x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
AVIAT NETWORKS, INC. (Exact name of registrant as specified in its charter) | ||
Delaware | 20-5961564 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
860 N. McCarthy Blvd., Suite 200, Milpitas, California | 95035 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | x (Do not check if a smaller reporting company) | Smaller reporting company | o | |
Emerging growth company | o |
Page | |
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) | |
Item 1. | Financial Statements |
(In thousands, except share and par value amounts) | March 30, 2018 | June 30, 2017 | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 37,264 | $ | 35,658 | |||
Restricted cash | 1,273 | 541 | |||||
Short-term investments | 276 | 264 | |||||
Accounts receivable, net | 38,459 | 45,945 | |||||
Unbilled receivables | 14,409 | 12,110 | |||||
Inventories | 22,087 | 21,794 | |||||
Customer service inventories | 1,609 | 1,871 | |||||
Other current assets | 5,967 | 6,402 | |||||
Total current assets | 121,344 | 124,585 | |||||
Property, plant and equipment, net | 16,915 | 16,406 | |||||
Deferred income taxes | 5,737 | 6,178 | |||||
Other assets | 9,888 | 5,407 | |||||
TOTAL ASSETS | $ | 153,884 | $ | 152,576 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Short-term debt | $ | 9,000 | $ | 9,000 | |||
Accounts payable | 31,661 | 33,606 | |||||
Accrued expenses | 21,117 | 21,933 | |||||
Advanced payments and unearned income | 20,553 | 20,004 | |||||
Restructuring liabilities | 198 | 1,475 | |||||
Total current liabilities | 82,529 | 86,018 | |||||
Unearned income | 6,935 | 7,062 | |||||
Other long-term liabilities | 1,064 | 1,022 | |||||
Reserve for uncertain tax positions | 2,497 | 2,453 | |||||
Deferred income taxes | 1,610 | 1,681 | |||||
Total liabilities | 94,635 | 98,236 | |||||
Commitments and contingencies (Note 10) | |||||||
Equity: | |||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock, $0.01 par value, 300,000,000 shares authorized, 5,349,309 shares issued and outstanding at March 30, 2018; 5,317,766 shares issued and outstanding at June 30, 2017 | 53 | 53 | |||||
Additional paid-in-capital | 815,437 | 813,733 | |||||
Accumulated deficit | (746,413 | ) | (748,204 | ) | |||
Accumulated other comprehensive loss | (10,976 | ) | (11,785 | ) | |||
Noncontrolling interests | 1,148 | 543 | |||||
Total equity | 59,249 | 54,340 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 153,884 | $ | 152,576 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands, except per share amounts) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
Revenues: | |||||||||||||||
Revenue from product sales | $ | 40,686 | $ | 39,099 | $ | 113,472 | $ | 119,781 | |||||||
Revenue from services | 21,407 | 19,601 | 66,526 | 65,662 | |||||||||||
Total revenues | 62,093 | 58,700 | 179,998 | 185,443 | |||||||||||
Cost of revenues: | |||||||||||||||
Cost of product sales | 28,704 | 26,911 | 76,151 | 82,774 | |||||||||||
Cost of services | 15,257 | 14,057 | 46,529 | 46,456 | |||||||||||
Total cost of revenues | 43,961 | 40,968 | 122,680 | 129,230 | |||||||||||
Gross margin | 18,132 | 17,732 | 57,318 | 56,213 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development expenses | 4,754 | 4,264 | 14,696 | 13,682 | |||||||||||
Selling and administrative expenses | 14,745 | 13,284 | 42,571 | 42,527 | |||||||||||
Restructuring (recovery) charges | (2 | ) | 111 | (252 | ) | 343 | |||||||||
Total operating expenses | 19,497 | 17,659 | 57,015 | 56,552 | |||||||||||
Operating (loss) income | (1,365 | ) | 73 | 303 | (339 | ) | |||||||||
Interest income | 49 | 42 | 149 | 168 | |||||||||||
Interest expense | (5 | ) | (7 | ) | (24 | ) | (28 | ) | |||||||
Other (expense) income | (54 | ) | 341 | (220 | ) | 164 | |||||||||
(Loss) income before income taxes | (1,375 | ) | 449 | 208 | (35 | ) | |||||||||
Provision for (benefit from) income taxes | 1,015 | 779 | (2,188 | ) | (826 | ) | |||||||||
Net (loss) income | (2,390 | ) | (330 | ) | 2,396 | 791 | |||||||||
Less: Net income attributable to noncontrolling interests, net of tax | 233 | 69 | 605 | 141 | |||||||||||
Net (loss) income attributable to Aviat Networks’ common stockholders | $ | (2,623 | ) | $ | (399 | ) | $ | 1,791 | $ | 650 | |||||
Net (loss) income per share of common stock outstanding: | |||||||||||||||
Basic | $ | (0.49 | ) | $ | (0.08 | ) | $ | 0.34 | $ | 0.12 | |||||
Diluted | $ | (0.49 | ) | $ | (0.08 | ) | $ | 0.32 | $ | 0.12 | |||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 5,344 | 5,310 | 5,331 | 5,286 | |||||||||||
Diluted | 5,344 | 5,310 | 5,632 | 5,392 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
Net (loss) income | $ | (2,390 | ) | $ | (330 | ) | $ | 2,396 | $ | 791 | |||||
Other comprehensive income (loss): | |||||||||||||||
Net change in cumulative translation adjustments | 188 | 229 | 809 | (919 | ) | ||||||||||
Other comprehensive income (loss) | 188 | 229 | 809 | (919 | ) | ||||||||||
Comprehensive (loss) income | (2,202 | ) | (101 | ) | 3,205 | (128 | ) | ||||||||
Less: Comprehensive income attributable to noncontrolling interests, net of tax | 233 | 69 | 605 | 141 | |||||||||||
Comprehensive (loss) income attributable to Aviat Networks | $ | (2,435 | ) | $ | (170 | ) | $ | 2,600 | $ | (269 | ) |
Nine Months Ended | |||||||
(In thousands) | March 30, 2018 | March 31, 2017 | |||||
Operating Activities | |||||||
Net income | $ | 2,396 | $ | 791 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization of property, plant and equipment | 3,981 | 4,540 | |||||
Provision for (recovery from) uncollectible receivables | 48 | (874 | ) | ||||
Share-based compensation | 1,689 | 1,511 | |||||
Deferred tax assets, net | (2,823 | ) | 320 | ||||
Charges for inventory and customer service inventory write-downs | 376 | 1,026 | |||||
Loss on disposition of property, plant and equipment | 28 | 116 | |||||
Gain on liquidation of subsidiary | — | (349 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 8,068 | 19,220 | |||||
Unbilled receivables | (2,299 | ) | (4,662 | ) | |||
Inventories | 954 | 7,632 | |||||
Customer service inventories | (351 | ) | 25 | ||||
Accounts payable | (1,399 | ) | (2,127 | ) | |||
Accrued expenses | (569 | ) | (1,591 | ) | |||
Advanced payments and unearned income | (806 | ) | (9,375 | ) | |||
Income taxes payable or receivable | (72 | ) | 1,214 | ||||
Other assets and liabilities | (1,942 | ) | (3,998 | ) | |||
Net cash provided by operating activities | 7,279 | 13,419 | |||||
Investing Activities | |||||||
Payments for acquisition of property, plant and equipment | (5,048 | ) | (3,195 | ) | |||
Net cash used in investing activities | (5,048 | ) | (3,195 | ) | |||
Financing Activities | |||||||
Proceeds from borrowings | 27,000 | 24,000 | |||||
Repayments of borrowings | (27,000 | ) | (25,000 | ) | |||
Proceeds from issuance of common stock under employee stock plans | 15 | 9 | |||||
Net cash provided by (used in) financing activities | 15 | (991 | ) | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 60 | (333 | ) | ||||
Net Increase in Cash, Cash Equivalents, and Restricted Cash | 2,306 | 8,900 | |||||
Cash, Cash Equivalents and Restricted Cash, Beginning of Period | 36,569 | 31,425 | |||||
Cash, Cash Equivalents and Restricted Cash, End of Period | $ | 38,875 | $ | 40,325 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands, except per share amounts) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
Numerator: | |||||||||||||||
Net (loss) income attributable to Aviat Networks | $ | (2,623 | ) | $ | (399 | ) | $ | 1,791 | $ | 650 | |||||
Denominator: | |||||||||||||||
Weighted average shares outstanding, basic | 5,344 | 5,310 | 5,331 | 5,286 | |||||||||||
Effect of potentially dilutive equivalent shares | — | — | 301 | 106 | |||||||||||
Weighted average shares outstanding, diluted | 5,344 | 5,310 | 5,632 | 5,392 | |||||||||||
Net (loss) income per share of common stock outstanding: | |||||||||||||||
Basic | $ | (0.49 | ) | $ | (0.08 | ) | $ | 0.34 | $ | 0.12 | |||||
Diluted | $ | (0.49 | ) | $ | (0.08 | ) | $ | 0.32 | $ | 0.12 |
Three Months Ended | Nine Months Ended | ||||||||||
(In thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||
Stock options | 343 | 398 | 333 | 423 | |||||||
Restricted stock units and performance stock units | 437 | 455 | — | — | |||||||
Total potential shares of common stock excluded | 780 | 853 | 333 | 423 |
(In thousands) | March 30, 2018 | June 30, 2017 | |||||
Cash and cash equivalents | $ | 37,264 | $ | 35,658 | |||
Restricted cash | 1,273 | 541 | |||||
Restricted cash included in Other assets | 338 | 370 | |||||
Total cash, cash equivalents, and restricted cash | $ | 38,875 | $ | 36,569 |
(In thousands) | March 30, 2018 | June 30, 2017 | |||||
Accounts receivable | $ | 41,152 | $ | 49,864 | |||
Less allowances for collection losses | (2,693 | ) | (3,919 | ) | |||
$ | 38,459 | $ | 45,945 |
(In thousands) | March 30, 2018 | June 30, 2017 | |||||
Finished products | $ | 17,216 | $ | 16,619 | |||
Work in process | 2,883 | 3,088 | |||||
Raw materials and supplies | 1,988 | 2,087 | |||||
Total inventories | $ | 22,087 | $ | 21,794 | |||
Deferred cost of revenue included within finished goods | $ | 5,628 | $ | 7,120 | |||
Consigned inventories included within raw materials and supplies | $ | 1,237 | $ | 1,268 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
Excess and obsolete inventory (recovery) charges | $ | (138 | ) | $ | (399 | ) | $ | (280 | ) | $ | 168 | ||||
Customer service inventory write-downs | 309 | 328 | 656 | 858 | |||||||||||
$ | 171 | $ | (71 | ) | $ | 376 | $ | 1,026 |
(In thousands) | March 30, 2018 | June 30, 2017 | |||||
Land | $ | 710 | $ | 710 | |||
Buildings and leasehold improvements | 11,445 | 11,442 | |||||
Software | 15,502 | 14,803 | |||||
Machinery and equipment | 47,399 | 43,174 | |||||
75,056 | 70,129 | ||||||
Less accumulated depreciation and amortization | (58,141 | ) | (53,723 | ) | |||
$ | 16,915 | $ | 16,406 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
Depreciation and amortization | $ | 1,391 | $ | 1,404 | $ | 3,981 | $ | 4,540 |
(In thousands) | March 30, 2018 | June 30, 2017 | |||||
Accrued compensation and benefits | $ | 8,082 | $ | 8,317 | |||
Accrued warranties | 3,172 | 3,056 | |||||
Other | 9,863 | 10,560 | |||||
$ | 21,117 | $ | 21,933 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
Balance as of the beginning of the period | $ | 3,168 | $ | 3,559 | $ | 3,056 | $ | 3,944 | |||||||
Warranty provision recorded during the period | 589 | 597 | 1,817 | 1,413 | |||||||||||
Consumption during the period | (585 | ) | (656 | ) | (1,701 | ) | (1,857 | ) | |||||||
Balance as of the end of the period | $ | 3,172 | $ | 3,500 | $ | 3,172 | $ | 3,500 |
(In thousands) | March 30, 2018 | June 30, 2017 | |||||
Advanced payments | $ | 6,727 | $ | 8,760 | |||
Unearned income | 13,826 | 11,244 | |||||
$ | 20,553 | $ | 20,004 |
• | Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities; |
• | Level 2 — Observable market-based inputs or observable inputs that are corroborated by market data; and |
• | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
March 30, 2018 | June 30, 2017 | Valuation Inputs | |||||||||||||||
(In thousands) | Cost | Fair Value | Cost | Fair Value | |||||||||||||
Assets: | |||||||||||||||||
Cash equivalents: | |||||||||||||||||
Money market funds | $ | 17,789 | $ | 17,789 | $ | 22,059 | $ | 22,059 | Level 1 | ||||||||
Bank certificates of deposit | $ | 13 | $ | 13 | $ | 66 | $ | 66 | Level 2 | ||||||||
Short term investments: | |||||||||||||||||
Bank certificates of deposit | $ | 276 | $ | 276 | $ | 264 | $ | 264 | Level 2 | ||||||||
Other current assets: | |||||||||||||||||
Foreign exchange forward contracts | $ | 153 | $ | 153 | $ | — | $ | — | Level 2 | ||||||||
Liabilities: | |||||||||||||||||
Other accrued expenses: | |||||||||||||||||
Foreign exchange forward contracts | $ | 2 | $ | 2 | $ | 5 | $ | 5 | Level 2 |
Severance and Benefits | Facilities and Other | Total | |||||||||||||||||||||||||
(In thousands) | Fiscal 2016-2017 Plan | Fiscal 2015-2016 Plan | Fiscal 2013-2014 Plan | Fiscal 2015-2016 Plan | Fiscal 2014-2015 Plan | Fiscal 2013-2014 Plan | |||||||||||||||||||||
Accrual balance, June 30, 2017 | $ | 315 | $ | 99 | $ | 64 | $ | 563 | $ | 168 | $ | 505 | $ | 1,714 | |||||||||||||
Charges (recovery), net | (3 | ) | — | — | — | 1 | 4 | 2 | |||||||||||||||||||
Cash payments | (253 | ) | — | — | — | (102 | ) | (306 | ) | (661 | ) | ||||||||||||||||
Foreign exchange impact | (1 | ) | 2 | — | 18 | — | — | 19 | |||||||||||||||||||
Accrual balance, September 29, 2017 | $ | 58 | $ | 101 | $ | 64 | $ | 581 | $ | 67 | $ | 203 | $ | 1,074 | |||||||||||||
(Recovery) charges, net | — | — | — | (252 | ) | — | — | (252 | ) | ||||||||||||||||||
Cash payments | (2 | ) | — | — | — | (67 | ) | (203 | ) | (272 | ) | ||||||||||||||||
Foreign exchange impact | — | 1 | — | 7 | — | — | 8 | ||||||||||||||||||||
Accrual balance, December 29, 2017 | $ | 56 | $ | 102 | $ | 64 | $ | 336 | $ | — | $ | — | $ | 558 | |||||||||||||
(Recovery) charges, net | (2 | ) | — | — | — | — | — | (2 | ) | ||||||||||||||||||
Cash payments | (19 | ) | (66 | ) | — | (13 | ) | — | — | (98 | ) | ||||||||||||||||
Foreign exchange impact | — | — | — | (2 | ) | — | — | (2 | ) | ||||||||||||||||||
Accrual balance, March 30, 2018 | $ | 35 | $ | 36 | $ | 64 | $ | 321 | $ | — | $ | — | $ | 456 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
By Expense Category: | |||||||||||||||
Cost of revenues | $ | 53 | $ | 48 | $ | 152 | $ | 151 | |||||||
Research and development | 36 | 38 | 114 | 100 | |||||||||||
Selling and administrative | 446 | 479 | 1,423 | 1,260 | |||||||||||
Total share-based compensation expense | $ | 535 | $ | 565 | $ | 1,689 | $ | 1,511 | |||||||
By Types of Award: | |||||||||||||||
Options | $ | 36 | $ | 36 | $ | 104 | $ | 225 | |||||||
Restricted and performance stock awards and units | 499 | 529 | 1,585 | 1,286 | |||||||||||
Total share-based compensation expense | $ | 535 | $ | 565 | $ | 1,689 | $ | 1,511 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
North America | $ | 31,756 | $ | 29,188 | $ | 99,743 | $ | 97,125 | |||||||
Africa and Middle East | 17,623 | 17,335 | 43,767 | 48,454 | |||||||||||
Europe and Russia | 3,638 | 4,012 | 11,898 | 11,329 | |||||||||||
Latin America and Asia Pacific | 9,076 | 8,165 | 24,590 | 28,535 | |||||||||||
Total Revenue | $ | 62,093 | $ | 58,700 | $ | 179,998 | $ | 185,443 |
Fiscal Years | Amounts | ||
(In thousands) | |||
2018 (one quarter remaining) | $ | 583 | |
2019 | 1,843 | ||
2020 | 1,232 | ||
2021 | 928 | ||
2022 | 208 | ||
Thereafter | 2,023 | ||
Total | $ | 6,817 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
Rent expense | $ | 906 | $ | 987 | $ | 2,804 | $ | 2,134 |
• | continued price and margin erosion as a result of increased competition in the microwave transmission industry; |
• | the impact of the volume, timing and customer, product and geographic mix of our product orders; |
• | our ability to meet financial covenant requirements which could impact, among other things, our liquidity; |
• | the timing of our receipt of payment for products or services from our customers; |
• | our ability to meet projected new product development dates or anticipated cost reductions of new products; |
• | our suppliers’ inability to perform and deliver on time as a result of their financial condition, component shortages or other supply chain constraints; |
• | customer acceptance of new products; |
• | the ability of our subcontractors to timely perform; |
• | continued weakness in the global economy affecting customer spending; |
• | retention of our key personnel; |
• | our ability to manage and maintain key customer relationships; |
• | uncertain economic conditions in the telecommunications sector combined with operator and supplier consolidation; |
• | our failure to protect our intellectual property rights or defend against intellectual property infringement claims by others; |
• | the results of our restructuring efforts; |
• | the ability to preserve and use our net operating loss carryforwards; |
• | the effects of currency and interest rate risks; |
• | the conduct of unethical business practices in developing countries; and |
• | the impact of political turmoil in countries where we have significant business. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(In thousands, except percentages) | March 30, 2018 | March 31, 2017 | $ Change | % Change | March 30, 2018 | March 31, 2017 | $ Change | % Change | |||||||||||||||||||||
North America | $ | 31,756 | $ | 29,188 | $ | 2,568 | 8.8 | % | $ | 99,743 | $ | 97,125 | $ | 2,618 | 2.7 | % | |||||||||||||
Africa and Middle East | 17,623 | 17,335 | 288 | 1.7 | % | 43,767 | 48,454 | (4,687 | ) | (9.7 | )% | ||||||||||||||||||
Europe and Russia | 3,638 | 4,012 | (374 | ) | (9.3 | )% | 11,898 | 11,329 | 569 | 5.0 | % | ||||||||||||||||||
Latin America and Asia Pacific | 9,076 | 8,165 | 911 | 11.2 | % | 24,590 | 28,535 | (3,945 | ) | (13.8 | )% | ||||||||||||||||||
Total Revenue | $ | 62,093 | $ | 58,700 | $ | 3,393 | 5.8 | % | $ | 179,998 | $ | 185,443 | $ | (5,445 | ) | (2.9 | )% |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(In thousands, except percentages) | March 30, 2018 | March 31, 2017 | $ Change | % Change | March 30, 2018 | March 31, 2017 | $ Change | % Change | |||||||||||||||||||||
Product sales | $ | 40,686 | $ | 39,099 | $ | 1,587 | 4.1 | % | $ | 113,472 | $ | 119,781 | $ | (6,309 | ) | (5.3 | )% | ||||||||||||
Services | 21,407 | 19,601 | 1,806 | 9.2 | % | 66,526 | 65,662 | 864 | 1.3 | % | |||||||||||||||||||
Total Revenue | $ | 62,093 | $ | 58,700 | $ | 3,393 | 5.8 | % | $ | 179,998 | $ | 185,443 | $ | (5,445 | ) | (2.9 | )% |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(In thousands, except percentages) | March 30, 2018 | March 31, 2017 | $ Change | % Change | March 30, 2018 | March 31, 2017 | $ Change | % Change | |||||||||||||||||||||
Revenue | $ | 62,093 | $ | 58,700 | $ | 3,393 | 5.8 | % | $ | 179,998 | $ | 185,443 | $ | (5,445 | ) | (2.9 | )% | ||||||||||||
Cost of revenue | 43,961 | 40,968 | 2,993 | 7.3 | % | 122,680 | 129,230 | (6,550 | ) | (5.1 | )% | ||||||||||||||||||
Gross margin | $ | 18,132 | $ | 17,732 | $ | 400 | 2.3 | % | $ | 57,318 | $ | 56,213 | $ | 1,105 | 2.0 | % | |||||||||||||
% of revenue | 29.2 | % | 30.2 | % | 31.8 | % | 30.3 | % | |||||||||||||||||||||
Product margin % | 29.4 | % | 31.2 | % | 32.9 | % | 30.9 | % | |||||||||||||||||||||
Service margin % | 28.7 | % | 28.3 | % | 30.1 | % | 29.2 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(In thousands, except percentages) | March 30, 2018 | March 31, 2017 | $ Change | % Change | March 30, 2018 | March 31, 2017 | $ Change | % Change | |||||||||||||||||||||
Research and development | $ | 4,754 | $ | 4,264 | $ | 490 | 11.5 | % | $ | 14,696 | $ | 13,682 | $ | 1,014 | 7.4 | % | |||||||||||||
% of revenue | 7.7 | % | 7.3 | % | 8.2 | % | 7.4 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(In thousands, except percentages) | March 30, 2018 | March 31, 2017 | $ Change | % Change | March 30, 2018 | March 31, 2017 | $ Change | % Change | |||||||||||||||||||||
Selling and administrative | $ | 14,745 | $ | 13,284 | $ | 1,461 | 11.0 | % | $ | 42,571 | $ | 42,527 | $ | 44 | 0.1 | % | |||||||||||||
% of revenue | 23.7 | % | 22.6 | % | 23.7 | % | 22.9 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(In thousands, except percentages) | March 30, 2018 | March 31, 2017 | $ Change | % Change | March 30, 2018 | March 31, 2017 | $ Change | % Change | |||||||||||||||||||||
Restructuring (recovery) charges | $ | (2 | ) | $ | 111 | $ | (113 | ) | (101.8 | )% | $ | (252 | ) | $ | 343 | $ | (595 | ) | (173.5 | )% |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(In thousands, except percentages) | March 30, 2018 | March 31, 2017 | $ Change | % Change | March 30, 2018 | March 31, 2017 | $ Change | % Change | |||||||||||||||||||||
Interest income | $ | 49 | $ | 42 | $ | 7 | 16.7 | % | $ | 149 | $ | 168 | $ | (19 | ) | (11.3 | )% | ||||||||||||
Interest expense | $ | (5 | ) | $ | (7 | ) | $ | 2 | (28.6 | )% | $ | (24 | ) | $ | (28 | ) | $ | 4 | (14.3 | )% | |||||||||
Other (expense) income | $ | (54 | ) | $ | 341 | $ | (395 | ) | (115.8 | )% | $ | (220 | ) | $ | 164 | $ | (384 | ) | (234.1 | )% |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
(In thousands, except percentages) | March 30, 2018 | March 31, 2017 | $ Change | % Change | March 30, 2018 | March 31, 2017 | $ Change | % Change | |||||||||||||||||||||
(Loss) income before income taxes | $ | (1,375 | ) | $ | 449 | $ | (1,824 | ) | (406.2 | )% | $ | 208 | $ | (35 | ) | $ | 243 | (694.3 | )% | ||||||||||
Provision for (benefit from) income taxes | $ | 1,015 | $ | 779 | $ | 236 | 30.3 | % | $ | (2,188 | ) | $ | (826 | ) | $ | (1,362 | ) | 164.9 | % |
Currency | Notional Contract Amount (Local Currency) | Notional Contract Amount (USD) | |||||
(In thousands) | |||||||
Canadian | 250 | $ | 192 | ||||
Euro | 350 | 432 | |||||
New Zealand dollar | 5,900 | 4,207 | |||||
South African rand | 5,746 | 493 | |||||
Total of all currency forward contracts | $ | 5,324 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(In thousands) | March 30, 2018 | March 31, 2017 | March 30, 2018 | March 31, 2017 | |||||||||||
Amount included in costs of revenues | $ | 58 | $ | (322 | ) | $ | (40 | ) | $ | (602 | ) | ||||
Amount included in other expense | (51 | ) | 339 | (188 | ) | 131 | |||||||||
Total foreign exchange loss, net | $ | 7 | $ | 17 | $ | (228 | ) | $ | (471 | ) |
AVIAT NETWORKS, INC. (Registrant) |
By: | /s/ Eric Chang |
Eric Chang Vice President, Corporate Controller and Principal Accounting Officer (Principal accounting officer and duly authorized officer) |
Exhibit Number | Descriptions | |
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
31.1 | ||
31.2 | ||
32.1 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
1. | I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2018, of Aviat Networks, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 14, 2018 | /s/ Michael A. Pangia | ||
Name: | Michael A. Pangia | |||
Title: | President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2018, of Aviat Networks, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 14, 2018 | /s/ Ralph S. Marimon | ||
Name: | Ralph S. Marimon | |||
Title: | Senior Vice President and Chief Financial Officer, Principal Financial Officer |
Date: | May 14, 2018 | /s/ Michael A. Pangia |
Name: Michael A. Pangia | ||
Title: President and Chief Executive Officer |
Date: | May 14, 2018 | /s/ Ralph S. Marimon |
Name: Ralph S. Marimon | ||
Title: Senior Vice President and Chief Financial Officer, Principal Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Mar. 30, 2018 |
Apr. 30, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | AVIAT NETWORKS, INC. | |
Entity Central Index Key | 0001377789 | |
Current Fiscal Year End Date | --06-29 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 5,349,309 |
Condensed Consolidated Balance Sheets (Unaudited) - Parenthetical - $ / shares |
Mar. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock shares issued (in shares) | 0 | 0 |
Preferred stock shares outstanding (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock shares issued (in shares) | 5,349,309 | 5,317,766 |
Common stock shares outstanding (in shares) | 5,349,309 | 5,317,766 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 30, 2018 |
Mar. 31, 2017 |
Mar. 30, 2018 |
Mar. 31, 2017 |
|
Revenues: | ||||
Revenue from product sales | $ 40,686 | $ 39,099 | $ 113,472 | $ 119,781 |
Revenue from services | 21,407 | 19,601 | 66,526 | 65,662 |
Total revenues | 62,093 | 58,700 | 179,998 | 185,443 |
Cost of revenues: | ||||
Cost of product sales | 28,704 | 26,911 | 76,151 | 82,774 |
Cost of services | 15,257 | 14,057 | 46,529 | 46,456 |
Total cost of revenues | 43,961 | 40,968 | 122,680 | 129,230 |
Gross margin | 18,132 | 17,732 | 57,318 | 56,213 |
Operating expenses: | ||||
Research and development expenses | 4,754 | 4,264 | 14,696 | 13,682 |
Selling and administrative expenses | 14,745 | 13,284 | 42,571 | 42,527 |
Restructuring (recovery) charges | (2) | 111 | (252) | 343 |
Total operating expenses | 19,497 | 17,659 | 57,015 | 56,552 |
Operating (loss) income | (1,365) | 73 | 303 | (339) |
Interest income | 49 | 42 | 149 | 168 |
Interest expense | (5) | (7) | (24) | (28) |
Other (expense) income | (54) | 341 | (220) | 164 |
(Loss) income before income taxes | (1,375) | 449 | 208 | (35) |
Provision for (benefit from) income taxes | 1,015 | 779 | (2,188) | (826) |
Net (loss) income | (2,390) | (330) | 2,396 | 791 |
Less: Net income attributable to noncontrolling interests, net of tax | 233 | 69 | 605 | 141 |
Net (loss) income attributable to Aviat Networks’ common stockholders | $ (2,623) | $ (399) | $ 1,791 | $ 650 |
Net (loss) income per share of common stock outstanding: | ||||
Basic (in dollars per share) | $ (0.49) | $ (0.08) | $ 0.34 | $ 0.12 |
Diluted (in dollars per share) | $ (0.49) | $ (0.08) | $ 0.32 | $ 0.12 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 5,344 | 5,310 | 5,331 | 5,286 |
Diluted (in shares) | 5,344 | 5,310 | 5,632 | 5,392 |
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 30, 2018 |
Mar. 31, 2017 |
Mar. 30, 2018 |
Mar. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (2,390) | $ (330) | $ 2,396 | $ 791 |
Other comprehensive income (loss): | ||||
Net change in cumulative translation adjustments | 188 | 229 | 809 | (919) |
Other comprehensive income (loss) | 188 | 229 | 809 | (919) |
Comprehensive (loss) income | (2,202) | (101) | 3,205 | (128) |
Less: Comprehensive income attributable to noncontrolling interests, net of tax | 233 | 69 | 605 | 141 |
Comprehensive (loss) income attributable to Aviat Networks | $ (2,435) | $ (170) | $ 2,600 | $ (269) |
The Company and Basis of Presentation |
9 Months Ended |
---|---|
Mar. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Basis of Presentation | The Company and Basis of Presentation The Company Aviat Networks, Inc. (the “Company,” “we,” “us,” and “our”) designs, manufactures and sells a range of wireless networking solutions and services to mobile and fixed telephone service providers, private network operators, government agencies, transportation and utility companies, public safety agencies and broadcast system operators across the globe. Due to the volume of our international sales, especially in developing countries, we may be susceptible to a number of political, economic and geographic risks that could harm our business as outlined in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017. Our products include broadband wireless access base stations and customer premises equipment for fixed and mobile, point-to-point digital microwave radio systems for access, backhaul, trunking and license-exempt applications, supporting new network deployments, network expansion, and capacity upgrades. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the statements do not include all information and footnotes required by U.S. GAAP for annual consolidated financial statements. In the opinion of our management, such interim financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows for such periods. The results for the three and nine months ended March 30, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year or future operating periods. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany transactions and accounts have been eliminated. We operate on a 52-week or 53-week year ending on the Friday closest to June 30. The first three quarters of fiscal 2018 and fiscal 2017 included 13 weeks in each quarter. Fiscal year 2018 will be comprised of 52 weeks and will end on June 29, 2018. Use of Estimates The preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates, assumptions and judgments affecting the amounts reported and related disclosures. Estimates are based upon historical factors, current circumstances and the experience and judgment of our management. We evaluate our estimates and assumptions on an ongoing basis and may employ outside experts to assist us in making these evaluations. Changes in such estimates, based on more accurate information, or different assumptions or conditions, may affect amounts reported in future periods. Such estimates affect significant items, including revenue recognition, provision for uncollectible receivables, inventory valuation, valuation allowances for deferred tax assets, uncertainties in income taxes, restructuring obligations, product warranty obligations, share-based awards, contingencies, recoverability of long-lived assets and useful lives of property, plant and equipment. Summary of Significant Accounting Policies There have been no material changes in our significant accounting policies as of and for the nine months ended March 30, 2018, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017. Accounting Standards Adopted In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16 (Topic 740), Accounting for Income Taxes: Intra-Entity Transfers of Assets Other than Inventory, which requires that an entity recognizes the tax expense from the sale of intra-entity sales of assets, other than inventory, in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminate in consolidation. We adopted this update during the first quarter of fiscal 2018. The adoption had no material impact on our unaudited condensed consolidated financial statements. In July 2015, the FASB issued ASU 2015-11 (Topic 330), Simplifying the Measurement of Inventory, which provides guidance to companies who account for inventory using either the first-in, first-out or average cost methods. The guidance states that companies should measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this update prospectively during the first quarter of fiscal 2018. The adoption had no material impact on our unaudited condensed consolidated financial statements. Accounting Standards Not Yet Adopted In May 2014, the FASB issued ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers with amendments issued in 2015 and 2016. This standard update will supersede nearly all current U.S. GAAP guidance on this topic and eliminate industry-specific guidance. Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures will also be required to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption. We will adopt the new standard using the modified retrospective method at the beginning of our first quarter of fiscal 2019 with the cumulative effect recognized as an adjustment to the opening balance of our accumulated deficit (net of tax) as of June 30, 2018. Prior periods will not be retroactively adjusted and will continue to be reported under the accounting standards in effect for those periods. However, we will include additional disclosures of the amount by which each financial statement line item is impacted by the new standard as compared to the standard that was in effect prior to the adoption. We are on schedule in establishing new accounting policies, implementing systems and processes (including more extensive use of estimates), and internal controls necessary to support the requirements of the new standard. We have completed our preliminary assessment of the financial statement impact of the new standard and will continue to update that assessment as more information becomes available. We expect the timing of revenue recognition to change in certain areas, including our services segment’s installation revenue (and related costs), which upon adoption, will be recognized over a period of time rather than at a point in time. Certain product revenues are also expected to be accelerated to reflect when the control of the promised goods is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. The remaining deferred revenue and related deferred costs (net of tax) as of the adoption date relating to the satisfied portion of the performance obligations of these contracts in process will be recorded through accumulated deficit as of June 30, 2018. Additionally, the analysis of our contracts under the new revenue recognition standard supports the recognition of revenue over time under the cost-to-cost method for some of our contracts, which is consistent with our current revenue recognition model. Revenue on these contracts will continue to be recognized over time based on a percentage-of-completion basis because of the continuous transfer of control to the customer as they meet one or more of the criteria established in the new revenue standard. Under the new standard, the cost-to-cost measure of progress continues to best depict the transfer of control of assets to the customer, which occurs as we incur costs. The ongoing effect of recording revenue on a percentage-of-completion basis within these businesses is not expected to be material. In addition, the number of our performance obligations within our financial accounting and reporting model under the existing standard is not expected to be materially different under the new standard. This preliminary assessment is based on the types and number of revenue arrangements currently in place. The exact impact of the new standard will be dependent on facts and circumstances at the point of adoption and could vary from quarter to quarter. We are still finalizing the calculation of the impact of this change to our accumulated deficit as of June 30, 2018. We have considered the impact of the guidance in ASC 340-40, Other Assets and Deferred Costs; Contracts with Customers, and the interpretations of the FASB Transition Resource Group for Revenue Recognition (TRG) with respect to capitalization and amortization of incremental costs of obtaining a contract (e.g., sales commission). In conjunction with this interpretation, we have elected to implement the practical expedient clause allowing for incremental costs to be recognized as an expense when incurred if the period of the asset recognition is one year or less, and amortized over the period of performance, if the period of the asset recognition is greater than one year. We are continuing to assess all potential impacts of the guidance on our unaudited condensed consolidated financial statements and given normal ongoing business dynamics, preliminary conclusions are subject to change. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. This standard will become effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The guidance is required to be adopted at the earliest period presented using a modified retrospective approach. We expect that most of our operating lease commitments will be subject to the new standard and recognized as right-of-use assets and operating lease liabilities upon the adoption of ASU 2016-02. We are evaluating the effect the adoption of the standard will have on our unaudited condensed consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance retains the current accounting for classifying and measuring investments in debt securities and loans, but requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation. The guidance also changes the accounting for investments without a readily determinable fair value and do not qualify for the practical expedient to estimate fair value. A policy election can be made for these investments whereby estimated fair value may be measured at cost and adjusted in subsequent periods for any impairment or changes in observable prices of identical or similar investments. This ASU is effective for fiscal years beginning after December 15, 2017. We do not expect the adoption of this standard to have a material impact on our unaudited condensed consolidated financial statements. |
Net (Loss) Income Per Share of Common Stock |
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Net (Loss) Income Per Share of Common Stock | Net (Loss) Income Per Share of Common Stock Net (loss) income per share is computed using the two-class method, by dividing net (loss) income attributable to us by the weighted-average number of shares of our outstanding common stock and participating securities outstanding. Our restricted shares contain rights to receive non-forfeitable dividends and therefore are considered to be participating securities and included in the calculations of net income per basic and diluted common share. Undistributed losses are not allocated to unvested restricted shares as the unvested restricted shares are not contractually obligated to share our losses. The impact on earnings per share of the participating securities under the two-class method is immaterial. The following table presents the computation of basic and diluted net (loss) income per share attributable to our common stockholders:
The following table summarizes the weighted-average equity awards that were excluded from the diluted net income per share calculations since they were antidilutive:
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Balance Sheet Components |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Components | Balance Sheet Components Cash, Cash Equivalents and Restricted Cash The following table provides a summary of our cash, cash equivalents and restricted cash:
The restricted cash in the amount of $1.3 million above became unrestricted in April 2018. Accounts Receivable, net Our net accounts receivable were as follows:
Inventories Our inventories were as follows:
We record recovery or charges to adjust our inventory and customer service inventory due to excess and obsolete inventory resulting from lower sales forecasts, product transitioning or discontinuance. During the three and nine months ended March 30, 2018, we recorded a net recovery of $0.1 million and $0.3 million, respectively, related to previously reserved inventory due to sell through. During the three and nine months ended March 31, 2017, we recorded a net recovery of $0.4 million and a net write down charge of $0.2 million, respectively. Such recovery or charges during the three and nine months ended March 30, 2018 and March 31, 2017 were classified in cost of product sales as follows:
Property, Plant and Equipment, net Our property, plant and equipment, net were as follows:
Depreciation and amortization expense related to property, plant and equipment was as follows:
Accrued Expenses Our accrued expenses are summarized below:
Accrued Warranties We accrue for the estimated cost to repair or replace products under warranty at the time of sale. Changes in our warranty liability, which is included as a component of accrued expenses in the unaudited condensed consolidated balance sheets were as follows:
Advanced payments and Unearned Income Our advanced payments and unearned income are summarized below:
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Fair Value Measurements of Assets and Liabilities |
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Fair Value Measurements of Assets and Liabilities | Fair Value Measurements of Assets and Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal market (or most advantageous market, in the absence of a principal market) for the asset or liability in an orderly transaction between market participants as of the measurement date. We maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value and establish a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:
The carrying amounts, estimated fair values and valuation input levels of our assets and liabilities that are measured at fair value on a recurring basis as of March 30, 2018 and June 30, 2017 were as follows:
We classify items within Level 1 if quoted prices are available in active markets. Our Level 1 items mainly are money market funds. As of March 30, 2018 and June 30, 2017, these money market funds were valued at $1.00 net asset value per share. We classify items in Level 2 if the observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources are available with reasonable levels of price transparency. Our bank certificates of deposit and foreign exchange forward contracts are classified within Level 2. Foreign currency forward contracts are measured at fair value using observable foreign currency exchange rates. The changes in fair value related to our foreign currency forward contracts were recorded in cost of revenues on our unaudited condensed consolidated statements of operations. As of March 30, 2018 and June 30, 2017, we did not have any recurring assets or liabilities that were valued using significant unobservable inputs. Our policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer. During the first nine months of fiscal 2018 and 2017, we had no transfers between levels of the fair value hierarchy of our assets or liabilities measured at fair value. |
Credit Facility and Debt |
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Mar. 30, 2018 | |
Debt Disclosure [Abstract] | |
Credit Facility and Debt | Credit Facility and Debt On March 28, 2014, we entered into a Second Amended and Restated Loan Agreement with Silicon Valley Bank (the “SVB Credit Facility”). The SVB Credit Facility expires on June 30, 2018. The SVB Credit Facility provides for a committed amount of up to $30.0 million, with a $30.0 million sublimit that can be borrowed by our Singapore subsidiary. Borrowings may be advanced under the SVB Credit Facility at the lesser of $30.0 million or a borrowing base equal to a specified percentage of the value of eligible accounts receivable and U.S. unbilled accounts of the Company, subject to certain reserves and eligibility criteria. The SVB Credit Facility can also be utilized to issue letters of credit with a $12.0 million sublimit. If the SVB Credit Facility is terminated by us in certain circumstances prior to its expiration, we are subject to an early termination fee equal to 1% of the revolving line. In September 2017, the SVB Credit Facility was amended to allow up to 30% of our Singapore subsidiary’s accounts receivable to be included in the calculation of the borrowing base and the inclusion of the accounts receivable of certain high credit quality customers that are aged 90 to 120 days to be included in the calculation of the borrowing base. Our outstanding debt under the SVB Credit Facility was $9.0 million as of March 30, 2018 and June 30, 2017. The SVB Credit Facility carries an interest rate computed at the daily prime rate as published in the Wall Street Journal plus a spread of 0.50% to 1.50%, with such spread determined based on our adjusted quick ratio. During the first nine months of fiscal year 2018, the weighted average interest rate on our outstanding loan was 4.90%. As of March 30, 2018, available credit under the SVB Credit Facility was $6.9 million reflecting the calculated borrowing base of $18.6 million less existing borrowings of $9.0 million and outstanding letters of credit of $2.7 million. The SVB Credit Facility contains quarterly financial covenants including minimum adjusted quick ratio and minimum profitability (EBITDA) requirements. In the event our adjusted quick ratio falls below a certain level, cash received in our accounts with SVB may be directly applied to reduce outstanding obligations under the SVB Credit Facility. The SVB Credit Facility also imposes certain restrictions on our ability to dispose of assets, permit a change in control, merge or consolidate, make acquisitions, incur indebtedness, grant liens, make investments, make certain restricted payments and enter into transactions with affiliates under certain circumstances. Certain of our assets, including accounts receivable, inventory, and equipment, are pledged as collateral for the SVB Credit Facility. Upon an event of default, outstanding obligations would be immediately due and payable. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default at a per annum rate of interest equal to 2% above the applicable interest rate. As of March 30, 2018, we were in compliance with the quarterly financial covenants, as amended, contained in the SVB Credit Facility. In addition, we have an uncommitted short-term line of credit of $0.4 million from a bank in New Zealand to support the operations of our subsidiary located there. This line of credit provides for $0.3 million in short-term advances at various interest rates, all of which was available as of March 30, 2018 and June 30, 2017. The line of credit also provides for the issuance of standby letters of credit and company credit cards, of which $0.1 million was outstanding as of March 30, 2018. This facility may be terminated upon notice, is reviewed annually for renewal or modification, and is supported by a corporate guarantee. |
Restructuring Activities |
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Restructuring Activities | Restructuring Activities The following table summarizes our restructuring related activities during the first nine months of fiscal 2018:
As of March 30, 2018, $0.2 million of the accrual balance was in short-term restructuring liabilities while $0.3 million was included in other long-term liabilities on the unaudited condensed consolidated balance sheets. In January 2018, we reached an agreement with a certain foreign government which allowed us to reduce our estimated payments relating to the fiscal 2014-2015 restructuring plan by $0.3 million. We recorded this reduction in the second quarter of fiscal 2018. We have completed the restructuring activities under each of the plans referenced in the table above. Remaining payments for these plans will be paid through fiscal year 2020. |
Equity |
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Equity | Equity As of March 30, 2018, we had two stock incentive plans for our employees and nonemployee directors, the 2018 Incentive Plan and the 2007 Stock Equity Plan, as amended and restated effective November 13, 2015 (the “2007 Stock Plan”). The 2018 Incentive Plan was approved by the stockholders’ during the fiscal year 2017 Annual Stockholders’ Meeting and it added 500,000 shares to the equity pool of shares available to grant to employees. During the first nine months of fiscal 2018, we issued 785 shares of common stock under the Employee Stock Purchase Plan (ESPP), and 191 shares of common stock for options exercised. Total compensation expense for share-based awards included in our unaudited condensed consolidated statements of operations was as follows:
As of March 30, 2018, there was less than $0.1 million of total unrecognized compensation expense related to nonvested stock options granted under our 2007 Stock Plan. This expense is expected to be recognized over a weighted average period of 0.34 years. As of March 30, 2018, there was $2.0 million of total unrecognized compensation expense related to nonvested stock awards and units granted under our 2007 Stock Plan. This expense is expected to be recognized over a weighted average period of 0.97 years. |
Segment and Geographic Information |
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Segment and Geographic Information | Segment and Geographic Information We operate in one reportable business segment: the design, manufacturing and sale of a range of wireless networking products, solutions and services. We conduct business globally and our sales and support activities are managed on a geographic basis. Our Chief Executive Officer is our Chief Operating Decision Maker. We report revenue by region and country based on the location where our customers accept delivery of our products and services. Revenue by region for the three and nine months ended March 30, 2018 and March 31, 2017 was as follows:
During the three and nine months ended March 30, 2018, Mobile Telephone Networks Group (MTN Group) accounted 17% and 14%, respectively, of our total revenue. During the three and nine months ended March 31, 2017, MTN Group accounted for 19% and 13%, respectively, of our total revenue. MTN Group accounted for 18% of our accounts receivable as of both March 30, 2018 and June 30, 2017. We have a contract with MTN Group, as well as separate arrangements with its various subsidiaries. The loss of all business from MTN Group, or any other significant customers, could adversely affect our results of operations, cash flows and financial position. |
Income Taxes |
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Mar. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code that will affect our fiscal year ending June 29, 2018, including, but not limited to, (1) reducing the U.S. federal corporate tax rate, (2) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years, and (3) elimination of the corporate Alternative Minimum Tax (“AMT”). The Tax Act reduces the federal corporate tax rate to 21.0% in the fiscal year ending June 29, 2018. Section 15 of the Internal Revenue Code stipulates that our fiscal year ending June 29, 2018 will have a blended corporate tax rate of 28.1%, which is based on the applicable tax rates before and after the Tax Act and the number of days in the year. Our effective tax rate varies from the U.S. federal statutory rate of 28.1% due to results of foreign operations that are subject to income taxes at different statutory rates, certain jurisdictions where we cannot recognize tax benefits on current losses, tax benefit from a foreign tax refund and release of valuation allowance. During interim periods, we accrue tax expenses for jurisdictions that are anticipated to be profitable for fiscal 2018. The determination of our tax benefit for the first nine months of fiscal 2018 and 2017 was based on our estimated annual effective tax rate adjusted for losses in certain jurisdictions for which no tax benefit can be recognized. The tax benefit for the first nine months of fiscal 2018 was primarily attributable to the foreign tax refunds received from the Inland Revenue Authority of Singapore (“IRAS”) of $1.3 million and the release of a valuation allowance related to the refundable AMT credit of $3.3 million as provided under the Tax Act, offset by tax expense related to profitable subsidiaries. The tax benefit for the first nine months of fiscal 2017 was primarily attributable to a foreign tax refund received from the IRAS of $3.7 million, offset by the tax expense related to profitable subsidiaries. During the fiscal year 2014, we received an assessment letter from IRAS related to deductions claimed in prior years and made a payment of $13.2 million related to tax years 2007 through 2010, reflecting all the taxes incrementally assessed by IRAS. Since the initial assessment, we continued to challenge this assessment. During the first quarter of fiscal 2017, we received an initial refund of $3.7 million from IRAS. During the first quarter of fiscal 2018, we received an additional refund of $1.3 million from IRAS which represents a final settlement. These refunds were recorded as a discrete tax benefit during the quarter the respective payment was received. During the second quarter of fiscal 2018, we recorded a valuation allowance release of $3.3 million related to refundable AMT credit under the Tax Act as a discrete benefit and recorded as a long-term receivable in our “Other assets” in our unaudited condensed consolidated balance sheet. Under the Tax Act, any carryforward AMT tax credits can be refunded if not fully utilized by fiscal year 2022. We expect to receive the refund of this tax benefit starting in our fiscal year 2020. We have a number of years with open tax audits which vary from jurisdiction to jurisdiction. Our major tax jurisdictions include the U.S., Singapore, Nigeria and the Ivory Coast. The earliest years that are open and subject to potential audits for these jurisdictions are as follows: U.S. — 2003; Singapore — 2011; Nigeria — 2011, and Ivory Coast — 2016. We account for interest and penalties related to unrecognized tax benefits as part of our provision for federal, foreign and state income taxes. Such interest expense was not material for the three and nine months ended March 30, 2018 and March 31, 2017. The SEC staff issued Staff Accounting Bulletin (“SAB”) No. 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in its financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. In connection with our initial analysis of the impact of the Tax Act, we have recorded a discrete net tax benefit of $3.3 million in the period ended December 29, 2017. This net benefit relates to a valuation allowance release of refundable AMT credit. For various reasons that are discussed more fully below, we have not fully completed our accounting for the income tax effects of certain elements of the Tax Act. If we were able to make reasonable estimates of the effects of elements for which our analysis is not yet complete, we recorded provisional adjustments. If we were not yet able to make reasonable estimates of the impact of certain elements, we have not recorded any adjustments related to those elements and have continued accounting for them in accordance with ASC 740 on the basis of the tax laws in effect before the Tax Act. Our accounting for the following elements of the Tax Act is incomplete. However, we were able to make reasonable estimates of certain effects and, therefore, recorded provisional adjustments as follows: Reduction of U.S. Federal Corporate Tax Rate: The Tax Act reduces the corporate tax rate to 21.0%, effective January 1, 2018. For certain deferred tax assets and deferred tax liabilities, we have recorded a provisional decrease of $53.8 million with a corresponding net adjustment to valuation allowance of $53.8 million for the period ended December 29, 2017. While we are able to make a reasonable estimate of the impact of the reduction in the corporate rate, such estimate may be affected by other analyses related to the Tax Act, including, but not limited to, our calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary differences. Deemed Repatriation Transition Tax: The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings and profits (“E&P”) of certain foreign subsidiaries. To determine the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-1986 E&P of our relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We are able to make a reasonable estimate of the Transition Tax and currently do not believe we will be charged this tax, due to preliminary calculations of net negative E&P for our foreign subsidiaries subjected to this tax. However, we are continuing to gather additional information to more precisely compute the amount of the Transition Tax. Our accounting for the following elements of the Tax Act is incomplete, and we are not yet able to make reasonable estimates of the effects. Therefore, no provisional adjustments have been recorded. Global Intangible Low Taxed Income (“GILTI”): The Tax Act creates a new requirement that certain income (i.e., GILTI) earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC tested income” over the net deemed tangible income return, which is currently defined as the excess of, (1) 10.0% of the aggregate of the U.S. shareholder’s pro-rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder, (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. Because of the complexity of the new GILTI tax rules, we are continuing to evaluate this provision of the Tax Act and the application of ASC 740. Under U.S. GAAP, we are allowed to make an accounting policy choice of either, (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or, (2) factoring such amounts into a company’s measurement of its deferred taxed (the “deferred method”). Our selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Because whether we expect to have future U.S. inclusions in taxable income related to GILTI depends on not only our current structure and estimated future results of global operations but also our intent and ability to modify our structure and/or our business, we are not yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, we have not made any adjustments related to the potential GILTI tax in our financial statements and have not made a policy decision regarding whether to record deferred taxes on GILTI. Valuation Allowances: The company must assess whether valuation allowance assessments are affected by various aspects of the Tax Act (e.g., deemed repatriation of deferred foreign income, GILTI inclusions, new categories of FTCs, AMT repeal). During the second quarter of fiscal 2018, we recorded a valuation allowance release of $3.3 million related to refundable AMT credit under the Tax Act as a discrete benefit. Under the Tax Act, any carryforward AMT tax credits can be refunded if not fully utilized by fiscal year 2022. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Lease Commitments We lease office and manufacturing facilities under non-cancelable operating leases expiring at various dates through 2024. We lease approximately 19,000 square feet of office space in Milpitas, California as our corporate headquarters. As of March 30, 2018, our future minimum lease payments under all non-cancelable operating leases with an initial lease term in excess of one year were as follows:
These commitments do not contain any material rent escalations, rent holidays, contingent rent, rent concessions, leasehold improvement incentives or unusual provisions or conditions. We sublease a portion of our facilities to third parties and the total minimum rents to be received in the future under our non-cancelable subleases were $0.1 million as of March 30, 2018. The future minimum lease payments are not reduced by the minimum sublease rents. Rental expense for operating leases, including rentals on a month-to-month basis, was as follows:
Purchase Orders and Other Commitments From time to time in the normal course of business we may enter into purchasing agreements with our suppliers that require us to accept delivery of, and remit full payment for, finished products that we have ordered, finished products that we requested be held as safety stock, and work in process started on our behalf, in the event we cancel or terminate the purchasing agreement. Because these agreements do not specify fixed or minimum quantities, do not specify minimum or variable price provisions, and do not specify the approximate timing of the transaction, and we have no present intention to cancel or terminate any of these agreements, we currently do not believe that we have any future liability under these agreements. As of March 30, 2018, we had outstanding purchase obligations with our suppliers or contract manufacturers of $20.0 million. In addition, we had contractual obligations of approximately $0.3 million associated with software licenses as of March 30, 2018. Financial Guarantees and Commercial Commitments Guarantees issued by banks, insurance companies or other financial institutions are contingent commitments issued to guarantee our performance under borrowing arrangements, such as bank overdraft facilities, tax and customs obligations and similar transactions or to ensure our performance under customer or vendor contracts. The terms of the guarantees are generally equal to the remaining term of the related debt or other obligations and are generally limited to two years or less. As of March 30, 2018, we had no guarantees applicable to our debt arrangements. We have entered into commercial commitments in the normal course of business including surety bonds, standby letters of credit agreements and other arrangements with financial institutions primarily relating to the guarantee of future performance on certain contracts to provide products and services to customers. As of March 30, 2018, we had commercial commitments of $54.7 million outstanding that were not recorded on our unaudited condensed consolidated balance sheets. We do not believe, based on historical experience and information currently available, that it is probable that any significant amounts will be required to be paid on the performance guarantees in the future. Indemnifications Under the terms of substantially all of our license agreements, we have agreed to defend and pay any final judgment against our customers arising from claims against such customers that our products infringe the intellectual property rights of a third party. As of March 30, 2018, we have not received any notices that any customer is subject to an infringement claim arising from the use of our products; we have not received any requests to defend any customers from infringement claims arising from the use of our products; and we have not paid any final judgment on behalf of any customer related to an infringement claim arising from the use of our products. Because the outcome of infringement disputes is related to the specific facts of each case, and given the lack of previous or current indemnification claims, we cannot estimate the maximum amount of potential future payments, if any, related to our indemnification provisions. As of March 30, 2018, we had not recorded any liabilities related to these indemnifications. Legal Proceedings We are subject from time to time to disputes with customers concerning our products and services. In May 2016, we received notification of a claim for $1.0 million in damages from a customer in Austria alleging that certain of our products were defective. We are continuing to investigate this claim, and at this time an estimate of the reasonably possible loss or range of loss cannot be made. We believe that we have numerous contractual and legal defenses to these disputes, and we intend to dispute them vigorously. From time to time, we may be involved in various other legal claims and litigation that arise in the normal course of our operations. We are aggressively defending all current litigation matters. Although there can be no assurances and the outcome of these matters is currently not determinable, we currently believe that none of these claims or proceedings are likely to have a material adverse effect on our financial position. We expect to defend each of these disputes vigorously. There are many uncertainties associated with any litigations and these actions or other third-party claims against us may cause us to incur costly litigation and/or substantial settlement charges. As a result, our business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from our estimates, if any. We record accruals for our outstanding legal proceedings, investigations or claims when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. We evaluate, at least on a quarterly basis, developments in legal proceedings, investigations or claims that could affect the amount of any accrual, as well as any developments that would result in a loss contingency to become both probable and reasonably estimable. We have not recorded any accrual for loss contingencies associated with such legal claims or litigation discussed above. Contingent Liabilities We record a loss contingency as a charge to operations when (i) it is probable that an asset has been impaired or a liability has been incurred at the date of the unaudited condensed consolidated financial statements; and (ii) the amount of the loss can be reasonably estimated. Disclosure in the notes to the unaudited condensed consolidated financial statements is required for loss contingencies that do not meet both those conditions if there is a reasonable possibility that a loss may have been incurred. Gain contingencies are not recorded until realized. We expense all legal costs incurred to resolve regulatory, legal and tax matters as incurred. Periodically, we review the status of each significant matter to assess the potential financial exposure. If a potential loss is considered probable and the amount can be reasonably estimated, we reflect the estimated loss in our results of operations. Significant judgment is required to determine the probability that a liability has been incurred or an asset impaired and whether such loss is reasonably estimable. Further, estimates of this nature are highly subjective, and the final outcome of these matters could vary significantly from the amounts that have been included in our unaudited condensed consolidated financial statements. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise estimates accordingly. Such revisions in the estimates of the potential liabilities could have a material impact on our results of operations and financial position. |
Subsequent Event |
9 Months Ended |
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Mar. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On May 13, 2018, our Board of Directors authorized a stock repurchase program. Under the program, we may purchase up to $7.5 million of our common stock beginning May 17, 2018. We intend to repurchase shares through authorized Rule 10b5-1 plans (which would permit us to repurchase shares when we might otherwise be precluded from doing so under insider trading laws), open market purchases, privately-negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Security Exchange Act of 1934. We may choose to suspend or discontinue the repurchase program at any time. The repurchase program does not obligate us to purchase any particular number of shares. |
The Company and Basis of Presentation (Policies) |
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Mar. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the statements do not include all information and footnotes required by U.S. GAAP for annual consolidated financial statements. In the opinion of our management, such interim financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows for such periods. The results for the three and nine months ended March 30, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year or future operating periods. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany transactions and accounts have been eliminated. We operate on a 52-week or 53-week year ending on the Friday closest to June 30. The first three quarters of fiscal 2018 and fiscal 2017 included 13 weeks in each quarter. |
Use of Estimates | Use of Estimates The preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates, assumptions and judgments affecting the amounts reported and related disclosures. Estimates are based upon historical factors, current circumstances and the experience and judgment of our management. We evaluate our estimates and assumptions on an ongoing basis and may employ outside experts to assist us in making these evaluations. Changes in such estimates, based on more accurate information, or different assumptions or conditions, may affect amounts reported in future periods. Such estimates affect significant items, including revenue recognition, provision for uncollectible receivables, inventory valuation, valuation allowances for deferred tax assets, uncertainties in income taxes, restructuring obligations, product warranty obligations, share-based awards, contingencies, recoverability of long-lived assets and useful lives of property, plant and equipment. |
Accounting Standards Adopted and Accounting Standards Not Yet Adopted | Accounting Standards Adopted In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16 (Topic 740), Accounting for Income Taxes: Intra-Entity Transfers of Assets Other than Inventory, which requires that an entity recognizes the tax expense from the sale of intra-entity sales of assets, other than inventory, in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminate in consolidation. We adopted this update during the first quarter of fiscal 2018. The adoption had no material impact on our unaudited condensed consolidated financial statements. In July 2015, the FASB issued ASU 2015-11 (Topic 330), Simplifying the Measurement of Inventory, which provides guidance to companies who account for inventory using either the first-in, first-out or average cost methods. The guidance states that companies should measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We adopted this update prospectively during the first quarter of fiscal 2018. The adoption had no material impact on our unaudited condensed consolidated financial statements. Accounting Standards Not Yet Adopted In May 2014, the FASB issued ASU 2014-09 (ASC Topic 606), Revenue from Contracts with Customers with amendments issued in 2015 and 2016. This standard update will supersede nearly all current U.S. GAAP guidance on this topic and eliminate industry-specific guidance. Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures will also be required to enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption. We will adopt the new standard using the modified retrospective method at the beginning of our first quarter of fiscal 2019 with the cumulative effect recognized as an adjustment to the opening balance of our accumulated deficit (net of tax) as of June 30, 2018. Prior periods will not be retroactively adjusted and will continue to be reported under the accounting standards in effect for those periods. However, we will include additional disclosures of the amount by which each financial statement line item is impacted by the new standard as compared to the standard that was in effect prior to the adoption. We are on schedule in establishing new accounting policies, implementing systems and processes (including more extensive use of estimates), and internal controls necessary to support the requirements of the new standard. We have completed our preliminary assessment of the financial statement impact of the new standard and will continue to update that assessment as more information becomes available. We expect the timing of revenue recognition to change in certain areas, including our services segment’s installation revenue (and related costs), which upon adoption, will be recognized over a period of time rather than at a point in time. Certain product revenues are also expected to be accelerated to reflect when the control of the promised goods is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. The remaining deferred revenue and related deferred costs (net of tax) as of the adoption date relating to the satisfied portion of the performance obligations of these contracts in process will be recorded through accumulated deficit as of June 30, 2018. Additionally, the analysis of our contracts under the new revenue recognition standard supports the recognition of revenue over time under the cost-to-cost method for some of our contracts, which is consistent with our current revenue recognition model. Revenue on these contracts will continue to be recognized over time based on a percentage-of-completion basis because of the continuous transfer of control to the customer as they meet one or more of the criteria established in the new revenue standard. Under the new standard, the cost-to-cost measure of progress continues to best depict the transfer of control of assets to the customer, which occurs as we incur costs. The ongoing effect of recording revenue on a percentage-of-completion basis within these businesses is not expected to be material. In addition, the number of our performance obligations within our financial accounting and reporting model under the existing standard is not expected to be materially different under the new standard. This preliminary assessment is based on the types and number of revenue arrangements currently in place. The exact impact of the new standard will be dependent on facts and circumstances at the point of adoption and could vary from quarter to quarter. We are still finalizing the calculation of the impact of this change to our accumulated deficit as of June 30, 2018. We have considered the impact of the guidance in ASC 340-40, Other Assets and Deferred Costs; Contracts with Customers, and the interpretations of the FASB Transition Resource Group for Revenue Recognition (TRG) with respect to capitalization and amortization of incremental costs of obtaining a contract (e.g., sales commission). In conjunction with this interpretation, we have elected to implement the practical expedient clause allowing for incremental costs to be recognized as an expense when incurred if the period of the asset recognition is one year or less, and amortized over the period of performance, if the period of the asset recognition is greater than one year. We are continuing to assess all potential impacts of the guidance on our unaudited condensed consolidated financial statements and given normal ongoing business dynamics, preliminary conclusions are subject to change. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which introduces the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. This standard will become effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The guidance is required to be adopted at the earliest period presented using a modified retrospective approach. We expect that most of our operating lease commitments will be subject to the new standard and recognized as right-of-use assets and operating lease liabilities upon the adoption of ASU 2016-02. We are evaluating the effect the adoption of the standard will have on our unaudited condensed consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance retains the current accounting for classifying and measuring investments in debt securities and loans, but requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation. The guidance also changes the accounting for investments without a readily determinable fair value and do not qualify for the practical expedient to estimate fair value. A policy election can be made for these investments whereby estimated fair value may be measured at cost and adjusted in subsequent periods for any impairment or changes in observable prices of identical or similar investments. This ASU is effective for fiscal years beginning after December 15, 2017. We do not expect the adoption of this standard to have a material impact on our unaudited condensed consolidated financial statements. |
Net (Loss) Income Per Share of Common Stock (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the computation of basic and diluted net (loss) income per share attributable to our common stockholders:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the weighted-average equity awards that were excluded from the diluted net income per share calculations since they were antidilutive:
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Balance Sheet Components (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash, Cash Equivalents and Restricted Cash | The following table provides a summary of our cash, cash equivalents and restricted cash:
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Schedule of Accounts Receivable, Net | Our net accounts receivable were as follows:
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Schedule of Inventories | Our inventories were as follows:
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Schedule of Adjustments to Inventory | Such recovery or charges during the three and nine months ended March 30, 2018 and March 31, 2017 were classified in cost of product sales as follows:
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Property, Plant and Equipment, Net | Our property, plant and equipment, net were as follows:
Depreciation and amortization expense related to property, plant and equipment was as follows:
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Schedule of Accrued Expenses | Our accrued expenses are summarized below:
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Schedule of Changes in Warranty Liability | Changes in our warranty liability, which is included as a component of accrued expenses in the unaudited condensed consolidated balance sheets were as follows:
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Schedule of Advanced Payments and Unearned Income | Our advanced payments and unearned income are summarized below:
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Fair Value Measurements of Assets and Liabilities (Tables) |
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Mar. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping | The carrying amounts, estimated fair values and valuation input levels of our assets and liabilities that are measured at fair value on a recurring basis as of March 30, 2018 and June 30, 2017 were as follows:
|
Restructuring Activities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Related Activities | The following table summarizes our restructuring related activities during the first nine months of fiscal 2018:
|
Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compensation Expense for Share-based Compensation Awards | Total compensation expense for share-based awards included in our unaudited condensed consolidated statements of operations was as follows:
|
Segment and Geographic Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue by Region | Revenue by region for the three and nine months ended March 30, 2018 and March 31, 2017 was as follows:
|
Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Lease Payments for Operating Leases | As of March 30, 2018, our future minimum lease payments under all non-cancelable operating leases with an initial lease term in excess of one year were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Rent Expense | Rental expense for operating leases, including rentals on a month-to-month basis, was as follows:
|
The Company and Basis of Presentation (Details) |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 30, 2018 |
Dec. 29, 2017 |
Sep. 29, 2017 |
Mar. 31, 2017 |
Dec. 30, 2016 |
Sep. 30, 2016 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Fiscal period duration | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days |
Balance Sheet Components (Cash, Cash Equivalents and Restricted Cash) (Details) - USD ($) $ in Thousands |
Mar. 30, 2018 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Jul. 01, 2016 |
---|---|---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||||
Cash and cash equivalents | $ 37,264 | $ 35,658 | ||
Restricted cash | 1,273 | 541 | ||
Restricted cash included in Other assets | 338 | 370 | ||
Total cash, cash equivalents, and restricted cash | $ 38,875 | $ 36,569 | $ 40,325 | $ 31,425 |
Balance Sheet Components (Receivables) (Details) - USD ($) $ in Thousands |
Mar. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Accounts receivable | $ 41,152 | $ 49,864 |
Less allowances for collection losses | (2,693) | (3,919) |
Accounts receivable, net | $ 38,459 | $ 45,945 |
Balance Sheet Components (Inventories) (Details) - USD ($) $ in Thousands |
Mar. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Finished products | $ 17,216 | $ 16,619 |
Work in process | 2,883 | 3,088 |
Raw materials and supplies | 1,988 | 2,087 |
Total inventories | 22,087 | 21,794 |
Deferred cost of revenue included within finished goods | 5,628 | 7,120 |
Consigned inventories included within raw materials and supplies | $ 1,237 | $ 1,268 |
Balance Sheet Components (Inventory Adjustments) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 30, 2018 |
Mar. 31, 2017 |
Mar. 30, 2018 |
Mar. 31, 2017 |
|
Balance Sheet Related Disclosures [Abstract] | ||||
Excess and obsolete inventory (recovery) charges | $ (138) | $ (399) | $ (280) | $ 168 |
Customer service inventory write-downs | 309 | 328 | 656 | 858 |
Charges for inventory and customer service inventory write-downs | $ 171 | $ (71) | $ 376 | $ 1,026 |
Balance Sheet Components (Property, Plant and Equipment) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Mar. 30, 2018 |
Mar. 31, 2017 |
Mar. 30, 2018 |
Mar. 31, 2017 |
Jun. 30, 2017 |
|
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | $ 75,056 | $ 75,056 | $ 70,129 | ||
Less accumulated depreciation and amortization | (58,141) | (58,141) | (53,723) | ||
Property, plant and equipment, net | 16,915 | 16,915 | 16,406 | ||
Depreciation and amortization | 1,391 | $ 1,404 | 3,981 | $ 4,540 | |
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 710 | 710 | 710 | ||
Buildings and leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 11,445 | 11,445 | 11,442 | ||
Software | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 15,502 | 15,502 | 14,803 | ||
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | $ 47,399 | $ 47,399 | $ 43,174 |
Balance Sheet Components (Accrued Expenses) (Details) - USD ($) $ in Thousands |
Mar. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Accrued compensation and benefits | $ 8,082 | $ 8,317 |
Accrued warranties | 3,172 | 3,056 |
Other | 9,863 | 10,560 |
Accrued expenses | $ 21,117 | $ 21,933 |
Balance Sheet Components (Accrued Warranties) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 30, 2018 |
Mar. 31, 2017 |
Mar. 30, 2018 |
Mar. 31, 2017 |
|
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||||
Balance as of the beginning of the period | $ 3,168 | $ 3,559 | $ 3,056 | $ 3,944 |
Warranty provision recorded during the period | 589 | 597 | 1,817 | 1,413 |
Consumption during the period | (585) | (656) | (1,701) | (1,857) |
Balance as of the end of the period | $ 3,172 | $ 3,500 | $ 3,172 | $ 3,500 |
Balance Sheet Components (Advanced Payments and Unearned Income) (Details) - USD ($) $ in Thousands |
Mar. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Balance Sheet Related Disclosures [Abstract] | ||
Advanced payments | $ 6,727 | $ 8,760 |
Unearned income | 13,826 | 11,244 |
Advanced payments and unearned income | $ 20,553 | $ 20,004 |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Dec. 29, 2017 |
Sep. 29, 2017 |
Sep. 30, 2016 |
Mar. 30, 2018 |
Mar. 31, 2017 |
Jun. 29, 2018 |
Jun. 27, 2014 |
|
Income Tax Contingency [Line Items] | |||||||
Discrete benefit from valuation allowance release related to refundable AMT credits under Tax Cuts and Jobs Act | $ 3.3 | $ 3.3 | |||||
Provisional decrease related to reduction of tax rate on certain deferred tax assets and deferred tax liabilities | $ 53.8 | ||||||
Forecast | |||||||
Income Tax Contingency [Line Items] | |||||||
Statutory U.S. federal tax rate | 28.10% | ||||||
Foreign Tax Authority | Inland Revenue, Singapore (IRAS) | |||||||
Income Tax Contingency [Line Items] | |||||||
Tax refunds | $ 1.3 | $ 3.7 | $ 1.3 | $ 3.7 | |||
Income taxes paid | $ 13.2 |
Commitments and Contingencies (Future Minimum Lease Payments) (Details) $ in Thousands |
Mar. 30, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 (one quarter remaining) | $ 583 |
2019 | 1,843 |
2020 | 1,232 |
2021 | 928 |
2022 | 208 |
Thereafter | 2,023 |
Total | $ 6,817 |
Commitments and Contingencies (Rental Expense for Operating Leases) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 30, 2018 |
Mar. 31, 2017 |
Mar. 30, 2018 |
Mar. 31, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 906 | $ 987 | $ 2,804 | $ 2,134 |
Subsequent Event (Details) |
May 13, 2018
shares
|
---|---|
Subsequent Event | |
Subsequent Event [Line Items] | |
Stock repurchase program, common stock authorized for repurchase (in shares) | 7,500,000 |
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