10 unchanged sentences
We utilize interest rate derivatives to mitigate interest rate exposure with respect to our financing arrangements.
−Removed: On January 11, 2019, we entered into an interest rate swap (the “Swap”) with Bank of America, N.A.
−Removed: in order to establish a fixed interest rate associated with a portion of our Revolver.
−Removed: The Swap was designated as a cash flow hedge.
−Removed: We paid down the remaining balance on our Revolver and terminated the related Swap during fiscal 2019 and as such, there were no outstanding borrowings against the Revolver or swaps outstanding at June 30, 2019.
+Added: There were no outstanding borrowings against the Revolver or swaps outstanding at July 3, 2020.
C ONCENTRATION O F C REDIT R ISK
1 unchanged sentence
We place our cash and cash equivalents with financial institutions with high credit quality.
−Removed: At June 30, 2019 and 2018 , we had $257.9 million and $66.5 million, respectively, of cash and cash equivalents on deposit or invested with our financial and lending institutions.
+Added: As of July 3, 2020 and June 30, 2019, we had $226.8 million and $257.9 million, respectively, of cash and cash equivalents on deposit or invested with our financial and lending institutions.
We provide credit to customers in the normal course of business.
We perform ongoing credit evaluations of our customers’ financial condition and limit the amount of credit extended when deemed necessary.
−Removed: At June 30, 2019 , five customers accounted for 56% of our receivables, unbilled receivables and costs in excess of billings.
−Removed: At June 30, 2018 , five customers accounted for 54% of our receivables, unbilled receivables and costs in excess of billings.
+Added: As of July 3, 2020, five customers accounted for 52% of our receivables, unbilled receivables and costs in excess of billings.
+Added: As of June 30, 2019, five customers accounted for 56% of our receivables, unbilled receivables and costs in excess of billings.
F OREIGN C URRENCY R ISK
We operate primarily in the United States;
−Removed: however, we conduct business outside the United States through our foreign subsidiaries in Switzerland, the United Kingdom, France, Japan, Spain and Canada where business is largely transacted in non-
+Added: however, we conduct business outside the United States through our foreign subsidiaries in Switzerland, the United Kingdom, France, Japan, Spain and Canada where business is largely transacted in non-U.S.
dollar currencies.
11 unchanged sentences
We have audited the accompanying consolidated balance sheets of Mercury Systems, Inc.
−Removed: and subsidiaries (the Company) as of June 30, 2019 and 2018, the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2019, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).
−Removed: We also have audited the Company’s internal control over financial reporting as of June 30, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended June 30, 2019, in conformity with U.S.
+Added: and subsidiaries (the Company) as of July 3, 2020 and June 30, 2019, the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for each of the fiscal years in the three-year period ended July 3, 2020, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).
+Added: We also have audited the Company’s internal control over financial reporting as of July 3, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of July 3, 2020 and June 30, 2019, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended July 3, 2020, in conformity with U.S.
generally accepted accounting principles.
−Removed: Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: The Company acquired Germane Systems, LC (Germane), GECO Avionics, LLC (GECO), The Athena Group, Inc.
−Removed: (Athena), and Syntonic Microwave LLC (Syntonic) during fiscal year 2019, and management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of June 30, 2019, Germane’s, GECO’s, Athena’s and Syntonic’s internal control over financial reporting associated with 11 percent of total consolidated assets (of which 8 percent represented goodwill and intangible assets included within the scope of the assessment) and 7 percent of total consolidated revenues included in the consolidated financial statements of the Company as of and for the year ended June 30, 2019.
−Removed: Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Germane, GECO, Athena and Syntonic.
+Added: Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 3, 2020 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: The Company acquired American Panel Corporation (“APC”) during fiscal year 2020, and management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of July 3, 2020, APC’s internal control over financial reporting associated with 7 percent of total consolidated assets (of which 5 percent represented goodwill and intangible assets included within the scope of the assessment) and 3 percent of total consolidated revenues included in the consolidated financial statements of the Company as of and for the fiscal year ended July 3, 2020.
+Added: Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of APC.
Basis for Opinions
22 unchanged sentences
The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Estimation of total contract costs to be incurred for fixed-price long-term contract revenue
−Removed: As discussed in Note B to the consolidated financial statements, revenue recognized under long-term contracts for the year ended June 30, 2019 represented 23% of total revenues.
−Removed: For those long-term contracts that are fixed-price in nature, the Company recognizes revenue over time based on the ratio of (1) actual contract costs incurred to date to (2) the Company’s estimate of total contract costs to be incurred.
−Removed: We identified the evaluation of the estimate of total contract costs to be incurred for fixed-price long-term contracts as a critical audit matter given the complex nature of the Company’s products sold under such contracts.
+Added: Estimate of total contract costs to be incurred for fixed price contract revenue recognized over time
+Added: As discussed in Note B to the consolidated financial statements, fixed price contract revenue recognized over time for the year ended July 3, 2020 represented 27% of total revenues.
+Added: For those fixed price contracts recognized over time the Company recognizes revenue based on the ratio of (1) actual contract costs incurred to date to (2) the Company’s estimate of total contract costs to be incurred.
+Added: We identified the evaluation of total contract costs to be incurred for fixed price contract revenue recognized over time as a critical audit matter given the complex nature of the Company’s products sold under such contracts.
In particular, evaluating the Company’s judgments regarding the amount of time to complete the contracts, including the assessment of the nature and complexity of the work to be performed, involved a high degree of subjective auditor judgment.
−Removed: The primary procedures we performed to address this critical audit matter included the following.
−Removed: We tested certain internal controls over the Company’s process to develop estimates of total contract costs to be incurred.
−Removed: Such controls included controls over the development of the estimated amount of time to complete the contracts, including the assessment of the nature and complexity of the work to be performed.
−Removed: We evaluated factors including the value and stage of completion to select a sample of customer contracts to challenge the Company’s assumptions underlying the estimate of total contract costs to be incurred.
−Removed: We inspected the sampled contracts to evaluate the Company’s identification of performance obligations and the determined method for measuring contract progress.
+Added: The following are the primary procedures we performed to address this critical audit matter.
+Added: We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to develop estimates of total contract costs to be incurred for partially completed performance obligations.
+Added: Such controls included controls over the estimated amount of time to complete the contracts, including the assessment of the nature and complexity of the work to be performed.
+Added: We considered factors, including the value and stage of completion, to select customer contracts to evaluate the Company’s assumptions underlying the estimate of total contract costs to be incurred.
+Added: We inspected the selected contracts to evaluate the Company’s identification of performance obligations and the determined method for measuring contract progress.
We compared the Company’s original or prior period estimate of total contract costs to be incurred to the actual costs incurred for completed contracts to assess the Company’s ability to accurately estimate costs.
−Removed: We interviewed operational personnel of the Company to evaluate progress to date, the estimate of remaining costs to be incurred, and factors impacting the amount of time and cost to complete the sampled contracts, including the assessment of the nature and complexity of the work to be performed.
−Removed: We inspected correspondence, if any, between the Company and the customer for the sampled contracts as part of our evaluation of contract progress.
+Added: We inquired of operational personnel of the Company to evaluate progress to date, the estimate of remaining costs to be incurred, and factors impacting the amount of time and cost to complete the selected contracts, including the assessment of the nature and complexity of the work to be performed.
+Added: We inspected correspondence, if any, between the Company and the customer for the selected contracts as part of our evaluation of contract progress.
We have served as the Company’s auditor since 2006.
2 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.