Aviat Networks, Inc_NASDAQ_AVNW_2023(10-K).pdf

《Aviat Networks, Inc_NASDAQ_AVNW_2023(10-K).pdf》由会员分享，可在线阅读，更多相关《Aviat Networks, Inc_NASDAQ_AVNW_2023(10-K).pdf（93页珍藏版）》请在三个皮匠报告上搜索。

1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 _Form 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended June 30,2023 orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934C

2、ommission File Number 001-33278 _AVIAT NETWORKS,INC.(Exact name of registrant as specified in its charter)_Delaware20-5961564(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)200 Parker Drive,Suite C100A,Austin,Texas78728(Address of principal executive

3、offices)(Zip Code)Registrants telephone number,including area code:(408)941-7100Securities registered pursuant to Section 12(b)of the Act:Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which RegisteredCommon Stock,par value$0.01 per shareAVNWNASDAQ Stock Market LLCPreferred Share Purch

4、ase RightsNASDAQ Stock Market LLCSecurities registered pursuant to Section 12(g)of the Act:None_Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursua

5、nt to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of1934 during the preceding 12 months(or for such shorter period that the registrant was required to file

6、 such reports),and(2)has been subject to suchfiling 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 toRule 405 of Regulation S-T(232.405 of this chapter)during the preced

7、ing 12 months(or for such shorter period that the registrant was required tosubmit 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

8、of“large accelerated filer,”“accelerated filer,”“smaller reporting company”and“emerging growthcompany”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark i

9、f the registrant has elected not to use the extended transition period for complying withany new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements asse

10、ssment of the effectiveness of itsinternal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firmthat prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by chec

11、k mark whether the financial statements of the registrant includedin the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensatio

12、nreceived by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No 2025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data

13、/1377789/000137778923000023/avnw-20230630.htm1/93As of December 30,2022,the aggregate market value of the registrants common stock held by non-affiliates was approximately$340.4 million.For purposes of this calculation,the registrant has assumed that its directors,executive officers and holders of 1

14、0%or more of the outstanding commonstock are affiliates.As of August 23,2023,there were 11,528,714 shares of the registrants common stock outstanding._DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants definitive Proxy Statement for its fiscal 2023 Annual Meeting of Stockholders(“Proxy S

15、tatement”),which will be filedwith the U.S.Securities and Exchange Commission within 120 days after the end of the registrants fiscal year ended June 30,2023,are incorporatedby reference into Part III of this Annual Report on Form 10-K.2025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/da

16、ta/1377789/000137778923000023/avnw-20230630.htm2/93Table of ContentsAVIAT NETWORKS,INC.ANNUAL REPORT ON FORM 10-KFor the Fiscal Year Ended June 30,2023Table of Contents PART I5Item 1.Business5Item 1A.Risk Factors14Item 1B.Unresolved Staff Comments33Item 2.Properties33Item 3.Legal Proceedings33Item 4

17、.Mine Safety Disclosures34PART II35Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities35Item 6.Reserved36Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations37Item 7A.Quantitative and Qualitative Disc

18、losures About Market Risk45Item 8.Financial Statements and Supplementary Data46Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure84Item 9A.Controls and Procedures84Item 9B.Other Information87Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Insp

19、ections87PART III88Item 10.Directors,Executive Officers and Corporate Governance88Item 11.Executive Compensation88Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters88Item 13.Certain Relationships and Related Transactions,and Director Independence88

20、Item 14.Principal Accountant Fees and Services88PART IV89Item 15.Exhibits and Financial Statement Schedules89Item 16.Form 10-K Summary89Signatures90Schedule II91Exhibit Index9232025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm3/93Table of

21、 ContentsCAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K,including“Item 7.Managements Discussion and Analysis of Financial Condition and Resultsof Operations,”contains forward-looking statements that involve risks and uncertainties,as well as assumptions that

22、,if they do notmaterialize or prove correct,could cause our results to differ materially from those expressed or implied by such forward-lookingstatements.All statements other than statements of historical fact are statements that could be deemed forward-looking statements,including statements of,ab

23、out,concerning or regarding:our plans,strategies and objectives for future operations,including with respectto growing our business and sustaining profitability;our research and development efforts and new product releases and services;trendsin revenue;drivers of our business and the markets in whic

24、h we operate;future economic conditions;performance or outlook andchanges in our industry and the markets we serve;the outcome of contingencies;the value of our contract awards;beliefs orexpectations;the sufficiency of our cash and our capital needs and expenditures;our intellectual property protect

25、ion;our compliancewith regulatory requirements and the associated expenses;expectations regarding litigation;our intention not to pay cash dividends;seasonality of our business;the impact of foreign exchange and inflation;taxes;and assumptions underlying any of the foregoing.Forward-looking statemen

26、ts may be identified by the use of forward-looking terminology,such as“anticipates,”“believes,”“expects,”“may,”“should,”“would,”“will,”“intends,”“plans,”“estimates,”“strategy,”“projects,”“targets,”“goals,”“seeing,”“delivering,”“continues,”“forecasts,”“future,”“predict,”“might,”“could,”“potential,”or

27、 the negative of these terms,and similar words orexpressions.These forward-looking statements are based on estimates reflecting the current beliefs of the senior management of AviatNetworks,Inc.These forward-looking statements involve a number of risks and uncertainties that could cause actual resul

28、ts to differmaterially from those suggested by the forward-looking statements.Forward-looking statements should therefore be considered in lightof various important factors,including those set forth in this Annual Report on Form 10-K.See“Item 1A.Risk Factors”in this Annual Report on Form 10-K for mo

29、re information regarding factors that may cause ourresults to differ materially from those expressed or implied by the forward-looking statements contained in this Annual Report on Form10-K.You should not place undue reliance on these forward-looking statements,which reflect our managements opinions

30、 only as of thedate of the filing of this Annual Report on Form 10-K.Forward-looking statements are made in reliance upon the safe harbor provisionsof Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,as amended,alongwith provisions of the Pr

31、ivate Securities Litigation Reform Act of 1995,and we expressly disclaim any obligation,other than as requiredby law,to update any forward-looking statements to reflect further developments or information obtained after the date of filing of thisAnnual Report on Form 10-K or,in the case of any docum

32、ent incorporated by reference,the date of that document.42025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm4/93Table of ContentsPART IItem 1.BusinessAviat Networks,Inc.,together with its subsidiaries,is a global supplier of microwave netwo

33、rking and wireless access networkingsolutions,backed by an extensive suite of professional services and support.Aviat Networks,Inc.may be referred to as“the Company,”“AVNW,”“Aviat Networks,”“Aviat,”“we,”“us”and“our”in this Annual Report on Form 10-K.Aviat was incorporated in Delaware in 2006 to comb

34、ine the businesses of Harris Corporations Microwave CommunicationsDivision(“MCD”)and Stratex Networks,Inc.(“Stratex”).On January 28,2010,we changed our corporate name from Harris StratexNetworks,Inc.to Aviat Networks,Inc.Our principal executive offices are located at 200 Parker Dr.,Suite C100A,Austi

35、n,Texas 78728,and our telephone number is(408)941-7100.Our common stock is listed on the NASDAQ Global Select Market under the symbol AVNW.As of June 30,2023,wehad 704 employees.Overview and Description of the BusinessWe design,manufacture and sell a range of wireless transport and access networking

36、 products,solutions and services to twoprincipal customer types.1.Communications Service Providers(“CSPs”):These include mobile and fixed telecommunications network operators,broadband and internet service providers and network operators which generate revenues from the communications servicesthat t

37、hey provide.2.Private network operators:These are customers which do not resell communications services but build networks for reasons ofeconomics,autonomy,and/or security to support a wide variety of mission critical performance applications.Examplesinclude federal,state and local government agenci

38、es,transportation agencies,energy and utility companies,public safetyagencies and broadcast network operators around the world.We sell products and services directly to our customers,and,to a lesser extent,agents and resellers.Our products utilize microwave and millimeter wave technologies to create

39、 point to point and point to multi-point wireless linksfor short,medium and long-distance interconnections.In addition to our wireless products,we also provide routers and a range ofpremise and hosted private cloud-based software tools and applications to enable deployment,monitoring,network managem

40、ent,andoptimization and operational assurance of our systems as well as to automate network design and procurement.We also source,qualify,supply,integrate,test and support third party equipment such as antennas,optical transmission equipment and other equipmentnecessary to build and deploy a complet

41、e telecommunications transmission network.We provide a full suite of professional services forplanning,deployment,operations,optimization and maintenance of our customers networks.Our wireless systems deliver urban,suburban,regional and country-wide communications links as the primary alternative to

42、 fiberoptic,low earth orbit satellite and copper connections.Fiber optic connections are the primary connectivity alternative to wirelesssystems.In dense urban and suburban areas,wireless solutions can be faster to deploy and lower cost per mile than new fiberdeployments.In developing nations,fiber

43、infrastructure is often scarce and as a result wireless systems are used for both long and shortdistance connections.Wireless systems also have advantages over optical fiber in areas with rugged terrain,and to provide connectionsover bodies of water such as between islands or to offshore oil and gas

44、 production platforms.Through the air wireless transmission isalso inherently lower in latency than transmission through optical cables and can be leveraged in time sensitive networking applications,such as high frequency trading.Revenue from our North America and international regions represented a

45、pproximately 58%and 42%of our revenue in fiscal2023,66%and 34%of our revenue in fiscal 2022,and 67%and 33%of our revenue in fiscal 2021,respectively.Information about ourrevenue attributable to our geographic regions is set forth in“Item 7.Managements Discussion and Analysis of Financial Condition a

46、ndResults of Operations”and in“Note 10.Segment and Geographic Information”of the accompanying consolidated financial statementsin this Annual Report on Form 10-K.52025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm5/93Table of ContentsMarke

47、t OverviewWe believe that future demand for microwave and millimeter wave transmission systems will be influenced by a number offactors across several market segments.Mobile/5G NetworksAs mobile networks evolve and expand,add subscribers,and increase the number of wirelessly connected devices,sensor

48、s andmachines,investment in backhaul infrastructure is required.Whether mobile network operators choose to self-build this backhaulinfrastructure,or lease backhaul services from other network providers,we expect that the evolution of mobile networks will continue todrive demand for microwave and mil

49、limeter wave wireless backhaul transmission technologies.Within this overall scope,there aremultiple individual drivers for investment in backhaul infrastructure.5G Deployments.Mobile Radio Access Network(“RAN”)technologies are evolving.With the evolution from 4G(HSPA+andLTE)to 5G,technology is rapi

50、dly advancing and providing subscribers with higher speed access to the Internet,social media,andvideo streaming services.The dramatic increase in data to be transported through the RAN and across the backhaul infrastructuredrives requirements for higher data transport links necessitating upgrades t

51、o or replacement of the existing backhaul infrastructure.Subscriber Growth.Traffic on the backhaul infrastructure increases as the number of unique subscribers grows.Connected Devices.The number of devices such as smart phones and tablets connected to the mobile network is far greater than thenumber

52、 of unique subscribers and is continuing to grow as consumers adopt multiple mobile device types.There is also rapidgrowth in the number and type of wireless enabled sensors and machines being connected to the mobile network creating newrevenue streams for network operators in healthcare,agriculture

53、,transportation and education.As a result,the data traffic crossingthe backhaul infrastructure continues to grow.IoT.The Internet of Things(“IoT”)brings the potential of massive deployment of wireless end points for sensing and reporting dataand remotely controlling machines and devices.The increase

54、 of data volume drives investment in network infrastructure.Network Densification.RAN frequency spectrum is a limited resource and shared between all of the devices and users within thecoverage area of each base station.Meeting the combined demand of increasing subscribers and devices will require t

55、he deploymentof much higher densities of base stations with smaller and smaller range(small cells)each requiring interconnection andproportionally driving increased demand for wireless backhaul and or fronthaul solutions as the primary alternative to optical fiberconnectivity.Geographic Coverage.Exp

56、anding the geographic area covered by a mobile network requires the deployment of additional cellularbase station sites.Each additional base station site also needs to be connected to the core of the mobile network through expansionof the backhaul system.License Mandates.Mobile Operators are license

57、d telecommunications service providers.Licenses will typically mandate aminimum geographic footprint within a specific period of time and/or a minimum proportion of a national or regional populationserved.This can pace backhaul infrastructure investment and cause periodic spikes in demand.Rural Broa

58、dbandMiddle Mile.Aviat transport equipment is used to deliver broadband connectivity to rural and suburban communities as analternative to costly fiber.There are significant investments being made to improve rural household and enterprise connectivity andmany of these investments target middle mile

59、infrastructure builds.Expansion of Offered Services.Internet service providers,especially those in emerging markets,now own and operate the mostmodern communications networks within their respective regions.These network assets can be further leveraged to provide highspeed broadband services to fixe

60、d locations such as small,medium and large business enterprises,airports,hotels,hospitals,andeducational institutions.Microwave and millimeter wave backhaul is ideally suited to providing high speed broadband connectionsto these end points due to the lack of fiber infrastructure.Private NetworksIn a

61、ddition to mobile backhaul,we see demand for microwave technology in other vertical markets,including utility,publicsafety,energy and mining,government,financial institutions and broadcast.Many utility companies around the world are actively investing in“Smart Grid”solutions and energy demand manage

62、ment,whichdrive the need for network modernization and increased capacity of networks.62025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm6/93Table of ContentsThe investments in network modernization in the public safety market can signific

63、antly enhance the capabilities of securityagencies.Improving border patrol effectiveness,enabling inter-operable emergency communications services for local or statepolice,providing access to timely information from centralized databases,or utilizing video and imaging devices at the scene of anincid

64、ent requires a high bandwidth and reliable network.The mission critical nature of public safety and national security networkscan require that these networks are built,operated and maintained independently of other network infrastructure.Microwave is wellsuited to this environment because it is a co

65、st-effective alternative to fiber.Microwave technology can be used to engineer long distance and more direct connections than optical cable.Microwave signalsalso travel through the air much faster than light through glass and the combined effect of shorter distance and higher speed reduceslatency,wh

66、ich is valued for trading applications in the financial industry.Our products have already been used to create low latencyconnections between major centers in the United States(“U.S.”),Europe and Asia and we see long-term interest in the creation offurther low latency routes in various geographies a

67、round the world.Evolution to IP(internet protocol).Network Infrastructure capacity,efficiency and flexibility is greatly enhanced by transitioningfrom legacy SDH(synchronous digital hierarchy)/SONET(synchronous optical network)/TDM(time division multiplexing)to IPinfrastructure.Our products offer in

68、tegrated IP transport and routing functionality increasing the value they bring in the backhaulnetwork.The enhancement of border security and surveillance networks to counter terrorism and insurgency is aided by the use of wirelesstechnologies including microwave backhaul.The expected growth of remo

69、te and industrial access applications to support the evolution of smart networks for cities,oilfields,mines and remote rural broadband connectivity using fixed,nomadic and mobile wireless technologies,particularly where a highdegree of environmental resilience and ruggedness is required.These factor

70、s are combining to create a range of opportunities for continued investment in backhaul,transport and accessnetworks that favor microwave and millimeter wave technologies.As we focus on executing future generations of our technology,ourgoal is to make wireless technology a viable choice for an ever-

71、broadening range of network types.StrategyWe are engaging with customers on the evolution of use cases and applications as 5G mobile and broadband networks edge closerto implementation and begin to factor more strongly in the vendor selection process.We are confident in our ability to address curren

72、tand future 5G market needs.We are focused on building a sustainable and profitable business with growth potential.We have invested in our people andprocesses to create a platform for operational excellence across sales,services,product development and supply chain areas whilecontinuing to make inve

73、stments in strengthening our product and services portfolio and expanding our reach into targeted market areas.Our strategy has three main elements aligned to deliver a compelling Total Cost of Ownership(“TCO”)value proposition.Thefirst is our portfolio of wireless transport products allowing our cu

74、stomers increased capacity and flexibility with a much better total costsolution.We are expanding the data-carrying capacity of our wireless products to address the increasing data demand in networks of alltypes,while reducing overall energy consumption.Our research and development is focused on inn

75、ovations that increase capacity,reduce energy consumption and lower overall TCO.Second,to address the operational complexity of planning,deploying,owning and operating microwave networks,we areinvesting in a combination of software applications,tools and services where simplification,process automat

76、ion,optimization andperformance assurance,combined with our unique expertise in wireless technology can make a significant difference for our customersand partners.Finally,Aviat is investing in e-commerce through our online platform,the“Aviat Store”and supporting supply chain capabilities.Aviat can

77、better service customers buying through the Aviat Store with lower costs,faster lead times and a simpler purchasingexperience.The Aviat Store,together with our supply chain,enables customers(including ISP,Tier 2 and mobile 5G operators)topurchase products as needed,thus avoiding lengthy and variable

78、 lead times that come with other vendor solutions and allowing thosecustomers to lower warehousing costs,reduce obsolete equipment,and lower the cost of capital by paying only when equipment isneeded.We continue to develop our professional services portfolio as key to our long-term strategy and diff

79、erentiation.We offer aportfolio of hosted expert services and we continue to offer training and accreditation programs for microwave and IP network design,deployment and maintenance.72025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm7/93Ta

80、ble of ContentsWe expect to continue to serve and expand upon our existing customer base and develop business with new customers.We intendto leverage our customer base,longstanding presence in many countries,distribution channels,comprehensive product line,superiorcustomer service and our turnkey so

81、lution capability to continue to sell existing and new products and services to current and futurecustomers.Products and SolutionsOur product and solutions portfolio is key to building and maintaining our base of customers.We offer a comprehensive productand solutions portfolio that meets the needs

82、of service providers and network operators and that addresses a broad range of applications,frequencies,capacities and network topologies.Broad product and solution portfolio.We offer a comprehensive suite of wireless transport and access systems for microwave andmillimeter wave networking applicati

83、ons.These solutions utilize a wide range of transmission frequencies,ranging from 450 MHzto 90 GHz,and can deliver a wide range of transmission capacities,ranging up to 20 Gigabits per second(Gbps).The major productfamilies included in these solutions are CTR 8000,WTM 4000,RDL 3000,FDL 6000,IRU 600

84、UHP and AviatCloud.Our CTR8000 platform is a range of routers purpose-built for transport applications,especially those that require high level of reliability andsecurity.WTM 4000,the highest capacity microwave radio ever produced to date,and purpose built for software-defined networks(“SDN”).SDN te

85、chnology is an approach to networking management that enables dynamic,programmatically efficient networkingconfiguration to improve networking performance and monitoring,making it more like cloud computing than traditional networkingmanagement.We introduced multiple important variants to the WTM 400

86、0 platform;WTM4100&4200 providing single and dualfrequency microwave links with advanced XPIC and MIMO capabilities;WTM4500 for multi-channel aggregation of microwavechannels in long distance applications;WTM4800 is the latest addition to address 5G network requirements and is capable ofoperating in

87、 the 80GHz E Band at up to 20Gbps capacity,with a unique Multi-Band capability which simultaneously usesmicrowave and E Band frequencies for maximum capacity,distance and reliability.WTM 4800 is the only single box multi-bandsolution for lowest total cost of ownership deployments.Our RDL 3000 platfo

88、rm is designed to support ruggedized fixed andnomadic wireless access in remote and industrial applications.RDL 6000 is a highly differentiated Private-LTE solution thatprovides the equivalent coverage of a macro-base station,but in a compact and cost-effective all-outdoor design.Our IRU 600 UHPis a

89、n ultra-high power indoor microwave radio that enables relocation of mission critical links from the 6 GHz band to the 11 GHzband to minimize potential interference and deliver longer links and more capacity.To address the issues of operational complexityin our customers networks,AviatCloud is a pla

90、tform with secure hosted software and services to automate networks and theiroperations.Low total cost of ownership.Our wireless-based solutions focus on achieving a low total cost of ownership,including savings onthe combined costs of initial acquisition,installation and ongoing operation and maint

91、enance.Our latest generation system designsreduce rack space requirements,require less power,are software-configurable to reduce spare parts requirements,and are simple toinstall,operate,upgrade and maintain.Our advanced wireless features also enable operators to save on related costs,includingspect

92、rum fees and tower rental fees.Futureproof network.Our solutions are designed to protect the network operators investment by incorporating software-configurable capacity upgrades and plug-in modules that provide a smooth migration path to Carrier Ethernet and IP/MPLS(multiprotocol label switching)an

93、d segment routing based networking,without the need for costly equipment substitutions andadditions.Our products include key technologies we believe will be needed by operators for their network evolution to support newbroadband services.Flexible,easily configurable products.We use flexible architec

94、tures with a high level of software configurable features.This designapproach produces high-performance products with reusable components while at the same time allowing for a manufacturingstrategy with a high degree of flexibility,improved cost and reduced time-to-market.The software features of ou

95、r products offer ourcustomers a greater degree of flexibility in installing,operating and maintaining their networks.Comprehensive network management.We offer a range of flexible network management solutions,from element management toenterprise-wide network management and service assurance that we c

96、an optimize to work with our wireless systems.Complete professional services.In addition to our product offerings,we provide network planning and design,site surveys andbuilds,systems integration,installation,maintenance,network monitoring,training,customer service and many other professionalservice

97、s.Our services cover the entire evaluation,purchase,deployment and operational cycle and enable us to be one of the fewcomplete,turnkey solution providers in the industry.82025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm8/93Table of Cont

98、entsBusiness OperationsSales and ServiceOur primary route to market is through our own direct sales,service and support organization.This provides us with the bestopportunity to leverage our role as a technology specialist and differentiate ourselves from competitors.Our focus on key customers andge

99、ographies allows us to consistently achieve a high level of customer retention and repeat business.Our highest concentrations of salesand service resources are in the United States,Western and Southern Africa,the Philippines,and the European Union.We maintain apresence in a number of other countries

100、,some of which are based in customer locations and include,but not limited to,Canada,Mexico,Kenya,India,Saudi Arabia,Australia,New Zealand,and Singapore.In addition to our direct channel to market,we have relationships with original equipment manufacturers(“OEMs”)and systemintegrators especially foc

101、used towards large and complex projects in national security and government-related applications.Our role inthese relationships ranges from equipment supply only to being a sub-contractor for a portion of the project scope where we will supplyequipment and a variety of design,deployment and maintena

102、nce services.We also use indirect sales channels,including dealers,resellers and sales representatives,in the marketing and sale of some linesof products and equipment on a global basis.These independent representatives may buy for resale or,in some cases,solicit orders fromcommercial or governmenta

103、l customers for direct sales by us.Prices to the ultimate customer in many instances may be recommendedor established by the independent representative and may be above or below our list prices.These independent representatives generallyreceive a discount from our list prices and are free to set the

104、 final sales prices paid by the customer.We have a direct online sales option through our online“Aviat Store”.The Aviat Store targets customers with a traditional highcost to serve via traditional channels.We provide online design tools for radio link planning and online ordering tools,which we fulf

105、illdirectly from our Aviat Store with multiple options of product available for next day shipment.Shipments from Aviat Store commencedin late 2018.We have repair and service centers in the Philippines and the United States.We have customer service and support personnel whoprovide customers with trai

106、ning,installation,technical support,maintenance and other services on systems under contract.We installand maintain customer equipment directly,in some cases,and contract with third-party service providers in other cases.The specific terms and conditions of our product warranties vary depending upon

107、 the product sold and country in which we dobusiness.On direct sales,warranty periods generally start on the delivery date and continue for one to three years.ManufacturingOur global manufacturing strategy follows an outsourced manufacturing model using contract manufacturing partners in Asia andthe

108、 United States.Our strategy is based on balancing cost and supplier performance as well as taking into account qualification forlocalization requirements of certain market segments,such as the Buy American Act.All manufacturing operations have been certified to International Standards Organization 9

109、001,a recognized international qualitystandard.We have also been certified to the TL 9000 standard,a telecommunication industry-specific quality system standard.BacklogOur backlog was approximately$289 million at June 30,2023 and$245 million at July 1,2022,consisting primarily of contractsor purchas

110、e orders for both product and service deliveries and extended service warranties.Services include managements initialestimate of the value of a customers commitment under a services contract.The calculation used by management involves estimates andjudgments to gauge the extent of a customers commitm

111、ent,including the type and duration of the agreement,and the presence oftermination charges or wind down costs.Contract extensions and increases in scope are treated as backlog only to the extent of the newincremental value.We regularly review our backlog to ensure that our customers continue to hon

112、or their purchase commitments andhave the financial means to purchase and deploy our products and services in accordance with the terms of their purchase contracts.Backlog estimates are subject to change and are affected by several factors,including terminations,changes in the scope of contracts,per

113、iodic revalidation,adjustments for revenue not materialized and adjustments for currency.92025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm9/93Table of ContentsWe expect to substantially deliver against the backlog as of June 30,2023 duri

114、ng fiscal 2024,but we cannot be assured that thiswill occur.Product orders in our current backlog are subject to changes in delivery schedules or to cancellation at the option of thepurchaser without significant penalty as well as long-term projects that could take more than a year to complete.Accor

115、dingly,althoughuseful for scheduling production,backlog as of any particular date may not be a reliable measure of sales for any future period becauseof the timing of orders,delivery intervals,customer and product mix and the possibility of changes in delivery schedules and additionsor cancellations

116、 of orders.CustomersAlthough we have a large customer base,during any given fiscal year or quarter,a small number of customers may account for asignificant portion of our revenue.During fiscal 2023 and 2021,no customers accounted for more than 10%of our total revenue.During fiscal 2022 one customera

117、ccounted for 13%of our total revenue.CompetitionThe microwave and millimeter wave wireless networking business is a competitive and specialized segment of thetelecommunications industry that is sensitive to technological advancements.Our principal competitors include business units of largemobile an

118、d IP network infrastructure manufacturers such as Ericsson,Huawei and Nokia Corporation,as well as a number of smallermicrowave specialist companies such as Ceragon Networks Ltd.,SIAE Microelectronica S.p.A.,Cambium Networks Corporation andAirspan Networks.We also compete with fiber optic cable and

119、low earth orbit satellites for networking connections.Some of our larger competitors may have greater name recognition,broader product lines(some including non-wirelesstelecommunications equipment and managed services),a larger installed base of products and longer-standing customer relationships.Th

120、ey may from time to time leverage their extensive overall portfolios into completely outsourced and managed network offeringsrestricting opportunities for specialist suppliers.In addition,some competitors may offer seller financing,which can be a competitiveadvantage under certain economic climates.

121、Some of our larger competitors may also act as systems integrators through which we sometimes distribute and sell products andservices to end users.The smaller independent private and public specialist competitors typically leverage new technologies and low product costs butare generally less capabl

122、e of offering a complete solution including professional services,especially in the North America and Africaregions which form the majority of our addressed market.We concentrate on market opportunities that we believe are compatible with our resources,overall technological capabilities andobjective

123、s.Principal competitive factors are unique differentiators,Total Cost of Ownership(“TCO”),product quality and reliability,technological capabilities,service,ability to meet delivery schedules and the effectiveness of dealers in international areas.We believethat the combination of our network and sy

124、stems engineering support and service,global reach,technological innovation,agility andclose collaborative relationships with our customers are the key competitive strengths for us.However,customers may still makedecisions based primarily on factors such as price,financing terms and/or past or exist

125、ing relationships,where it may be difficult for usto compete effectively or profitably.Research and DevelopmentWe believe that our ability to enhance our current products,develop and introduce new products on a timely basis,maintaintechnological competitiveness and meet customer requirements is esse

126、ntial to our success.Accordingly,we allocate,and intend tocontinue to allocate,a significant portion of our resources to research and development efforts in key technology areas and innovation todifferentiate our overall portfolio from our competition.The majority of such research and development re

127、sources will be focused ontechnologies in microwave and millimeter wave RF,digital signal processing,networking protocols and software applications.Our research and development expenditures totaled$24.9 million,or 7.2%of revenue,in fiscal 2023,$22.6 million,or 7.5%ofrevenue,in fiscal 2022,and$21.8 m

128、illion,or 7.9%of revenue,in fiscal 2021.Research and development are primarily directed to the development of new products and to build technological capability.Weare an industry innovator and intend to continue to focus significant resources on product development in an effort to maintain ourcompet

129、itiveness and support our entry into new markets.102025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm10/93Table of ContentsOur product development teams totaled 173 employees as of June 30,2023,and were located primarily in New Zealand,Slo

130、veniaand Canada.Raw Materials and SuppliesBecause of our range of products and services,as well as the wide geographic dispersion of our facilities,we use numeroussources of raw materials needed for our operations and for our products,such as electronic components,printed circuit boards,metalsand pl

131、astics.We are dependent upon suppliers and subcontractors for a large number of components and subsystems and upon the abilityof our suppliers and subcontractors to adhere to customers requirements or regulatory restrictions and to meet performance and qualityspecifications and delivery schedules.Ou

132、r strategy for procuring raw material and supplies includes dual sourcing(where possible)on strategic assemblies andcomponents.In general,we believe this reduces our risk with regard to the potential financial difficulties in our supply base.In someinstances,we are dependent upon one or a few source

133、s,either because of the specialized nature of a particular item or because of localcontent preference requirements pursuant to which we operate on a given project.Examples of sole or limited source categories includemetal fabrications and castings,for which we own the tooling and therefore limit our

134、 supplier relationships,and ASICs and MMICs(types of integrated circuit used in manufacturing microwave radios),which we procure at volume discount from a single source.Oursupply chain plan includes mitigation plans for alternative manufacturing sites which would also mitigate COVID-19 and otherdisr

135、uption risks.Although we have been affected by performance issues of some of our suppliers and subcontractors,we have not been materiallyadversely affected by the inability to obtain raw materials or products.In general,any performance issues causing short-term materialshortages are within the norma

136、l frequency and impact range currently experienced by high-tech manufacturing companies and are dueprimarily to the highly technical nature of many of our purchased components.Patents and Other Intellectual PropertyWe consider our patents,trademarks and other intellectual property rights,in the aggr

137、egate,to constitute an important asset.Weown a portfolio of patents,trade secrets,know-how,confidential information,trademarks,copyrights and other intellectual property.Asof June 30,2023,we(collectively with our subsidiaries)own approximately 339 U.S.patents and 237 international patents and had 14

138、U.S.patent applications pending and 28 international patent applications pending.The United States Patent and Trademark Office(“USPTO”)and international equivalent bodies have not yet concluded substantive examination of our pending patent applications.Therefore,it is unclear what scope of additiona

139、l patent coverage,if any,will eventually be provided as a result of those pendingapplications.Failure to obtain comprehensive patent coverage could impair our ability to prevent competitors from replicating someportions or all of our products.We also license intellectual property to and from third p

140、arties.The costs we pay or revenue we receivefrom such licenses may be dependent on certain factors,such as the market for such licenses and whether such licenses can benegotiated on commercially acceptable terms.However,we do not consider our business to be materially dependent upon any singlepaten

141、t,license or other intellectual property right.Further,changes in either the patent laws or in the interpretations of patent laws in the United States and other countries maydiminish the value of our intellectual property and may increase the uncertainties and costs surrounding the prosecution of pa

142、tentapplications and the enforcement or defense of issued patents.We cannot predict the breadth of claims that may be allowed or enforcedin our patents or in third-party patents.In addition,Congress or other foreign legislative bodies may pass patent reform legislation that isunfavorable to us.For e

143、xample,the United States Supreme Court has ruled on several patent cases in recent years,either narrowing thescope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.In addition toincreasing uncertainty with regard to our ability to

144、 obtain patents in the future,this combination of events has created uncertainty withrespect to the value of patents,once obtained.Depending on decisions by the United States Congress,the United States federal courts,the USPTO,or similar authorities in foreign jurisdictions,the laws and regulations

145、governing patents could change in unpredictableways that would weaken our ability to obtain new patents or to enforce our existing patents and the patents we might obtain or license inthe future.Our registered or unregistered trademarks or trade names may be challenged,circumvented,declared generic

146、or determined to beinfringing on other marks.There can be no assurance that competitors will not infringe our trademarks,that we will have adequateresources to enforce our trademarks or that any of our current or future trademark applications will be approved.During trademarkregistration proceedings

147、,we may receive rejections and,although we are given an opportunity to respond,we may be unable toovercome such rejections.In addition,in proceedings before the USPTO112025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm11/93Table of Content

148、sand in proceedings before comparable agencies in many foreign jurisdictions,trademarks are examined for registrability against priorpending and registered third-party trademarks,and third parties are given an opportunity to oppose registration of pending trademarkapplications and/or to seek cancell

149、ation of registered trademarks.Applications to register our trademarks may be finally rejected,andopposition or cancellation proceedings may be filed against our trademarks,which may necessitate a change in branding strategy if suchrejections and proceedings cannot be overcome or resolved.Additional

150、ly,competitors may try to develop products that are similar to ours and that may infringe,misappropriate or otherwiseviolate our intellectual property rights.As a result,from time to time,we might engage in litigation to enforce our patents or otherintellectual property rights or defend against clai

151、ms of alleged infringement asserted by third parties.Any of our patents,trade secrets,trademarks,copyrights and other intellectual property rights could be challenged,invalidated or circumvented,or may not providecompetitive advantages.Despite our efforts to protect our intellectual property rights,

152、we cannot be certain that the steps we have takenwill be sufficient or effective to prevent the unauthorized access,use,copying,or the reverse engineering of our technology and otherintellectual property,including by third parties who may use our technology or other proprietary information to develo

153、p products andservices that compete with ours.Additionally,policing unauthorized use of our intellectual property and proprietary rights can bedifficult,costly and time consuming.The enforcement of our intellectual property and proprietary rights also depends on any legalactions we may bring against

154、 any such parties being successful,but these actions are costly,time-consuming,and may not be successful,even when our rights have been infringed,misappropriated,or otherwise violated.Furthermore,our competitors or other third partiesmay assert that our products infringe,misappropriate or otherwise

155、violate their intellectual property rights.Successful claims ofinfringement,misappropriation or other violations by a third party could prevent us from offering certain products or features,require usto develop alternate,non-infringing technology,which could require significant time and expense,and

156、at which time we could be unableto continue to offer our affected products or solutions,or require us to obtain a license,which may not be available on reasonable termsor at all,or force us to pay substantial damages,royalties or other fees.In addition,to protect our confidential information,includi

157、ng our trade secrets,we require our employees and contractors to signconfidentiality and invention assignment agreements.We also enter into non-disclosure agreements with our suppliers and appropriatecustomers to limit their access to and disclosure of our proprietary information.Although our abilit

158、y to compete may be affected by our ability to protect our intellectual property rights and proprietaryinformation,we believe that,because of the rapid pace of technological change in the wireless telecommunications industry,ourinnovative skills,technical expertise and ability to introduce new produ

159、cts on a timely basis is just as important in maintaining ourcompetitive position as protecting our intellectual property.Trade secret,trademark,copyright and patent protections are important butmust be supported by other factors such as the expanding knowledge,ability and experience of our personne

160、l,new product introductionsand product enhancements.Although we have and will continue to implement protective measures and intend to vigorously defend ourintellectual property rights,there can be no assurance that these measures will be successful.Environmental and Other RegulationsOur facilities a

161、nd operations,in common with those of our industry in general,are subject to numerous domestic and internationallaws and regulations designed to protect the environment,particularly with regard to wastes and emissions.We believe that we havecomplied with these requirements and that such compliance h

162、as not had a material adverse effect on our results of operations,financialcondition or cash flows.Based upon currently available information,we do not expect expenditures to protect the environment and tocomply with current environmental laws and regulations over the next several years to have a ma

163、terial impact on our competitive orfinancial position but can give no assurance that such expenditures will not exceed current expectations.From time to time,we receivenotices from the U.S.Environmental Protection Agency or equivalent state or international environmental agencies that we are apotent

164、ially responsible party under the Comprehensive Environmental Response,Compensation and Liability Act,which is commonlyknown as the Superfund Act,and equivalent laws.Such notices may assert potential liability for cleanup costs at various sites,whichinclude sites owned by us,sites we previously owne

165、d and treatment or disposal sites not owned by us,allegedly containing hazardoussubstances attributable to us from past operations.We are not presently aware of any such liability that could be material to our business,financial condition or operating results,but due to the nature of our business an

166、d environmental risks,we cannot provide assurance thatany such material liability will not arise in the future.Electronic products are subject to environmental regulation in a number of jurisdictions.Equipment produced by us is subject todomestic and international requirements requiring end-of-life

167、management and/or restricting materials in122025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm12/93Table of Contentsproducts delivered to customers.We believe that we have complied with such rules and regulations,where applicable,with resp

168、ect toour existing products sold into such jurisdictions.Radio communications are also subject to governmental regulation.Equipment produced by us is subject to domestic andinternational requirements to avoid interference among users of radio frequencies and to permit interconnection of telecommunic

169、ationsequipment.We believe that we have complied with such rules and regulations with respect to our existing products,and we intend tocomply with such rules and regulations with respect to our future products.Reallocation of the frequency spectrum could impact ourbusiness,financial condition and re

170、sults of operations.We have a comprehensive policy and procedures in effect concerning conflict minerals compliance.Human Capital ManagementAs of June 30,2023,we had 704 employees,of whom 685 were full-time employees and 270 were located in the U.S.None ofour employees in the U.S.are represented by

171、a labor union.In certain international subsidiaries,our employees are represented byworkers councils or statutory labor unions.In general,we believe that our employee relations are good.We believe we offer a competitive compensation package,tailored to the job function and location of each employee.

172、We have aglobal team,and we offer competitive compensation and benefits programs that meet the needs of our employees,while also reflectinglocal market practices.Our U.S.benefits plan includes health benefits,life and disability insurance,various voluntary insurances,flexible time off and leave prog

173、rams,and a retirement plan with employer match.Our international benefits plans are competitive locallyand generally provide similar benefits.We grant equity-based compensation to many of our employees.In addition,we offer benefits tosupport our employees physical and mental health by providing tool

174、s and resources to help them improve or maintain their health andencourage healthy behaviors.Information about our Executive OfficersThe name,age,position held with us,and principal occupation and employment during at least the past 5 years for each of ourexecutive officers as of August 30,2023,are

175、as follows:Name and AgePosition Currently Held and Past Business ExperiencePeter A.Smith,57Mr.Smith was appointed President and Chief Executive Officer in January 2020.Prior to joiningAviat Networks,Mr.Smith served as Senior Vice President,US Windows and Canada for Jeld-Wenfrom March 2017 to Decembe

176、r 2019.Prior to Jeld-Wen,he served as President of PolyporeInternationals Transportation and Industrial segment from October 2013 to March 2017.Previously,he served as Chief Executive Officer and a director of Voltaix Inc.from September 2011 to October2013.Earlier in his career,Mr.Smith held various

177、 executive leadership positions at Fortune 100 andFortune 500 companies,including Cooper Industries,Dover Knowles Electronics and HoneywellSpecialty Materials.Mr.Smith also served on the board of Soleras Advanced Coatings from August2015 to October 2018 and Adaptive 3D Technologies from December 202

178、0 through its sale in May2021.He has both a Bachelor of Science degree in Material(Ceramics)Engineering and PhD inMaterial Science and Engineering from Rutgers University,and holds a Master of BusinessAdministration degree from Arizona State University.David M.Gray,54As Chief Financial Officer(CFO),

179、Mr.Gray is responsible for worldwide finance,treasury,accounting,reporting,compliance and taxation.Prior to joining Aviat,Mr.Gray was Chief FinancialOfficer and Treasurer of Superior Essex,a$2.6 billion global manufacturer and distributor ofcommunications and electrical equipment,and before that he

180、served at Cooper Industries where hewas CFO of an$800M revenue business focused on electrical,electronic and power managementsolutions.He also held a variety of executive finance and accounting positions at Newell Brands,Philips Electronics,and Autoliv.Mr.Gray holds a BS in Accounting from Penn Stat

181、e University,is aCertified Public Accountant(CPA)and Certified Management Accountant(CMA),and brings toAviat significant CFO experience in complex multi-national businesses as well as a deep backgroundin P&L leadership,cash flow management,and mergers and acquisitions.132025/2/11 21:06avnw-20230630h

182、ttps:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm13/93Table of ContentsBryan C.Tucker,55As Senior Vice President Americas,Mr.Tucker is responsible for sales and services in the Americas.Mr.Tucker joined the Company in 2005,and since,has served in a number of roles fo

183、r AviatNetworks and its predecessor companies Harris Stratex Networks and Harris MicrowaveCommunications Division(“MCD”).For example,as senior director for North America Operations,Mr.Tucker spearheaded major transitions in ERP systems,product lines and operational locations.Healso led the companys

184、post-merger systems unification with Harris MCD in 2007.Before joiningAviat Networks,Mr.Tucker worked for Sony Corp.as director of Manufacturing Engineering andMaintenance for two production facilities.Overall,Mr.Tucker has more than 25 years of experiencein engineering and manufacturing operations

185、with high-tech companies.He has a bachelors degree inelectrical engineering from the University of Florida,is Six Sigma Certified and has pursuedpostgraduate studies/research in semiconductor physics at Georgia Tech.Erin R.Boase,44As General Counsel,Ms.Boase is responsible for all aspects of the Leg

186、al function.Ms.Boase bringsa depth of experience to the team in privacy,employment,compliance,real estate,M&A,as well as,copyright,trademark and other product,software,service and cloud-related legal matters.Ms.Boasewas previously at Lifesize,Inc.where she served as Head of Legal and Corporate Secre

187、tary.Prior tothat she was the Senior Corporate Counsel at Cisco(formerly Duo Security,Inc.)where she managedthe adoption of GDPR privacy compliance,development of company policies,copyright andtrademark,technical compliance as well as other legal matters.Earlier in her career she held legalpositions

188、 of progressive responsibility with Dells Computer and Security business and ThomsonReuters.Erin holds a Juris Doctorate,Technology and Communications and graduated Cum Laudefrom Thomas Jefferson School of Law and a Bachelor of Arts from Midwestern State University.Gary G.Croke,51As Vice President o

189、f Marketing,Mr.Croke is responsible for Aviats global marketing which includescorporate and strategic marketing functions and product line management.Mr.Croke charts Aviatsglobal product and marketing strategy and ensures successful company-wide implementation.Histeams primary focus is on achieving

190、business growth through the definition and launch of newsolutions that drive customer economic value.Mr.Croke has over 25 years of leadership experiencein the data and mobile communications sectors and he is highly skilled at delivering creative andcompelling value propositions with demand generatio

191、n programs that produce business results.Garyhas a bachelors degree in electrical engineering from Memorial University of Newfoundland and haspursued postgraduate studies/research in business administration at the University of Ottawa.There is no family relationship between any of our executive offi

192、cers or directors,and there are no arrangements orunderstandings between any of our executive officers or directors and any other person pursuant to which any of them was appointed orelected as an officer or director,other than arrangements or understandings with our directors.Website Access to Avia

193、t Networks Reports;Available InformationWe maintain a website at .Our annual reports on Form 10-K,quarterly reports on Form 10-Q,currentreports on Form 8-K and amendments to such reports are available free of charge on our website as soon as reasonably practicable aftersuch material is electronicall

194、y filed with,or furnished to,the Securities and Exchange Commission(“SEC”).In addition to our reportsfiled or furnished with the SEC,we publicly disclose material information in press releases,at annual meetings of shareholders,inpublicly accessible conferences and investor presentations,and through

195、 our website.References to our website in this Form 10-K areprovided as a convenience and should not be deemed an incorporation by reference or a part of this Form 10-K.Additional information relating to our business and operations is set forth in“Item 7.Managements Discussion and Analysis ofFinanci

196、al Condition and Results of Operations”in this Annual Report on Form 10-K.Item 1A.Risk FactorsThe nature of the business activities conducted by the Company subjects us to certain hazards and risks.The following is asummary of some of the material risks relating to the Companys business activities.O

197、ther risks are described in“Item 1.Business,”“Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations”and“Item 7A.Quantitative andQualitative Disclosures About Market Risk.”Prospective and existing142025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/dat

198、a/1377789/000137778923000023/avnw-20230630.htm14/93Table of Contentsinvestors are strongly urged to carefully consider the various cautionary statements and risks set forth in this Annual Report on Form 10-K and in our other public filings.We face many business risks,including those related to our f

199、inancial performance,investments in our common stock,operatingour business and legal matters.If any of these risks occur,our financial condition and results of operations could be materially andadversely affected.In that case,the market price of the Companys common stock could decline.Risk Factors S

200、ummaryThe following is a summary of the principal risks that could adversely affect our business,operations and financial results.Business and Operational Risk FactorsOur sales cycle may be lengthy,and the timing of sales,along with additional services such as network design,installation andimplemen

201、tation of our products within our customers networks,may extend over more than one period,which can make ouroperating results volatile and difficult to predict.We face risks related to pandemics,threatened health epidemics and other outbreaks,which could significantly disrupt ourmanufacturing,sales

202、and other operations.Our success will depend on new products introduced to the marketplace in a timely manner,successfully completing producttransitioning and achieving customer acceptance.We rely on various third-party service partners to help complement our global operations,and failure to adequat

203、ely managethese relationships could adversely impact our financial results and relationships with customers.We must respond to rapid technological change and comply with evolving industry standards and requirements for our productsto be successful.Our average sales prices may decline in the future.C

204、redit and commercial risks and exposures could increase if the financial condition of our customers declines.Our restructuring actions could harm our relationships with our employees and impact our ability to recruit new employees.Our business could be adversely affected if we are unable to attract

205、and retain key personnel.We face strong competition for maintaining and improving our position in the market,which can adversely affect our revenuegrowth and operating results.Our ability to sell our products and compete successfully is highly dependent on the quality of our customer service andsupp

206、ort,and our failure to offer high quality service and support could have a material adverse effect on our sales and results ofoperations.Product performance problems,including undetected errors in our hardware or software,or deployment delays could harm ourbusiness and reputation.If we fail to accur

207、ately forecast our manufacturing requirements or customer demand,we could incur additional costs,whichwould adversely affect our business and results of operations.If we fail to effectively manage our contract manufacturer relationships,we could incur additional costs or be unable to timelyfulfill o

208、ur customer commitments,which would adversely affect our business and results of operations and,in the event of aninability to fulfill commitments,would harm our customer relationships.We depend on sole or limited sources and geographies for some key components and failure to receive timely delivery

209、 of any ofthese components could result in deferred or lost sales.Because a significant amount of our revenue may come from a limited number of customers,the termination of any of thesecustomer relationships may adversely affect our business.We continually evaluate strategic transaction opportunitie

210、s which could involve merger,divestiture,sale and/or acquisitionactivities that could disrupt our operations and harm our operating results.The NEC Transaction may not be consummated on a timely basis or at all.Failure to complete the acquisition within theexpected timeframe or at all could adversel

211、y affect our stock price and our future business and financial results.152025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm15/93Table of ContentsThe NEC Transaction will require management to devote significant attention and resources to i

212、ntegrating the acquired NECbusinesses with our business.Financial and Macroeconomic Risk FactorsAdverse developments affecting the financial services industry,including events or concerns involving liquidity,defaults ornon-performance by financial institutions,could adversely affect our business,fin

213、ancial condition or results of operations.Due to the volume of our international sales,we may be susceptible to a number of political,economic and geographic risksthat could harm our business.There are inherent limitations on the effectiveness of our controls.We may not be able to obtain capital whe

214、n desired on favorable terms,if at all,or without dilution to our stockholders.The effects of global financial and economic conditions in certain markets have had,and may continue to have,significanteffects on our customers and suppliers,and has in the past,and may in the future have,a material adve

215、rse effect on ourbusiness,operating results,financial condition and stock price.Changes in tax laws,treaties,rulings,regulations or agreements,or their interpretation in any country in which we operate;theloss of a major tax dispute;a successful challenge to our operating structure,intercompany pric

216、ing policies or the taxablepresence of our key subsidiaries in certain countries;or other factors could cause volatility in our effective tax rate and couldadversely affect our operating results.Our ability to use net operating loss carryforwards to offset future taxable income for U.S.federal incom

217、e tax purposes andother tax benefits may be limited.Legal and Regulatory Risk FactorsContinued tension in U.S.-China trade relations may adversely impact our supply chain operations and business.If we are unable to adequately protect our intellectual property rights,we may be deprived of legal recou

218、rse against those whomisappropriate our intellectual property.If sufficient radio frequency spectrum is not allocated for use by our products,or we fail to obtain regulatory approval for ourproducts,our ability to market our products may be restricted.Our business is subject to changing regulation o

219、f corporate governance,public disclosure and anti-bribery measures which haveresulted in increased costs and may continue to result in additional costs or potential liabilities in the future.Our products are used in critical communications networks which may subject us to significant liability claim

220、s.We may be subject to litigation regarding our intellectual property.This litigation could be costly to defend and resolve andcould prevent us from using or selling the challenged technology.We are subject to laws,rules,regulations and policies regarding data privacy and security.Many of these laws

221、 and regulationsare subject to change and reinterpretation,and could result in claims,changes to our business practices,monetary penalties,increased cost of operations or other harm to our business.We are subject to complex federal,state,local and international laws and regulations related to protec

222、tion of the environmentthat could materially and adversely affect the cost,manner or feasibility of conducting our operations,as well as those of oursuppliers and contract manufacturers.Increased attention to environmental,social,and governance(“ESG”)matters,conservation measures and climate changei

223、ssues has contributed to an evolving state of environmental regulation,which could impact our results of operations,financialor competitive position and may adversely impact our business.Anti-takeover provisions of Delaware law,Tax Benefit Preservation Plan(the“Plan”),and provisions in our Amended a

224、ndRestated Certificate of Incorporation,as amended,and Amended and Restated Bylaws could make a third-party acquisition ofus difficult.General Risk FactorsNatural disasters or other catastrophic events such as terrorism and war could have an adverse effect on our business.162025/2/11 21:06avnw-20230

225、630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm16/93Table of ContentsSystem security risks,data protection breaches,and cyberattacks could compromise our proprietary information,disrupt ourinternal operations and harm public perception of our products,which cou

226、ld cause our business and reputation to suffer andadversely affect our stock price.For a more complete discussion of the material risks facing our business,see below.Business and Operational Risk FactorsOur sales cycle may be lengthy,and the timing of sales,along with additional services such as net

227、work design,installation andimplementation of our products within our customers networks,may extend over more than one period,which can make ouroperating results volatile and difficult to predict.We experience difficulty in accurately predicting the timing of the sale of products and amounts of reve

228、nue generated from salesof our products,primarily in developing countries.The establishment of a business relationship with a potential customer is a lengthyprocess,usually taking several months or more.Following the establishment of the relationship,the negotiation of purchase terms can betime-cons

229、uming,and a potential customer may require an extended evaluation and testing period.Once a purchase agreement has beenexecuted,the timing and amount of revenue,if applicable,may remain difficult to predict.Our typical product sales cycle,which resultsin our products being designed into our customer

230、s networks,can take 12 to 24 months.A number of factors contribute to the length ofthe sales cycle,including technical evaluations of our products and the design process required to integrate our products into ourcustomers networks.The completion of services such as installation and testing of the c

231、ustomers networks and the completion of allother suppliers network elements are subject to the customers timing and efforts and other factors outside our control,each of whichmay prevent us from making predictions of revenue with any certainty and could cause us to experience substantial period-to-p

232、eriodfluctuations in our operating results.Due to the challenges from our lengthy sales cycle,our recognition of revenue from our selling efforts may be substantiallydelayed,our ability to forecast our future revenue may be more limited and our revenue may fluctuate significantly from quarter toquar

233、ter.Our operating results are expected to be difficult to predict and delays in product delivery or closing a sale can cause revenue,margins and net income or loss to fluctuate significantly from anticipated levels.A substantial portion of our contracts are completed inthe latter part of a quarter a

234、nd a significant percentage of these are large orders.Because a significant portion of our cost structure islargely fixed in the short term,revenue shortfalls tend to have a disproportionately negative impact on our profitability and can increaseour inventory.The number of large new transactions als

235、o increases the risk of fluctuations in our quarterly results because a delay ineven a small number of these transactions could cause our quarterly revenues and profitability to fall significantly short of ourpredictions.In addition,we may increase spending in response to competitive actions,in purs

236、uit of new market opportunities,or tomitigate supply chain disruptions.Accordingly,we cannot provide assurances that we will be able to achieve profitability in the future orthat if profitability is attained,that we will be able to sustain profitability,particularly on a quarter-to-quarter basis.We

237、face risks related to pandemics,threatened health epidemics and other outbreaks,which could significantly disrupt ourmanufacturing,sales and other operations.Our business could be adversely impacted by the effects of a widespread outbreak of contagious disease,such as COVID-19.Apandemic such as COVI

238、D-19 or other such health crisis could impact our supply operations;for example,if any of our suppliers ceaseoperating,causing us to move production to an alternate supplier.In addition,constraints on supply operations as a result of a pandemichas in the past and could in the future result in compon

239、ent part shortages due to global capacity constraints.Such a constraint could andhas caused lead times for our products to increase.In an effort to halt the outbreak of a pandemic such as COVID-19,governments havein the past and may in the future place significant restrictions on travel,leading to e

240、xtended business closures,including closures at ourthird-party manufacturers.Our suppliers and third-party manufacturers have and could be disrupted by worker absenteeism,quarantines,office and factory closures,disruptions to ports and other shipping infrastructure,or other travel or health-related

241、restrictions and suchrestrictions could spread to other locations where we outsource the manufacturing or distribution of our products if the virus and itsvariants continues to spread or resurge.If our supply chain operations are affected or are curtailed by the outbreak of diseases such asCOVID-19,

242、our supply chain,manufacturing and product shipments will be delayed,which could adversely affect our business,operations and customer relationships.We may need to seek alternate sources of supply which may be more expensive,unavailable ormay result in delays in shipments to us from our supply chain

243、 and subsequently to our customers.Further,if our distributors or end usercustomers172025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm17/93Table of Contentsbusinesses are similarly affected,they might delay or reduce purchases from us,whi

244、ch could adversely affect our results of operations.In addition,freight and logistics constraints caused in part by restrictions imposed by governments to combat the COVID-19pandemic and additionally due to container and carriage shortages,have resulted in increased costs and constrained available t

245、ransport,for us and our channel partners,all at a time when global demand has increased.We have sought and may continue to seek alternatesources of supply which may be more expensive,unavailable or may result in delays in shipments to us and from our supply chain andsubsequently to our customers.We

246、are conducting business with certain modifications to employee travel,employee work locations,and virtualization orcancellation of certain sales and marketing events,among other modifications.Our business is dependent on travel of our sales,operations,quality and technical support,and other managers

247、 and employees.Limitations placed on travel globally could limit ourability to manage post-contract support and maintenance activities.We may take further actions that alter our business operations as maybe required by federal,state or local authorities,or that we determine are in the best interest

248、of our employees,customers,partners,suppliers and shareholders.Any such alterations or modifications may adversely impact our business,our customers and prospects,orour financial results.The extent to which the COVID-19 pandemic or any other pandemic will impact our business and financial results go

249、ing forwardwill be dependent on future developments such as the length and severity of the crisis,the potential resurgence of COVID-19 or otherpandemics and its variants in the future,future government actions in response to the crisis,the acceptance and effectiveness of theCOVID-19 vaccines and the

250、 overall impact of the COVID-19 pandemic on the global economy and capital markets,among many otherfactors,all of which remain highly uncertain and unpredictable.We cannot at this time quantify or forecast the business impact ofCOVID-19,and there can be no assurance that the COVID-19 pandemic or oth

251、er health crisis will not have a material and adverse effecton our business,financial results and financial condition.Our success will depend on new products introduced to the marketplace in a timely manner,successfully completing producttransitioning and achieving customer acceptance.The market for

252、 our products and services is characterized by rapid technological change,evolving industry standards and frequentnew product introductions.Our future success will depend,in part,on continuous timely development and introduction of new productsand enhancements that address evolving market requiremen

253、ts and are attractive to customers.If we fail to develop or introduce,on atimely basis,new products or product enhancements or features that achieve market acceptance,our business may suffer.Additionally,we work closely with a variety of third-party partners to develop new product features and new p

254、latforms.Should our partners facedelays in the development process,then the timing of the rollout of our new products may be significantly impacted which maynegatively impact our revenue and gross margin.Another factor impacting our future success is the growth in the customer demand ofour new produ

255、cts.Rapidly changing technology,frequent new product introductions and enhancements,short product life cycles andchanges in customer requirements characterize the markets for our products.We believe that successful new product introductionsprovide a significant competitive advantage because of the s

256、ignificant resources committed by customers in adopting new products andtheir reluctance to change products after these resources have been expended.We have spent,and expect to continue to spend,significant resources on internal research and development to support our effort to develop and introduce

257、 new products andenhancements.As we transition to new product platforms,we face significant risk that the development of our new products may not be acceptedby our current customers or by new customers.To the extent that we fail to introduce new and innovative products that are adopted bycustomers,w

258、e could fail to obtain an adequate return on these investments and could lose market share to our competitors,which couldbe difficult or impossible to regain.Similarly,we may face decreased revenue,gross margins and profitability due to a rapid decline insales of current products as customers hold s

259、pending to focus purchases on new product platforms.We could incur significant costs incompleting the transition,including costs of inventory write-downs of the current product as customers transition to new productplatforms.In addition,products or technologies developed by others may render our pro

260、ducts non-competitive or obsolete and result insignificant reduction in orders from our customers and the loss of existing and prospective customers.We rely on various third-party service partners to help complement our global operations,and failure to adequately manage theserelationships could adve

261、rsely impact our financial results and relationships with customers.We rely on a number of third-party service partners,to complement our global operations.We rely upon these partners for certaininstallation,maintenance,logistics and support functions.In addition,as our customers increasingly182025/

262、2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm18/93Table of Contentsseek to rely on vendors to perform additional services relating to the design,construction and operation of their networks,the scope ofwork performed by our service partner

263、s is likely to increase and may include areas where we have less experience providing ormanaging such services.We must successfully identify,assess,train and certify qualified service partners to ensure the properinstallation,deployment and maintenance of our products.The vetting and certification o

264、f these partners can be costly and time-consuming,and certain partners may not have the same operational history,financial resources and scale as we have.Moreover,certainservice partners may provide similar services for other companies,including our competitors.We may not be able to manage ourrelati

265、onships with our service partners effectively,and we cannot be certain that they will be able to deliver services in the manner ortime required,that we will be able to maintain the continuity of their services,or that they will adhere to our approach to ethical businesspractices.If we do not effecti

266、vely manage our relationships with third-party service partners,or if they fail to perform these services in themanner or time required,our financial results and relationships with our customers could be adversely affected.We must respond to rapid technological change and comply with evolving indust

267、ry standards and requirements for our products tobe successful.The optical transport networking equipment market is characterized by rapid technological change,changes in customerrequirements and evolving industry standards.We continually invest in research and development to sustain or enhance our

268、existingproducts,but the introduction of new communications technologies and the emergence of new industry standards or requirements couldrender our products obsolete.Further,in developing our products,we have made,and will continue to make,assumptions with respect towhich standards or requirements

269、will be adopted by our customers and competitors.If the standards or requirements adopted by ourprospective customers are different from those on which we have focused our efforts,market acceptance of our products would bereduced or delayed,and our business would be harmed.We are continuing to inves

270、t a significant portion of our research and development efforts in the development of our next-generation products.We expect our competitors will continue to improve the performance of their existing products and introduce newproducts and technologies and to influence customers buying criteria so as

271、 to emphasize product capabilities that we do not,or may not,possess.To be competitive,we must anticipate future customer requirements and continue to invest significant resources in research anddevelopment,sales and marketing,and customer support.If we do not anticipate these future customer requir

272、ements and invest in thetechnologies necessary to enable us to have and to sell the appropriate solutions,it may limit our competitive position and future sales,which would have an adverse effect on our business and financial condition.We may not have sufficient resources to make theseinvestments an

273、d we may not be able to make the technological advances necessary to be competitive.Our average sales prices may decline in the future.We have experienced,and could continue to experience,declining sales prices.This price pressure is likely to result in downwardpricing pressure on our products and s

274、ervices.As a result,we are likely to experience declining average sales prices for our products.Our future profitability will depend upon our ability to improve manufacturing efficiencies,to reduce the costs of materials used in ourproducts and to continue to introduce new lower-cost products and pr

275、oduct enhancements and if we are unable to do so,we may not beable to respond to pricing pressures.If we are unable to respond to increased price competition,our business,financial condition andresults of operations will be harmed.Because customers frequently negotiate supply arrangements far in adv

276、ance of delivery dates,wemay be required to commit to price reductions for our products before we are aware of how,or if,cost reductions can be obtained.As aresult,current or future price reduction commitments and any inability on our part to respond to increased price competition could harmour busi

277、ness,financial condition and results of operations.Credit and commercial risks and exposures could increase if the financial condition of our customers declines.A substantial portion of our sales are to customers in the telecommunications industry.These customers may require theirsuppliers,including

278、 the Company,to provide extended payment terms,direct loans or other forms of financial support as a condition toobtaining commercial contracts.In addition,if local currencies cannot be hedged,we have an inherent exposure in our ability to convertmonies at favorable rates from or to U.S.dollars.More

279、 generally,we expect to routinely enter into long-term contracts involvingsignificant amounts to be paid by our customers over time.Pursuant to these contracts,we may deliver products and servicesrepresenting an important portion of the contract price before receiving any significant payment from th

280、e customer.As a result of thefinancing that may be provided to customers and our commercial risk exposure under long-term contracts,our business could beadversely affected if the192025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm19/93Tabl

281、e of Contentsfinancial condition of our customers erodes.Over the past few years,certain of our customers have filed with the courts seekingprotection under the bankruptcy or reorganization laws of the applicable jurisdiction or have experienced financial difficulties.Ourcustomers financial conditio

282、ns face additional challenges in many emerging markets,where our customers are being affected not onlyby recession,but by deteriorating local currencies and a lack of credit and,more broadly,by the COVID-19 pandemic and relatedeconomic effects.If customers fail to meet their obligations to us,we may

283、 experience reduced cash flows and losses in excess ofreserves,which could materially adversely impact our results of operations and financial position.Our business requires extensive credit risk management that may not be adequate to protect against customer nonpayment.A riskof non-payment by custo

284、mers is a significant focus of our business.We expect a significant amount of future revenue to come frominternational customers in developing countries.We do not generally expect to obtain collateral for sales,although we require letters ofcredit or credit insurance as appropriate for international

285、 customers.Because a significant amount of our revenue may come from alimited number of customers,the termination of any of these customer relationships may adversely affect our business.Our historicalaccounts receivable balances have been concentrated in a small number of significant customers.Unex

286、pected adverse events impactingthe financial condition of our customers,bank failures or other unfavorable regulatory,economic or political events in the countries inwhich we do business may impact collections and adversely impact our business,require increased bad debt expense or receivable write-o

287、ffs and adversely impact our cash flows,financial condition and operating results,which could also result in a breach of our bankcovenants.Our business could be adversely affected if we are unable to attract and retain key personnel.Our success and ability to invest and grow depend largely on our ab

288、ility to attract and retain highly skilled technical,professional,managerial,sales and marketing personnel.Historically,competition for these key personnel has been intense.The loss of services ofany of our key personnel,the inability to retain and attract qualified personnel in the future,delays in

289、 hiring required personnel,particularly engineering and sales personnel,or the loss of key personnel to competitors could make it difficult for us to meet keyobjectives,such as timely and effective product introductions and financial goals.We face strong competition for maintaining and improving our

290、 position in the market,which can adversely affect our revenuegrowth and operating results.The wireless access,interconnection and backhaul business is a specialized segment of the wireless telecommunications industryand is extremely competitive.Competition in this segment is intense,and we expect i

291、t to increase.Some of our competitors have moreextensive engineering,manufacturing and marketing capabilities and significantly greater financial,technical and personnel resourcesthan we have.In addition,some of our competitors have greater name recognition,broader product lines,a larger installed b

292、ase ofproducts and longer-standing customer relationships.Our competitors include established companies,such as Ericsson,Huawei andNokia,as well as a number of other public and private companies,such as Ceragon and SIAE.Some of our competitors are OEMs orsystems integrators through whom we market an

293、d sell our products,which means our business success may depend on these competitorsto some extent.One or more of our largest customers could internally develop the capability to manufacture products similar to thosemanufactured or outsourced by us and,as a result,the demand for our products and ser

294、vices may decrease.In addition,we compete for acquisition and expansion opportunities with many entities that have substantially greater resourcesthan we have.Our competitors may enter business combinations to accelerate product development or to compete more aggressively andwe may lack the resource

295、s to meet such enhanced competition.Our ability to compete successfully will depend on a number of factors,including price,quality,availability,customer service andsupport,breadth of product lines,product performance and features,rapid time-to-market delivery capabilities,reliability,timing of newpr

296、oduct introductions by us,our customers and competitors,the ability of our customers to obtain financing and the stability of regionalsociopolitical and geopolitical circumstances,and the ability of large competitors to obtain business by providing more seller financingespecially for large transacti

297、ons.We can give no assurances that we will have the financial resources,technical expertise,or marketing,sales,distribution,customer service and support capabilities to compete successfully,or that regional sociopolitical and geographiccircumstances will be favorable for our successful operation.202

298、025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm20/93Table of ContentsOur ability to sell our products and compete successfully is highly dependent on the quality of our customer service and support,andour failure to offer high quality se

299、rvice and support could have a material adverse effect on our sales and results of operations.Once our products are delivered,our customers depend on our service and support to resolve any issues relating to our products.Our support personnel includes employees in various geographic locations,who pr

300、ovide general technical support to our customers.Ahigh level of support is important for the successful marketing and sale of our products.If we do not effectively help our customersquickly resolve issues or provide effective ongoing support,it could adversely affect our ability to sell our products

301、 to existingcustomers as well as demand for maintenance and renewal contracts and could harm our reputation with existing and potentialcustomers.Product performance problems,including undetected errors in our hardware or software,or deployment delays could harm ourbusiness and reputation.The develop

302、ment and production of products with high technology content is complicated and often involves problems withhardware,software,components and manufacturing methods.Complex hardware and software systems,such as our products,can oftencontain undetected errors or bugs when first introduced or as new ver

303、sions are released.In addition,errors associated with componentswe purchase from third parties,including customized components,may be difficult to resolve.We have experienced issues in the past inconnection with our products,including failures due to the receipt of faulty components from our supplie

304、rs and performance issuesrelated to software updates.From time to time we have had to replace certain components or provide software remedies or otherremediation in response to errors or bugs,and we may have to do so again in the future.In addition,performance issues can beheightened during periods

305、where we are developing and introducing multiple new products to the market,as any performance issues weencounter in one technology or product could impact the performance or timing of delivery of other products.Our products may alsosuffer degradation of performance and reliability over time.If reli

306、ability,quality,security or network monitoring problems develop,a number of negative effects on our business could result,including:reduced orders from existing customers;declining interest from potential customers;delays in our ability to recognize revenue or in collecting accounts receivables;cost

307、s associated with fixing hardware or software defects or replacing products;high service and warranty expenses;delays in shipments;high inventory excess and obsolescence expense;high levels of product returns;diversion of our engineering personnel from our product development efforts;andpayment of l

308、iquidated damages,performance guarantees or similar penalties.Because we outsource the manufacturing of certain components of our products,we may also be subject to product performanceproblems as a result of the acts or omissions of third parties,and we may not have adequate compensating remedies ag

309、ainst such thirdparties.From time to time,we encounter interruptions or delays in the activation of our products at a customers site.These interruptionsor delays may result from product performance problems or from issues with installation and activation,some of which are outside ourcontrol.If we ex

310、perience significant interruptions or delays that we cannot promptly resolve,the associated revenue for theseinstallations may be delayed or confidence in our products could be undermined,which could cause us to lose customers,fail to add newcustomers,and consequently harm our financial results.If w

311、e fail to accurately forecast our manufacturing requirements or customer demand,we could incur additional costs,which wouldadversely affect our business and results of operations.If we fail to accurately predict our manufacturing requirements or forecast customer demand,we may incur additional costs

312、 ofmanufacturing and our gross margins and financial results could be adversely affected.If we overestimate our requirements,our contractmanufacturers may experience an oversupply of components and assess us212025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/0001377789230000

313、23/avnw-20230630.htm21/93Table of Contentscharges for excess or obsolete components that could adversely affect our gross margins.If we underestimate our requirements,ourcontract manufacturers may have inadequate inventory or components,which could interrupt manufacturing and result in highermanufac

314、turing costs,shipment delays,damage to customer relationships and/or our payment of penalties to our customers.Our contractmanufacturers also have other customers and may not have sufficient capacity to meet all of their customers needs,including ours,during periods of excess demand.If we fail to ef

315、fectively manage our contract manufacturer relationships,we could incur additional costs or be unable to timely fulfillour customer commitments,which would adversely affect our business and results of operations and,in the event of an inability tofulfill commitments,would harm our customer relations

316、hips.We outsource all of our manufacturing and a substantial portion of our repair service operations to independent contractmanufacturers and other third parties.Our contract manufacturers typically manufacture our products based on rolling forecasts of ourproduct needs that we provide to them on a

317、 regular basis.The contract manufacturers are responsible for procuring componentsnecessary to build our products based on our rolling forecasts,building and assembling the products,testing the products in accordancewith our specifications and then shipping the products to us.We configure the produc

318、ts to our customer requirements,conduct finaltesting and then ship the products to our customers.There can be no assurance that we will not encounter problems with our contractmanufacturer related to these manufacturing services or that we will be able to replace a contract manufacturer that is not

319、able to meetour demand.In addition,if we fail to effectively manage our relationships with our contract manufacturers or other service providers,or if theydo not fully comply with their contractual obligations or should experience delays,disruptions,component procurement problems orquality control p

320、roblems,then our ability to ship products to our customers or otherwise fulfill our contractual obligations to ourcustomers could be delayed or impaired which would adversely affect our business,financial results and customer relationships.We depend on sole or limited sources and geographies for som

321、e key components and failure to receive timely delivery of any of thesecomponents could result in deferred or lost sales.In some instances,we are dependent upon one or a few sources,either because of the specialized nature of a particular item orbecause of local content preference requirements pursu

322、ant to which we operate on a given project.Examples of sole or limited sourcingcategories include metal fabrications and castings,for which we own the tooling and therefore limit our supplier relationships,andMMICs(a type of integrated circuit used in manufacturing microwave radios),which we procure

323、 at a volume discount from a singlesource.Additionally,certain semiconductor supply is concentrated in Taiwan,with little to no availability in other geographies.As such,any military conflict between Taiwan and China could interrupt supply.Our supply chain strategy includes mitigation plans for alte

324、rnative manufacturing sources and identified alternate suppliers.However,if these alternatives cannot address our requirements when our existing sources of these components fail to deliver them ontime,we could suffer delayed shipments,canceled orders and lost or deferred revenues,as well as material

325、 damage to our customerrelationships.Should this occur,our operating results,cash flows and financial condition could be materially adversely affected.Because a significant amount of our revenue may come from a limited number of customers,the termination of any of thesecustomer relationships may adv

326、ersely affect our business.Although we have a large customer base,during any given quarter or fiscal year a small number of customers may account for asignificant portion of our revenue.Principal customers for our products and services include domestic and international wireless/mobileservice provid

327、ers,OEMs,as well as private network users such as public safety agencies;government institutions;and utility,pipeline,railroad and other industrial enterprises that operate broadband wireless networks.In addition,the telecommunications industry has experienced significant consolidation among its par

328、ticipants,and we expect thistrend to continue.Some operators in this industry have experienced financial difficulty and have filed,or may file,for bankruptcyprotection.Other operators may merge and one or more of our competitors may supply products to the customers of the combinedcompany following t

329、hose mergers.This consolidation could result in purchasing decision delays and decreased opportunities for us tosupply products to companies following any consolidation.This consolidation may also result in lost opportunities for cost reduction andeconomies of scale,and could generally reduce our op

330、portunities to win new customers to the extent that the number of potentialcustomers decreases.Furthermore,as222025/2/11 21:06avnw-20230630https:/www.sec.gov/Archives/edgar/data/1377789/000137778923000023/avnw-20230630.htm22/93Table of Contentsour customers become larger,they may have more leverage

331、to negotiate better pricing which could adversely affect our revenues andgross margins.It is possible that a significant portion of our future product sales could become even more concentrated in a limited number ofcustomers due to the factors described above.Product sales to major customers have va

332、ried widely from period to period.The loss ofany existing customer,a significant reduction in the level of sales to any existing customer,the consolidation of existing customers,orour inability to gain additional customers could result in declines in our revenue or an inability to grow revenue.We co

333、ntinually evaluate strategic transaction opportunities which could involve merger,divestiture,sale and/or acquisition activitiesthat could disrupt our operations and harm our operating results.Our growth depends upon market growth,our ability to enhance our existing products and our ability to introduce new productson a timely basis.We intend to continue to address the need to develop new products