Cover
Cover - shares | 9 Months Ended | |
Mar. 31, 2023 | Apr. 30, 2023 | |
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 0-23599 | |
Entity Registrant Name | MERCURY SYSTEMS, INC. | |
Entity Incorporation, State or Country Code | MA | |
Entity Tax Identification Number | 04-2741391 | |
Entity Address, Address Line One | 50 MINUTEMAN ROAD | |
Entity Address, City or Town | ANDOVER | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 01810 | |
City Area Code | 978 | |
Local Phone Number | 256-1300 | |
Title of 12(g) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | MRCY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 58,190,096 | |
Entity Central Index Key | 0001049521 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Jul. 01, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 64,441 | $ 65,654 |
Accounts receivable, net of allowance for credit losses of $1,090 and $2,074 at March 31, 2023 and July 1, 2022, respectively | 125,562 | 144,494 |
Unbilled receivables and costs in excess of billings | 376,722 | 303,356 |
Inventory | 342,777 | 270,339 |
Prepaid income taxes | 3,588 | 7,503 |
Prepaid expenses and other current assets | 24,785 | 23,906 |
Total current assets | 937,875 | 815,252 |
Property and equipment, net | 119,482 | 127,191 |
Goodwill | 938,093 | 937,880 |
Intangible assets, net | 310,647 | 351,538 |
Operating lease right-of-use assets, net | 63,960 | 66,366 |
Other non-current assets | 13,816 | 6,188 |
Total assets | 2,383,873 | 2,304,415 |
Current liabilities: | ||
Accounts payable | 111,246 | 98,673 |
Accrued expenses | 27,508 | 34,954 |
Accrued compensation | 26,704 | 44,813 |
Deferred revenues and customer advances | 54,700 | 15,487 |
Total current liabilities | 220,158 | 193,927 |
Deferred income taxes | 6,451 | 32,398 |
Income taxes payable | 4,901 | 9,112 |
Long-term debt | 511,500 | 451,500 |
Operating lease liabilities | 68,099 | 69,888 |
Other non-current liabilities | 11,865 | 10,405 |
Total liabilities | 822,974 | 767,230 |
Commitments and contingencies (Note N) | ||
Shareholders' equity: | ||
Preferred stock, $0.01 par value; 1,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, $0.01 par value; 85,000,000 shares authorized; 56,673,677 and 55,679,747 shares issued and outstanding at March 31, 2023 and July 1, 2022, respectively | 567 | 557 |
Additional paid-in capital | 1,187,335 | 1,145,323 |
Retained earnings | 365,675 | 385,774 |
Accumulated other comprehensive income | 7,322 | 5,531 |
Total shareholders’ equity | 1,560,899 | 1,537,185 |
Total liabilities and shareholders’ equity | $ 2,383,873 | $ 2,304,415 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Jul. 01, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 1,090 | $ 2,074 |
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (shares) | 0 | 0 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 85,000,000 | 85,000,000 |
Common stock, shares issued (shares) | 56,673,677 | 55,679,747 |
Common stock, shares outstanding (shares) | 56,673,677 | 55,679,747 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | |
Income Statement [Abstract] | ||||
Net revenues | $ 263,479 | $ 253,075 | $ 720,646 | $ 698,468 |
Cost of revenues | 173,190 | 153,321 | 471,302 | 423,083 |
Gross margin | 90,289 | 99,754 | 249,344 | 275,385 |
Operating expenses: | ||||
Selling, general and administrative | 44,626 | 39,261 | 128,626 | 113,027 |
Research and development | 26,516 | 25,387 | 81,188 | 82,604 |
Amortization of intangible assets | 12,809 | 16,077 | 40,919 | 45,813 |
Restructuring and other charges | 2,778 | 6,348 | 6,355 | 22,424 |
Acquisition costs and other related expenses | 1,606 | 2,726 | 5,043 | 7,524 |
Total operating expenses | 88,335 | 89,799 | 262,131 | 271,392 |
Income (loss) from operations | 1,954 | 9,955 | (12,787) | 3,993 |
Interest income | 80 | 110 | 329 | 124 |
Interest expense | (6,711) | (1,664) | (17,848) | (3,353) |
Other expense, net | (613) | (2,160) | (3,412) | (4,898) |
(Loss) income before income taxes | (5,290) | 6,241 | (33,718) | (4,134) |
Income tax (benefit) provision | (10,446) | 2,102 | (13,619) | 1,506 |
Net income (loss) | $ 5,156 | $ 4,139 | $ (20,099) | $ (5,640) |
Basic net (loss) earnings per share (in dollars per share) | $ 0.09 | $ 0.07 | $ (0.36) | $ (0.10) |
Diluted net (loss) earnings per share (in dollars per share) | $ 0.09 | $ 0.07 | $ (0.36) | $ (0.10) |
Weighted-average shares outstanding: | ||||
Basic (in shares) | 56,511 | 55,590 | 56,310 | 55,495 |
Diluted (in shares) | 56,896 | 56,027 | 56,310 | 55,495 |
Comprehensive income (loss): | ||||
Net income (loss) | $ 5,156 | $ 4,139 | $ (20,099) | $ (5,640) |
Change in fair value of derivative instruments, net of tax | (2,687) | 0 | 1,275 | 0 |
Foreign currency translation adjustments | (20) | 232 | 374 | 207 |
Pension benefit plan, net of tax | 46 | 48 | 142 | 144 |
Total other comprehensive (loss) income, net of tax | (2,661) | 280 | 1,791 | 351 |
Total comprehensive income (loss) | $ 2,495 | $ 4,419 | $ (18,308) | $ (5,289) |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity Statement $ in Thousands | USD ($) shares | Common Stock | Common Stock USD ($) shares | Additional Paid-in Capital USD ($) | Retained Earnings USD ($) | Accumulated Other Comprehensive Income USD ($) |
Beginning balance (in shares) at Jul. 02, 2021 | shares | 55,241,000 | |||||
Beginning balance at Jul. 02, 2021 | $ 1,484,146 | $ 552 | $ 1,109,434 | $ 374,499 | $ (339) | |
Issuance of common stock under employee stock incentive plans (in shares) | shares | 445,000 | |||||
Issuance of common stock under employee stock incentive plans | 0 | $ 4 | (4) | |||
Issuance of common stock under employee stock purchase plan (in shares) | shares | 54,000 | |||||
Issuance of common stock under defined contribution plan | 2,516 | $ 1 | 2,515 | |||
Purchased and retirement of common stock (in shares) | shares | (145,000) | |||||
Issuance of common stock under employee stock purchase plan | (7,716) | $ (1) | (7,715) | |||
Retirement of common stock | 26,787 | 26,787 | ||||
Net loss | (5,640) | (5,640) | ||||
Other comprehensive income (loss) | 351 | 351 | ||||
Ending balance (in shares) at Apr. 01, 2022 | shares | 55,595,000 | |||||
Ending balance at Apr. 01, 2022 | 1,500,444 | $ 556 | 1,131,017 | 368,859 | 12 | |
Common stock ownership percentage | 0.075 | |||||
Beginning balance (in shares) at Dec. 31, 2021 | shares | 55,583,000 | |||||
Beginning balance at Dec. 31, 2021 | 1,487,121 | $ 556 | 1,122,113 | 364,720 | (268) | |
Issuance of common stock under employee stock incentive plans (in shares) | shares | 16,000 | |||||
Issuance of common stock under employee stock incentive plans | 0 | |||||
Purchased and retirement of common stock (in shares) | shares | (4,000) | |||||
Issuance of common stock under employee stock purchase plan | (217) | (217) | ||||
Retirement of common stock | 9,121 | 9,121 | ||||
Net loss | 4,139 | 4,139 | ||||
Other comprehensive income (loss) | 280 | 280 | ||||
Ending balance (in shares) at Apr. 01, 2022 | shares | 55,595,000 | |||||
Ending balance at Apr. 01, 2022 | $ 1,500,444 | $ 556 | 1,131,017 | 368,859 | 12 | |
Beginning balance (in shares) at Jul. 01, 2022 | shares | 55,679,747 | 55,680,000 | ||||
Beginning balance at Jul. 01, 2022 | $ 1,537,185 | $ 557 | 1,145,323 | 385,774 | 5,531 | |
Issuance of common stock under employee stock incentive plans (in shares) | shares | 702,000 | |||||
Issuance of common stock under employee stock incentive plans | 0 | $ 7 | (7) | |||
Issuance of common stock under employee stock purchase plan (in shares) | shares | 57,000 | |||||
Issuance of common stock under employee stock purchase plan | 2,393 | $ 1 | 2,392 | |||
Issuance of common stock under defined contribution plan (in shares) | shares | 236,000 | |||||
Issuance of common stock under defined contribution plan | 11,582 | $ 2 | 11,580 | |||
Purchased and retirement of common stock (in shares) | shares | (1,000) | |||||
Issuance of common stock under employee stock purchase plan | (63) | (63) | ||||
Retirement of common stock | 28,110 | 28,110 | ||||
Net loss | (20,099) | (20,099) | ||||
Other comprehensive income (loss) | $ 1,791 | 1,791 | ||||
Ending balance (in shares) at Mar. 31, 2023 | shares | 56,673,677 | 56,674,000 | ||||
Ending balance at Mar. 31, 2023 | $ 1,560,899 | $ 567 | 1,187,335 | 365,675 | 7,322 | |
Beginning balance (in shares) at Dec. 30, 2022 | shares | 56,365,000 | |||||
Beginning balance at Dec. 30, 2022 | 1,544,092 | $ 564 | 1,173,026 | 360,519 | 9,983 | |
Issuance of common stock under employee stock incentive plans (in shares) | shares | 225,000 | |||||
Issuance of common stock under employee stock incentive plans | 0 | $ 2 | (2) | |||
Issuance of common stock under defined contribution plan (in shares) | shares | 84,000 | |||||
Issuance of common stock under defined contribution plan | 4,190 | $ 1 | 4,189 | |||
Retirement of common stock | 10,122 | 10,122 | ||||
Net loss | 5,156 | 5,156 | ||||
Other comprehensive income (loss) | $ (2,661) | (2,661) | ||||
Ending balance (in shares) at Mar. 31, 2023 | shares | 56,673,677 | 56,674,000 | ||||
Ending balance at Mar. 31, 2023 | $ 1,560,899 | $ 567 | $ 1,187,335 | $ 365,675 | $ 7,322 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2023 | Apr. 01, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (20,099) | $ (5,640) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization expense | 74,827 | 70,021 |
Stock-based compensation expense | 27,446 | 26,262 |
Share-based matching contributions on defined contribution plan | 9,715 | 0 |
Benefit for deferred income taxes | (34,644) | (5,241) |
Other non-cash items | 721 | (1,092) |
Cash settlement for termination of interest rate swap | 5,995 | 0 |
Changes in operating assets and liabilities, net of effects of businesses acquired: | ||
Accounts receivable, unbilled receivables, and costs in excess of billings | (53,705) | (65,203) |
Inventory | (70,029) | (28,386) |
Prepaid income taxes | 3,866 | (7,710) |
Prepaid expenses and other current assets | (1,154) | (10,528) |
Other non-current assets | 2,752 | 3,211 |
Accounts payable, accrued expenses, and accrued compensation | (11,765) | 45,572 |
Deferred revenues and customer advances | 39,051 | (14,591) |
Income taxes payable | (4,229) | 3 |
Other non-current liabilities | (2,612) | (6,112) |
Net cash (used in) provided by operating activities | (33,864) | 566 |
Cash flows from investing activities: | ||
Acquisition of business, net of cash acquired | 0 | (243,255) |
Purchases of property and equipment | (29,950) | (19,476) |
Other investing activities | 150 | (3,214) |
Net cash used in investing activities | (29,800) | (265,945) |
Cash flows from financing activities: | ||
Proceeds from employee stock plans | 2,393 | 2,516 |
Borrowings under credit facilities | 100,000 | 251,500 |
Payments under credit facilities | (40,000) | 0 |
Purchase and retirement of common stock | (63) | (7,716) |
Payments of deferred financing and offering costs | 0 | (2,662) |
Net cash provided by financing activities | 62,330 | 243,638 |
Effect of exchange rate changes on cash and cash equivalents | 121 | (404) |
Net decrease in cash and cash equivalents | (1,213) | (22,145) |
Cash and cash equivalents at beginning of period | 65,654 | 113,839 |
Cash and cash equivalents at end of period | 64,441 | 91,694 |
Cash paid during the period for: | ||
Interest | 18,751 | 2,424 |
Income taxes | 21,928 | 15,023 |
Non-cash investing activity: Purchases of property and equipment incurred but not yet paid | $ 5,105 | $ 4,615 |
Description of Business
Description of Business | 9 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Mercury Systems, Inc. is a technology company that delivers commercial innovation to rapidly transform the global aerospace and defense industry. Headquartered in Andover, Massachusetts, the Company's end-to-end processing platform enables a broad range of aerospace and defense programs, optimized for mission success in some of the most challenging and demanding environments. Mercury's Processing Platform includes signal solutions, display, software applications, networking, storage and secure processing. The Company's innovative solutions are mission-ready, trusted and secure, software-defined and open and modular (the Company's differentiators), to meet customers’ most-pressing high-tech needs, including those specific to the aerospace and defense community. Investors and others should note that the Company announces material financial information using its website ( www.mrcy.com ), Securities and Exchange Commission (“SEC”) filings, press releases, public conference calls, webcasts, and social media, including Twitter ( twitter.com/mrcy and twitter.com/mrcy_CEO ) and LinkedIn ( www.linkedin.com/company/mercury-systems ). Therefore, the Company encourages investors and others interested in Mercury to review the information the Company posts on the social media and other communication channels listed on its website. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies B ASIS OF P RESENTATION The accompanying consolidated financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America for interim financial information and with the instructions to the Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual consolidated financial statements have been condensed or omitted pursuant to those rules and regulations; however, in the opinion of management the financial information reflects all adjustments, consisting of adjustments of a normal recurring nature, necessary for fair presentation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended July 1, 2022 which are contained in the Company’s Annual Report on Form 10-K filed with the SEC on August 16, 2022. The results for the third quarter and nine months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full fiscal year. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. All references to the third quarter of fiscal 2023 are to the quarter ended March 31, 2023. There were 13 weeks during the third quarters ended March 31, 2023 and April 1, 2022, respectively. There were 39 weeks during the nine months ended March 31, 2023 and April 1, 2022, respectively. U SE OF E STIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. B USINESS C OMBINATIONS The Company utilizes the acquisition method of accounting under ASC 805, Business Combinations , (“ASC 805”), for all transactions and events in which it obtains control over one or more other businesses, to recognize the fair value of all assets and liabilities acquired, even if less than one hundred percent ownership is acquired, and in establishing the acquisition date fair value as the measurement date for all assets and liabilities assumed. The Company also utilizes ASC 805 for the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in business combinations. F OREIGN C URRENCY Local currencies are the functional currency for the Company’s subsidiaries in Switzerland, the United Kingdom, France, Spain and Canada. The accounts of foreign subsidiaries are translated using exchange rates in effect at period-end for assets and liabilities and at average exchange rates during the period for results of operations. The related translation adjustments are reported in Accumulated other comprehensive income (loss) (“AOCI”) in shareholders’ equity. Gains (losses) resulting from non-U.S. currency transactions are included in Other expense, net in the Consolidated Statements of Operations and Comprehensive Income (Loss) and were immaterial for all periods presented. A CCOUNTS R ECEIVABLE Accounts receivable, net, represents amounts that have been billed and are currently due from customers. The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be collected. The Company provides credit to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended as necessary. The allowance is based upon an assessment of the customer's credit worthiness, reasonable forecasts about the future, history with the customer, and the age of the receivable balance. The Company typically invoices a customer upon shipment of the product (or completion of a service) for contracts where revenue is recognized at a point in time. For contracts where revenue is recognized over time, the invoicing events are typically based on specified performance obligation deliverables or milestone events, or quantifiable measures of performance. A CCOUNTS R ECEIVABLES F ACTORING On September 27, 2022, the Company executed an uncommitted receivables purchase agreement (“RPA”) with Bank of the West, as purchaser, pursuant to which the Company may offer to sell certain customer receivables, subject to the terms and conditions of the RPA. The RPA is an uncommitted arrangement such that the Company is not obligated to sell any receivables and Bank of the West has no obligation to purchase any receivables from the Company. Pursuant to the RPA, Bank of the West may purchase certain of the Company's customer receivables at a discounted rate, subject to a limit that as of any date, the total amount of purchased receivables held by Bank of the West, less the amount of all collections received on such receivables, may not exceed $20,000. The RPA has an indefinite term and the agreement remains in effect until it is terminated by either party. Factoring under the RPA Agreement is treated as a true sale of accounts receivable by the Company. The Company has continued involvement in servicing accounts receivable under the Purchase Agreement, but no retained interests related to the factored accounts receivable. On March 14, 2023, the Company amended the RPA to increase the capacity from $20,000 to $30,600. Proceeds for amounts factored by the Company are recorded as an increase to cash and a reduction to accounts receivable outstanding in the Consolidated Balance Sheets. Cash Flows attributable to factoring are reflected as cash flows from operating activities in the Company's Consolidated Statements of Cash Flows. Factoring fees are included as selling, general and administrative expenses in the Company's Consolidated Statements of Operations and Comprehensive Income (Loss). The Company had $24,502 factored in accounts receivables as of March 31, 2023 and incurred factoring fees of approximately $179 and $317 for the third quarter and nine months ended March 31, 2023, respectively. The Company did not factor any accounts receivable or incur any factoring fees for the third quarter and nine months ended April 1, 2022. D ERIVATIVES The Company records the fair value of its derivative financial instruments in its condensed consolidated financial statements in Other non-current assets, or Other non-current liabilities depending on their net position, regardless of the purpose or intent for holding the derivative contract. Changes in the fair value of the derivative financial instruments are either recognized periodically in earnings or in shareholders’ equity as a component of Other comprehensive income (“OCI”). Changes in the fair value of cash flow hedges that qualify for hedge accounting treatment are recorded in OCI and reclassified into earnings in the same line item on the Consolidated Statements of Operations and Comprehensive Income (Loss) as the impact of the hedged transaction when the underlying contract matures and, for interest rate exposure derivatives, over the term of the corresponding debt instrument. Changes in the fair values of derivatives not qualifying for hedge accounting are reported in earnings as they occur. All derivatives for the Company qualified for hedge accounting as of March 31, 2023. R EVENUE R ECOGNITION The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers , (“ASC 606”). Revenues are derived from the sales of products that are grouped into one of the following three categories: (i) components; (ii) modules and sub-assemblies; and (iii) integrated subsystems. The Company also generates revenues from the performance of services, including systems engineering support, consulting, maintenance and other support, testing and installation. Each promised good or service within a contract is accounted for separately under the guidance of ASC 606 if they are distinct. Promised goods or services not meeting the criteria for being a distinct performance obligation are bundled into a single performance obligation with other goods or services that together meet the criteria for being distinct. The appropriate allocation of the transaction price and recognition of revenue is then determined for the bundled performance obligation. Revenue recognized at a point in time generally relates to contracts that include a combination of components, modules and sub-assemblies, integrated subsystems and related system integration or other services. Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, totaled 48% and 43% of revenues for the third quarter and nine months ended March 31, 2023, respectively. Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, totaled 45% and 48% for the third quarter and nine months ended April 1, 2022, respectively. The Company also engages in over time contracts for development, production and service activities and recognizes revenue for performance obligations over time. These over time contracts involve the design, development, manufacture, or modification of complex modules and sub-assemblies or integrated subsystems and related services. Over time contracts include both fixed-price and cost reimbursable contracts. The Company’s cost reimbursable contracts typically include cost-plus fixed fee and time and material contracts. Total revenue recognized over time was 52% and 57% of total revenues for the third quarters and nine months ended March 31, 2023, respectively. Total revenue recognized over time was 55% and 52% of total revenues for the third quarter and nine months ended April 1, 2022, respectively. The Company generally does not provide its customers with rights of product return other than those related to assurance warranty provisions that permit repair or replacement of defective goods generally over a period of 12 to 36 months. The Company accrues for anticipated warranty costs upon product shipment. The Company does not consider activities related to such assurance warranties, if any, to be a separate performance obligation. The Company does offer separately priced extended warranties which generally range from 12 to 36 months that are treated as separate performance obligations. The transaction price allocated to extended warranties is recognized over time in proportion to the costs expected to be incurred in satisfying the obligations under the contract. The Company's contracts generally do not include significant financing components. The Company's over time contracts may include milestone payments, which align the payment schedule with the progress towards completion on the performance obligation. Otherwise, the Company's contracts are predicated on payment upon completion of the performance obligation. On certain contracts, the Company may be entitled to receive an advance payment, which is not considered a significant financing component because most contracts have a duration of approximately two years on average and it is used to facilitate inventory demands at the onset of a contract and to safeguard the Company from the failure of the other party to abide by some or all of their obligations under the contract. All revenues are reported net of government assessed taxes (e.g., sales taxes or value-added taxes). Refer to Note M for disaggregation of revenue for the period. C ONTRACT B ALANCES Contract balances result from the timing of revenue recognized, billings and cash collections resulting in the generation of contract assets and liabilities. Contract assets represent revenue recognized in excess of amounts invoiced to the customer and the right to payment is not subject to the passage of time. Instead, while the Company has an enforceable right to payment as progress is made over performance obligations, billings to customers are generally predicated on (i) completion of defined milestones, (ii) monthly costs incurred or (iii) final delivery of goods or services. Contract assets are presented as Unbilled receivables and costs in excess of billings on the Company’s Consolidated Balance Sheets. Contract liabilities consist of deferred product revenue, billings in excess of revenues, deferred service revenue and customer advances. Deferred product revenue represents amounts that have been invoiced to customers, but are not yet recognizable as revenue because the Company has not satisfied its performance obligations under the contract. Billings in excess of revenues represents milestone billing contracts where the billings of the contract exceed recognized revenues. Deferred service revenue primarily represents amounts invoiced to customers for annual maintenance contracts or extended warranty contracts, which are recognized over time in proportion to the costs expected to be incurred in satisfying the obligations under the contract. Customer advances represent deposits received from customers on an order. Contract liabilities are included in deferred revenue as well as Other non-current liabilities on the Company’s Consolidated Balance Sheets. Contract balances are reported in a net position on a contract-by-contract basis. The contract asset balances were $376,722 and $303,356 as of March 31, 2023 and July 1, 2022, respectively. The contract asset balance increased due to growth in revenue recognized under over time contracts, as well as the timing of program milestone billings during the third quarter ended March 31, 2023. The contract liability balances were $55,276 and $15,966 as of March 31, 2023 and July 1, 2022, respectively. The increase was due to a higher volume of advance milestone billing events as well as timing of revenue conversion across multiple programs. Revenue recognized for the third quarter and nine months ended March 31, 2023 that was included in the contract liability balance at July 1, 2022 was $2,681 and $10,418, respectively. Revenue recognized for the third quarter and nine months ended April 1, 2022 that was included in the contract liability balance at July 2, 2021 was $6,263 and $24,551, respectively. R EMAINING P ERFORMANCE O BLIGATIONS The Company includes in its computation of remaining performance obligations customer orders for which it has accepted signed sales orders. The definition of remaining performance obligations excludes contracts with original expected durations of less than one year, as well as those contracts that provide the customer with the right to cancel or terminate the order with no substantial penalty, even if the Company’s historical experience indicates the likelihood of cancellation or termination is remote. As of March 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $505,791. The Company expects to recognize approximately 63% of its remaining performance obligations as revenue in the next 12 months and the balance thereafter. L ONG -L IVED A SSETS Long-lived assets primarily include property and equipment, intangible assets and right-of-use ("ROU") assets. The Company regularly evaluates its long-lived assets for events and circumstances that indicate a potential impairment in accordance with ASC 360, Property, Plant and Equipment (“ASC 360”). The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the estimated undiscounted cash flows of the asset as compared to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. As part of the Company's assessment over the future benefit of certain long-lived assets in the second quarter ended December 30, 2022, the Company identified an immaterial correction of an error in the useful lives assigned to certain leasehold improvements. This resulted in a cumulative adjustment to depreciation expense of approximately $3,100, which was recorded during the second quarter ended December 30, 2022. W EIGHTED -A VERAGE S HARES Weighted-average shares were calculated as follows: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Basic weighted-average shares outstanding 56,511 55,590 56,310 55,495 Effect of dilutive equity instruments 385 437 — — Diluted weighted-average shares outstanding 56,896 56,027 56,310 55,495 Equity instruments to purchase 792 and 1,873 shares of common stock were not included in the calculation of diluted net earnings per share for the third quarter and nine months ended March 31, 2023, respectively, because the equity instruments were anti-dilutive. Equity instruments to purchase 246 and 386 shares of common stock were not included in the calculation of diluted net earnings per share for the third quarter and nine months ended April 1, 2022, respectively, because the equity instruments were anti-dilutive. R ECENTLY I SSUED A CCOUNTING P RONOUNCEMENTS In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , an amendment of the FASB Accounting Standards Codification. The amendments in this ASU address diversity and inconsistency related to the recognition and measurement of contract assets and contract liabilities acquired in a business combination and require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. Under current U.S. GAAP, an acquirer generally recognizes assets and liabilities assumed in a business combination, including contract assets and liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under Topic 606. This ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, including adoption in an interim period. The impact to the Company's consolidated financial statements and related disclosures of the adoption of the amendments in this update will depend on the magnitude of any customer contracts assumed in a business combination in fiscal 2023 and beyond. R ECENTLY A DOPTED A CCOUNTING P RONOUNCEMENTS Effective July 2, 2022, the Company adopted ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, an amendment of the FASB Accounting Standards Codification. The amendments in this ASU provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This adoption did not have a material impact to the Company's consolidated financial statements or related disclosures. Effective July 2, 2022, the Company adopted ASU No. 2020-06, Debt - Debt with conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity , an amendment of the FASB Accounting Standards Codification. The amendments in this ASU simplify the accounting for convertible debt securities. This adoption did not have a material impact to the Company's consolidated financial statements or related disclosures. Effective December 1, 2022, the Company adopted ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, an amendment of the FASB Accounting Standards Codification. The amendments in this ASU extend the sunset date under Topic 848 from December 31, 2022 to December 31, 2024 to align the temporary accounting relief guidance with the expected LIBOR cessation date of June 30, 2023. This adoption did not have a material impact to the Company's consolidated financial statements or related disclosures. |
Acquisitions
Acquisitions | 9 Months Ended |
Mar. 31, 2023 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions A TLANTA M ICRO A CQUISITION On November 29, 2021, the Company acquired Atlanta Micro, Inc. (“Atlanta Micro”) for a purchase price of $90,000, prior to net working capital and net debt adjustments. Based in Norcross, Georgia, Atlanta Micro is a leading designer and manufacturer of high-performance RF modules and components, including advanced monolithic microwave integrated circuits (“MMICs”) which are critical for high-speed data acquisition applications including electronic warfare, radar and weapons. The Company funded the acquisition through the Company's existing revolving credit facility (the “Revolver”). On March 28, 2022, the Company and former owners of Atlanta Micro agreed to post closing adjustments totaling $58, which increased the Company's net purchase price. The following table presents the net purchase price and the fair values of the assets and liabilities of Atlanta Micro: Amounts Consideration transferred Cash paid at closing $ 91,438 Working capital and net debt adjustment (416) Less cash acquired (1,782) Net purchase price $ 89,240 Fair value of tangible assets acquired and liabilities assumed Cash $ 1,782 Accounts receivable 1,568 Inventory 4,475 Fixed assets 434 Other current and non-current assets 2,079 Accounts payable (529) Accrued expenses (845) Other current and non-current liabilities (11,174) Fair value of net tangible assets acquired (2,210) Fair value of identifiable intangible assets 34,980 Goodwill 58,252 Fair value of net assets acquired 91,022 Less cash acquired (1,782) Net purchase price $ 89,240 On November 29, 2022, the measurement period for Atlanta Micro expired. The identifiable intangible assets include customer relationships of $27,310 with a useful life of 20 years, completed technology of $7,260 with a useful life of 8 years and backlog of $410 with a useful life of two years. The goodwill of $58,252 largely reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to the Company’s existing products and markets and is not deductible for tax purposes. The goodwill from this acquisition is reported in the Microelectronics reporting unit. A VALEX A CQUISITION On September 27, 2021, the Company signed a definitive agreement to acquire Avalex Technologies, LLC. (“Avalex”) for a purchase price of $155,000, prior to net working capital and net debt adjustments. On November 5, 2021, the transaction closed and the Company acquired Avalex. Based in Gulf Breeze, Florida, Avalex is a provider of mission-critical avionics, including rugged displays, integrated communications management systems, digital video recorders and warning systems. The Company funded the acquisition with the Revolver. On March 17, 2022, the Company and former owner of Avalex agreed to post closing adjustments totaling $151, which increased the Company's net purchase price. The following table presents the net purchase price and the fair values of the assets and liabilities of Avalex: Amounts Consideration transferred Cash paid at closing $ 157,367 Working capital and net debt adjustment (1,034) Less cash acquired (2,188) Net purchase price $ 154,145 Fair value of tangible assets acquired and liabilities assumed Cash $ 2,188 Accounts receivable 5,363 Inventory 7,141 Fixed assets 1,245 Other current and non-current assets 5,228 Accounts payable (1,755) Accrued expenses (1,421) Other current and non-current liabilities (4,788) Fair value of net tangible assets acquired 13,201 Fair value of identifiable intangible assets 61,360 Goodwill 81,772 Fair value of net assets acquired 156,333 Less cash acquired (2,188) Net purchase price $ 154,145 On November 5, 2022, the measurement period for Avalex expired. The identifiable intangible assets include customer relationships of $41,880 with a useful life of 9 years, completed technology of $14,430 with a useful life of 7 years and backlog of $5,050 with a useful life of one year. The goodwill of $81,772 largely reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to the Company’s existing products and markets. The goodwill from this acquisition is reported in the Mission Systems reporting unit, formerly referred to as the Processing reporting unit. The Company is amortizing the amount over 15 years for tax purposes. As of March 31, 2023, the Compan y had $76,068 of |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair Value Measurements March 31, 2023 Level 1 Level 2 Level 3 Liabilities: Interest rate swap $ 3,244 $ — $ 3,244 $ — Total $ 3,244 $ — $ 3,244 $ — The carrying values of cash and cash equivalents, including money market funds, restricted cash, accounts receivable and payable, contract assets and liabilities and accrued liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The Company determined the carrying value of long-term debt approximated fair value due to variable interest rates charged on the borrowings, which reprice frequently. During the first quarter ended September 30, 2022, the Company entered into an interest rate hedging agreement (the “Swap”). Refer to Note O for further information regarding the Swap. The fair value of the Swap is estimated using a discounted cash flow analysis based on the contractual terms of the derivative, leveraging observable inputs other than quoted prices, such as interest rates. As of March 31, 2023, the fair value of the Swap was a liability of $3,244 and is included within Other non-current liabilities in the Company's Consolidated Balance Sheets. |
Inventory
Inventory | 9 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Inventory is stated at the lower of cost (first-in, first-out) or net realizable value, and consists of materials, labor and overhead. On a quarterly basis, the Company uses consistent methodologies to evaluate inventory for net realizable value. Once an item is written down, the value becomes the new inventory cost basis. The Company reduces the value of inventory for excess and obsolete inventory, consisting of on-hand inventory in excess of estimated usage. The excess and obsolete inventory evaluation is based upon assumptions about future demand, historical usage, product mix and possible alternative uses. Inventory was comprised of the following: As of March 31, 2023 July 1, 2022 Raw materials $ 235,668 $ 178,410 Work in process 83,305 64,287 Finished goods 23,804 27,642 Total $ 342,777 $ 270,339 |
Goodwill
Goodwill | 9 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill In accordance with FASB ASC 350, Intangibles-Goodwill and Other (“ASC 350”), the Company determines its reporting units based upon whether discrete financial information is available, if management regularly reviews the operating results of the component, the nature of the products offered to customers and the market characteristics of each reporting unit. A reporting unit is considered to be an operating segment or one level below an operating segment also known as a component. Component level financial information is reviewed by management across two divisions: Mission Systems and Microelectronics. Accordingly, these were determined to be the Company's reporting units. The following table sets forth the changes in the carrying amount of goodw ill for the nine months ended March 31, 2023 : Total Balance at July 1, 2022 $ 937,880 Goodwill adjustment for the Avalex acquisition 66 Goodwill adjustment for the Atlanta Micro acquisition 147 Balance at March 31, 2023 $ 938,093 The Company performs its annual goodwill impairment test in the fourth quarter of each fiscal year. |
Restructuring
Restructuring | 9 Months Ended |
Mar. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring During the third quarter and nine months ended March 31, 2023, the Company incurred $2,778 and $6,355 of restructuring and other charges, respectively. The Company incurs restructuring and other charges in connection with management's decision to undertake certain actions to realign operating expenses through workforce reductions and the closure of certain Company facilities, businesses and product lines. The Company's adjustments reflected in restructuring and other charges are typically related to acquisitions and organizational redesign programs initiated as part of discrete post acquisition integration activities. Consistent with the Company's definition of restructuring and other charges, 1MPACT is an organizational redesign program initiated on the heels of a series of acquisitions since 2014 rather than a single, discrete acquisition. Since the inception of 1MPACT, the Company has selectively engaged with leading consultants to accelerate solution design and implementation for the highest value workstreams. These costs are associated with this discrete transformation initiative and are non-routine and may not be indicative of ongoing results. Restructuring and other charges for the third quarter ended March 31, 2023 primarily related to $1,977 of severance costs, 1MPACT related costs consisting of $786 of costs for facility optimization efforts, including $556 related to lease asset impairment, as well as $15 of third party consulting costs. Restructuring and other charges for the nine months ended March 31, 2023 primarily related to $2,776 of severance costs, 1MPACT related costs consisting of $1,825 of costs for facility optimization efforts, including $1,339 related to lease asset impairment, as well as $1,754 of third party consulting costs. All of the restructuring and other charges are classified as Operating expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) and any remaining restructuring obligations are expected to be paid within the next twelve months. The restructuring liability is classified as Accrued expenses in the Consolidated Balance Sheets. The following table presents the detail of charges included in the Company’s liability for restructuring and other charges: Severance & Related Facilities Total Balance at July 1, 2022 $ 4,722 $ — $ 4,722 Restructuring charges 2,776 486 3,262 Cash paid (5,312) (448) (5,760) Balance at March 31, 2023 $ 2,186 $ 38 $ 2,224 |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded an income tax (benefit) provision of $(10,446) and $2,102 on a (loss) income before income taxes of $(5,290) and $6,241 for the third quarters ended March 31, 2023 and April 1, 2022, respectively. The Company recorded an income tax (benefit) provision of $(13,619) and $1,506 on a loss before income taxes of $33,718 and $4,134 for the nine months ended March 31, 2023 and April 1, 2022, respectively. For the third quarter ended March 31, 2023, the Company calculated the U.S. income tax benefit using the discrete method which assumes the nine month period was the annual period as this was more appropriate given the facts and circumstances. The Company determined that the application of the estimated annual effective tax rate (“AETR”) method generally required by ASC 740 is impractical given that normal deviations in the projected close to break-even pre-tax net income (loss) could result in a disproportionate and unreliable effective tax rate under the AETR method. The tax benefit for the third quarter ended March 31, 2023 also includes a true-up to the prior quarters due to the change in methodology. During the third quarter ended March 31, 2023, the Company concluded its income tax audit with the Internal Revenue Service for fiscal years 2016 through 2018 and recognized a tax benefit of $1,335 related to a release of income tax reserves for unrecognized income tax benefits. During the nine months ended March 31, 2023, the Company recognized a tax benefit of $3,683 related to a release of income tax reserves for unrecognized income tax benefits due to the expiration of the statute of limitations. During the nine months ended March 31, 2023 and April 1, 2022, the Company recognized a tax provision of $1,655 and $906 related to stock compensation shortfalls, respectively. The effective tax rate for the third quarter and nine months ended March 31, 2023 and April 1, 2022 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation and state taxes. The effective tax rate for the third quarter and nine months ended March 31, 2023 also differed from the federal statutory rate due to the release of income tax reserves for unrecognized income tax benefits. On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 into law which contained provisions that include a 15% corporate minimum tax effective for taxable years beginning after December 31, 2022 and a 1% excise tax on certain stock buybacks after December 31, 2022. The Company expects the impact of this legislation to be immaterial. Effective for tax years beginning after December 31, 2021, the Tax Cuts and Jobs Act of 2017 requires companies to capitalize and amortize domestic research and development expenditures over five years for tax purposes, and foreign research and development expenditures over fifteen years for tax purposes. |
Debt
Debt | 9 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt R EVOLVING C REDIT F ACILITY On February 28, 2022, the Company amended the Revolver to increase and extend the borrowing capacity to a $1,100,000, 5-year revolving credit line, with the maturity extended to February 28, 2027. As of March 31, 2023, the Company's outstanding balance of unamortized deferred financing costs was $3,681 , which is being amortized to Other expense, net in the Consolidated Statements of Operations and Comprehensive Income (Loss) on a straight line basis over the term of the Revolver. As of March 31, 2023, the Company was in compliance with all covenants and conditions under the Revolver and there were outstanding borrowings of $511,500 against the Revolver, resulting in interest expense of $6,711 and $17,848 for the third quarter and nine months ended March 31, 2023. The Company had a total of approximately $1,000,000 of the Revolver available as of March 31, 2023, less outstanding borrowings of $511,500. There were outstanding letters of cre dit of $963 a s of March 31, 2023. |
Employee Benefit Plan
Employee Benefit Plan | 9 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan P ENSION P LAN The Company maintains a defined benefit pension plan (the “Plan”) for its Swiss employees, which is administered by an independent pension fund. The Plan is mandated by Swiss law and meets the criteria for a defined benefit plan under ASC 715, Compensation—Retirement Benefits (“ASC 715”), because participants of the Plan are entitled to a defined rate of return on contributions made. The independent pension fund is a multi-employer plan with unrestricted joint liability for all participating companies for which the Plan’s overfunding or underfunding is allocated to each participating company based on an allocation key determined by the Plan. The Company recognizes a net asset or liability for the Plan equal to the difference between the projected benefit obligation of the Plan and the fair value of the Plan’s assets as required by ASC 715. The funded status may vary from year to year due to changes in the fair value of the Plan’s assets and variations on the underlying assumptions of the projected benefit obligation of the Plan. The Plan's funded status at March 31, 2023 was a net liability of $4,589, which is recorded in Other non-current liabilities on the Consolidated Balance Sheet. The Company recorded a net gain of $46 and $142 in AOCI during the third quarter and nine months ended March 31, 2023. The Company recorded a net gain of $48 and $144 in AOCI during the third quarter and nine months April 1, 2022. The Company recognized net periodic benefit costs of $230 and $671 associated with the Plan for the third quarter and nine months ended March 31, 2023, respectively. The Company recognized net periodic benefit costs of $267 and $805 associated with the Plan for the third quarter and nine months ended April 1, 2022, respectively. The Company's total expected employer contributions to the Plan during fiscal 2023 are $1,093. 401(k) Plan The Company maintains a qualified 401(k) plan (the “401(k) Plan”) for its U.S. employees. Effective in the first quarter of fiscal 2023, the Company increased the rate of its matching contributions from 3% to 6% of participants' eligible annual compensation and changed the form of these contributions from cash to Company stock. The Company may also make optional contributions to the plan for any plan year at its discretion. The Company had $1,868 of capitalized stock-based 401(k) matching compensation expense on the Consolidated Balance Sheet at March 31, 2023. Stock-based 401(k) matching compensation cost is measured based on the value of the matching amount and is recognized as expense as incurred. During the third quarter ended March 31, 2023, the Company recognized share-based matching contributions related to the 401(k) plan of $3,288 as compared to $2,145 of cash match during the third quarter ended April 1, 2022. During the nine months ended March 31, 2023, the Company recognized share-based matching contributions related to the 401(k) plan of $9,715 as compared to $5,966 of cash match during the nine months ended April 1, 2022. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders' Equity S TOCKHOLDER R IGHTS P LAN On December 27, 2021, the Company's Board of Directors authorized and declared a dividend of one preferred share purchase right (a “Right”), payable on January 10, 2022, for each outstanding share of common stock par value $0.01 per share to the stockholders of record on that date. Each Right entitled the registered holder to purchase from the Company a unit of Series A Junior Preferred Stock, par value $0.01 per share, of the Company at a designated price per unit, subject to adjustment. The Rights initially trade with, and are inseparable from, the shares of common stock. On June 24, 2022, the Company amended the Rights Agreement, dated as of December 27, 2021, to increase the ownership threshold for a person to be an “Acquiring Person” (as defined in the Rights Agreement) from 7.5% of common stock to 10% of common stock (10% of common stock to 20% of common stock in the case of a passive institutional investor). Additional details about the Rights Agreement are contained in the Current Reports on Form 8-K filed by the Company with the SEC on December 29, 2021 and June 24, 2022. On October 26, 2022 the Stockholder Rights Plan and the Rights thereunder expired. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation S TOCK I NCENTIVE P LANS At March 31, 2023, the aggregate number of shares authorized for issuance under the Company’s Amended and Restated 2018 Stock Incentive Plan (the “2018 Plan”) is 7,862 shares, including 3,000 shares approved by the Company's shareholders on October 28, 2020 and 2,000 shares approved for future grant under the 2018 Plan by the Company's shareholders on October 26, 2022. The 2018 Plan shares available for issuance also include 948 shares rolled into the 2018 Plan that were available for future grant under the Company’s 2005 Stock Incentive Plan, as amended and restated (the “2005 Plan”). The 2018 Plan replaced the 2005 Plan. The shares authorized for issuance under the 2018 Plan will continue to be increased by any future cancellations, forfeitures or terminations (other than by exercise) of awards under the 2005 Plan. The foregoing does not affect any outstanding awards under the 2005 Plan, which remain in full force and effect in accordance with their terms. The 2018 Plan provides for the grant of non-qualified and incentive stock options, restricted stock, stock appreciation rights and deferred stock awards to employees and non-employees. Stock options must be granted with an exercise price of not less than 100% of the fair value of the Company’s common stock on the date of grant and the options generally have a term of seven years. There were 2,690 available shares for future grant under the 2018 Plan at March 31, 2023. As part of the Company's ongoing annual equity grant program for employees, the Company grants performance-based restricted stock awards to certain executives and employees pursuant to the 2018 Plan. Performance awards vest based on the requisite service period subject to the achievement of specific financial performance targets. Based on the performance targets, some of these awards require graded vesting which results in more rapid expense recognition compared to traditional time-based vesting over the same vesting period. The Company monitors the probability of achieving the performance targets on a quarterly basis and may adjust periodic stock compensation expense accordingly based on its determination of the likelihood for reaching targets. The performance targets generally include the achievement of internal performance targets in relation to a peer group of companies. E MPLOYEE S TOCK P URCHASE P LAN At March 31, 2023, the aggregate number of shares authorized for issuance under the Company’s 1997 Employee Stock Purchase Plan, as amended and restated (“ESPP”), is 2,300 shares, including 500 shares approved by the Company's shareholders on October 28, 2020. Under the ESPP, rights are granted to purchase shares of common stock at 85% of the lesser of the market value of such shares at either the beginning or the end of each six-month offering period. The ESPP permits employees to purchase common stock through payroll deductions, which may not exceed 10% of an employee’s compensation as defined in the ESPP. There were 57 and 54 shares issued under the ESPP during the nine months ended March 31, 2023 and April 1, 2022, respectively. Shares available for future purchase under the ESPP totaled 256 at March 31, 2023. S TOCK A WARD A CTIVITY The following table summarizes the status of the Company’s non-vested restricted stock awards and deferred stock awards since July 1, 2022: Non-vested Restricted Stock Awards Number of Weighted Average Outstanding at July 1, 2022 2,305 $ 57.47 Granted 269 54.52 Vested (702) 60.81 Forfeited (214) 55.74 Outstanding at March 31, 2023 1,658 $ 55.08 S TOCK -B ASED C OMPENSATION E XPENSE The Company recognizes expense for its share-based payment plans in the Consolidated Statements of Operations and Comprehensive Income (Loss) in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). The Company had $1,893 and $1,229 of capitalized stock-based compensation expense on the Consolidated Balance Sheets for the periods ended March 31, 2023 and July 1, 2022, respectively. Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the service period, net of estimated forfeitures. The following table presents share-based compensation expenses included in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss): Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Cost of revenues $ 630 $ 467 $ 1,666 $ 1,348 Selling, general and administrative 7,577 6,845 20,732 20,438 Research and development 1,732 1,575 5,048 4,476 Stock-based compensation expense before tax 9,939 8,887 27,446 26,262 Income taxes (2,684) (2,399) (7,410) (7,091) Stock-based compensation expense, net of income taxes $ 7,255 $ 6,488 $ 20,036 $ 19,171 |
Operating Segment, Geographic I
Operating Segment, Geographic Information and Significant Customers | 9 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Operating Segment, Geographic Information and Significant Customers | Operating Segment, Geographic Information and Significant CustomersOperating segments are defined as components of an enterprise evaluated regularly by the Company's chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. During the first quarter of fiscal 2022, the Company announced its 1MPACT value creation initiative to promote scale as the organization continues to grow. The Company evaluated this internal reorganization under FASB ASC 280, Segment Reporting (“ASC 280”) to determine whether this change has impacted the Company's single operating and reportable segment. The Company concluded this change had no effect given the CODM continues to evaluate and manage the Company on the basis of one operating and reportable segment. The Company utilized the management approach for determining its operating segment in accordance with ASC 280. The geographic distribution of the Company’s revenues as determined by country in which the Company's legal subsidiary is domiciled is summarized as follows: U.S. Europe Asia Pacific Eliminations Total THIRD QUARTER ENDED MARCH 31, 2023 Net revenues to unaffiliated customers $ 252,945 $ 10,525 $ 9 $ — $ 263,479 Inter-geographic revenues 1,794 26 — (1,820) — Net revenues $ 254,739 $ 10,551 $ 9 $ (1,820) $ 263,479 THIRD QUARTER ENDED APRIL 1, 2022 Net revenues to unaffiliated customers $ 243,100 $ 9,216 $ 759 $ — $ 253,075 Inter-geographic revenues (729) 824 — (95) — Net revenues $ 242,371 $ 10,040 $ 759 $ (95) $ 253,075 NINE MONTHS ENDED MARCH 31, 2023 Net revenues to unaffiliated customers $ 690,922 $ 29,708 $ 16 $ — $ 720,646 Inter-geographic revenues 1,873 398 — (2,271) — Net revenues $ 692,795 $ 30,106 $ 16 $ (2,271) $ 720,646 NINE MONTHS ENDED APRIL 1, 2022 Net revenues to unaffiliated customers $ 666,336 $ 31,211 $ 921 $ — $ 698,468 Inter-geographic revenues 2,418 2,152 — (4,570) — Net revenues $ 668,754 $ 33,363 $ 921 $ (4,570) $ 698,468 The Company offers a broad family of products and processing solutions designed to meet the full range of requirements in compute-intensive, signal processing, image processing and command and control applications. To maintain a competitive advantage, the Company seeks to leverage technology investments across multiple product lines and product solutions. The Company’s products are typically compute-intensive and require extremely high bandwidth and high throughput. These processing solutions often must also meet significant SWaP constraints for use in aircraft, unmanned aerial vehicles, ships and other platforms and be ruggedized for use in harsh environments. The Company's products transform the massive streams of digital data created in these applications into usable information in real time. The systems can scale from a few processors to thousands of processors. In recent years, the Company completed a series of acquisitions that augmented its technological capabilities, applications and end markets. As these acquisitions and changes occurred, the Company's proportion of revenue derived from the sale of components in different technological areas, and modules, sub-assemblies and integrated subsystems which combine technologies into more complex diverse products has shifted. The following tables present revenue consistent with the Company's strategy of expanding its technological capabilities and program content. As additional information related to the Company’s products by end user, application, product grouping and/or platform is attained, the categorization of these products can vary over time. When this occurs, the Company reclassifies revenue by end user, application, product grouping and/or platform for prior periods. Such reclassifications typically do not materially change the underlying trends of results within each revenue category. The following table presents the Company's net revenue by end user for the periods presented: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Domestic (1) $ 238,159 $ 227,254 $ 648,948 $ 603,094 International/Foreign Military Sales (2) 25,320 25,821 71,698 95,374 Total Net Revenue $ 263,479 $ 253,075 $ 720,646 $ 698,468 (1) Domestic revenues consist of sales where the end user is within the U.S., as well as sales to prime defense contractor customers where the ultimate end user location is not defined. (2) International/Foreign Military Sales consist of sales to U.S. prime defense contractor customers where the end user is outside the U.S., foreign military sales through the U.S. government and direct sales to non-U.S. based customers intended for end use outside of the U.S. The following table presents the Company's net revenue by end application for the periods presented: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Radar (1) $ 83,853 $ 50,033 $ 180,968 $ 160,109 Electronic Warfare (2) 35,939 44,010 104,746 110,320 Other Sensor & Effector (3) 20,143 23,768 70,679 77,374 Total Sensor & Effector 139,935 117,811 356,393 347,803 C4I (4) 104,188 111,282 303,054 285,614 Other (5) 19,356 23,982 61,199 65,051 Total Net Revenue $ 263,479 $ 253,075 $ 720,646 $ 698,468 (1) Radar includes end-use applications where radio frequency signals are utilized to detect, track and identify objects. (2) Electronic Warfare includes end-use applications comprising the offensive and defensive use of the electromagnetic spectrum. (3) Other Sensor and Effector products include all Sensor and Effector end markets other than Radar and Electronic Warfare. (4) C4I includes rugged secure rackmount servers that are designed to drive the most powerful military processing applications. (5) Other products include all component and other sales where the end use is not specified. The following table presents the Company's net revenue by product grouping for the periods presented: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Components (1) $ 53,187 $ 42,198 $ 130,263 $ 108,735 Modules and Sub-assemblies (2) 55,433 52,719 173,547 134,342 Integrated Subsystems (3) 154,859 158,158 416,836 455,391 Total Net Revenue $ 263,479 $ 253,075 $ 720,646 $ 698,468 (1) Components represent the basic building blocks of an electronic system. They generally perform a single function such as switching, storing or converting electronic signals. Some examples include power amplifiers and limiters, switches, oscillators, filters, equalizers, digital and analog converters, chips, MMICs (monolithic microwave integrated circuits) and memory and storage devices. (2) Modules and sub-assemblies combine multiple components to serve a range of complex functions, including processing, networking and graphics display. Typically delivered as computer boards or other packaging, modules and sub-assemblies are usually designed using open standards to provide interoperability when integrated in a subsystem. Examples of modules and sub-assemblies include embedded processing boards, switched fabrics and boards for high-speed input/output, digital receivers, graphics and video, along with multi-chip modules, integrated radio frequency and microwave multi-function assemblies and radio frequency tuners and transceivers. (3) Integrated subsystems bring components, modules and/or sub-assemblies into one system, enabled with software. Subsystems are typically, but not always, integrated within an open standards-based chassis and often feature interconnect technologies to enable communication between disparate systems. Spares and replacement modules and sub-assemblies are provided for use with subsystems sold by the Company. The Company’s subsystems are deployed in sensor processing, aviation and mission computing and C4I applications. The following table presents the Company's net revenue by platform for the periods presented: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Airborne (1) $ 126,674 $ 126,176 $ 364,968 $ 353,730 Land (2) 58,816 38,285 119,483 100,118 Naval (3) 39,961 42,725 104,900 116,938 Other (4) 38,028 45,889 131,295 127,682 Total Net Revenues $ 263,479 $ 253,075 $ 720,646 $ 698,468 (1) Airborne platform includes products that relate to personnel, equipment or pieces of equipment designed for airborne applications. (2) Land platform includes products that relate to fixed or mobile equipment, or pieces of equipment for personnel, weapon systems, vehicles and support elements operating on land. (3) Naval platform includes products that relate to personnel, equipment or pieces of equipment designed for naval operations. (4) All platforms other than Airborne, Land or Naval. The geographic distribution of the Company’s identifiable long-lived assets is summarized as follows: U.S. Europe Asia Pacific Eliminations Total March 31, 2023 $ 116,212 $ 3,270 $ — $ — $ 119,482 July 1, 2022 $ 122,712 $ 4,476 $ 3 $ — $ 127,191 Identifiable long-lived assets exclude right-of-use assets, goodwill, and intangible assets. Customers comprising 10% or more of the Company’s revenues for the periods shown are as follows: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Raytheon Technologies 18 % 15 % 14 % 15 % Lockheed Martin Corporation 13 % * 14 % * Northrop Grumman 11 % * 11 % * U.S. Navy * 14 % 10 % 15 % 42 % 29 % 49 % 30 % * Indicates that the amount is less than 10% of the Company's revenue for the respective period. While the Company typically has customers from which it derives 10% or more of its revenue, the sales to each of these customers are spread across multiple programs and platforms. There were no programs comprising 10% or more of the Company's revenues for the third quarters and nine months ended March 31, 2023 and April 1, 2022. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies L EGAL C LAIMS The Company is subject to litigation, claims, investigations and audits arising from time to time in the ordinary course of business. Although legal proceedings are inherently unpredictable, the Company believes that it has valid defenses with respect to any matters currently pending against the Company and intends to defend itself vigorously. The outcome of these matters, individually and in the aggregate, is not expected to have a material impact on the Company's cash flows, results of operations, or financial position. In June 2021, Embedded Reps of America, LLC (“ERA”), a former sales representative, and James Mazzola, a principal of ERA, filed for binding arbitration related to the termination of ERA’s sales representative agreement raising multiple claims that aggregate to approximately $9,000 in direct damages, with treble damages requested on a number of those claims. ERA was a sales representative of Themis Computer (“Themis”) when Themis was acquired by Mercury. The sales representative agreement provided for termination by either party upon 30 days written notice with ERA entitled to commissions for orders obtained by ERA with product shipment occurring prior to termination. The Company responded to the complaint in July 2021. An arbitration proceeding was held during September 2022, with final motions in October 2022 and oral arguments in November 2022. The arbitrator issued its final ruling in January 2023, awarding ERA $72 in damages and fees. In December 2021, counsel for National Technical Systems, Inc. (“NTS”) sent the Company an environmental demand letter pursuant to Massachusetts General Laws Chapter 21E, Section 4A, and CERCLA 42 U.S.C. Section 9601, related to a site that NTS formerly owned at 533 Main Street, Acton, Massachusetts. NTS received a Notice of Responsibility from the Massachusetts Department of Environmental Protection (“MassDEP”) alleging trichloroethene, freon and 1,4-dioxane contamination in the groundwater emanating from NTS’s former site. NTS alleges in its demand letter that the operations of a predecessor company to Mercury which was acquired in the Company’s acquisition of the Microsemi carve-out business that once owned and operated a facility at 531 Main Street, Acton, Massachusetts contributed to the groundwater contamination. NTS is seeking payment by the Company of NTS’s costs for any required environmental remediation. In April 2022, the Company engaged in a meet and confer session with NTS pursuant to Massachusetts General Laws Chapter 21E, Section 4A to discuss the status of the environmental review performed by NTS and its licensed site professional. In addition, in November 2021, the Company responded to a request for information from MassDEP regarding the detection of PFAS (per- and polyfluoroakyl substances) in the Acton, Massachusetts Water District’s Conant public water supply wells near the former facility at 531 Main Street, Acton, Massachusetts at a level above the standard that MassDEP published for PFAS in October 2020. It is too early to determine what responsibility, if any, the Company may have for these matters. I NDEMNIFICATION O BLIGATIONS The Company’s standard product sales and license agreements entered into in the ordinary course of business typically contain an indemnification provision pursuant to which the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with any patent, copyright or other intellectual property infringement claim by any third party with respect to the Company’s products. Such provisions generally survive termination or expiration of the agreements. The potential amount of future payments the Company could be required to make under these indemnification provisions is, in some instances, unlimited. P URCHASE C OMMITMENTS As of March 31, 2023, the Company has entered into non-cancelable purchase commitments for certain inventory components and services used in its normal operations. The purchase commitments covered by these agreements are for less than one year and aggregate to $142,698 . O THER As part of the Company's strategy for growth, the Company continues to explore acquisitions or strategic alliances. The associated acquisition costs incurred in the form of professional fees and services may be material to the future periods in which they occur, regardless of whether the acquisition is ultimately completed. The Company may elect from time to time to purchase and subsequently retire shares of common stock in order to settle employees’ tax liabilities associated with vesting of a restricted stock award or exercise of stock options. These transactions would be treated as a use of cash in financing activities in the Company's Consolidated Statements of Cash Flows. |
Derivatives
Derivatives | 9 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives The Company utilizes interest rate derivatives to mitigate interest rate exposure with respect to its financing arrangements. On September 7, 2022, the Company entered into an interest rate Swap (the “initial Swap”) with JP Morgan Chase Bank, N.A. (“JPMorgan”) for a notional amount of $300,000 in order to fix the interest rate associated with a portion of the total $511,500 existing borrowings on the Revolver. The initial Swap agreement was designated and qualified for hedge accounting treatment as a cash flow hedge. The initial Swap matures on February 28, 2027, coterminous with the maturity of the Revolver. The initial Swap established a fixed interest rate on the first $300,000 of the Company's outstanding borrowings against the Revolver obligation at 3.25%. On September 29, 2022, the Company terminated the initial Swap. At the time of termination, the fair value of the initial Swap was an asset of $5,995. The Company received the cash settlement of $5,995 and these proceeds are classified within Operating Activities of the Consolidated Statements of Cash Flows. During the third quarter and nine months ended March 31, 2023, the Company amortized $339 and $678, respectively, of the gain, which is included within Other comprehensive income (loss). Following the termination of the initial Swap the Company entered a new Swap agreement (“the Swap”) on September 29, 2022 with JPMorgan. The Swap fixes $300,000 of the total $511,500 existing borrowings of outstanding borrowings under the Revolver at a rate of 3.79%. As of March 31, 2023, the fair value of the hedge was a liability of $3,244 and is included within Other non-current liabilities in the Company's Consolidated Balance Sheets. The market risk associated with the Company’s derivative instrument is the result of interest rate movements that are expected to offset the market risk of the underlying arrangement. The counterparty to the Swap is JPMorgan. Based on the credit ratings of the Company’s counterparty as of March 31, 2023, nonperformance is not perceived to be a material risk. Furthermore, none of the Company’s derivatives are subject to collateral or other security arrangements and none contain provisions that are dependent on the Company’s credit ratings from any credit rating agency. While the contract or notional amounts of derivative financial instruments provide one measure of the volume of these transactions, they do not represent the amount of the Company’s exposure to credit risk. The amounts potentially subject to credit risk (arising from the possible inability of the counterparty to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparty obligations under the contracts exceed the obligations of the Company to the counterparty. As a result of the above considerations, the Company does not consider the risk of counterparty default to be significant. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsThe Company has evaluated subsequent events from the date of the Consolidated Balance Sheet through the date the consolidated financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosures. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | B ASIS OF P RESENTATION The accompanying consolidated financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America for interim financial information and with the instructions to the Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual consolidated financial statements have been condensed or omitted pursuant to those rules and regulations; however, in the opinion of management the financial information reflects all adjustments, consisting of adjustments of a normal recurring nature, necessary for fair presentation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended July 1, 2022 which are contained in the Company’s Annual Report on Form 10-K filed with the SEC on August 16, 2022. The results for the third quarter and nine months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full fiscal year. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | U SE OF E STIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Business Combinations | B USINESS C OMBINATIONS The Company utilizes the acquisition method of accounting under ASC 805, Business Combinations , (“ASC 805”), for all transactions and events in which it obtains control over one or more other businesses, to recognize the fair value of all assets and liabilities acquired, even if less than one hundred percent ownership is acquired, and in establishing the acquisition date fair value as the measurement date for all assets and liabilities assumed. The Company also utilizes ASC 805 for the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in business combinations. |
Foreign Currency | F OREIGN C URRENCY Local currencies are the functional currency for the Company’s subsidiaries in Switzerland, the United Kingdom, France, Spain and Canada. The accounts of foreign subsidiaries are translated using exchange rates in effect at period-end for assets and liabilities and at average exchange rates during the period for results of operations. The related translation adjustments are reported in Accumulated other comprehensive income (loss) (“AOCI”) in shareholders’ equity. Gains (losses) resulting from non-U.S. currency transactions are included in Other expense, net in the Consolidated Statements of Operations and Comprehensive Income (Loss) and were immaterial for all periods presented. |
Accounts Receivable | A CCOUNTS R ECEIVABLE Accounts receivable, net, represents amounts that have been billed and are currently due from customers. The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be collected. The Company provides credit to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended as necessary. The allowance is based upon an assessment of the customer's credit worthiness, reasonable forecasts about the future, history with the customer, and the age of the receivable balance. The Company typically invoices a customer upon shipment of the product (or completion of a service) for contracts where revenue is recognized at a point in time. For contracts where revenue is recognized over time, the invoicing events are typically based on specified performance obligation deliverables or milestone events, or quantifiable measures of performance. |
Derivatives | D ERIVATIVES |
Revenue Recognition and Contract Balances | R EVENUE R ECOGNITION The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers , (“ASC 606”). Revenues are derived from the sales of products that are grouped into one of the following three categories: (i) components; (ii) modules and sub-assemblies; and (iii) integrated subsystems. The Company also generates revenues from the performance of services, including systems engineering support, consulting, maintenance and other support, testing and installation. Each promised good or service within a contract is accounted for separately under the guidance of ASC 606 if they are distinct. Promised goods or services not meeting the criteria for being a distinct performance obligation are bundled into a single performance obligation with other goods or services that together meet the criteria for being distinct. The appropriate allocation of the transaction price and recognition of revenue is then determined for the bundled performance obligation. Revenue recognized at a point in time generally relates to contracts that include a combination of components, modules and sub-assemblies, integrated subsystems and related system integration or other services. Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, totaled 48% and 43% of revenues for the third quarter and nine months ended March 31, 2023, respectively. Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, totaled 45% and 48% for the third quarter and nine months ended April 1, 2022, respectively. The Company also engages in over time contracts for development, production and service activities and recognizes revenue for performance obligations over time. These over time contracts involve the design, development, manufacture, or modification of complex modules and sub-assemblies or integrated subsystems and related services. Over time contracts include both fixed-price and cost reimbursable contracts. The Company’s cost reimbursable contracts typically include cost-plus fixed fee and time and material contracts. Total revenue recognized over time was 52% and 57% of total revenues for the third quarters and nine months ended March 31, 2023, respectively. Total revenue recognized over time was 55% and 52% of total revenues for the third quarter and nine months ended April 1, 2022, respectively. The Company generally does not provide its customers with rights of product return other than those related to assurance warranty provisions that permit repair or replacement of defective goods generally over a period of 12 to 36 months. The Company accrues for anticipated warranty costs upon product shipment. The Company does not consider activities related to such assurance warranties, if any, to be a separate performance obligation. The Company does offer separately priced extended warranties which generally range from 12 to 36 months that are treated as separate performance obligations. The transaction price allocated to extended warranties is recognized over time in proportion to the costs expected to be incurred in satisfying the obligations under the contract. The Company's contracts generally do not include significant financing components. The Company's over time contracts may include milestone payments, which align the payment schedule with the progress towards completion on the performance obligation. Otherwise, the Company's contracts are predicated on payment upon completion of the performance obligation. On certain contracts, the Company may be entitled to receive an advance payment, which is not considered a significant financing component because most contracts have a duration of approximately two years on average and it is used to facilitate inventory demands at the onset of a contract and to safeguard the Company from the failure of the other party to abide by some or all of their obligations under the contract. All revenues are reported net of government assessed taxes (e.g., sales taxes or value-added taxes). Refer to Note M for disaggregation of revenue for the period. C ONTRACT B ALANCES Contract balances result from the timing of revenue recognized, billings and cash collections resulting in the generation of contract assets and liabilities. Contract assets represent revenue recognized in excess of amounts invoiced to the customer and the right to payment is not subject to the passage of time. Instead, while the Company has an enforceable right to payment as progress is made over performance obligations, billings to customers are generally predicated on (i) completion of defined milestones, (ii) monthly costs incurred or (iii) final delivery of goods or services. Contract assets are presented as Unbilled receivables and costs in excess of billings on the Company’s Consolidated Balance Sheets. Contract liabilities consist of deferred product revenue, billings in excess of revenues, deferred service revenue and customer advances. Deferred product revenue represents amounts that have been invoiced to customers, but are not yet recognizable as revenue because the Company has not satisfied its performance obligations under the contract. Billings in excess of revenues represents milestone billing contracts where the billings of the contract exceed recognized revenues. Deferred service revenue primarily represents amounts invoiced to customers for annual maintenance contracts or extended warranty contracts, which are recognized over time in proportion to the costs expected to be incurred in satisfying the obligations under the contract. Customer advances represent deposits received from customers on an order. Contract liabilities are included in deferred revenue as well as Other non-current liabilities on the Company’s Consolidated Balance Sheets. Contract balances are reported in a net position on a contract-by-contract basis. |
Weighted-Average Shares | W EIGHTED -A VERAGE S HARES Weighted-average shares were calculated as follows: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Basic weighted-average shares outstanding 56,511 55,590 56,310 55,495 Effect of dilutive equity instruments 385 437 — — Diluted weighted-average shares outstanding 56,896 56,027 56,310 55,495 Equity instruments to purchase 792 and 1,873 shares of common stock were not included in the calculation of diluted net earnings per share for the third quarter and nine months ended March 31, 2023, respectively, because the equity instruments were anti-dilutive. Equity instruments to purchase 246 and 386 shares of common stock were not included in the calculation of diluted net earnings per share for the third quarter and nine months ended April 1, 2022, respectively, because the equity instruments were anti-dilutive. |
Recently Adopted Accounting Pronouncements | R ECENTLY I SSUED A CCOUNTING P RONOUNCEMENTS In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , an amendment of the FASB Accounting Standards Codification. The amendments in this ASU address diversity and inconsistency related to the recognition and measurement of contract assets and contract liabilities acquired in a business combination and require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. Under current U.S. GAAP, an acquirer generally recognizes assets and liabilities assumed in a business combination, including contract assets and liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under Topic 606. This ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, including adoption in an interim period. The impact to the Company's consolidated financial statements and related disclosures of the adoption of the amendments in this update will depend on the magnitude of any customer contracts assumed in a business combination in fiscal 2023 and beyond. R ECENTLY A DOPTED A CCOUNTING P RONOUNCEMENTS Effective July 2, 2022, the Company adopted ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, an amendment of the FASB Accounting Standards Codification. The amendments in this ASU provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This adoption did not have a material impact to the Company's consolidated financial statements or related disclosures. Effective July 2, 2022, the Company adopted ASU No. 2020-06, Debt - Debt with conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity , an amendment of the FASB Accounting Standards Codification. The amendments in this ASU simplify the accounting for convertible debt securities. This adoption did not have a material impact to the Company's consolidated financial statements or related disclosures. Effective December 1, 2022, the Company adopted ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, an amendment of the FASB Accounting Standards Codification. The amendments in this ASU extend the sunset date under Topic 848 from December 31, 2022 to December 31, 2024 to align the temporary accounting relief guidance with the expected LIBOR cessation date of June 30, 2023. This adoption did not have a material impact to the Company's consolidated financial statements or related disclosures. |
Stock-Based Compensation | As part of the Company's ongoing annual equity grant program for employees, the Company grants performance-based restricted stock awards to certain executives and employees pursuant to the 2018 Plan. Performance awards vest based on the requisite service period subject to the achievement of specific financial performance targets. Based on the performance targets, some of these awards require graded vesting which results in more rapid expense recognition compared to traditional time-based vesting over the same vesting period. The Company monitors the probability of achieving the performance targets on a quarterly basis and may adjust periodic stock compensation expense accordingly based on its determination of the likelihood for reaching targets. The performance targets generally include the achievement of internal performance targets in relation to a peer group of companies. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basic and Diluted Weighted Average Shares Outstanding | Weighted-average shares were calculated as follows: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Basic weighted-average shares outstanding 56,511 55,590 56,310 55,495 Effect of dilutive equity instruments 385 437 — — Diluted weighted-average shares outstanding 56,896 56,027 56,310 55,495 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Business Combinations [Abstract] | |
Schedule of the Net Purchase Price and Fair Values of Assets and Liabilities Acquired | The following table presents the net purchase price and the fair values of the assets and liabilities of Atlanta Micro: Amounts Consideration transferred Cash paid at closing $ 91,438 Working capital and net debt adjustment (416) Less cash acquired (1,782) Net purchase price $ 89,240 Fair value of tangible assets acquired and liabilities assumed Cash $ 1,782 Accounts receivable 1,568 Inventory 4,475 Fixed assets 434 Other current and non-current assets 2,079 Accounts payable (529) Accrued expenses (845) Other current and non-current liabilities (11,174) Fair value of net tangible assets acquired (2,210) Fair value of identifiable intangible assets 34,980 Goodwill 58,252 Fair value of net assets acquired 91,022 Less cash acquired (1,782) Net purchase price $ 89,240 The following table presents the net purchase price and the fair values of the assets and liabilities of Avalex: Amounts Consideration transferred Cash paid at closing $ 157,367 Working capital and net debt adjustment (1,034) Less cash acquired (2,188) Net purchase price $ 154,145 Fair value of tangible assets acquired and liabilities assumed Cash $ 2,188 Accounts receivable 5,363 Inventory 7,141 Fixed assets 1,245 Other current and non-current assets 5,228 Accounts payable (1,755) Accrued expenses (1,421) Other current and non-current liabilities (4,788) Fair value of net tangible assets acquired 13,201 Fair value of identifiable intangible assets 61,360 Goodwill 81,772 Fair value of net assets acquired 156,333 Less cash acquired (2,188) Net purchase price $ 154,145 |
Fair Value Measures and Disclos
Fair Value Measures and Disclosures (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Assets Measured at Fair Value | Fair Value Measurements March 31, 2023 Level 1 Level 2 Level 3 Liabilities: Interest rate swap $ 3,244 $ — $ 3,244 $ — Total $ 3,244 $ — $ 3,244 $ — |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory was comprised of the following: As of March 31, 2023 July 1, 2022 Raw materials $ 235,668 $ 178,410 Work in process 83,305 64,287 Finished goods 23,804 27,642 Total $ 342,777 $ 270,339 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Goodwill | The following table sets forth the changes in the carrying amount of goodw ill for the nine months ended March 31, 2023 : Total Balance at July 1, 2022 $ 937,880 Goodwill adjustment for the Avalex acquisition 66 Goodwill adjustment for the Atlanta Micro acquisition 147 Balance at March 31, 2023 $ 938,093 |
Restructuring (Tables)
Restructuring (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Expenses by Reportable Segment for Restructuring Plans | The following table presents the detail of charges included in the Company’s liability for restructuring and other charges: Severance & Related Facilities Total Balance at July 1, 2022 $ 4,722 $ — $ 4,722 Restructuring charges 2,776 486 3,262 Cash paid (5,312) (448) (5,760) Balance at March 31, 2023 $ 2,186 $ 38 $ 2,224 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Nonvested Restricted Stock | The following table summarizes the status of the Company’s non-vested restricted stock awards and deferred stock awards since July 1, 2022: Non-vested Restricted Stock Awards Number of Weighted Average Outstanding at July 1, 2022 2,305 $ 57.47 Granted 269 54.52 Vested (702) 60.81 Forfeited (214) 55.74 Outstanding at March 31, 2023 1,658 $ 55.08 |
Stock Based Compensation Expenses | The following table presents share-based compensation expenses included in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss): Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Cost of revenues $ 630 $ 467 $ 1,666 $ 1,348 Selling, general and administrative 7,577 6,845 20,732 20,438 Research and development 1,732 1,575 5,048 4,476 Stock-based compensation expense before tax 9,939 8,887 27,446 26,262 Income taxes (2,684) (2,399) (7,410) (7,091) Stock-based compensation expense, net of income taxes $ 7,255 $ 6,488 $ 20,036 $ 19,171 |
Operating Segment, Geographic_2
Operating Segment, Geographic Information and Significant Customers (Tables) | 9 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Geographic Distribution of Revenues and Long Lived Assets from Continuing Operations | The geographic distribution of the Company’s revenues as determined by country in which the Company's legal subsidiary is domiciled is summarized as follows: U.S. Europe Asia Pacific Eliminations Total THIRD QUARTER ENDED MARCH 31, 2023 Net revenues to unaffiliated customers $ 252,945 $ 10,525 $ 9 $ — $ 263,479 Inter-geographic revenues 1,794 26 — (1,820) — Net revenues $ 254,739 $ 10,551 $ 9 $ (1,820) $ 263,479 THIRD QUARTER ENDED APRIL 1, 2022 Net revenues to unaffiliated customers $ 243,100 $ 9,216 $ 759 $ — $ 253,075 Inter-geographic revenues (729) 824 — (95) — Net revenues $ 242,371 $ 10,040 $ 759 $ (95) $ 253,075 NINE MONTHS ENDED MARCH 31, 2023 Net revenues to unaffiliated customers $ 690,922 $ 29,708 $ 16 $ — $ 720,646 Inter-geographic revenues 1,873 398 — (2,271) — Net revenues $ 692,795 $ 30,106 $ 16 $ (2,271) $ 720,646 NINE MONTHS ENDED APRIL 1, 2022 Net revenues to unaffiliated customers $ 666,336 $ 31,211 $ 921 $ — $ 698,468 Inter-geographic revenues 2,418 2,152 — (4,570) — Net revenues $ 668,754 $ 33,363 $ 921 $ (4,570) $ 698,468 The following table presents the Company's net revenue by end user for the periods presented: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Domestic (1) $ 238,159 $ 227,254 $ 648,948 $ 603,094 International/Foreign Military Sales (2) 25,320 25,821 71,698 95,374 Total Net Revenue $ 263,479 $ 253,075 $ 720,646 $ 698,468 (1) Domestic revenues consist of sales where the end user is within the U.S., as well as sales to prime defense contractor customers where the ultimate end user location is not defined. (2) International/Foreign Military Sales consist of sales to U.S. prime defense contractor customers where the end user is outside the U.S., foreign military sales through the U.S. government and direct sales to non-U.S. based customers intended for end use outside of the U.S. The following table presents the Company's net revenue by end application for the periods presented: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Radar (1) $ 83,853 $ 50,033 $ 180,968 $ 160,109 Electronic Warfare (2) 35,939 44,010 104,746 110,320 Other Sensor & Effector (3) 20,143 23,768 70,679 77,374 Total Sensor & Effector 139,935 117,811 356,393 347,803 C4I (4) 104,188 111,282 303,054 285,614 Other (5) 19,356 23,982 61,199 65,051 Total Net Revenue $ 263,479 $ 253,075 $ 720,646 $ 698,468 (1) Radar includes end-use applications where radio frequency signals are utilized to detect, track and identify objects. (2) Electronic Warfare includes end-use applications comprising the offensive and defensive use of the electromagnetic spectrum. (3) Other Sensor and Effector products include all Sensor and Effector end markets other than Radar and Electronic Warfare. (4) C4I includes rugged secure rackmount servers that are designed to drive the most powerful military processing applications. (5) Other products include all component and other sales where the end use is not specified. The following table presents the Company's net revenue by product grouping for the periods presented: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Components (1) $ 53,187 $ 42,198 $ 130,263 $ 108,735 Modules and Sub-assemblies (2) 55,433 52,719 173,547 134,342 Integrated Subsystems (3) 154,859 158,158 416,836 455,391 Total Net Revenue $ 263,479 $ 253,075 $ 720,646 $ 698,468 (1) Components represent the basic building blocks of an electronic system. They generally perform a single function such as switching, storing or converting electronic signals. Some examples include power amplifiers and limiters, switches, oscillators, filters, equalizers, digital and analog converters, chips, MMICs (monolithic microwave integrated circuits) and memory and storage devices. (2) Modules and sub-assemblies combine multiple components to serve a range of complex functions, including processing, networking and graphics display. Typically delivered as computer boards or other packaging, modules and sub-assemblies are usually designed using open standards to provide interoperability when integrated in a subsystem. Examples of modules and sub-assemblies include embedded processing boards, switched fabrics and boards for high-speed input/output, digital receivers, graphics and video, along with multi-chip modules, integrated radio frequency and microwave multi-function assemblies and radio frequency tuners and transceivers. (3) Integrated subsystems bring components, modules and/or sub-assemblies into one system, enabled with software. Subsystems are typically, but not always, integrated within an open standards-based chassis and often feature interconnect technologies to enable communication between disparate systems. Spares and replacement modules and sub-assemblies are provided for use with subsystems sold by the Company. The Company’s subsystems are deployed in sensor processing, aviation and mission computing and C4I applications. The following table presents the Company's net revenue by platform for the periods presented: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Airborne (1) $ 126,674 $ 126,176 $ 364,968 $ 353,730 Land (2) 58,816 38,285 119,483 100,118 Naval (3) 39,961 42,725 104,900 116,938 Other (4) 38,028 45,889 131,295 127,682 Total Net Revenues $ 263,479 $ 253,075 $ 720,646 $ 698,468 (1) Airborne platform includes products that relate to personnel, equipment or pieces of equipment designed for airborne applications. (2) Land platform includes products that relate to fixed or mobile equipment, or pieces of equipment for personnel, weapon systems, vehicles and support elements operating on land. (3) Naval platform includes products that relate to personnel, equipment or pieces of equipment designed for naval operations. (4) All platforms other than Airborne, Land or Naval. The geographic distribution of the Company’s identifiable long-lived assets is summarized as follows: U.S. Europe Asia Pacific Eliminations Total March 31, 2023 $ 116,212 $ 3,270 $ — $ — $ 119,482 July 1, 2022 $ 122,712 $ 4,476 $ 3 $ — $ 127,191 |
Customers Comprising Ten Percent or More Revenues | Customers comprising 10% or more of the Company’s revenues for the periods shown are as follows: Third Quarters Ended Nine Months Ended March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022 Raytheon Technologies 18 % 15 % 14 % 15 % Lockheed Martin Corporation 13 % * 14 % * Northrop Grumman 11 % * 11 % * U.S. Navy * 14 % 10 % 15 % 42 % 29 % 49 % 30 % * Indicates that the amount is less than 10% of the Company's revenue for the respective period. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | Mar. 14, 2023 | Sep. 27, 2022 | Jul. 01, 2022 | |
Significant Accounting Policies [Line Items] | |||||||
Factoring fees | $ 179 | $ 317 | |||||
Percentage of revenue recognized | 63% | ||||||
Unbilled receivables and costs in excess of billings | 376,722 | $ 376,722 | $ 303,356 | ||||
Contract liability balance | 55,276 | 55,276 | $ 15,966 | ||||
Revenue recognized in the contract liability balance | 2,681 | $ 6,263 | 10,418 | $ 24,551 | |||
Remaining performance obligations | 505,791 | 505,791 | |||||
Limit on purchased receivables | $ 30,600 | $ 20,000 | |||||
Accounts Receivable, Amount Factored | 24,502 | 24,502 | |||||
Error correction | |||||||
Significant Accounting Policies [Line Items] | |||||||
Depreciation | $ 3,100 | $ 3,100 | |||||
Minimum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Standard warranty period | 12 months | ||||||
Extended warranty period | 12 months | ||||||
Maximum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Standard warranty period | 36 months | ||||||
Extended warranty period | 36 months | ||||||
Transferred over Time | |||||||
Significant Accounting Policies [Line Items] | |||||||
Percentage of revenue recognized | 52% | 55% | 57% | 52% | |||
Ship and bill | |||||||
Significant Accounting Policies [Line Items] | |||||||
Percentage of revenue recognized | 48% | 45% | 43% | 48% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Basic and Diluted Weighted Average Shares Outstanding (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | |
Earnings Per Share [Abstract] | ||||
Basic weighted-average shares outstanding (in shares) | 56,511 | 55,590 | 56,310 | 55,495 |
Effect of dilutive equity instruments (in shares) | 385 | 437 | 0 | 0 |
Diluted weighted-average shares outstanding (in shares) | 56,896 | 56,027 | 56,310 | 55,495 |
Antidilutive securities excluded from computation of earnings per share (in shares) | 792 | 246 | 1,873 | 386 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Mar. 28, 2022 | Nov. 29, 2021 | Nov. 05, 2021 | Mar. 31, 2023 | Jul. 01, 2022 | |
Business Acquisition [Line Items] | |||||
Business combination, post closing adjustments | $ 58 | ||||
Goodwill | $ 938,093 | $ 937,880 | |||
Goodwill, amortization period | 15 years | ||||
Atlanta Micro | |||||
Business Acquisition [Line Items] | |||||
Total consideration | $ 90,000 | ||||
Goodwill | 58,252 | ||||
Atlanta Micro | Customer Relationships | |||||
Business Acquisition [Line Items] | |||||
Finite-lived intangible assets acquired | $ 27,310 | $ 41,880 | |||
Useful life of acquired assets | 20 years | 9 years | |||
Atlanta Micro | Developed Technology | |||||
Business Acquisition [Line Items] | |||||
Finite-lived intangible assets acquired | $ 7,260 | $ 14,430 | |||
Useful life of acquired assets | 8 years | 7 years | |||
Atlanta Micro | Backlog | |||||
Business Acquisition [Line Items] | |||||
Finite-lived intangible assets acquired | $ 410 | $ 5,050 | |||
Useful life of acquired assets | 2 years | 1 year | |||
Avalex | |||||
Business Acquisition [Line Items] | |||||
Total consideration | $ 155,000 | ||||
Goodwill | 81,772 | $ 76,068 | |||
Post-closing adjustments | $ 151 |
Acquisitions - Net Purchase Pri
Acquisitions - Net Purchase Price and Fair Values of Assets and Liabilities Acquired (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Nov. 29, 2021 | Nov. 05, 2021 | Mar. 31, 2023 | Apr. 01, 2022 | Jul. 01, 2022 | |
Business Combination, Consideration Transferred [Abstract] | |||||
Net purchase price | $ 0 | $ 243,255 | |||
Fair value of tangible assets acquired and liabilities assumed | |||||
Goodwill | 938,093 | $ 937,880 | |||
Atlanta Micro | |||||
Business Combination, Consideration Transferred [Abstract] | |||||
Cash paid at closing | $ 91,438 | ||||
Working capital and net debt adjustment | (416) | ||||
Cash Acquired from Acquisition | (1,782) | ||||
Net purchase price | 89,240 | ||||
Fair value of tangible assets acquired and liabilities assumed | |||||
Cash | 1,782 | ||||
Accounts receivable | 1,568 | ||||
Inventory | 4,475 | ||||
Fixed assets | 434 | ||||
Other current and non-current assets | 2,079 | ||||
Accounts payable | (529) | ||||
Accrued expenses | (845) | ||||
Other current and non-current liabilities | (11,174) | ||||
Fair value of net tangible assets acquired | (2,210) | ||||
Fair value of identifiable intangible assets | 34,980 | ||||
Goodwill | 58,252 | ||||
Fair value of net assets acquired | $ 91,022 | ||||
Avalex | |||||
Business Combination, Consideration Transferred [Abstract] | |||||
Cash paid at closing | $ 157,367 | ||||
Working capital and net debt adjustment | (1,034) | ||||
Cash Acquired from Acquisition | (2,188) | ||||
Net purchase price | 154,145 | ||||
Fair value of tangible assets acquired and liabilities assumed | |||||
Cash | 2,188 | ||||
Accounts receivable | 5,363 | ||||
Inventory | 7,141 | ||||
Fixed assets | 1,245 | ||||
Other current and non-current assets | 5,228 | ||||
Accounts payable | (1,755) | ||||
Accrued expenses | (1,421) | ||||
Other current and non-current liabilities | (4,788) | ||||
Fair value of net tangible assets acquired | 13,201 | ||||
Fair value of identifiable intangible assets | 61,360 | ||||
Goodwill | 81,772 | $ 76,068 | |||
Fair value of net assets acquired | $ 156,333 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring - Fair Value $ in Thousands | Mar. 31, 2023 USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value measurement disclosure | $ 3,244 |
Interest rate swap | Swap Agreement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value measurement disclosure | 3,244 |
Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value measurement disclosure | 0 |
Level 1 | Interest rate swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value measurement disclosure | 0 |
Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value measurement disclosure | 3,244 |
Level 2 | Interest rate swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value measurement disclosure | 3,244 |
Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value measurement disclosure | 0 |
Level 3 | Interest rate swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value measurement disclosure | $ 0 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Jul. 01, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 235,668 | $ 178,410 |
Work in process | 83,305 | 64,287 |
Finished goods | 23,804 | 27,642 |
Total | $ 342,777 | $ 270,339 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 9 Months Ended |
Mar. 31, 2023 USD ($) reporting_unit | |
Goodwill [Roll Forward] | |
Beginning Balance | $ 937,880 |
Ending Balance | $ 938,093 |
Number of reporting units | reporting_unit | 2 |
Avalex | |
Goodwill [Roll Forward] | |
Goodwill adjustment | $ 66 |
Ending Balance | 76,068 |
Atlanta Micro | |
Goodwill [Roll Forward] | |
Goodwill adjustment | $ 147 |
Restructuring - Additional Info
Restructuring - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other charges | $ 2,778 | $ 6,348 | $ 6,355 | $ 22,424 |
Facility Optimization Efforts | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other charges | 786 | 1,825 | ||
Lease Asset Impairment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other charges | 556 | 1,339 | ||
Severance & Related | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other charges | 1,977 | 2,776 | ||
Third-Party Consulting Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other charges | $ 15 | $ 1,754 |
Restructuring - Expenses by Rep
Restructuring - Expenses by Reportable Segment for Restructuring Plans (Details) $ in Thousands | 9 Months Ended |
Mar. 31, 2023 USD ($) | |
Restructuring Reserve [Roll Forward] | |
Balance at July 1, 2022 | $ 4,722 |
Restructuring charges | 3,262 |
Cash paid | (5,760) |
Balance at March 31, 2023 | 2,224 |
Severance & Related | |
Restructuring Reserve [Roll Forward] | |
Balance at July 1, 2022 | 4,722 |
Restructuring charges | 2,776 |
Cash paid | (5,312) |
Balance at March 31, 2023 | 2,186 |
Facilities & Other | |
Restructuring Reserve [Roll Forward] | |
Balance at July 1, 2022 | 0 |
Restructuring charges | 486 |
Cash paid | (448) |
Balance at March 31, 2023 | $ 38 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | |
Income Tax Examination [Line Items] | ||||
Income tax (benefit) expense | $ 10,446 | $ (2,102) | $ 13,619 | $ (1,506) |
(Loss) income before income taxes | (5,290) | $ 6,241 | (33,718) | (4,134) |
Discrete tax provision | 1,655 | $ 906 | ||
Tax expense (benefit) related to release of income tax reserves | $ 3,683 | |||
Tax Year 2016 Through 2018 | ||||
Income Tax Examination [Line Items] | ||||
Income tax (benefit) expense | $ 1,335 |
Debt (Details)
Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Feb. 28, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | Jul. 01, 2022 | |
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 1,000,000,000 | $ 1,000,000,000 | ||||
Long-term debt | 511,500,000 | 511,500,000 | $ 451,500,000 | |||
Interest expense | 6,711,000 | $ 1,664,000 | 17,848,000 | $ 3,353,000 | ||
Amount of outstanding letter of credit | 963,000 | 963,000 | ||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 1,100,000,000 | |||||
Term of revolving credit facility | 5 years | |||||
Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Debt issuance costs | $ 3,681,000 | $ 3,681,000 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Pension benefit plan, net of tax | $ 46 | $ 48 | $ 142 | $ 144 |
Net periodic benefit cost | 230 | 267 | 671 | $ 805 |
Expected employer contributions | 1,093 | $ 1,093 | ||
Defined contribution plan, employer matching contribution, percent of employees' gross pay | 6% | 3% | ||
Deferred compensation arrangement with individual, compensation expense | $ 1,868 | |||
Share-based matching contributions on defined contribution plan | 3,288 | 9,715 | $ 0 | |
Defined contribution plan, employer discretionary contribution amount, cash payment | $ 2,145 | $ 5,966 | ||
Foreign Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Defined benefit plan, funded (unfunded) status of plan | $ 4,589 | $ 4,589 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) | 9 Months Ended | ||||
Jun. 24, 2022 | Apr. 01, 2022 | Mar. 31, 2023 $ / shares | Jul. 01, 2022 $ / shares | Dec. 27, 2021 $ / shares | |
Equity [Abstract] | |||||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 | |||
Class of Stock [Line Items] | |||||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 | |||
Common Stock | |||||
Equity [Abstract] | |||||
Common stock, par value (usd per share) | $ 0.01 | ||||
Class of Stock [Line Items] | |||||
Common stock, par value (usd per share) | 0.01 | ||||
Common stock ownership percentage | 0.10 | 0.075 | |||
Series A Preferred Stock | |||||
Equity [Abstract] | |||||
Common stock, par value (usd per share) | 0.01 | ||||
Class of Stock [Line Items] | |||||
Common stock, par value (usd per share) | $ 0.01 | ||||
Common stock ownership percentage | 0.20 | 0.10 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | |||
Oct. 28, 2020 | Mar. 31, 2023 | Apr. 01, 2022 | Jul. 01, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price, percentage of fair value threshold | 100% | |||
Allocation of recognized period costs, capitalized amount | $ 1,893 | $ 1,229 | ||
Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of common stock under employee stock purchase plan (in shares) | 57 | 54 | ||
Employee Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized for issuance under stock incentive plan (in shares) | 500 | 2,300 | ||
Shares available for future grant (in shares) | 256 | |||
Purchase price as a percentage of the lesser of the market value of such shares at either the beginning or the end of each nine-month offering period | 85% | |||
Percentage of employee compensation that may be uses to purchase common stock through payroll deductions, maximum | 10% | |||
2018 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized for issuance under stock incentive plan (in shares) | 7,862 | |||
Number of additional shares authorized (in shares) | 3,000 | |||
Shares available for future grant (in shares) | 2,690,000 | |||
2005 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of additional shares authorized (in shares) | 2,000 | |||
Shares available for future grant (in shares) | 948 | |||
2005 Stock Incentive Plan | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Term of stock option | 7 years |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Nonvested Restricted Stock (Details) - Restricted Stock shares in Thousands | 9 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of Shares | |
Beginning Balance (in shares) | shares | 2,305 |
Granted (in shares) | shares | 269 |
Vested (in shares) | shares | (702) |
Forfeited (in shares) | shares | (214) |
Ending Balance (in shares) | shares | 1,658 |
Weighted Average Grant Date Fair Value | |
Beginning Balance (usd per share) | $ / shares | $ 57.47 |
Granted (usd per share) | $ / shares | 54.52 |
Vested (usd per share) | $ / shares | 60.81 |
Forfeited (usd per share) | $ / shares | 55.74 |
Ending Balance (usd per share) | $ / shares | $ 55.08 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-Based Compensation Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before tax | $ 9,939 | $ 8,887 | $ 27,446 | $ 26,262 |
Income taxes | (2,684) | (2,399) | (7,410) | (7,091) |
Net compensation expense | 7,255 | 6,488 | 20,036 | 19,171 |
Cost of revenues | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before tax | 630 | 467 | 1,666 | 1,348 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before tax | 7,577 | 6,845 | 20,732 | 20,438 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before tax | $ 1,732 | $ 1,575 | $ 5,048 | $ 4,476 |
Operating Segment, Geographic_3
Operating Segment, Geographic Information and Significant Customers - Narrative (Details) | 9 Months Ended |
Mar. 31, 2023 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
Operating Segment, Geographic_4
Operating Segment, Geographic Information and Significant Customers - Geographic Distribution of Revenues and Long Lived Assets from Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | Jul. 01, 2022 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | $ 263,479 | $ 253,075 | $ 720,646 | $ 698,468 | |
Identifiable long-lived assets | 119,482 | 119,482 | $ 127,191 | ||
Components | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 53,187 | 42,198 | 130,263 | 108,735 | |
Modules and Sub-assemblies | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 55,433 | 52,719 | 173,547 | 134,342 | |
Integrated Subsystems | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 154,859 | 158,158 | 416,836 | 455,391 | |
Total Sensor & Effector | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 139,935 | 117,811 | 356,393 | 347,803 | |
Radar | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 83,853 | 50,033 | 180,968 | 160,109 | |
Electronic Warfare | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 35,939 | 44,010 | 104,746 | 110,320 | |
Other Sensor & Effector | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 20,143 | 23,768 | 70,679 | 77,374 | |
C4I | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 104,188 | 111,282 | 303,054 | 285,614 | |
Other End Applications | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 19,356 | 23,982 | 61,199 | 65,051 | |
Domestic | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 238,159 | 227,254 | 648,948 | 603,094 | |
International/Foreign Military Sales | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 25,320 | 25,821 | 71,698 | 95,374 | |
US | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 252,945 | 243,100 | 690,922 | 666,336 | |
Europe | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 10,525 | 9,216 | 29,708 | 31,211 | |
Asia Pacific | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 9 | 759 | 16 | 921 | |
Reportable Geographical Components | US | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 254,739 | 242,371 | 692,795 | 668,754 | |
Identifiable long-lived assets | 116,212 | 116,212 | 122,712 | ||
Reportable Geographical Components | Europe | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 10,551 | 10,040 | 30,106 | 33,363 | |
Identifiable long-lived assets | 3,270 | 3,270 | 4,476 | ||
Reportable Geographical Components | Asia Pacific | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 9 | 759 | 16 | 921 | |
Identifiable long-lived assets | 0 | 0 | 3 | ||
Geography Eliminations | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | (1,820) | (95) | (2,271) | (4,570) | |
Identifiable long-lived assets | 0 | 0 | $ 0 | ||
Geography Eliminations | US | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 1,794 | (729) | 1,873 | 2,418 | |
Geography Eliminations | Europe | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 26 | 824 | 398 | 2,152 | |
Geography Eliminations | Asia Pacific | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Operating Segment, Geographic_5
Operating Segment, Geographic Information and Platform - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | |
Revenue from External Customer [Line Items] | ||||
Net revenues | $ 263,479 | $ 253,075 | $ 720,646 | $ 698,468 |
Airborne | ||||
Revenue from External Customer [Line Items] | ||||
Net revenues | 126,674 | 126,176 | 364,968 | 353,730 |
Land | ||||
Revenue from External Customer [Line Items] | ||||
Net revenues | 58,816 | 38,285 | 119,483 | 100,118 |
Naval | ||||
Revenue from External Customer [Line Items] | ||||
Net revenues | 39,961 | 42,725 | 104,900 | 116,938 |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Net revenues | $ 38,028 | $ 45,889 | $ 131,295 | $ 127,682 |
Operating Segment, Geographic_6
Operating Segment, Geographic Information and Significant Customers - Customers Comprising Ten Percent or more Revenues (Details) - Customer Concentration Risk - Sales Revenue, Net | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Apr. 01, 2022 | Mar. 31, 2023 | Apr. 01, 2022 | |
Lockheed Martin Corporation | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 13% | 14% | ||
Raytheon Company | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 18% | 15% | 14% | 15% |
U.S. Navy | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 14% | 10% | 15% | |
Northrop Grumman | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 11% | 11% | ||
Four Major Customers, Cumulative | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 42% | 29% | 49% | 30% |
Commitments And Contingencies (
Commitments And Contingencies (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Jan. 31, 2023 | Jun. 30, 2021 | Mar. 31, 2023 | |
Embedded Reps of America, LLC Legal Claim | |||
Long-term Purchase Commitment [Line Items] | |||
Damages sought, value | $ 9,000 | ||
Loss Contingency, Damages Paid, Value | $ 72 | ||
Non-cancelable purchase commitments | |||
Long-term Purchase Commitment [Line Items] | |||
Purchase commitments for less than one year | $ 142,698 |
Derivatives (Details)
Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2023 | Sep. 29, 2022 | Sep. 07, 2022 | Jul. 01, 2022 | |
Derivative [Line Items] | |||||
Notional amount | $ 300,000 | ||||
Long-term debt | $ 511,500 | $ 511,500 | $ 451,500 | ||
Derivative, fixed interest rate | 3.25% | ||||
Fair Value | Fair Value, Measurements, Recurring | |||||
Derivative [Line Items] | |||||
Fair value measurement disclosure | 3,244 | 3,244 | |||
Swap Agreement | |||||
Derivative [Line Items] | |||||
Notional amount | $ 300,000 | ||||
Derivative, fixed interest rate | 3.79% | ||||
Swap | |||||
Derivative [Line Items] | |||||
Derivative asset | $ 5,995 | ||||
Gain on termination of derivative | 339 | 678 | |||
Interest rate swap | Swap Agreement | Fair Value | Fair Value, Measurements, Recurring | |||||
Derivative [Line Items] | |||||
Fair value measurement disclosure | $ 3,244 | $ 3,244 |