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Item 1. Financial Statements

2024-11-05 compared with 2024-05-01 · 255 added, 283 removed, 433 unchanged (55% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

(In thousands, except per share amounts) March 29,

2024 March 31,

2023 March 29,

2024 March 31,

Three Months Ended

(In thousands, except per share amounts) September 27,

2024 September 29,

Product sales $ 61,116 $ 59,545

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Selling and administrative 24,948 19,237

Restructuring (recovery) charges ( 417 ) ( 23 ) 2,227 2,855

Restructuring charges — 644

Total operating expenses 35,356 26,305

Operating income 5,028 7,496 15,569 20,087

Operating (loss) income ( 15,568 ) 4,890

Interest expense, net 1,115 99

Other expense, net 710 802

Income before income taxes 4,037 7,068 13,920 17,337

Provision for income taxes 619 2,179 3,607 9,148

Net income $ 3,418 $ 4,889 $ 10,313 $ 8,189

Net income per share of common stock outstanding:

(Loss) income before income taxes ( 17,393 ) 3,989

(Benefit from) provision for income taxes ( 5,514 ) 432

Net (loss) income $ ( 11,879 ) $ 3,557

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

Basic $ ( 0.94 ) $ 0.31

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AVIAT NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

(In thousands) March 29,

2024 March 31,

2023 March 29,

2024 March 31,

Net income $ 3,418 $ 4,889 $ 10,313 $ 8,189

Other comprehensive (loss) income:

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended

(In thousands) September 27,

2024 September 29,

Net (loss) income $ ( 11,879 ) $ 3,557

Other comprehensive income:

Net change in cumulative translation adjustments

( 341 ) 370 237 258

Other comprehensive (loss) income ( 341 ) 370 237 258

Comprehensive income $ 3,077 $ 5,259 $ 10,550 $ 8,447

Other comprehensive income 2,153 33

Comprehensive (loss) income $ ( 9,726 ) $ 3,590

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value amounts) March 29,

(In thousands, except share and par value amounts) September 27,

2024 June 28,

1 unchanged sentence

Cash and cash equivalents $ 51,034 $ 64,622

Marketable securities

Accounts receivable, net of allowances of $ 2,190 and $ 1,854

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Accrued expenses 39,137 42,148

Short-term lease liabilities 780 610

Operating lease liabilities 1,125 1,006

Advance payments and unearned revenue 79,380 58,839

Restructuring liabilities 350 600

Other current liabilities

21,234 21,614

Current portion of long-term debt

1 unchanged sentence

Long-term debt

80,980 45,954

Unearned revenue 7,522 7,413

Long-term lease liabilities 2,370 2,140

Long-term operating lease liabilities 2,782 2,823

Other long-term liabilities 407 394

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Preferred stock, $ 0.01 par value, 50.0 million shares authorized, none issued

Common stock, $ 0.01 par value, 300.0 million shares authorized, 12.6 million shares issued and outstanding at March 29, 2024;

11.5 million shares issued and outstanding at June 30, 2023

Treasury stock ( 6,479 ) ( 6,147 )

Common stock, $ 0.01 par value, 300.0 million shares authorized, 12.7 million and 12.6 million shares issued and outstanding as of September 27, 2024 and June 28, 2024, respectively.

Treasury stock 0.2 million and 0.2 million shares as of September 27, 2024 and June 28, 2024, respectively

( 6,479 ) ( 6,479 )

Additional paid-in-capital 861,023 860,071

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

(In thousands) March 29,

2024 March 31,

Three Months Ended

(In thousands) September 27,

2024 September 29,

Operating Activities

Net income $ 10,313 $ 8,189

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

Net (loss) income $ ( 11,879 ) $ 3,557

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

Depreciation of property, plant and equipment 1,317 1,168

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Inventory write-downs 501 547

Noncash lease expense 575 524

Net (gain) loss on marketable securities ( 61 ) 1,730

Non-cash lease expense 325 177

Other non-cash operating activities, net ( 37 ) 17

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Advance payments and unearned revenue 20,015 1,998

Income taxes 1,099 1,932

Income taxes payable 1,773 331

Other assets and liabilities ( 5,152 ) ( 769 )

Net cash provided by (used in) operating activities 22,229 ( 9,005 )

Net cash (used in) provided by operating activities ( 27,165 ) 13,980

Investing Activities

Purchase of property, plant and equipment ( 5,421 ) ( 717 )

Purchase of marketable securities ( 925 ) —

Proceeds from sale of marketable securities — 9,163

Proceeds from sale of asset held for sale 2,396 —

Acquisition, net of cash acquired ( 18,150 ) —

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Repayments of revolver — ( 25,200 )

Proceeds from term loan 50,000 —

Repayments of term loan ( 625 ) —

Payments of deferred financing costs ( 79 ) —

Payments for repurchase of common stock - treasury shares ( 332 ) —

Payments for taxes related to net settlement of equity awards ( 711 ) ( 105 )

2 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 1,293 ( 223 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 35,958 ( 14,438 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 12,758 ) 13,220

Cash, cash equivalents, and restricted cash, beginning of period 64,934 22,521

Cash, cash equivalents, and restricted cash, end of period $ 52,176 $ 35,741

Supplemental disclosures of cash flow information

Non-cash investing and financing activities:

Common stock issued in connection with acquisition $ 22,331 $ —

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended March 29, 2024

Three Months Ended September 27, 2024

Common Stock Treasury Stock Additional Paid-in Capital

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(In thousands) Shares $

Balance as of December 29, 2023 12,521 $ 125 $ ( 6,479 ) $ 856,735 $ ( 581,019 ) $ ( 15,426 ) $ 253,936

Net income — — — — 3,418 — 3,418

Other comprehensive loss — — — — — ( 341 ) ( 341 )

Issuance of common stock under employee stock plans 58 1 — 174 — — 175

Shares withheld for taxes related to vesting of equity awards ( 17 ) — — ( 567 ) — — ( 567 )

Stock repurchase — — — — — — —

Share-based compensation — — — 1,886 — — 1,886

Common stock issued in connection with acquisition — — — — — — —

Balance as of March 29, 2024 12,562 $ 126 $ ( 6,479 ) $ 858,228 $ ( 577,601 ) $ ( 15,767 ) $ 258,507

Three Months Ended March 31, 2023

Common Stock Treasury Stock Additional

Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Equity

(In thousands) Shares $

Balance as of December 30, 2022 11,378 $ 114 $ ( 6,147 ) $ 826,812 $ ( 596,142 ) $ ( 16,141 ) $ 208,496

Net income — — — — 4,889 — 4,889

Other comprehensive income — — — — — 370 370

Issuance of common stock under employee stock plans 71 ( 1 ) — 328 — — 327

Shares withheld for taxes related to vesting of equity awards ( 12 ) 1 — ( 367 ) — — ( 366 )

Share-based compensation — — — 1,638 — — 1,638

Balance as of March 31, 2023 11,437 $ 114 $ ( 6,147 ) $ 828,411 $ ( 591,253 ) $ ( 15,771 ) $ 215,354

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

Nine Months Ended March 29, 2024

Common Stock Treasury Stock Additional

Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Equity

(In thousands) Shares $

Balance as of June 28, 2024 12,622 $ 126 $ ( 6,479 ) $ 860,071 $ ( 578,513 ) $ ( 19,320 ) $ 255,885

Net income — — — — 10,313 — 10,313

Net loss — — — — ( 11,879 ) — ( 11,879 )

Other comprehensive income — — — — — 2,153 2,153

1 unchanged sentence

Shares withheld for taxes related to vesting of equity awards ( 26 ) — — ( 711 ) — — ( 711 )

Stock repurchase ( 11 ) — ( 332 ) — — — ( 332 )

Share-based compensation — — — 1,664 — — 1,664

Common stock issued in connection with acquisition 737 7 — 22,324 — — 22,331

Balance as of March 29, 2024 12,562 $ 126 $ ( 6,479 ) $ 858,228 $ ( 577,601 ) $ ( 15,767 ) $ 258,507

Nine Months Ended March 31, 2023

Balance as of September 27, 2024 12,676 $ 127 $ ( 6,479 ) $ 861,023 $ ( 590,392 ) $ ( 17,167 ) $ 247,112

Three Months Ended September 29, 2023

Common Stock Treasury Stock Additional

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(In thousands) Shares $

Balance as of July 1, 2022 11,161 $ 112 $ ( 6,147 ) $ 823,259 $ ( 599,442 ) $ ( 16,029 ) $ 201,753

Balance as of June 30, 2023 11,518 $ 115 $ ( 6,147 ) $ 830,048 $ ( 589,273 ) $ ( 16,004 ) $ 218,739

Net income — — — — 3,557 — 3,557

3 unchanged sentences

Share-based compensation — — — 1,834 — — 1,834

Balance as of March 31, 2023 11,437 $ 114 $ ( 6,147 ) $ 828,411 $ ( 591,253 ) $ ( 15,771 ) $ 215,354

Balance as of September 29, 2023 11,719 $ 117 $ ( 6,147 ) $ 832,060 $ ( 585,716 ) $ ( 15,971 ) $ 224,343

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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GAAP for annual consolidated financial statements.

In the opinion of the Company’s 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 nine months ended March 29, 2024 are not necessarily indicative of the results that may be expected for the full fiscal year or future operating periods.

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

The results for the three months ended September 27, 2024 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 the consolidated financial statements and footnotes thereto included in Aviat’s Annual Report on Form 10-K for the fiscal year ended June 28, 2024.

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Aviat’s fiscal year includes 52 or 53 weeks and ends on the Friday nearest to June 30.

The three months ended March 29, 2024 and March 31, 2023 both consisted of 13 weeks.

The three months ended September 27, 2024 and September 29, 2023 both consisted of 13 weeks.

Fiscal year 2025 contains 52 weeks and will end on June 27, 2025.

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Actual results may differ materially from estimates.

Revisions to Prior Period Consolidated Financial Statements

Subsequent to the third quarter of fiscal 2024, the Company identified certain errors in the quarterly financial statements for fiscal 2024.

In accordance with ASC 250, Accounting Changes and Error Corrections and Staff Accounting Bulletins (“SAB”) No.

99, Materiality and No.

108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the materiality of the errors and determined that the impacts were not material, individually or in the aggregate, to the Company’s previously issued consolidated financial

As a result, the Company has revised the prior period financial statements and related disclosures to correct the errors for comparability across all periods presented herein.

Refer to Note 15.

Revisions to Prior Period Consolidated Financial Statements of the Notes to this Form 10-Q, and Note 1.

The Company and Summary of Significant Accounting Policies and Part II, Item 9B.

Other Information of the Company’s Annual Report on Form 10-K for the fiscal year ended June 28, 2024 for further information.

Summary of Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies as of and for the nine months ended March 29, 2024, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

There have been no material changes in the Company’s significant accounting policies as of and for the three months ended September 27, 2024, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 28, 2024.

Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The ASU enhances the transparency and usefulness of income tax information through improvements to disclosures primarily related to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for the Company’s annual reporting beginning in fiscal 2026.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

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The Company is currently evaluating the impact of the ASU on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The ASU enhances the transparency and usefulness of income tax information through improvements to disclosures primarily related to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for the Company’s annual reporting beginning in fiscal 2026.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements

The Company considers the applicability and impact of all ASUs issued by the FASB.

The Company determined at this time that all other ASUs issued but not yet adopted are either not applicable or are expected to have a minimal impact on its financial position and results of operations.

Net Income Per Share of Common Stock

The following table presents the computation of basic and diluted net income per share:

Three Months Ended Nine Months Ended

(In thousands, except per share amounts) March 29,

2024 March 31,

2023 March 29,

2024 March 31,

Net income $ 3,418 $ 4,889 $ 10,313 $ 8,189

Net (Loss) Income Per Share of Common Stock

The following table presents the computation of basic and diluted net (loss) income per share:

Three Months Ended

(In thousands, except per share amounts) September 27,

2024 September 29,

Net (loss) income $ ( 11,879 ) $ 3,557

Weighted-average shares outstanding, basic

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Effect of potentially dilutive equivalent shares

224 471 282 510

Weighted-average shares outstanding, diluted

12,646 11,943

Net income per share of common stock outstanding:

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

$ ( 0.94 ) $ 0.31

$ ( 0.94 ) $ 0.30

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

Three Months Ended Nine Months Ended

(In thousands) March 29,

2024 March 31,

2023 March 29,

2024 March 31,

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:

Three Months Ended

(In thousands) September 27,

2024 September 29,

Stock options 396 259

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(In thousands)

September 27,

2024 June 28,

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however, this will have no impact on the Company’s future obligation to bill and collect.

As of March 29, 2024, the Company reported $ 49.8 million in advance payments and unearned revenue and long-term unearned revenue, of which approximately 64 % is expected to be recognized as revenue in the next twelve months and the remainder thereafter.

Approximately $ 9.2 million and $ 29.1 million, respectively, of revenue was recognized during the three and nine months ended March 29, 2024, which was included in advance payments and unearned revenue at June 30, 2023.

As of September 27, 2024, the Company reported $ 86.9 million in advance payments and unearned revenue and long-term unearned revenue, of which approximately 80 % is expected to be recognized as revenue in the next twelve months and the remainder thereafter.

Approximately $ 16.6 million of revenue was recognized during the three months ended September 27, 2024, which was included in advance payments and unearned revenue at June 28, 2024.

Remaining Performance Obligations

The aggregate amount of transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations was approximately $ 154.5 million at March 29, 2024.

The aggregate amount of transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations was approximately $ 144.8 million at September 27, 2024 relating to our long-term field service projects.

Of this amount, approximately 50 % is expected to be recognized as revenue during the next 12 months, with the remaining amount to be recognized thereafter.

The unsatisfied (or partially unsatisfied) performance obligations excludes the impact of the NEC Transaction (as defined below).

Acquisitions for further information.

The Company is in the process of reviewing the contracts acquired in connection with the NEC Transaction.

However, due to the timing of the closing of the NEC Transaction and delivery of related data, there was insufficient time to finalize the analysis for incorporation into this disclosure.

Three Months Ended Nine Months Ended

2024 March 31,

2023 March 29,

2024 March 31,

(In thousands)

Operating lease costs $ 280 $ 270 $ 765 $ 817

Short-term lease costs 1,204 490 2,667 1,507

Variable lease costs 21 12 51 92

Total lease costs

$ 1,505 $ 772 $ 3,483 $ 2,416

The weighted average lease term and discount rate as of March 29, 2024 were as follows:

Weighted average remaining lease term 6.2 years

Weighted average discount rate 5.4 %

As of March 29, 2024, future minimum lease payments under all non-cancelable operating leases with an initial term in excess of one year were as follows (in thousands):

Remainder of fiscal 2024 $ 206

Thereafter 1,235

Total lease payments 3,827

interest ( 677 )

Present value of lease liabilities $ 3,150

Balance Sheet Components

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The following provides a summary of cash, cash equivalents, and restricted cash reported within the unaudited condensed consolidated balance sheets that reconciles to the corresponding amount in the unaudited condensed consolidated statement of cash flows:

(In thousands) March 29,

(In thousands) September 27,

2024 June 28,

Cash and cash equivalents $ 51,034 $ 64,622

Restricted cash included in other assets 278 279

Total cash, cash equivalents, and restricted cash in the Statement of Cash Flows $ 58,479 $ 22,521

(In thousands) March 29,

Restricted cash included in long-term other assets 1,142 312

Total cash, cash equivalents, and restricted cash $ 52,176 $ 64,934

(In thousands) September 27,

2024 June 28,

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Total inventories $ 79,559 $ 62,267

$ 56,812 $ 33,057

Consigned inventories included within raw materials and supplies

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The Company records charges to adjust inventories due to excess and obsolete inventory resulting from lower sales forecasts, product transitioning or discontinuance.

The charges incurred during the three and nine months ended March 29, 2024 and March 31, 2023 were included in cost of product sales as follows:

Three Months Ended Nine Months Ended

The charges incurred during the three months ended September 27, 2024 and September 29, 2023 were included in cost of product sales as follows:

Three Months Ended

(In thousands)

2024 March 31,

2023 March 29,

2024 March 31,

September 27,

2024 September 29,

Excess and obsolete inventory $ 310 $ 294

Customer service inventory write-downs 191 253

Total inventory charges $ 2,404 $ 577 $ 3,589 $ 1,715

Total charges

Other Current Assets

(In thousands) March 29,

(In thousands) September 27,

2024 June 28,

Prepaid and other current assets $ 15,076 $ 13,559

Taxes 11,256 8,623

Due from related party

Contract manufacturing assets 6,610 4,894

Prepaid and other current assets 13,235 13,258

Total other current assets $ 32,942 $ 27,076

Assets Held for Sale

During the third quarter of fiscal 2024, management initiated the sale of the Company’s property located in New Zealand.

The Company expects to complete the sale within twelve months.

As of March 29, 2024, the aggregate carrying value of the assets held for sale was $ 2.7 million.

Property, Plant and Equipment, net

(In thousands) March 29,

(In thousands) September 27,

2024 June 28,

Land $ — $ 210

Buildings and leasehold improvements $ 1,302 $ 1,302

Software 17,006 16,989

Machinery and equipment 49,037 47,150

Software and equipment 73,456 69,898

Total property, plant and equipment, gross 74,758 71,200

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Total property, plant and equipment, net $ 11,883 $ 9,480

Included in the total property, plant and equipment, gross were $ 1.3 million and $ 0.4 million of assets in progress which have not been placed in service as of March 29, 2024 and June 30, 2023, respectively.

During the third quarter of fiscal 2024, $ 0.2 million of land, $ 4.7 million of buildings and improvements, and $ 2.2 million of accumulated depreciation, were reclassified from property, plant and equipment, net to Assets held for sale on the Company’s unaudited condensed consolidated balance sheets.

Included in the total property, plant and equipment, gross were $ 4.2 million and $ 4.1 million of assets in progress which have not been placed in service as of September 27, 2024 and June 28, 2024, respectively.

Depreciation expense related to property, plant and equipment, was as follows:

Three Months Ended Nine Months Ended

(In thousands) March 29,

2024 March 31,

2023 March 29,

2024 March 31,

Three Months Ended

(In thousands) September 27,

2024 September 29,

Depreciation $ 1,317 $ 1,168

Accrued Expenses

(In thousands) March 29,

(In thousands) September 27,

2024 June 28,

Project costs $ 10,342 $ 1,319

Compensation and benefits 8,690 10,368

Taxes $ 11,718 $ 8,827

Due to related party

Compensation and benefits 8,240 9,689

Project costs 7,007 14,305

Other 5,816 3,507

Warranties 3,510 2,996

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Professional fees 1,313 1,286

Other 3,782 2,482

Total accrued expenses $ 39,137 $ 42,148

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Changes in the warranty liability were as follows:

Three Months Ended Nine Months Ended

(In thousands) March 29,

2024 March 31,

2023 March 29,

2024 March 31,

Three Months Ended

(In thousands) September 27,

2024 September 29,

Balance as of the beginning of the period $ 2,996 $ 2,100

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Advance Payments and Unearned Revenue

(In thousands) March 29,

(In thousands) September 27,

2024 June 28,

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Total advance payments and unearned revenue $ 79,380 $ 58,839

Excluded from the balances above are $ 7.7 million and $ 7.4 million in long-term unearned revenue as of March 29, 2024 and June 30, 2023, respectively.

Excluded from the balances above are $ 7.5 million and $ 7.4 million in long-term unearned revenue as of September 27, 2024 and June 28, 2024, 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 estimated fair values and valuation input levels of assets and liabilities that are measured at fair value on a recurring basis as of March 29, 2024 and June 30, 2023 were as follows:

March 29, 2024 June 30, 2023 Valuation Inputs

(In thousands) Fair Value Fair Value

The estimated fair values and valuation input levels of assets and liabilities that are measured at fair value on a recurring basis as of September 27, 2024 and June 28, 2024 were as follows:

(In thousands) September 27, 2024 June 28, 2024 Valuation Inputs

Cash and cash equivalents:

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Bank certificates of deposit $ 3,574 $ 3,706 Level 2

Marketable securities

$ 988 $ 2 Level 1

Items are classified within Level 1 if quoted prices are available in active markets.

The Company’s Level 1 items are primarily money market funds and marketable securities.

As of March 29, 2024 and June 30, 2023, the money market funds were valued at $ 1.00 net asset value per share.

Marketable securities include publicly traded stock measured at fair value and classified within Level 1.

As of September 27, 2024 and June 28, 2024, the money market funds were valued at $ 1.00 net asset value per share.

Items are classified within 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.

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The carrying value of bank certificates of deposit approximates their fair value.

As of March 29, 2024 and June 30, 2023, there were no recurring assets or liabilities valued using significant unobservable inputs.

The Company did not have any recurring assets or liabilities that were valued using significant unobservable inputs.

Credit Facility and Debt

The Company entered into a Secured Credit Facility Agreement (the “Credit Facility”), dated May 9, 2023, amended as of November 22, 2023, 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 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 $ 40.0 million revolving credit facility (the “Revolver”) and a $ 50.0 million Delayed Draw Term Loan Facility (the “Term Loan”) with a maturity date of May 8, 2028.

The $ 40.0 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.

Refer to Note 16.

Subsequent Events 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 (as defined below).

Acquisitions for further information.

As of March 29, 2024, the available credit under the Revolver was $ 35.2 million, reflecting the available limit of $ 40.0 million less outstanding letters of credit of $ 4.8 million.

The Company borrowed $ 33.2 million and repaid $ 33.2 million against the Revolver during the nine months ended March 29, 2024.

As of March 29, 2024, the Company had $ 49.4 million outstanding under its Term Loan and no borrowings under its Revolver.

The following summarizes the Company’s outstanding long-term debt as of March 29, 2024:

As of September 27, 2024, the available credit under the Revolver was $ 0.7 million, reflecting the available limit of $ 5.0 million less outstanding letters of credit of $ 4.3 million.

The Company borrowed $ 35.0 million against the Revolver during the three months ended September 27, 2024.

As of September 27, 2024, the Company had $ 48.8 million outstanding under its Term Loan and $ 35.0 million outstanding under its Revolver.

The following summarizes the Company’s outstanding long-term debt as of September 27, 2024:

(In thousands)

Revolver $ 35,000

Term loan 48,750

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The pricing levels for interest rate margins are determined based on the Consolidated Total Leverage Ratio as determined and adjusted quarterly.

As of March 29, 2024, the applicable margin on Adjusted Term SOFR and Base Rate borrowings was 2.50 % and 1.50 %, respectively.

The effective rate of interest on the outstanding Term Loan borrowings as of March 29, 2024 was 7.9 %.

As of September 27, 2024, the applicable margin on Adjusted Term SOFR and Base Rate borrowings was 2.50 % and 1.50 %, respectively.

The effective rate of interest on the outstanding Term Loan and Revolver borrowings as of September 27, 2024 was 7.4 % and 7.6 %, respectively.

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.

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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 March 29, 2024, the Company was in compliance with all financial covenants contained in the Credit Facility.

As of March 29, 2024, scheduled maturities of outstanding long-term debt are as follows:

As of September 27, 2024, the Company was in compliance with all financial covenants contained in the Credit Facility.

As of September 27, 2024, scheduled maturities of outstanding long-term debt are as follows:

(In thousands)

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Restructuring

Employee Severance and Benefits

(In thousands) Fiscal 2024 Plans

Prior Years’ Plans

Accrual balance, June 30, 2023 $ — $ 600 $ 600

Charges, net 333 348 681

Cash payments ( 221 ) ( 948 ) ( 1,169 )

Accrual balance, September 29, 2023 112 — 112

Charges, net 2,000 — 2,000

Cash payments ( 580 ) — ( 580 )

Accrual balance, December 29, 2023 $ 1,532 $ — $ 1,532

Charges (recoveries), net ( 635 ) 214 ( 421 )

The following table summarizes restructuring related activities during the three months ended September 27, 2024:

(In thousands) Employee Severance and Benefits Facilities and Other Total

Balance as of June, 28, 2024 $ 1,718 $ — $ 1,718

Cash payments ( 80 ) — ( 80 )

Accrual balance, March 29, 2024 350 — 350

As of March 29, 2024, the accrual balance of $ 0.4 million was classified as current.

Fiscal 2024 Plans

During fiscal 2024, the Company’s Board of Directors approved restructuring plans, primarily associated with the NEC Transaction (as defined below) and reductions in workforce in certain of the Company’s operations to optimize skill sets and align cost structure.

The fiscal 2024 plans are expected to be completed through the end of calendar 2024.

Balance as of September, 27, 2024 $ 1,638 $ — $ 1,638

As of September 27, 2024, the accrued restructuring balance of $ 1.6 million was included in other current liabilities on the unaudited condensed consolidated balance sheets.

Included in the above were positions identified for termination that have not been executed from a restructuring perspective.

Prior Years’ Plans

Activities under the prior years’ plans primarily included reductions in workforce across the Company, associated with the acquisition of Redline (as defined below) and certain of the Company’s operations outside the United States.

Payments related to the accrued restructuring balance for these plans are complete.

The fiscal 2024 plans are expected to be completed through the end of fiscal 2025.

Stockholders’ Equity

1 unchanged sentence

In November 2021, the Company’s Board of Directors approved a stock repurchase program to purchase up to $ 10.0 million of the Company’s common stock.

As of March 29, 2024, $ 6.9 million remains available and Aviat may choose to suspend or discontinue the repurchase program at any time.

As of September 27, 2024, $ 6.9 million remains available and Aviat may choose to suspend or discontinue the repurchase program at any time.

Repurchased shares are recorded as treasury stock.

During the third quarter of fiscal 2024, the Company did not repurchase any shares of its common stock.

During the nine months ended March 29, 2024, the Company repurchased 11,208 shares of its common stock in the open market for an aggregate purchase price, including commissions, of $ 0.3 million.

During the first quarter of fiscal 2025, the Company did not repurchase any shares of its common stock.

Stock Incentive Programs

As of March 29, 2024, the Company had one stock incentive plan for its employees and non-employee directors, the 2018 Incentive Plan (the “2018 Plan”).

As of September 27, 2024, the Company had one stock incentive plan for its employees and non-employee directors, the 2018 Incentive Plan (the “2018 Plan”).

The 2018 Plan provides for the issuance of share-based awards in the form of stock options, stock appreciation rights, restricted stock awards and units, and performance share awards and units.

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Vesting of performance share awards and units is subject to the achievement of predetermined financial performance and share price criteria, and continued employment through the end of the applicable period.

During the nine months ended March 29, 2024, the Company granted 100,689 restricted stock units, 64,643 performance share awards and 151,094 stock options.

During the three months ended September 27, 2024, the Company granted 9,140 restricted stock units.

The Company recognizes compensation cost for share-based payment awards on a straight-line basis over the requisite service period.

2 unchanged sentences

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

Three Months Ended Nine Months Ended

(In thousands) March 29,

2024 March 31,

2023 March 29,

2024 March 31,

Three Months Ended

(In thousands) September 27,

2024 September 29,

By Expense Category:

6 unchanged sentences

Restricted stock and performance share awards and units

1,478 1,592 4,372 4,273

Total share-based compensation expense $ 1,664 $ 1,834

As of March 29, 2024, there was approximately $ 2.7 million of total unrecognized compensation expense related to non-vested stock options granted which is expected to be recognized over a weighted-average period of 1.9 years.

As of March 29, 2024, there was $ 8.2 million of total unrecognized compensation expense related to non-vested stock awards which is expected to be recognized over a weighted-average period of 1.5 years.

As of September 27, 2024, there was approximately $ 1.8 million of total unrecognized compensation expense related to non-vested stock options granted which is expected to be recognized over a weighted-average period of 1.7 years.

As of September 27, 2024, there was $ 5.9 million of total unrecognized compensation expense related to non-vested stock awards which is expected to be recognized over a weighted-average period of 1.5 years.

Segment and Geographic Information

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The Company reports revenue by region and country based on the location where its customers accept delivery of products and services.

Revenue by region for the three and nine months ended March 29, 2024 and March 31, 2023 was as follows:

Three Months Ended Nine Months Ended

(In thousands) March 29,

2024 March 31,

2023 March 29,

2024 March 31,

Revenue by region for the three months ended September 27, 2024 and September 29, 2023 was as follows:

Three Months Ended

(In thousands) September 27,

2024 September 29,

North America

6 unchanged sentences

The Company’s effective tax rate varies from the U.S.

federal statutory rate of 21% primarily due to non-deductible transaction costs, global intangible low-taxed income inclusion (GILTI) in the U.S., state taxes and certain jurisdictions where the tax benefit on prior year losses were not recognized.

During interim periods, tax expenses are accrued for jurisdictions that are anticipated to be profitable for fiscal 2024.

The determination of income taxes for the nine months ended March 29, 2024 and March 31, 2023 was based on the Company’s estimated annual effective tax rate adjusted for losses in certain jurisdictions for which no tax benefit can be recognized.

Tax expense for the nine months ended March 29, 2024 was primarily due to tax expense related to U.S.

federal statutory rate of 21% primarily due to U.S.

global intangible low-taxed income inclusion (GILTI), state taxes, stock-based compensation and foreign operations that are subject to income taxes at different statutory rates.

During interim periods, tax expense or benefit are accrued for jurisdictions that are anticipated to be profitable for fiscal 2025.

The determination of income taxes for the three months ended September 27, 2024 and September 29, 2023 was based on the Company’s estimated annual effective tax rate adjusted for losses in certain jurisdictions for which no tax benefit can be recognized.

The tax benefit for the three months ended September 27, 2024 was primarily due to tax benefit resulting from year-to-date losses.

The tax expense for the three months ended September 29, 2023 was primarily due to tax expense related to U.S.

and profitable foreign subsidiaries.

Tax expense for the nine months ended March 31, 2023 was primarily due to tax expense related to U.S.

and profitable foreign subsidiaries, including deferred tax expense associated with the acquisition of Redline in July 2022 and the subsequent multi-step restructuring plan in which two Canadian Redline corporations converted to unlimited liability companies and then amalgamated by the end of September 2022.

The Company has a number of years with open tax audits which vary from jurisdiction to jurisdiction.

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Interest and penalties related to unrecognized tax benefits are accounted for as part of the provision for federal, foreign, and state income taxes.

Such interest expense was not material for the nine months ended March 29, 2024 and March 31, 2023.

Such interest expense was not material for the three months ended September 27, 2024 and September 29, 2023.

On March 11, 2021, the US enacted the American Rescue Plan Act of 2021 (“ARPA”) which expands Section 162(m) to cover the next five most highly compensated employees for the taxable year, in addition to the “covered employees” effective for taxable years beginning after December 31, 2026.

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The Company will continue to evaluate the applicability and effect of the IRA as more guidance is issued.

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.

4RF 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.

The Company is in the process of determining the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed.

The preliminary estimated fair value of the assets acquired and liabilities assumed consisted of working capital of $ 5.6 million, other assets and liabilities of $ 1.6 million, intangible assets of $ 8.5 million, and goodwill of $ 2.5 million.

The goodwill from this acquisition is non-deductible for tax purposes.

NEC’s Wireless Transport Business

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Aggregate consideration transferred at closing was approximately $ 54.5 million, which is subject to certain post-closing adjustments.

The Company estimates additional cash consideration of approximately $ 22.4 million will be transferred to NEC in the first quarter of fiscal 2025, primarily related to settlement of the post-closing working capital adjustment.

As of March 29, 2024, the accrual balance related to the estimated additional consideration was included in other current liabilities on the unaudited condensed consolidated balance sheets.

As of September 27, 2024, the Company recorded accruals of approximately $ 19.6 million in estimated additional cash consideration, which is included in other current liabilities on the unaudited condensed consolidated balance sheets.

The additional consideration is primarily related to the settlement of the post-closing working capital adjustment, and is expected to be transferred to NEC in the second quarter of fiscal 2025.

The Company funded the cash portion of the consideration with Term Loan borrowings under its Credit Facility.

1 unchanged sentence

The NEC Transaction was accounted for as a business combination using the acquisition method of accounting.

The Company is in the process of identifying the amounts assigned to certain assets, including the acquired intangible assets and goodwill for the acquisition.

The Company is in the process of obtaining independent third-party valuations of certain intangible and tangible assets acquired.

The Company is in the process of obtaining final independent third-party valuations of certain intangible and tangible assets acquired.

The fair values of the acquired intangible assets are based on estimates and assumptions that are considered reasonable by the Company.

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The goodwill from this acquisition is expected to be fully deductible for tax purposes.

Transaction costs related to the acquisition were expensed as incurred and are included in selling and administrative expenses in the consolidated statements of operations.

For the three and nine months ended March 29, 2024, the Company incurred transaction costs of $ 1.3 million and $ 7.7 million, respectively.

A summary of the preliminary purchase price allocation is as follows:

12 unchanged sentences

Net assets acquired $ 74,088

The preliminary purchase price allocation has been updated for certain measurement period adjustments based on revised estimates of fair value, which primarily resulted in a $ 1.4 million decrease in inventories and a $ 1.5 million decrease in identifiable finite-lived intangible assets acquired.

The adjustments resulted in corresponding increases to goodwill.

The preliminary purchase price allocation is subject to adjustment based on the Company obtaining final independent third-party valuations, determining fair value and allocations of purchase price to the identifiable assets acquired and liabilities assumed, and determining the final consideration, including adjustments related to settlement of the final post-closing working capital adjustment.

Revenue and operating loss associated with the NEC Transaction included in the consolidated statements of operations for the three months ended March 29, 2024 were $ 22.5 million and $( 0.4 ) million, respectively.

Revenue and operating loss associated with the NEC Transaction included in the consolidated statements of operations from the acquisition date to the period ending March 29, 2024 were $ 29.8 million and $( 1.2 ) million, respectively.

The following unaudited supplemental pro forma information has been presented as if the NEC Transaction occurred at the beginning of fiscal 2023 and includes certain pro forma adjustments for interest expense, depreciation and amortization expense, the fair value of acquired inventory, and transaction costs, net of income tax:

Three Months Ended Nine Months Ended

2024 March 31,

2023 March 29,

2024 March 31,

Revenue $ 111,613 $ 139,094 $ 379,128 $ 408,358

Net income (loss) 4,393 7,812 18,765 ( 1,214 )

The unaudited pro forma information presented above is for informational purposes only and is not necessarily indicative of the operating results that would have occurred if the NEC Transaction occurred at the beginning of fiscal 2023, nor is it necessarily indicative of future operating results.

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”), a leading provider of mission-critical data infrastructure, for a purchase price of $ 20.4 million.

Acquisitions to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for the final purchase price allocation, valuation methodology, and other information related to the completion of the Redline acquisition.

The preliminary purchase price allocation has been updated for certain measurement period adjustments based on revised estimates of fair value, which primarily resulted in a $ 6.8 million decrease in accounts receivables, a $ 4.9 million decrease in inventories, a $ 6.8 million increase in identifiable finite-lived intangible assets acquired and a $ 4.9 million increase to goodwill.

The preliminary purchase price allocation is subject to adjustment based on the Company obtaining final independent third-party valuations, determining fair value and final allocations of purchase price to the identifiable assets acquired and liabilities assumed, and determining the final consideration, including adjustments related to settlement of the final post-closing working capital adjustment.

Revenue and operating income associated with the NEC Transaction included in the consolidated statements of operations for the three months ended September 27, 2024 were $ 25.0 million and $ 1.0 million, respectively.

Commitments and Contingencies

Purchase Orders and Other Commitments

From time to time in the normal course of business, the Company may enter into purchasing agreements with its suppliers that require the Company to accept delivery of and remit full payment for finished products that it has ordered, finished products that it requested be held as safety stock, and work in process started on its behalf, in the event it cancels or terminates the purchasing agreement.

From time to time in the normal course of business, the Company may enter into purchasing agreements with its suppliers that require the Company to accept delivery of and remit full payment for (i) finished products that it has ordered, (ii) finished products that it requested be held as safety stock, and (iii) work in process started on its behalf, in the event it cancels or terminates 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 the Company has no present intention to cancel or terminate any of these agreements, the Company currently does not believe that it has any future liability under these agreements.

As of March 29, 2024, the Company had outstanding purchase obligations with its suppliers or contract manufacturers of $ 53.5 million.

In addition, the Company had contractual obligations of approximately $ 4.4 million associated with software licenses.

As of September 27, 2024, the Company had outstanding purchase obligations with its suppliers or contract manufacturers of $ 72.0 million.

In addition, the Company had purchase obligations of approximately $ 5.3 million associated with software as a service and software maintenance support.

Financial Guarantees and Commercial Commitments

1 unchanged sentence

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 March 29, 2024, the Company had no guarantees applicable to its debt arrangements.

As of September 27, 2024, the Company had no guarantees applicable to its debt arrangements.

The Company has 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 March 29, 2024, the Company had commercial commitments outstanding of $ 16.6 million, that were not recorded on the unaudited condensed consolidated balance sheets.

The Company does 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 these performance guarantees in the future.

As of September 27, 2024, the Company had commercial commitments outstanding of $ 19.7 million, that were not recorded on the unaudited condensed consolidated balance sheets.

The Company does 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 these performance guarantees in the future.

The following table presents details of the Company’s commercial commitments:

(In thousands)

September 27,

Letters of credit $ 4,292

1 unchanged sentence

Under the terms of substantially all of the Company’s license agreements, it has agreed to defend and pay any final judgment against its customers arising from claims against such customers that the Company’s products infringe the intellectual property rights of a third party.

As of March 29, 2024, the Company has not received any notice that any customer is subject to an infringement claim arising from the use of its products;

As of September 27, 2024, the Company has not received any notice that any customer is subject to an infringement claim arising from the use of its products;

the Company has not received any request to defend any customers from infringement claims arising from the use of its products;

1 unchanged sentence

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, the Company cannot estimate the maximum amount of potential future payments, if any, related to its indemnification provisions.

As of March 29, 2024, the Company had not recorded any liabilities related to these indemnifications.

As of September 27, 2024, the Company had not recorded any liabilities related to these indemnifications.

Legal Proceedings

19 unchanged sentences

In March 2024, the Company appeared before the Joint Director of Enforcement to review the transactions at issue.

No subsequent hearing date has been scheduled as of March 29, 2024.

No subsequent

hearing date has been scheduled as of September 27, 2024.

The Company has accrued an immaterial amount representing the estimated probable loss for which it would settle the matter.

The Company currently cannot form an estimate of the range of

loss in excess of its amounts already accrued.

The Company currently cannot form an estimate of the range of loss in excess of its amounts already accrued.

If the outcome of this matter is greater than the current immaterial amount accrued, the Company intends to dispute it vigorously.

8 unchanged sentences

(In thousands)

September 27,

2024 June 28,

Goodwill $ 15,153 $ 8,217

The Company recognized goodwill of $ 3.1 million associated with the NEC Transaction, based on the preliminary estimated fair value of the assets acquired and liabilities assumed.

The $ 6.9 million increase for the three months ended September 27, 2024 is associated with the preliminary purchase price allocations for the 4RF acquisition and the NEC Transaction.

Refer to Note 11.

Acquisitions for further information.

2 unchanged sentences

(In thousands except useful life)

Useful life in Years March 29,

Useful life in Years September 27,

2024 June 28,

3 unchanged sentences

Customer relationships 14 — 15

22,123 11,530

Trade names 16 1,330 1,330

2 unchanged sentences

Total net intangible assets $ 28,754 $ 13,644

Amortization of finite-lived intangibles for the three and nine months ended March 29, 2024 was $ 0.2 million and $ 0.7 million, respectively, and is included in selling and administrative expenses.

There were no impairment charges recorded for the three and nine months ended March 29, 2024 and March 31, 2023.

As of March 29, 2024, the estimated future amortization expense of finite-lived intangible assets is as follows (in thousands):

Amortization of finite-lived intangibles for the three months ended September 27, 2024 was $ 0.5 million and is included in selling and administrative expenses.

There were no impairment charges recorded for the three months ended September 27, 2024.

As of September 27, 2024, the estimated future amortization expense of finite-lived intangible assets is as follows (in thousands):

Remainder of 2025 $ 2,449

3 unchanged sentences

NEC Corporation

On November 30, 2023, the Company completed the NEC Transaction.

On November 30, 2023 (the “Closing Date”), the Company completed the NEC Transaction.

Acquisitions for further information.

A portion of the total consideration in the NEC Transaction included the issuance of 736,750 shares in Company common stock to NEC.

On the Closing Date, the Company and NEC entered into a Registration Rights and Lock-Up Agreement, restricting NEC’s ability to transfer shares (the “Lock-Up”), except for certain limited exceptions as provided in the Registration Rights and Lock-Up Agreement, until one day after the one-year anniversary of the Closing Date (the “Initial Lock-Up Expiration Date”).

The Company and NEC entered into a Registration Rights and Lock-Up Agreement, restricting NEC’s ability to transfer shares (the “Lock-Up”), except for certain limited exceptions as provided in the Registration Rights and Lock-Up Agreement, until one day after the one-year anniversary of the Closing Date (the “Initial Lock-Up Expiration Date”).

Starting one day after the Initial Lock-Up Expiration Date, one-twelfth of the issued shares shall be released from the Lock-Up each month, such that all issued shares shall be released from Lock-Up by the two-year anniversary of the Closing Date.

Pursuant to the Purchase Agreement, NEC will have the right to nominate a director to the Company’s Board of Directors from the Closing Date and for a period of two years thereafter.

As of March 29, 2024, NEC holds approximately 5.9 % of the Company’s outstanding common stock.

As of September 27, 2024, NEC held approximately 5.8 % of the Company’s outstanding common stock.

In connection with the closing of the NEC Transaction and as of the Closing Date, the Company and NEC entered into agreements covering the performance of certain post-closing services and licensing arrangements.

6 unchanged sentences

The licensing agreements are royalty-free and perpetual.

For the three and nine months ended March 29, 2024, the Company made aggregate inventory purchases from NEC of $ 4.8 million.

For the three months ended March 29, 2024, the Company incurred expenses of $ 1.2 million for transition services and $ 3.2 million for research and development services.

For the nine months ended March 29, 2024, the Company incurred expenses of $ 2.2 million for transition services and $ 4.3 million for research and development services.

As of March 29, 2024, the Company had outstanding related party receivable balances due from NEC of $ 4.7 million, of which $ 0.5 million is included in accounts receivable, net and $ 4.2 million is included in other current assets on the unaudited condensed consolidated balance sheets.

As of March 29, 2024, the Company had outstanding related party payable balances due to NEC of $ 12.9 million, of which $ 8.6 million is included in accounts payable and $ 4.3 million is included in accrued expenses on the unaudited condensed consolidated balance sheets.

A summary of the related party activity between the Company and NEC during the three months ended September 27, 2024 is as follows:

(In thousands)

Transition services received $ 745

Research and development services received 3,013

Purchase of inventories 8,293

As of September 27, 2024, the Company’s outstanding related party balances with NEC included in the unaudited condensed consolidated balance sheets are as follows:

(In thousands)

Accounts receivable, net $ 4,822

Accounts payable 11,878

Other current liabilities 19,596

Revisions to Prior Period Consolidated Financial Statements

As described in Note 1.

The Company and Basis of Presentation, subsequent to the third quarter of fiscal 2024, the Company identified certain errors in the quarterly financial statements for fiscal 2024 related to estimated total contract costs and progress to completion for an over-time arrangement.

The Company identified additional errors impacting the quarterly financial statements for fiscal 2024 related to the recognition of revenue prior to performance obligations being met and related to journal entries recorded in error.

In accordance with ASC 250, Accounting Changes and Error Corrections and Staff Accounting Bulletins (“SAB”) No.

99, Materiality and No.

The Company has revised the prior period financial statements and related disclosures for the first quarter of fiscal 2024 to correct the errors.

A summary of the corrections to the impacted financial statement line items in the Company’s previously issued Consolidated Statements of Operations, Comprehensive Income, Equity and Cash Flows for the three months ended September 29, 2023 is provided below.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Three Months Ended September 29, 2023

(In thousands, except per share amounts) As Previously Reported

Services $ 28,021 $ ( 657 ) $ 27,364

Total revenues 87,566 ( 657 ) 86,909

Gross margin 31,852 ( 657 ) 31,195

Operating income 5,547 ( 657 ) 4,890

Income before income taxes 4,646 ( 657 ) 3,989

Provision for income taxes 641 ( 209 ) 432

Net income $ 4,005 $ ( 448 ) $ 3,557

Net income per share of common stock outstanding:

Basic $ 0.35 $ ( 0.04 ) $ 0.31

Diluted $ 0.34 $ ( 0.04 ) $ 0.30

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Three Months Ended September 29, 2023

(In thousands) As Previously Reported

Net income $ 4,005 $ ( 448 ) $ 3,557

Comprehensive income $ 4,038 $ ( 448 ) $ 3,590

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Three Months Ended September 29, 2023

(In thousands) As Previously Reported

Operating Activities

Net income $ 4,005 $ ( 448 ) $ 3,557

Deferred taxes 39 ( 209 ) ( 170 )

Unbilled receivables ( 2,395 ) 657 ( 1,738 )

Net cash provided by operating activities 13,980 — 13,980

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited)

Three Months Ended September 29, 2023

Accumulated Deficit Total Equity

(In thousands)

As Previously Reported

Balance as of June 30, 2023

$ ( 587,914 ) $ 220,098

Net income 4,005 4,005

Balance as of September 29, 2023

$ ( 583,909 ) $ 226,150

Balance as of June 30, 2023

$ ( 1,359 ) $ ( 1,359 )

Net income ( 448 ) ( 448 )

Balance as of September 29, 2023

$ ( 1,807 ) $ ( 1,807 )

Balance as of June 30, 2023

$ ( 589,273 ) $ 218,739

Net income 3,557 3,557

Balance as of September 29, 2023

$ ( 585,716 ) $ 224,343

Subsequent Events

Credit Facility Amendment

On October 18, 2024, the Company entered into a Second Amendment to Credit Agreement (the “Credit Facility Amendment”), 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 Amendment amends and modifies that certain Credit Facility dated May 9, 2023.

The Credit Facility Amendment provided for changes and modifications to the Credit Facility, which include, among other things, (i) changes to certain payment term mechanics, (ii) a commitment to make term loans in the aggregate principal amount of $ 75.0 million for the purpose of refinancing the Term Loan currently outstanding under the Credit Facility, and (iii) an increase in the Revolver to $ 75.0 million in the aggregate.

Refer to Note 6.

Credit Facility and Debt for further information.

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