10 unchanged sentences
We utilize interest rate derivatives to mitigate interest rate exposure with respect to our financing arrangements.
−Removed: There were no outstanding borrowings against the Revolver or swaps outstanding at July 3, 2020.
+Added: There were $200.0 million of outstanding borrowings against the Revolver at July 2, 2021.
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: 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.
+Added: As of July 2, 2021 and July 3, 2020, we had $113.8 million and $226.8 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.
1 unchanged sentence
As of July 2, 2021, five customers accounted for 60% of our receivables, unbilled receivables and costs in excess of billings.
−Removed: As of June 30, 2019, five customers accounted for 56% 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.
F OREIGN C URRENCY R ISK
14 unchanged sentences
We have audited the accompanying consolidated balance sheets of Mercury Systems, Inc.
−Removed: 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: and subsidiaries (the Company) as of July 2, 2021 and July 3, 2020, 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 2, 2021, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).
We also have audited the Company’s internal control over financial reporting as of July 2, 2021, 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 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.
+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 2, 2021 and July 3, 2020, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended July 2, 2021, in conformity with U.S.
generally accepted accounting principles.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 2, 2021 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 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.
−Removed: Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of APC.
+Added: The Company acquired Physical Optics Corporation (“POC”), Pentek Technologies, LLC and Pentek Systems, Inc.
+Added: (collectively, “Pentek”) during fiscal year 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of July 2, 2021, POC’s and Pentek’s internal control over financial reporting associated with 22 percent of total consolidated assets (of which 16 percent represented goodwill and intangible assets included within the scope of the assessment) and 9 percent of total consolidated revenues included in the consolidated financial statements of the Company as of and for the fiscal year ended July 2, 2021.
+Added: Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of POC and Pentek.
Basis for Opinions
14 unchanged sentences
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
+Added: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
1 unchanged sentence
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: Critical Audit Matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:
−Removed: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment.
−Removed: 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.
+Added: Critical Audit Matters
+Added: The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:
+Added: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Estimate of total contract costs to be incurred for fixed price contract revenue recognized over time
4 unchanged sentences
The following are the primary procedures we performed to address this critical audit matter.
−Removed: 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.
−Removed: 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.
−Removed: 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 evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to develop estimates of total contract costs to be incurred for partially completed performance obligations.
+Added: This included controls related to 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 certain customer contracts to evaluate the Company’s assumptions underlying the estimate of total contract costs to be incurred.
We inspected the selected contracts to evaluate the Company’s identification of performance obligations and the determined method for measuring contract progress.
2 unchanged sentences
We inspected correspondence, if any, between the Company and the customer for the selected contracts as part of our evaluation of contract progress.
+Added: Evaluation of the fair value of customer relationship intangible assets acquired in the Physical Optics Corporation business combination
+Added: As discussed in Note C to the consolidated financial statements, on December 30, 2020, the Company acquired Physical Optics Corporation.
+Added: As a result of the transaction, the Company acquired customer relationship intangible assets.
+Added: The acquisition-date preliminary fair value for the customer relationship intangible assets were $83.0 million.
+Added: We identified the evaluation of the fair value of a certain customer relationship intangible asset acquired in the Physical Optics Corporation transaction as a critical audit matter.
+Added: A high degree of subjectivity was required in evaluating certain inputs in the discounted cash flow model used to determine the fair value of such asset.
+Added: The key assumptions used within the discounted cash flow model included expected future revenue growth and the discount rate.
+Added: Changes in these assumptions could have a significant impact on the fair value of the customer relationship intangible asset.
+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 related to the Company’s acquisition-date valuation process, including controls over the development of the expected future revenue growth and discount rate used in the discounted cash flow model to value the customer relationship intangible assets.
+Added: We evaluated the expected future revenue growth used by the Company by comparing the assumptions used to the historical performance of the acquired Company, as well as considering defense industry data.
+Added: We also involved valuation professionals with specialized skills and knowledge who assisted in:
+Added: • evaluating the Company’s discount rate by comparing the rate against a discount rate range that was independently developed using publicly available market data for comparable entities
+Added: • developing a fair value estimate of the customer relationship intangible assets using the Company’s cash flow projections and independently developed range of discount rates and comparing it to the Company’s estimate.
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.