AVIAT NETWORKS, INC.

Previous wording

On November 30, 2023, the Company completed the acquisition of NEC Corporation’s (“NEC”) wireless transport business (the “NEC Transaction”). Prior to the acquisition date, NEC was a leader in wireless backhaul networks with an extensive installed base of their Pasolink series products. The completion of the NEC Transaction increases the scale of Aviat, enhances the Company’s product portfolio with a greater capability to innovate, and creates a more diversified business. See Note 11. Acquisitions of the Notes for further information.

Current wording

Prior to the acquisition date, NEC was a leader in wireless backhaul networks with an extensive installed base of their Pasolink series products. The completion of the NEC Transaction increases the scale of Aviat, enhances the Company’s product portfolio with a greater capability to innovate, and creates a more diversified business. Refer to Note 11. Acquisitions of the Notes for further information.

Previous wording

The fair value of the consideration transferred at the closing of the NEC Transaction was comprised of (i) cash of $32.2 million, and (ii) the issuance of 736,750 shares or $22.3 million of Company common stock. Aggregate consideration transferred at closing was approximately $54.5 million, which was subject to certain post-closing adjustments. In the second quarter of fiscal 2025, the Company transferred consideration of $5.8 million to settle a portion of the post-closing working capital adjustment. The Company estimates additional cash consideration of approximately $13.2 million will be transferred to NEC, primarily related to settlement of the remaining post-closing working capital adjustment.

Current wording

The fair value of the consideration transferred at the closing of the NEC Transaction was comprised of (i) cash of $32.2 million, and (ii) the issuance of 736,750 shares or $22.3 million of Company common stock. Aggregate consideration transferred at closing was approximately $54.5 million, which was subject to certain post-closing adjustments. In fiscal 2025, the Company transferred consideration of $18.6 million to settle the post-closing working capital adjustment. The Company funded the cash portion of the NEC Transaction with Term Loan borrowings under its Credit Facility. Refer to Note 6. Credit Facility and Debt of the Notes for further information.

Previous wording

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first nine months of fiscal 2025. In North America, the Company supported 5G and long-term evolution (“LTE”) deployments of its mobile operator customers, public safety network deployments for state and local governments, and private network implementations for utilities and other customers. In international markets, the Company’s business continued to rely on a combination of customers increasing their capacity to handle subscriber growth and the ongoing build-out of some large LTE and 5G deployments. Aviat’s position continues to be to support its customers for 5G and LTE readiness and ensure that its technology roadmap is well aligned with evolving market requirements. Aviat’s strength in turnkey and after-sale support services is a differentiating factor that wins business for the Company and enables it to expand its business with existing customers. Additionally, Aviat operates an e-commerce platform that provides low-cost services, simple experience, and fast delivery to mobile operators and private network customers. In early 2025, new U.S. tariffs on foreign imports were proposed and introduced. Aviat plans to mitigate these tariffs by optimizing its sourcing and operations to minimize any cost impact. Aviat may also implement pricing actions to offset the impact of these tariffs. However, as disclosed above and in the “Risk Factors” section in Item 1A of its Annual Report on Form 10-K filed with the SEC on October 4, 2024, a number of factors could prevent the Company from achieving its objectives, including ongoing pricing pressures attributable to competition and macroeconomic conditions in the geographic markets that it serves.

Current wording

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first three months of fiscal 2026. In North America, the Company supported 5G and long-term evolution (“LTE”) deployments of its mobile operator customers, public safety network deployments for state and local governments, and private network implementations for utilities and other customers. In international markets, the Company’s business continued to rely on a combination of customers increasing their capacity to handle subscriber growth and the ongoing build-out of some large LTE and 5G deployments. Aviat’s position continues to be to support its customers for 5G and LTE readiness and ensure that its technology roadmap is well aligned with evolving market requirements. Aviat’s strength in turnkey and after-sale support services is a differentiating factor that wins business for the Company and enables it to expand its business with existing customers. Additionally, Aviat operates an e-commerce platform that provides low-cost services, simple experience, and fast delivery to mobile operators and private network customers. In early 2025, new U.S. tariffs on foreign imports were proposed and introduced. Aviat will attempt to mitigate these tariffs by optimizing its sourcing and operations to minimize any cost impact. Aviat has and may continue to implement pricing actions to offset the impact of these tariffs. However, as disclosed above and in the “Risk Factors” section in Item 1A of its Annual Report on Form 10-K filed with the SEC on September 10, 2025, a number of factors could prevent the Company from achieving its objectives, including ongoing pricing pressures attributable to competition and macroeconomic conditions in the geographic markets that it serves.

Previous wording

The Company manages its sales activities primarily on a geographic basis in North America and three international geographic regions: (1) Africa and the Middle East, (2) Europe, and (3) Latin America and Asia Pacific. Revenue by region for the three and nine months ended March 28, 2025 and March 29, 2024 and the related changes were as follows:

Current wording

The Company manages its sales activities primarily on a geographic basis in North America and three international geographic regions: (1) Africa and the Middle East, (2) Europe, and (3) Latin America and Asia Pacific. Revenue by region for the three months ended September 26, 2025 and September 27, 2024 and the related changes were as follows:

Previous wording

Revenue from product sales increased by 8.4% and revenue from services decreased by 10.4% for the third quarter of fiscal 2025 compared with the same quarter of fiscal 2024. Revenue from product sales and services increased by 12.7% and 3.1%, respectively for the first nine months of fiscal 2025 compared with the same period of fiscal 2024. The changes were primarily due to the factors discussed above and product sales contribution from the NEC Transaction.

Current wording

Revenue from product sales increased by 22.9% and revenue from services increased by 18.0% for the first quarter of fiscal 2026 compared with the same quarter of fiscal 2025. The changes were primarily due to the factors discussed above.

Previous wording

Research and development expenses decreased by $2.9 million compared with the same quarter of fiscal 2024 primarily due to cost management. Research and development expenses increased by $2.9 million for the first nine months of fiscal 2025 primarily due to development activity related to the NEC Transaction.

Current wording

Selling and administrative expenses decreased by $1.6 million for the first quarter of fiscal 2026 compared with the same quarter of fiscal 2025 primarily due to cost management initiatives.

Previous wording

Interest expense, net increased by $0.6 million and $2.8 million for the three and nine months ended March 28, 2025, respectively, primarily due to interest expense incurred on incremental Term Loan borrowings compared to the prior year period.

Current wording

Interest expense, net increased by $0.6 million for the first quarter of fiscal 2026 compared with the same quarter of fiscal 2025 primarily due to interest expense incurred on incremental Term Loan borrowings compared to the prior year.

Previous wording

Other expense, net increased by $3.0 million and $3.8 million for the three and nine months ended March 28, 2025, respectively, primarily as a result of foreign exchange rate movement and losses recognized on the extinguishment of debt.

Current wording

Other expense, net increased by $0.3 million for the first quarter of fiscal 2026 compared with the same quarter of fiscal 2025, primarily as a result of foreign exchange rate movement.

Previous wording

The tax benefit for the first nine months of fiscal 2025 was primarily due to tax benefit resulting from year-to-date losses. The tax expense for the first nine months of fiscal 2024 was primarily attributable to tax expense related to U.S. and profitable foreign subsidiaries.

Current wording

The tax benefit for the first three months of fiscal 2026 was primarily due to tax benefit resulting from year-to-date losses. The tax expense for the first three months of fiscal 2025 was primarily attributable to tax expense related to U.S. and profitable foreign subsidiaries.

Previous wording

As of March 28, 2025, the Company’s total cash and cash equivalents were $49.4 million. Approximately $12.7 million was held in the United States. The remaining balance of $36.8 million, or 74%, was held outside the United States.

Current wording

As of September 26, 2025, the Company’s total cash and cash equivalents were $64.8 million. Approximately $22.7 million was held in the United States. The remaining balance of $42.2 million, or 65%, was held outside the United States.

Previous wording

Operating cash flows is presented as net (loss) income adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash (used in) provided by operating activities was $(4.8) million for the first nine months of fiscal 2025, compared with $22.2 million in the prior year. The $(27.0) million decrease is primarily attributable to increases in working capital and decreased earnings compared to the prior year.

Current wording

Operating cash flows is presented as net income (loss) adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash used in operating activities was $(11.7) million for the first three months of fiscal 2026, compared with $(27.2) million in the prior year. The $15.4 million increase is primarily attributable to increases in net income and deferred taxes compared to the prior year.

Previous wording

Net cash used in investing activities was $26.3 million for the first nine months of fiscal 2025, compared to $35.0 million in the prior year. The $8.7 million decrease is primarily due to higher acquisition payments in the prior year associated with the NEC Transaction.

Current wording

Net cash used in investing activities was $1.7 million for the first three months of fiscal 2026, compared to $21.2 million in the prior year. The $19.4 million decrease is primarily due to prior year acquisition payments associated with the NEC Transaction.

Previous wording

Financing cash flows consist primarily of borrowings and repayments under the Company’s Credit Facility and proceeds from the exercise of employee stock options. Net cash provided by financing activities was $17.6 million for the first nine months of fiscal 2025, compared with $49.3 million in the prior year. The $(31.7) million decrease is primarily due to reduced Term Loan borrowings compared to the prior year as the prior year period included the $50.0 million of Term Loan borrowings primarily used to fund the NEC Transaction.

Current wording

Financing cash flows consist primarily of borrowings and repayments under the Company’s Credit Facility and proceeds from the exercise of employee stock options. Net cash provided by financing activities was $18.5 million for the first three months of fiscal 2026, compared with $34.3 million in the prior year. The $(15.8) million decrease is primarily due to reduced Revolver net borrowings compared to the prior year of $35 million, which was partially offset by increased borrowings on the Term Loan of $20 million.

Previous wording

As of March 28, 2025, the Company’s principal sources of liquidity consisted of $49.4 million in cash and cash equivalents, $66.3 million of available credit under its Credit Facility, and future collections of receivables from customers. In the second quarter of fiscal 2025, the Company amended its Credit Facility which increased the borrowing capacity to $75.0 million for each of the Term Loan and Revolver facilities. The Company regularly requires letters of credit from certain customers, and, from time to time, these letters of credit are discounted without recourse shortly after shipment occurs in order to meet immediate liquidity requirements and to reduce its credit and sovereign risk. Historically, the Company’s primary sources of liquidity have been cash flows from operations and credit facilities.

Current wording

As of September 26, 2025, the Company’s principal sources of liquidity consisted of $64.8 million in cash and cash equivalents, $72.1 million of available credit under its Credit Facility, and future collections of receivables from customers. On August 28, 2025, the Company entered into an amendment under the Credit Facility to increase the Term Loan and Revolver commitments by $20 million for each instrument. The Company regularly requires letters of credit from certain customers, and, from time to time, these letters of credit are discounted without recourse shortly after shipment occurs in order to meet immediate liquidity requirements and to reduce its credit and sovereign risk. Historically, the Company’s primary sources of liquidity have been cash flows from operations and credit facilities.

Previous wording

The Company borrowed and repaid $55.0 million against the Revolver during the first nine months of fiscal 2025. As of March 28, 2025, the Company had $74.1 million outstanding under its Term Loan and no borrowings outstanding under its Revolver and was in compliance with all financial covenants contained in the Credit Facility.

Current wording

The Company borrowed and repaid $25.0 million against the Revolver during the first three months of fiscal 2026 and had $15.0 million borrowings outstanding under the Revolver. As of September 26, 2025, the Company had $92.2 million outstanding under its Term Loan and during the first three months of fiscal 2026 borrowed $20.0 million and repaid $0.9 million against the Term Loan. As of September 26, 2025, the Company was in compliance with all financial covenants contained in the Credit Facility.