10-Q 1 avnw-20220401.htm 10-Q avnw-20220401
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
________________________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______           
Commission File Number 001-33278

  AVIAT NETWORKS, INC.
(Exact name of registrant as specified in its charter)

Delaware 20-5961564
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
200 Parker Drive, Suite C100A, Austin,Texas 78728
(Address of principal executive offices) (Zip Code)
(408) 941-7100
(Registrant’s telephone number, including area code)

__________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which Registered
Common StockAVNWThe Nasdaq Global Select Market
Indicate by checkmark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  
The number of shares outstanding of the registrant’s Common Stock as of April 29, 2022 was 11,166,918



AVIAT NETWORKS, INC.
QUARTERLY REPORT ON FORM 10-Q
For the Quarterly Period Ended April 1, 2022
Table of Contents
 Page
3



PART I.     FINANCIAL INFORMATION
4



Item 1.Financial Statements
AVIAT NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and par value amounts)April 1,
2022
July 2,
2021
ASSETS
Current Assets:
Cash and cash equivalents$31,296 $47,942 
Accounts receivable, net76,150 48,135 
Unbilled receivables45,700 37,521 
Inventories28,669 23,436 
Customer service inventories1,807 1,431 
Assets held for sale 2,218 
Other current assets12,984 9,556 
Total current assets196,606 170,239 
Property, plant and equipment, net9,522 11,701 
Deferred income taxes98,002 103,467 
Right of use assets3,196 3,816 
Marketable securities2,515  
Other assets9,841 8,430 
TOTAL ASSETS
$319,682 $297,653 
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable$40,634 $32,405 
Accrued expenses25,392 28,154 
Short-term lease liabilities565 769 
Advance payments and unearned revenue38,066 32,304 
Restructuring liabilities999 2,737 
Total current liabilities105,656 96,369 
Unearned revenue7,604 8,592 
Long-term lease liabilities2,786 3,223 
Other long-term liabilities324 356 
Reserve for uncertain tax positions5,396 5,164 
Deferred income taxes586 614 
Total liabilities122,352 114,318 
Commitments and contingencies (Note 12)
Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued
  
Common stock, $0.01 par value, 300,000,000 shares authorized, 11,166,918 shares issued and outstanding at April 1, 2022; 11,153,445 shares issued and outstanding at July 2, 2021
112 112 
Treasury stock(5,398)(787)
Additional paid-in-capital821,976 818,939 
Accumulated deficit(603,975)(620,602)
Accumulated other comprehensive loss(15,385)(14,327)
Total equity197,330 183,335 
TOTAL LIABILITIES AND EQUITY
$319,682 $297,653 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
5



AVIAT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months EndedNine Months Ended
(In thousands, except per share amounts)April 1,
2022
April 2,
2021
April 1,
2022
April 2,
2021
Revenues:
Revenue from product sales$52,047 $45,246 $156,361 $136,401 
Revenue from services22,469 21,158 69,177 66,824 
Total revenues74,516 66,404 225,538 203,225 
Cost of revenues:
Cost of product sales31,850 26,456 97,789 81,823 
Cost of services15,130 14,370 45,976 44,666 
Total cost of revenues46,980 40,826 143,765 126,489 
Gross margin27,536 25,578 81,773 76,736 
Operating expenses:
Research and development expenses5,259 5,275 17,338 15,541 
Selling and administrative expenses14,867 15,106 41,304 41,555 
Restructuring (recovery) charges(72)1,162 (373)1,162 
Total operating expenses20,054 21,543 58,269 58,258 
Operating income7,482 4,035 23,504 18,478 
Other expense (income), net175 (128)387 (201)
Income before income taxes7,307 4,163 23,117 18,679 
Provision for (benefit from) income taxes1,278 (90,568)6,490 (88,629)
Net income$6,029 $94,731 $16,627 $107,308 
Net income per share of common stock outstanding:
Basic$0.54 $8.49 $1.49 $9.76 
Diluted$0.51 $8.00 $1.40 $9.31 
Weighted-average shares outstanding:
Basic11,173 11,152 11,172 10,994 
Diluted11,761 11,842 11,848 11,532 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
6



AVIAT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months EndedNine Months Ended
(In thousands)April 1,
2022
April 2,
2021
April 1,
2022
April 2,
2021
Net income$6,029 $94,731 $16,627 $107,308 
Other comprehensive (loss) income:
Net change in cumulative translation adjustments
(786)(284)(1,058)314 
Other comprehensive (loss) income(786)(284)(1,058)314 
Comprehensive income$5,243 $94,447 $15,569 $107,622 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

7



AVIAT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months Ended
(In thousands)April 1,
2022
April 2,
2021
Operating Activities
Net income$16,627 $107,308 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization of property, plant and equipment3,444 4,016 
(Recoveries) Provision for uncollectible receivables(56)46 
Share-based compensation2,464 2,154 
Deferred tax assets, net5,437 (89,732)
Charges for inventory and customer service inventory write-downs1,140 1,148 
(Gain) loss on disposition of property, plant and equipment, net(66)6 
Noncash lease expense620 581 
Net gain on marketable securities(23) 
Restructuring (recoveries) charges(373)1,162 
Changes in operating assets and liabilities:
Accounts receivable(28,252)(3,507)
Unbilled receivables(8,446)(15,389)
Inventories(5,634)(8,365)
Customer service inventories(1,061)(684)
Accounts payable7,934 5,400 
Accrued expenses(569)(249)
Advance payments and unearned revenue4,719 12,077 
Income taxes payable or receivable(1,400)(317)
Other assets and liabilities(6,652)(818)
Change in lease liabilities(641)(650)
Net cash (used in) provided by operating activities(10,788)14,187 
Investing Activities
Payments for acquisition of property, plant and equipment(1,028)(2,399)
Purchase of marketable securities(2,492) 
Proceeds from sale of asset held for sale2,284  
Net cash used in investing activities(1,236)(2,399)
Financing Activities
Repayments of borrowings (9,000)
Payments for repurchase of common stock - treasury shares(4,611)(458)
Payments for taxes related to net settlement of equity awards(358)(167)
Proceeds from issuance of common stock under employee stock plans931 1,889 
Net cash used in financing activities(4,038)(7,736)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(663)140 
Net (decrease) increase in cash, cash equivalents, and restricted cash(16,725)4,192 
Cash, cash equivalents, and restricted cash, beginning of period48,198 41,872 
Cash, cash equivalents, and restricted cash, end of period$31,473 $46,064 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
8



AVIAT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
Three Months Ended April 1, 2022
Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated DeficitAccumulated Other Comprehensive LossTotal Equity
(In thousands, except share amounts)Shares$
Amount
Balance as of December 31, 202111,195,542 $112 $(3,408)$820,791 $(610,004)$(14,599)$192,892 
Net income— — — — 6,029 — 6,029 
Other comprehensive loss, net of tax— — — — — (786)(786)
Issuance of common stock under employee stock plans37,327 1 — 345 — — 346 
Stock repurchase(65,951)(1)(1,990)— — — (1,991)
Share-based compensation— — — 840 — — 840 
Balance as of April 1, 202211,166,918 $112 $(5,398)$821,976 $(603,975)$(15,385)$197,330 

Three Months Ended April 2, 2021
Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated DeficitAccumulated Other Comprehensive LossTotal Equity
(In thousands, except share amounts)Shares$
Amount
Balance as of January 1, 202111,119,536 $111 $ $816,988 $(718,164)$(14,371)$84,564 
Net income— — — — 94,731 — 94,731 
Other comprehensive loss, net of tax— — — — — (284)(284)
Issuance of common stock under employee stock plans54,324 1 — 401 — — 402 
Shares withheld for taxes related to vesting of equity awards (1,366)— — 1 — — 1 
Stock repurchase(8,300)— (458)— — — (458)
Share-based compensation— — — 765 — — 765 
Balance as of April 2, 202111,164,194 $112 $(458)$818,155 $(623,433)$(14,655)$179,721 

9




Nine Months Ended April 1, 2022
Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated DeficitAccumulated Other Comprehensive LossTotal Equity
(In thousands, except share amounts)Shares$
Amount
Balance as of July 2, 202111,153,445 $112 $(787)$818,939 $(620,602)$(14,327)$183,335 
Net income— — — — 16,627 — 16,627 
Other comprehensive income, net of tax— — — — — (1,058)(1,058)
Issuance of common stock under employee stock plans172,996 2 — 931 — — 933 
Shares withheld for taxes related to vesting of equity awards (10,134)— — (358)— — (358)
Stock repurchase(149,389)(2)(4,611)— — — (4,613)
Share-based compensation— — — 2,464 — — 2,464 
Balance as of April 1, 202211,166,918 $112 $(5,398)$821,976 $(603,975)$(15,385)$197,330 


Nine Months Ended April 2, 2021
Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated DeficitAccumulated Other Comprehensive LossTotal Equity
(In thousands, except share amounts)Shares$
Amount
Balance as of July 3, 202010,792,674 $108 $ $814,283 $(730,741)$(14,969)$68,681 
Net income— — — — 107,308 — 107,308 
Other comprehensive loss, net of tax— — — — — 314 314 
Issuance of common stock under employee stock plans393,354 4 — 1,885 — — 1,889 
Shares withheld for taxes related to vesting of equity awards (13,534)— — (167)— — (167)
Stock repurchase(8,300)(458)— — (458)
Share-based compensation— — — 2,154 — — 2,154 
Balance as of April 2, 202111,164,194 $112 $(458)$818,155 $(623,433)$(14,655)$179,721 



See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



10



AVIAT NETWORKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. The Company and Basis of Presentation
The Company
Aviat Networks, Inc. (the “Company,” “we,” “us,” and “our”) designs, manufactures, and sells a range of wireless networking solutions and services to mobile and fixed telephone service providers, private network operators, government agencies, transportation and utility companies, public safety agencies, and broadcast system operators across the globe. 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, 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. GAAP for annual consolidated financial statements. 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 nine months ended April 1, 2022 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 our Annual Report on Form 10-K for the fiscal year ended July 2, 2021.
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. All intercompany transactions and accounts have been eliminated.
We operate on a 52-week or 53-week year ending on the Friday closest to June 30. The three months ended April 1, 2022 and the three months ended April 2, 2021 both consisted of 13 weeks. Fiscal year 2022 will be comprised of 52 weeks and will end on July 1, 2022. Fiscal year 2021 was comprised of 52 weeks and ended on July 2, 2021.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates, assumptions and judgments affecting the amounts reported and related disclosures. Estimates are based upon historical factors, current circumstances and the experience and judgment of our management. We evaluate our estimates and assumptions on an ongoing basis and may employ outside experts to assist us in making these evaluations. Changes in such estimates, based on more accurate information, or different assumptions or conditions, may affect amounts reported in future periods. Such estimates affect significant items, including revenue recognition, provision for uncollectible receivables, inventory valuation, valuation allowances for deferred tax assets, uncertainties in income taxes, contingencies and recoverability of long-lived assets. 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 April 1, 2022 and for the nine months ended April 1, 2022, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 2, 2021.
Accounting Standards Adopted
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740). This guidance simplifies the accounting for income taxes by removing certain
11



exceptions to the general principles and also simplifies areas such as franchise taxes, step-up in tax basis of goodwill, separate entity financial statements and interim recognition of enactment of tax laws and rate changes. ASU 2019-12 became effective for us in our first quarter of fiscal 2022. The adoption had no material impact on our unaudited condensed consolidated financial statements.
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. The adoption of ASU 2020-04 will not have a material impact on our unaudited condensed consolidated financial statements..
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): 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). 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 adopting Topic 326 will have on our unaudited condensed consolidated financial statements.
Note 2. Balance Sheet Components
Cash, Cash Equivalents, and Restricted Cash
The following table provides a summary of our cash, cash equivalents, and restricted cash reported within our unaudited condensed consolidated balance sheets that reconciles to the corresponding amount in our unaudited condensed consolidated statement of cash flows:

(In thousands)April 1,
2022
July 2,
2021
Cash and cash equivalents$31,296 $47,942 
Restricted cash included in other assets177 256 
Total cash, cash equivalents, and restricted cash in the Statement of Cash Flows$31,473 $48,198 
Accounts Receivable, net
Our net accounts receivable are summarized below:
(In thousands)April 1,
2022
July 2,
2021
Accounts receivable$77,484 $50,276 
Less: Allowances for collection losses(1,334)(2,141)
Total accounts receivable, net$76,150 $48,135 
Inventories
Our inventories are summarized below
(In thousands)April 1,
2022
July 2,
2021
Finished products$16,994 $15,409 
Raw materials and supplies11,675 8,027 
Total inventories
$28,669 $23,436 
Consigned inventories included within raw materials and supplies
$11,098 $6,570 

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We increased certain levels of inventory during the three and nine months ended April 1, 2022 primarily to mitigate supply chain constraints.
We currently rely on a few vendors for substantially all of our inventory purchases.
We record charges to adjust our inventory and customer service inventory due to excess and obsolete inventory resulting from lower sales forecasts, product transitioning, or discontinuance. The charges during the three and nine months ended April 1, 2022 and April 2, 2021 were classified in cost of product sales as follows:
 Three Months EndedNine Months Ended
(In thousands)April 1,
2022
April 2,
2021
April 1,
2022
April 2,
2021
Excess and obsolete inventory$196 $270 $436 $467 
Customer service inventory write-downs286 293 704 681 
Total inventory charges
$482 $563 $1,140 $1,148 
Assets Held for Sale
We consider properties to be Assets held for sale when management approves and commits to a plan to dispose of a property or group of properties. The property held for sale prior to the sale date is separately presented on the balance sheet as Assets held for sale.
During the second quarter of fiscal 2021 management initiated the sale of our facility located in the United Kingdom. We completed the sale during the third quarter of fiscal 2022 with proceeds of $2.3 million, reflecting a gain of $0.1 million. We have no additional assets held for sale.
Property, Plant and Equipment, net
Our property, plant and equipment, net are summarized below:
(In thousands)April 1,
2022
July 2,
2021
Land$210 $210 
Buildings and leasehold improvements5,910 6,914 
Software21,375 21,370 
Machinery and equipment52,065 51,244 
Total property, plant and equipment, gross79,560 79,738 
Less: Accumulated depreciation and amortization(70,038)(68,037)
Total property, plant and equipment, net$9,522 $11,701 
    
Included in the total plant, property and equipment above there were no assets in progress which have not been placed in service as of April 1, 2022 and $0.3 million as of July 2, 2021. Depreciation and amortization expense related to property, plant and equipment, including amortization of software developed for internal use, was as follows:
 Three Months EndedNine Months Ended
(In thousands)April 1,
2022
April 2,
2021
April 1,
2022
April 2,
2021
Depreciation and amortization$1,051 $1,355 $3,444 $4,016 
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Accrued Expenses
Our accrued expenses are summarized below:
(In thousands)April 1,
2022
July 2,
2021
Accrued compensation and benefits$8,885 $13,455 
Accrued agent commissions2,079 2,348 
Accrued warranties3,223 3,228 
Other11,205 9,123 
Total accrued expenses$25,392 $28,154 
Accrued Warranties
We accrue for the estimated cost to repair or replace products under warranty. Changes in our warranty liability, which are included as a component of accrued expenses in our unaudited condensed consolidated balance sheets were as follows:
Three Months EndedNine Months Ended
(In thousands)April 1,
2022
April 2,
2021
April 1,
2022
April 2,
2021
Balance as of the beginning of the period$3,198 $3,315 $3,228 $3,196 
Warranty provision recorded during the period402 469 1,242 1,242 
Consumption during the period(377)(491)(1,247)(1,145)
Balance as of the end of the period$3,223 $3,293 $3,223 $3,293 
Advance Payments and Unearned Revenue
Our advance payments and unearned revenue are summarized below:
(In thousands)April 1,
2022
July 2,
2021
Advance payments$2,906 $2,445 
Unearned revenue35,160 29,859 
Total advance payments and unearned revenue$38,066 $32,304 
Excluded from the balances above are $7.6 million and $8.6 million in long-term unearned revenue as of April 1, 2022 and July 2, 2021, respectively.
Note 3. Fair Value Measurements of Assets and Liabilities
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal market (or most advantageous market in the absence of a principal market) for the asset or liability in an orderly transaction between market participants as of the measurement date. We maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value and establish a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:
Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities;
Level 2 — Observable market-based inputs or observable inputs that are corroborated by market data; and
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.
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The fair values, and valuation input levels of our assets and liabilities that are measured at fair value on a recurring basis as of April 1, 2022 and July 2, 2021 were as follows:
 April 1, 2022July 2, 2021Valuation Inputs
(In thousands)Fair ValueFair Value
Assets:
Cash and cash equivalents:
Money market funds
$8,778 $26,847 Level 1
Bank certificates of deposit
$3,475 $3,288 Level 2
Marketable securities $2,515 $ Level 1
We classify items within Level 1 if quoted prices are available in active markets. Our Level 1 items mainly are money market funds. As of April 1, 2022 and July 2, 2021, these money market funds were valued at $1.00 net asset value per share.
Our marketable securities are included in non-current assets on our balance sheet as we intend to hold for longer than 12 months. These marketable securities are publicly traded stock measured at fair value and classified within Level 1.
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. Our bank certificates of deposit and foreign exchange forward contracts are classified within Level 2.
As of April 1, 2022 and July 2, 2021, 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 nine months of fiscal 2022 and 2021, we had no transfers between levels of the fair value hierarchy of our assets or liabilities measured at fair value.
Note 4. Leases
The Company has facilities under non-cancelable operating lease agreements. These leases have varying terms that range from one to 20 years and contain leasehold improvement incentives, rent holidays and escalation clauses.
We determine if an arrangement contains a lease at inception. These operating leases are included in "Right of use assets" on our unaudited condensed consolidated balance sheets and represent our right to use the underlying asset for the lease term. Our obligations to make lease payments are included in "Short-term lease liabilities" and "Long-term lease liabilities" on our unaudited condensed consolidated balance sheets. We did not enter into any finance leases during the nine months ended April 1, 2022.
The following summarizes our lease costs (in thousands):
Three Months EndedNine Months Ended
April 1,
2022
April 2, 2021April 1,
2022
April 2, 2021
(In thousands)(In thousands)
Operating lease costs$251 $295 $813 $909 
Short-term lease costs$623 506 1,823 1,323 
Variable lease costs$64 93 138 255 
Total lease costs
$938 $894 $2,774 $2,487 

15



The following summarizes our lease term and discount rate for the nine months ended April 1, 2022:
Weighted average remaining lease term7.8 years
Weighted average discount rate5.8 %
As of April 1, 2022, 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):
Amount
(In thousands)
Remainder of 2022
$163 
2023711 
2024593 
2025612 
2026552 
Thereafter1,701 
Total lease payments4,332 
Less: interest(981)
Present value of lease liabilities$3,351 

Note 5. Credit Facility and Debt
On May 17, 2021, we entered into Amendment No. 4 to Third Amended and Restated Loan and Security Agreement with Silicon Valley Bank (the “SVB Credit Facility”) which extended the expiration date to June 28, 2024. 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. company, with a $25.0 million sub-limit that can be borrowed by our U.S. and Singapore entities. Loans may be advanced under the SVB Credit Facility based on a borrowing base equal to a specified percentage of the value of eligible accounts of the borrowers under the SVB Credit Facility. The borrowing base is subject to certain eligibility criteria. Availability under the accounts receivable formula based revolving credit facility can also be utilized to issue letters of credit with a $12.0 million sub-limit. We may prepay loans under the SVB Credit Facility in whole or in part at any time without premium or penalty. As of April 1, 2022, available credit under the SVB Credit Facility was $21.7 million, reflecting the lower available limit of $25.0 million less outstanding letters of credit of $3.3 million. As of July 3, 2020, our outstanding debt balance under the SVB Credit Facility, classified as a current liability, was $9.0 million, and the interest rate was 3.75%. We repaid the outstanding debt balance in July 2020. We have not borrowed against the SVB Credit Facility during the nine months ended April 1, 2022 and there were no borrowing outstanding as of April 1, 2022 or July 2, 2021.
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; or (ii) if we satisfy a minimum adjusted quick ratio, a LIBOR rate determined in accordance with the SVB Credit Facility, plus a spread of 2.75%. Any outstanding Singapore subsidiary borrowed loans shall bear interest at an additional 2.00% above the applicable prime or LIBOR rate.
The SVB Credit Facility contains quarterly financial covenants including minimum adjusted quick ratio and minimum profitability (EBITDA) requirements. In the event our adjusted quick ratio falls below a certain level, cash received in our accounts with Silicon Valley Bank may be directly applied to reduce outstanding obligations under the SVB Credit Facility. The SVB Credit Facility also imposes certain restrictions on our ability 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 under certain circumstances. Certain of our assets, including accounts receivable, inventory, and equipment, are pledged as collateral for the SVB Credit Facility. Upon an event of default, outstanding obligations would be immediately due and payable. 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 April 1, 2022, we were in compliance with the quarterly financial covenants contained in the SVB Credit Facility, as amended.
16



We also obtained an uncommitted short-term line of credit of $0.4 million from a bank in New Zealand to support the operations of our New Zealand subsidiary. This line of credit provides for up to $0.3 million in short-term advances at various interest rates, all of which was available as of April 1, 2022 and July 2, 2021. The line of credit also provides for the issuance of standby letters of credit and company credit cards, of which none was outstanding as of April 1, 2022 and July 2, 2021. This line of credit may be terminated upon notice, is reviewed annually for renewal or modification, and is supported by a corporate guarantee.
Note 6. Revenue Recognition
Contract Balances, Performance Obligations, and Backlog

The following table provides information about receivables and liabilities from contracts with customers (in thousands):
 April 1, 2022 July 2, 2021
Contract Assets  
Accounts receivable, net$76,150  $48,135 
Unbilled receivables$45,700  $37,521 
Capitalized commissions$1,304 $1,720 
Contract Liabilities  
Advance payments and unearned revenue$38,066  $32,304 
Unearned revenue, long-term$7,604  $8,592 
Significant changes in contract balances may arise as a result of recognition over time for services, transfer of control for equipment, and periodic payments (both in arrears and in advance).
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. 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 April 1, 2022, we had $45.7 million in advance payments and unearned revenue and long-term unearned revenue, of which approximately 18% is expected to be recognized as revenue in the remainder of fiscal 2022 and the balance thereafter. During the three and nine months ended April 1, 2022 we recognized $5.3 million and $18.8 million, respectively, of revenue which was included in advance payments and unearned revenue at July 2, 2021.
Remaining Performance Obligations
The aggregate amount of transaction price allocated to our unsatisfied (or partially unsatisfied) performance obligations was approximately $82.8 million at April 1, 2022. Of this amount, we expect to recognize approximately 70% as revenue during the next 12 months, with the remaining amount to be recognized as revenue within two to five years.
Note 7. Segment and Geographic Information
We operate in one reportable business segment: the design, manufacturing, and sale of a range of wireless networking products, solutions, and services. Our financial performance is regularly reviewed by our chief operating decision maker who is our Chief Executive Officer (“CEO”).
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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 nine months ended April 1, 2022 and April 2, 2021 was as follows:
 Three Months EndedNine Months Ended
(In thousands)April 1,
2022
April 2,
2021
April 1,
2022
April 2,
2021
North America
$49,042 $42,021 $151,025 $136,678 
Africa and the Middle East13,123 9,904 37,360 31,138 
Europe2,898 3,280 8,509 7,053 
Latin America and Asia Pacific9,453 11,199 28,644 28,356 
Total revenue
$74,516 $66,404 $225,538 $203,225 
The loss of a significant portion of business from any significant customers could adversely affect our unaudited condensed consolidated financial statements.
Customers accounting for 10% or more of our total revenue were as follows:
Three Months EndedNine Months Ended
April 1,
2022
April 2,
2021
April 1,
2022
April 2,
2021
Motorola Solutions, Inc.12.0 %*13.0 %*
A U.S. State Government Customer*12.5 %**
Mobile Telephone Networks Group (MTN Group)13.0 %*10.0 %*
*Less than 10.0%
Customer accounting for 10% or more of our accounts receivable were as follows:
April 1, 2022July 2, 2021
Mobile Telephone Networks Group (MTN Group)20.0 %14.0 %

Note 8. Equity
Stock Repurchase Program
During the third quarter of fiscal 2022, we repurchased 65,951 shares of our common stock in the open market for an aggregate purchase price, including commissions, of $2.0 million. During the nine months ended of fiscal 2022, we repurchased 149,389 shares of our common stock in the open market for an aggregate purchase price, including commission of $4.6 million. These shares were recorded as treasury stock, and we do not anticipate retiring them.
In November 2021 our Board of Directors approved a stock repurchase program to purchase up to $10.0 million of our common stock. As of April 1, 2022, $8.0 million remains available and we may choose to suspend or discontinue the repurchase program at any time.

Stock Incentive Programs
As of April 1, 2022, we had one stock incentive plan for our 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.
Under the 2018 Plan, option exercise prices are equal to the fair market value of our common stock on the date the options are granted using our closing stock price. After vesting, options generally may be exercised within seven years after the date of grant.
18



Restricted stock units are not transferable until vested and the restrictions lapse upon the achievement of continued employment or service over a specified time period. Restricted stock units issued to employees generally vest three years from the date of grant (three-year cliff or annually over three years). Restricted stock units issued to non-executive board members annually generally vest on the day before the annual stockholders’ meeting.
Vesting of performance share awards and units is subject to the achievement of predetermined financial performance criteria and continued employment through the end of the applicable period. Market-based stock units vest upon meeting certain predetermined share price performance criteria and continued employment through the end of the applicable period.
During the nine months ended April 1, 2022, we granted 70,531 restricted stock units, 46,533 market-based stock units and 114,012 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 EndedNine Months Ended
(In thousands)April 1,
2022
April 2,
2021
April 1,
2022
April 2,
2021
By Expense Category:
Cost of revenues$101 $114 $271 $279 
Research and development5 82 103 179 
Selling and administrative734 569 2,090 1,696 
Total share-based compensation expense$840 $765 $2,464 $2,154 
By Types of Award:
Options$139 $179 $434 $569 
Restricted and performance stock awards and units701 586 2,030 1,585 
Total share-based compensation expense$840 $765 $2,464 $2,154 
As of April 1, 2022, there was approximately $1.1 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 1.3 years. As of April 1, 2022, there was $4.8 million of total unrecognized compensation expense related to non-vested stock awards which is expected to be recognized over a weighted-average period of 1.3 years.
Note 9. Restructuring Activities
The following table summarizes our restructuring-related activities: