# AVIAT NETWORKS, INC. (AVNW)

Informational only - not investment advice.

CIK: 0001377789
SIC: 3663 Radio & Tv Broadcasting & Communications Equipment
SIC breadcrumb: [Manufacturing](/division/D/) > [Electronic And Other Electrical Equipment And Components, Except Computer Equipment](/major-group/36/) > [SIC 3663 Radio & Tv Broadcasting & Communications Equipment](/industry/3663/)
Latest 10-K filed: 2025-09-10
SEC page: https://www.sec.gov/edgar/browse/?CIK=1377789
Filing source: https://www.sec.gov/Archives/edgar/data/1377789/000137778925000068/avnw-20250627.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 434606000 | USD | 2025 | 2025-09-10 |
| Net income | 1341000 | USD | 2025 | 2025-09-10 |
| Assets | 633296000 | USD | 2025 | 2025-09-10 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-09-10. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001377789.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  |  |  | 243,858,000 | 238,642,000 | 274,911,000 | 302,959,000 | 344,433,000 | 408,083,000 | 434,606,000 |
| Net income | -29,907,000 | -823,000 | 1,845,000 | 9,738,000 | 257,000 | 110,139,000 | 21,160,000 | 10,169,000 | 10,760,000 | 1,341,000 |
| Operating income | -27,446,000 | -985,000 | 1,317,000 | 1,368,000 | 3,378,000 | 22,210,000 | 28,745,000 | 24,620,000 | 19,401,000 | 10,575,000 |
| Gross profit | 61,717,000 | 75,472,000 | 80,503,000 | 79,270,000 | 84,696,000 | 102,615,000 | 109,235,000 | 122,382,000 | 144,732,000 | 139,436,000 |
| Diluted EPS | -5.71 | -0.16 | 0.33 | 0.87 | 0.02 | 9.42 | 1.79 | 0.86 | 0.86 | 0.10 |
| Operating cash flow | 356,000 | 9,405,000 | 8,209,000 | 2,944,000 | 17,493,000 | 17,298,000 | 2,789,000 | -1,644,000 | 30,540,000 | 5,721,000 |
| Capital expenditures | 1,574,000 | 4,021,000 | 6,563,000 | 5,246,000 | 4,608,000 | 2,847,000 | 1,792,000 | 5,335,000 | 2,675,000 | 12,970,000 |
| Assets | 166,111,000 | 152,576,000 | 156,061,000 | 169,193,000 | 179,801,000 | 297,653,000 | 323,904,000 | 363,137,000 | 535,223,000 | 633,296,000 |
| Liabilities | 112,654,000 | 98,236,000 | 98,545,000 | 97,677,000 | 111,120,000 | 114,318,000 | 122,151,000 | 144,398,000 | 279,338,000 | 370,113,000 |
| Stockholders' equity | 53,116,000 | 53,797,000 | 57,516,000 | 71,516,000 | 68,681,000 | 183,335,000 | 201,753,000 | 218,739,000 | 255,885,000 | 263,183,000 |
| Cash and cash equivalents | 30,479,000 | 35,658,000 | 37,425,000 | 31,946,000 | 41,618,000 | 47,942,000 | 36,877,000 | 22,242,000 | 64,622,000 | 59,690,000 |
| Free cash flow | -1,218,000 | 5,384,000 | 1,646,000 | -2,302,000 | 12,885,000 | 14,451,000 | 997,000 | -6,979,000 | 27,865,000 | -7,249,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  |  |  | 3.99% | 0.11% | 40.06% | 6.98% | 2.95% | 2.64% | 0.31% |
| Operating margin |  |  |  | 0.56% | 1.42% | 8.08% | 9.49% | 7.15% | 4.75% | 2.43% |
| Return on equity | -56.31% | -1.53% | 3.21% | 13.62% | 0.37% | 60.08% | 10.49% | 4.65% | 4.21% | 0.51% |
| Return on assets | -18.00% | -0.54% | 1.18% | 5.76% | 0.14% | 37.00% | 6.53% | 2.80% | 2.01% | 0.21% |
| Liabilities / equity | 2.12 | 1.83 | 1.71 | 1.37 | 1.62 | 0.62 | 0.61 | 0.66 | 1.09 | 1.41 |
| Current ratio | 1.40 | 1.45 | 1.43 | 1.53 | 1.49 | 1.77 | 1.98 | 1.81 | 1.85 | 1.64 |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-04. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001377789.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2023-Q1 | 2022-09-30 |  |  | -0.25 | reported discrete quarter |
| 2023-Q2 | 2022-12-30 |  |  | 0.51 | reported discrete quarter |
| 2023-Q3 | 2023-03-31 |  |  | 0.41 | reported discrete quarter |
| 2023-Q4 | 2023-06-30 | 91,179,000 | 3,339,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2023-09-29 | 87,566,000 | 4,005,000 | 0.34 | reported discrete quarter |
| 2024-Q2 | 2023-12-29 | 95,036,000 | 2,890,000 | 0.24 | reported discrete quarter |
| 2024-Q3 | 2024-03-29 | 111,613,000 | 3,418,000 | 0.27 | reported discrete quarter |
| 2024-Q4 | 2024-06-28 | 113,868,000 | 447,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2024-09-27 | 88,429,000 | -11,879,000 | -0.94 | reported discrete quarter |
| 2025-Q2 | 2024-12-27 | 118,197,000 | 4,495,000 | 0.35 | reported discrete quarter |
| 2025-Q3 | 2025-03-28 | 112,640,000 | 3,528,000 | 0.27 | reported discrete quarter |
| 2025-Q4 | 2025-06-27 | 115,340,000 | 5,197,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2025-09-26 | 107,320,000 | 162,000 | 0.01 | reported discrete quarter |
| 2026-Q2 | 2025-12-26 | 111,472,000 | 5,718,000 | 0.44 | reported discrete quarter |
| 2026-Q3 | 2026-03-27 | 100,003,000 | -2,065,000 | -0.16 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1377789/000162828026029810/avnw-20260327.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high
Filing date: 2026-05-04
Report date: 2026-03-27

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q, including “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including without limitation statements of, about, concerning or regarding: our ability to maintain effective internal control over financial reporting and management systems and remediate material weaknesses; our plans, strategies and objectives for future operations, including with respect to growing our business and sustaining profitability; our restructuring efforts; our research and development efforts and new product releases and services; trends in revenue; drivers of our business and the markets in which we operate; future economic conditions, performance or outlook, and changes in our industry and the markets we serve; the outcome of contingencies; the value of our contract awards; beliefs or expectations; the sufficiency of our cash and our capital needs and expenditures; our intellectual property protection; our compliance with regulatory requirements and the associated expenses; expectations regarding litigation; our intention not to pay cash dividends; seasonality of our business; the impact of foreign exchange and inflation; taxes; the impact of tariffs, the adoption of trade restrictions affecting our products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; and assumptions underlying any of the foregoing. Forward-looking statements may be identified by the use of forward-looking terminology, such as “anticipates,” “believes,” “expects,” “may,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “strategy,” “projects,” “targets,” “goals,” “seeing,” “delivering,” “continues,” “forecasts,” “future,” “predict,” “might,” “could,” “potential,” or the negative of these terms, and similar words or expressions.

These forward-looking statements are based on estimates reflecting the current beliefs of the senior management of Aviat Networks, Inc. (“Aviat,” the “Company,” “we,” “us,” and “our”). These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should therefore be considered in light of various important factors, including those set forth in this Quarterly Report on Form 10-Q.

See “Item 1A. Risk Factors” in the Company’s fiscal 2025 Annual Report on Form 10-K filed with the SEC on September 10, 2025 for more information regarding factors that may cause its results to differ materially from those expressed or implied by the forward-looking statements contained in this Quarterly Report on Form 10-Q.

You should not place undue reliance on these forward-looking statements, which reflect our management’s opinions only as of the date of the filing of this Quarterly Report on Form 10-Q. Forward-looking statements are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), along with provisions of the Private Securities Litigation Reform Act of 1995, and we expressly disclaim any obligation, other than as required by law, to update any forward-looking statements to reflect further developments or information obtained after the date of filing of this Quarterly Report on Form 10-Q or, in the case of any document incorporated by reference, the date of that document.

Overview of Business; Operating Environment and Key Factors Impacting Fiscal 2026 and 2025 Results

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Aviat’s results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s unaudited condensed consolidated financial statements and accompanying notes. In the discussion herein, the fiscal year ending July 3, 2026 is referred to as “fiscal 2026” or “2026” and the fiscal year ended June 27, 2025 is referred to as “fiscal 2025” or “2025.”

24

Overview

Aviat is a global supplier of microwave networking and access networking solutions, backed by an extensive suite of professional services and support. Aviat sells radios, routers, software and services integral to the functioning of data transport networks. Aviat has more than 3,000 customers and significant relationships with global service providers and private network operators. Aviat’s North America manufacturing base consists of a combination of contract manufacturing and assembly and testing operated in Austin, Texas by Aviat. Additionally, Aviat utilizes a contract manufacturer based in Asia for much of its international equipment demand. Aviat’s technology is underpinned by more than 400 patents. Aviat competes on the basis of total cost of ownership, microwave radio expertise and solutions for mission critical communications. Aviat has a global presence.

Operations Review

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first nine months of fiscal 2026. In North America, the Company supported 5G and long-term evolution (“LTE”) deployments of its mobile operator customers, public safety network deployments for state and local governments, and private network implementations for utilities and other customers. In international markets, the Company’s business continued to rely on a combination of customers increasing their capacity to handle subscriber growth and the ongoing build-out of some large LTE and 5G deployments. Aviat’s position continues to be to support its customers for 5G and LTE readiness and ensure that its technology roadmap is well aligned with evolving market requirements. Aviat’s strength in turnkey and after-sale support services is a differentiating factor that wins business for the Company and enables it to expand its business with existing customers. Additionally, Aviat operates an e-commerce platform that provides low-cost services, simple experience, and fast delivery to mobile operators and private network customers. In early 2025, U.S. tariffs on foreign imports were introduced. Aviat will attempt to mitigate these tariffs; however, as disclosed below and in the “Risk Factors” section in Item 1A of its Annual Report on Form 10-K filed with the SEC on September 10, 2025, a number of factors could prevent the Company from achieving its objectives, including ongoing pricing pressures attributable to competition and macroeconomic conditions in the geographic markets that it serves.

Revenue

The Company manages its sales activities primarily on a geographic basis in North America and three international geographic regions: (1) Africa and the Middle East, (2) Europe, and (3) Latin America and Asia Pacific. Revenue by region for the three and nine months ended March 27, 2026 and March 28, 2025 and the related changes were as follows:

Three Months Ended

Nine Months Ended

(In thousands, except percentages)

March 27, 2026

March 28, 2025

$ Change

% Change

March 27, 2026

March 28, 2025

$ Change

% Change

North America

$

46,165 

$

49,402 

$

(3,237)

(6.6)

%

$

151,713 

$

149,589 

$

2,124 

1.4 

%

Africa and the Middle East

16,446 

15,086 

1,360 

9.0 

%

43,868 

38,210 

5,658 

14.8 

%

Europe

10,333 

9,429 

904 

9.6 

%

29,318 

23,376 

5,942 

25.4 

%

Latin America and Asia Pacific

27,059 

38,723 

(11,664)

(30.1)

%

93,896 

108,091 

(14,195)

(13.1)

%

Total revenue

$

100,003 

$

112,640 

$

(12,637)

(11.2)

%

$

318,795 

$

319,266 

$

(471)

(0.1)

%

Revenue in North America decreased by $3.2 million during the third quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for products of 17%. Revenue in North America increased by $2.1 million during the first nine months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand for services and software offerings of 10% and 5% respectively, partially offset by a decrease in demand for products of 4%.

Revenue in Africa and the Middle East increased by $1.4 million during the third quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand for software offerings and products of 133% and 13%, respectively, partially offset by a decrease in demand of 35% for services. Revenue in Africa and the Middle East increased by $5.7 million during the first nine months of fiscal 2026 compared with the same period of fiscal 2025, primarily due to increases in demand for software offerings and products of 36% and 15%, respectively.

25

Revenue in Europe increased by $0.9 million during the third quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand for software offerings and services of 52% and 16%, respectively. Revenue in Europe increased by $5.9 million during the first nine months of fiscal 2026 compared with the same period of fiscal 2025. The increase for the first nine months of fiscal 2026 was primarily due to increases in demand for software offerings and products of 48% and 31%, respectively.

Revenue in Latin America and Asia Pacific decreased by $11.7 million during the third quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for software offerings, services, and products of 64%, 25% and 18%, respectively. Revenue in Latin America and Asia Pacific decreased by $14.2 million during the first nine months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for services and products of 29% and 11% respectively, partially offset by an increase of 12% on software offerings.

Gross Margin

Three Months Ended

Nine Months Ended

(In thousands, except percentages)

March 27, 2026

March 28, 2025

$ Change

% Change

March 27, 2026

March 28, 2025

$ Change

% Change

Revenue

$

100,003 

$

112,640 

$

(12,637)

(11.2)

%

$

318,795 

$

319,266 

$

(471)

(0.1)

%

Cost of revenue

70,720 

73,344 

(2,624)

(3.6)

%

217,748 

219,296 

(1,548)

(0.7)

%

Gross margin

$

29,283 

$

39,296 

$

(10,013)

(25.5)

%

$

101,047 

$

99,970 

$

1,077 

1.1 

%

% of revenue

29.3 

%

34.9 

%

31.7 

%

31.3 

%

Product margin %

25.4 

%

33.1 

%

29.6 

%

28.0 

%

Service margin %

37.6 

%

38.6 

%

36.7 

%

38.6 

%

Gross margin for the third quarter of fiscal 2026 decreased by $10.0 million compared with the same quarter of fiscal 2025 primarily due to sales volumes and the mix of product and service offerings. Gross margin for the first nine months of fiscal 2026 increased by $1.1 million due to sales volumes and the mix of product and service offerings.

Research and Development

Three Months Ended

Nine Months Ended

(In thousands, except percentages)

March 27, 2026

March 28, 2025

$ Change

% Change

March 27, 2026

March 28, 2025

$ Change

% Change

Research and development

$

7,656 

$

7,704 

$

(48)

(0.6)

%

$

21,163 

$

28,334 

$

(7,171)

(25.3)

%

% of revenue

7.7 

%

6.8 

%

6.6 

%

8.9 

%

Research and development expenses decreased by $48 thousand and $7.2 million for the three and nine months ended March 27, 2026, respective

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization.
Confidence: high

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Aviat Networks, Inc.’s (“Aviat”, the “Company”, “we”, “us”, or “our”) results of operations and financial condition during the two-year period ended June 27, 2025. MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s consolidated financial statements and accompanying notes. In the discussion herein, the fiscal years ended June 27, 2025, June 28, 2024, and June 30, 2023, are referred to as “fiscal 2025”, “fiscal 2024” and “fiscal 2023”, respectively. Aviat’s fiscal year ends on the Friday nearest to June 30. For a comparison of the results of operations for fiscal 2024 and 2023, refer to Aviat’s Annual Report on Form 10-K for the fiscal year ended June 28, 2024, filed with the SEC on October 4, 2024.

Overview

Aviat is a global supplier of microwave networking and access networking solutions, backed by an extensive suite of professional services and support. Aviat sells radios, routers, software and services integral to the functioning of data transport networks. Aviat has more than 3,000 customers and significant relationships with global service providers and private network operators. Aviat’s North America manufacturing base consists of a combination of contract manufacturing and assembly and testing operated in Austin, Texas by Aviat. Additionally, Aviat utilizes a contract manufacturer based in Asia for much of its international equipment demand. Aviat’s technology is underpinned by more than 400 patents. Aviat competes on the basis of Total Cost of Ownership (“TCO”), microwave radio expertise and solutions for mission critical communications.

Acquisitions

4RF Limited

On July 2, 2024, the Company acquired 4RF Limited (“4RF”), a New Zealand company, Aviat purchased all of the issued and outstanding shares of 4RF in an all-cash transaction for $18.2 million, net of $1.2 million cash acquired. 4F is a leading provider of industrial wireless access solutions, including narrowband point-to-point/multi-point radios and Private LTE and 5G routers. The acquisition of 4RF allows Aviat to expand its product offering for the global industrial wireless access markets including Private LTE/5G. See Note 12. Acquisitions of the Notes to the consolidated financial statements in this Annual Report on Form 10-K (the “Notes”) for further information.

NEC’s Wireless Transport Business

On May 9, 2023, the Company entered into a Master Sale of Business Agreement (as amended on November 30, 2023, the “Purchase Agreement”) with NEC Corporation (“NEC”), to acquire NEC’s wireless transport business (the “NEC Transaction”). The Company completed the NEC Transaction on November 30, 2023.

Prior to the acquisition date, NEC was a leader in wireless backhaul networks with an extensive installed base of their Pasolink series products. The completion of the NEC Transaction increases the scale of Aviat, enhances the Company’s product portfolio with a greater capability to innovate, and creates a more diversified business. Refer to Note 12. Acquisitions of the Notes to the consolidated financial statements in this Annual Report on Form 10-K for further information.

The fair value of the consideration transferred at the closing of the NEC Transaction was comprised of (i) cash of $32.2 million, and (ii) the issuance of 736,750 shares or $22.3 million of Company common stock. Aggregate consideration transferred at closing was approximately $54.5 million, which is subject to certain post-closing adjustments. In fiscal 2025, the Company transferred consideration of $18.6 million to settle the post-closing working capital adjustment. The Company funded the cash portion of the NEC Transaction with Term Loan borrowings under its Credit Facility (as defined below). Refer to Note 7. Credit Facility and Debt of the Notes for further information.

Redline Communications Group Inc.

In the first quarter of fiscal 2023, the Company acquired all of the issued and outstanding shares of Redline Communications Group Inc. (“Redline”), for a purchase price of $20.4 million. Redline is a leading provider of mission-critical data infrastructure. See Note 12. Acquisitions of the Notes for further information.

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Operations Review

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in fiscal 2025. In North America, the Company supported 5G and long-term evolution (“LTE”) deployments of its mobile operator customers, public safety network deployments for state and local governments, and private network implementations for utilities and other customers. In international markets, the Company’s business continued to rely on a combination of customers increasing their capacity to handle subscriber growth and the ongoing build-out of some large LTE and 5G deployments. Aviat’s position continues to be to support its customers for 5G and LTE readiness and ensure that its technology roadmap is well aligned with evolving market requirements. Aviat’s strength in turnkey and after-sale support services is a differentiating factor that wins business for the Company and enables it to expand its business with existing customers. Additionally, Aviat operates an e-commerce on-line platform, Aviat Store, that provides low-cost services, a simple experience, and fast delivery to mobile operators and private network customers. In 2025, new U.S. tariffs on foreign imports were proposed, and in certain cases implemented. In response, Aviat implemented mitigation strategies by optimizing its sourcing and operations to minimize the effects and took pricing actions to offset the impact of these tariffs. However, as disclosed in the “Risk Factors” section in Item 1A of this Annual Report on Form 10-K, a number of factors could prevent the Company from achieving its objectives, including ongoing pricing pressures attributable to competition and macroeconomic conditions in the geographic markets that it serves.

Fiscal 2025 Compared to Fiscal 2024

Revenue

The Company manages its sales activities primarily on a geographic basis in North America and three international geographic regions: (1) Africa and the Middle East, (2) Europe and (3) Latin America and Asia Pacific. Revenue by region for fiscal 2025 and 2024 and the related changes were as follows:

Fiscal Year

(In thousands, except percentages)

2025

2024

$ Change

% Change

North America

$

207,606 

$

206,073 

$

1,533 

0.7 

%

Africa and the Middle East

49,428 

48,884 

544 

1.1 

%

Europe

31,713 

24,608 

7,105 

28.9 

%

Latin America and Asia Pacific

145,859 

128,518 

17,341 

13.5 

%

Total Revenue

$

434,606 

$

408,083 

$

26,523 

6.5 

%

The Company achieved revenue growth of 6.5% in fiscal 2025 primarily driven by contributions from the NEC Transaction and the 4RF acquisition, and 21% growth in managed services driven by increased demand on a larger install base. This was partially offset by lower demand for software offerings and equipment, which both decreased 3%. During fiscal 2025, contributions from the NEC Transaction and 4RF acquisition totaled $126.8 million and $25.3 million, respectively.

Revenue in North America increased by $1.5 million in fiscal 2025 primarily due to contributions of the 4RF acquisition of $18.8 million, partially offset by lower mobile operator demand, which decreased $17 million.

Revenue in Africa and the Middle East increased by $0.5 million in fiscal 2025 primarily due to increased demand of managed services and software offerings on a larger install base, which increased 36% and 42%, respectively, partially offset by a 12% decrease in equipment sales.

Revenue in Europe increased by $7.1 million in fiscal 2025 primarily due to increased equipment sales to mobile operators in the region.

Revenue in Latin America and Asia Pacific increased by $17.3 million in fiscal 2025 primarily due to higher demand for Pasolink projects and services increasing 37%, higher demand for software which increased 13%, and contributions from the 4RF acquisition of $5.4 million, partially offset by lower equipment sales to mobile operators.

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Fiscal Year

(In thousands, except percentages)

2025

2024

$ Change

% Change

Product sales

$

287,657 

$

274,205 

$

13,452 

4.9 

%

Services

146,949 

133,878 

13,071 

9.8 

%

Total Revenue

$

434,606 

$

408,083 

$

26,523 

6.5 

%

Revenue from product sales and services increased by 4.9% and 9.8%, respectively in fiscal 2025 primarily due to the same overall factors of revenue growth discussed previously.

Gross Margin

Fiscal Year

(In thousands, except percentages)

2025

2024

$ Change

% Change

Revenue

$

434,606 

$

408,083 

$

26,523 

6.5 

%

Cost of revenue

295,170 

263,351 

31,819 

12.1 

%

Gross margin

$

139,436 

$

144,732 

$

(5,296)

(3.7)

%

% of revenue

32.1 

%

35.5 

%

Product margin %

27.7 

%

37.4 

%

Service margin %

40.7 

%

31.6 

%

Gross margin for fiscal 2025 decreased by $(5.3) million, while gross margin as a percentage of revenue reduced by 3.4 percentage points due to higher volumes on lower margin sales.

Research and Development Expenses

Fiscal Year

(In thousands, except percentages)

2025

2024

$ Change

% Change

Research and development expenses

$

35,768 

$

36,426 

$

(658)

(1.8)

%

% of revenue

8.2 

%

8.9 

%

Research and development expenses decreased by $(0.7) million in fiscal 2025 primarily due to synergies achieved leading to cost optimization from the NEC Transaction.

Selling and Administrative Expenses

Fiscal Year

(In thousands, except percentages)

2025

2024

$ Change

% Change

Selling and administrative expenses

$

89,482 

$

85,038 

$

4,444 

5.2 

%

% of revenue

20.6 

%

20.8 

%

Selling and administrative expenses increased by $4.4 million in fiscal 2025 primarily due to merger and acquisition expenses and additional costs resulting from the NEC Transaction and 4RF acquisition.

Restructuring Charges

Fiscal Year

(In thousands, except percentages)

2025

2024

$ Change

% Change

Restructuring charges

$

3,611 

$

3,867 

$

(256)

(6.6)

%

% of revenue

0.8 

%

0.9 

%

During fiscal 2025 restructuring charges were $3.6 million, a decrease of $(0.3) million compared to fiscal 2024. Fiscal 2025 restructuring activities were primarily associated with reductions in workforce in certain of the Company’s operations to optimize skill sets and align cost structure. The prior year comparison period includes restructuring charges primarily associated with the NEC Transaction.

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The Company’s success in restructuring initiatives has enabled it to restructure specific groups to optimize skill sets and align its organizational structure to execute on strategic deliverables, in addition to aligning cost structure with the core business.

Interest Expense, Net

Fiscal Year

(In thousands, except percentages)

2025

2024

$ Change

% Change

Interest expense, net

$

6,058 

$

2,337 

$

3,721 

159.2 

%

Interest expense, net increased by $3.7 million in fiscal 2025 primarily due to interest expense incurred on incremental Term Loan borrowings.

Other Expense, Net

Fiscal Year

(In thousands, except percentages)

2025

2024

$ Change

% Change

Other expense, net

$

941 

$

158 

$

783 

495.6 

%

Other expense, net increased by $0.8 million in fiscal 2025 primarily as a result of foreign exchange rate movement.

Income Taxes

Fiscal Year

(In thousands, except percentages)

2025

2024

$ Change

% Change

Income before income taxes

$

3,576 

$

16,906 

$

(13,330)

(78.8)

%

Provision for income taxes

2,235 

6,146 

(3,911)

(63.6)

%

As % of income before income taxes

62.5 

%

36.4 

%

The Company estimates its annual effective tax rate at the end of each reporting period, and records the tax effect of certain discrete items in the interim period in which they occur, including changes in judgment about uncertain tax positions and deferred tax valuation allowances.

Tax expense was $2.2 million in fiscal 2025 and $6.1 million in fiscal 2024. Tax expense in fiscal 2025 was primarily attributable to tax expense for the U.S. entity, profitable foreign subsidiaries, and withholding taxes, partially offset by a Canada valuation allowance release. Tax expense in fiscal 2024 was primarily attributable to tax expense related to U.S. and profitable foreign subsidiaries, partially offset by Canada valuation allowance release.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. We continue to analyze the OBBBA and at this time do not expect a material effect on our consolidated financial statements.

Fiscal 2024 Compared to Fiscal 2023

For a comparison of the results of operations for fiscal 2024 and 2023, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Aviat’s Annual Report on Form 10-K for the fiscal year ended June 28, 2024, filed with the SEC on October 4, 2024.

Liquidity, Capital Resources and Financial Strategies

Sources of Cash

As of June 27, 2025, the Company’s total cash and cash equivalents were $59.7 million. Approximately $22.2 million, or 37% was held in the United States. The remaining balance of $37.5 million, or 63% was held outside the United States. Of the amount of cash and cash equivalents held by the Company’s foreign subsidiaries on June 27, 2025, $37.1 million was held in jurisdictions where its undistributed earnings are indefinitely reinvested, and if repatriated, would be subject to foreign withholding taxes.

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Operating Activities

Operating cash flows is presented as net income adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash provided by operating activities was $5.7 million for fiscal 2025, compared with $30.5 million in the prior year. The $(24.8) million decrease is primarily attributable to decreased net income prior to non-cash adjustments and overall decreases in the net changes in operating assets and liabilities compared to the prior year. Net changes in operating assets and liabilities resulted in $(16.8) million of cash used in operating activities for fiscal 2025, compared to $(2.5) million in fiscal 2024. The $(14.3) million increase compared to the prior year is primarily attributable to increases in inventory as well as an increase in accounts receivable which is primarily driven by increased sales in the year and timing of receiving payments. These impacts were partially offset by an increase in accounts payable due to purchasing of increased inventory as well as the timing of payments as compared to the prior year.

Investing Activities

Net cash used in investing activities was $28.5 million for fiscal 2025, compared to $35.2 million in the prior year. The $6.7 million decrease is driven by prior year cash paid for the NEC Transaction of $32.2 million compared to current year net cash paid for the 4RF acquisition of $18.2 million. This is partially offset by an increase in purchases of property, plant, and equipment of $10.3 million compared to the prior year.

Financing Activities

Financing cash flows consist primarily of borrowings and repayments under the Company’s Credit Facility and proceeds from the exercise of employee stock options. Net cash provided by financing activities was $18.7 million for fiscal 2025, compared with $48.7 million in the prior year. The $(30.0) million decrease is primarily due to payment of deferred consideration of $18.6 million related to the NEC acquisition and repayment of $50.6 million in the current year on Term Loan borrowings compared to $1.3 million in the prior year. The decrease is partially offset by increased net borrowings of $15.0 million on the Revolver (as defined below) in the current year.

As of June 27, 2025, the Company’s sources of liquidity consisted of $59.7 million in cash and cash equivalents, $51.3 million of available credit under its Credit Facility, and future collections of receivables from customers. The Company regularly requires letters of credit from certain customers, and, from time to time, these letters of credit are discounted without recourse shortly after shipment occurs in order to meet immediate liquidity requirements and to reduce its credit and sovereign risk. Historically, the Company’s primary sources of liquidity have been cash flows from operations and credit facilities.

The Company believes that its existing cash and cash equivalents, the available borrowings under its Credit Facility, the availability under its effective shelf registration statement and future cash collections from customers will be sufficient to provide for its anticipated requirements and plans for cash for at least the next 12 months. In addition, the Company believes these sources of liquidity will be sufficient to provide for its anticipated requirements and plans for cash beyond the next 12 months.

Available Credit Facility, Borrowings and Repayment of Debt

The Company entered into a Secured Credit Facility Agreement (the “Credit Facility”), dated May 9, 2023, amended as of November 22, 2023 and October 18, 2024, with Wells Fargo Bank, National Association, as administrative agent, swingline lender and issuing lender and Wells Fargo Securities LLC, Citigroup Global Markets Inc., and Regions Capital Markets as lenders. The Credit Facility provides for a $75.0 million revolving credit facility (the “Revolver”) and a $75.0 million Term Loan Facility (the “Term Loan”) with a maturity date of October 18, 2029. The $75.0 million Revolver can be borrowed with a $10.0 million sub-limit for letters of credit, and a $10.0 million swingline loan sub-limit. On August 28, 2025, the Company entered into an amendment under the Credit Facility to increase the Term Loan and Revolver commitments by $20 million for each instrument. Refer to Note 7. Credit Facility and Debt and Note 16. Subsequent Events of the Notes for further information.

In November 2023, the Company borrowed $50.0 million against the Term Loan to primarily settle the cash portion of the consideration associated with the NEC Transaction. Refer to Note 12. Acquisitions of the Notes for further information.

43

As of June 27, 2025, the available credit under the Revolver was $51.3 million, reflecting the available limit of $60.0 million less outstanding letters of credit of $8.7 million. The Company borrowed $95.0 million and repaid $80.0 million against the Revolver in fiscal 2025. The Company borrowed $75.0 million and repaid $50.6 million against the Term Loan in fiscal 2025. As of June 27, 2025, the Company had $73.1 million outstanding under its Term Loan and $15.0 million borrowings under its Revolver.

Outstanding borrowings under the Credit Facility bear interest at either: (a) Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus the applicable margin; or (b) the Base Rate plus the applicable margin. The pricing levels for interest rate margins are determined based on the Consolidated Total Leverage Ratio as determined and adjusted quarterly. As of June 27, 2025, the applicable margin on Adjusted Term SOFR and Base Rate borrowings was 2.8% and 1.8%, respectively. The effective rate of interest on the outstanding Term Loan borrowings as of June 27, 2025, was 6.9%.

The Credit Facility requires the Company and its subsidiaries to maintain a fixed charge coverage ratio to be greater than 1.25 to 1.00 as of the last day of any fiscal quarter of the Company. The Credit Facility also requires that the Company maintain a maximum leverage ratio of 3.00 times Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), with a step-down to 2.75 times EBITDA after four full quarters, and 2.50 times EBITDA after eight full quarters. The Credit Facility contains customary affirmative and negative covenants, including, among others, covenants limiting the ability of the Company and its subsidiaries to dispose of assets, permit a change in control, merge or consolidate, make acquisitions, incur indebtedness, grant liens, make investments, make certain restricted payments, and enter into transactions with affiliates, in each case subject to customary exceptions. As of June 27, 2025, the Company was in compliance with all financial covenants contained in the Credit Facility.

Restructuring Payments

The Company had liabilities for restructuring activities totaling $1.8 million as of June 27, 2025, which was classified as current and are expected to be paid in cash within the next 12 months. The Company expects to fund the future payments with available cash and cash provided by operations. Refer to Note 8. Restructuring Activities of the Notes for further information.

Financial Risk Management

In the normal course of doing business, the Company is exposed to the risks associated with foreign currency exchange rates and changes in interest rates. The Company employs established policies and procedures governing the use of financial instruments to manage its exposure to such risks.

Exchange Rate Risk

The Company conducts business globally in numerous currencies and is therefore exposed to foreign currency risks. From time to time, the Company uses derivative instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The Company does not hold or issue derivatives for trading purposes or make speculative investments in foreign currencies.

The Company enters into foreign exchange forward contracts to mitigate the change in fair value of specific non-functional currency assets and liabilities on the balance sheet. All balance sheet hedges are marked to market through earnings every period. Changes in the fair value of these derivatives are largely offset by re-measurement of the underlying assets and liabilities. The Company did not have any foreign exchange forward contracts outstanding as of June 27, 2025, or June 28, 2024.

Net foreign exchange (gains) losses recorded in the consolidated statements of operations during fiscal 2025, 2024 and 2023 were $(0.8) million, $(0.3) million and $1.0 million, respectively.

Certain of the Company’s international business are transacted in non-U.S. dollar (“USD”) currencies. From time to time, the Company utilizes foreign currency hedging instruments to minimize the currency risk of non-USD transactions. The impact of translating the assets and liabilities of foreign operations to USD is included as a component of stockholders’ equity. As of June 27, 2025, and June 28, 2024, the cumulative translation adjustment decreased stockholders’ equity by $18.8 million and $19.3 million, respectively.

44

Interest Rate Risk

The Company’s exposure to market risk for changes in interest rates relates primarily to its cash equivalents and borrowings under its Credit Facility.

Exposure on Cash Equivalents

The Company had $59.7 million in total cash and cash equivalents as of June 27, 2025. Cash equivalents totaled $6.4 million as of June 27, 2025, and were comprised of money market funds and bank certificates of deposit. Cash equivalents have been recorded at fair value. Fair value is measured using inputs that fall into a three-level hierarchy that prioritizes the inputs used to measure fair value based on observability of such inputs. Refer to Note 6. Fair Value Measurements of Assets and Liabilities of the Notes for further information.

The Company’s cash equivalents earn interest at fixed rates; therefore, changes in interest rates will not generate a gain or loss on these investments unless they are sold prior to maturity. The weighted-average days to maturity for cash equivalents held as of June 27, 2025, was approximately 27 days, and these investments had an average yield of approximately 5.0% per annum. A 10% change in interest rates on the Company’s cash equivalents is not expected to have a material impact on its financial position, results of operations, or cash flows.

Exposure on Borrowings

As of June 27, 2025, the Company had $73.1 million outstanding under its Term Loan and $15.0 million outstanding under its Revolver. Refer to Note 7 Credit Facility and Debt of the Notes for further information.

The Company’s borrowings under the current Credit Facility bear interest at either: (a) Adjusted Term SOFR plus the applicable margin; or (b) the Base Rate plus the applicable margin. The pricing levels for interest rate margins are determined based on the Consolidated Total Leverage Ratio as determined and adjusted quarterly. As of June 27, 2025, the applicable margin on Adjusted Term SOFR and Base Rate borrowings was 2.8% and 1.8%, respectively. The effective rate of interest on the Company’s outstanding Term Loan borrowings as of June 27, 2025, was 6.9%.

A 10% change in interest rates is estimated to have a $0.5 million impact on annual interest expense on the Company’s outstanding long-term debt as of June 27, 2025.

Critical Accounting Estimates

The Company’s consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us.

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected.

The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

•revenue recognition for estimated costs to complete over-time services;

•inventory valuation and provision for excess and obsolete inventory losses;

•income taxes valuation; and

•business combinations.

In some cases, the accounting treatment of a particular transaction is specifically dictated by U.S. GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. Our senior management has reviewed these critical accounting policies and related disclosures with the Audit Committee of the Board.

45

The following is not intended to be a comprehensive list of all of our accounting policies or estimates. Our significant accounting policies are more fully described in Note 1. The Company and Summary of Significant Accounting Policies of the Notes. In preparing our financial statements and accounting for the underlying transactions and balances, we apply those accounting policies. We consider the estimates discussed below as critical to an understanding of our financial statements because their application places the most significant demands on our judgment, with financial reporting results relying on estimates about the effect of matters that are inherently uncertain.

Besides estimates that meet the “critical” accounting estimate criteria, we make many other accounting estimates in preparing our financial statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenue and expenses as well as disclosures of contingent assets and liabilities. Estimates are based on experience and other information available prior to the issuance of the financial statements. Materially different results can occur as circumstances change and additional information becomes known, including for estimates that we do not deem “critical.”

Revenue Recognition

We recognize revenue by applying the following five-step approach: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when, or as, we satisfy a performance obligation.

Revenue from services includes certain network planning and design, engineering, installation and commissioning, extended warranty, customer support, consulting, training, and education. Maintenance and support services are generally offered to our customers and recognized over a specified period of time and from sales and subsequent renewals of maintenance and support contracts. The network planning and design, engineering and installation related services noted are recognized based on an over-time recognition model using the cost-input method. Certain judgment is required when estimating total contract costs and progress to completion on the over-time arrangements, as well as whether a loss is expected to be incurred on the contract. The cost estimation process for these contracts is based on the knowledge and experience of the Company’s project managers, engineers, and financial professionals. Changes in job performance and job conditions are factors that influence estimates of the total costs to complete those contracts and the Company’s revenue recognition. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made in a timely manner. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in income in the period in which the circumstances that gave rise to the revision become known to us. As of June 27, 2025, favorable and unfavorable changes in contract estimates are not considered material for each period presented. We perform ongoing profitability analysis of our service contracts accounted for under this method to determine whether the latest estimates of revenues, costs, and profits require updating. In rare circumstances if these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. As of June 27, 2025, contract losses recognized are not considered material during each period presented and there are no material loss contracts for each period presented.

46

Inventory Valuation and Provisions for Excess and Obsolete Losses

Our inventories have been valued at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We balance the need to maintain prudent inventory levels to ensure competitive delivery performance with the risk of excess or obsolete inventory due to changing technology and customer requirements, and new product introductions. The manufacturing of our products is handled primarily by contract manufacturers. Our contract manufacturers procure components and manufacture our products based on our forecast of product demand. We regularly review inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand, the stage of the product life cycle, anticipated end of product life and production requirements. Several factors may influence the sale and use of our inventories, including decisions to exit a product line, technological change, new product development and competing product offerings. These factors could result in a change in the amount of obsolete inventory quantities on hand. Additionally, our estimates of future product demand may prove to be inaccurate, in which case the provision required for excess and obsolete inventory may be overstated or understated. In the future, if we determine that our inventory is overvalued, we would be required to recognize such costs in cost of product sales and services in our consolidated statements of operations at the time of such determination. In the case of goods which have been written down below cost at the close of a fiscal quarter, such reduced amount is considered the new lower cost basis for subsequent accounting purposes, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. We did not make any material changes in the valuation methodology during the past three fiscal years.

Our customer service inventories are stated at the lower of cost or net realizable value. We carry service parts because we generally provide product warranty for 12 to 36 months and earn revenue by providing enhanced and extended warranty and repair service during and beyond this warranty period. Customer service inventories consist of both component parts, which are primarily used to repair defective units, and finished units, which are provided for customer use permanently or on a temporary basis while the defective unit is being repaired. We record adjustments to reduce the carrying value of customer service inventories to their net realizable value. Factors influencing these adjustments include product life cycles, end of service life plans and volume of enhanced or extended warranty service contracts. Estimates of net realizable value involve significant estimates and judgments about the future, and revisions would be required if these factors differ from our estimates.

Income Taxes Valuation

We record the estimated future tax effects of temporary differences between the tax basis of assets and liabilities of amounts reported in our consolidated balance sheets, as well as operating loss and tax credit carryforwards. Certain judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. Although we believe our reserves are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in our historical income tax provisions and accruals. We adjust these reserves in light of changing facts and circumstances, such as the opening and closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences may result in an increase or decrease to our tax provision in a subsequent period in which such determination is made.

We record deferred taxes by applying enacted statutory tax rates to the respective jurisdictions and follow specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded on the consolidated balance sheets and provide necessary valuation allowances as required. Future realization of deferred tax assets ultimately depends on meeting certain criteria in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740, Income Taxes (“ASC 740”). One of the major criteria is the existence of sufficient taxable income of the appropriate character (for example, ordinary income or capital gain) within the carry-back or carry-forward periods available under the tax law. We regularly review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. Our judgments regarding future profitability may change due to many factors, including future market conditions and our ability to successfully execute our business plans and/or tax planning strategies. Should there be a change in our ability to recover our deferred tax assets, our tax provision would increase or decrease in the period in which the assessment is changed.

47

The accounting estimates related to the liability for uncertain tax position require us to make judgments regarding the sustainability of each uncertain tax position based on its technical merits. It is inherently difficult and subjective to estimate our reserves for the uncertain tax positions. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome of these matters will be the same as these estimates. These estimates are updated quarterly based on factors such as changes in facts or circumstances, changes in tax law, new audit activity, and effectively settled issues.

Business Combinations

The Company accounts for acquisitions as required by FASB ASC Topic 805, Business Combinations (“ASC 805”). Under the acquisition method of accounting, the assets and liabilities of acquired businesses are recorded at their estimated fair values at the date of acquisition. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and involves the use of significant estimates and assumptions to properly allocate purchase price consideration between the fair value of the assets acquired and liabilities assumed. The Company leverages independent third-party valuations in determining the estimated fair values of acquired tangible assets, identifiable intangible assets, and assumed liabilities. If assumptions or estimates used in determining fair values change based on information that becomes available during the one-year period from the acquisition date, we record measurement period adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Impact of Recently Issued Accounting Pronouncements

Refer to Note 1. The Company and Summary of Significant Accounting Policies of the Notes for a full description of recently issued accounting pronouncements, including the respective expected dates of adoption and effects on the consolidated financial position and results of operations.