |  | 5,490 |  |  |  | 5,490 |  |  |  | — |  |  |  | — |
Equity funds: |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Global equity |  |  | 15,452 |  |  |  | 15,150 |  |  |  | 301 |  |  |  | — |
Balanced fund |  |  | 5,190 |  |  |  | 4,148 |  |  |  | 1,042 |  |  |  | — |
Emerging markets |  |  | 1,707 |  |  |  | 1,707 |  |  |  | — |  |  |  | — |
Large cap value |  |  | 194 |  |  |  | 194 |  |  |  | — |  |  |  | — |
Global real estate fund |  |  | 6,008 |  |  |  | 742 |  |  |  | 1,577 |  |  |  | 3,689 |
Available-for-sale securities |  |  | 47,297 |  |  |  | 39,098 |  |  |  | 4,510 |  |  |  | 3,689 |
Total |  | $ | 48,720 |  |  | $ | 40,521 |  |  | $ | 4,510 |  |  | $ | 3,689 |
Our investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner necessary to meet expected future benefits earned by participants and consider a broad range of economic conditions. The objectives of the target allocations are to maintain investment portfolios that diversify risk through prudent asset allocation parameters, achieve asset returns that meet or exceed the plans’ actuarial assumptions and achieve asset returns that are competitive with like institutions employing similar investment strategies. The investment policy is periodically reviewed by the Company and a designated third-party fiduciary for investment matters. The policy is established and administered in a manner that is compliant at all times with applicable government regulations. 401(k) Savings Plans We maintain the ADTRAN, Inc. 401(k) Retirement Plan and the Adtran Networks SE 401(k) Retirement Plan (the “Savings Plans”) for the benefit of eligible employees. The Savings Plans are intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), and is intended to be a “safe harbor” 401(k) plan under Code Section 401(k)(12). The Savings Plans allows employees to save for retirement by contributing part of their compensation to the plan on a tax-deferred basis. The Savings Plans also requires us to contribute a “safe harbor” amount each year. In our legacy ADTRAN, Inc. plan, we match up to 4% of employee contributions (100% of an employee’s first 3% of contributions and 50% of their next 2% of contributions), beginning on the employee’s one-year anniversary date. All matching contributions under the legacy ADTRAN, Inc. Savings Plan vest im mediately. In our legacy ADTRAN Networks, plan, we match up to 1.5% of employee contributions (25% of an employee's first 6% of contributions). All matching contributions under the legacy ADTRAN Networks Savings Plan vest ratably over five years beginning on the employee's one-year anniversary date. In addition, under the legacy ADTRAN Networks plan, an annual matching employer contribution is made which is based on the Company's achievement against a yearly relative Pro-forma EBIT target which can range from no additional match up to an additional 50% match. In calculating our matching contributions, compensation up to the statutory maximum under the Code is used ($330,000 for 2023). Employer contribution expense and plan administration costs for both Savings Plan amounted to approximately $4.2 million, $4.1 million and $3.9 million in 2023, 2022 and 2021, respectively. Deferred Compensation Plans We maintain four deferred compensation programs for certain executive management employees and our Board of Directors. The ADTRAN, Inc. Deferred Compensation Program for Employees is offered as a supplement to our tax-qualified 401(k) plan and is available to certain executive management employees who have been designated by our Board of Directors. This deferred compensation plan allows participants to defer all or a portion of certain specified bonuses and up to 25% of remaining cash compensation and permits us to make matching contributions on a discretionary basis without the limitations that apply to the 401(k) plan. To date, we have not made any matching contributions under this plan. We also maintain the ADTRAN, Inc. Equity Deferral Program for Employees. Under this plan, participants may elect to defer all or a portion of their vested PSUs and RSUs to the plan. Such deferrals shall continue to be held and deemed to be invested in shares of ADTRAN stock unless and until the amounts are distributed or such deferrals are moved to another deemed investment pursuant to an election made by the participant. For our Board of Directors, we maintain the ADTRAN, Inc. Deferred Compensation Program for Directors. This program allows our Board of Directors to defer all or a portion of monetary remuneration paid to the Director, including, but not limited to, meeting fees and annual retainers. We also maintain the ADTRAN, Inc. Equity Deferral Program for Directors. Under this plan, participants may elect to defer all or a portion of their vested restricted stock awards. Such deferrals shall continue to be held and deemed to be invested in shares of ADTRAN stock unless and until the amounts are distributed or such deferrals are moved to another deemed investment pursuant to an election made by the director. We have set aside the plan assets for all plans in a rabbi trust (the “Trust”) and all contributions are credited to bookkeeping accounts for the participants. The Trust assets are subject to the claims of our creditors in the event of bankruptcy or insolvency. The assets of the Trust are deemed to be invested in pre-approved mutual funds as directed by each participant and the participant’s bookkeeping account is credited with the earnings and losses attributable to those investments. Benefits are scheduled to be distributed six months after termination of employment in a single lump sum payment or annual installments paid over a three or ten-year term based on the participant’s election. Distributions will be made on a pro-rata basis from each of the hypothetical investments of the participant’s account in cash. Any whole shares of ADTRAN, Inc. common stock that are distributed will be distributed in-kind. Assets of the Trust are deemed invested in mutual funds that cover an investment spectrum ranging from equities to money market instruments. These mutual funds are publicly quoted and reported at fair value. The fair value of the assets held by the Trust and the amounts payable to the plan participants as of December 31, 2023 and 2022 were as follows:
(In thousands) |  | 2023 |  |  | 2022 |
Fair Value of Plan Assets |  |  |  |  |  |
Long-term investments |  | $ | 26,838 |  |  | $ | 22,943 |
Total Fair Value of Plan Assets |  | $ | 26,838 |  |  | $ | 22,943 |
Amounts Payable to Plan Participants |  |  |  |  |  |
Deferred compensation liability |  | $ | 29,039 |  |  | $ | 26,668 |
Total Amounts Payable to Plan Participants |  | $ | 29,039 |  |  | $ | 26,668 |
The Trust held $2.2 million and $3.7 million of common stock in the Company as of December 31, 2023 and 2022, respectively. Shares of the Company held by the Trust are recorded at cost and classified as treasury stock on the Consolidated Balance Sheet. Interest and dividend income of the Trust are included in interest and dividend income in the accompanying 2023, 2022 and 2021 Consolidated Statements of Loss. Changes in the fair value of the plan assets held by the Trust have been included in other income, net in the accompanying 2023, 2022 and 2021 Consolidated Statements of Loss. Changes in the fair value of the deferred compensation liability are included as selling, general and administrative expense in the accompanying 2023, 2022 and 2021 Consolidated Statements of Loss. Based on the changes in the total fair value of the Trust’s assets, the Company recorded deferred compensation income in 2023, 2022 and 2021 of $3.0 million, $6.3 million and $0.9 million, respectively. Retiree Medical Coverage Medical, dental and prescription drug coverage is provided to certain spouses and former spouses of current and former officers on the same terms as provided to our active officers for up to 30 years. As of December 31, 2023 and 2022, this liability totaled $0.3 million and $0.2 million, respectively.

X
- References No definition available. + Details
Name: | us-gaap_CompensationAndRetirementDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for retirement benefits. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 70 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480794/715-70-50-1 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 55 -Paragraph 17 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480482/715-20-55-17 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (d)(iv)(03) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480506/715-20-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (d)(i) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480506/715-20-50-1 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (q) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480506/715-20-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (l) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480506/715-20-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//715/tableOfContent Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (d)(iii) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480506/715-20-50-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (o) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480506/715-20-50-1 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (p) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480506/715-20-50-1 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (r)(1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480506/715-20-50-1 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (r)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480506/715-20-50-1 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 20 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480126/715-20-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 715 -SubTopic 60 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480266/715-60-50-3 + Details
Name: | us-gaap_PensionAndOtherPostretirementBenefitsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration