Aviat Networks Announces Restructuring Plan
SANTA CLARA, Calif., Jan. 29, 2014
SANTA CLARA, Calif., Jan. 29, 2014 /PRNewswire/ --Aviat Networks, Inc.
(NASDAQ: AVNW), the leading expert in microwave networking solutions, today
announced that it is immediately implementing a restructuring plan to reduce
costs and expenses in light of the current operating environment. In addition,
the Board of Directors is reviewing initiatives that are expected to further
improve the company's financial performance and strategic position.
Following a review of the Company's core operations and near-term global
business conditions along with expected procurement cycles, Aviat Networks is
implementing an organizational restructuring plan that is expected to lower
quarterly non-GAAP operating expenses to approximately $27 million by the
fourth quarter of fiscal 2014, below the $28 million level communicated by the
Company on January 14, 2014. These actions are expected to result in cost and
expense savings of approximately $5 million to $6 million in fiscal year 2014
with an incremental cost savings of $13 million to $14 million in fiscal year
"We are implementing a restructuring plan to rapidly realign our cost
structure with near term business conditions while continuing to position the
company for future opportunities," says Michael Pangia, president and CEO,
Aviat Networks. "The decision to downsize our workforce was not made lightly,
but is a necessary step to achieve Aviat Networks' long-term goals. The
changes announced today have been carefully selected to have a minimal impact
on the introduction of new products and our customers."
The comprehensive restructuring program includes:
oRealignment of the product development organization
oStreamlining of the overall organization through the consolidation of
internal functions and back office and sales support productivity
oLowering operations and services overhead
oIncreasing use of outsourcing to reduce fixed costs and enhance
Aviat Networks expects to incur approximately $6 million to $7 million of cash
payments related with these cost reduction initiatives for severance and
employee-related cash charges. Cash payments in fiscal 2014 are expected to be
approximately $5 million with the remaining $1 million to $2 million of cash
payments occurring in the first half of fiscal 2015.
The actions being taken under the restructuring plan, combined with the
on-going actions being taken by the Company, are intended to bring Aviat
Networks' operational cost and expenses largely in line with the current
dynamics of the microwave radio and telecommunications markets. These cost
reduction initiatives are expected to be mainly completed by the end of
calendar 2014. Management will provide additional information on this
restricting plan during its second quarter of fiscal 2014 earnings call
scheduled for February 6, 2014.
The Board of Directors intends to commence a review of both executive and
Board compensation to ensure alignment with the company's current positioning.
Also, the Board of Directors are actively reviewing strategic initiatives to
further improve the Company's ability to scale and address new markets with a
focus on better positioning Aviat Networks for top line growth, consistent
positive cash flow generation and better shareholder returns.
Non-GAAP Measures and Comparative Financial Information
Aviat Networks, Inc. reports information in accordance with U.S. Generally
Accepted Accounting Principles ("GAAP"). Management of Aviat Networks monitors
gross margin, research and development expenses, selling and administrative
expenses, operating income or loss, income tax provision or benefit, income or
loss from continuing operations, basic and diluted income or loss per share
from continuing operations, adjusted earnings (losses) before interest, tax,
depreciation and amortization ("Adjusted EBITDA") adjusted to exclude certain
costs, charges, gains and losses, on a non-GAAP basis for planning and
forecasting results in future periods, and may use these measures for some
management compensation purposes. These measures exclude certain costs,
expenses, gains and losses as shown on the attached Reconciliation of Non-GAAP
Financial Measures table. As a result, management is presenting these non-GAAP
measures in addition to results reported in accordance with GAAP to better
communicate underlying operational and financial performance in each period.
Management believes these non-GAAP measures provide information that is useful
to investors in understanding period-over-period operating results separate
and apart from items that may, or could, have a disproportionate positive or
negative impact on results in any given period. Management also believes that
these non-GAAP measures enhance the ability of an investor to analyze trends
in Aviat Networks' business and to better understand our performance.
Aviat Networks' management does not, nor does it suggest that investors
should, consider such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP. Aviat
Networks presents these non-GAAP financial measures in reporting its financial
results to provide investors with an additional tool to evaluate its financial
performance. Reconciliations of these non-GAAP financial measures with the
most directly comparable financial measures calculated in accordance with GAAP
are included in the tables below.
About Aviat Networks
Aviat Networks, Inc. (NASDAQ: AVNW) is a leading global provider of microwave
networking solutions transforming communications networks to handle the
exploding growth of IP-centric, multi-Gigabit data services. With more than
750,000 systems installed around the world, Aviat Networks provides LTE-proven
microwave networking solutions to mobile operators, including some of the
largest and most advanced 4G/LTE networks in the world. Public safety,
utility, government and defense organizations also trust Aviat Networks'
solutions for their mission-critical applications where reliability is
paramount. In conjunction with its networking solutions, Aviat Networks
provides a comprehensive suite of localized professional and support services
enabling customers to effectively and seamlessly migrate to next generation
Carrier Ethernet/IP networks. For more than 50 years, customers have relied on
Aviat Networks' high performance and scalable solutions to help them maximize
their investments and solve their most challenging network problems.
Headquartered in Santa Clara, California, Aviat Networks operates in more than
100 countries around the world. For more information, visit
www.aviatnetworks.com or connect with Aviat Networks on Twitter, Facebook and
The information contained in this document includes forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
Section 21E of the Securities Exchange Act and Section 27A of the Securities
Act, including the nature and expected results of the restructuring plan
implemented by Aviat Networks, the exploration of alternatives that would
further improve expense to revenue ratio for fiscal 2015 and the review of
potential strategic initiatives. All statements, trend analyses and other
information contained herein about the markets for the services and products
of Aviat Networks, Inc. and trends in revenue, as well as other statements
identified by the use of forward-looking terminology, including "anticipate,"
"believe," "plan," "estimate," "expect," "goal," "will," "see," "continue,"
"delivering," "view," and "intend," or the negative of these terms or other
similar expressions, constitute forward-looking statements. These
forward-looking statements are based on estimates reflecting the current
beliefs of the senior management of Aviat Networks. 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 document.
Important factors that could cause actual results to differ materially from
estimates or projections contained in the forward-looking statements include
ocontinued price and margin erosion as a result of increased competition in
the microwave transmission industry;
othe impact of the volume, timing and customer, product and geographic mix
of our product orders;
oour ability to meet projected new product development dates or anticipated
cost reductions of new products;
oour suppliers' inability to perform and deliver on time as a result of
their financial condition, component shortages or other supply chain
ocustomer acceptance of new products;
othe ability of our subcontractors to timely perform;
ocontinued weakness in the global economy affecting customer spending;
oretention of our key personnel;
oour ability to manage and maintain key customer relationships;
ouncertain economic conditions in the telecommunications sector combined
with operator and supplier consolidation;
othe timing of our receipt of payment for products or services from our
oour failure to protect our intellectual property rights or defend against
intellectual property infringement claims by others;
othe effects of currency and interest rate risks; and
othe impact of political turmoil in countries where we have significant
For more information regarding the risks and uncertainties for our business,
see "Risk Factors" in our Form 10-K filed with the U.S. Securities and
Exchange Commission ("SEC") on September 23, 2013 as well as other reports
filed by Aviat Networks, Inc. with the SEC from time to time. Aviat Networks
undertakes no obligation to update publicly any forward-looking statement for
any reason, except as required by law, even as new information becomes
available or other events occur in the future.
SOURCE Aviat Networks, Inc.
Contact: Media Contact: Ned Hayes, Aviat Networks, Inc., (408) 567-7120,
Ned.Hayes@aviatnet.com, Investor Relations: Peter Salkowski, Aviat Networks,
Inc., (408) 567-7117, Investorinfo@aviatnet.com
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