Aviat Networks (AVNW) Announces Update on Corp. Realignment; See Challenges in Mobile Operators

Aviat Networks, Inc. (NASDAQ: AVNW) provided updates on its corporate realignment initiatives and outlined aggressive actions to drive to profitability.

"We're continuing to see strong demand for our products and services within the Private Network vertical," said Michael Pangia, president and CEO, Aviat Networks. "However, spending by Mobile Operators continues to be more challenging than anticipated. This will have an impact on our short-term revenue, though we remain well entrenched within this segment, and believe we are positioned for growth as the next generation of technology upgrades comes to market. We are also continuing our realignment transformation and aggressively instituting a series of Lean Six Sigma processes to drive better efficiencies and performance while significantly lowering our cost structure."

Aviat previously commenced a series of process improvement initiatives geared towards enhancing operational efficiencies, improving gross margins and lowering costs. Based on the impact of these initiatives, the Company will be reducing its headcount by approximately 87 positions, resulting in an estimated annualized savings of approximately $6.0 - $7.0 million. The majority of workforce reductions are anticipated to take place in Aviat's Fiscal 2016 fourth quarter.

Aviat will also be implementing the next phase of its corporate realignment programs, which includes office consolidation, the integration of various shared service business units and other cost control measures, which should improve gross profit margins while lowering general and administrative expenses further. Inclusive of the workforce reductions noted above, the Company anticipates overall savings of approximately $14.0 - $16.0 million during Fiscal 2017 compared to Fiscal 2016, with annualized savings higher based on programs deployed throughout the year. Additionally, the Company anticipates that it will incur restructuring expenses associated with these events of approximately $4.0 million.

Mr. Pangia continued, "After analyzing our customers' spending plans and third-party industry data, we are taking more aggressive actions now to realign the organization to be profitable at a lower revenue run-rate than previously anticipated. We believe we have leading technologies and differentiated services that address our customers' needs globally, and we will continue to invest in these areas. As a result of the improvements made to date, we're in a better position to expedite our plans with a focus on generating positive Adjusted EBITDA in the first half of Fiscal 2017."

On January 4, 2016, Aviat Networks received a notice from The Nasdaq Stock Market ("Nasdaq") stating that the Company was not in compliance with Nasdaq Listing Rule 5450(a)(1) (the "Rule") because the Company's common stock failed to maintain a minimum closing bid price of $1.00 for 30 consecutive business days. The Board of Directors intends to implement a plan that addresses the Company's non- compliance prior to the 180-day period granted by Nasdaq.

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