EXHIBIT 99.3
Supplemental Non-GAAP Financial Measures
ADTRAN Holdings, Inc. (the “Company”) is providing the following tables to present certain non-GAAP information for the reporting periods covered in the Company’s Quarterly Reports on Form 10-Q/A (the “Amended Quarterly Reports”) for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, which were filed with the Securities and Exchange Commission on March 14, 2024.
As previously reported, the Company filed the Amended Quarterly Reports in order to, among other items, restate the presentation of the results attributable to the non-controlling interest, net loss attributable to the Company, and loss per common share attributable to the Company for each of the reporting periods covered by the Amended Quarterly Reports (collectively, the “Non-Reliance Periods”). In addition to results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) presented in the Amended Quarterly Reports’ financial statements, the Company provides herein corrected non-GAAP measures and reconciliation tables for non-GAAP net loss attributable to the Company, non-GAAP net (loss) income attributable to the non-controlling interest, and non-GAAP loss per share - basic and diluted, attributable to the Company for each of the Non-Reliance Periods. No other non-GAAP measures were affected by the restatements to the Company’s financial statements for the Non-Reliance Periods.
Set forth in the tables below are reconciliations of net (loss) income inclusive of the non-controlling interest, net income (loss) attributable to the non-controlling interest, net (loss) income attributable to the Company, and (loss) earnings per share - basic and diluted, attributable to the Company, in each case as reported based on GAAP, to non-GAAP net (loss) income inclusive of the non-controlling interest, non-GAAP net income attributable to the non-controlling interest, non-GAAP net (loss) income attributable to the Company, and non-GAAP (loss) earnings per share - basic and diluted, attributable to the Company, respectively. Such non-GAAP measures exclude acquisition related expenses, amortization 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, integration expenses, restructuring expenses, goodwill impairments, 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 these non-GAAP measures 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.
Supplemental Information
Reconciliation of Net Loss inclusive of Non-Controlling Interest to
Non-GAAP Net Loss inclusive of Non-Controlling Interest
(Unaudited)
and
Reconciliation of Net Loss attributable to Non-Controlling Interest to
Non-GAAP Net Income attributable to Non-Controlling Interest
(Unaudited)
and
Reconciliation of Net Loss attributable to ADTRAN Holdings, Inc. and
Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to
Non-GAAP Net Loss attributable to ADTRAN Holdings, Inc. and
Non-GAAP Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted
(Unaudited)
(In thousands, except per share amounts)
| | | | | | | | | | | | | |
| | For the Three Months Ended
March 31, 2023 | | |
| | As Reported | | | Adjustment | | | As Restated | | |
Net Loss attributable to ADTRAN Holdings, Inc. | | $ | (34,464 | ) | | $ | (5,619 | ) | | $ | (40,083 | ) | |
Net Loss attributable to non-controlling interest(1) | | | (5,989 | ) | | | 5,619 | | | | (370 | ) | |
Net Loss inclusive of non-controlling interest | | $ | (40,453 | ) | | $ | — | | | $ | (40,453 | ) | |
Acquisition related expenses, amortization and adjustments | | | 37,162 | | | | — | | | | 37,162 | | |
Stock-based compensation expense | | | 3,698 | | | | — | | | | 3,698 | | |
Deferred compensation adjustments (2) | | | (856 | ) | | | — | | | | (856 | ) | |
Pension adjustments (3) | | | 7 | | | | — | | | | 7 | | |
Restructuring expenses | | | 2,437 | | | | — | | | | 2,437 | | |
Integration expenses | | | 849 | | | | — | | | | 849 | | |
Tax effect of adjustments to net loss | | | (12,307 | ) | | | — | | | | (12,307 | ) | |
Non-GAAP Net Loss inclusive of non-controlling interest(4) | | $ | (9,463 | ) | | $ | — | | | $ | (9,463 | ) | |
Less: Non-GAAP Net (Loss) Income attributable to non-controlling interest(1) | | | (4,460 | ) | | | 5,619 | | | | 1,159 | | |
Non-GAAP Net Loss attributable to ADTRAN Holdings, Inc. | | $ | (5,003 | ) | | $ | (5,619 | ) | | $ | (10,622 | ) | |
| | | | | | | | | | |
GAAP Net Loss attributable to non-controlling interest (1) | | $ | (5,989 | ) | | $ | 5,619 | | | $ | (370 | ) | |
Acquisition related expenses, amortizations and adjustments | | | 1,457 | | | | — | | | | 1,457 | | |
Restructuring expenses | | | 29 | | | | — | | | | 29 | | |
Integration expenses | | | 6 | | | | — | | | | 6 | | |
Stock-based compensation expense | | | 37 | | | | — | | | | 37 | | |
Non-GAAP Net (Loss) Income attributable to non-controlling interest (1) | | $ | (4,460 | ) | | $ | 5,619 | | | $ | 1,159 | | |
| | | | | | | | | | |
Weighted average shares outstanding – basic | | | 78,358 | | | | 78,358 | | | | 78,358 | | |
Weighted average shares outstanding – diluted | | | 78,358 | | | | 78,358 | | | | 78,358 | | |
| | | | | | | | | | |
Loss per common share attributable to ADTRAN Holdings, Inc. - basic | | $ | (0.44 | ) | | $ | (0.07 | ) | | $ | (0.51 | ) | |
Loss per common share attributable to ADTRAN Holdings, Inc. - diluted | | $ | (0.44 | ) | | $ | (0.07 | ) | | $ | (0.51 | ) | |
| | | | | | | | | | |
Non-GAAP Loss per common share attributable to ADTRAN Holdings, Inc. - basic | | $ | (0.06 | ) | | $ | (0.07 | ) | | $ | (0.14 | ) | |
Non-GAAP Loss per common share attributable to ADTRAN Holdings, Inc. - diluted | | $ | (0.06 | ) | | $ | (0.07 | ) | | $ | (0.14 | ) | |
(1) Represents the non-controlling interest portion of the Company's ownership of Adtran Networks 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.
(4) The method of calculation of Non-GAAP net loss inclusive of non-controlling interest changed effective December 31, 2023. Previously, the Company excluded tax valuation allowance adjustments from Non-GAAP Net Loss inclusive of non-controlling interest. The table has been adjusted to include valuation allowance adjustments in Non-GAAP Net Loss inclusive of non-controlling interest.
Supplemental Information
Reconciliation of Loss inclusive of Non-Controlling Interest to
Non-GAAP Net Loss inclusive of Non-Controlling Interest
(Unaudited)
and
Reconciliation of Net Income attributable to Non-Controlling Interest to
Non-GAAP Net Income attributable to Non-Controlling Interest
(Unaudited)
and
Reconciliation of Net Loss attributable to ADTRAN Holdings, Inc. and
Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to
Non-GAAP Net Loss attributable to ADTRAN Holdings, Inc. and
Non-GAAP Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted
(Unaudited)
(In thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended
June 30, 2023 | | | For the Six Months Ended
June 30, 2023 | | |
| | As Reported | | | Adjustment | | | As Restated | | | As Reported | | | Adjustment | | | As Restated | | |
Net Loss attributable to ADTRAN Holdings, Inc. | | $ | (33,334 | ) | | $ | (5,762 | ) | | $ | (39,096 | ) | | $ | (67,798 | ) | | $ | (11,382 | ) | | $ | (79,180 | ) | |
Net (Loss) Income attributable to non-controlling interest(1) | | | (2,881 | ) | | | 5,762 | | | | 2,881 | | | | (8,870 | ) | | | 11,382 | | | | 2,512 | | |
Net Loss inclusive of non-controlling interest | | $ | (36,215 | ) | | $ | — | | | $ | (36,215 | ) | | $ | (76,668 | ) | | $ | — | | | $ | (76,668 | ) | |
Acquisition related expenses, amortization and adjustments | | | 37,837 | | | | — | | | | 37,837 | | | | 74,999 | | | | — | | | | 74,999 | | |
Stock-based compensation expense | | | 4,309 | | | | — | | | | 4,309 | | | | 8,007 | | | | — | | | | 8,007 | | |
Deferred compensation adjustments (2) | | | (1,561 | ) | | | — | | | | (1,561 | ) | | | (2,417 | ) | | | — | | | | (2,417 | ) | |
Pension adjustments (3) | | | 6 | | | | — | | | | 6 | | | | 13 | | | | — | | | | 13 | | |
Restructuring expenses | | | 5,868 | | | | — | | | | 5,868 | | | | 8,305 | | | | — | | | | 8,305 | | |
Integration expenses | | | 563 | | | | — | | | | 563 | | | | 1,412 | | | | — | | | | 1,412 | | |
Goodwill impairment | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | |
Tax effect of adjustments to net loss | | | (13,426 | ) | | | — | | | | (13,426 | ) | | | (25,733 | ) | | | — | | | | (25,733 | ) | |
Non-GAAP Net Loss inclusive of non-controlling interest(4) | | $ | (2,619 | ) | | $ | — | | | $ | (2,619 | ) | | $ | (12,082 | ) | | $ | - | | | $ | (12,082 | ) | |
Less: Non-GAAP Net (Loss) Income attributable to non-controlling interest(1) | | | (2,881 | ) | | | 5,762 | | | | 2,881 | | | | (7,341 | ) | | | 11,382 | | | | 4,041 | | |
Non-GAAP Net Income (Loss) attributable to ADTRAN Holdings, Inc. | | $ | 262 | | | $ | (5,762 | ) | | $ | (5,500 | ) | | $ | (4,741 | ) | | $ | (11,382 | ) | | $ | (16,123 | ) | |
| | | | | | | | | | | | | | | | | | | |
GAAP Net (loss) Income attributable to non-controlling interest (1) | | $ | (2,881 | ) | | $ | 5,762 | | | $ | 2,881 | | | $ | (8,870 | ) | | $ | 11,382 | | | $ | 2,512 | | |
Acquisition related expenses, amortizations and adjustments | | | — | | | | — | | | | — | | | | 1,457 | | | | — | | | | 1,457 | | |
Restructuring expenses | | | — | | | | — | | | | — | | | | 29 | | | | — | | | | 29 | | |
Integration expenses | | | — | | | | — | | | | — | | | | 6 | | | | — | | | | 6 | | |
Stock-based compensation expense | | | — | | | | — | | | | — | | | | 37 | | | | — | | | | 37 | | |
Non-GAAP Net (Loss) Income attributable to non-controlling interest (1) | | $ | (2,881 | ) | | $ | 5,762 | | | $ | 2,881 | | | $ | (7,341 | ) | | $ | 11,382 | | | $ | 4,041 | | |
| | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding – basic | | | 78,366 | | | | 78,366 | | | | 78,366 | | | | 78,364 | | | | 78,364 | | | | 78,364 | | |
Weighted average shares outstanding – diluted | | | 78,366 | | | | 78,366 | | | | 78,366 | | | | 78,364 | | | | 78,364 | | | | 78,364 | | |
| | | | | | | | | | | | | | | | | | | |
Loss per common share attributable to ADTRAN Holdings, Inc. - basic | | $ | (0.43 | ) | | $ | (0.07 | ) | | $ | (0.50 | ) | | $ | (0.87 | ) | | $ | (0.15 | ) | | $ | (1.01 | ) | |
Loss per common share attributable to ADTRAN Holdings, Inc. - diluted | | $ | (0.43 | ) | | $ | (0.07 | ) | | $ | (0.50 | ) | | $ | (0.87 | ) | | $ | (0.15 | ) | | $ | (1.01 | ) | |
| | | | | | | | | | | | | | | | | | | |
Non-GAAP Loss per common share attributable to ADTRAN Holdings, Inc. - basic | | $ | 0.00 | | | $ | (0.07 | ) | | $ | (0.07 | ) | | $ | (0.06 | ) | | $ | (0.15 | ) | | $ | (0.21 | ) | |
Non-GAAP Loss per common share attributable to ADTRAN Holdings, Inc. - diluted | | $ | 0.00 | | | $ | (0.07 | ) | | $ | (0.07 | ) | | $ | (0.06 | ) | | $ | (0.15 | ) | | $ | (0.21 | ) | |
(1) Represents the non-controlling interest portion of the Company's ownership of Adtran Networks 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.
(4) The method of calculation of Non-GAAP net loss inclusive of non-controlling interest changed effective December 31, 2023. Previously, the Company excluded tax valuation allowance adjustments from Non-GAAP Net Loss inclusive of non-controlling interest. The table has been adjusted to include valuation allowance adjustments in Non-GAAP Net Loss inclusive of non-controlling interest.
Supplemental Information
Reconciliation of Net Loss inclusive of Non-Controlling Interest to
Non-GAAP Net Loss inclusive of Non-Controlling Interest
(Unaudited)
and
Reconciliation of Net Income attributable to Non-Controlling Interest to
Non-GAAP Net Income attributable to Non-Controlling Interest
(Unaudited)
and
Reconciliation of Net Loss attributable to ADTRAN Holdings, Inc. and
Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to
Non-GAAP Net Loss attributable to ADTRAN Holdings, Inc. and
Non-GAAP Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted
(Unaudited)
(In thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended
September 30, 2023 | | | For the Nine Months Ended
September 30, 2023 | | |
| | As Reported | | | Adjustment | | | As Restated | | | As Reported | | | Adjustment | | | As Restated | | |
Net Loss attributable to ADTRAN Holdings, Inc. | | $ | (72,735 | ) | | $ | (5,828 | ) | | $ | (78,563 | ) | | $ | (140,533 | ) | | $ | (17,210 | ) | | $ | (157,743 | ) | |
Net (Loss) Income attributable to non-controlling interest(1) | | | (2,914 | ) | | | 5,828 | | | | 2,914 | | | | (11,784 | ) | | | 17,210 | | | | 5,426 | | |
Net Loss inclusive of non-controlling interest | | $ | (75,649 | ) | | $ | — | | | $ | (75,649 | ) | | $ | (152,317 | ) | | $ | — | | | $ | (152,317 | ) | |
Acquisition related expenses, amortization and adjustments | | | 18,070 | | | | — | | | | 18,070 | | | | 93,069 | | | | — | | | | 93,069 | | |
Stock-based compensation expense | | | 3,530 | | | | — | | | | 3,530 | | | | 11,537 | | | | — | | | | 11,537 | | |
Deferred compensation adjustments (2) | | | (684 | ) | | | — | | | | (684 | ) | | | (3,101 | ) | | | — | | | | (3,101 | ) | |
Pension adjustments (3) | | | 7 | | | | — | | | | 7 | | | | 20 | | | | — | | | | 20 | | |
Restructuring expenses | | | 24,873 | | | | — | | | | 24,873 | | | | 33,178 | | | | — | | | | 33,178 | | |
Integration expenses | | | 1,639 | | | | — | | | | 1,639 | | | | 3,051 | | | | — | | | | 3,051 | | |
Goodwill impairment | | | 37,874 | | | | — | | | | 37,874 | | | | 37,874 | | | | — | | | | 37,874 | | |
Tax effect of adjustments to net loss | | | (23,366 | ) | | | — | | | | (23,366 | ) | | | (49,099 | ) | | | — | | | | (49,099 | ) | |
Non-GAAP Net Loss inclusive of non-controlling interest(4) | | $ | (13,706 | ) | | $ | — | | | $ | (13,706 | ) | | $ | (25,788 | ) | | $ | - | | | $ | (25,788 | ) | |
Net (Loss) Income attributable to non-controlling interest(1) | | | (2,914 | ) | | | 5,828 | | | | 2,914 | | | | (10,255 | ) | | | 17,210 | | | | 6,955 | | |
Non-GAAP Net Loss attributable to ADTRAN Holdings, Inc. | | $ | (10,792 | ) | | $ | (5,828 | ) | | $ | (16,620 | ) | | $ | (15,533 | ) | | $ | (17,210 | ) | | $ | (32,743 | ) | |
| | | | | | | | | | | | | | | | | | | |
GAAP Net (loss) Income attributable to non-controlling interest (1) | | $ | (2,914 | ) | | $ | 5,828 | | | $ | 2,914 | | | $ | (11,784 | ) | | $ | 17,210 | | | $ | 5,426 | | |
Acquisition related expenses, amortizations and adjustments | | | — | | | | — | | | | — | | | | 1,457 | | | | — | | | | 1,457 | | |
Restructuring expenses | | | — | | | | — | | | | — | | | | 29 | | | | — | | | | 29 | | |
Integration expenses | | | — | | | | — | | | | — | | | | 6 | | | | — | | | | 6 | | |
Stock-based compensation expense | | | — | | | | — | | | | — | | | | 37 | | | | — | | | | 37 | | |
Non-GAAP Net (Loss) Income attributable to non-controlling interest (1) | | $ | (2,914 | ) | | $ | 5,828 | | | $ | 2,914 | | | $ | (10,255 | ) | | $ | 17,210 | | | $ | 6,955 | | |
| | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding – basic | | | 78,389 | | | | 78,389 | | | | 78,389 | | | | 78,378 | | | | 78,378 | | | | 78,378 | | |
Weighted average shares outstanding – diluted | | | 78,389 | | | | 78,389 | | | | 78,389 | | | | 78,378 | | | | 78,378 | | | | 78,378 | | |
| | | | | | | | | | | | | | | | | | | |
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 | ) | |
| | | | | | | | | | | | | | | | | | | |
Non-GAAP Loss per common share attributable to ADTRAN Holdings, Inc. - basic | | $ | (0.14 | ) | | $ | (0.07 | ) | | $ | (0.21 | ) | | $ | (0.20 | ) | | $ | (0.22 | ) | | $ | (0.42 | ) | |
Non-GAAP Loss per common share attributable to ADTRAN Holdings, Inc. - diluted | | $ | (0.14 | ) | | $ | (0.07 | ) | | $ | (0.21 | ) | | $ | (0.20 | ) | | $ | (0.22 | ) | | $ | (0.42 | ) | |
(1) Represents the non-controlling interest portion of the Company's ownership of Adtran Networks 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.
(4) The method of calculation of Non-GAAP net loss inclusive of non-controlling interest changed effective December 31, 2023. Previously, the Company excluded tax valuation allowance adjustments from Non-GAAP Net Loss inclusive of non-controlling interest. The table has been adjusted to include valuation allowance adjustments in Non-GAAP Net Loss inclusive of non-controlling interest.
