What changed in this filing

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Item 1. Financial Statements

2020-05-12 compared with 2020-02-06 · 178 added, 121 removed, 537 unchanged (36% of the section changed)

30 unchanged sentences

Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued

Common stock, $0.01 par value, 300,000,000 shares authorized, 5,414,480 shares issued and outstanding at December 27, 2019;

Common stock, $0.01 par value, 300,000,000 shares authorized, 5,393,030 shares issued and outstanding at April 3, 2020;

5,359,695 shares issued and outstanding at June 28, 2019

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands, except per share amounts)

11 unchanged sentences

Total operating expenses

Operating (loss) income

Operating income (loss)

Interest income

Interest expense

(Loss) income before income taxes

Other (expense) income, net

Income (loss) before income taxes

Provision for (benefit from) income taxes

Net (loss) income

Net (loss) income per share of common stock outstanding:

Net income (loss)

Net income (loss) per share of common stock outstanding:

Weighted-average shares outstanding:

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

Net (loss) income

Other comprehensive income (loss):

Net income (loss)

Other comprehensive loss:

Net change in cumulative translation adjustments

Other comprehensive income (loss )

Other comprehensive loss

Comprehensive (loss) income

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

(In thousands)

1 unchanged sentence

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization of property, plant and equipment

Recovery from uncollectible receivables

(Provision) recovery from uncollectible receivables

Share-based compensation

11 unchanged sentences

Other assets and liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Investing Activities

15 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended December 27, 2019

Three Months Ended April 3, 2020

Accumulated Deficit

1 unchanged sentence

(In thousands, except share amounts)

Balance as of September 27, 2019

Other comprehensive income, net of tax

Balance as of December 27, 2019

Other comprehensive loss, net of tax

Issuance of common stock under employee stock plans

Shares withheld for taxes related to vesting of equity awards

Stock repurchase

Share-based compensation

Balance as of December 27, 2019

Three Months Ended December 28, 2018

Balance as of April 3, 2020

Three Months Ended March 29, 2019

Accumulated Deficit

1 unchanged sentence

(In thousands, except share amounts)

Balance as of September 28, 2018

Balance as of December 28, 2018

Other comprehensive loss, net of tax

3 unchanged sentences

Share-based compensation

Balance as of December 28, 2018

Six Months Ended December 27, 2019

Balance as of March 29, 2019

Nine Months Ended April 3, 2020

Accumulated Deficit

8 unchanged sentences

Share-based compensation

Balance as of December 27, 2019

Six Months Ended December 28, 2018

Balance as of April 3, 2020

Nine Months Ended March 29, 2019

Accumulated Deficit

9 unchanged sentences

Share-based compensation

Balance as of December 28, 2018

Balance as of March 29, 2019

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

6 unchanged sentences

Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 28, 2019 .

Our products include broadband wireless access base stations and customer premises equipment for fixed and mobile, point-to-point digital microwave radio systems for access, backhaul, trunking, and license-exempt applications, supporting new network deployments, network expansion, and capacity upgrades.

Our products include broadband wireless access base stations and customer premises equipment for fixed and mobile, point-to-point digital microwave radio systems for access, backhaul, trunking, license-exempt applications, supporting new network deployments, network expansion, and capacity upgrades.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S.

GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information.

GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information, and we have made estimates, assumptions and judgments affecting the amounts reported in our unaudited condensed consolidated financial statements and the accompanying notes, as discussed in greater detail below.

Accordingly, the statements do not include all information and footnotes required by U.S.

1 unchanged sentence

In the opinion of our management, such interim financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows for such periods.

The results for the three and six months ended December 27, 2019 are not necessarily indicative of the results that may be expected for the full fiscal year or future operating periods.

The results for the three and nine months ended April 3, 2020 are not necessarily indicative of the results that may be expected for the full fiscal year or future operating periods.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 28, 2019 .

2 unchanged sentences

We operate on a 52 -week or 53 -week year ending on the Friday closest to June 30.

The first two quarters of fiscal 2020 and fiscal 2019 included 13 weeks in each quarter.

The nine months ended April 3, 2020 consisted of 40 weeks while the nine months ended 2019 included 39 weeks.

The three months ended April 3, 2020 and March 29, 2019 consisted of 14 weeks and 13 weeks, respectively.

Fiscal year 2020 will be comprised of 53 weeks and will end on July 3, 2020 .

6 unchanged sentences

Such estimates affect significant items, including revenue recognition, provision for uncollectible receivables, inventory valuation, valuation allowances for deferred tax assets, uncertainties in income taxes, lease liabilities, restructuring obligations, product warranty obligations, share-based awards, contingencies, recoverability of long-lived assets and useful lives of property, plant and equipment.

The actual results that we experience may differ materially from our estimates.

Summary of Significant Accounting Policies

There have been no material changes in our significant accounting policies as of and for the six months ended December 27, 2019 , as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended June 28, 2019 , with the exception of our adoption of Accounting Standards Update (“ASU”) No.

2016-02, Leases (Topic 842) (ASU 2016-02) (“ASC 842”).

There have been no material changes in our significant accounting policies as of and for the nine months ended April 3, 2020 , as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended June 28, 2019 , with the exception of our adoption of Accounting Standards Update (“ASU”) No.

2016-02, Leases (Topic 842)

(ASU 2016-02) (“ASC 842”).

See Note 4, “Leases” to the Notes to unaudited condensed consolidated financial statements for discussion of the impact of the adoption of this standard on our policies for leases.

17 unchanged sentences

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) .

This guidance provides optional guidance related to reference rate reform, which provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued.

This guidance is applicable for our borrowing instruments, which use LIBOR as a reference rate, and was effective March 12, 2020 through December 31, 2022.

We are currently evaluating the potential impact of ASU 2020-04 will have on our unaudited condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) .

This guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles and also simplifies areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws and rate changes.

ASU 2019-12 will be effective for us in our first quarter of fiscal 2022.

We are currently evaluating the potential impact that adopting ASU 2019-12 will have on our unaudited condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

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The standard can be adopted either using the prospective or retrospective transition approach.

We are evaluating the effect the adoption of the standard will have on our unaudited condensed consolidated financial statements.

We are evaluating the potential impact adopting ASU 2018-15 will have on our unaudited condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

5 unchanged sentences

Measurement of Credit Losses on Financial Instruments (ASU 2016-13) and also issued subsequent amendments to the initial guidance:

ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, Topic 326).

ASU 2019-04, and ASU 2019-05 (collectively, Topic 326).

Topic 326 requires measurement and recognition of expected credit losses for financial assets held.

Topic 326 will be effective for us in our first quarter of fiscal 2024, and earlier adoption is permitted.

We are evaluating the impact the adoption of Topic 326 will have on our unaudited condensed consolidated financial statements.

Net (Loss) Income Per Share of Common Stock

Net (loss) income per share is computed using the two-class method, by dividing net income attributable to us by the weighted-average number of shares of our outstanding common stock and participating securities outstanding.

We are evaluating the impact adopting Topic 326 will have on our unaudited condensed consolidated financial statements.

Net Income (Loss) Per Share of Common Stock

Net income (loss) per share is computed using the two-class method, by dividing net income attributable to us by the weighted-average number of shares of our outstanding common stock and participating securities outstanding.

Our restricted shares contain rights to receive non-forfeitable dividends and therefore are considered to be participating securities and included in the calculations of net income per basic and diluted common share.

1 unchanged sentence

The impact on earnings per share of the participating securities under the two-class method was immaterial.

The following table presents the computation of basic and diluted net (loss) income per share attributable to our common stockholders:

The following table presents the computation of basic and diluted net income (loss) per share attributable to our common stockholders:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands, except per share amounts)

Net (loss) income

Net income (loss)

Weighted-average shares outstanding, basic

1 unchanged sentence

Weighted-average shares outstanding, diluted

Net (loss) income per share of common stock outstanding:

The following table summarizes the weighted-average equity awards that were excluded from the diluted net (loss) income per share calculations since they were anti-dilutive:

Net income (loss) per share of common stock outstanding:

The following table summarizes the weighted-average equity awards that were excluded from the diluted net income (loss) per share calculations since they were anti-dilutive:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

10 unchanged sentences

Revenue from product sales is generated predominately from the sales of products manufactured by third-party manufacturers to whom we have outsourced our manufacturing processes.

Printed circuit assemblies, mechanical housings, and packaged modules are manufactured by contract manufacturing partners, with periodic business reviews of material levels and obsolescence.

Printed circuit assemblies, mechanical housings, and

packaged modules are manufactured by contract manufacturing partners, with periodic business reviews of material levels and obsolescence.

Product assembly, product testing, complete system integration, and system testing may either be performed within our own facilities or at the locations of our third-party manufacturers.

6 unchanged sentences

Significant judgment is required when estimating total contract costs and progress to completion on the arrangements, as well as whether a loss is expected to be incurred on the contract.

If circumstances arise that change the original estimates of revenues, costs, or

extent of progress toward completion, revisions to the estimates are made.

If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made.

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.

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These costs are recorded as sales and marketing expense and included on our unaudited condensed consolidated balance sheet as accrued expenses until paid.

Our amortization expense was not material for the three and six months ended December 27, 2019 .

Our amortization expense was not material for the three and nine months ended April 3, 2020 .

Contract Balances, Performance Obligations, and Backlog

The following table provides information about receivables and liabilities from contracts with customers (in thousands):

December 27, 2019

April 3, 2020

June 28, 2019

8 unchanged sentences

From time to time, we may experience unforeseen events that could result in a change to the scope or price associated with an arrangement.

When such events occur, we update the transaction price and measure of progress for the performance obligation and recognize the change as a cumulative catch-up to revenue.

When such events occur, we update the transaction price and measure of progress for the performance

obligation and recognize the change as a cumulative catch-up to revenue.

Because of the nature and type of contracts we engage in, the timeframe to completion and satisfaction of current and future performance obligations can shift;

however, this will have no impact on our future obligation to bill and collect.

As of December 27, 2019 , we had $27.9 million in advance payments and unearned revenue and long-term unearned revenue, of which approximately 45% is expected to be recognized as revenue in fiscal 2020 and the remainder thereafter.

During the three and six months ended December 27, 2019 we recognized approximately $2.4 million and $5.6 million , respectively, in maintenance service revenue which was included in advance payments and unearned revenue at the beginning of the reporting period.

As of April 3, 2020 , we had $29.7 million in advance payments and unearned revenue and long-term unearned revenue, of which approximately 30% is expected to be recognized as revenue in the remainder of fiscal 2020 and the balance thereafter.

During the three and nine months ended April 3, 2020 we recognized approximately $1.8 million and $7.4 million , respectively, in maintenance service revenue which was included in advance payments and unearned revenue at the beginning of the reporting period.

Remaining Performance Obligations

The aggregate amount of transaction price allocated to our unsatisfied performance obligations (or partially unsatisfied) was approximately $73.8 million at December 27, 2019 .

The aggregate amount of transaction price allocated to our unsatisfied (or partially unsatisfied) performance obligations was approximately $71.8 million at April 3, 2020 .

Of this amount, we expect to recognize approximately 60% as revenue during the next 12 months , with the remaining amount to be recognized as revenue within two to five years.

4 unchanged sentences

We determine if an arrangement contains a lease at inception.

These operating leases are included in "Right of use assets" on our December 27, 2019 unaudited condensed consolidated balance sheets and represent our right to use the underlying asset for the lease term.

Our obligation to make lease payments are included in " Short-term lease liabilities " and "Long-term lease liabilities" on our December 27, 2019 unaudited condensed consolidated balance sheets.

We did not enter into any finance leases during the six months ended December 27, 2019 .

These operating leases are included in "Right of use assets" on our April 3, 2020 unaudited condensed consolidated balance sheets and represent our right to use the underlying asset for the lease term.

Our obligation to make lease payments are included in " Short-term lease liabilities " and "Long-term lease liabilities" on our April 3, 2020 unaudited condensed consolidated balance sheets.

We did not enter into any finance leases during the nine months ended April 3, 2020 .

Operating lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

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The adoption did not impact our prior year condensed consolidated statements of operations and statements of cash flows.

As of December 27, 2019 , total ROU assets were approximately $5.6 million , and short-term lease liabilities and long-term lease liabilities were approximately $3.3 million and $2.6 million , respectively.

Cash paid for lease liabilities was $1.3 million and $2.5 million for the three and six months ended December 27, 2019 , respectively.

During the three and six months ended December 27, 2019 , we obtained $0.1 million of right-of-use assets in exchange for new operating lease obligations.

The following summarizes our lease costs, lease term and discount rate for the three and six months ended December 27, 2019 (in thousands, except for weighted average):

As of April 3, 2020 , total ROU assets were approximately $4.6 million , and short-term lease liabilities and long-term lease liabilities were approximately $2.4 million and $2.5 million , respectively.

Cash paid for lease liabilities was $1.4 million and $4.0 million for the three and nine months ended April 3, 2020 , respectively.

During the three and nine months ended April 3, 2020 , we obtained $0.2 million and $0.3 million , respectively, of right-of-use assets in exchange for new operating lease obligations.

The following summarizes our lease costs, lease term and discount rate for three and nine months ended April 3, 2020 (in thousands, except for weighted average):

Three Months Ended

Six Months Ended

December 27, 2019

Nine Months Ended

April 3, 2020

(In thousands)

5 unchanged sentences

Weighted average discount rate

As of December 27, 2019 , our future minimum lease payments under all non-cancelable operating leases with an initial term in excess of one year were as follows (in thousands):

Rent expense for operating leases, including rentals on a month-to-month basis, for the three and nine months ended March 29, 2019 were $0.9 million and $2.8 million , respectively.

As of April 3, 2020 , our future minimum lease payments under all non-cancelable operating leases with an initial term in excess of one year were as follows (in thousands):

(In thousands)

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Consigned inventories included within raw materials and supplies

We currently rely on a few vendors for substantially all of our inventory purchases.

We record recovery or charges to adjust our inventory and customer service inventory due to excess and obsolete inventory resulting from lower sales forecast, product transitioning, or discontinuance.

The recovery or charges during the three and six months ended December 27, 2019 and December 28, 2018 were classified in cost of product sales as follows:

The recovery or charges during the three and nine months ended April 3, 2020 and March 29, 2019 were classified in cost of product sales as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

Excess and obsolete inventory charges (recovery)

Excess and obsolete inventory (recovery) charges

Customer service inventory write-downs

8 unchanged sentences

Total property, plant and equipment, net

Included in the total plant, property and equipment above were $3.6 million and $2.8 million of assets in progress which have not been placed in service as of December 27, 2019 and June 28, 2019 , respectively.

Included in the total plant, property and equipment above were $3.9 million and $2.8 million of assets in progress which have not been placed in service as of April 3, 2020 and June 28, 2019 , respectively.

Depreciation and amortization expense related to property, plant and equipment, including amortization of software developed for internal use, was as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

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Total advance payments and unearned revenue

Excluded from the balances above are $8.7 million and $9.7 million in long-term unearned revenue as of December 27, 2019 and June 28, 2019 , respectively.

Excluded from the balances above are $8.2 million and $9.7 million in long-term unearned revenue as of April 3, 2020 and June 28, 2019 , respectively.

Fair Value Measurements of Assets and Liabilities

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Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts, estimated fair values, and valuation input levels of our assets and liabilities that are measured at fair value on a recurring basis as of December 27, 2019 and June 28, 2019 were as follows:

December 27, 2019

The carrying amounts, estimated fair values, and valuation input levels of our assets and liabilities that are measured at fair value on a recurring basis as of April 3, 2020 and June 28, 2019 were as follows:

April 3, 2020

June 28, 2019

6 unchanged sentences

Bank certificates of deposit

Other current assets:

Foreign exchange forward contracts

Other accrued expenses:

2 unchanged sentences

Our Level 1 items mainly are money market funds.

As of December 27, 2019 and June 28, 2019 , these money market funds were valued at $ 1.00 net asset value per share.

As of April 3, 2020 and June 28, 2019 , these money market funds were valued at $ 1.00 net asset value per share.

We classify items in Level 2 if the observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes, or alternative pricing sources are available with reasonable levels of price transparency.

2 unchanged sentences

The changes in fair value related to our foreign currency forward contracts were recorded in cost of revenues on our unaudited condensed consolidated statements of operations.

As of December 27, 2019 and June 28, 2019 , we did not have any recurring assets or liabilities that were valued using significant unobservable inputs.

As of April 3, 2020 and June 28, 2019 , we did not have any recurring assets or liabilities that were valued using significant unobservable inputs.

Our policy is to recognize asset or liability transfers among Level 1, Level 2, and Level 3 as of the actual date of the events or change in circumstances that caused the transfer.

During the first six months of fiscal 2020 and 2019 , we had no transfers between levels of the fair value hierarchy of our assets or liabilities measured at fair value.

During the first nine months of fiscal 2020 and 2019 , we had no transfers between levels of the fair value hierarchy of our assets or liabilities measured at fair value.

Credit Facility and Debt

1 unchanged sentence

2 to Third Amended and Restated Loan and Security Agreement with Silicon Valley Bank (the “SVB Credit Facility”).

The SVB Credit Facility expires on June 29, 2020 .

On May 4, 2020, we entered into Amendment No.

3 to Third Amended and Restated Loan and Security Agreement which extended the expiration date to June 28, 2021.

The SVB Credit Facility provides for a $25.0 million accounts receivable formula-based revolving credit facility that can be borrowed by our U.S.

4 unchanged sentences

We may prepay loans under the SVB Credit Facility in whole or in part at any time without premium or penalty.

As of December 27, 2019 , available credit under the SVB Credit Facility was $14.5 million , reflecting the calculated borrowing base of $25.0 million less existing borrowings of $9.0 million and outstanding letters of credit of $1.5 million .

As of April 3, 2020 , available credit under the SVB Credit Facility was $14.5 million , reflecting the calculated borrowing base of $25.0 million less existing borrowings of $9.0 million and outstanding letters of credit of $1.5 million .

The SVB Credit Facility carries an interest rate computed, at our option, based on either (i) at the prime rate reported in the Wall Street Journal plus a spread of 0.50% to 1.50% , with such spread determined based on our adjusted quick ratio;

1 unchanged sentence

Any outstanding Singapore subsidiary borrowed loans shall bear interest at an additional 2.00% above the applicable prime or LIBOR rate.

During the first six months of fiscal 2020 , the weighted-average interest rate on our outstanding loan was 5.46% .

As of December 27, 2019 and June 28, 2019 , our outstanding debt balance under the SVB Credit Facility was $9.0 million , and the interest rate was 5.25% and 6.00% , respectively.

During the first nine months of fiscal 2020 , the weighted-average interest rate on our outstanding loan was 4.24% .

As of April 3, 2020 and June 28, 2019 , our outstanding debt balance under the SVB Credit Facility was $9.0 million , and the interest rate was 3.75% and 6.00% , respectively.

The SVB Credit Facility contains quarterly financial covenants including minimum adjusted quick ratio and minimum profitability (EBITDA) requirements.

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Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default at a per annum rate of interest equal to 5.00% above the applicable interest rate.

As of December 27, 2019 , we were in compliance with the quarterly financial covenants, as amended, contained in the SVB Credit Facility.

The $9.0 million borrowing was classified as a current liability as of December 27, 2019 and June 28, 2019 , and repaid in January 2020 and July 2019 , respectively.

As of April 3, 2020 , we were in compliance with the quarterly financial covenants contained in the SVB Credit Facility, as amended.

The $9.0 million borrowing was classified as a current liability as of April 3, 2020 and June 28, 2019 .

On September 28, 2018, we entered into Amendment No.

2 unchanged sentences

In addition, we have a short-term line of credit for up to $0.3 million from a bank in New Zealand to support the operations of our subsidiary located there.

This line of credit provides for up to $0.2 million in short-term advances at various interest rates, all of which was available as of December 27, 2019 and June 28, 2019 .

The line of credit also provides for the issuance of standby letters of credit and company credit cards, of which $0.1 million was outstanding as of December 27, 2019 .

This line of credit provides for up to $0.2 million in short-term advances at various interest rates, all of which was available as of April 3, 2020 and June 28, 2019 .

The line of credit also provides for the issuance of standby letters of credit and company credit cards, of which $0.1 million was outstanding as of April 3, 2020 .

This line of credit may be terminated upon notice, is reviewed annually for renewal or modification, and is supported by a corporate guarantee.

Restructuring Activities

The following table summarizes our restructuring-related activities during the six months ended December 27, 2019 :

The following table summarizes our restructuring-related activities during the nine months ended April 3, 2020 :

Severance and Benefits

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Accrual balance, December 27, 2019

As of December 27, 2019 , $1.7 million of the accrual balance was in short-term restructuring liabilities while $0.2 million was included in other long-term liabilities on our unaudited condensed consolidated balance sheets.

Cash payments

Accrual balance, April 3, 2020

As of April 3, 2020 , $1.5 million of the accrual balance was in short-term restructuring liabilities while $0.3 million was included in other long-term liabilities on our unaudited condensed consolidated balance sheets.

During the third quarter of fiscal 2020, our Board of Directors approved a restructuring plan (the “Q3 2020 Plan”) in order to continue to reduce its operating costs and improve profitability to optimize its business model and increase efficiencies.

Payments related to the accrued restructuring liability balance for this plan are expected to be fully paid in fiscal 2021.

During the fourth quarter of fiscal 2019, our Board of Directors approved a restructuring plan (the “Fiscal 2020 Plan”) to primarily consolidate product development, right size our resources to support our international business and other support functions.

5 unchanged sentences

Stock Repurchase Program

In May 2018 , our board of directors approved a repurchase program, which does not have an expiration date, for the repurchase of up to $7.5 million of our common stock.

In May 2018 , our board of directors approved a stock repurchase program, which does not have an expiration date, for the repurchase of up to $7.5 million of our common stock.

The following table summarizes the repurchases of our common stock:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands, except share amounts)

December 27, 2019

December 28, 2018

December 27, 2019

April 3, 2020

March 29, 2019

April 3, 2020

Number of shares repurchased

1 unchanged sentence

All repurchased shares were retired.

As of December 27, 2019 , $3.8 million remained available under our stock repurchase program.

As of April 3, 2020 , $3.4 million remained available under our stock repurchase program.

In February 2020, we suspended the stock repurchase program.

Stock Incentive Programs

As of December 27, 2019 , we had two stock incentive plans for our employees and nonemployee directors, the 2018 Incentive Plan and the 2007 Stock Equity Plan, as amended and restated effective November 13, 2015.

During the three months ended December 27, 2019 , we granted restricted stock units for the issuance of 21,172 shares of our common stock .

During the six months ended December 27, 2019 , we granted restricted stock units for the issuance of 84,202 shares of our common stock, performance restricted stock units for the issuance of 51,706 shares of our common stock and options to purchase 126,118 shares of our common stock.

As of April 3, 2020 , we had two stock incentive plans for our employees and nonemployee directors, the 2018 Incentive Plan and the 2007 Stock Equity Plan, as amended and restated effective November 13, 2015.

During the three months ended April 3, 2020 , we granted 46,500 market-based stock units.

During the nine months ended April 3, 2020 , we granted 84,202 restricted stock units, 51,706 performance restricted stock units, 46,500 market-based stock units and 126,118 stock options to purchase shares of our common stock.

Total compensation expense for share-based awards included in our unaudited condensed consolidated statements of operations was as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

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Total share-based compensation expense

As of December 27, 2019 , there was approximately $1.3 million of total unrecognized compensation expense related to non-vested stock options granted which are expected to be recognized over a weighted-average period of 2.3 years.

As of December 27, 2019 , there was $2.1 million of total unrecognized compensation expense related to non-vested stock awards which are expected to be recognized over a weighted-average period of 2.2 years.

As of April 3, 2020 , there was approximately $1.1 million of total unrecognized compensation expense related to non-vested stock options granted which are expected to be recognized over a weighted-average period of 2.1 years.

As of April 3, 2020 , there was $1.7 million of total unrecognized compensation expense related to non-vested stock awards which are expected to be recognized over a weighted-average period of 2.1 years.

Segment and Geographic Information

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We report revenue by region and country based on the location where our customers accept delivery of our products and services.

Revenue by region for the three and six months ended December 27, 2019 and December 28, 2018 was as follows:

Revenue by region for the three and nine months ended April 3, 2020 and March 29, 2019 was as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

December 28, 2018

March 29, 2019

North America

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Total revenue

During the three months ended December 27, 2019 , no customer accounted for over 10% of our total revenue.

During the six months ended December 27, 2019 , Motorola Solutions, Inc.

During the nine months ended April 3, 2020 , Motorola Solutions, Inc.

accounted for 10% of our total revenue.

During both the three and six months ended December 28, 2018 , Mobile Telephone Networks Group (MTN Group) accounted for 12% of our total revenue .

As of December 27, 2019 , MTN Group accounted for 13% of our accounts receivable.

As of June 28, 2019 , MTN Group and Globe Telecom, Inc.

(Globe) accounted for 10% and 11% of our accounts receivable, respectively.

No customer accounted for 10% of our total revenue during the three months ended April 3, 2020.

During the three months ended March 29, 2019 , Mobile Telephone Networks Group (MTN Group) and Globe Telecom, Inc.

(Globe) accounted for 13% and 12% , respectively, of our total revenue .

During the nine months ended March 29, 2019 , MTN Group accounted for 12% of our

total revenue .

As of April 3, 2020 , MTN Group and Digitec accounted for 16% and 11% of our accounts receivable, respectively.

As of June 28, 2019 , MTN Group and Globe accounted for 10% and 11% of our accounts receivable, respectively.

We have entered into separate and distinct contracts with Globe and MTN Group, as well as separate arrangements with their various subsidiaries.

The loss of a significant portion of business from Globe and MTN Group, or any other significant customers, could adversely affect our unaudited condensed consolidated financial statements.

The loss of a significant portion of business from any significant customers could adversely affect our unaudited condensed consolidated financial statements.

Our effective tax rate varies from the U.S.

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During interim periods, we accrue tax expenses for jurisdictions that are anticipated to be profitable for fiscal 2020.

The determination of our income taxes for the six months ended December 27, 2019 and December 28, 2018 was based on our estimated annual effective tax rate adjusted for losses in certain jurisdictions for which no tax benefit can be recognized.

Our tax expense for the six months ended December 27, 2019 was primarily due to tax expense related to profitable subsidiaries and a $0.6 million increase in our reserves for uncertain tax positions.

The tax benefit for the six months ended December 28, 2018 was primarily due to tax expense related to profitable subsidiaries, net against the $1.6 million release of valuation allowance due to the potential foreign tax refund to be received from the Department of Federal Revenue of Brazil.

The determination of our income taxes for the nine months ended April 3, 2020 and March 29, 2019 was based on our estimated annual effective tax rate adjusted for losses in certain jurisdictions for which no tax benefit can be recognized.

Our tax expense for the nine months ended April 3, 2020 was primarily due to tax expense related to profitable subsidiaries and a $0.4 million increase in our reserves for uncertain tax positions.

The tax benefit for the nine months ended March 29, 2019 was primarily due to tax expense related to profitable subsidiaries, net against the $1.6 million release of valuation allowance due to the potential foreign tax refund to be received from the Department of Federal Revenue of Brazil.

We continue to record a partial valuation allowance on our U.S.

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If future events cause us to conclude that it is not more likely than not that we will be able to recover more or less of the current anticipated portion of deferred tax assets, we would be required to either decrease or increase the valuation allowance on our deferred tax assets at that time, which would result in a charge to income tax expense (benefit) and a material increase or decrease in net income in the period in which we change our judgment.

During the second quarter of fiscal 2020 , we did not record any adjustment to valuation allowance on our U.S.

During the third quarter of fiscal 2020 , we did not record any adjustment to valuation allowance on our U.S.

deferred tax assets.

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We account for interest and penalties related to unrecognized tax benefits as part of our provision for federal, foreign and state income taxes.

Such interest expense was not material for the three and six months ended December 27, 2019 and December 28, 2018 .

Such interest expense was not material for the three and nine months ended April 3, 2020 and March 29, 2019 .

On March 27, 2020, the US enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act which provided certain tax relief measures including, but not limited to, (1) a five-year net operating loss carryback, (2) changes in the deduction of interest, (3) acceleration of alternative minimum tax credit (AMT) refunds, and (4) a technical correction to allow accelerated deductions for qualified improvement property.

The Tax Cuts and Jobs Act repealed the corporate AMT credit and allowed taxpayers to claim any unused AMT credit over four tax years beginning in tax year 2018.

The CARES Act allows for acceleration of the refundable AMT credit up to 100% of the AMT credit to be refunded in tax year 2018.

In connection with our analysis of the impact of the CARES Act, we have reclassified the refundable AMT credit of $3.4 million from long-term to short-term receivable and recorded no income tax effects on the other tax relief measures of the CARES Act.

We continue to examine the elements of CARES Act and the impact they may have on our future business.

Commitments and Contingencies

Purchase Orders and Other Commitments

From time to time in the normal course of business, we may enter into purchasing agreements with our suppliers that require us to accept delivery of, and remit full payment for, finished products that we have ordered, finished products that we requested be held as safety stock, and work in process started on our behalf, in the event we cancel or terminate the purchasing agreement.

requested be held as safety stock, and work in process started on our behalf, in the event we cancel or terminate the purchasing agreement.

Because these agreements do not specify fixed or minimum quantities, do not specify minimum or variable price provisions, and do not specify the approximate timing of the transaction, and we have no present intention to cancel or terminate any of these agreements, we currently do not believe that we have any future liability under these agreements.

As of December 27, 2019 , we had outstanding purchase obligations with our suppliers or contract manufacturers of $18.6 million .

In addition, we had contractual obligations of approximately $2.1 million associated with software licenses as of December 27, 2019 .

As of April 3, 2020 , we had outstanding purchase obligations with our suppliers or contract manufacturers of $22.7 million .

In addition, we had contractual obligations of approximately $2.1 million associated with software licenses as of April 3, 2020 .

Financial Guarantees and Commercial Commitments

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The terms of the guarantees are generally equal to the remaining term of the related debt or other obligations and are generally limited to two years or less.

As of December 27, 2019 , we had no guarantees applicable to our debt arrangements.

As of April 3, 2020 , we had no guarantees applicable to our debt arrangements.

We have entered into commercial commitments in the normal course of business including surety bonds, standby letters of credit agreements, and other arrangements with financial institutions primarily relating to the guarantee of future performance on certain contracts to provide products and services to customers.

As of December 27, 2019 , we had commercial commitments of $61.2 million outstanding that were not recorded on our unaudited condensed consolidated balance sheets.

As of April 3, 2020 , we had commercial commitments of $57.7 million outstanding that were not recorded on our unaudited condensed consolidated balance sheets.

We do not believe, based on historical experience and information currently available, that it is probable that any significant amounts will be required to be paid on the performance guarantees in the future.

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Under the terms of substantially all of our license agreements, we have agreed to defend and pay any final judgment against our customers arising from claims against such customers that our products infringe the intellectual property rights of a third party.

As of December 27, 2019 , we have not received any notice that any customer is subject to an infringement claim arising from the use of our products;

As of April 3, 2020 , we have not received any notice that any customer is subject to an infringement claim arising from the use of our products;

we have not received any request to defend any customers from infringement claims arising from the use of our products;

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Because the outcome of infringement disputes is related to the specific facts of each case and given the lack of previous or current indemnification claims, we cannot estimate the maximum amount of potential future payments, if any, related to our indemnification provisions.

As of December 27, 2019 , we had not recorded any liabilities related to these indemnifications.

As of April 3, 2020 , we had not recorded any liabilities related to these indemnifications.

Legal Proceedings

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We believe that we have numerous contractual and legal defenses to these disputes, and we intend to dispute them vigorously.

In March 2016, an enforcement action by the Indian Department of Revenue, Ministry of Finance was brought against Aviat Networks (India) Private Limited (Aviat India) relating to the non-realization of intercompany receivables and non-payment of intercompany payables, which originated from 1999 to 2012, within the time frames dictated by the Indian regulations under

the Foreign Exchange Management Act ("FEMA").

In November 2017, the Indian Department of Revenue, Ministry of Finance also initiated a similar action against Telsima Communications Private Limited (Telsima India) relating to the non-realization of intercompany receivables and non-payment of intercompany payables which originated from the period prior to our acquisition of Telsima India in February 2009.

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We expect to defend each of these disputes vigorously.

There are many uncertainties associated with any litigation and these actions or other third-party claims against us may cause us to incur costly litigation and/or substantial settlement charges.

There are many uncertainties associated with any litigation and these actions or other third-party claims against us may cause us to incur costly

litigation and/or substantial settlement charges.

As a result, our business, financial condition, results of operations, and cash flows could be adversely affected.

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Such revisions in the estimates of the potential liabilities could have a material impact on our results of operations and financial position.

In March 2020, the World Health Organization characterized a recent pandemic of respiratory illness caused by novel coronavirus disease, known as COVID-19, as a pandemic.

The pandemic has resulted in government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place or stay-at-home orders, and business shutdowns.

Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the COVID-19 virus.

The COVID-19 virus may have an impact on our operations, supply chains and distribution systems and increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking or requiring.

The extent to which the COVID-19 pandemic impacts our business, prospects and results of operations will depend on future developments, which are highly uncertain and cannot be predicted with certainty, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating activities can resume.

Management is actively monitoring the impact of COVID-19 on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce.

Our first priority remains the health and safety of our employees and their families.

Employees whose tasks can be done off-site have been instructed to work from home.

Our manufacturing sites support essential businesses and remain operational.

We are maintaining social distancing for workers on-site and have enhanced cleaning protocols and usage of personal protective equipment, where appropriate.

The impact to our supply chain lead times and ability to fulfill orders was minimal for the three months ended April 3, 2020.

However, depending on pandemic-related factors like the uncertain duration of temporary manufacturing restrictions as well as our ability to perform field services during shelter in place orders, we could experience constraints and delays in fulfilling customer orders in future periods.

We are monitoring, assessing and adapting to the situation and preparing for implications to our business, supply chain and customer demand.

We expect these challenges to continue until business and economic activities return to more normal levels.

The financial results for the three and nine months ended April 3, 2020 reflect some of the reduced activity experienced during the period in various locations around the world and are not necessary indicative of the results for the full year.

Subsequent Event

The United States and other countries are experiencing a major global health pandemic related to the outbreak of a novel strain of coronavirus, COVID-19.

Due to the current economic uncertainty stemming from the impact of the COVID-19 pandemic, on April 21, 2020, we entered into a Paycheck Protection Program Note (the “Note”) effective April 21, 2020 with Silicon Valley Bank as the lender (“Lender”) in an aggregate principal amount of $5.9 million pursuant to the Paycheck Protection Program under the CARES Act (the “PPP Loan”).

Subject to the terms of the Note, the PPP Loan bears interest at a fixed rate of one percent ( 1% ) per annum, with the first six months of interest deferred.

Commencing seven months after the effective date of the PPP Loan, we are required to pay the Lender equal monthly payments of principal and interest as required to fully amortize the PPP Loan by April 21, 2022.

The PPP Loan is unsecured and guaranteed by the Small Business Administration (the “SBA”).

On April 22, 2020, we received proceeds of $5.9 million from the PPP Loan.

At the time when we applied for the PPP Loan, we had qualified to receive the funds pursuant to the then published qualification requirements.

On April 23, 2020, the SBA, in consultation with the Department of Treasury, issued new guidance regarding qualification requirements for public companies.

Based on our assessment of the new guidance, we repaid the principal and interest on the PPP Loan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements