What changed in this filing

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Item 1. Financial Statements

2025-02-04 compared with 2024-11-05 · 184 added, 119 removed, 593 unchanged (34% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 27, 2024 June 28, 2024

December 27, 2024 June 28, 2024

Current assets:

Cash and cash equivalents $ 242,565 $ 180,521

Accounts receivable, net of allowance for credit losses of $ 1,989 and $ 2,020 at September 27, 2024 and June 28, 2024, respectively

Accounts receivable, net of allowance for credit losses of $ 1,951 and $ 2,020 at December 27, 2024 and June 28, 2024, respectively

104,491 111,441

Unbilled receivables and costs in excess of billings, net of allowance for credit losses of $ 5,311 and $ 6,340 at September 27, 2024 and June 28, 2024, respectively

Unbilled receivables and costs in excess of billings, net of allowance for credit losses of $ 5,311 and $ 6,340 at December 27, 2024 and June 28, 2024, respectively

278,657 304,029

29 unchanged sentences

85,000,000 shares authorized;

58,454,728 and 58,093,528 shares issued and outstanding at September 27, 2024 and June 28, 2024, respectively

58,660,201 and 58,093,528 shares issued and outstanding at December 27, 2024 and June 28, 2024, respectively

Additional paid-in capital 1,266,926 1,242,402

7 unchanged sentences

(In thousands, except per share data)

First Quarters Ended

September 27, 2024 September 29, 2023

Second Quarters Ended Six Months Ended

December 27, 2024 December 29, 2023 December 27, 2024 December 29, 2023

Net revenues $ 223,125 $ 197,463 $ 427,556 $ 378,454

24 unchanged sentences

Foreign currency translation adjustments 603 409 283 829

Pension benefit plan, net of tax ( 54 ) ( 56 )

Total other comprehensive (loss) income, net of tax ( 6,259 ) 2,106

Deferred compensation and pension benefit plan, net of tax ( 46 ) ( 57 ) ( 93 ) ( 113 )

Total other comprehensive income (loss), net of tax 4,334 ( 5,512 ) ( 1,925 ) ( 3,406 )

Total comprehensive loss $ ( 13,245 ) $ ( 51,093 ) $ ( 37,029 ) $ ( 85,695 )

3 unchanged sentences

(In thousands)

For the First Quarter Ended September 27, 2024

For the Second Quarter Ended December 27, 2024

Common Stock Additional

4 unchanged sentences

Shares Amount

Balance at June 28, 2024 58,094 $ 581 $ 1,242,402 $ 219,799 $ 9,993 $ 1,472,775

Balance at September 27, 2024 58,455 $ 584 $ 1,253,249 $ 202,274 $ 3,734 $ 1,459,841

Issuance of common stock under employee stock incentive plans 57 1 ( 1 ) — — —

Issuance of common stock under employee stock purchase plan 60 1 1,491 — — 1,492

Issuance of common stock under defined contribution plan 88 1 3,368 — — 3,369

1 unchanged sentence

Net loss — — — ( 17,579 ) — ( 17,579 )

Other comprehensive loss — — — — ( 6,259 ) ( 6,259 )

Other comprehensive income — — — — 4,334 4,334

Balance at December 27, 2024 58,660 $ 587 $ 1,266,926 $ 184,695 $ 8,068 $ 1,460,276

For the Second Quarter Ended December 29, 2023

Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Shareholders’

Shares Amount

Balance at September 29, 2023 57,274 $ 573 $ 1,205,573 $ 320,731 $ 13,935 $ 1,540,812

For the First Quarter Ended September 29, 2023

Issuance of common stock under employee stock incentive plans 82 1 ( 1 ) — — —

Issuance of common stock under employee stock purchase plan 107 1 3,162 — — 3,163

Issuance of common stock under defined contribution plan 101 1 3,578 — — 3,579

Retirement of common stock — — ( 15 ) — — ( 15 )

Stock-based compensation — — 8,046 — — 8,046

Net loss — — — ( 45,581 ) — ( 45,581 )

Other comprehensive loss — — — — ( 5,512 ) ( 5,512 )

Balance at December 29, 2023 57,564 $ 576 $ 1,220,343 $ 275,150 $ 8,423 $ 1,504,492

For the Six Months Ended December 27, 2024

Common Stock Additional

6 unchanged sentences

Issuance of common stock under employee stock incentive plans 292 3 ( 3 ) — — —

Issuance of common stock under employee stock purchase plan 60 1 1,491 — — 1,492

Issuance of common stock under defined contribution plan 214 2 7,879 — — 7,881

1 unchanged sentence

Net loss — — — ( 35,104 ) — ( 35,104 )

Other comprehensive income — — — — 2,106 2,106

Balance at September 29, 2023 57,274 $ 573 $ 1,205,573 $ 320,731 $ 13,935 $ 1,540,812

Other comprehensive loss — — — — ( 1,925 ) ( 1,925 )

Balance at December 27, 2024 58,660 $ 587 $ 1,266,926 $ 184,695 $ 8,068 $ 1,460,276

For the Six Months Ended December 29, 2023

Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive Income Total

Shareholders’

Shares Amount

Balance at June 30, 2023 56,962 $ 570 $ 1,196,847 $ 357,439 $ 11,829 $ 1,566,685

Issuance of common stock under employee stock incentive plans 269 3 ( 3 ) — — —

Issuance of common stock under employee stock purchase plan 107 1 3,162 — — 3,163

Issuance of common stock under defined contribution plan 226 2 8,215 — — 8,217

Retirement of common stock — — ( 15 ) — — ( 15 )

Stock-based compensation — — 12,137 — — 12,137

Net loss — — — ( 82,289 ) — ( 82,289 )

Other comprehensive loss — — — — ( 3,406 ) ( 3,406 )

Balance at December 29, 2023 57,564 $ 576 $ 1,220,343 $ 275,150 $ 8,423 $ 1,504,492

The accompanying notes are an integral part of the consolidated financial statements.

2 unchanged sentences

(In thousands)

First Quarters Ended

September 27, 2024 September 29, 2023

Six Months Ended

December 27, 2024 December 29, 2023

Cash flows from operating activities:

Net loss $ ( 35,104 ) $ ( 82,289 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization expense 42,142 44,885

15 unchanged sentences

Other non-current liabilities ( 4,961 ) 1,078

Net cash used in operating activities ( 14,660 ) ( 39,068 )

Net cash provided by operating activities 70,802 6,426

Cash flows from investing activities:

Purchases of property and equipment ( 9,791 ) ( 16,005 )

Other investing activities 1,900 —

Net cash used in investing activities ( 7,891 ) ( 16,005 )

Cash flows from financing activities:

Proceeds from employee stock plans 1,492 3,163

Borrowings under credit facilities — 105,000

Purchase and retirement of common stock — ( 15 )

Payments of deferred financing and offering costs ( 2,249 ) ( 1,931 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 110 ) 445

Net (decrease) increase in cash and cash equivalents ( 22,398 ) 17,806

Net increase in cash and cash equivalents 62,044 97,083

Cash and cash equivalents at beginning of period 180,521 71,563

Cash and cash equivalents at end of period $ 242,565 $ 168,646

Cash paid (received) during the period for:

Cash paid (refunded) during the period for:

Interest $ 19,237 $ 16,113

3 unchanged sentences

Purchases of property and equipment incurred but not yet paid $ 2,644 $ 6,220

Non-cash investing activity:

Inventory transfer to property and equipment, net $ 12,675 $ —

The accompanying notes are an integral part of the consolidated financial statements.

17 unchanged sentences

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended June 28, 2024, which are contained in the Company’s Annual Report on Form 10-K filed with the SEC on August 13, 2024.

The results for the first quarter ended September 27, 2024 are not necessarily indicative of the results to be expected for the full fiscal year.

The results for the second quarter and six months ended December 27, 2024 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 first quarter of fiscal 2025 are to the quarter ended September 27, 2024.

There were 13 weeks during the first quarters ended September 27, 2024 and September 29, 2023, respectively.

All references to the second quarter of fiscal 2025 are to the quarter ended December 27, 2024.

There were 13 weeks during the second quarters ended December 27, 2024 and December 29, 2023, respectively.

There were 26 weeks during the six months ended December 27, 2024 and December 29, 2023, respectively.

U SE OF E STIMATES

12 unchanged sentences

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 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.

2 unchanged sentences

On September 27, 2022, the Company executed an uncommitted receivables purchase agreement (“RPA”), 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 the party has no obligation to purchase any receivables from the Company.

The RPA was an uncommitted arrangement such that the Company was not obligated to sell any receivables and the party had no obligation to purchase any receivables from the Company.

Pursuant to the RPA, the party may purchase certain of the Company's customer receivables at a discounted rate, subject to a limit that as of any date, the total amount of purchased receivables held by the party, 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.

The RPA had an indefinite term, with the agreement remaining in effect until termination by either party.

Factoring under the RPA was treated as a true sale of accounts receivable by the Company.

The Company had 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 .

8 unchanged sentences

Factor ing fees are included as selling, general and administrative expenses in the Company's Consolidated Statements of Operations and Comprehensive Loss.

The Company had $ 43,659 and $ 362 of factored accounts receivables and factoring fees, respectively, for the first quarter ended September 27, 2024.

At September 27, 2024, the Company had $ 18,835 of factored receivables included in Accounts receivable, net allowance for credit losses on Consolidated Balance Sheet.

The Company had $ 28,826 and $ 308 of factored accounts receivables and factoring fees, respectively, for the first quarter ended September 29, 2023.

The Company had $ 58,120 factored accounts receivables as of December 27, 2024 and incurred factoring fees of approximately $ 459 and $ 821 for the second quarter and six months ended December 27, 2024.

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 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.

2 unchanged sentences

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 September 27, 2024.

All derivatives for the Company qualified for hedge accounting as of December 27, 2024.

R EVENUE R ECOGNITION

9 unchanged sentences

Revenue recognized at a point in time generally relates to contracts that include a combination of components, modules and sub-assemblies, integrated solutions 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, to taled 45 % and 42 % of revenues for the first quarters ended September 27, 2024 and September 29, 2023, respectively.

Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, to taled 55 % and 50 % of

revenues for the second quarter and six months ended December 27, 2024, respectively.

Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, to taled 47 % and 45 % of revenues for the second quarters and six months ended December 29, 2023, respectively.

The Company also engages in contracts for development, production and service activities and recognizes revenue for performance obligations over time.

2 unchanged sentences

The Company’s cost reimbursable contracts typically include cost-plus fixed fee and time and material contracts.

Total revenue recognized over time was 45 % and 50 % of total revenues for the second quarter and six months ended December 27, 2024, respectively.

Total revenue recognized over time was 53 % and 55 % of total revenues for the second quarter and six months ended December 29, 2023 , respectively.

Accounting for contracts recognized over time requires significant judgment relative to estimating total contract revenues and costs.

4 unchanged sentences

The net impact of changes in estimates had the following impact on the Company’s operating results:

First Quarters Ended

(In thousands, except per share data) September 27, 2024 September 29, 2023

Second Quarters Ended Six Months Ended

(In thousands, except per share data) December 27, 2024 December 29, 2023 December 27, 2024 December 29, 2023

Loss from operations $ ( 4,408 ) $ ( 30,651 ) $ ( 12,701 ) $ ( 47,914 )

Net loss (1) $ ( 6,054 ) $ ( 12,018 )

$ ( 3,218 ) $ ( 22,375 ) $ ( 9,272 ) $ ( 34,977 )

Diluted net loss per share $ ( 0.05 ) $ ( 0.39 ) $ ( 0.16 ) $ ( 0.61 )

1 unchanged sentence

(1) Federal and state statutory rate of 27%

Total revenue recognized over time was 55 % and 58 % of total revenues for the first quarters ended September 27, 2024 and September 29, 2023, 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.

21 unchanged sentences

Contract balances are reported in a net position on a contract-by-contract basis.

The contract asset balances were $ 298,270 and $ 304,029 as of September 27, 2024 and June 28, 2024, res pectively.

The contract asset balance decreased due to $ 117,865 of billings, offset by revenue recognized under over time contracts of $ 112,106 during the first quarter ended September 27, 2024.

The contract liability balances were $ 96,859 and $ 74,367 as of September 27, 2024 and June 28, 2024, respectively.

The contract asset balances were $ 278,657 and $ 304,029 as of December 27, 2024 and June 28, 2024, res pectively.

The contract asset balance decreased due to $ 238,263 of billings, offset by revenue recognized under over time contracts of $ 212,891 during the six months ended December 27, 2024.

The contract liability balances were $ 136,308 and $ 74,367 as of December 27, 2024 and June 28, 2024, respectively.

The contract liability increased due to a higher volume of milestone billing events as well as timing of revenue recognized across multiple programs.

Revenue recognized for the first quarter ended September 27, 2024 that was included in the contract liability balance at June 28, 2024 was $ 26,411 .

Revenue recognized for the first quarter ended September 29, 2023 that was included in the contract liability balance at June 30, 2023 was $ 21,015 .

Revenue recognized for the second quarter and six months ended December 27, 2024 that was included in the contract liability balance at June 28, 2024 was $ 15,336 and $ 41,747 , r espectively.

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.

R EMAINING P ERFORMANCE O BLIGATIONS

1 unchanged sentence

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 September 27, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 765,775 .

As of December 27, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 770,011 .

The Company expects to recognize approximately 52 % of its remaining performance obligations as revenue in the next 12 months and the balance thereafter.

12 unchanged sentences

Intangible assets result from the Company’s various business acquisitions and certain licensed technologies, and consist of identifiable intangible assets, including completed technology, licensing agreements, patents, customer relationships, trademarks, backlog and non-compete agreements.

Intangible assets are reported at cost, net of accumulated amortization and

are either amortized on a straight-line basis over their estimated useful lives of up to 12.5 years or over the period the economic benefits of the intangible asset are consumed.

Intangible assets are reported at cost, net of accumulated amortization and are either amortized on a straight-line basis over their estimated useful lives of up to 12.5 years or over the period the economic benefits of the intangible asset are consumed.

P RODUCT W ARRANTY A CCRUAL

7 unchanged sentences

Settlements made during the period ( 2,115 )

Balance at September 27, 2024 $ 4,820

Balance at December 27, 2024 $ 4,118

W EIGHTED -A VERAGE S HARES

Weighted-average shares were calculated as follows:

First Quarters Ended

September 27, 2024 September 29, 2023

Second Quarters Ended Six Months Ended

December 27, 2024 December 29, 2023 December 27, 2024 December 29, 2023

Basic weighted-average shares outstanding 58,561 57,424 58,454 57,314

1 unchanged sentence

Diluted weighted-average shares outstanding 58,561 57,424 58,454 57,314

Equity instruments to purchase 2,694 and 1,912 shares of common stock were not included in the calculation of diluted net loss per share for the first quarters ended September 27, 2024 and September 29, 2023, respectively, because the equity instruments were anti-dilutive.

Equity instruments to purchase 2,993 and 2,840 shares of common stock were not included in the calculation of diluted net loss per share for the second quarter and six months ended December 27, 2024, respectively, because the equity instruments were anti-dilutive.

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 quarter and six months ended December 29, 2023, respectively, because the equity instruments were anti-dilutive.

R ECENTLY I SSUED A CCOUNTING P RONOUNCEMENTS

12 unchanged sentences

The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures , an amendment of the FASB Accounting Standard Codification.

The amendments in this ASU address improvements to disclosures surrounding operating expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion, which are all normally included in common expense captions on the face of the income statement.

Any expenses remaining in relevant expense captions that are not disaggregated should be accompanied with a qualitative disclosure as to the nature.

This ASU is effective for fiscal years beginning after December 15,

2026, and interim reporting periods beginning after December 15, 2027, 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

1 unchanged sentence

Fair Value of Financial Instruments

The following table summarizes the Companies' financial instruments measured at fair value on a recurring basis as of September 27, 2024:

The following table summarizes the Companies' financial instruments measured at fair value on a recurring basis as of December 27, 2024:

Fair Value Measurements

September 27, 2024 Level 1 Level 2 Level 3

December 27, 2024 Level 1 Level 2 Level 3

Interest rate swap $ 3,559 $ — $ 3,559 $ —

4 unchanged sentences

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 September 27, 2024, the fair value of the September 2023 Swap was a liability of $ 9,628 and is included within Other non-current liabilities in the Company's Consolidated Balance Sheets.

As of December 27, 2024, the fair value of the September 2023 Swap was a liability of $ 3,559 a nd is included within Other non-current liabilities in the Company's Consolidated Balance Sheets.

As of June 28, 2024, the fair value of the September 2023 Swap was a liability of $ 2,436 and was included within Other non-current liabilities in the Company's Consolidated Balance Sheets.

11 unchanged sentences

The excess and obsolete inventory evaluation is based upon assumptions about future demand, historical usage, product mix and possible alternative uses.

During the six months ended December 27, 2024, the Company reclassified $ 12,675 of work in process inventory to Property and equipment, net to support broader customer outreach for its technologies and to meet anticipated production demands for its solutions through additional testing capabilities.

Inventory was comprised of the following:

September 27, 2024 June 28, 2024

December 27, 2024 June 28, 2024

Raw materials $ 214,529 $ 200,501

16 unchanged sentences

The Company also assesses potential triggering events during interim reporting periods.

During the first quarter ended September 27, 2024, the Company assessed events and circumstances to consider its reporting units for a potential triggering event, including:

During the second quarter ended December 27, 2024, 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.

1 unchanged sentence

Restructuring

During the first quarter ended September 27, 2024, the Company incurred $ 2,260 of severance costs.

During the six months ended December 27, 2024, the Company incurred $ 2,300 of severance costs.

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.

6 unchanged sentences

Cash paid ( 9,185 )

Balance at September 27, 2024 $ 4,833

The Company recorded an income tax benefit of $ 5,594 and $ 13,027 on a loss before income taxes of $ 23,119 and $ 49,735 for the first quarters ended September 27, 2024 and September 29, 2023, respectively.

During the first quarters ended September 27, 2024 and September 29, 2023, the Company recognized a tax provision of $ 219 and $ 1,215 related to stock compensation shortfalls, respectively.

The effective tax rate for the first quarter ended September 27, 2024 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation and state taxes.

The effective tax rate for the first quarter ended September 29, 2023 differed from the federal statutory rate primarily due to federal and state research and development credits and state taxes.

Balance at December 27, 2024 $ 1,873

The Company recorded an income tax benefit of $ 6,725 and $ 18,141 on a loss before income taxes of $ 24,304 and $ 63,722 for the second quarters ended December 27, 2024 and December 29, 2023, respectively.

The Company recorded an income tax benefit of $ 12,319 and $ 31,168 on a loss before income taxes of $ 47,423 and $ 113,457 for the six months ended December 27, 2024, and December 29, 2023, respectively.

During the second quarter and six months ended December 27, 2024, the Company recognized a tax provision of $ 138 and $ 357 related to stock compensation shortfalls, respectively, and 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.

The effective tax rate for the second quarter and six months ended December 27, 2024 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, and state taxes.

The effective tax rate for the second quarter and six months ended December 29, 2023 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 Company continues to maintain a valuation allowance on the majority of its foreign net operating loss carryforwards and state research and developmental tax credit carryforwards.

2 unchanged sentences

The Company maintains a 5 -year revolving credit facility (the "Revolver") with a maturity extended to February 28, 2027.

As of September 27, 2024, the Company's outstanding balance of unamortized deferred financing costs was $ 5,108 , 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 August 2024 amendment to the Revolver.

As of December 27, 2024, the Company's outstanding balance of unamortized deferred financing costs was $ 4,580 , 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 August 2024 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.

8 unchanged sentences

6 to the Revolver, the Company incurred $ 2,249 of new deferred financing costs that will be amortized over the remaining term of the Revolver.

As part of the amendment, the Company wrote off $ 714 of previously deferred financing costs associated with the line of credit facility prior to the amendment.

As part of the amendment, the Company wrote off $ 714 of previously deferred financing costs associated with the

line of credit facility prior to the amendment.

This write-off is included in Other expense, net in the Consolidated Statements of Operations and Comprehensive Loss.

Refer to exhibit 10.7.6 on Form 10-K filed by the Company with the SEC on August 13, 2024.

During the first quarter ended September 27, 2024, the Company made no additional borrowings.

As of September 27, 2024, the Company was in compliance with all covenants and conditions under the Revolver and there were outstanding borrowings of $ 591,500 against the Revolver, resulting in interest expense of $ 8,906 for the first quarter ended September 27, 2024.

The borrowing capacity as defined under the Revolver as of September 27, 2024 is approximately $ 750,000 less outstanding borrowings of $ 591,500 .

There were outstanding letters of credit of $ 753 as of September 27, 2024.

During the second quarter and six months ended December 27, 2024, the Company made no borrowings or repayments.

As of December 27, 2024, the Company was in compliance with all covenants and conditions under the Revolver and there were outstanding borrowings of $ 591,500 against the Revolver, resulting in interest expense of $ 8,430 and $ 17,336 for the second quarter and six months ended December 27, 2024.

The borrowing capacity as defined under the Revolver as of December 27, 2024 is approximately $ 750,000 less outstanding borrowings of $ 591,500 .

There were outstanding letters of credit of $ 987 as of December 27, 2024.

Employee Benefit Plan

5 unchanged sentences

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 September 27, 2024 was a net liability of $ 5,383 , which is recorded in Other non-current liabilities on the Consolidated Balance Sheet.

The Company recognized net periodic benefit costs of $ 232 and $ 207 associated with the Plan and a net loss of $ 54 and $ 56 in AOCI during the first quarters ended September 27, 2024 and September 29, 2023, respectively.

The Plan's funded status at December 27, 2024 was a net liability of $ 5,057 , which is recorded in Other non-current liabilities on the Consolidated Balance Sheet.

The Company recognized net periodic benefit costs of $ 231 and $ 208 associated with the Plan and a net loss of $ 51 and $ 57 in AOCI during the second quarters ended December 27, 2024 and December 29, 2023, respectively.

The Company recognized net periodic benefit costs of $ 463 and $ 415 associated with the Plan and a net loss of $ 105 and $ 113 in AOCI during the six months ended December 27, 2024 and December 29, 2023, respectively.

The Company's total expected employer contributions to the Plan during fiscal 2025 are $ 953 .

2 unchanged sentences

The Company may also make optional contributions to the plan for any plan year at its discretion.

The Company had $ 2,981 and $ 2,901 of capitalized stock-based 401(k) matching compensation expense on the Consolidated Balance Sheets at September 27, 2024 and June 28, 2024, respectively.

The Company had $ 2,922 and $ 2,901 of capitalized stock-based 401(k) matching compensation expense on the Consolidated Balance Sheets at December 27, 2024 and June 28, 2024, respectively.

Stock-based 401(k) matching compensation cost is measured based on the value of the matching amount and is recognized as expense as incurred.

During the first quarter ended September 27, 2024, the Company recognized share-based matching contributions related to the 401(k) plan of $ 4,432 , as compared to $ 4,841 during the first quarter ended September 29, 2023.

During the second quarter and six months ended December 27, 2024, the Company recognized share-based matching contributions related to the 401(k) plan of $ 3,428 and $ 7,860 , as compared to $ 2,811 and $ 7,652 during the second quarter and six months ended December 29, 2023.

Deferred Compensation Plan

5 unchanged sentences

All deferrals or employer contributions under the plan, and all earnings thereon, are fully vested as and when made or credited to plan participants.

As of September 27, 2024, the Company held assets under the rabbi trust of $ 183 , and was subject to liabilities for amounts payable under the plan to participants (including accrued employer matching contributions not yet credited to plan participants) of $ 183 .

As of December 27, 2024, the Company held assets under the rabbi trust of $ 210 , and was subject to liabilities for amounts payable under the plan to participants (including accrued employer matching contributions not yet credited to plan participants) of $ 210 .

Assets related to this plan are included in Other assets, and liabilities related to this plan are included in Other long-term liabilities in the Consolidated Balance Sheets.

During the first quarter ended September 27, 2024, the Company recognized an immaterial value of compensation expense as a result of changes in the value of notional investments selected by plan participants for the investment of their plan account balances, with the same amount being recorded as other income attributable to changes in the market value of the assets held by the Rabbi trust.

The nonqualified deferred compensation plan was not in place as of the first quarter ended September 29, 2023.

During the second quarter ended December 27, 2024, the Company recognized an immaterial value of compensation expense as a result of changes in the value of notional investments selected by plan participants for the investment of their plan account balances, with the same amount being recorded as other income attributable to changes in the market value of the assets held by the Rabbi trust.

The nonqualified deferred compensation plan was not in place as of the second quarter ended December 29, 2023.

Stock-Based Compensation

S TOCK I NCENTIVE P LANS

At September 27, 2024, 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.

At December 27, 2024, 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.

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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 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 3,091 available shares for future grant under the 2018 Plan at September 27, 2024.

There were 3,076 available shares for future grant under the 2018 Plan at December 27, 2024.

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.

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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.

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

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The 1997 ESPP permitted employees to purchase common stock through payroll deductions, which may not have exceeded 10 % of an employee’s compensation as defined in the 1997 ESPP.

There were no shares issued under the 1997 ESPP during the first quarter ended September 29, 2023.

There were no shares and 107 shares issued under the 1997 ESPP during the six months ended December 27, 2024 and December 29, 2023, respectively.

There were an immaterial amount of shares related to the 1997 Plan issued and returned to the reserve during the six months ended December 27, 2024.

The Company adopted a new employee stock purchase plan (the “2024 ESPP”) in April 2024.

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The 2024 ESPP permits employees to purchase common stock through payroll deductions, which may not exceed 10 % of an employee’s compensation as defined in the 2024 ESPP.

As of September 27, 2024, no shares have been issued under the 2024 ESPP.

There were 65 shares and no shares issued under the 2024 ESPP during the six months ended December 27, 2024 and December 29, 2023, respectively.

Shares available for future purchase under the 2024 ESPP totaled 935 at December 27, 2024.

S TOCK O PTION A ND A WARD A CTIVITY

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(Years) Aggregate

Intrinsic Value as of September 27, 2024

Intrinsic Value as of December 27, 2024

Outstanding at June 28, 2024 934 $ 12.71 $ 45.00 —

Exercised — —

Outstanding at September 27, 2024 934 $ 12.71 $ 45.00 3.45 —

Exercisable at September 27, 2024 — $ — $ — — —

There were no options vested or exercised during the first quarter ended September 27, 2024.

Outstanding at December 27, 2024 934 12.71 45.00 3.21 years —

Exercisable at December 27, 2024 — $ — $ — — —

There were no options vested or exercised during the second quarter ended December 27, 2024.

Non-vested stock options are subject to the risk of forfeiture until the fulfillment of specified conditions.

As of September 27, 2024, there was $ 8,360 of total unrecognized compensation cost related to non-vested options granted that is expected to be recognized over a weighted-average period of 2.45 years from September 27, 2024.

There were no stock options granted during fiscal year ended June 28, 2024.

As of December 27, 2024, there was $ 7,531 of total unrecognized compensation cost related to non-vested options granted that is expected to be recognized over a weighted-average period of 2.21 years from December 27, 2024.

The following table summarizes the status of the Company’s non-vested restricted stock awards and deferred stock awards since June 28, 2024:

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Forfeited ( 97 ) 43.65

Outstanding at September 27, 2024 2,123 $ 40.31

Outstanding at December 27, 2024 2,010 $ 39.68

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 $ 715 and $ 456 of capitalized stock-based compensation expense on the Consolidated Balance Sheets for the periods ended September 27, 2024 and June 28, 2024, respectively.

The Company had $ 1,559 and $ 456 of capitalized stock-based compensation expense on the Consolidated Balance Sheets for the periods ended December 27, 2024 and June 28, 2024, 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:

First Quarters Ended

September 27, 2024 September 29, 2023

Second Quarters Ended Six Months Ended

December 27, 2024 December 29, 2023 December 27, 2024 December 29, 2023

Cost of revenues $ ( 167 ) $ 4 $ ( 54 ) $ 820

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Income taxes (1)

( 2,150 ) ( 1,994 ) ( 3,795 ) ( 3,106 )

Stock-based compensation expense, net of income taxes $ 5,812 $ 5,392 $ 10,259 $ 8,397

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Europe Asia Pacific Eliminations Total

FIRST QUARTER ENDED SEPTEMBER 27, 2024

SECOND QUARTER ENDED DECEMBER 27, 2024

Net revenues to unaffiliated customers $ 205,054 $ 18,071 $ — $ — $ 223,125

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Net revenues $ 207,772 $ 20,600 $ — $ ( 5,247 ) $ 223,125

FIRST QUARTER ENDED SEPTEMBER 29, 2023

SECOND QUARTER ENDED DECEMBER 29, 2023

Net revenues to unaffiliated customers $ 183,162 $ 14,295 $ 6 $ — $ 197,463

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Net revenues $ 184,448 $ 14,499 $ 6 $ ( 1,490 ) $ 197,463

SIX MONTHS ENDED DECEMBER 27, 2024

Net revenues to unaffiliated customers $ 397,714 $ 29,842 $ — $ — $ 427,556

Inter-geographic revenues 4,773 5,348 — ( 10,121 ) —

Net revenues $ 402,487 $ 35,190 $ — $ ( 10,121 ) $ 427,556

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

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.

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The following table presents the Company's net revenue by end user for the periods presented:

First Quarters Ended

September 27, 2024 September 29, 2023

Second Quarters Ended Six Months Ended

December 27, 2024 December 29, 2023 December 27, 2024 December 29, 2023

$ 176,291 $ 181,822 $ 337,485 $ 328,289

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The following table presents the Company's net revenue by end application for the periods presented:

First Quarters Ended

September 27, 2024 September 29, 2023

Second Quarters Ended Six Months Ended

December 27, 2024 December 29, 2023 December 27, 2024 December 29, 2023

$ 47,110 $ 11,063 $ 80,859 $ 37,766

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The following table presents the Company's net revenue by product grouping for the periods presented:

First Quarters Ended

September 27, 2024 September 29, 2023

Second Quarters Ended Six Months Ended

December 27, 2024 December 29, 2023 December 27, 2024 December 29, 2023

Components (1)

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The following table presents the Company's net revenue by platform for the periods presented:

First Quarters Ended

September 27, 2024 September 29, 2023

Second Quarters Ended Six Months Ended

December 27, 2024 December 29, 2023 December 27, 2024 December 29, 2023

$ 96,214 $ 118,078 $ 186,704 $ 222,794

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11,827 4,540 27,186 10,603

48,060 38,007 91,675 61,373

Total Net Revenues $ 223,125 $ 197,463 $ 427,556 $ 378,454

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The geographic distribution of the Company’s identifiable long-lived assets is summarized as follows:

September 27, 2024 $ 103,176 $ 1,883 $ 105,059

December 27, 2024 $ 109,025 $ 2,434 $ 111,459

June 28, 2024 $ 107,655 $ 2,698 $ 110,353

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Customers comprising 10% or more of the Company’s revenues for the periods shown are as follows:

First Quarters Ended

September 27, 2024 September 29, 2023

Second Quarters Ended Six Months Ended

December 27, 2024 December 29, 2023 December 27, 2024 December 29, 2023

RTX Corporation 15 % * 12 % 10 %

Navy 11 % 10 % 10 % *

L3Harris * * 10 % 10 %

Lockheed Martin Corporation * * 10 % *

RTX Corporation * 11 %

26 % 10 % 42 % 20 %

* 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 first quarters ended September 27, 2024 and September 29, 2023.

There were no programs comprising 10% or more of the Company's revenues for the second quarters and six months ended December 27, 2024 and December 29, 2023.

Commitments and Contingencies

15 unchanged sentences

The Company has not been contacted by MassDEP since the Company's response was provided in November 2021.

It is too early to determine what responsibility, if any, Mercury may have for these environmental matters.

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.

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On July 24, 2024, the Court dismissed the case without prejudice and permitted the plaintiffs 30 days to file an amended complaint.

The plaintiffs filed for leave to amend their complaint on August 23, 2024, Mercury filed its opposition motion on September 6th, the plaintiffs filed their response brief on September 17, 2024, and Mercury filed its reply on September 30, 2024.

On October 17, 2024, Mercury received a shareholder derivative demand alleging the same claims as those covered in the federal securities class action.

The plaintiffs filed for leave to amend their complaint on August 23, 2024, the Company filed its opposition motion on September 6th, the plaintiffs filed their response brief on September 17, 2024, and the Company filed its reply on September 30, 2024.

On October 17, 2024, the Company received a shareholder derivative demand alleging the same claims as those covered in the federal securities class action.

On November 14, 2024, the Company and the shareholder entered into a tolling agreement on the derivative demand.

Subject to the terms of the Company's by-laws and applicable Massachusetts law, Mr.

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Ballhaus, the Company's current Chief Executive Officer, and Mr.

Farnsworth, the Company's current Chief Financial officer, are indemnified by the

Company for this matter.

Farnsworth, the Company's current Chief Financial officer, are

indemnified by the Company for this matter.

The Company believes the claims in the complaints are without merit and intends to defend itself vigorously.

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On October 1, 2024, a second former employee at our Torrance location filed a PAGA notice to act in a representative capacity on allegations of a range of violations of California wage and hour regulations.

The Company believes the claims in the complaints 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.

On December 21, 2024, the Company, reached an agreement in principle to settle these wage and hour class action claims for $ 450 , which settlement is subject to review and approval by the court.

I NDEMNIFICATION O BLIGATIONS

3 unchanged sentences

P URCHASE C OMMITMENTS

As of September 27, 2024, the Company has entered into non-cancelable purchase commitments for certain inventory components and services used in its normal operations.

As of December 27, 2024, 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 $ 124,422 .

15 unchanged sentences

The September 2023 Swap matures on February 28, 2027, coterminous with the maturity of the Revolver.

As of September 27, 2024, the fair value of the September 2023 Swap was a liability of $ 9,628 and is included within Other non-current liabilities in the Company's Consolidated Balance Sheets.

During the first quarter ended September 27, 2024, the Company amortized a total of $ 881 of the gain associated with the interest swaps terminated on September 29, 2022 and September 28, 2023, which is included within Other comprehensive loss.

As of December 27, 2024, the fair value of the September 2023 Swap was a liability of $ 3,559 a nd is included within Other non-current liabilities in the Company's Consolidated Balance Sheets.

During the second quarter and six months ended December 27, 2024, the Company amortized a total of $ 881 and $ 1,762 , 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 September 27, 2024, nonperformance is not perceived to be a material risk.

Based on the credit ratings of the Company’s counterparty as of December 27, 2024, 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.

3 unchanged sentences

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 and noted no items requiring adjustment of the financial statements or additional disclosures.

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 29, 2025, the Company executed a workforce reduction that will eliminate approximately 145 positions, resulting in expected restructuring charges of approximately $ 5,000 .

All of the restructuring and other charges will be 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.

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.

What changed 10-Q

Item 1. Financial Statements