Adtran sees $293M impairment charge related to goodwill

According to a regulatory filing, in connection with the preparation of its consolidated financial statements for the first quarter of 2024, Adtran determined that factors such as a decrease in the company’s market capitalization, cautious service provider spending due to economic uncertainty and continued customer inventory adjustments triggered a quantitative impairment assessment of the company’s reporting units. Based on this assessment, on May 3, 2024, the company determined that the carrying value of its Network Solutions segment exceeded its fair value and a material charge for impairment to goodwill will be required for the first quarter of 2024. As a result, the company expects to record a material impairment charge in an estimated amount of $293M related to the company’s goodwill during the three months ended March 31, 2024. The impairment leads to an increased GAAP operating loss for the first quarter 2024 by the same amount. It will not, however, result in any current or future cash expenditure, and it has no impact on the company’s GAAP revenue and non-GAAP operating margin guidance for the first quarter of 2024. Additionally, the charge has no impact on the company’s compliance with covenants under its credit agreement.