XML 36 R32.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Summary of Significant Accounting Policies (Policies) | 9 Months Ended
--- | ---
Sep. 30, 2023
Accounting Policies [Abstract] |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of ADTRAN Holdings, Inc. and its subsidiaries have been prepared pursuant to the rules and regulations of the SEC applicable to interim financial information presented in Quarterly Reports on Form 10-Q. Accordingly, certain information and notes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements are not included herein. The December 31, 2022 Condensed Consolidated Balance Sheet is derived from audited financial statements but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments necessary to fairly state these interim statements have been recorded and are of a normal and recurring nature. The results of operations for an interim period are not necessarily indicative of the results for the full year. The interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Amendment No. 1 to the ADTRAN Holdings, Inc. Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on August 14, 2023.
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Significant estimates include allowance for credit losses on accounts receivable and contract assets, excess and obsolete inventory reserves, warranty reserves, customer rebates, determination and accrual of the deferred revenue related to performance obligations under contracts with customers, estimated costs to complete obligations associated with deferred and accrued revenues and network installations, estimated income tax provision and income tax contingencies, fair value of stock-based compensation, assessment of goodwill and other intangibles for impairment, estimated lives of intangible assets, estimates of intangible assets upon measurement, estimated pension liability and fair value of investments and estimated contingent liabilities. Actual amounts could differ significantly from these estimates. We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of supply chain constraints, inflationary pressures, the energy crisis, currency fluctuations and political tensions as of September 30, 2023, and through the date of this report. The accounting matters assessed included, but were not limited to, the allowance for credit losses, stock-based compensation, carrying value of goodwill, intangibles and other long-lived assets, financial assets, valuation allowances for tax as sets, revenue recognition and costs of revenue. Future conditions related to supply chain constraints, inflationary pressures, the energy crisis, rising interest rates, instability in the financial services industry, currency fluctuations and political tensions could result in further impacts to the Company's consolidated financial statements in future reporting periods
Restatement of Previously Issued Financial Statements | Restatement of Previously Issued Financial Statements During the fourth quarter of 2023, the Company determined that it understated income attributable to the non-controlling interest, loss attributable to the Company, loss per common share attributable to ADTRAN Holdings, Inc. – basic and diluted, understated comprehensive income attributable to non-controlling interest and understated comprehensive loss attributable to ADTRAN Holdings, Inc., net of tax for the three and nine months ended September 30, 2023. The misstatements occurred following the effectiveness of the Domination Profit and Loss Transfer Agreement (“DPLTA”) between the Company and the Company’s majority-owned subsidiary, Adtran Networks SE (“Adtran Networks”) upon the registration of the DPLTA with the commercial register on January 16, 2023. Pursuant to the DPLTA, the minority shareholders of Adtran Networks are guaranteed recurring cash compensation commencing with respect to the 2023 fiscal year. The Company incorrectly presented the guaranteed cash compensation attributable to the non-controlling interest as a loss rather than income attributable to the non-controlling interest during the three and nine months ended September 30, 2023. This error resulted in an understatement of net income attributable to the non-controlling interest, an understatement of net loss attributable to the Company and loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted, an understatement of comprehensive income attributable to non-controlling interest and an understatement of comprehensive loss attributable to ADTRAN Holdings, Inc., net of tax. Additionally, this error resulted in an understatement of additional paid-in capital and an overstatement of accumulated other comprehensive income. The Company restated the Condensed Consolidated Statements of Loss for the three and nine months ended September 30, 2023 presented in this report by increasing net loss attributable to the Company by $5.8 million and $17.2 million, respectively. The Company restated the Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2023 presented in this report by increasing comprehensive loss attributable to the Company by $2.9 million and $5.6 million, respectively. The following tables reflects the impact of the restatement to the specific line items presented in the Company’s previously reported Condensed Consolidated Statements of Loss and the previously reported Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2023:
|  |  | For the Three Months Ended September 30, 2023 |  |  | For the Nine Months Ended September 30, 2023 |
(In thousands) |  |  | As Reported |  |  | Adjustment |  |  | As Restated |  |  | As Reported |  |  | Adjustment |  |  | As Restated |
Income (Loss) attributable to non-controlling interest |  |  | $ | (2,914 | ) |  | $ | 5,828 |  |  | $ | 2,914 |  |  | $ | (11,784 | ) |  | $ | 17,210 |  |  | $ | 5,426 |
Net Loss attributable to ADTRAN Holdings, Inc. |  |  | $ | (72,735 | ) |  | $ | (5,828 | ) |  | $ | (78,563 | ) |  | $ | (140,533 | ) |  | $ | (17,210 | ) |  | $ | (157,743 | )
Loss per common share attributable to ADTRAN Holdings, Inc. – basic |  |  | $ | (0.93 | ) |  | $ | (0.07 | ) |  | $ | (1.00 | ) |  | $ | (1.79 | ) |  | $ | (0.22 | ) |  | $ | (2.01 | )
Loss per common share attributable to ADTRAN Holdings, Inc. – diluted |  |  | $ | (0.93 | ) |  | $ | (0.07 | ) |  | $ | (1.00 | ) |  | $ | (1.79 | ) |  | $ | (0.22 | ) |  | $ | (2.01 | )
Comprehensive Income attributable to non-controlling interest |  |  | $ | — |  |  | $ | 2,914 |  |  | $ | 2,914 |  |  | $ | 244 |  |  | $ | 5,564 |  |  | $ | 5,808 |
Comprehensive Loss attributable to ADTRAN Holdings, Inc., net of tax |  |  | $ | (105,057 | ) |  | $ | (2,914 | ) |  | $ | (107,971 | ) |  | $ | (166,230 | ) |  | $ | (5,564 | ) |  | $ | (171,794 | )
The accompanying applicable Notes have been updated to reflect the effects of the restatement as of September 30, 2023. The following table reflects the impact of the restatement, in addition to the revision of the December 31, 2022 balances referenced above, to the specific line items presented in the Company’s previously reported Condensed Consolidated Balance Sheets as of September 30, 2023 and the Condensed Consolidated Statement of Changes in Equity for the period ended September 30, 2023:
|  |  | September 30, 2023 |
(In thousands) |  |  | As Reported |  |  | Adjustment |  |  | As Restated |
Additional Paid-in Capital |  |  | $ | 770,565 |  |  | $ | 20,725 |  |  | $ | 791,290 |
Accumulated Other Comprehensive Income |  |  | $ | 32,800 |  |  | $ | (20,725 | ) |  | $ | 12,075 |
Total Equity |  |  | $ | 684,893 |  |  | $ | — |  |  | $ | 684,893 |
Revision of Previously Issued Financial Statements | Revision of Previously Issued Financial Statements During the fourth quarter of 2023, management identified an immaterial error relating to the understatement of non-controlling interest and the overstatement of accumulated other comprehensive income in the Condensed Consolidated Balance Sheet as of December 31, 2022 and the understatement of comprehensive loss attributable to non-controlling interest and overstated the comprehensive loss attributable to ADTRAN Holdings, Inc., net of tax in the Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2022. The immaterial misstatements occurred following the Business Combination between the Company and the Company’s majority-owned subsidiary, Adtran Networks SE (“Adtran Networks”) on July 15, 2022. The Company incorrectly presented the allocation of foreign currency translation loss attributable to the non-controlling interest for the year ended December 31, 2022. Management evaluated the impact of this error on the Company’s full year 2022 consolidated financial statements and determined that the consolidated financial statements were not materially misstated. However, in order to correctly state non-controlling interest and accumulated other comprehensive income in connection with the filing of this Amendment No. 1, the December 31, 2022 balance sheet items and comprehensive loss for the three and nine months ended September 30, 2022 have been corrected to reflect the impact of this immaterial error. The Company will revise its consolidated financial statements as of and for the year ended December 31, 2022 when it files its Form 10-K for the period ended December 31, 2023. The following table reflects the impact of the revision to the specific line items presented in the Company’s previously reported Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement of Changes in Equity as of December 31, 2022:
|  |  | December 31, 2022 |
(In thousands) |  |  | As Reported |  |  | Adjustment |  |  | As Revised |
Accumulated Other Comprehensive Income |  |  | $ | 46,713 |  |  | $ | (20,587 | ) |  | $ | 26,126 |
Non-Controlling Interest |  |  | $ | 309,072 |  |  | $ | 20,587 |  |  | $ | 329,659 |
Total Equity |  |  | $ | 1,303,613 |  |  | $ | — |  |  | $ | 1,303,613 |
The following table reflects the impact of the revision to the specific line items presented in the Company’s previously reported Condensed Consolidated Statement of Changes in Equity as of September 30, 2022:
|  |  | September 30, 2022 |
(In thousands) |  |  | As Reported |  |  | Adjustment |  |  | As Restated |
Accumulated Other Comprehensive Income |  |  | $ | (40,288 | ) |  | $ | 7,137 |  |  | $ | (33,151 | )
Non-Controlling Interest |  |  | $ | 313,677 |  |  | $ | (7,137 | ) |  | $ | 306,540 |
Total Equity |  |  | $ | 1,184,827 |  |  | $ | — |  |  | $ | 1,184,827 |
The following table reflects the impact of the revision to the specific line items presented in the Company’s previously reported Condensed Consolidated Statements of Comprehensive Loss as of September 30, 2022:
|  |  | For the Three Months Ended September 30, 2022 |  |  | For the Nine Months Ended September 30, 2022 |
(In thousands) |  |  | As Reported |  |  | Adjustment |  |  | As Revised |  |  | As Reported |  |  | Adjustment |  |  | As Revised |
Comprehensive Loss attributable to non-controlling interest |  |  | $ | (94 | ) |  | $ | (10,062 | ) |  | $ | (10,156 | ) |  | $ | (94 | ) |  | $ | (10,062 | ) |  | $ | (10,156 | )
Comprehensive Loss attributable to ADTRAN Holdings, Inc., net of tax |  |  | $ | (68,451 | ) |  | $ | 10,062 |  |  | $ | (58,389 | ) |  | $ | (72,217 | ) |  | $ | 10,062 |  |  | $ | (62,155 | )
The accompanying applicable Notes have been updated to reflect the effects of the revision.
Redeemable Non-Controlling Interest | Redeemable Non-Controlling Interest As of September 30, 2023 and December 31, 2022, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 34.6% and 34.7%, respectively. As a result of the effectiveness of the DPLTA on January 16, 2023, the Adtran Networks shares, representing the equity interest in Adtran Networks held by holders other than the Company, can be tendered at any time and are, therefore, redeemable and must be classified outside stockholders’ equity. Therefore, the permanent equity noncontrolling interest balance was reclassified to redeemable non-controlling interest on January 16, 2023 and was remeasured to fair value based on the trading market price of the Adtran Networks shares. Subsequently, the carrying value of the RNCI is adjusted to its maximum redemption value at each reporting date when the maximum redemption value is greater than the initial carrying amount of the RNCI. However, the RNCI will be remeasured using the current exchange rate at each reporting date as long as the RNCI is currently redeemable. For the period of time that the DPLTA is in effect, the RNCI will continue to be presented as RNCI outside of stockholders’ equity in the Condensed Consolidated Balance Sheets. See Note 16 for additional information on RNCI.
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which would require an acquirer to recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the acquiree recognized and measured them in its pre-acquisition financial statements in accordance with Topic 606, Revenue Recognition. The Company early adopted ASU 2021-08 on July 1, 2022 and the standard was applied retrospectively beginning with January 1, 2022.
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted There are currently no accounting pronouncements not yet adopted that are expected to have a material effect on the Condensed Consolidated Financial Statements.

X
- Definition Recent accounting pronouncements not yet adopted. + References No definition available. + Details
Name: | adtn_RecentAccountingPronouncementsNotYetAdoptedPolicyTextBlock
Namespace Prefix: | adtn_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Redeemable non-controlling interest. + References No definition available. + Details
Name: | adtn_RedeemableNonControllingInterestPolicyTextBlock
Namespace Prefix: | adtn_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Restatement of previously issued financial statements. + References No definition available. + Details
Name: | adtn_RestatementOfPreviouslyIssuedFinancialStatementsPolicytextBlock
Namespace Prefix: | adtn_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Revision of previously issued financial statements [PolicyText block] + References No definition available. + Details
Name: | adtn_RevisionOfPreviouslyIssuedFinancialStatementsPolicytextBlock
Namespace Prefix: | adtn_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

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

X
- Definition Disclosure of accounting policy regarding (1) the principles it follows in consolidating or combining the separate financial statements, including the principles followed in determining the inclusion or exclusion of subsidiaries or other entities in the consolidated or combined financial statements and (2) its treatment of interests (for example, common stock, a partnership interest or other means of exerting influence) in other entities, for example consolidation or use of the equity or cost methods of accounting. The accounting policy may also address the accounting treatment for intercompany accounts and transactions, noncontrolling interest, and the income statement treatment in consolidation for issuances of stock by a subsidiary. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147483426/235-10-50-4 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147481203/810-10-50-1 + Details
Name: | us-gaap_ConsolidationPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy pertaining to new accounting pronouncements that may impact the entity's financial reporting. Includes, but is not limited to, quantification of the expected or actual impact. + References No definition available. + Details
Name: | us-gaap_NewAccountingPronouncementsPolicyPolicyTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Disclosure of accounting policy for the use of estimates in the preparation of financial statements in conformity with generally accepted accounting principles. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482861/275-10-50-9 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 4 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482861/275-10-50-4 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b) -SubTopic 10 -Topic 275 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482861/275-10-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (c) -SubTopic 10 -Topic 275 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482861/275-10-50-1 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 11 -SubTopic 10 -Topic 275 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482861/275-10-50-11 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 12 -SubTopic 10 -Topic 275 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482861/275-10-50-12 Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 8 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482861/275-10-50-8 + Details
Name: | us-gaap_UseOfEstimates
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration