What changed in this filing

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Item 1. Business

2021-08-25 compared with 2020-08-27 · 45 added, 33 removed, 235 unchanged (25% of the section changed)

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Our common stock is listed on the NASDAQ Global Select Market under the symbol AVNW.

As of July 3, 2020, we had 674 employees compared with 708 employees as of June 28, 2019.

As of July 2, 2021, we had 687 employees compared with 674 employees as of July 3, 2020.

Overview and Description of the Business

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We believe that future demand for microwave and millimeter wave transmission systems will be influenced by a number of factors across several market segments.

Mobile Networks

Mobile/5G Networks

As mobile networks expand, add subscribers and increase the number of wirelessly connected devices, sensors and machines, they require ongoing investment in backhaul infrastructure.

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This can pace backhaul infrastructure investment and cause periodic spikes in demand.

Rural Broadband

• Middle Mile .

Aviat transport equipment is used to deliver broadband connectivity to rural and suburban communities as an alternative to costly fiber.

There are significant investments being made to improve rural household and enterprise connectivity and many of these investments target middle mile infrastructure builds.

• Expansion of Offered Services.

Mobile network operators especially in emerging markets now own and operate the most modern communications networks within their respective regions.

Internet service providers, especially those in emerging markets, now own and operate the most modern communications networks within their respective regions.

These network assets can be further leveraged to provide high speed broadband services to fixed locations such as small, medium and large business enterprises, airports, hotels, hospitals, and educational institutions.

Microwave and millimeter wave backhaul is ideally suited to providing high speed broadband connections to these end points due to the lack of fiber infrastructure.

Other Vertical Markets

Private Networks

In addition to mobile backhaul, we see demand for microwave technology in other vertical markets, including utility, public safety, financial institutions and broadcast.

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Improving border patrol effectiveness, enabling inter-operable emergency communications services for local or state police, providing access to timely information from centralized databases, or utilizing video and imaging devices at the scene of an incident requires a high bandwidth and reliable network.

The mission critical nature of public safety and national security networks can require that these networks are built, operated and

maintained independently of other public network infrastructure and microwave is very well suited to this environment because it is a cost-effective alternative to fiber.

The mission critical nature of public safety and national security networks can require that these networks are built, operated and maintained independently of other public network infrastructure and microwave is very well suited to this environment because it is a cost-effective alternative to fiber.

• Microwave technology can be used to engineer long distance and more direct connections than optical cable.

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We have invested in our people and processes to create a platform for operational excellence across sales, services, product development and supply chain areas while continuing to make investments in strengthening our product and services portfolio and expanding our reach into targeted market areas.

Our technology strategy has three main elements aligned to deliver a compelling Total Cost of Ownership (“TCO”) value proposition.

The first is the integration of network routing functions into our wireless transport solution allowing our customers increased flexibility with a much better total cost solution.

Second, we are expanding the data-carrying capacity of our wireless products to address the increasing data demand in networks of all types.

Third, in order to address the operational complexity of planning, deploying, owning and operating microwave networks, we are investing in a combination of software applications, tools and services where simplification, process automation and our unique expertise in wireless technology can make a significant difference for our customers and partners.

Our strategy has three main elements aligned to deliver a compelling Total Cost of Ownership (“TCO”) value proposition.

The first is our portfolio of wireless transport products allowing our customers increased capacity and flexibility with a much better total cost solution.

We are expanding the data-carrying capacity of our wireless products to address the increasing data demand in networks of all types.

Second, in order to address the operational complexity of planning, deploying, owning and operating microwave networks, we are investing in a combination of software applications, tools and services where simplification, process automation and our unique expertise in wireless technology can make a significant difference for our customers and partners.

Finally, Aviat is investing in e-commerce through our Aviat Store platform and supporting supply chain capabilities.

Aviat can better service customers buying through the Aviat Store with lower costs, faster lead times and a simpler purchasing experience.

The Aviat Store, together with our supply chain, enables customers (including Tier 2 and mobile 5G operators) to purchase products as needed, thus avoiding lengthy and variable lead times that come with other vendor solutions and allowing those customers to lower warehousing costs, reduce obsolete equipment, and lower the cost of capital by paying only when equipment is needed.

We continue to develop our professional services portfolio as key to our long-term strategy and differentiation.

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The major product families included in these solutions are CTR 8000, WTM 4000 and AviatCloud.

Our CTR 8000 platform merges the functionality of an indoor microwave modem unit and a cell

site router into a single integrated solution, simplifying IP/MPLS deployments and creating a better performing network.

Our CTR 8000 platform merges the functionality of an indoor microwave modem unit and a cell site router into a single integrated solution, simplifying IP/MPLS deployments and creating a better performing network.

The newest addition to our product portfolio is the WTM 4000, the highest capacity microwave radio ever produced, and purpose built for software-defined networks (“SDN.”) SDN technology is an approach to networking management that enables dynamic, programmatically efficient networking configuration in order to improve networking performance and monitoring, making it more like cloud computing than traditional networking management.

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These independent representatives may buy for resale or, in some cases, solicit orders from commercial or governmental customers for direct sales by us.

Prices to the ultimate customer in many instances may be recommended or established by the independent representative and may be above or

below our list prices.

Prices to the ultimate customer in many instances may be recommended or established by the independent representative and may be above or below our list prices.

These independent representatives generally receive a discount from our list prices and are free to set the final sales prices paid by the customer.

We have introduced a direct online sales option through our online “AviatStore” for our WTM radio platform, initially in North America and targeted at wireless internet service providers delivering broadband services in rural and underserved areas.

We provide online design tools for radio link planning and on-line ordering tools, which we fulfill directly from our AviatStore with multiple options of product available for next day shipment.

Shipments from AviatStore commenced late in 2018.

We have introduced a direct online sales option through our online “Aviat Store” for our WTM radio platform, initially in North America and targeted at wireless internet service providers delivering broadband services in rural and underserved areas.

We provide online design tools for radio link planning and on-line ordering tools, which we fulfill directly from our Aviat Store with multiple options of product available for next day shipment.

Shipments from Aviat Store commenced late in 2018.

We have repair and service centers in India, Nigeria, Ghana, Mexico, the Philippines, the United Kingdom and the United States.

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We have also been certified to the TL 9000 standard, a telecommunication industry-specific quality system standard.

Our backlog was approximately $210 million at July 3, 2020 and $160.1 million at June 28, 2019 consisting primarily of contracts or purchase orders for both product and service deliveries and extended service warranties.

Our backlog was approximately $225 million at July 2, 2021 and $210 million at July 3, 2020 consisting primarily of contracts or purchase orders for both product and service deliveries and extended service warranties.

Services include management’s initial estimate of the value of a customer’s commitment under a services contract.

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We regularly review our backlog to ensure that our customers continue to honor their purchase commitments and have the financial means to purchase and deploy our products and services in accordance with the terms of their purchase contracts.

Backlog estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidation, adjustments for revenue not materialized and adjustments for currency.

We expect to substantially fill the backlog as of July 3, 2020 during fiscal 2021, but we cannot be assured that this will occur.

Product orders in our current backlog are subject to changes in delivery schedules or to cancellation at the option of the purchaser without significant penalty.

estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidation, adjustments for revenue not materialized and adjustments for currency.

We expect to substantially deliver against the backlog as of July 2, 2021 during fiscal 2022, but we cannot be assured that this will occur.

Product orders in our current backlog are subject to changes in delivery schedules or to cancellation at the option of the purchaser without significant penalty as well as long-term projects that could take more than a year to complete.

Accordingly, although useful for scheduling production, backlog as of any particular date may not be a reliable measure of sales for any future period because of the timing of orders, delivery intervals, customer and product mix and the possibility of changes in delivery schedules and additions or cancellations of orders.

Although we have a large customer base, during any given fiscal year or quarter, a small number of customers may account for a significant portion of our revenue.

Mobile Telephone Networks Group (“MTN Group”) in Africa accounted for 11% of total revenue in fiscal 2019 and 13% in fiscal 2018.

No customer accounted for more than 10% of our revenue in fiscal 2020.

Mobile Telephone Networks Group (“MTN Group”) in Africa accounted for 11% of fiscal 2019 total revenue.

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

No customer was greater than 10% of total revenue for fiscal 2021 or 2020.

The microwave and millimeter wave wireless networking business is a specialized segment of the telecommunications industry that is sensitive to technological advancements and is extremely competitive.

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In some instances, we are dependent upon one or a few sources, either because of the specialized nature of a particular item or because of local content preference requirements pursuant to which we operate on a given project.

Examples of sole or limited source categories include metal fabrications and castings, for which we own the tooling and

therefore limit our supplier relationships, and ASIC’s and MMICs (types of integrated circuit used in manufacturing microwave radios), which we procure at volume discount from a single source.

Examples of sole or limited source categories include metal fabrications and castings, for which we own the tooling and therefore limit our supplier relationships, and ASIC’s and MMICs (types of integrated circuit used in manufacturing microwave radios), which we procure at volume discount from a single source.

Our supply chain plan includes mitigation plans for alternative manufacturing sites which would also mitigate COVID-19 risks.

Although we have been affected by performance issues of some of our suppliers and subcontractors, we have not been materially adversely affected by the inability to obtain raw materials or products.

In general, any performance issues causing short-term material shortages are within the normal frequency and impact range experienced by high-tech manufacturing companies and are due primarily to the highly technical nature of many of our purchased components.

In general, any performance issues causing short-term material shortages are within the normal frequency and impact range currently experienced by high-tech manufacturing companies and are due primarily to the highly technical nature of many of our purchased components.

Patents and Other Intellectual Property

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Our facilities and operations, in common with those of our industry in general, are subject to numerous domestic and international laws and regulations designed to protect the environment, particularly with regard to wastes and emissions.

We believe that we have complied with these requirements and that such compliance has not had a material adverse effect on our results of operations, financial condition or cash flows.

We believe that we have complied with these requirements and that such compliance has not had a material

adverse effect on our results of operations, financial condition or cash flows.

Based upon currently available information, we do not expect expenditures to protect the environment and to comply with current environmental laws and regulations over the next several years to have a material impact on our competitive or financial position but can give no assurance that such expenditures will not exceed current expectations.

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Radio communications are also subject to governmental regulation.

Equipment produced by us is subject to domestic and international requirements to avoid interference among users of radio frequencies and to permit

interconnection of telecommunications equipment.

Equipment produced by us is subject to domestic and international requirements to avoid interference among users of radio frequencies and to permit interconnection of telecommunications equipment.

We believe that we have complied with such rules and regulations with respect to our existing products, and we intend to comply with such rules and regulations with respect to our future products.

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We have a comprehensive policy and procedures in effect concerning conflict minerals compliance.

As of July 3, 2020, we employed 674 people compared with 708 people as of the end of fiscal 2019, and 704 as of the end of fiscal 2018.

As of July 3, 2020, 272 of our employees were located in the U.S.

Of the 674 employees employed as of July 3, 2020, 656 were full-time employees.

We also utilized 18 and 30 independent contractors as of July 3, 2020 and June 28, 2019, respectively.

As of July 2, 2021, we had 687 employees, compared with 674 employees at the end of fiscal 2020, and 708 employees at the end of fiscal 2019.

As of July 2, 2021, of the 687 employees, 661 were full-time employees with 278 located in the U.S.

None of our employees in the U.S.

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Chang is a Certified Public Accountant in California and holds a Bachelor of Science degree in Accounting and Computer Information Systems from Indiana University Kelley School of Business.

Tucker, 53 As Senior Vice President Americas, Mr.

Tucker is responsible for sales and services in the Americas.

Tucker joined the Company in 2005, and since, has served in a number of roles for Aviat Networks and its predecessor companies Harris Stratex Networks and Harris Microwave Communications Division (“MCD”).

For example, as senior director for North America Operations, Mr.

Tucker spearheaded major transitions in ERP systems, product lines and operational locations.

He also led the company’s post-merger systems unification with Harris MCD in 2007.

Before joining Aviat Networks, Mr.

Tucker worked for Sony Corp.

as director of Manufacturing Engineering and Maintenance for two production facilities.

Tucker has more than 24 years of experience in engineering and manufacturing operations with high-tech companies.

He has a bachelor’s degree in electrical engineering from the University of Florida, is Six Sigma Certified and has pursued postgraduate studies/research in semiconductor physics at Georgia Tech.

There is no family relationship between any of our executive officers or directors, and there are no arrangements or understandings between any of our executive officers or directors and any other person pursuant to which any of them was appointed or elected as an officer or director, other than arrangements or understandings with our directors.

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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-K

Item 1. Business