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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 December 30, 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 January 27, 2023 was 11,395,261



AVIAT NETWORKS, INC.
QUARTERLY REPORT ON FORM 10-Q
For the Quarterly Period Ended December 30, 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)December 30,
2022
July 1,
2022
ASSETS
Current Assets:
Cash and cash equivalents$21,360 $36,877 
Marketable securities2 10,893 
Accounts receivable, net91,371 73,168 
Unbilled receivables53,600 45,857 
Inventories35,185 25,394 
Customer service inventories1,875 1,775 
Other current assets20,132 12,437 
Total current assets223,525 206,401 
Property, plant and equipment, net11,416 8,887 
Goodwill4,950  
Intangible assets, net7,042  
Deferred income taxes89,647 95,412 
Right of use assets2,874 2,759 
Other assets9,834 10,445 
TOTAL ASSETS
$349,288 $323,904 
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable$59,750 $42,394 
Accrued expenses23,605 26,451 
Short-term lease liabilities784 513 
Advance payments and unearned revenue38,870 33,740 
Restructuring liabilities1,472 1,381 
Total current liabilities124,481 104,479 
Unearned revenue7,824 8,920 
Long-term lease liabilities2,368 2,412 
Other long-term liabilities249 273 
Reserve for uncertain tax positions5,307 5,504 
Deferred income taxes563 563 
Total liabilities140,792 122,151 
Commitments and contingencies (Note 13)
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, 11,377,066 shares issued and outstanding at December 30, 2022; 11,160,160 shares issued and outstanding at July 1, 2022
114 112 
Treasury stock(6,147)(6,147)
Additional paid-in-capital826,812 823,259 
Accumulated deficit(596,142)(599,442)
Accumulated other comprehensive loss(16,141)(16,029)
Total equity208,496 201,753 
TOTAL LIABILITIES AND EQUITY
$349,288 $323,904 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
5



AVIAT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months EndedSix Months Ended
(In thousands, except per share amounts)December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
Revenues:
Revenue from product sales$65,561 $53,467 $120,662 $104,314 
Revenue from services25,122 24,397 51,272 46,708 
Total revenues90,683 77,864 171,934 151,022 
Cost of revenues:
Cost of product sales40,569 34,014 75,822 65,939 
Cost of services17,894 15,694 34,438 30,846 
Total cost of revenues58,463 49,708 110,260 96,785 
Gross margin32,220 28,156 61,674 54,237 
Operating expenses:
Research and development expenses6,047 6,169 12,134 12,079 
Selling and administrative expenses16,567 13,739 34,071 26,437 
Restructuring charges (recovery)928 (960)2,878 (301)
Total operating expenses23,542 18,948 49,083 38,215 
Operating income8,678 9,208 12,591 16,022 
Other (income)/expense, net(460)240 2,322 212 
Income before income taxes9,138 8,968 10,269 15,810 
Provision for income taxes3,092 3,052 6,969 5,212 
Net income$6,046 $5,916 $3,300 $10,598 
Net income per share of common stock outstanding:
Basic$0.53 $0.52 $0.29 $0.95 
Diluted$0.51 $0.49 $0.28 $0.89 
Weighted-average shares outstanding:
Basic11,347 11,309 11,273 11,172 
Diluted11,805 11,960 11,795 11,895 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
6



AVIAT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months EndedSix Months Ended
(In thousands)December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
Net income$6,046 $5,916 $3,300 $10,598 
Other comprehensive income (loss):
Net change in cumulative translation adjustments
1,001 (108)(112)(272)
Other comprehensive income (loss)1,001 (108)(112)(272)
Comprehensive income$7,047 $5,808 $3,188 $10,326 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

7



AVIAT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended
(In thousands)December 30,
2022
December 31,
2021
Operating Activities
Net income$3,300 $10,598 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of property, plant and equipment2,765 2,393 
Amortization of intangible assets acquired248  
Provision (recoveries) for uncollectible receivables474 (3)
Share-based compensation3,497 1,624 
Deferred tax assets, net5,278 3,548 
Charges for inventory and customer service inventory write-downs1,138 658 
Noncash lease expense319 445 
Net loss on marketable securities1,740  
Restructuring recoveries (301)
Changes in operating assets and liabilities:
Accounts receivable(14,865)(21,063)
Unbilled receivables(8,002)(5,570)
Inventories(4,826)(2,393)
Customer service inventories(661)(745)
Accounts payable10,429 11,159 
Accrued expenses(3,759)(605)
Advance payments and unearned revenue578 2,843 
Income taxes payable or receivable754 (1,550)
Other assets and liabilities(6,414)(2,729)
Change in lease liabilities(352)(472)
Net cash used in operating activities(8,359)(2,163)
Investing Activities
Payments for acquisition of property, plant and equipment(672)(798)
Proceeds from sale of marketable securities9,151  
Acquisition, net of cash acquired and purchases of intangible assets(15,769) 
Net cash used in investing activities(7,290)(798)
Financing Activities
Proceeds from borrowings24,000  
Repayments of borrowings(24,000) 
Payments for repurchase of common stock - treasury shares (2,621)
Payments for taxes related to net settlement of equity awards(689)(358)
Proceeds from issuance of common stock under employee stock plans747 586 
Net cash provided by (used in) financing activities58 (2,393)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash41 (291)
Net decrease in cash, cash equivalents, and restricted cash(15,550)(5,645)
Cash, cash equivalents, and restricted cash, beginning of period37,104 48,198 
Cash, cash equivalents, and restricted cash, end of period$21,554 $42,553 
8



See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
9



AVIAT NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
Three Months Ended December 30, 2022
Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated DeficitAccumulated Other Comprehensive LossTotal Equity
(In thousands, except share amounts)Shares$
Amount
Balance as of September 30, 202211,312,974 $113 $(6,147)$824,786 $(602,188)$(17,142)$199,422 
Net income— — — — 6,046 — 6,046 
Other comprehensive income, net of tax— — — — — 1,001 1,001 
Issuance of common stock under employee stock plans64,757 1 — 386 — — 387 
Shares withheld for taxes related to vesting of equity awards (665)— — (19)— — (19)
Share-based compensation— — — 1,659 — — 1,659 
Balance as of December 30, 202211,377,066 $114 $(6,147)$826,812 $(596,142)$(16,141)$208,496 

Three Months Ended December 31, 2021
Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated DeficitAccumulated Other Comprehensive LossTotal Equity
(In thousands, except share amounts)Shares$
Amount
Balance as of October 1, 202111,187,003 $112 $(1,500)$819,711 $(615,920)$(14,491)$187,912 
Net income— — — — 5,916 — 5,916 
Other comprehensive loss, net of tax— — — — — (108)(108)
Issuance of common stock under employee stock plans69,434 1 — 319 — — 320 
Shares withheld for taxes related to vesting of equity awards  — —  — —  
Stock repurchase(60,895)(1)(1,908)— — — (1,909)
Share-based compensation— — — 761 — — 761 
Balance as of December 31, 202111,195,542 $112 $(3,408)$820,791 $(610,004)$(14,599)$192,892 

10




Six Months Ended December 30, 2022
Common StockTreasury StockAdditional
Paid-in
Capital
Accumulated DeficitAccumulated Other Comprehensive LossTotal Equity
(In thousands, except share amounts)Shares$
Amount
Balance as of July 1, 202211,160,160 $112 $(6,147)$823,259 $(599,442)$(16,029)$201,753 
Net income— — — — 3,300 — 3,300 
Other comprehensive income, net of tax— — — — — (112)(112)
Issuance of common stock under employee stock plans239,074 3 — 744 — — 747 
Shares withheld for taxes related to vesting of equity awards (22,168)(1)— (688)— — (689)
Stock repurchase   — — —  
Share-based compensation— — — 3,497 — — 3,497 
Balance as of December 30, 202211,377,066 $114 $(6,147)$826,812 $(596,142)$(16,141)$208,496 


Six Months Ended December 31, 2021
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— — — — 10,598 — 10,598 
Other comprehensive loss, net of tax— — — — — (272)(272)
Issuance of common stock under employee stock plans135,669 1 — 586 — — 587 
Shares withheld for taxes related to vesting of equity awards (10,134)— — (358)— — (358)
Stock repurchase(83,438)(1)(2,621)— — (2,622)
Share-based compensation— — — 1,624 — — 1,624 
Balance as of December 31, 202111,195,542 $112 $(3,408)$820,791 $(610,004)$(14,599)$192,892 



See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.



11



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 six months ended December 30, 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 1, 2022.
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 December 30, 2022 and the three months ended December 31, 2021 both consisted of 13 weeks. Fiscal year 2023 will be comprised of 52 weeks and will end on June 30, 2023. Fiscal year 2022 was comprised of 52 weeks and ended on July 1, 2022.
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, business combinations, 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 December 30, 2022 and for the six months ended December 30, 2022, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended July 1, 2022.
12



Accounting Standards Adopted
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“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, ASU 2019-05 and ASU 2022-02 (collectively, Topic 326). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 became effective for us in our first quarter of fiscal 2023. The adoption had no material impact 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 the 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)December 30,
2022
July 1,
2022
Cash and cash equivalents$21,360 $36,877 
Restricted cash included in other assets194 227 
Total cash, cash equivalents, and restricted cash in the Statement of Cash Flows$21,554 $37,104 
Accounts Receivable, net
Our net accounts receivable are summarized below:
(In thousands)December 30,
2022
July 1,
2022
Accounts receivable$92,289 $74,102 
Less: Allowances for collection losses(918)(934)
Total accounts receivable, net$91,371 $73,168 
Inventories
Our inventories are summarized below
(In thousands)December 30,
2022
July 1,
2022
Finished products$21,396 $14,916 
Raw materials and supplies13,789 10,478 
Total inventories
$35,185 $25,394 
Consigned inventories included within raw materials and supplies
$9,590 $9,796 
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 six months ended December 30, 2022 and December 31, 2021 consisted of the following which were recorded in cost of product sales:
 Three Months EndedSix Months Ended
(In thousands)December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
Excess and obsolete inventory$411 $107 $581 $240 
Customer service inventory write-downs322 170 557 418 
Total inventory charges
$733 $277 $1,138 $658 
13



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 assets held for sale as of December 30, 2022.
Property, Plant and Equipment, net
Our property, plant and equipment, net are summarized below:
(In thousands)December 30,
2022
July 1,
2022
Land$210 $210 
Buildings and leasehold improvements5,889 5,796 
Software17,073 21,368 
Machinery and equipment48,128 49,584 
Total property, plant and equipment, gross71,300 76,958 
Less: Accumulated depreciation and amortization(59,884)(68,071)
Total property, plant and equipment, net$11,416 $8,887 
    
Included in the total plant, property and equipment above there was $0.7 million of assets in progress which have not been placed in service as of December 30, 2022 and $1.2 million as of July 1, 2022.
Depreciation and amortization expense related to property, plant and equipment, including amortization of software developed for internal use, was as follows:
 Three Months EndedSix Months Ended
(In thousands)December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
Depreciation and amortization$1,421 $1,129 $2,765 $2,393 
Accrued Expenses
Our accrued expenses are summarized below:
(In thousands)December 30,
2022
July 1,
2022
Accrued compensation and benefits$8,182 $11,625 
Accrued agent commissions1,370 1,864 
Accrued warranties2,549 2,913 
Other11,504 10,049 
Total accrued expenses$23,605 $26,451 
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:
14



Three Months EndedSix Months Ended
(In thousands)December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
Balance as of the beginning of the period$2,755 $3,318 $2,913 $3,228 
Warranty provision recorded during the period199 341 374 839 
Assumed in Redline acquisition  55  
Consumption during the period(405)(461)(793)(869)
Balance as of the end of the period$2,549 $3,198 $2,549 $3,198 
Advance Payments and Unearned Revenue
Our advance payments and unearned revenue are summarized below:
(In thousands)December 30,
2022
July 1,
2022
Advance payments$2,884 $1,870 
Unearned revenue35,986 31,870 
Total advance payments and unearned revenue$38,870 $33,740 
Excluded from the balances above are $7.8 million and $8.9 million in long-term unearned revenue as of December 30, 2022 and July 1, 2022, 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.
The fair values, and valuation input levels of our assets and liabilities that are measured at fair value on a recurring basis as of December 30, 2022 and July 1, 2022 were as follows:
 December 30, 2022July 1, 2022Valuation Inputs
(In thousands)Fair ValueFair Value
Assets:
Cash and cash equivalents:
Money market funds
$5,599 $5,367 Level 1
Bank certificates of deposit
$3,569 $3,682 Level 2
Marketable securities $2 $10,893 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 December 30, 2022 and July 1, 2022, these money market funds were valued at $1.00 net asset value per share.
Our marketable securities are included in current assets on our balance sheet as they are available to be converted into cash to fund current operations. These marketable securities are publicly traded stock measured at fair value and classified
15



within Level 1. For the six months ended December 30, 2022 we recognized a loss of $1.7 million associated with the sales of our marketable securities.
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 are classified within Level 2.
As of December 30, 2022 and July 1, 2022, we did not have any recurring assets or liabilities that were valued using significant unobservable inputs.
Our policy is to recognize asset or liability transfers among Level 1, Level 2, and Level 3 as of the actual date of the events or change in circumstances that caused the transfer. During the first six months of fiscal 2023 and 2022, 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 six months ended December 30, 2022.
The following summarizes our lease costs (in thousands):
Three Months EndedSix Months Ended
December 30,
2022
December 31, 2021December 30,
2022
December 31, 2021
(In thousands)(In thousands)
Operating lease costs$235 $245 $547 $562 
Short-term lease costs$466 513 1,017 1,200 
Variable lease costs$45 47 80 74 
Total lease costs
$746 $805 $1,644 $1,836 

The following summarizes our lease term and discount rate for the six months ended December 30, 2022:
Weighted average remaining lease term6.8 years
Weighted average discount rate5.7 %
As of December 30, 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):
16



Amount
(In thousands)
Remainder of 2023
$641 
2024741 
2025633 
2026490 
2027169 
Thereafter1,384 
Total lease payments4,058 
Less: interest(906)
Present value of lease liabilities$3,152 

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 December 30, 2022, available credit under the SVB Credit Facility was $22.0 million, reflecting the available limit of $25.0 million less outstanding letters of credit of $3.0 million. We borrowed and repaid $24.0 million against the SVB Credit Facility during the six months ended December 30, 2022 and the interest rate was 6.07%. As of December 30, 2022 there was no borrowing outstanding.
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 December 30, 2022, we were in compliance with the quarterly financial covenants contained in the SVB Credit Facility, as amended.
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):
17



 December 30, 2022 July 1, 2022
Contract Balances  
Accounts receivable, net$91,371  $73,168 
Contract Assets$53,600  $45,857 
Capitalized commissions$2,120 $2,341 
Contract Liabilities  
Advance payments and unearned revenue$38,870  $33,740 
Unearned revenue, long-term$7,824  $8,920 
Capitalized commissions are classified as both current and long term in included in other assets. 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 December 30, 2022, we had $46.7 million in advance payments and unearned revenue and long-term unearned revenue, of which approximately 38% is expected to be recognized as revenue in the remainder of fiscal 2023 and the balance thereafter. During the three and six months ended December 30, 2022 we recognized $6.0 million and $11.9 million, respectively, of revenue which was included in advance payments and unearned revenue at July 1, 2022.
Remaining Performance Obligations
The aggregate amount of transaction price allocated to our unsatisfied (or partially unsatisfied) performance obligations was approximately $115.9 million at December 30, 2022. Of this amount, we expect to recognize approximately 51% 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”).
We report revenue by region and country based on the location where our customers accept delivery of our products and services. Revenue by region for the three and six months ended December 30, 2022 and December 31, 2021 was as follows:
 Three Months EndedSix Months Ended
(In thousands)December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
North America
$52,049 $51,046 $100,897 $101,983 
Africa and the Middle East14,135 13,535 25,119 24,237 
Europe5,334 2,908 9,834 5,611 
Latin America and Asia Pacific19,165 10,375 36,084 19,191 
Total revenue
$90,683 $77,864 $171,934 $151,022 
The loss of a significant portion of business from any significant customers could adversely affect our unaudited condensed consolidated financial statements.
18



Customers accounting for 10% or more of our total revenue were as follows:
Three Months EndedSix Months Ended
December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
Motorola Solutions, Inc.*11.0 %11.4 %13.0 %
Verizon Wireless10.1 %***
*Less than 10.0%
Customer accounting for 10% or more of our accounts receivable were as follows:
December 30, 2022July 1, 2022
Mobile Telephone Networks Group (MTN Group)*17.0 %
*Less than 10.0%

Note 8. Equity
Stock Repurchase Program
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 December 30, 2022, $8.0 million remains available and we may choose to suspend or discontinue the repurchase program at any time.

During the first six months of fiscal 2023, we did not repurchase any shares of our common stock in the open market.

Stock Incentive Programs
As of December 30, 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.
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 six months ended December 30, 2022, we granted 72,162 restricted stock units, 49,321 market-based stock units and 110,945 stock options to purchase shares of our common stock.
19



Total compensation expense for share-based awards included in our unaudited condensed consolidated statements of operations was as follows:
Three Months EndedSix Months Ended
(In thousands)December 30,
2022
December 31,
2021
December 30,
2022
December 31,
2021
By Expense Category:
Cost of revenues$166 $102 $338 $170 
Research and development137 22 272 98 
Selling and administrative1,356 637 2,887 1,356 
Total share-based compensation expense$1,659 $761 $3,497 $1,624 
By Types of Award:
Options$306 $120 $816 $295 
Restricted and performance stock awards and units1,353 641 2,681 1,329 
Total share-based compensation expense$1,659 $761 $3,497 $1,624 
As of December 30, 2022, there was approximately $2.3 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 1.8 years. As of December 30, 2022, there was $10.6 million of total unrecognized compensation expense related to non-vested stock awards which is expected to be recognized over a weighted-average period of 1.8 years.
Note 9. Restructuring Activities
The following table summarizes our restructuring-related activities:
Severance and BenefitsTotal
(In thousands)Q2 2023 PlanQ1 2023 PlanQ4 2022 PlanFiscal 2021 Plan
Accrual balance, July 1, 2022$ $ $295 $1,086 $1,381 
Charges, net