# Aviat Networks, Inc.: Form 10-Q for the period ended Dec 26, 2025

- Company: [Aviat Networks, Inc.](/companies/avnw.md) (CIK 1377789)
- Form: 10-Q
- Filed: 2026-02-03
- Accepted by EDGAR: Feb 3, 2026, 21:17 ET
- Period: 2025-12-26
- Accession: 0001628280-26-005015
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1377789/000162828026005015/avnw-20251226.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1377789/000162828026005015/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-12-26.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-09-27 to 2025-12-26 | $111.5m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 6 months, 2025-06-28 to 2025-12-26 | $218.8m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2025-09-27 to 2025-12-26 | $75.4m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2025-06-28 to 2025-12-26 | $147.0m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-09-27 to 2025-12-26 | $36.1m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-06-28 to 2025-12-26 | $71.8m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-09-27 to 2025-12-26 | $6.4m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-06-28 to 2025-12-26 | $13.5m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2025-09-27 to 2025-12-26 | $22.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2025-06-28 to 2025-12-26 | $45.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-09-27 to 2025-12-26 | $7.3m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-06-28 to 2025-12-26 | $12.5m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-09-27 to 2025-12-26 | $2.4m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-06-28 to 2025-12-26 | $4.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-09-27 to 2025-12-26 | $5.7m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-06-28 to 2025-12-26 | $5.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-09-27 to 2025-12-26 | $0.44 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-06-28 to 2025-12-26 | $0.45 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-09-27 to 2025-12-26 | $0.44 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-06-28 to 2025-12-26 | $0.46 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-09-27 to 2025-12-26 | 13,005,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-06-28 to 2025-12-26 | 12,995,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-06-28 to 2025-12-26 | $12.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-06-28 to 2025-12-26 | $3.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2025-06-28 to 2025-12-26 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-12-26 | $86.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-12-26 | $493.9m | us-gaap:AssetsCurrent |
| Total assets | at 2025-12-26 | $659.4m | us-gaap:Assets |
| Current liabilities | at 2025-12-26 | $267.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-12-26 | $387.7m | us-gaap:Liabilities |
| Long-term debt | at 2025-12-26 | $100.9m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-12-26 | $4.4m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-12-26 | $271.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 20,645 characters.

This Quarterly Report on Form 10-Q, including “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including without limitation statements of, about, concerning or regarding: our ability to maintain effective internal control over financial reporting and management systems and remediate material weaknesses; our plans, strategies and objectives for future operations, including with respect to growing our business and sustaining profitability; our restructuring efforts; our research and development efforts and new product releases and services; trends in revenue; drivers of our business and the markets in which we operate; future economic conditions, performance or outlook, and changes in our industry and the markets we serve; the outcome of contingencies; the value of our contract awards; beliefs or expectations; the sufficiency of our cash and our capital needs and expenditures; our intellectual property protection; our compliance with regulatory requirements and the associated expenses; expectations regarding litigation; our intention not to pay cash dividends; seasonality of our business; the impact of foreign exchange and inflation; taxes; the impact of tariffs, the adoption of trade restrictions affecting our products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; and assumptions underlying any of the foregoing. Forward-looking statements may be identified by the use of forward-looking terminology, such as “anticipates,” “believes,” “expects,” “may,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “strategy,” “projects,” “targets,” “goals,” “seeing,” “delivering,” “continues,” “forecasts,” “future,” “predict,” “might,” “could,” “potential,” or the negative of these terms, and similar words or expressions.

These forward-looking statements are based on estimates reflecting the current beliefs of the senior management of Aviat Networks, Inc. (“Aviat,” the “Company,” “we,” “us,” and “our”). These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should therefore be considered in light of various important factors, including those set forth in this Quarterly Report on Form 10-Q.

See “Item 1A. Risk Factors” in the Company’s fiscal 2025 Annual Report on Form 10-K filed with the SEC on September 10, 2025 for more information regarding factors that may cause its results to differ materially from those expressed or implied by the forward-looking statements contained in this Quarterly Report on Form 10-Q.

You should not place undue reliance on these forward-looking statements, which reflect our management’s opinions only as of the date of the filing of this Quarterly Report on Form 10-Q. Forward-looking statements are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), along with provisions of the Private Securities Litigation Reform Act of 1995, and we expressly disclaim any obligation, other than as required by law, to update any forward-looking statements to reflect further developments or information obtained after the date of filing of this Quarterly Report on Form 10-Q or, in the case of any document incorporated by reference, the date of that document.

### Overview of Business; Operating Environment and Key Factors Impacting Fiscal 2026 and 2025 Results

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Aviat’s results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s unaudited condensed consolidated financial statements and accompanying notes. In the discussion herein, the fiscal year ending July 3, 2026 is referred to as “fiscal 2026” or “2026” and the fiscal year ended June 27, 2025 is referred to as “fiscal 2025” or “2025.”

### Overview

Aviat is a global supplier of microwave networking and access networking solutions, backed by an extensive suite of professional services and support. Aviat sells radios, routers, software and services integral to the functioning of data transport networks. Aviat has more than 3,000 customers and significant relationships with global service providers and private network operators. Aviat’s North America manufacturing base consists of a combination of contract manufacturing and assembly and testing operated in Austin, Texas by Aviat. Additionally, Aviat utilizes a contract manufacturer based in Asia for much of its international equipment demand. Aviat’s technology is underpinned by more than 500 patents. Aviat competes on the basis of total cost of ownership, microwave radio expertise and solutions for mission critical communications. Aviat has a global presence.

### Operations Review

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first six 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, U.S. tariffs on foreign imports were introduced. Aviat will attempt to mitigate 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.

### Revenue

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 six months ended December 26, 2025 and December 27, 2024 and the related changes were as follows:

*(In thousands, except percentages)*

|  | Three Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change | Six Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| North America | $52,901 | $57,962 | $(5,061) | (8.7)% | $105,548 | $100,187 | $5,361 | 5.4% |
| Africa and the Middle East | 14,626 | 12,674 | 1,952 | 15.4% | 27,422 | 23,124 | 4,298 | 18.6% |
| Europe | 11,425 | 8,347 | 3,078 | 36.9% | 18,985 | 13,947 | 5,038 | 36.1% |
| Latin America and Asia Pacific | 32,520 | 39,214 | (6,694) | (17.1)% | 66,837 | 69,368 | (2,531) | (3.6)% |
| Total revenue | $111,472 | $118,197 | $(6,725) | (5.7)% | $218,792 | $206,626 | $12,166 | 5.9% |

Revenue in North America decreased by $5.1 million during the second quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for products of 19%, partially offset by higher demand of services by 12%, across mobile network operators and private network customers. Revenue in North America increased by $5.4 million during the first six months of fiscal 2026 compared with the same period of fiscal 2025, primarily due to higher demand for service and product offerings of 13% and 3%, respectively, across private network customers and mobile networks operators.

Revenue in Africa and the Middle East increased by $2.0 million during the second quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand for products and services of 20% and 7%, respectively, across mobile network operators and private network customers. Additionally, demand for software offerings increased by 15% compared with the same period of fiscal 2025. Revenue in Africa and the Middle East increased by $4.3 million during the first six months of fiscal 2026 compared with the same period of fiscal 2025, primarily due to increases in demand for services and products of 36% and 17%, respectively, for mobile network operators and private network customers.

Revenue in Europe increased by $3.1 million during the second quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand of services of 56% from project timing, increase in product demand of 35% for mobile network operators, and a 20% increase in demand of software offerings. Revenue in Europe increased by $5.0 million during the first six months of fiscal 2026 compared with the same period of fiscal 2025. The increase for the first six months of fiscal 2026 was primarily due to increases in demand for product and software offerings of 54% and 46%, respectively, for mobile network operators.

Revenue in Latin America and Asia Pacific decreased by $6.7 million during the second quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for services of 61%, partially offset by an increase of 36% on software offerings. Revenue in Latin America and Asia Pacific decreased by $2.5 million during the first six months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to due to lower demand for services and products of 31% and 14% respectively, partially offset by an increase of 139% on software offerings.

*(In thousands, except percentages)*

|  | Three Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change | Six Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Product sales | $81,210 | $82,312 | $(1,102) | (1.3)% | $156,294 | $143,428 | $12,866 | 9.0% |
| Services | 30,262 | 35,885 | (5,623) | (15.7)% | 62,498 | 63,198 | (700) | (1.1)% |
| Total revenue | $111,472 | $118,197 | $(6,725) | (5.7)% | $218,792 | $206,626 | $12,166 | 5.9% |

Revenue from product sales decreased by 1.3% and revenue from services decreased by 15.7% for the second quarter of fiscal 2026 compared with the same quarter of fiscal 2025. Revenue from product sales increased by 9.0% and revenue from services decreased by 1.1% for the first six months of fiscal 2026 compared with the same period of fiscal 2025. The changes were primarily due to the factors discussed above.

### Gross Margin

*(In thousands, except percentages)*

|  | Three Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change | Six Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $111,472 | $118,197 | $(6,725) | (5.7)% | $218,792 | $206,626 | $12,166 | 5.9% |
| Cost of revenue | 75,371 | 77,311 | (1,940) | (2.5)% | 147,028 | 145,952 | 1,076 | 0.7% |
| Gross margin | $36,101 | $40,886 | $(4,785) | (11.7)% | $71,764 | $60,674 | $11,090 | 18.3% |
| % of revenue | 32.4% | 34.6% |  |  | 32.8% | 29.4% |  |  |
| Product margin % | 32.9% | 33.2% |  |  | 31.4% | 25.3% |  |  |
| Service margin % | 30.9% | 37.7% |  |  | 36.2% | 38.6% |  |  |

Gross margin for the second quarter of fiscal 2026 decreased by $4.8 million compared with the same quarter of fiscal 2025 primarily due to higher volumes on lower margin products. Gross margin for the first six months of fiscal 2026 increased by $11.1 million due to higher sales volumes on higher margin products, specifically software offerings.

### Research and Development

*(In thousands, except percentages)*

|  | Three Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change | Six Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Research and development | $6,409 | $10,222 | $(3,813) | (37.3)% | $13,507 | $20,630 | $(7,123) | (34.5)% |
| % of revenue | 5.7% | 8.6% |  |  | 6.2% | 10.0% |  |  |

Research and development expenses decreased by $3.8 million and $7.1 million for the three and six months ended December 26, 2025, respectively, compared with the same periods in fiscal 2025, primarily due to cost management initiatives and synergies related to acquisitions.

### Selling and Administrative

*(In thousands, except percentages)*

|  | Three Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change | Six Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Selling and administrative | $22,384 | $21,279 | $1,105 | 5.2% | $45,760 | $46,227 | $(467) | (1.0)% |
| % of revenue | 20.1% | 18.0% |  |  | 20.9% | 22.4% |  |  |

Selling and administrative expenses increased by $1.1 million for the second quarter of fiscal 2026 compared with the same quarter of fiscal 2025 primarily due to higher administrative costs. Selling and administrative expenses decreased by $0.5 million for the first six months of fiscal 2026 compared with the same quarter of fiscal 2025 primarily due to cost management initiatives.

### Interest Expense, net

*(In thousands, except percentages)*

|  | Three Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change | Six Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest expense, net | $1,908 | $1,580 | $328 | 20.8% | $3,620 | $2,695 | $925 | 34.3% |

Interest expense, net increased by $0.3 million and $0.9 million for the three and six months ended December 26, 2025, respectively, primarily due to interest expense incurred on incremental Term Loan borrowings compared to the prior year period.

### Other Expense, net

*(In thousands, except percentages)*

|  | Three Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change | Six Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Other (income) expense, net | $(2,744) | $269 | $(3,013) | (1,120.1)% | $(1,771) | $979 | $(2,750) | (280.9)% |

Other (income) expense, net decreased by $3.0 million and $2.8 million for the three and six months ended December 26, 2025, respectively, compared with the same quarter of fiscal 2025 primarily as a result of foreign exchange rate movement.

### Income Taxes

*(In thousands, except percentages)*

|  | Three Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change | Six Months Ended December 26, 2025 | December 27, 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Income (loss) before income taxes | $8,123 | $6,121 | $2,002 | 32.7% | $10,627 | $(11,272) | $21,899 | (194.3)% |
| Provision for (benefit from) income taxes | $2,405 | $1,626 | $779 | 47.9% | $4,747 | $(3,888) | $8,635 | (222.1)% |

The Company estimates its annual effective tax rate at the end of each quarterly period and records the tax effect of certain discrete items in the interim period in which they occur, including changes in judgment about uncertain tax positions and deferred tax valuation allowances.

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

### Liquidity, Capital Resources, and Financial Strategies

### Sources of Cash

As of December 26, 2025, the Company’s total cash and cash equivalents were $86.5 million. Approximately $33.3 million was held in the United States. The remaining balance of $53.2 million, or 62%, was held outside the United States.

### Operating Activities

Operating cash flows is presented as net income (loss) adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash provided by (used in) operating activities was $12.2 million for the first six months of fiscal 2026, compared with $(6.4) million in the prior year. The $18.6 million increase is primarily attributable to net income along with decreases in inventory, unbilled, and deferred taxes which was partially offset by an increase in accounts receivable and a decrease in accounts payable.

### Investing Activities

Net cash used in investing activities was $3.2 million for the first six months of fiscal 2026, compared to $23.5 million in the prior year. The $20.3 million decrease is primarily due to the absence of prior year acquisition payments associated with the NEC Transaction in the current year.

### Financing Activities

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 $17.1 million for the first six months of fiscal 2026, compared with $18.6 million in the prior year. The $1.5 million decrease is primarily due to reduced net Term Loan borrowings of $17.9 million compared to $26.3 million in the prior year and the absence of prior year payments of deferred consideration for acquisitions of $5.8 million.

As of December 26, 2025, the Company’s principal sources of liquidity consisted of $86.5 million in cash and cash equivalents, $74.4 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.

The Company believes that its existing cash and cash equivalents, the available borrowings under its Credit Facility and future cash collections from customers will be sufficient to provide for its anticipated requirements and plans for cash for at least the next 12 months. In addition, the Company believes these sources of liquidity will be sufficient to provide for its anticipated requirements and plans for cash beyond the next 12 months.

The Company borrowed and repaid $50.0 million against the Revolver during the first six months of fiscal 2026 and had $15.0 million borrowings outstanding under the Revolver. As of December 26, 2025, the Company had $91.0 million outstanding under its Term Loan and during the first six months of fiscal 2026 borrowed $20.0 million and repaid $2.1 million against the Term Loan. As of December 26, 2025, the Company was in compliance with all financial covenants contained in the Credit Facility.

### Critical Accounting Estimates

For information about the Company’s critical accounting estimates, see the “Critical Accounting Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its fiscal 2025 Annual Report on Form 10-K.

## Market risk

As filed, 4,520 characters.

In the normal course of doing business, the Company is exposed to risks associated with foreign currency exchange rates and changes in interest rates. The Company employs established policies and procedures governing the use of financial instruments to manage its exposure to such risks. Information about the Company’s market risk is presented in Part II, Item 7A in its fiscal 2025 Annual Report on Form 10-K. There have been no material changes to the Company’s market risk during the first six months of fiscal 2026.

### Exchange Rate Risk

The Company conducts business globally in numerous currencies and is therefore exposed to foreign currency risks. From time to time, the Company uses derivative instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The Company does not hold or issue derivatives for trading purposes or make speculative investments in foreign currencies.

From time to time, the Company enters into foreign exchange forward contracts to mitigate the change in fair value of specific non-functional currency assets and liabilities on the balance sheet. All balance sheet hedges are marked to market through earnings every period. Changes in the fair value of these derivatives are largely offset by re-measurement of the underlying assets and liabilities. The Company did not have any foreign exchange forward contracts outstanding as of December 26, 2025.

Certain of the Company’s international business are transacted in non-U.S. dollar (“USD”) currencies. From time to time, the Company utilizes foreign currency hedging instruments to minimize the currency risk of non-USD transactions. The impact of translating the assets and liabilities of foreign operations to USD is included as a component of stockholders’ equity. As of December 26, 2025 and June 27, 2025, the cumulative translation adjustment decreased stockholders’ equity by $18.6 million and $18.8 million, respectively.

### Interest Rate Risk

The Company’s exposure to market risk for changes in interest rates relates primarily to its cash equivalents and borrowings under its Credit Facility. Refer to Note 6. Credit Facility and Debt of the Notes for further information.

### Exposure on Cash Equivalents

The Company had $86.5 million in total cash and cash equivalents as of December 26, 2025. Cash equivalents totaled $8.4 million as of December 26, 2025 and were comprised of money market funds and bank certificates of deposit. Cash equivalents have been recorded at fair value. Fair value is measured using inputs that fall into a three-level hierarchy that prioritizes the inputs used to measure fair value based on observability of such inputs. For more information on the fair value measurements of cash equivalents, refer to Note 5. Fair Value Measurements of Assets and Liabilities of the Notes for further information.

The Company’s cash equivalents earn interest at fixed rates; therefore, changes in interest rates will not generate a gain or loss on these investments unless they are sold prior to maturity. A 10% change in interest rates on the Company’s cash equivalents is not expected to have a material impact on its financial position, results of operations, or cash flows.

### Exposure on Borrowings

The Company borrowed and repaid $50.0 million against the Revolver during the first six months of fiscal 2026 and had $15.0 million borrowings outstanding under the Revolver. As of December 26, 2025, the Company had $91.0 million outstanding under its Term Loan and during the first six months of fiscal 2026 borrowed $20.0 million and repaid $2.1 million against the Term Loan. As of December 26, 2025, the Company was in compliance with all financial covenants contained in the Credit Facility.

The Company’s borrowings under the current Credit Facility bear interest at either: (a) Adjusted Term SOFR plus the applicable margin; or (b) the Base Rate plus the applicable margin. The pricing levels for interest rate margins are determined based on the Consolidated Total Leverage Ratio as determined and adjusted quarterly. As of December 26, 2025, the applicable margin on Adjusted Term SOFR and Base Rate borrowings was 2.75% and 1.75%, respectively. The effective rate of interest on the outstanding Term Loan borrowings as of December 26, 2025 was 6.6%.

A 10% change in interest rates is estimated to have a $0.6 million impact on annual interest expense on the Company’s outstanding long-term debt as of December 26, 2025.

## Controls and procedures

As filed, 4,282 characters.

### Evaluation of Disclosure Controls and Procedures

As disclosed in the Company’s Annual Reports on Form 10-K for the fiscal years ended June 28, 2024, and June 27, 2025, the Company’s management concluded that our disclosure controls and procedures were not effective due to certain material weaknesses in internal control over financial reporting. Refer to Part II, Item 9A. Controls and Procedures in the Company’s Annual Reports on Form 10-K for the fiscal years ended June 28, 2024 and June 27, 2025, for further information.

During fiscal 2025 and continuing into the second quarter of fiscal 2026, the Company implemented actions designed to improve our internal control over financial reporting and remediate these material weaknesses, including (i) providing training to the applicable control performers related to the importance of timely execution of control activities for which they are responsible; (ii) beginning the redesign of controls over the determination of the appropriate period for revenue recognition, controls over arrangements where revenue is recognized over time and controls related to the review and approval of journal entries, and (iii) implementing a formal monitoring program to perform the necessary evaluations to ascertain whether the components of internal control are present and functioning, including implementing corrective actions as necessary.

These steps are subject to ongoing senior management review, as well as oversight by the audit committee of our Board of Directors. While significant progress has been made to remediate the material weaknesses, the material weaknesses will not be considered remediated until the associated controls operate effectively for a sufficient period of time and management concludes, through testing, that the controls are operating effectively. We will continue to monitor the design and effectiveness of these and other processes, procedures and controls and make further changes management deems appropriate.

The Company’s management, with the participation of our President and CEO, and Chief Financial Officer (“CFO”), completed an evaluation of the effectiveness of the design and operation of the disclosure controls and procedures as of December 26, 2025. The Company’s CEO and CFO have concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, were not effective as of December 26, 2025, due to the material weaknesses described above not being fully remediated as of the date of the evaluation.

### Changes in Internal Controls over Financial Reporting

Except as noted above, there were no changes to our internal controls over financial reporting as defined in Rules 13a-15(f) or 15d-15(f) that occurred during the quarter ended December 26, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

### Inherent Limitations on Effectiveness of Controls

The Company’s management, including its CEO and CFO, does not expect that its disclosure controls and procedures or its internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

## Risk factors

As filed, 678 characters.

Investors should carefully review and consider the information regarding certain factors which could materially affect our business, operating results, cash flows, and financial condition set forth under Item 1A, Risk Factors, in our fiscal 2025 Annual Report on Form 10-K filed with the SEC on September 10, 2025.

There have been no material changes from the risk factors described in our Annual Report, although we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

Filed Feb 3, 2026.
Source: SEC EDGAR, the filing index for accession 0001628280-26-005015. Last ingested by Listed: Oct 24, 2026, 15:09 ET. No prices; not investment advice.