ADTRAN : Costs Associated with Exit/Disposal - Form 8-K

Item 2.05 Costs Associated with Exit or Disposal Activities.

As ADTRAN Holdings, Inc. (the "Company") previously reported in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (as amended) and Annual Report on Form 10-K for the year ended December 31, 2023, on November 6, 2023, the Company's management resolved to implement a comprehensive business efficiency program (the "Business Efficiency Program") which includes site consolidations. In connection with the Business Efficiency Program, management of the Company determined on April 11, 2024 to close the Company's facility in Greifswald, Germany (the "Facility"), within the next three months.

The Company currently expects to incur total costs ranging from approximately $13.5 million to $18.4 million in connection with the closure of the facility. This includes cash charges ranging between approximately $13.3 million and $17.6 million in severance, outplacement and related expenses and a range of approximately $0.7 million to $1.3 million in lease exit costs, as well as non-cash charges of approximately $0.2 million in accelerated depreciation expenses. The Company expects these charges to be fully incurred in fiscal year 2024 with cash payments expected to span into 2025. The total estimated costs of the Business Efficiency Program are being adjusted accordingly.

The Company does not currently anticipate incurring other charges or cash expenditures associated with the closure of the Facility. However, the Company will amend this disclosure in the event that there is a material change in costs or cash payments in connection with the closure of the Facility.

The closure of the Facility will be substantially completed by June 30, 2024.

Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements that are based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among other things, statements regarding the Company's estimated costs with respect to the closure of the Facility, the timing of the closure, and related matters. Forward-looking statements include statements that are not historical facts and can be identified by terms such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "seek," "should," "will," "would" or similar expressions and the negatives of those terms. Our actual results and the timing of events could materially differ from those anticipated in such forward-looking statements as a result of certain risks and uncertainties, including risks relating to the time necessary to cease operations at the Facility, the outcome of discussions with the union representing the employees at the Facility, the timing, effectiveness and expense associated with transferring production capabilities to other locations, ongoing restructuring of our operations under our Business Efficiency Program more generally, our ability to achieve the anticipated cost savings associated with such program, as well as fluctuations in revenue and its impact on our operating results, our ability to manage our inventory, our ability to meet our debt service obligations, and the risks described in more detail in the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as amended, and other documents on file with the SEC. The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this filing, except as required by applicable law or regulation.