Cover
Cover - shares | 6 Months Ended | |
Dec. 29, 2023 | Jan. 31, 2024 | |
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 29, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-41194 | |
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 $0.01 per share | |
Trading Symbol | MRCY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 59,365,980 | |
Entity Central Index Key | 0001049521 | |
Current Fiscal Year End Date | --06-28 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 29, 2023 | Jun. 30, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 168,646 | $ 71,563 |
Accounts receivable, net of allowance for credit losses of $737 and $1,335 at December 29, 2023 and June 30, 2023, respectively | 82,737 | 124,729 |
Unbilled receivables and costs in excess of billings, net of allowance for credit losses of $2,313 and $0 at December 29, 2023 and June 30, 2023, respectively | 351,003 | 382,558 |
Inventory | 354,212 | 337,216 |
Prepaid income taxes | 5,753 | 0 |
Prepaid expenses and other current assets | 21,470 | 20,952 |
Total current assets | 983,821 | 937,018 |
Property and equipment, net | 114,361 | 119,554 |
Goodwill | 938,093 | 938,093 |
Intangible assets, net | 273,309 | 298,051 |
Operating lease right-of-use assets, net | 65,657 | 63,015 |
Deferred tax asset | 55,426 | 27,099 |
Other non-current assets | 5,585 | 8,537 |
Total assets | 2,436,252 | 2,391,367 |
Current liabilities: | ||
Accounts payable | 88,060 | 103,986 |
Accrued expenses | 31,484 | 28,423 |
Accrued compensation | 25,133 | 30,419 |
Income taxes payable | 0 | 13,874 |
Deferred revenues and customer advances | 81,044 | 56,562 |
Total current liabilities | 225,721 | 233,264 |
Income taxes payable | 5,166 | 5,166 |
Long-term debt | 616,500 | 511,500 |
Operating lease liabilities | 68,252 | 66,797 |
Other non-current liabilities | 16,121 | 7,955 |
Total liabilities | 931,760 | 824,682 |
Commitments and contingencies (Note L) | ||
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; 57,563,733 and 56,961,665 shares issued and outstanding at December 29, 2023 and June 30, 2023, respectively | 576 | 570 |
Additional paid-in capital | 1,220,343 | 1,196,847 |
Retained earnings | 275,150 | 357,439 |
Accumulated other comprehensive income | 8,423 | 11,829 |
Total shareholders’ equity | 1,504,492 | 1,566,685 |
Total liabilities and shareholders’ equity | $ 2,436,252 | $ 2,391,367 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 29, 2023 | Jun. 30, 2023 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 737 | $ 1,335 |
Unbilled receivables and costs in excess of billings, allowance for credit losses | $ 2,313 | $ 0 |
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) | 57,563,733 | 56,961,665 |
Common stock, shares outstanding (shares) | 57,563,733 | 56,961,665 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | |
Income Statement [Abstract] | ||||
Net revenues | $ 197,463 | $ 229,588 | $ 378,454 | $ 457,167 |
Cost of revenues | 165,943 | 148,628 | 296,407 | 298,112 |
Gross margin | 31,520 | 80,960 | 82,047 | 159,055 |
Operating expenses: | ||||
Selling, general and administrative | 44,470 | 45,057 | 80,264 | 84,000 |
Research and development | 28,476 | 26,906 | 60,348 | 54,672 |
Amortization of intangible assets | 12,270 | 13,536 | 24,817 | 28,110 |
Restructuring and other charges | 2 | 2,069 | 9,548 | 3,577 |
Acquisition costs and other related expenses | 231 | 939 | 1,200 | 3,437 |
Total operating expenses | 85,449 | 88,507 | 176,177 | 173,796 |
Loss from operations | (53,929) | (7,547) | (94,130) | (14,741) |
Interest income | 29 | 220 | 132 | 249 |
Interest expense | (8,674) | (6,590) | (16,537) | (11,137) |
Other (expense) income, net | (1,148) | 846 | (2,922) | (2,799) |
Loss before income tax benefit | (63,722) | (13,071) | (113,457) | (28,428) |
Income tax benefit | (18,141) | (2,151) | (31,168) | (3,173) |
Net loss | $ (45,581) | $ (10,920) | $ (82,289) | $ (25,255) |
Basic net loss per share (in dollars per share) | $ (0.79) | $ (0.19) | $ (1.44) | $ (0.45) |
Diluted net loss per share (in dollars per share) | $ (0.79) | $ (0.19) | $ (1.44) | $ (0.45) |
Weighted-average shares outstanding: | ||||
Basic (in shares) | 57,424 | 56,252 | 57,314 | 56,126 |
Diluted (in shares) | 57,424 | 56,252 | 57,314 | 56,126 |
Comprehensive loss: | ||||
Net loss | $ (45,581) | $ (10,920) | $ (82,289) | $ (25,255) |
Change in fair value of derivative instruments, net of tax | (5,864) | (458) | (4,122) | 3,962 |
Foreign currency translation adjustments | 409 | (35) | 829 | 394 |
Pension benefit plan, net of tax | (57) | 48 | (113) | 96 |
Total other comprehensive (loss) income, net of tax | (5,512) | (445) | (3,406) | 4,452 |
Total comprehensive loss | $ (51,093) | $ (11,365) | $ (85,695) | $ (20,803) |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income |
Beginning balance (in shares) at Jul. 01, 2022 | 55,680,000 | ||||
Beginning balance at Jul. 01, 2022 | $ 1,537,185 | $ 557 | $ 1,145,323 | $ 385,774 | $ 5,531 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under employee stock incentive plans (in shares) | 477,000 | ||||
Issuance of common stock under employee stock incentive plans | 0 | $ 5 | (5) | ||
Issuance of common stock under employee stock purchase plan (in 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) | 152,000 | ||||
Issuance of common stock under defined contribution plan | 7,392 | $ 1 | 7,391 | ||
Retirement of common stock (in shares) | (1,000) | ||||
Retirement of common stock | (63) | $ 0 | (63) | ||
Stock-based compensation | 17,988 | 17,988 | |||
Net loss | (25,255) | (25,255) | |||
Other comprehensive income (loss) | 4,452 | 4,452 | |||
Ending balance (in shares) at Dec. 30, 2022 | 56,365,000 | ||||
Ending balance at Dec. 30, 2022 | 1,544,092 | $ 564 | 1,173,026 | 360,519 | 9,983 |
Beginning balance (in shares) at Sep. 30, 2022 | 56,180,000 | ||||
Beginning balance at Sep. 30, 2022 | 1,538,930 | $ 562 | 1,156,501 | 371,439 | 10,428 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under employee stock incentive plans (in shares) | 59,000 | ||||
Issuance of common stock under employee stock incentive plans | 0 | $ 1 | (1) | ||
Issuance of common stock under employee stock purchase plan (in 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) | 69,000 | ||||
Issuance of common stock under defined contribution plan | 3,269 | 3,269 | |||
Stock-based compensation | 10,865 | 10,865 | |||
Net loss | (10,920) | (10,920) | |||
Other comprehensive income (loss) | (445) | (445) | |||
Ending balance (in shares) at Dec. 30, 2022 | 56,365,000 | ||||
Ending balance at Dec. 30, 2022 | $ 1,544,092 | $ 564 | 1,173,026 | 360,519 | 9,983 |
Beginning balance (in shares) at Jun. 30, 2023 | 56,961,665 | 56,962,000 | |||
Beginning balance at Jun. 30, 2023 | $ 1,566,685 | $ 570 | 1,196,847 | 357,439 | 11,829 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under employee stock incentive plans (in shares) | 269,000 | ||||
Issuance of common stock under employee stock incentive plans | 0 | $ 3 | (3) | ||
Issuance of common stock under employee stock purchase plan (in shares) | 107,000 | ||||
Issuance of common stock under employee stock purchase plan | 3,163 | $ 1 | 3,162 | ||
Issuance of common stock under defined contribution plan (in shares) | 226,000 | ||||
Issuance of common stock under defined contribution plan | 8,217 | $ 2 | 8,215 | ||
Retirement of common stock | (15) | (15) | |||
Stock-based compensation | 12,137 | 12,137 | |||
Net loss | (82,289) | (82,289) | |||
Other comprehensive income (loss) | $ (3,406) | (3,406) | |||
Ending balance (in shares) at Dec. 29, 2023 | 57,563,733 | 57,564,000 | |||
Ending balance at Dec. 29, 2023 | $ 1,504,492 | $ 576 | 1,220,343 | 275,150 | 8,423 |
Beginning balance (in shares) at Sep. 29, 2023 | 57,274,000 | ||||
Beginning balance at Sep. 29, 2023 | 1,540,812 | $ 573 | 1,205,573 | 320,731 | 13,935 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under employee stock incentive plans (in shares) | 82,000 | ||||
Issuance of common stock under employee stock incentive plans | 0 | $ 1 | (1) | ||
Issuance of common stock under employee stock purchase plan (in shares) | 107,000 | ||||
Issuance of common stock under employee stock purchase plan | 3,163 | $ 1 | 3,162 | ||
Issuance of common stock under defined contribution plan (in shares) | 101,000 | ||||
Issuance of common stock under defined contribution plan | 3,579 | $ 1 | 3,578 | ||
Retirement of common stock | (15) | (15) | |||
Stock-based compensation | 8,046 | 8,046 | |||
Net loss | (45,581) | (45,581) | |||
Other comprehensive income (loss) | $ (5,512) | (5,512) | |||
Ending balance (in shares) at Dec. 29, 2023 | 57,563,733 | 57,564,000 | |||
Ending balance at Dec. 29, 2023 | $ 1,504,492 | $ 576 | $ 1,220,343 | $ 275,150 | $ 8,423 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 29, 2023 | Dec. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (82,289) | $ (25,255) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization expense | 44,885 | 50,934 |
Stock-based compensation expense | 11,503 | 17,507 |
Stock-based matching contributions on defined contribution plan | 7,652 | 6,427 |
Benefit for deferred income taxes | (28,432) | (22,334) |
Other non-cash items | 7,266 | (991) |
Cash settlement for termination of interest rate swap | 7,403 | 5,995 |
Changes in operating assets and liabilities: | ||
Accounts receivable, unbilled receivables, and costs in excess of billings | 69,715 | (30,876) |
Inventory | (15,503) | (40,215) |
Prepaid income taxes | (5,818) | 7,463 |
Prepaid expenses and other current assets | (366) | (4,768) |
Other non-current assets | (2,697) | 6,589 |
Accounts payable, accrued expenses, and accrued compensation | (18,173) | (28,825) |
Deferred revenues and customer advances | 24,098 | 23,871 |
Income taxes payable | (13,896) | 10,537 |
Other non-current liabilities | 1,078 | (6,706) |
Net cash provided by (used in) operating activities | 6,426 | (30,647) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (16,005) | (20,504) |
Other investing activities | 0 | 102 |
Net cash used in investing activities | (16,005) | (20,402) |
Cash flows from financing activities: | ||
Proceeds from employee stock plans | 3,163 | 2,393 |
Borrowings under credit facilities | 105,000 | 100,000 |
Payments under credit facilities | 0 | (40,000) |
Purchase and retirement of common stock | (15) | (63) |
Payments of deferred financing and offering costs | (1,931) | 0 |
Net cash provided by financing activities | 106,217 | 62,330 |
Effect of exchange rate changes on cash and cash equivalents | 445 | 9 |
Net increase in cash and cash equivalents | 97,083 | 11,290 |
Cash and cash equivalents at beginning of period | 71,563 | 65,654 |
Cash and cash equivalents at end of period | 168,646 | 76,944 |
Cash paid during the period for: | ||
Interest | 16,113 | 11,191 |
Income taxes, net of refunds | 14,881 | 2,528 |
Supplemental disclosures—non-cash activities: | ||
Non-cash investing activity: Purchases of property and equipment incurred but not yet paid | $ 6,220 | $ 5,367 |
Description of Business
Description of Business | 6 Months Ended |
Dec. 29, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Dec. 29, 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 June 30, 2023 which are contained in the Company’s Annual Report on Form 10-K filed with the SEC on August 15, 2023. The results for the second quarter and six months ended December 29, 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 second quarter of fiscal 2024 are to the quarter ended December 29, 2023. There were 13-weeks during the second quarters ended December 29, 2023 and December 30, 2022, respectively. There were 26 weeks during the six months ended December 29, 2023 and December 30, 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. F OREIGN C URRENCY Local currencies are the functional currency for the Company’s subsidiaries in Switzerland, the United Kingdom, 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 (“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 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 pu rchase 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 RPA, 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. On June 21, 2023, the Company further amended the RPA with BMO Harris Bank (as successor in interest to Bank of the West) to increase the capacity from $30,600 to $60,000. Proceeds for amounts factored by the Company are recorded as an incr ease 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 Loss. The Company had $48,205 factored accounts receivables as of December 29, 2023 and incurred factoring fees of approximately $953 and $1,261 for the second quarter and six months ended December 29, 2023. The Company had $20,000 factored in accounts receivables as of December 30, 2022 and incurred factoring fees of approximately $138 for the second quarter and six months ended December 30, 2022. D ERIVATIVES The Company records the fair value of its derivative financial instruments in its 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 (loss) (“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 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 December 29, 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 47% and 45% of revenues for the second quarter and six months ended December 29, 2023, respectively. Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, totaled 44% and 40% of revenues for the second quarter and six months ended and December 30, 2022, respectively. The Company also engages in 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 53% and 55% of total revenues for the second quarters and six months ended December 29, 2023, respectively. Total revenue recognized over time was 56% and 60% of total revenues for the second quarters and six months ended December 30, 2022, respectively. The Company generally does not provid e 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 K 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 $351,003 and $382,558 as of December 29, 2023 and June 30, 2023, respectively. The contract asset balance decreased due to the successful execution and billings across multiple programs, as well as, cumulative adjustments from the cost growth impact and contract settlements during the six months ended December 29, 2023. The contract liability balances were $81,596 and $57,142 as of December 29, 2023 and June 30, 2023, respectively. The contract liability increased due to a higher volume of advanced milestone billing events as well as timing of revenue conversion across multiple programs. Revenue recognized for the second quarter and six months ended December 29, 2023 that was included in the contract liability balance at June 30, 2023 was $10,228 and $31,243, respectively. Revenue recognized for the second quarter and six months ended December 30, 2022 that was included in the contract liability balance at July 1, 2022 was $3,068 and $7,737, 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 December 29, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $657,598. The Company expects to recognize approximately 58% 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. W EIGHTED -A VERAGE S HARES Weighted-average shares were calculated as follows: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Basic weighted-average shares outstanding 57,424 56,252 57,314 56,126 Effect of dilutive equity instruments — — — — Diluted weighted-average shares outstanding 57,424 56,252 57,314 56,126 Equity instruments to purchase 2,865 and 2,460 shares of common stock were not included in the calculation of diluted net loss per share for the second quarters and six months ended December 29, 2023, respectively, because the equity instruments were anti-dilutive. Equity instruments to purchase 511 and 300 shares of common stock were not included in the calculation of diluted net earnings per share for the second quarter and six months ended December 30, 2022, respectively, because the equity instruments were anti-dilutive. R ECENTLY I SSUED A CCOUNTING P RONOUNCEMENTS In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (ASC 280): Improvements to Reportable Segment Disclosures , an amendment of the FASB Accounting Standards Codification. The amendments in this ASU address improvements to reportable segment disclosure requirements, specifically requiring disclosure of significant segment expenses. The amendment also extends certain annual disclosures to interim periods, and clarifies that single reportable segment entities must apply ASC 280 in its entirety, inclusive of this update. This ASU is effective for fiscal years beginning after December 15, 2023, as well as all interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, including adoption in an interim period. The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU No. 2023-09, Improvement to Income Tax Disclosures , an amendment of the FASB Accounting Standards Codification. The amendments in this ASU enact new income tax disclosure requirements in addition to modifying existing requirements. The amendment requires entities to categorize and provide greater disaggregation of information in the rate reconciliation and income taxes paid disclosures. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures. R ECENTLY A DOPTED A CCOUNTING P RONOUNCEMENTS Effective July 1, 2023, the company adopted ASU No. 2021-08, Business Combinations (ASC 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 ASC 606, Revenue from Contracts with Customers . This adoption did not have an impact to the Company's consolidated financial statements or related disclosures. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Dec. 29, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following table summarizes the Companies' financial instruments measured at fair value on a recurring basis as of December 29, 2023: Fair Value Measurements December 29, 2023 Level 1 Level 2 Level 3 Liabilities: Interest rate swap $ 8,710 $ — $ 8,710 $ — Total $ 8,710 $ — $ 8,710 $ — 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 29, 2023, the Company entered into an interest rate hedging agreement (the “September 2023 Swap”). The fair value of the September 2023 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 December 29, 2023, the fair value of the September 2023 Swap was a liability of $8,710 and is included within Other non-current liabilities in the Company's Consolidated Balance Sheets. The following table summarizes the Companies' financial instruments measured at fair value on a recurring basis as of June 30, 2023: Fair Value Measurements June 30, 2023 Level 1 Level 2 Level 3 Assets: Interest rate swap $ 3,523 $ — $ 3,523 $ — Total assets measured at fair value $ 3,523 $ — $ 3,523 $ — The fair value of interest rate hedging agreement entered on September 29, 2022 ("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 June 30, 2023, the fair value of the Swap was an asset of $3,523 and was included within Other non-current assets in the Company's Consolidated Balance Sheets. The Company terminated the Swap during the first quarter ended September 29, 2023. Refer to Note M for further information regarding the September 2023 Swap and the termination of the Swap. |
Inventory
Inventory | 6 Months Ended |
Dec. 29, 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 December 29, 2023 June 30, 2023 Raw materials $ 227,072 $ 229,984 Work in process 108,247 81,930 Finished goods 18,893 25,302 Total $ 354,212 $ 337,216 |
Goodwill
Goodwill | 6 Months Ended |
Dec. 29, 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 Company performs its annual goodwill impairment test in the fourth quarter of each fiscal year, and also assesses potential triggering events during interim reporting periods. During the second quarter ended December 29, 2023, the Company assessed events and circumstances to consider its reporting units for a potential triggering event, including: macroeconomic conditions, industry and market considerations, financial performance and expectations of projected financial performance and cash flows, changes in the Company's stock price in relation to the carrying value of its reporting units, among other relevant factors. The Company concluded that there was no triggering event during the second quarter ended December 29, 2023 that would require an interim impairment test. The Company will continue to monitor these events and circumstances in future periods and adverse changes to these events and circumstances could require the Company to perform an interim impairment test. There has been no change to the carrying amount of goodwill during the six months ended December 29, 2023. |
Restructuring
Restructuring | 6 Months Ended |
Dec. 29, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring For the six months ended December 29, 2023, the Company initiated several immediate cost savings measures that simplify the Company’s organizational structure, facilitate clearer accountability, and align to the Company’s priorities, including: (i) embedding the 1MPACT value creation initiatives and execution into the Company’s operations; (ii) streamlining organizational structure and removing areas of redundancy between corporate and divisional organizations; and (iii) reducing selling, general, and administrative headcount and rebalancing discretionary and third party spending to better align with the Company’s priority areas. On July 20, 2023, the Company executed the plan to embed the 1MPACT value creation initiatives into operations, and on August 9, 2023, the Company approved and initiated a workforce reduction that, together with the 1MPACT related action, eliminated approximately 150 positions resulting in $9,548 of severance costs for the six months ended December 29, 2023. 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. All of the restructuring and other charges are classified as Operating expenses in the Consolidated Statements of Operations and Comprehensive 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. Refer to Note N for further information regarding the workforce reduction announced during the third quarter of fiscal 2024. The following table presents the detail of charges included in the Company’s liability for restructuring and other charges: Severance & Related Balance at June 30, 2023 $ 1,529 Restructuring charges 9,548 Cash paid (7,390) Balance at December 29, 2023 $ 3,687 |
Income Taxes
Income Taxes | 6 Months Ended |
Dec. 29, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded an income tax benefit of $18,141 and $2,151 on a loss before income taxes of $63,722 and $13,071 for the second quarters ended December 29, 2023 and December 30, 2022, respectively. The Company recorded an income tax benefit of $31,168 and $3,173 on a loss before income taxes of $113,457 and $28,428 for the six months ended December 29, 2023 and December 30, 2022, respectively. During the second quarter and six months ended December 29, 2023, the Company recognized a tax provision of $431 and $1,646 related to stock compensation shortfalls, respectively, and during the second quarter and six months ended December 30, 2022 the Company recognized a tax provision of $134 and $1,745 related to stock compensation shortfalls, respectively. During the second quarter ended December 30, 2022, the Company recognized a tax benefit of $2,348 related to a release of income tax reserves for unrecognized income tax benefits due to the expiration of the statute of limitations. The effective tax rate for the second quarters and six months ended December 29, 2023 and December 30, 2022 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation shortfalls and state taxes. The effective tax rate for the second quarter and six months ended December 30, 2022 also differed from the federal statutory rate due to the release of income tax reserves for previously unrecognized income tax benefits. 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, effective for the Company beginning in the fiscal year ended June 30, 2023. As a result, the Company has recorded a deferred tax asset through the second quarter ended December 29, 2023 of $88,949. During the six months ended December 29, 2023, the Company has made $15,314 of tax payments related to this requirement. The Company will continue to monitor guidance and any proposed regulations and adjust the estimates as necessary. |
Debt
Debt | 6 Months Ended |
Dec. 29, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt R EVOLVING C REDIT F ACILITY On February 28, 2022, the Company amended the revolving credit facility (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 December 29, 2023, the Company's outstanding balance of unamortized deferred financing costs was $4,811, which is being amortized to Other expense, net in the Consolidated Statements of Operations and Comprehensive Loss on a straight line basis over the term of the Revolver and includes the costs incurred in conjunction with the November 2023 amendment to the Revolver. On November 7, 2023, due to the uncertainty surrounding a government shutdown or prolonged continuing resolution and the potential impact on the second quarter and fiscal 2024 results, the Company proactively executed Amendment No. 5 to the Revolver, as amended to date, with a syndicate of commercial banks and Bank of America, N.A acting as the administrative agent allowing for a temporary increase in the Consolidated Total Net Leverage Ratio covenant requirement from 4.50 to 5.25 for the second quarter ended December 29, 2023. In conjunction with Amendment No. 5 to the Revolver, the Company incurred $1,931 of new unamortized deferred financing costs that will be amortized over the remaining term of the Revolver. Refer to exhibit 10.1 on Form 8-K filed by the Company with the SEC on November 7, 2023. |
Employee Benefit Plan
Employee Benefit Plan | 6 Months Ended |
Dec. 29, 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 December 29, 2023 was a net liability of $4,431, which is recorded in Other non-current liabilities on the Consolidated Balance Sheet. The Company recorded a net loss of $57 and $113 in AOCI during the second quarter and six months ended December 29, 2023. The Company recorded a net gain of $48 and $96 in AOCI during the second quarter and six months ended December 30, 2022. The Company recognized net periodic benefit costs of $208 and $415 associated with the Plan for the second quarter and six months ended December 29, 2023, respectively. The Company recognized net periodic benefit costs of $220 and $441 associated with the Plan for the second quarter and six months ended December 30, 2022, respectively. The Company's total expected employer contributions to the Plan during fiscal 2024 are $1,133. 401(k) Plan |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Dec. 29, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation S TOCK I NCENTIVE P LANS At December 29, 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. On October 25, 2023, the Company's shareholders approved an additional 3,450 shares to be added to the 2018 plan. 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 4,110 available shares for future grant under the 2018 Plan at December 29, 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 financial performance goals, either on an absolute basis or relative to a peer group of companies. Payouts under performance-based restricted stock awards may also be subject to modification based on Mercury’s total shareholder return relative to the component companies within the Spade Defense Index. E MPLOYEE S TOCK P URCHASE P LAN At December 29, 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 107 and 57 shares issued under the ESPP during the six months ended December 29, 2023 and December 30, 2022, respectively. Shares available for future purchase under the ESPP totaled 60 at December 29, 2023. S TOCK O PTION A ND A WARD A CTIVITY On August 15, 2023, the Company announced that William L. Ballhaus was appointed as the Company’s President and Chief Executive Officer. Mr. Ballhaus received an onboarding grant of premium-priced stock options ("New Hire Option") under the 2018 Plan. The Company and Mr. Ballhaus are parties to an employment agreement, which is included in exhibit 10.1 on Form 8-K filed by the Company with the SEC on August 15, 2023. The New Hire Option is granted in four (4) tranches as follows: (w) 233,500 shares of the Company’s common stock with an exercise price equal to $42.00 (“Tranche 1”); (x) 233,500 shares of the Company’s common stock with an exercise price equal to $43.00 (“Tranche 2”); (y) 233,500 shares of the Company’s common stock with an exercise price equal to $46.00 (“Tranche 3”); and (z) 233,500 shares of the Company’s common stock with an exercise price equal to $49.00 (“Tranche 4”). Tranche 1 and Tranche 2 shall become vested and exercisable on the third anniversary of August 17, 2023 ("the Initial Grant Date") (subject to the Executive’s continued employment through such date) and shall expire on the four four The following table summarizes activity of the Company's stock option plans since June 30, 2023: Options Outstanding Number of Weighted Average Weighted Average Weighted Average Aggregate Outstanding at June 30, 2023 — $ — $ — — — Granted 934 12.71 45.00 Exercised — — Canceled — — Outstanding at December 29, 2023 934 $ 12.71 $ 45.00 3.18 — Exercisable at December 29, 2023 — $ — $ — — — There were no options vested or exercised during the second quarter ended December 29, 2023. Non-vested stock options are subject to the risk of forfeiture until the fulfillment of specified conditions. As of December 29, 2023, there was $10,609 of total unrecognized compensation cost related to non-vested options granted that is expected to be recognized over a weighted-average period 3.18 years from December 29, 2023. The Company uses the Black-Scholes valuation model for estimating the fair value on the date of grant of stock options. The Company calculated the fair values of the options grants using the following weighted-average assumptions: Second Quarter Ended December 29, 2023 Expected volatility 45 % Expected term 4 years Risk-free interest rate 4.44 % Expected dividend yield — % Weighted-average grant date fair value per share $ 12.71 The expected volatility of options granted has been determined using a weighted average of the historical volatility of the Company’s stock for a period equal to the expected life of the option. The expected life of options has been determined using the average of the contractual term and the weighted average vesting term of the options. The risk-free interest rate is based on a zero-coupon U.S. treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. The Company applied an estimated annual forfeiture rate based on historical averages in determining the expense recorded in each period. There were no stock options granted during fiscal year ended June 30, 2023. The following table summarizes the status of the Company’s non-vested restricted stock awards and deferred stock awards since June 30, 2023: Non-vested Restricted Stock Awards Number of Weighted Average Outstanding at June 30, 2023 1,339 $ 54.45 Granted 1,198 37.06 Vested (269) 60.27 Forfeited (337) 50.31 Outstanding at December 29, 2023 1,931 $ 43.57 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 Loss in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). The Company had $1,848 and $1,215 of capitalized stock-based compensation expense on the Consolidated Balance Sheets for the periods ended December 29, 2023 and June 30, 2023, 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 Loss: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Cost of revenues $ 4 $ 237 $ 820 $ 1,036 Selling, general and administrative 5,742 8,277 7,503 13,155 Research and development 1,640 1,744 3,180 3,316 Stock-based compensation expense before tax 7,386 10,258 11,503 17,507 Income taxes (1,994) (2,770) (3,106) (4,727) Stock-based compensation expense, net of income taxes $ 5,392 $ 7,488 $ 8,397 $ 12,780 |
Operating Segment, Geographic I
Operating Segment, Geographic Information and Significant Customers | 6 Months Ended |
Dec. 29, 2023 | |
Segment Reporting [Abstract] | |
Operating Segment, Geographic Information and Significant Customers | Operating Segment, Geographic Information and Significant Customers Operating 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. The Company evaluated its internal organization under FASB ASC 280, Segment Reporting (“ASC 280”) to determine whether there has been a change to its conclusion of a single operating and reportable segment. The Company concluded there has been no changes 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 SECOND QUARTER ENDED DECEMBER 29, 2023 Net revenues to unaffiliated customers $ 183,162 $ 14,295 $ 6 $ — $ 197,463 Inter-geographic revenues 1,286 204 — (1,490) — Net revenues $ 184,448 $ 14,499 $ 6 $ (1,490) $ 197,463 SECOND QUARTER ENDED DECEMBER 30, 2022 Net revenues to unaffiliated customers $ 219,155 $ 10,431 $ 2 $ — $ 229,588 Inter-geographic revenues (68) 168 — (100) — Net revenues $ 219,087 $ 10,599 $ 2 $ (100) $ 229,588 SIX MONTHS ENDED DECEMBER 29, 2023 Net revenues to unaffiliated customers $ 355,043 $ 23,399 $ 12 $ — $ 378,454 Inter-geographic revenues 3,005 296 — (3,301) — Net revenues $ 358,048 $ 23,695 $ 12 $ (3,301) $ 378,454 SIX MONTHS ENDED DECEMBER 30, 2022 Net revenues to unaffiliated customers $ 437,977 $ 19,183 $ 7 $ — $ 457,167 Inter-geographic revenues 79 372 — (451) — Net revenues $ 438,056 $ 19,555 $ 7 $ (451) $ 457,167 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 size, weight and power ("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 changed 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: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Domestic (1) $ 181,822 $ 204,959 $ 328,289 $ 410,789 International/Foreign Military Sales (2) 15,641 24,629 50,165 46,378 Total Net Revenue $ 197,463 $ 229,588 $ 378,454 $ 457,167 (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: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Radar (1) $ 13,254 $ 43,707 $ 41,813 $ 97,115 Electronic Warfare (2) 28,377 33,718 56,518 68,807 Other Sensor & Effector (3) 22,635 29,333 43,801 50,536 Total Sensor & Effector 64,266 106,758 142,132 216,458 C4I (4) 115,470 103,735 206,674 198,866 Other (5) 17,727 19,095 29,648 41,843 Total Net Revenue $ 197,463 $ 229,588 $ 378,454 $ 457,167 (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: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Components (1) $ 41,440 $ 45,158 $ 78,949 $ 77,076 Modules and Sub-assemblies (2) 35,851 62,312 73,384 118,114 Integrated Subsystems (3) 120,172 122,118 226,121 261,977 Total Net Revenue $ 197,463 $ 229,588 $ 378,454 $ 457,167 (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: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Airborne (1) $ 124,835 $ 119,944 $ 232,569 $ 238,294 Land (2) 25,968 26,735 49,618 60,667 Naval (3) 12,870 31,204 39,545 64,939 Other (4) 33,790 51,705 56,722 93,267 Total Net Revenues $ 197,463 $ 229,588 $ 378,454 $ 457,167 (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 Total December 29, 2023 $ 112,008 $ 2,353 $ 114,361 June 30, 2023 $ 116,381 $ 3,173 $ 119,554 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: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 U.S. Navy 10 % 11 % * 11 % RTX Corporation * 12 % 10 % 12 % L3Harris * * 10 % * Lockheed Martin Corporation * 12 % * 14 % Northrop Grumman * 11 % * 10 % 10 % 46 % 20 % 47 % * 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 second quarters and six months ended December 29, 2023 and December 30, 2022. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 29, 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 those 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. On December 7, 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 the Company that 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 from 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 standard that MassDEP published for PFAS in October 2020. The Company has not been contacted by NTS or MassDEP since the dates discussed above. It is too early to determine what responsibility, if any, the Company may have for these environmental matters. On June 19, 2023, the Board of Directors received notice of the Company’s former CEO’s resignation from the positions of President and Chief Executive Officer. The Board accepted his resignation effective June 24, 2023. In the notice, the former CEO claimed entitlement to certain benefits, including equity vesting, severance, and other benefits, under the change in control severance agreement (the “CIC Agreement”) because the former CEO had resigned with good reason during a potential change in control period. The Company disputes these claims and maintains that the former CEO resigned without good reason. On September 19, 2023, the former CEO filed for binding arbitration under the employment rules of the American Arbitration Association (“AAA”). An arbitrator was appointed on November 29, 2023, and the arbitration trial has been scheduled for mid-December 2024. The Company intends to contest vigorously the claims under the CIC Agreement and believes that the Company has strong arguments that the former CEO’s claims lack merit. If the arbitrator rules in the Company’s favor, the Company may still need to pay the former CEO’s reasonable legal fees and compensation during the dispute. If instead the arbitrator rules for the former CEO, the Company could be liable for up to approximately $12,900, based on the closing price of the Company's common stock on June 26, 2023, plus legal fees and expenses and compensation during dispute, for accelerated equity vesting, severance, and other benefits under the CIC Agreement. The Company categorically denies any wrongdoing or liability under the CIC Agreement, but the outcome of potential arbitration is inherently uncertain. Accordingly, it is reasonably possible that the Company will incur a liability in this matter, and the Company estimates the potential range of exposure from $0 to $12,900, plus costs and attorneys’ fees and compensation to the former CEO during the dispute. On December 13, 2023, a securities class action complaint was filed against the Company, Mark Aslett, and Michael Ruppert in the U.S. District Court for the District of Massachusetts. The complaint asserts Section 10(b) and 20(a) securities fraud claims on behalf of a purported class of purchasers and sellers of the Company's stock from December 7, 2020, through June 23, 2023. The complaint alleges that the Company's public disclosures in SEC filings and on earnings calls were false and/or misleading. Subject to the terms of the Company's by-laws and applicable Massachusetts law, Mr. Aslett, the Company's former Chief Executive Officer, and Mr. Ruppert, the Company's former Chief Financial Officer, are indemnified by the Company for this matter. The Company believes the claims in the complaint are without merit and intends to defend itself vigorously. It is too early to determine what responsibility, if any, the Company will have for this matter. 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 December 29, 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 $122,449 . 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 | 6 Months Ended |
Dec. 29, 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 29, 2022, the Company entered into the 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 at the time of the Swap. The Swap agreement was designated and qualified for hedge accounting treatment as a cash flow hedge. The Swap was scheduled to mature on February 28, 2027, coterminous with the maturity of the Revolver. The Swap established a fixed interest rate on the first $300,000 of the Company's outstanding borrowings against the Revolver obligation at 3.79%. On September 28, 2023, the Company terminated the Swap. At the time of termination, the fair value of the Swap was an asset of $7,403. The Company received the cash settlement of $7,403 and these proceeds are classified within Operating Activities of the Consolidated Statements of Cash Flows. Following the termination of the Swap, the Company entered into the September 2023 Swap agreement on September 28, 2023 with JPMorgan for a notional amount of $300,000 in order to fix the interest rate associated with a portion of the total $576,500 existing borrowings on Company's Revolver at the time of the Swap at 4.66%. The September 2023 Swap agreement was designated and qualified for hedge accounting treatment as a cash flow hedge. The September 2023 Swap matures on February 28, 2027, coterminous with the maturity of the Revolver. As of December 29, 2023, the fair value of the September 2023 Swap was a liability of $8,710 and is included within Other non-current liabilities in the Company's Consolidated Balance Sheets. During the second quarter and six months ended December 29, 2023, the Company amortized a total of $881 and $1,220, respectively, of the gain associated with the interest swaps terminated on September 29, 2022 and September 28, 2023, which is included within Other comprehensive loss. 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 September 2023 Swap is JPMorgan. Based on the credit ratings of the Company’s counterparty as of December 29, 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 | 6 Months Ended |
Dec. 29, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events from the date of the Consolidated Balance Sheet through the date the consolidated financial statements were issued. On January 12, 2024, the Company initiated and approved a workforce reduction that will eliminate approximately 100 positions, resulting in expected restructuring charges of approximately $10,000 - $12,000. These charges are for employee separation costs and will be classified as Restructuring and other charges within the Consolidated Statements of Operations and Comprehensive Loss for the fiscal quarter ending March 29, 2024. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net loss | $ (45,581) | $ (10,920) | $ (82,289) | $ (25,255) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 29, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 29, 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 June 30, 2023 which are contained in the Company’s Annual Report on Form 10-K filed with the SEC on August 15, 2023. The results for the second quarter and six months ended December 29, 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. |
Foreign Currency | F OREIGN C URRENCY Local currencies are the functional currency for the Company’s subsidiaries in Switzerland, the United Kingdom, 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 (“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 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 The Company records the fair value of its derivative financial instruments in its 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 (loss) (“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 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 December 29, 2023. |
Revenue Recognition, Contract Balances and Remaining Performance Obligations | 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 47% and 45% of revenues for the second quarter and six months ended December 29, 2023, respectively. Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, totaled 44% and 40% of revenues for the second quarter and six months ended and December 30, 2022, respectively. The Company also engages in 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 53% and 55% of total revenues for the second quarters and six months ended December 29, 2023, respectively. Total revenue recognized over time was 56% and 60% of total revenues for the second quarters and six months ended December 30, 2022, respectively. The Company generally does not provid e 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 K 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. R EMAINING P ERFORMANCE O BLIGATIONS |
Long-Lived Assets | 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 |
Weighted-Average Shares | W EIGHTED -A VERAGE S HARES Weighted-average shares were calculated as follows: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Basic weighted-average shares outstanding 57,424 56,252 57,314 56,126 Effect of dilutive equity instruments — — — — Diluted weighted-average shares outstanding 57,424 56,252 57,314 56,126 Equity instruments to purchase 2,865 and 2,460 shares of common stock were not included in the calculation of diluted net loss per share for the second quarters and six months ended December 29, 2023, respectively, because the equity instruments were anti-dilutive. Equity instruments to purchase 511 and 300 shares of common stock were not included in the calculation of diluted net earnings per share for the second quarter and six months ended December 30, 2022, respectively, because the equity instruments were anti-dilutive. |
Recently Issued And Adopted Accounting Pronouncements | R ECENTLY I SSUED A CCOUNTING P RONOUNCEMENTS In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (ASC 280): Improvements to Reportable Segment Disclosures , an amendment of the FASB Accounting Standards Codification. The amendments in this ASU address improvements to reportable segment disclosure requirements, specifically requiring disclosure of significant segment expenses. The amendment also extends certain annual disclosures to interim periods, and clarifies that single reportable segment entities must apply ASC 280 in its entirety, inclusive of this update. This ASU is effective for fiscal years beginning after December 15, 2023, as well as all interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, including adoption in an interim period. The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU No. 2023-09, Improvement to Income Tax Disclosures , an amendment of the FASB Accounting Standards Codification. The amendments in this ASU enact new income tax disclosure requirements in addition to modifying existing requirements. The amendment requires entities to categorize and provide greater disaggregation of information in the rate reconciliation and income taxes paid disclosures. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures. R ECENTLY A DOPTED A CCOUNTING P RONOUNCEMENTS Effective July 1, 2023, the company adopted ASU No. 2021-08, Business Combinations (ASC 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 ASC 606, Revenue from Contracts with Customers . This adoption did not have an 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 financial performance goals, either on an absolute basis or relative to a peer group of companies. Payouts under performance-based restricted stock awards may also be subject to modification based on Mercury’s total shareholder return relative to the component companies within the Spade Defense Index. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Dec. 29, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Weighted-Average Shares | Weighted-average shares were calculated as follows: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Basic weighted-average shares outstanding 57,424 56,252 57,314 56,126 Effect of dilutive equity instruments — — — — Diluted weighted-average shares outstanding 57,424 56,252 57,314 56,126 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Dec. 29, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Liabilities Measured at Fair Value on a Recurring Basis | The following table summarizes the Companies' financial instruments measured at fair value on a recurring basis as of December 29, 2023: Fair Value Measurements December 29, 2023 Level 1 Level 2 Level 3 Liabilities: Interest rate swap $ 8,710 $ — $ 8,710 $ — Total $ 8,710 $ — $ 8,710 $ — |
Schedule of Financial Assets Measured at Fair Value on a Recurring Basis | The following table summarizes the Companies' financial instruments measured at fair value on a recurring basis as of June 30, 2023: Fair Value Measurements June 30, 2023 Level 1 Level 2 Level 3 Assets: Interest rate swap $ 3,523 $ — $ 3,523 $ — Total assets measured at fair value $ 3,523 $ — $ 3,523 $ — |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Dec. 29, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory was comprised of the following: As of December 29, 2023 June 30, 2023 Raw materials $ 227,072 $ 229,984 Work in process 108,247 81,930 Finished goods 18,893 25,302 Total $ 354,212 $ 337,216 |
Restructuring (Tables)
Restructuring (Tables) | 6 Months Ended |
Dec. 29, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Charges for Restructuring | The following table presents the detail of charges included in the Company’s liability for restructuring and other charges: Severance & Related Balance at June 30, 2023 $ 1,529 Restructuring charges 9,548 Cash paid (7,390) Balance at December 29, 2023 $ 3,687 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Dec. 29, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Options | The following table summarizes activity of the Company's stock option plans since June 30, 2023: Options Outstanding Number of Weighted Average Weighted Average Weighted Average Aggregate Outstanding at June 30, 2023 — $ — $ — — — Granted 934 12.71 45.00 Exercised — — Canceled — — Outstanding at December 29, 2023 934 $ 12.71 $ 45.00 3.18 — Exercisable at December 29, 2023 — $ — $ — — — |
Schedule of Valuation assumptions | The Company calculated the fair values of the options grants using the following weighted-average assumptions: Second Quarter Ended December 29, 2023 Expected volatility 45 % Expected term 4 years Risk-free interest rate 4.44 % Expected dividend yield — % Weighted-average grant date fair value per share $ 12.71 |
Schedule of Restricted Stock Awards | The following table summarizes the status of the Company’s non-vested restricted stock awards and deferred stock awards since June 30, 2023: Non-vested Restricted Stock Awards Number of Weighted Average Outstanding at June 30, 2023 1,339 $ 54.45 Granted 1,198 37.06 Vested (269) 60.27 Forfeited (337) 50.31 Outstanding at December 29, 2023 1,931 $ 43.57 |
Schedule of Stock-Based Compensation Expense | The following table presents share-based compensation expenses included in the Company’s Consolidated Statements of Operations and Comprehensive Loss: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Cost of revenues $ 4 $ 237 $ 820 $ 1,036 Selling, general and administrative 5,742 8,277 7,503 13,155 Research and development 1,640 1,744 3,180 3,316 Stock-based compensation expense before tax 7,386 10,258 11,503 17,507 Income taxes (1,994) (2,770) (3,106) (4,727) Stock-based compensation expense, net of income taxes $ 5,392 $ 7,488 $ 8,397 $ 12,780 |
Operating Segment, Geographic_2
Operating Segment, Geographic Information and Significant Customers (Tables) | 6 Months Ended |
Dec. 29, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Geographic Distribution of Revenues and Revenue by Platform | 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 SECOND QUARTER ENDED DECEMBER 29, 2023 Net revenues to unaffiliated customers $ 183,162 $ 14,295 $ 6 $ — $ 197,463 Inter-geographic revenues 1,286 204 — (1,490) — Net revenues $ 184,448 $ 14,499 $ 6 $ (1,490) $ 197,463 SECOND QUARTER ENDED DECEMBER 30, 2022 Net revenues to unaffiliated customers $ 219,155 $ 10,431 $ 2 $ — $ 229,588 Inter-geographic revenues (68) 168 — (100) — Net revenues $ 219,087 $ 10,599 $ 2 $ (100) $ 229,588 SIX MONTHS ENDED DECEMBER 29, 2023 Net revenues to unaffiliated customers $ 355,043 $ 23,399 $ 12 $ — $ 378,454 Inter-geographic revenues 3,005 296 — (3,301) — Net revenues $ 358,048 $ 23,695 $ 12 $ (3,301) $ 378,454 SIX MONTHS ENDED DECEMBER 30, 2022 Net revenues to unaffiliated customers $ 437,977 $ 19,183 $ 7 $ — $ 457,167 Inter-geographic revenues 79 372 — (451) — Net revenues $ 438,056 $ 19,555 $ 7 $ (451) $ 457,167 The following table presents the Company's net revenue by end user for the periods presented: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Domestic (1) $ 181,822 $ 204,959 $ 328,289 $ 410,789 International/Foreign Military Sales (2) 15,641 24,629 50,165 46,378 Total Net Revenue $ 197,463 $ 229,588 $ 378,454 $ 457,167 (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: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Radar (1) $ 13,254 $ 43,707 $ 41,813 $ 97,115 Electronic Warfare (2) 28,377 33,718 56,518 68,807 Other Sensor & Effector (3) 22,635 29,333 43,801 50,536 Total Sensor & Effector 64,266 106,758 142,132 216,458 C4I (4) 115,470 103,735 206,674 198,866 Other (5) 17,727 19,095 29,648 41,843 Total Net Revenue $ 197,463 $ 229,588 $ 378,454 $ 457,167 (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: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Components (1) $ 41,440 $ 45,158 $ 78,949 $ 77,076 Modules and Sub-assemblies (2) 35,851 62,312 73,384 118,114 Integrated Subsystems (3) 120,172 122,118 226,121 261,977 Total Net Revenue $ 197,463 $ 229,588 $ 378,454 $ 457,167 (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: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 Airborne (1) $ 124,835 $ 119,944 $ 232,569 $ 238,294 Land (2) 25,968 26,735 49,618 60,667 Naval (3) 12,870 31,204 39,545 64,939 Other (4) 33,790 51,705 56,722 93,267 Total Net Revenues $ 197,463 $ 229,588 $ 378,454 $ 457,167 (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 Total December 29, 2023 $ 112,008 $ 2,353 $ 114,361 June 30, 2023 $ 116,381 $ 3,173 $ 119,554 |
Schedule of Revenue by Major Customers | Customers comprising 10% or more of the Company’s revenues for the periods shown are as follows: Second Quarters Ended Six Months Ended December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022 U.S. Navy 10 % 11 % * 11 % RTX Corporation * 12 % 10 % 12 % L3Harris * * 10 % * Lockheed Martin Corporation * 12 % * 14 % Northrop Grumman * 11 % * 10 % 10 % 46 % 20 % 47 % * 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 ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | Jun. 30, 2023 | Jun. 21, 2023 | Mar. 14, 2023 | Sep. 27, 2022 | |
Significant Accounting Policies [Line Items] | ||||||||
Limit on purchased receivables | $ 60,000 | $ 30,600 | $ 20,000 | |||||
Factored accounts receivables | $ 48,205 | $ 20,000 | $ 48,205 | $ 20,000 | ||||
Factoring fees | 953 | 1,261 | 138 | |||||
Contract asset balances | 351,003 | 351,003 | $ 382,558 | |||||
Contract liability balance | 81,596 | 81,596 | $ 57,142 | |||||
Revenue recognized in the contract liability balance | 10,228 | $ 3,068 | 31,243 | $ 7,737 | ||||
Remaining performance obligations | $ 657,598 | $ 657,598 | ||||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,865 | 511 | 2,460 | 300 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-12-30 | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Remaining performance obligations, percentage | 58% | 58% | ||||||
Remaining performance obligations, period of satisfaction | 12 months | 12 months | ||||||
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 | 53% | 56% | 55% | 60% | ||||
Ship and bill | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Percentage of revenue recognized | 47% | 44% | 45% | 40% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Weighted-Average Shares (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | |
Accounting Policies [Abstract] | ||||
Basic weighted-average shares outstanding (in shares) | 57,424 | 56,252 | 57,314 | 56,126 |
Effect of dilutive equity instruments (in shares) | 0 | 0 | 0 | 0 |
Diluted weighted-average shares outstanding (in shares) | 57,424 | 56,252 | 57,314 | 56,126 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Schedule of Financial Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value - Fair Value, Measurements, Recurring $ in Thousands | Dec. 29, 2023 USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total liabilities measured at fair value | $ 8,710 |
Interest rate swap | Swap Agreement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total liabilities measured at fair value | 8,710 |
Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total liabilities measured at fair value | 0 |
Level 1 | Interest rate swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total liabilities measured at fair value | 0 |
Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total liabilities measured at fair value | 8,710 |
Level 2 | Interest rate swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total liabilities measured at fair value | 8,710 |
Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total liabilities measured at fair value | 0 |
Level 3 | Interest rate swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total liabilities measured at fair value | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Additional Information (Details) - Fair Value - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Dec. 29, 2023 | Jun. 30, 2023 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total liabilities measured at fair value | $ 8,710 | |
Total assets measured at fair value | $ 3,523 | |
Interest rate swap | Swap Agreement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total liabilities measured at fair value | $ 8,710 | |
Total assets measured at fair value | $ 3,523 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Schedule of Financial Assets Measured at Fair Value on a Recurring Basis (Details) - Fair Value - Fair Value, Measurements, Recurring $ in Thousands | Jun. 30, 2023 USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total assets measured at fair value | $ 3,523 |
Interest rate swap | Swap Agreement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total assets measured at fair value | 3,523 |
Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total assets measured at fair value | 0 |
Level 1 | Interest rate swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total assets measured at fair value | 0 |
Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total assets measured at fair value | 3,523 |
Level 2 | Interest rate swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total assets measured at fair value | 3,523 |
Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total assets measured at fair value | 0 |
Level 3 | Interest rate swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total assets measured at fair value | $ 0 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Dec. 29, 2023 | Jun. 30, 2023 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 227,072 | $ 229,984 |
Work in process | 108,247 | 81,930 |
Finished goods | 18,893 | 25,302 |
Total | $ 354,212 | $ 337,216 |
Goodwill (Details)
Goodwill (Details) | 6 Months Ended |
Dec. 29, 2023 division | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Number of reporting units | 2 |
Restructuring - Additional Info
Restructuring - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 29, 2023 USD ($) | Dec. 30, 2022 USD ($) | Dec. 29, 2023 USD ($) | Dec. 30, 2022 USD ($) | Aug. 09, 2023 position | |
Restructuring and Related Activities [Abstract] | |||||
Number of positions eliminated | position | 150 | ||||
Severance costs | $ | $ 2 | $ 2,069 | $ 9,548 | $ 3,577 |
Restructuring - Schedule of Cha
Restructuring - Schedule of Charges for Restructuring (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | |
Restructuring Reserve [Roll Forward] | ||||
Balance at June 30, 2023 | $ 1,529 | |||
Restructuring charges | $ 2 | $ 2,069 | 9,548 | $ 3,577 |
Cash paid | (7,390) | |||
Balance at December 29, 2023 | $ 3,687 | $ 3,687 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Income tax benefit | $ (18,141) | $ (2,151) | $ (31,168) | $ (3,173) | |
Loss before income taxes | (63,722) | (13,071) | (113,457) | (28,428) | $ (28,428) |
Tax provision for stock compensation shortfalls | 431 | 134 | 1,646 | $ 1,745 | |
Tax benefit for release of income tax reserves | $ 2,348 | ||||
Income Taxes Paid | 15,314 | ||||
Deferred Tax Assets, Tax Credit Carryforwards, Research | $ 88,949 | $ 88,949 |
Debt (Details)
Debt (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Feb. 28, 2022 USD ($) | Dec. 29, 2023 USD ($) | Dec. 30, 2022 USD ($) | Dec. 29, 2023 USD ($) | Dec. 30, 2022 USD ($) | Nov. 06, 2023 | Sep. 29, 2023 USD ($) | Jun. 30, 2023 USD ($) | |
Debt Instrument [Line Items] | ||||||||
Outstanding borrowings | $ 616,500 | $ 616,500 | $ 576,500 | $ 511,500 | ||||
Interest expense | 8,674 | $ 6,590 | 16,537 | $ 11,137 | ||||
Outstanding letter of credit | $ 963 | $ 963 | ||||||
Revolving Credit Facility | Leverage Ratio | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, measurement input | 5.25 | 5.25 | 4.50 | |||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 1,100,000 | $ 750,000 | $ 750,000 | |||||
Term of revolving credit facility | 5 years | |||||||
Proceeds from Revolver | 40,000 | 105,000 | ||||||
Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issuance costs | 4,811 | 4,811 | ||||||
Unamortized deferred financing costs | $ 1,931 | $ 1,931 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 29, 2023 | Sep. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | |
Retirement Benefits [Abstract] | |||||
Plan net liability | $ 4,431 | $ 4,431 | |||
Plan net gain (loss) | 57 | $ (48) | 113 | $ (96) | |
Net periodic benefit cost | 208 | 220 | 415 | 441 | |
Expected employer contributions | 1,133 | $ 1,133 | |||
Maximum percentage of eligible participant annual compensation available to match | 6% | ||||
Capitalized stock-based matching compensation expense | $ 2,705 | $ 3,270 | |||
Share-based matching contributions | $ 2,811 | $ 3,822 | $ 7,652 | $ 6,427 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Oct. 25, 2023 shares | Aug. 15, 2023 USD ($) tranche $ / shares | Oct. 28, 2020 shares | Dec. 29, 2023 USD ($) shares | Dec. 30, 2022 shares | Dec. 29, 2023 USD ($) shares | Dec. 30, 2022 shares | Jun. 30, 2023 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Exercise price, percentage of fair value threshold | 100% | 100% | ||||||
Unrecognized compensation cost | $ | $ 10,609 | $ 10,609 | ||||||
Expected dividend yield | 0% | |||||||
Allocation of recognized period costs, capitalized amount | $ | $ 1,848 | $ 1,848 | $ 1,215 | |||||
Common Stock | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Issuance of common stock under employee stock purchase plan (in shares) | 107 | 57 | 107 | 57 | ||||
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 | 2,300 | |||||
Shares available for future grant (in shares) | 60 | 60 | ||||||
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% | |||||||
Offering period | 6 months | |||||||
Percentage of employee compensation that may be uses to purchase common stock through payroll deductions, maximum | 10% | |||||||
Stock Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Options exercised (in shares) | 0 | 0 | ||||||
Options vested (in shares) | 0 | |||||||
Weighted average recognition period | 3 years 2 months 4 days | |||||||
Stock options granted (in shares) | 0 | |||||||
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 | 7,862 | ||||||
Number of additional shares authorized (in shares) | 3,450 | 3,000 | ||||||
Shares available for future grant (in shares) | 4,110,000 | 4,110,000 | ||||||
2018 Stock Incentive Plan | New Hire Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of tranches | tranche | 4 | |||||||
2018 Stock Incentive Plan | New Hire Option | Tranche One | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares granted (in shares) | $ | $ 233,500 | |||||||
Exercise price of shares granted (in usd per share) | $ / shares | $ 42 | |||||||
Expiration period | 4 years | |||||||
Vested and exercisable period | 3 years | |||||||
2018 Stock Incentive Plan | New Hire Option | Tranche Two | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares granted (in shares) | $ | $ 233,500 | |||||||
Exercise price of shares granted (in usd per share) | $ / shares | $ 43 | |||||||
Expiration period | 4 years | |||||||
Vested and exercisable period | 3 years | |||||||
2018 Stock Incentive Plan | New Hire Option | Tranche Three | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares granted (in shares) | $ | $ 233,500 | |||||||
Exercise price of shares granted (in usd per share) | $ / shares | $ 46 | |||||||
Expiration period | 5 years | |||||||
Vested and exercisable period | 4 years | |||||||
2018 Stock Incentive Plan | New Hire Option | Tranche Four | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Shares granted (in shares) | $ | $ 233,500 | |||||||
Exercise price of shares granted (in usd per share) | $ / shares | $ 49 | |||||||
Expiration period | 5 years | |||||||
Vested and exercisable period | 4 years | |||||||
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 | 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 - Sche
Stock-Based Compensation - Schedule of Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands | 3 Months Ended | 6 Months Ended | |
Dec. 29, 2023 | Dec. 29, 2023 | Jun. 30, 2023 | |
Weighted Average Grant Date Fair Value | |||
Outstanding at end of period (in usd per share) | $ 12.71 | $ 12.71 | |
Stock Options | |||
Number of Shares | |||
Outstanding at beginning of period (in shares) | 0 | ||
Granted (in shares) | 934 | ||
Exercised (in shares) | 0 | 0 | |
Cancelled (in shares) | 0 | ||
Outstanding at end of period (in shares) | 934 | 934 | |
Exercisable (in shares) | 0 | 0 | |
Weighted Average Grant Date Fair Value | |||
Outstanding at beginning of period (in usd per share) | $ 0 | ||
Granted (in usd per share) | 12.71 | ||
Outstanding at end of period (in usd per share) | $ 12.71 | 12.71 | |
Exercisable (in usd per share) | 0 | ||
Weighted Average Exercise Price | |||
Outstanding at beginning of period (in usd per share) | 0 | ||
Granted (in usd per share) | 45 | ||
Exercised (usd per share) | 0 | ||
Cancelled (usd per share) | 0 | ||
Outstanding at end of period (in usd per share) | 45 | 45 | |
Exercisable (in usd per share) | $ 0 | $ 0 | |
Weighted Average Remaining Contractual Term (Years) | 3 years 2 months 4 days | ||
Aggregate Intrinsic Value as of 12/29/23 | $ 0 | $ 0 | $ 0 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Valuation Assumptions (Details) | 6 Months Ended |
Dec. 29, 2023 $ / shares | |
Share-Based Payment Arrangement [Abstract] | |
Expected volatility | 45% |
Expected term | 4 years |
Risk-free interest rate | 4.44% |
Expected dividend yield | 0% |
Weighted average grant date fair value per share (in usd per share) | $ 12.71 |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Restricted Stock Awards (Details) shares in Thousands | 6 Months Ended |
Dec. 29, 2023 $ / shares shares | |
Weighted Average Grant Date Fair Value | |
Outstanding at end of period (in usd per share) | $ 12.71 |
Restricted Stock | |
Number of Shares | |
Outstanding at beginning of period (in shares) | shares | 1,339 |
Granted (in shares) | shares | 1,198 |
Vested (in shares) | shares | (269) |
Forfeited (in shares) | shares | (337) |
Outstanding at end of period (in shares) | shares | 1,931 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of period (in usd per share) | $ 54.45 |
Granted (in usd per share) | 37.06 |
Vested (in usd per share) | 60.27 |
Forfeited (in usd per share) | 50.31 |
Outstanding at end of period (in usd per share) | $ 43.57 |
Stock-Based Compensation - Sc_4
Stock-Based Compensation - Schedule of Stock-Based Compensation Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense before tax | $ 7,386 | $ 10,258 | $ 11,503 | $ 17,507 |
Income taxes | (1,994) | (2,770) | (3,106) | (4,727) |
Stock-based compensation expense, net of income taxes | 5,392 | 7,488 | 8,397 | 12,780 |
Cost of revenues | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense before tax | 4 | 237 | 820 | 1,036 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense before tax | 5,742 | 8,277 | 7,503 | 13,155 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense before tax | $ 1,640 | $ 1,744 | $ 3,180 | $ 3,316 |
Operating Segment, Geographic_3
Operating Segment, Geographic Information and Significant Customers - Additional Information (Details) | 6 Months Ended |
Dec. 29, 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 - Schedule of Geographic Distribution of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | Jun. 30, 2023 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | $ 197,463 | $ 229,588 | $ 378,454 | $ 457,167 | |
Identifiable long-lived assets | 114,361 | 114,361 | $ 119,554 | ||
Components | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 41,440 | 45,158 | 78,949 | 77,076 | |
Modules and Sub-assemblies | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 35,851 | 62,312 | 73,384 | 118,114 | |
Integrated Subsystems | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 120,172 | 122,118 | 226,121 | 261,977 | |
Total Sensor & Effector | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 64,266 | 106,758 | 142,132 | 216,458 | |
Radar | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 13,254 | 43,707 | 41,813 | 97,115 | |
Electronic Warfare | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 28,377 | 33,718 | 56,518 | 68,807 | |
Other Sensor & Effector | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 22,635 | 29,333 | 43,801 | 50,536 | |
C4I | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 115,470 | 103,735 | 206,674 | 198,866 | |
Other | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 17,727 | 19,095 | 29,648 | 41,843 | |
Domestic | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 181,822 | 204,959 | 328,289 | 410,789 | |
International/Foreign Military Sales | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 15,641 | 24,629 | 50,165 | 46,378 | |
Inter-geographic revenues | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | (1,490) | (100) | (3,301) | (451) | |
U.S. | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 183,162 | 219,155 | 355,043 | 437,977 | |
U.S. | Inter-geographic revenues | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 1,286 | (68) | 3,005 | 79 | |
U.S. | Reportable Geographical Components | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 184,448 | 219,087 | 358,048 | 438,056 | |
Identifiable long-lived assets | 112,008 | 112,008 | 116,381 | ||
Europe | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 14,295 | 10,431 | 23,399 | 19,183 | |
Europe | Inter-geographic revenues | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 204 | 168 | 296 | 372 | |
Europe | Reportable Geographical Components | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 14,499 | 10,599 | 23,695 | 19,555 | |
Identifiable long-lived assets | 2,353 | 2,353 | $ 3,173 | ||
Asia Pacific | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 6 | 2 | 12 | 7 | |
Asia Pacific | Inter-geographic revenues | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | 0 | 0 | 0 | 0 | |
Asia Pacific | Reportable Geographical Components | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | $ 6 | $ 2 | $ 12 | $ 7 |
Operating Segment, Geographic_5
Operating Segment, Geographic Information and Significant Customers - Schedule of Revenue By Platform (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | |
Revenue from External Customer [Line Items] | ||||
Net revenues | $ 197,463 | $ 229,588 | $ 378,454 | $ 457,167 |
Airborne | ||||
Revenue from External Customer [Line Items] | ||||
Net revenues | 124,835 | 119,944 | 232,569 | 238,294 |
Land | ||||
Revenue from External Customer [Line Items] | ||||
Net revenues | 25,968 | 26,735 | 49,618 | 60,667 |
Naval | ||||
Revenue from External Customer [Line Items] | ||||
Net revenues | 12,870 | 31,204 | 39,545 | 64,939 |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Net revenues | $ 33,790 | $ 51,705 | $ 56,722 | $ 93,267 |
Operating Segment, Geographic_6
Operating Segment, Geographic Information and Significant Customers - Schedule of Revenue by Major Customers (Details) - Revenue Benchmark - Customer Concentration Risk | 3 Months Ended | 6 Months Ended | ||
Dec. 29, 2023 | Dec. 30, 2022 | Dec. 29, 2023 | Dec. 30, 2022 | |
Major Customers | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 10% | 46% | 20% | 47% |
U.S. Navy | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 10% | 11% | 11% | |
RTX Corporation | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 12% | 10% | 12% | |
L3Harris | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 10% | |||
Lockheed Martin Corporation | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 12% | 14% | ||
Northrop Grumman | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration risk, percentage | 11% | 10% |
Commitments And Contingencies (
Commitments And Contingencies (Details) - USD ($) $ in Thousands | Dec. 29, 2023 | Jul. 26, 2023 |
Long-term Purchase Commitment [Line Items] | ||
Loss contingency, estimate of possible loss | $ 12,900 | |
Minimum | ||
Long-term Purchase Commitment [Line Items] | ||
Loss contingency, range of possible loss, portion not accrued | 0 | |
Maximum | ||
Long-term Purchase Commitment [Line Items] | ||
Loss contingency, range of possible loss, portion not accrued | $ 12,900 | |
Non-cancelable purchase commitments | ||
Long-term Purchase Commitment [Line Items] | ||
Purchase commitments for less than one year | $ 122,449 |
Derivatives (Details)
Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Dec. 29, 2023 | Dec. 29, 2023 | Sep. 29, 2023 | Jun. 30, 2023 | Sep. 29, 2022 | Sep. 07, 2022 | |
Derivative [Line Items] | ||||||
Notional amount | $ 300,000 | |||||
Derivative interest rate | 3.79% | |||||
Long-term debt | $ 616,500 | $ 616,500 | $ 576,500 | $ 511,500 | ||
Amortized gain associated with derivative | $ 881 | $ 1,220 | ||||
Swap Agreement | ||||||
Derivative [Line Items] | ||||||
Notional amount | $ 300,000 | |||||
Derivative interest rate | 4.66% | |||||
Swap | ||||||
Derivative [Line Items] | ||||||
Derivative asset | $ 7,403 | |||||
Revolving Credit Facility | ||||||
Derivative [Line Items] | ||||||
Existing borrowing capacity | $ 511,500 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | Jan. 12, 2024 USD ($) position | Aug. 09, 2023 position |
Subsequent Event [Line Items] | ||
Number of positions eliminated | position | 150 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Number of positions eliminated | position | 100 | |
Subsequent Event | Minimum | ||
Subsequent Event [Line Items] | ||
Expected restructuring charges | $ | $ 10 | |
Subsequent Event | Maximum | ||
Subsequent Event [Line Items] | ||
Expected restructuring charges | $ | $ 12 |