MERCURY SYSTEMS INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MERCURY SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) June 27, 2025 June 28, 2024 Assets Current assets: Cash and cash equivalents $ 309,099 $ 180,521 Accounts receivable, net of allowance for credit losses of $ 1,767 and $ 2,020 at June 27, 2025 and June 28, 2024, respectively 109,588 111,441 Unbilled receivables and costs in excess of billings, net of allowance for credit losses of $ 5,311 and $ 6,340 at June 27, 2025 and June 28, 2024, respectively 278,475 304,029 Inventory 332,920 335,300 Prepaid income taxes 457 — Prepaid expenses and other current assets 27,639 22,493 Total current assets 1,058,178 953,784 Property and equipment, net 101,440 110,353 Goodwill 938,093 938,093 Intangible assets, net 210,611 250,512 Operating lease right-of-use assets, net 52,264 60,860 Deferred tax assets 69,016 58,612 Other non-current assets 5,162 6,691 Total assets $ 2,434,764 $ 2,378,905 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 79,116 $ 81,068 Accrued expenses 43,143 42,926 Accrued compensation 51,321 36,398 Income taxes payable — 109 Deferred revenues and customer advances 126,797 73,915 Total current liabilities 300,377 234,416 Income taxes payable 4,046 7,713 Long-term debt 591,500 591,500 Operating lease liabilities 52,738 62,584 Other non-current liabilities 12,642 9,917 Total liabilities 961,303 906,130 Commitments and contingencies (Note K) Shareholders’ equity: Preferred stock, $ 0.01 par value; 1,000,000 shares authorized; no shares issued or outstanding — — Common stock, $ 0.01 par value; 85,000,000 shares authorized; 59,003,174 and 58,093,528 shares issued and outstanding at June 27, 2025 and June 28, 2024, respectively 590 581 Additional paid-in capital 1,287,478 1,242,402 Retained earnings 181,895 219,799 Accumulated other comprehensive income 3,498 9,993 Total shareholders’ equity 1,473,461 1,472,775 Total liabilities and shareholders’ equity $ 2,434,764 $ 2,378,905 The accompanying notes are an integral part of the consolidated financial statements. 45 Table of Contents MERCURY SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except per share data) For the Fiscal Years Ended June 27, 2025 June 28, 2024 June 30, 2023 Net revenues $ 912,020 $ 835,275 $ 973,882 Cost of revenues 657,526 639,374 657,154 Gross margin 254,494 195,901 316,728 Operating expenses: Selling, general and administrative 154,412 166,786 160,637 Research and development 67,647 101,328 108,799 Amortization of intangible assets 42,849 47,661 53,552 Restructuring and other charges 7,216 26,170 6,981 Acquisition costs and other related expenses 1,997 1,710 8,444 Total operating expenses 274,121 343,655 338,413 Loss from operations ( 19,627 ) ( 147,754 ) ( 21,685 ) Interest income 3,607 1,199 1,053 Interest expense ( 33,430 ) ( 35,015 ) ( 25,159 ) Other expense, net ( 974 ) ( 7,705 ) ( 2,751 ) Loss before income taxes ( 50,424 ) ( 189,275 ) ( 48,542 ) Income tax benefit ( 12,520 ) ( 51,635 ) ( 20,207 ) Net loss $ ( 37,904 ) $ ( 137,640 ) $ ( 28,335 ) Basic net loss per share $ ( 0.65 ) $ ( 2.38 ) $ ( 0.50 ) Diluted net loss per share $ ( 0.65 ) $ ( 2.38 ) $ ( 0.50 ) Weighted-average shares outstanding: Basic 58,746 57,738 56,554 Diluted 58,746 57,738 56,554 Comprehensive loss: Net loss $ ( 37,904 ) $ ( 137,640 ) $ ( 28,335 ) Change in fair value of derivative instruments, net of tax ( 4,666 ) ( 833 ) 5,856 Foreign currency translation adjustments, net of tax ( 20 ) 380 300 Deferred compensation and pension benefit plan, net of tax ( 1,809 ) ( 1,383 ) 142 Total other comprehensive (loss) income, net of tax ( 6,495 ) ( 1,836 ) 6,298 Total comprehensive loss $ ( 44,399 ) $ ( 139,476 ) $ ( 22,037 ) The accompanying notes are an integral part of the consolidated financial statements. 46 Table of Contents MERCURY SYSTEMS, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY For the Fiscal Years Ended June 27, 2025, June 28, 2024 and June 30, 2023 (In thousands) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Total Shareholders’ Equity Shares Amount Balance at July 1, 2022 55,680 557 1,145,323 385,774 5,531 1,537,185 Issuance of common stock under employee stock incentive plans 738 7 ( 7 ) — — — Issuance of common stock under employee stock purchase plan 145 2 5,490 — — 5,492 Issuance of common stock under defined contribution plan 400 4 18,366 — — 18,370 Retirement of common stock ( 1 ) — ( 63 ) — — ( 63 ) Stock-based compensation — — 27,738 — — 27,738 Net loss — — — ( 28,335 ) — ( 28,335 ) Other comprehensive income — — — — 6,298 6,298 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 476 5 ( 5 ) — — — Issuance of common stock under employee stock purchase plan 167 2 4,640 — — 4,642 Issuance of common stock under defined contribution plan 490 5 16,044 — — 16,049 Retirement of common stock ( 1 ) ( 1 ) ( 30 ) — — ( 31 ) Stock-based compensation — — 24,906 — — 24,906 Net loss — — — ( 137,640 ) — ( 137,640 ) Other comprehensive loss — — — — ( 1,836 ) ( 1,836 ) Balance at June 28, 2024 58,094 $ 581 $ 1,242,402 $ 219,799 $ 9,993 $ 1,472,775 Issuance of common stock under employee stock incentive plans 409 4 ( 4 ) — — — Issuance of common stock under employee stock purchase plan 125 1 3,660 — — 3,661 Issuance of common stock under defined contribution plan 375 4 15,144 — — 15,148 Stock-based compensation — — 26,276 — — 26,276 Net loss — — — ( 37,904 ) — ( 37,904 ) Other comprehensive loss — — — — ( 6,495 ) ( 6,495 ) Balance at June 27, 2025 59,003 $ 590 $ 1,287,478 $ 181,895 $ 3,498 $ 1,473,461 The accompanying notes are an integral part of the consolidated financial statements. 47 MERCURY SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Fiscal Years Ended June 27, 2025 June 28, 2024 June 30, 2023 Cash flows from operating activities: Net loss $ ( 37,904 ) $ ( 137,640 ) $ ( 28,335 ) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization expense 82,027 88,030 97,329 Stock-based compensation expense 25,019 25,669 27,753 Stock-based matching contributions on defined contribution plan 14,900 15,853 15,665 Benefit for deferred income taxes ( 10,591 ) ( 31,511 ) ( 59,647 ) Provisions for bad debt 876 15,301 400 Other non-cash items ( 3,577 ) 452 ( 1,146 ) 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 29,950 76,458 ( 58,718 ) Inventory ( 17,087 ) 130 ( 64,061 ) Prepaid income taxes ( 575 ) — 7,433 Prepaid expenses and other current assets 5,538 ( 1,693 ) 2,942 Other non-current assets 8,217 148 3,769 Accounts payable, accrued expenses and accrued compensation 8,103 741 ( 16,732 ) Deferred revenues and customer advances 49,890 17,307 40,701 Income taxes payable ( 3,813 ) ( 11,217 ) 9,907 Other non-current liabilities ( 12,122 ) ( 5,049 ) ( 4,509 ) Net cash provided by (used in) operating activities 138,851 60,382 ( 21,254 ) Cash flows from investing activities: Purchases of property and equipment ( 19,803 ) ( 34,291 ) ( 38,796 ) Acquisition of assets and businesses, net of cash acquired ( 4,543 ) — — Proceeds from sale of manufacturing operations to Cicor Group 6,246 — — Other investing activities 4,600 — 235 Net cash used in investing activities ( 13,500 ) ( 34,291 ) ( 38,561 ) Cash flows from financing activities: Proceeds from employee stock plans 3,661 4,642 5,492 Borrowings under credit facilities — 105,000 140,000 Payments under credit facilities — ( 25,000 ) ( 80,000 ) Payments for retirement of common stock — ( 31 ) ( 63 ) Payments of deferred financing and offering costs ( 2,249 ) ( 1,931 ) — Net cash provided by financing activities 1,412 82,680 65,429 Effect of exchange rate changes on cash and cash equivalents 1,815 187 295 Net increase in cash and cash equivalents 128,578 108,958 5,909 Cash and cash equivalents at beginning of year 180,521 71,563 65,654 Cash and cash equivalents at end of year $ 309,099 $ 180,521 $ 71,563 Cash paid (received) during the period for: Interest $ 36,559 $ 37,423 $ 27,288 Income taxes paid (refunded), net $ 365 $ ( 9,315 ) $ 24,243 Supplemental disclosures—non-cash activities: Non-cash investing activity: Purchases of property and equipment incurred but not yet paid $ 3,895 $ 4,051 $ 6,475 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. 48 Table of Contents MERCURY SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except per share data) A. Description of Business Mercury Systems, Inc. (the Company) is a technology company that delivers mission-critical processing to the edge - where signals and data are collected - to solve the most pressing aerospace and defense challenges. Mercury’s products and solutions are deployed in more than 300 programs and across 35 countries. The Company is headquartered in Andover, Massachusetts, and has over 20 locations worldwide. The Mercury Processing Platform is the unique advantage the Company provides to its customers. It comprises the innovative technologies the Company has developed and acquired for more than 40 years that bring integrated, mission-critical processing to the edge. The Company's processing platform spans the full breadth of signal processing—from radio frequency (“RF”) front end to the human-machine interface—to rapidly convert meaningful data, gathered in the most remote and hostile environments, into critical decisions. It allows the Company to offer standard products and custom solutions from silicon to system scale, including components, modules, subsystems, and systems and it embodies the customer-centric approach the Company takes to delivering capabilities that are mission-ready, trusted and secure, software-defined, and open and modular. B. Summary of Significant Accounting Policies P RINCIPLES OF C ONSOLIDATION 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. B ASIS OF P RESENTATION All references to fiscal 2025 are to the 52-week period from June 29, 2024 to June 27, 2025. All references to fiscal 2024 are to the 52-week period from July 1, 2023 to June 28, 2024. All references to fiscal 2023 are to the 52-week period from July 2, 2022 to June 30, 2023. U SE OF E STIMATES The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. B USINESS C OMBINATIONS The Company utilizes the acquisition method of accounting under ASC 805, Business Combinations, (“ASC 805”), for all transactions and events in which it obtains control over one or more other businesses, to recognize the fair value of all assets and liabilities acquired, even if less than one hundred percent ownership is acquired, and in establishing the acquisition date fair value as of the measurement date for all assets and liabilities assumed. The Company also utilizes ASC 805 for the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in business combinations. Other estimates include: • estimated step-ups for fixed assets and inventory; • estimated fair values of intangible assets; and • estimated income tax assets and liabilities assumed from the acquiree. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business acquisition date, the estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the purchase price allocation period, which is generally one year from the business acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. For changes in the valuation of intangible assets between the preliminary and final purchase price allocation, the related amortization is adjusted in the period it occurs. Subsequent to the purchase price allocation period, any adjustment to assets acquired or liabilities assumed is included in operating results in the period in which the adjustment is determined. 49 Table of Contents L EASES The Company measures its lease obligations in accordance with ASC 842, Leases , (“ASC 842”), which requires lessees to recognize a right-of-use (“ROU”) asset and lease liability for most lease arrangements. The Company has arrangements involving the lease of facilities. Under ASC 842, at inception of the arrangement, the Company determines whether the contract is or contains a lease and whether the lease should be classified as an operating or a financing lease. This determination, among other considerations, involves an assessment of whether the Company can control the underlying asset and have the right to obtain substantially all of the economic benefits or outputs from the asset. The Company recognizes ROU assets and lease liabilities as of the lease commencement date based on the net present value of the future minimum lease payments over the lease term. ASC 842 requires lessees to use the rate implicit in the lease unless it is not readily determinable and then it may use its incremental borrowing rate (“IBR”) to discount the future minimum lease payments. Most of the Company's lease arrangements do not provide an implicit rate; therefore, the Company uses its IBR to discount the future minimum lease payments. The Company determines its IBR with its credit rating and current economic information available as of the commencement date, as well as the identified lease term. During the assessment of the lease term, the Company considers its renewal options and extensions within the arrangements and the Company includes these options when it is reasonably certain to extend the term of the lease. The Company has lease arrangements with both lease and non-lease components. Consideration is allocated to lease and non-lease components based on estimated standalone prices. The Company has elected to exclude non-lease components from the calculation of its ROU assets and lease liabilities. Leases with an initial term of 12 months or less do not result in recognition of a ROU asset and a lease liability and will be expensed as incurred over the lease term. Leases of this nature were immaterial to the Company’s consolidated financial statements. The Company has lease arrangements that contain incentives for tenant improvements as well as fixed rent escalation clauses. For contracts with tenant improvement incentives that are determined to be a leasehold improvement that will be owned by the lessee and the Company is reasonably certain to exercise, it records a reduction to the lease liability and amortizes the incentive over the identified term of the lease as a reduction to rent expense. The Company records rental expense on a straight-line basis over the identified lease term on contracts with rent escalation clauses. Finance leases are not material to the Company's consolidated financial statements and the Company is not a lessor in any material lease arrangements. There are no material restrictions, covenants, sale and leaseback transactions, variable lease payments or residual value guarantees in the Company's lease arrangements. Operating leases are included in Operating lease right-of-use assets, net, Accrued expenses, and Operating lease liabilities in the Company's Consolidated Balance Sheets. See Note I to the consolidated financial statements for more information regarding our obligations under leases. R EVENUE R ECOGNITION The Company recognizes revenue in accordance with the five step model set forth by ASC 606, Revenue from Contracts with Customers , (“ASC 606”), which involves identification of the contract(s), identification of performance obligations in the contract, determination of the transaction price, allocation of the transaction price to the previously identified performance obligations, and revenue recognition as the performance obligations are satisfied. During step one of the five step model, the Company considers whether contracts should be combined or segmented, and based on this assessment, the Company combines closely related contracts when all the applicable criteria are met. The combination of two or more contracts requires judgment in determining whether the intent of entering into the contracts was effectively to enter into a single contract, which should be combined to reflect an overall profit rate. Similarly, the Company may separate an arrangement, which may consist of a single contract or group of contracts, with varying rates of profitability, only if the applicable criteria are met. Judgment also is involved in determining whether a single contract or group of contracts may be segmented based on how the arrangement and the related performance criteria were negotiated. The conclusion to combine a group of contracts or segment a contract could change the amount of revenue and gross profit recorded in a given period. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied. Certain contracts with customers require the Company to perform tests of its products prior to shipment to ensure their performance complies with the Company’s published product specifications and, on occasion, with additional customer-requested specifications. In these cases, the Company conducts such tests and, if they are completed successfully, includes a written confirmation with each order shipped. As a result, at the time of each product shipment, the Company believes that no further customer testing requirements exist and that there is no uncertainty of acceptance by its customer. The Company's contracts with customers generally do not include a right of return relative to delivered products. In certain cases, contracts are modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are accounted for as part of the existing contract. Certain contracts with customers have options for the customer 50 Table of Contents to acquire additional goods or services. In most cases the pricing of these options are reflective of the standalone selling price of the good or service. These options do not provide the customer with a material right and are accounted for only when the customer exercises the option to purchase the additional goods or services. If the option on the customer contract was not indicative of the standalone selling price of the good or service, the material right would be accounted for as a separate performance obligation. The Company is a leading technology company serving the aerospace and defense industry, positioned at the intersection of high-tech and defense. 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 solutions. 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. Once the Company identifies the performance obligations, the Company then determines the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. Variable consideration typically arises due to volume discounts, or other provisions that can either decrease or increase the transaction price. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the method the Company expects to better predict the amount of consideration to which it will be entitled. The determination of the estimates for variable consideration require judgment, and are based on past history with similar contracts and anticipated performance. Further, variable consideration is only included in the determination of the transaction price if it is probable that a significant reversal in the amount of revenue recognized will not occur. There are no constraints on the variable consideration recorded. For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation using the standalone selling price of each distinct good or service in the contract. Standalone selling prices of the Company’s goods and services are generally not directly observable. Accordingly, the primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company estimates the expected costs of satisfying a performance obligation and then adds an appropriate margin for that distinct good or service. The objective of the expected cost plus a margin approach is to determine the price at which the Company would transact if the product or service were sold by the Company on a standalone basis. The Company's determination of the expected cost plus a margin approach involves the consideration of several factors based on the specific facts and circumstances of each contract. Specifically, the Company considers the cost to produce the deliverable, the anticipated margin on that deliverable, the selling price and profit margin for similar parts, the Company’s ongoing pricing strategy and policies, often based on the price list established and updated by management on a regular basis, the value of any enhancements that have been built into the deliverable and the characteristics of the varying markets in which the deliverable is sold. The Company analyzes the standalone selling prices used in its allocation of transaction price on contracts at least annually. Standalone selling prices will be analyzed on a more frequent basis if a significant change in the Company’s business necessitates a more frequent analysis or if the Company experiences significant variances in its selling prices. 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, totaled 53 %, 45 % and 44 % of revenues in the fiscal years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively. Revenue is recognized at a point in time for these products and services (versus over time recognition) due to the following: (i) customers are only able to consume the benefits provided by the Company upon completion of the product or service; (ii) customers do not control the product or service prior to completion; and (iii) the Company does not have an enforceable right to payment at all times for performance completed to date. Accordingly, there is little judgment in determining when control of the good or service transfers to the customer, and revenue is generally recognized upon transfer of control (for goods) or completion (for services). The Company 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. Revenue is recognized over time, due to the fact that: (i) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; and (ii) the Company’s performance creates an asset with no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. The Company considers the nature of these contracts and the types of products and services provided when determining the proper accounting for a particular contract. These contracts 51 Table of Contents include both fixed-price and cost reimbursable contracts. The Company’s cost reimbursable contracts typically include cost-plus fixed fee and time and material (“T&M”) contracts. For over time contracts, the Company typically leverages the input method, using a cost-to-cost measure of progress. The Company believes that this method represents the most faithful depiction of the Company’s performance because it directly measures value transferred to the customer. Contract estimates and estimates of any variable consideration are based on various assumptions to project the outcome of future events that may span several years. These assumptions include: the amount of time to complete the contract, including the assessment of the nature and complexity of the work to be performed; the cost and availability of materials; the availability of subcontractor services and materials; and the availability and timing of funding from the customer. The Company bears the risk of changes in estimates to complete on a fixed-price contract which may cause profit levels to vary from period to period. For cost reimbursable contracts, the Company is reimbursed periodically for allowable costs and is paid a portion of the fee based on contract progress. In the limited instances where the Company enters into T&M contracts, revenue recognized reflects the number of direct labor hours expended in the performance of a contract multiplied by the contract billing rate, as well as reimbursement of other direct billable costs. For T&M contracts, the Company recognizes revenue in the amount for which the Company has a right to invoice the customer based on the control transferred to the customer. For over time contracts, the Company recognizes anticipated contract losses as soon as they become known and estimable. Total revenue recognized under over time contracts was 47 %, 55 % and 56 % of revenues in the fiscal years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively. Accounting for contracts recognized over time requires significant judgment relative to estimating total contract revenues and costs, in particular, assumptions relative to the amount of time to complete the contract, including the assessment of the nature and complexity of the work to be performed and the impact of contract amendments which may result in cumulative adjustments. The Company’s estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each over time contract monthly to assess the contract’s schedule, performance, technical matters and estimated cost at completion. Changes in estimates are applied retrospectively and when adjustments in estimated contract costs are identified, such revisions may result in current period adjustments to earnings applicable to performance in prior periods. The aggregate effects of these favorable and unfavorable changes across the Company’s portfolio of programs can have a significant effect upon its reported Loss from operations, Net loss and Diluted net loss per share in each of the reporting periods. The net impact of changes in estimates had the following impact on the Company’s operating results: For the Fiscal Years Ended (In thousands, except per share data) June 27, 2025 June 28, 2024 June 30, 2023 Loss from operations $ ( 21,070 ) $ ( 73,245 ) $ ( 56,266 ) Net loss (1) $ ( 15,381 ) $ ( 53,469 ) $ ( 41,074 ) Diluted net loss per share $ ( 0.26 ) $ ( 0.93 ) $ ( 0.73 ) Diluted Shares 58,746 57,738 56,554 (1) Federal and state statutory rate of 27% The Company generally does not provide its customers with rights of product return other than those related to assurance warranty provisions that permit repair or replacement of defective goods 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. On over time contracts, the portion of the payments retained by the customer is not considered a significant financing component because most contracts have a duration of less than one year and payment is received as progress is made. Many of the Company's over time contracts have milestone payments, which align the payment schedule with the progress towards completion on the performance obligation. On some contracts, the Company may be entitled to receive an advance payment, which is not considered a significant financing component because 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). 52 Table of Contents C OSTS TO O BTAIN AND F ULFILL A C ONTRACT The Company expenses sales commissions as incurred for contracts where the amortization period would have been one year or less. The Company had $ 627 and $ 837 of deferred sales commissions for contracts where the amortization period is greater than one year as of June 27, 2025 and June 28, 2024, respectively. The Company has elected to treat shipping and handling activities performed after the customer has obtained control of the related goods as a fulfillment cost. Such costs are accrued for in conjunction with the recording of revenue for the goods and are classified as cost of revenues. C ONTRACT B ALANCES Contract balances result from the timing of revenue recognized, billings and cash collections, and 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. Contract assets are presented as unbilled receivables and costs in excess of billings, net of allowance for credit losses 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 and the long-term portion of deferred revenue is included within 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 $ 278,475 and $ 304,029 as of June 27, 2025 and June 28, 2024, respectively. The contract asset balance decreased due to $ 452,171 of billings, offset by revenue recognized under over time contracts of $ 426,617 during the fiscal year ended June 27, 2025. The contract liability balances were $ 127,605 and $ 74,367 as of June 27, 2025 and June 28, 2024, respectively. The contract liability increased due to a higher volume of advanced milestone billing events as well as timing of revenue recognized across multiple programs. Revenue recognized during fiscal 2025 that was included in the contract liability balance at June 28, 2024 was $ 59,183 . R EMAINING P ERFORMANCE O BLIGATIONS The Company includes in its computation of remaining performance obligations customer orders for which it has accepted executed sales orders. The definition of remaining performance obligations excludes 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 June 27, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 787,926 . The Company expects to recognize approximately 49 % of its remaining performance obligations as revenue in the next 12 months and the balance thereafter. C ASH AND C ASH E QUIVALENTS Cash equivalents, consisting of highly liquid money market funds and U.S. government and U.S. government agency issues with original maturities of 90 days or less at the date of purchase, are carried at fair market value which approximates cost. 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, recovery of balances from contract settlements, 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. 53 Table of Contents A CCOUNTS R ECEIVABLES F ACTORING On September 27, 2022, the Company executed an uncommitted receivables purchase agreement (“RPA”), pursuant to which the Company could offer to sell certain customer receivables, subject to the terms and conditions of the RPA. On August 13, 2024, the Company terminated the RPA in conjunction with entering into a new receivables purchase and service agreement. On August 13, 2024, the Company entered into a $ 60,000 committed receivables purchase and servicing agreement (“RPSA”) with a new party. The RPSA has an initial term of two years. Pursuant to the RPSA, the new party has committed to purchase receivables at a discount from a list of certain of the Company’s customers, maintaining a balance of purchased receivables at or below $ 60,000 . Under the RPSA, a portion of the factored receivables is paid by the counterparty in cash and classified as a deferred purchase price receivable, which is paid as receivables are collected by the Company. 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 factored receivables 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 $ 52,164 and $ 33,777 of factored accounts receivables as of June 27, 2025 and June 28, 2024, respectively. The Company incurred factoring fees of approximately $ 1,758 and $ 1,947 for fiscal years 2025 and 2024, respectively. F AIR V ALUE OF F INANCIAL I NSTRUMENTS The Company measures at fair value certain financial assets and liabilities, including cash equivalents, restricted cash, interest rate derivatives, and contingent consideration. ASC 820, Fair Value Measurement and Disclosures , specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy: Level 1—Quoted prices for identical instruments in active markets; Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. C ONCENTRATION OF C REDIT R ISK Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents, accounts receivable, unbilled receivables and costs in excess of billings. The Company places its cash and cash equivalents with financial institutions of high credit quality. As of June 27, 2025 and June 28, 2024, the Company had $ 309,099 and $ 180,521 , respectively, of cash and cash equivalents on deposit or invested with its financial and lending institutions. 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 when deemed necessary. As of June 27, 2025, five customers accounted for 48 % of the Company's accounts receivable, unbilled receivables and costs in excess of billings. As of June 28, 2024, five customers accounted for 51 % of the Company’s accounts receivable, unbilled receivables and costs in excess of billings. The Company maintains an allowance for credit losses to provide for the estimated amount of receivables that will not be fully collected. The allowance is based on the assessment of the following factors: customer creditworthiness; historical payment experience; age of outstanding receivables; and any applicable collateral. I NVENTORY 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 evaluates 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 and non-cancelable on-order inventory in excess of estimated usage. The excess and obsolete inventory evaluation is based upon assumptions about future demand, product mix and possible alternative uses. 54 Table of Contents S EGMENT I NFORMATION The Company uses the management approach for segment disclosure, which designates the internal organization that is used by management for making operating decisions and assessing performance as the source of its reportable segments. The Company manages its business on the basis of one reportable segment, as a leading technology company serving the aerospace and defense industry. G OODWILL AND I NTANGIBLE A SSETS Goodwill is the amount by which the purchase price of a business acquisition exceeded the fair values of the net identifiable assets on the date of purchase (see Note F). In accordance with the requirements of Intangibles-Goodwill and Other (“ASC 350”) Goodwill is not amortized. Goodwill is assessed for impairment at least annually, on a reporting unit basis, or when events and circumstances ("triggering event") occur indicating that the recorded goodwill may be impaired. Potential triggering events include macroeconomic conditions, industry and market considerations, financial performance and expectations of projected financial performance and cash flows, and changes in the Company's stock price in relation to the carrying value of its reporting units, among other relevant factors. Adverse changes to these events and circumstances could require the Company to perform an interim impairment test. Intangible assets result from the Company’s various business acquisitions (see Note G) 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. L ONG - LIVED A SSETS Long-lived assets primarily include property and equipment, intangible assets and 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. Property and equipment are the long-lived, physical assets of the Company acquired for use in the Company’s normal business operations and are not intended for resale by the Company. These assets are recorded at cost. Renewals and betterments that increase the useful lives of the assets are capitalized. Repair and maintenance expenditures that increase the efficiency of the assets are expensed as incurred. Equipment under capital lease is recorded at the present value of the minimum lease payments required during the lease period. Depreciation is based on the estimated useful lives of the assets using the straight-line method (see Note E). As assets are retired or sold, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for major software purchases and software developed for internal use are capitalized and depreciated using the straight-line method over the estimated useful lives of the related assets, which are generally three years . For software developed for internal use, all external direct costs for material and services and certain payroll and related fringe benefit costs are capitalized in accordance with ASC 350. During fiscal 2025, 2024 and 2023, the Company capitalized $ 444 , $ 2,086 and $ 3,931 of software development costs, respectively. I NCOME T AXES The Company accounts for income taxes under ASC 740, Income Taxes (“ASC 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates for the year in which the differences are expected to reverse. The Company records a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. ASC 740 requires a two-step approach to recognizing and measuring uncertain tax positions. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 % likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. 55 Table of Contents P RODUCT W ARRANTY A CCRUAL The Company’s product sales generally include a 12 to 36 month standard hardware warranty. At time of product shipment, the Company accrues for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar transactions and any specifically identified warranty requirements. Product warranty accrual is included as part of accrued expenses in the accompanying Consolidated Balance Sheets. The following table presents the changes in the Company's product warranty accrual. Fiscal 2025 Fiscal 2024 Fiscal 2023 Beginning balance $ 5,721 $ 1,282 $ 1,857 Accruals for warranties issued during the period 1,210 6,270 1,146 Settlements made during the period ( 3,986 ) ( 1,831 ) ( 1,721 ) Ending balance $ 2,945 $ 5,721 $ 1,282 R ESEARCH AND D EVELOPMENT C OSTS Research and development costs are expensed as incurred. Research and development costs are primarily made up of labor charges and prototype material and development expenses. S TOCK - BASED C OMPENSATION Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period, and includes an estimate of the awards that will be forfeited. Stock-based compensation expense for the Company’s performance-based restricted stock awards is amortized over the requisite service period using graded vesting. The Company’s other restricted stock awards recognize expense over the requisite service period on a straight-line basis. R ETIREMENT OF C OMMON S TOCK Stock that is repurchased or received in connection with the vesting of restricted stock is retired immediately upon the Company’s repurchase. The Company accounts for this under the cost method and upon retirement the excess amount over par value is charged against additional paid-in capital. N ET ( L OSS) E ARNINGS P ER S HARE Basic net (loss) earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net earnings per share computation includes the effect of shares which would be issuable upon the exercise of outstanding stock options and the vesting of restricted stock, reduced by the number of shares which are assumed to be purchased by the Company under the treasury stock method. For all periods presented, net (loss) income is the control number for determining whether securities are dilutive or not. Basic and diluted weighted average shares outstanding were as follows: Fiscal 2025 Fiscal 2024 Fiscal 2023 Basic weighted-average shares outstanding 58,746 57,738 56,554 Effect of dilutive equity instruments — — — Diluted weighted-average shares outstanding 58,746 57,738 56,554 Equity instruments to purchase 2,594 , 2,501 and 1,852 shares of common stock were not included in the calculation of diluted net earnings per share for the fiscal years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively, because the equity instruments were anti-dilutive. A CCUMULATED O THER C OMPREHENSIVE ( L OSS) I NCOME Accumulated other comprehensive (loss) income (“AOCI”) includes changes in fair value of derivative instruments, foreign currency translation adjustments and pension benefit plan adjustments. The components of AOCI included the change in fair value of derivative instruments, net of tax adjustments and totaled $( 4,666 ), $( 833 ), and $ 5,856 for the fiscal years ended June 27, 2025, June 28, 2024, and June 30, 2023, respectively. Also included are $( 20 ), $ 380 and $ 300 of foreign currency translation adjustments for the fiscal years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively, and pension benefit plan adjustments totaled $( 1,809 ), $( 1,383 ) and $ 142 for the fiscal years ended June 27, 2025, June 28, 2024 and June 30, 2023, respectively. 56 Table of Contents A summary of the change in component of Accumulated other comprehensive income, net of tax is provided below: Foreign currency translation adjustments, net of tax Deferred compensation and pension benefit plan, net of tax Change in fair of derivative instruments, net of tax Accumulated Other Comprehensive Income Balance at July 1, 2022 $ 1,051 $ 4,480 $ — $ 5,531 Other comprehensive income, net of tax 300 142 5,856 6,298 Balance at June 30, 2023 1,351 4,622 5,856 11,829 Other comprehensive income (loss), net of tax 380 ( 1,383 ) ( 833 ) ( 1,836 ) Balance at June 28, 2024 1,731 3,239 5,023 9,993 Other comprehensive loss, net of tax ( 20 ) ( 1,809 ) ( 4,666 ) ( 6,495 ) Balance at June 27, 2025 $ 1,711 $ 1,430 $ 357 $ 3,498 F OREIGN C URRENCY Local currencies are the functional currency for the Company’s subsidiaries in Switzerland, the United Kingdom, and Spain. 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 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. R ECENTLY I SSUED A CCOUNTING P RONOUNCEMENTS 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. In March 2024, the FASB issued ASU No. 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements , an amendment of the FASB Accounting Standards Codification. The amendments in this ASU are related to the removal of various references to FASB Concept Statements from the codification to make clear distinctions between authoritative and non-authoritative literature in the codification. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company does not believe this standard will have an impact 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 their 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. In May 2025, the FASB issued ASU No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, an amendment of the FASB Accounting Standards Codification. The amendments in this ASU are intended to clarify guidance surrounding who the accounting acquirer is in a business combination, specifically when a Variable Interest Entity ("VIE") is involved. The ASU is effective for fiscal years beginning after December 15, 2026, and all interim periods within applicable annual periods, with early adoption permitted. The Company does not believe this standard will have an impact on its consolidated financial statements and related disclosures. 57 Table of Contents R ECENTLY A DOPTED A CCOUNTING P RONOUNCEMENTS Effective March 29, 2025, the company adopted 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 adoption resulted in the Company disclosing it continues to be one reportable segment where the CEO is the Chief Operating Decision Maker ("CODM"), the selected profitability measure is consolidated net income (loss), and a reference that significant segment expenses are provided on the Consolidated Statement of Operations and Comprehensive Loss. The Company's segment assets are reported on the Consolidated Balance Sheets as Total Assets and its segment purchase of property plant and equipment are disclosed in the Notes to Consolidated Financial Statements. C. Fair Value of Financial Instruments The following table summarizes the Company's financial instruments measured at fair value on a recurring basis as of June 27, 2025: Fair Value Measurements June 27, 2025 Level 1 Level 2 Level 3 Liabilities: Interest rate swap $ 5,391 $ — $ 5,391 $ — Total measured at fair value $ 5,391 $ — $ 5,391 $ — 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 June 27, 2025, the fair value of the September 2023 Swap was a liability of $ 5,391 and is included within Other non-current liabilities in the Company's Consolidated Balance Sheets. The following table summarizes the Company's financial instruments measured at fair value on a recurring basis as of June 28, 2024: Fair Value Measurements June 28,2024 Level 1 Level 2 Level 3 Liabilities: Interest rate swap $ 2,436 $ — $ 2,436 $ — Total measured at fair value $ 2,436 $ — $ 2,436 $ — The fair value of interest rate hedging agreement entered on September 29, 2022 ("the September 2022 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 28, 2024, the fair value of the September 2022 Swap was a liability of $ 2,436 and included within Other non-current liabilities in the Company's Consolidated Balance Sheets. The Company terminated the September 2022 Swap during the first quarter ended September 29, 2023. Refer to Note Q for further information regarding the September 2023 Swap and the termination of the September 2022 Swap. 58 Table of Contents D. Inventory During fiscal 2025, 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. Fiscal 2025 includes the impact of $ 10,579 of inventory sold in connection to the sale of manufacturing operations to Cicor Group. Inventory was comprised of the following: As of June 27, 2025 June 28, 2024 Raw materials $ 195,496 $ 200,501 Work in process 118,376 118,060 Finished goods 19,048 16,739 Total $ 332,920 $ 335,300 E. Property and Equipment Property and equipment consisted of the following: Estimated Useful Lives (Years) As of June 27, 2025 June 28, 2024 Computer equipment and software 3 - 4 $ 149,342 $ 138,366 Furniture and fixtures 5 23,176 21,694 Leasehold improvements lesser of estimated useful life or lease term 74,278 72,420 Machinery and equipment 5 - 10 168,412 150,991 415,208 383,471 Less: accumulated depreciation ( 313,768 ) ( 273,118 ) Property and equipment, net $ 101,440 $ 110,353 The $ 8,913 decrease in Property and equipment, net was primarily due to depreciation expense and was partially offset by current year additions of $ 19,803 . During fiscal 2025 and 2024, the Company retired $ 991 and $ 1,308 , respectively, of computer equipment and software, furniture and fixtures, leasehold improvements, and machinery and equipment that were no longer in use by the Company. Depreciation expense related to property and equipment for the fiscal years ended June 27, 2025, June 28, 2024 and June 30, 2023 was $ 39,178 , $ 40,369 and $ 43,777 , respectively. F. 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 reporting units: Mission Systems and Microelectronics. Accordingly, these were determined to be the Company's reporting units which is consistent with the prior period. There were no adjustments to the carrying value of Goodwill during fiscal 2025 and 2024. The Company performed its annual goodwill impairment test in the fourth quarter of fiscal 2025. Based on the quantitative evaluation, the Company determined that the Mission Systems and Microelectronics reporting units had estimated fair values that substantially exceeded their carrying values. The Company concluded that its goodwill was not impaired. The Company is required to perform the next annual goodwill impairment analysis during the fourth quarter of fiscal year 2026. Adverse changes to the underlying information assumptions used in its assessment of potential triggering events could require the Company to perform an interim impairment test. If assumed revenue growth rate and cash flow projections are not achieved in future periods or the Company’s common stock price significantly declines from current levels, among other factors, its Mission Systems and Microelectronics reporting units could be at risk of failing the quantitative assessment and goodwill assigned to the respective reporting units could be impaired. Any impairment charges that the Company may record in the future could be material to its results of operations and financial condition. 59 Table of Contents G. Intangible Assets Intangible assets consisted of the following: Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Useful Life June 27, 2025 Customer relationships $ 340,110 $ ( 182,656 ) $ 157,454 12.2 years Licensing agreements and patents 4,162 ( 3,086 ) 1,076 5.0 years Completed technologies 125,586 ( 73,505 ) 52,081 9.2 years $ 469,858 $ ( 259,247 ) $ 210,611 June 28, 2024 Customer relationships $ 342,610 $ ( 155,903 ) $ 186,707 12.2 years Licensing agreements and patents 4,162 ( 2,254 ) 1,908 5.0 years Completed technologies 122,680 ( 62,975 ) 59,705 9.4 years Other 3,238 ( 1,046 ) 2,192 5.0 years $ 472,690 $ ( 222,178 ) $ 250,512 Estimated future amortization expense for intangible assets remaining at June 27, 2025 is as follows: Fiscal Year Totals 2026 $ 38,479 2027 35,680 2028 31,817 2029 28,523 2030 23,788 Thereafter 52,324 Total future amortization expense $ 210,611 The Company reviews net intangible assets with finite lives for impairment when an event occurs indicating the potential for impairment. Based on the Company’s last assessment, the Company believes that the carrying values of net intangible assets were recoverable as of June 27, 2025. However, if business conditions deteriorate, the Company may be required to record impairment losses, and or increase the amortization of intangibles in the future. Any impairment charges that the Company may record in the future could be material to the results of operations and financial condition. During fiscal 2025, the Company acquired completed technologies of $ 4,866 with a useful life of 7.5 years in connection with the Company's asset acquisition of Star Lab. H. Restructuring During fiscal 2025, the Company incurred $ 7,216 of restructuring charges in connection with workforce reductions that eliminated approximately 145 positions. 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 organizational redesign programs or discrete post-acquisition integration activities initiated as part of discrete post acquisition integration activities. 60 Table of Contents During fiscal 2024, 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. 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 during fiscal 2024. On January 12, 2024, the Company approved and initiated workforce reductions that eliminated approximately 100 positions resulting in an additional $ 9,841 of severance costs during fiscal 2024. On June 17, 2024, the Company approved and initiated workforce reductions that eliminated an additional 100 positions, resulting in an additional $ 6,781 of severance costs in fiscal 2024. The workforce reductions that eliminated approximately 350 positions in fiscal 2024 were across manufacturing, SG&A and R&D based on ongoing talent and workforce optimization efforts. All of the restructuring and other charges are classified as Operating expenses in the Consolidated Statements of Operations and Comprehensive (Loss) Income and any remaining severance obligations are expected to be paid within the next twelve months. The remaining restructuring liability is classified as Accrued expenses in the Consolidated Balance Sheets. The following table presents the detail of charges included in the Company’s liability for restructuring and other charges: Severance & Related Restructuring liability at June 30, 2023 $ 1,529 Restructuring charges 26,170 Cash paid ( 18,941 ) Restructuring liability at June 28, 2024 8,758 Restructuring charges 7,216 Cash paid ( 14,768 ) Restructuring liability at June 27, 2025 $ 1,206 I. Leases The Company enters into lease arrangements to facilitate its operations, including manufacturing, storage, as well as engineering, sales, marketing and administration resources. The Company measures its lease obligations in accordance with ASC 842, which requires lessees to record a ROU asset and lease liability for most lease arrangements. Finance leases are not material to the Company's consolidated financial statements and therefore are excluded from the following disclosures. S UPPLEMENTAL B ALANCE S HEET I NFORMATION Supplemental operating lease balance sheet information is summarized as follows: As of As of June 27, 2025 June 28, 2024 Operating lease right-of-use assets, net $ 52,264 $ 60,860 Accrued expenses(1) $ 11,810 $ 11,614 Operating lease liabilities 52,738 62,584 Total operating lease liabilities $ 64,548 $ 74,198 (1) The short term portion of the Operating lease liabilities is included within Accrued expenses on the Consolidated Balance Sheet. O THER S UPPLEMENTAL I NFORMATION Other supplemental operating lease information is summarized as follows: For the Fiscal Year Ended June 27, 2025 June 28, 2024 Cash paid for amounts included in the measurement of operating lease liabilities $ 11,401 $ 10,343 Right-of-use assets obtained in exchange for new lease liabilities $ 2,261 $ 7,249 Weighted average remaining lease term 5.7 years 6.4 years Weighted average discount rate 5.59 % 5.50 % 61 Table of Contents M ATURITIES OF L EASE C OMMITMENTS Maturities of operating lease commitments as of June 27, 2025 were as follows: Fiscal Year Totals 2026 $ 14,368 2027 14,203 2028 12,841 2029 11,045 2030 9,343 Thereafter 12,942 Total lease payments 74,742 Less: imputed interest ( 10,194 ) Present value of operating lease liabilities $ 64,548 During fiscal 2025, 2024 and 2023 the Company recognized operating lease expense of $ 14,587 , $ 13,775 , and $ 13,763 , respectively. There were no material restrictions, covenants, sale and leaseback transactions, variable lease payments or residual value guarantees imposed by the Company's leases at June 27, 2025. J. Income Taxes The components of (loss) income before income taxes and income tax (benefit) provision were as follows: Fiscal Years 2025 2024 2023 (Loss) income before income taxes: United States $ ( 53,335 ) $ ( 183,263 ) $ ( 42,864 ) Foreign 2,911 ( 6,012 ) ( 5,678 ) $ ( 50,424 ) $ ( 189,275 ) $ ( 48,542 ) Tax (benefit) provision: Federal: Current $ ( 609 ) $ ( 19,791 ) $ 33,898 Deferred ( 10,212 ) ( 21,274 ) ( 54,010 ) ( 10,821 ) ( 41,065 ) ( 20,112 ) State: Current 392 ( 3,016 ) 10,054 Deferred ( 2,306 ) ( 7,937 ) ( 10,200 ) ( 1,914 ) ( 10,953 ) ( 146 ) Foreign: Current 175 95 104 Deferred 40 288 ( 53 ) 215 383 51 $ ( 12,520 ) $ ( 51,635 ) $ ( 20,207 ) 62 Table of Contents The following is the reconciliation between the federal statutory income tax rate and the Company’s effective income tax rate: Fiscal Years 2025 2024 2023 Tax benefit at federal statutory rates ( 21.0 ) % ( 21.0 ) % ( 21.0 ) % State income tax, net of federal tax benefit ( 6.5 ) ( 5.9 ) ( 5.4 ) Research and development tax credits ( 2.0 ) ( 3.7 ) ( 15.1 ) Provision to return 1.2 ( 0.1 ) ( 0.7 ) Excess tax provision related to stock compensation 0.7 1.4 2.6 Foreign income tax rate differential ( 0.3 ) 0.2 0.2 Non-deductible compensation 4.6 0.9 1.0 Reserves for unrecognized income tax benefits ( 3.0 ) 0.2 ( 6.9 ) Valuation allowance ( 0.9 ) 0.7 3.8 Foreign derived intangible income ( 0.3 ) — ( 1.4 ) Global intangible low-taxed income 1.3 — — Other 1.4 — 1.3 ( 24.8 ) % ( 27.3 ) % ( 41.6 ) % The effective tax rate for fiscal 2025 differed from the federal statutory rate primarily due to federal and state research and development tax credits, releases to reserves for unrecognized income tax benefits and state taxes, partially offset by tax provisions related to stock compensation. The effective tax rate for fiscal 2024 differed from the federal statutory rate primarily due to federal and state research and development tax credits and state taxes, partially offset by tax provisions related to stock compensation. The effective tax rate for fiscal 2023 differed from the federal statutory rate primarily due to federal and state research and development tax credits, releases to reserves for unrecognized income tax benefits and state taxes, partially offset by valuation allowances recorded and tax provisions related to stock compensation. 63 Table of Contents The components of the Company’s net deferred tax assets (liabilities) were as follows: As of June 27, 2025 June 28, 2024 Deferred tax assets: Inventory valuation and receivable allowances $ 26,968 $ 23,799 Accruals 13,138 10,852 Stock compensation 4,477 6,700 Federal and state research and development tax credit carryforwards 18,605 17,762 Research and development expenditures 57,997 68,728 Interest expense carryforward 11,620 5,289 Federal and state net operating loss carryforward 3,277 2,357 Foreign net operating loss carryforward 3,435 4,004 Operating lease liabilities 17,493 20,107 Deferred revenue 2,951 1,135 Other 316 204 160,277 160,937 Valuation allowance ( 17,416 ) ( 17,575 ) Total deferred tax assets 142,861 143,362 Deferred tax liabilities: Property and equipment ( 9,861 ) ( 13,647 ) Intangible assets ( 48,280 ) ( 50,935 ) Operating lease right-of-use assets, net ( 14,164 ) ( 16,493 ) Other ( 1,540 ) ( 3,675 ) Total deferred tax liabilities ( 73,845 ) ( 84,750 ) Net deferred tax assets $ 69,016 $ 58,612 At June 27, 2025, the Company has gross state research and development tax credit carryforwards of $ 16,443 , $ 12,990 net of federal benefit, of which a portion will expire each fiscal year through fiscal year 2040. The Company maintains a valuation allowance on the majority of the Company’s state research and development tax credit carryforwards. The Company has gross federal research and development tax credit carryforwards of $ 5,351 , of which a portion will expire starting in fiscal year 2039. At June 27, 2025, the Company has gross interest expense carryforwards of $ 42,877 , which have an indefinite life, gross state net operating loss carryforwards of $ 47,591 , which will expire starting in fiscal year 2040 and gross foreign net operating loss carryforwards of $ 21,226 which will expire starting in fiscal year 2028. The Company maintains a valuation allowance on all foreign net operating loss carryforwards. The Company is subject to taxation in the U.S. (federal and state) and various foreign jurisdictions that it operates in. The Company has established income tax reserves for potential additional income taxes based upon management’s assessment, including recognition and measurement. All income tax reserves are analyzed quarterly, and adjustments are made as events occur and warrant modification. The changes in the Company’s income tax reserves for gross unrecognized income tax benefits, including interest and penalties, are summarized as follows: Fiscal Years 2025 2024 Unrecognized tax benefits, beginning of period $ 7,713 $ 5,165 Increases for tax positions taken related to a prior period — 3,371 Increases for tax positions taken during the current period 518 3,083 Decreases for tax positions taken related to a prior period ( 3,094 ) ( 2,971 ) Decreases as a result of a lapse of the applicable statute of limitations ( 1,091 ) ( 935 ) Unrecognized tax benefits, end of period $ 4,046 $ 7,713 64 Table of Contents The Company has $ 4,046 of unrecognized tax benefits as of June 27, 2025. If released, all $ 4,046 of these unrecognized income tax benefits would reduce the Company's income tax provision. The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. The total amount of interest and penalties accrued was $ 878 and $ 1,374 as of June 27, 2025 and June 28, 2024, respectively, and the amount of interest and penalties (released) accrued and recognized was $( 496 ) and $ 791 during June 27, 2025 and June 28, 2024, respectively. The Company’s major tax jurisdiction is the U.S. (Federal and state) and the open tax years are fiscal 2019 through 2025. K. Commitments and Contingencies L EGAL C LAIMS The Company is subject to litigation, claims, investigations and audits arising from time to time in the ordinary course of business. Although legal proceedings are inherently unpredictable, the Company believes that it has valid defenses with respect to any matters currently pending against the Company and intends to defend itself vigorously. The outcome of these matters, individually and in the aggregate, is not expected to have a material impact on the Company's cash flows, results of operations, or financial position. 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 Mercury 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. The Company subsequently delivered a letter to NTS outlining the deficiencies in their claim and reiterated that the Company is not obligated to tender a substantive response to their demand without first having received the responsive information requested in connection with the meet and confer session. In April 2024, counsel for NTS sent additional communications on their demand that the Company participate in their environmental monitoring and remediation planning, and in May 2024, the Company responded with a rebuttal of the allegations. The Company believes the NTS claims are without merit and intends to defend itself vigorously. In addition, in November 2021, the Company responded to a request for information from MassDEP regarding the detection of PFAS (per- and polyfluoroakyl substances) in the Acton, Massachusetts Water District’s Conant public water supply wells near the former facility at 531 Main Street, Acton, Massachusetts at a level above the standard that MassDEP published for PFAS in October 2020. The Company has not been contacted by MassDEP since the response was provided in November 2021. It is too early to determine what responsibility, if any, the Company may have for these environmental matters. While the Company has not received any communications on these environmental matters in over a year, the Company assesses them each quarter and plans to only continue reporting updates in the Company's quarterly reports only when there is an update on the claims. On June 19, 2023, the Board of Directors received notice of the Company's former CEO’s resignation from his positions of President and Chief Executive Officer. The Board accepted his resignation effective June 24, 2023. In his notice, the former CEO claimed he was entitled to certain benefits, including equity vesting, severance, and other benefits, under his change in control severance agreement (the “CIC Agreement”) because he had resigned with good reason during a potential change in control period. The Company disputes these claims and maintains that he 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. On March 25, 2024, the arbitrator denied the former CEO’s motion for compensation during the dispute and payment of his legal fees, preserving those matters for the arbitration hearing. An arbitration hearing was conducted from March 31 through April 9, 2025. Following the arbitration hearing, the parties filed post-hearing briefs on May 16, response briefs on June 13 and conducted oral arguments on June 30, 2025. Unless the arbitrator requests additional time, and the parties' consent to such request, the arbitrator is expected to deliver a ruling on the claims no than August 14, 2025. The Company continue 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, interest, and compensation during the dispute. If instead the arbitrator rules for the former CEO, the Company could be liable for up to approximately $ 14,100 , based on the closing price of the Company's common stock on June 26, 2023, for accelerated equity vesting, severance, and other benefits under the CIC Agreement, plus interest, legal fees and expenses and compensation during dispute, which could include the former CEO's base salary and other amounts based on the compensation, benefit and insurance plans in which he participated. The Company categorically denies any wrongdoing or liability under the CIC Agreement, but the outcome of potential 65 Table of Contents 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 $ 14,100 , 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 asserted 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 alleged that the Company's public disclosures in SEC filings and on earnings calls were false and/or misleading. On February 27, 2024, the Court entered an order appointing Carpenters Pension Trust Fund for Northern California as lead plaintiff. On April 18, 2024, the lead plaintiff filed an amended complaint including William Ballhaus and David Farnsworth as additional defendants and amended the class period to February 3, 2021 through February 6, 2024. The Company filed a motion to dismiss on May 24, 2024, and after the plaintiffs’ filed their opposition motion and the Company filed its reply to their opposition, a hearing on the motion was conducted by the Court on July 24, 2024. 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, 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 February 20, 2025, the Court issued an order that dismissed claims relating to 14 of 17 challenged statements and that allowed the remaining three challenged statements to proceed. The Court also dismissed Messrs. Ruppert and Farnsworth from the lawsuit. The parties are in the discovery process. Subject to the terms of our by-laws and applicable Massachusetts law, Mr. Aslett and Mr. Ballhaus are indemnified by the Company for the federal securities class action. On October 11, 2024, the Company received a shareholder derivative demand on behalf of Robert Sawyer alleging substantially the same claims as those covered in the federal securities class action. On November 14, 2024, the Company entered into a tolling agreement on this derivative demand. On February 28, 2025, the Company received a derivative demand on behalf of James Jones alleging substantially the same claims as those covered in the federal securities class action and the Robert Sawyer derivative demand. On May 20, 2025, the Board of Directors formed a Special Investigation Committee of independent directors to investigate the subject matters of the demand letters. On June 6, 2025, James Jones, on behalf of nominal defendant Mercury Systems, Inc., filed a derivative complaint in Massachusetts Superior Court in Essex County against Mark Aslett, Michael Ruppert, William Ballhaus, David Farnsworth, Orlando Carvalho, Lisa Disbrow, Barry Nearhos, Howard Lance, Debora Plunkett, Gerard DeMuro, Scott Ostfeld, Roger Krone, William O’Brien, Vincent Vitto, James Bass, Michael Daniels, and Mary Louise Krakauer, all current or former Mercury officers or directors. This derivative action has been stayed while the Special Investigation Committee conducts its investigation. On July 17, 2025, the Company received a derivative demand on behalf of Pauline McKinnon alleging substantially the same claims as those covered in the federal securities class action and the James Jones and Robert Sawyer derivative demands. The Company believes the claims in the federal securities class action, derivative demands, and derivative action are without merit and intend to defend itself vigorously. It is too early to determine what responsibility, if any, the Company will have for this matter. On January 31, 2024, a former employee at the Company's Torrance, California location, filed a wage and hour class action lawsuit in California state court in Los Angeles County, along with a companion Private Attorneys General Act (“PAGA”) lawsuit, to act in a representative capacity for other Mercury Mission Systems, LLC employees in California, alleging a range of violations of California wage and hour regulations. 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. On December 21, 2024, the Company reached an agreement in principle to settle these wage and hour class action claims for $450, which settlement in principle is subject to a final settlement agreement and review and approval by the court. 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 June 27, 2025, 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 aggregate to $ 206,386 . 66 Table of Contents O THER The Company may elect from time to time to purchase and subsequently retire shares of common stock in order to settle an individual employees’ tax liability associated with vesting of a restricted stock award or exercise of stock options. These transactions are treated as a use of cash in financing activities in the Company's Statements of Cash Flows. L. Debt Revolving Credit Facilities On February 28, 2022, the Company amended the Revolver to increase and extend the borrowing capacity to a $ 1,100,000 , 5-year revolving credit line, with the maturity extended to February 28, 2027. As of June 27, 2025, the Company's outstanding balance of unamortized deferred financing costs was $ 3,523 , which is being amortized to Other expense, net in the Consolidated Statements of Operations and Comprehensive Loss 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 deferred financing costs that will be amortized over the remaining term of the Revolver. Refer to exhibit 10.7.5 included herein. On August 13, 2024, the Company executed Amendment No. 6 to the Revolver, decreasing the permanent borrowing capacity to $ 900,000 , with a temporary reduction in credit availability to $ 750,000 until the Company meets a minimum consolidated EBITDA level, as defined in the Amendment No. 6 to the Revolver. In conjunction with Amendment No. 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. 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. Maturity The Revolver has a 5-year maturity and will mature on February 28, 2027. Interest Rates and Fees Borrowings under the Revolver bear interest, at the Company’s option, at floating rates tied to Secured Overnight Financing Rate ("SOFR") or the prime rate plus an applicable percentage in the case of dollar denominated loans or, in the case of certain other currencies, such alternative floating rates as agreed. The interest rate applicable to outstanding loans has initially been set at SOFR plus 1.25 % and in future fiscal quarters will be established pursuant to a pricing grid based on the Company’s total net leverage ratio. In addition to interest on the aggregate outstanding principal amounts of any borrowings, the Company will also pay a quarterly commitment fee on the unutilized commitments under the Revolver, which fee has initially been set at 0.20 % per annum and in future fiscal quarters will be established pursuant to a pricing grid based on the Company’s total net leverage ratio. The Company will also pay customary letter of credit and agency fees. Covenants and Events of Default The Revolver provides for customary negative covenants, including, among other things and subject to certain significant exceptions, restrictions on the incurrence of debt or guarantees, the creation of liens, the making of certain investments, loans and acquisitions, mergers and dissolutions, the sale of assets including capital stock of subsidiaries, the payment of dividends, the repayment or amending of junior debt, altering the business conducted, engaging in transactions with affiliates and entering into agreements limiting subsidiary dividends and distributions. The Revolver also requires the Company to comply with certain financial covenants, including a quarterly minimum consolidated cash interest charge ratio test and a quarterly maximum consolidated total net leverage ratio test. The Revolver also provides for customary representations and warranties, affirmative covenants and events of default (including, among others, the failure to make required payments of principal and interest, certain insolvency events and an event of default upon a change of control). If an event of default occurs, the lenders under the Revolver will be entitled to take 67 Table of Contents various actions, including the termination of unutilized commitments, the acceleration of amounts outstanding under the Revolver and all actions permitted to be taken by a secured creditor. Guarantees and Security The Company’s obligations under the Revolver are guaranteed by certain of the Company’s material domestic wholly-owned restricted subsidiaries (the “Guarantors”). The obligations of both the Company and the Guarantors are secured by a perfected security interest in substantially all of the assets of the Company and the Guarantors, in each case, now owned or later acquired, including a pledge of all of the capital stock of substantially all of the Company’s domestic wholly-owned restricted subsidiaries and 65 % of the capital stock of certain of its foreign restricted subsidiaries, subject in each case to the exclusion of certain assets and additional exceptions. As of June 27, 2025, the Company was in compliance with all covenants and conditions under the Revolver and there were outstanding borrowings of $ 591,500 against the Revolver for the fiscal years ended June 27, 2025 and June 28, 2024, respectively. The Company incurred interest expense of $ 33,430 and $ 35,015 for fiscal years ended June 27, 2025 and June 28, 2024, respectively. The current borrowing capacity as defined under the Revolver as of June 27, 2025 is approximately $ 900,000 , of which we had outstanding borrowings against of $ 591,500 . There were outstanding letters of credit of $ 7,740 as of June 27, 2025. M. Employee Benefit Plans Pension Plan The Company maintains a 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”), since 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. In fiscal 2021, the independent pension fund changed the conversion rate for accumulated retirement savings leading to a Plan amendment. The Company’s results contain the effects of this change in conversion rates by the independent pension fund as prior service costs. These prior service costs are amortized from AOCI to net periodic benefit costs over approximately nine years . At June 27, 2025, the accumulated benefit obligation of the Plan equals the fair value of the Plan's assets. The Plan's funded status at June 27, 2025 and June 28, 2024 was a net liability of $ 5,282 and $ 5,005 , respectively, which is recorded in other non-current liabilities on the Consolidated Balance Sheets. The Company recognized net periodic benefit (gain) costs of $( 1,233 ) and $ 471 associated with the Plan and a net loss of $ 1,809 and 1,383 in AOCI during the fiscal years ended June 27, 2025 and June 28, 2024, respectively. Total employer contributions to the Plan were $ 978 during the year ended June 27, 2025, and the Company's total expected employer contributions to the Plan during fiscal 2026 are $ 704 . The following table reflects the total pension benefits expected to be paid from the Plan, which is funded from contributions by participants and the Company. Fiscal Year Total 2026 $ 665 2027 801 2028 1,070 2029 845 2030 939 Thereafter (next 5 years) 5,064 Total $ 9,384 68 The following table outlines the components of net periodic benefit cost of the Plan for the fiscal years ended June 27, 2025 and June 28, 2024: Fiscal Years Ended June 27, 2025 June 28, 2024 Service cost $ 1,164 $ 965 Interest cost 320 481 Expected return on assets ( 247 ) ( 400 ) Amortization of prior service cost ( 227 ) ( 203 ) Amortization net of loss — ( 18 ) Settlement gain recognized ( 181 ) ( 354 ) Curtailment gain recognized ( 2,062 ) — Net periodic benefit (gain) cost $ ( 1,233 ) $ 471 During fiscal year 2025, due to the sale of manufacturing operations to Cicor Group, there was a $ 2,062 plan curtailment. The following table reflects the related actuarial assumptions used to determine net periodic benefit cost of the Plan for the fiscal years ended June 27, 2025 and June 28, 2024: Fiscal Years Ended June 27, 2025 June 28, 2024 Discount rate 1.20 % 1.30 % Expected rate of return on Plan assets 1.25 % 1.30 % Expected inflation 1.00 % 1.20 % Rate of compensation increases 3.00 % 2.50 % The calculation of the projected benefit obligation (“PBO”) utilized BVG 2020 Generational data for assumptions related to the mortality rates, disability rates, turnover rates, and early retirement ages. The PBO represents the present value of Plan benefits earned through the end of the year, with an allowance for future salary and pension increases as well as turnover rates. The following table presents the change in projected benefit obligation for the periods presented: Fiscal Years Ended June 27, 2025 June 28, 2024 Projected benefit obligation, beginning $ 21,878 $ 24,710 Service cost 1,164 965 Interest cost 320 481 Employee contributions 1,106 1,235 Actuarial gain 2,046 629 Benefits paid 557 ( 881 ) Settlements ( 10,299 ) ( 5,239 ) Plan amendment ( 22 ) 20 Curtailment ( 1,750 ) — Foreign exchange loss (gain) 2,722 ( 42 ) Projected benefit obligation at end of year $ 17,722 $ 21,878 69 The following table presents the change in Plan assets for the periods presented: Fiscal Years Ended June 27, 2025 June 28, 2024 Fair value of Plan assets, beginning $ 16,873 $ 20,559 Actual return on Plan assets 1,125 246 Company contributions 978 988 Employee contributions 1,106 1,235 Benefits paid 557 ( 881 ) Settlements ( 10,299 ) ( 5,239 ) Foreign exchange gain (loss) 2,100 ( 35 ) Fair value of Plan assets at end of year $ 12,440 $ 16,873 The following table presents the Company's reconciliation of funded status for the period presented: As of June 27, 2025 June 28, 2024 Projected benefit obligation at end of year $ 17,722 $ 21,878 Fair value of plan assets at end of year 12,440 16,873 Funded status $ ( 5,282 ) $ ( 5,005 ) The fair value of Plan assets was $ 12,440 at June 27, 2025. The Plan is denominated in a foreign currency, the Swiss Franc, which can have an impact on the fair value of Plan assets. The Plan was not subject to material fluctuations during the years ended June 27, 2025 or June 28, 2024. The Plan’s assets are administered by an independent pension fund foundation (the “foundation”). As of June 27, 2025, the foundation has invested the assets of the Plan in various investments vehicles, including cash, real estate, equity securities, and bonds. The investments are measured at fair value using a mix of Level 1, Level 2 and Level 3 inputs. 401(k) Plan The Company maintains a qualified 401(k) plan (the “401(k) Plan”) for its U.S. employees. Effective in the first quarter of fiscal 2023, the Company increased the rate of its matching contributions from 3 % to 6 % of participants' eligible annual compensation and changed the form of these contributions from cash to Company stock. The Company may also make optional contributions to the plan for any plan year at its discretion. The Company had $ 3,068 and $ 2,901 of capitalized stock-based 401(k) matching compensation expense on the Consolidated Balance Sheet as of June 27, 2025 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. Expense recognized by the Company for matching contributions related to the 401(k) plan was $ 14,900 , $ 15,853 , and $ 15,665 during the fiscal years ended June 27, 2025, June 28, 2024, and June 30, 2023, respectively. Deferred Compensation Plan The Company implemented a nonqualified deferred compensation plan as of January 1, 2024, under which eligible employees may defer up to 50% of their base salaries and up to 100% of their annual incentive bonuses. The Company may also make employer contributions to participant accounts in its sole discretion, and currently matches participants’ deferrals under the plan of up to 6% of their eligible annual compensation in the form of deferred stock units (or at the Company’s election, a cash deferral credited to participants’ account balances). The Company’s matching obligations for participant deferrals made during each calendar year are subject to a financial performance condition for the Company's four fiscal quarters corresponding to such calendar year. In the case of the Company's matching obligations for participant deferrals made during calendar year 2024, the financial performance condition was fully satisfied, and the deferred stock units issued in respect of the Company's matching obligations vested accordingly. Participant deferrals under the plan are held in a rabbi trust and are subject to the claims of the Company’s creditors. Assets held by the rabbi trust are classified as trading securities and are recorded at fair value, with changes in value recorded as adjustments to other income. 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 June 27, 2025, the Company held assets under the rabbi trust of $ 268 , was subject to liabilities for amounts payable under the plan to participants (including accrued employer matching contributions not yet credited to plan participants) of $ 268 . 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 fiscal year ended June 27, 2025, the Company recognized an immaterial value of compensation expense as a result of changes in the value of notional investments selected by plan 70 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. N. Shareholders’ Equity P REFERRED S TOCK The Company is authorized to issue 1,000 shares of preferred stock with a par value of $ 0.01 per share. S HELF R EGISTRATION S TATEMENT On October 4, 2023, the Company filed a shelf registration statement on Form S-3ASR with the SEC. The shelf registration statement, which was effective upon filing with the SEC, registered each of the following securities: debt securities; preferred stock; common stock; warrants; and units. The Company has an unlimited amount available under the shelf registration statement. S TOCKHOLDER R IGHTS P LAN On December 27, 2021, the Company's Board of Directors authorized and declared a dividend of one preferred share purchase right (a “Right”), payable on January 10, 2022, for each outstanding share of common stock par value $ 0.01 per share to the stockholders of record on that date. Each Right entitled the registered holder to purchase from the Company a unit of Series A Junior Preferred Stock, par value $ 0.01 per share, of the Company at a designated price per unit, subject to adjustment. The Rights initially trade with, and are inseparable from, the shares of common stock. On June 24, 2022, the Company amended the Rights Agreement, dated as of December 27, 2021, to increase the ownership threshold for a person to be an “Acquiring Person” (as defined in the Rights Agreement) from 7.5 % of common stock to 10 % of common stock ( 10 % of common stock to 20 % of common stock in the case of a passive institutional investor). Additional details about the Rights Agreement are contained in the Current Reports on Form 8-K filed by the Company with the SEC on December 29, 2021 and June 24, 2022. On October 26, 2022 the Stockholder Rights Plan and the Rights thereunder expired. O. Stock-Based Compensation S TOCK I NCENTIVE P LANS At June 27, 2025, 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 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 3,810 shares available for future grant under the 2018 Plan at June 27, 2025. 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 Defensive Index. 71 Table of Contents E MPLOYEE S TOCK P URCHASE P LAN The Company's 1997 Employee Stock Purchase Plan, as amended and restated (the “ 1997 ESPP”) was terminated in accordance with its terms effective May 14, 2024. Under the 1997 ESPP, rights were 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 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. The number of shares issued under the 1997 ESPP during fiscal years 2025, 2024 and 2023 was 0 , 167 and 145 , respectively. There were an immaterial amount of shares related to the 1997 Plan issued and returned to the reserve during fiscal 2025. The Company adopted a new employee stock purchase plan (the “2024 ESPP”) in April 2024. The Company's shareholders approved the plan at the Company’s 2024 annual meeting of shareholders, the number of shares authorized for issuance under the 2024 ESPP is 1,000 shares. Under the 2024 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 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 June 27, 2025, 130 shares have been issued under the 2024 ESPP. Shares available for future purchase under the 2024 ESPP totaled 870 as of June 27, 2025. 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 following table summarizes activity with respect to Company-issued stock options since June 30, 2023: Options Outstanding Number of Shares Weighted Average Grant Date Fair Value Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value as of 6/28/2024 Outstanding at June 30, 2023 — — $ — — — Granted 934 $ 12.71 $ 45.00 Exercised — $ — Cancelled — $ — Outstanding at June 28, 2024 934 $ 12.71 $ 45.00 3.69 years $ — Granted — $ — Exercised — $ — Cancelled — $ — Outstanding at June 27, 2025 934 $ 12.71 $ 45.00 2.75 years $ — Exercisable at June 27, 2025 — $ — $ — — $ — There were no options vested or exercised during fiscal year 2025. Non-vested stock options are subject to the risk of forfeiture until the fulfillment of specified conditions. As of June 27, 2025, there was $ 5,822 of total unrecognized compensation cost related to non-vested options granted that is expected to be recognized over a weighted-average period 1.75 years from June 27, 2025. 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: Fiscal Year Ended June 27, 2025 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 72 Table of Contents 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 term of the option. The expected term 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 term 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. 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 Shares Weighted Average Grant Date Fair Value Outstanding at June 30, 2023 1,339 $ 54.45 Granted 1,334 36.38 Vested ( 476 ) 56.04 Forfeited ( 671 ) 47.14 Outstanding at June 28, 2024 1,526 $ 41.35 Granted 939 41.47 Vested ( 409 ) 44.69 Forfeited ( 314 ) 41.40 Outstanding at June 27, 2025 1,742 $ 40.37 The total fair value of restricted stock awards vested during fiscal years 2025, 2024 and 2023 was $ 16,643 , $ 15,994 and $ 25,587 , respectively. S TOCK - BASED C OMPENSATION E XPENSE The Company recognizes expense for its share-based payment plans in the Consolidated Statements of Operations and Comprehensive (Loss) Income in accordance with ASC 718. The Company had $ 1,712 and $ 456 of capitalized stock-based compensation expense on the Consolidated Balance Sheets as of June 27, 2025 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. The following table presents share-based compensation expenses from continuing operations included in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income: Fiscal Years Ended June 27, 2025 June 28, 2024 June 30, 2023 Cost of revenues $ 1,205 $ 2,919 $ 2,926 Selling, general and administrative 17,809 16,936 18,335 Research and development 6,005 5,814 6,492 Stock-based compensation expense before tax 25,019 25,669 27,753 Income taxes (1) ( 6,755 ) ( 6,931 ) ( 7,216 ) Stock-based compensation expense, net of income taxes $ 18,264 $ 18,738 $ 20,537 (1) Federal and state statutory rate of 27% P. Operating Segment, Geographic Information and Significant Customers Operating segments are defined as components of an enterprise evaluated regularly by the Company's chief executive officer who acts as its 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. 73 Table of Contents The Company adopted Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures , as of March 29, 2025. See the section Recently Adopted Accounting Pronouncements in Note B for more information. The CODM utilizes Net loss that is reported on the Consolidated Statement of Operations and Comprehensive Loss to assess operating performance and make decisions related to resource allocation. The Company's significant segment expenses include stock-based compensation and deprecation which are disclosed in Note O and Note E, respectively. Any other significant segment expenses which are regularly provided to the CODM are provided on the Consolidated Statement of Operations and Comprehensive Loss. The Company's segment assets are reported on the Consolidated Balance Sheets as Total Assets and its segment purchase of property plant and equipment are disclosed in Note E. The geographic distribution of the Company’s revenues as determined by order origination based on the country in which the Company's legal subsidiary is domiciled is summarized as follows: U.S. Europe Asia Pacific Eliminations Total YEAR ENDED JUNE 27, 2025 Net revenues to unaffiliated customers $ 859,058 $ 52,962 $ — $ — $ 912,020 Inter-geographic revenues 11,072 9,868 — ( 20,940 ) — Net revenues $ 870,130 $ 62,830 $ — $ ( 20,940 ) $ 912,020 Identifiable long-lived assets (1) $ 100,484 $ 956 $ — $ — $ 101,440 YEAR ENDED JUNE 28, 2024 Net revenues to unaffiliated customers $ 785,881 $ 49,375 $ 19 $ — $ 835,275 Inter-geographic revenues 6,777 1,369 — ( 8,146 ) — Net revenues $ 792,658 $ 50,744 $ 19 $ ( 8,146 ) $ 835,275 Identifiable long-lived assets (1) $ 107,655 $ 2,698 $ — $ — $ 110,353 YEAR ENDED JUNE 30, 2023 Net revenues to unaffiliated customers $ 927,003 $ 46,857 $ 22 $ — $ 973,882 Inter-geographic revenues 2,764 447 — ( 3,211 ) — Net revenues $ 929,767 $ 47,304 $ 22 $ ( 3,211 ) $ 973,882 Identifiable long-lived assets (1) $ 116,381 $ 3,173 $ — $ — $ 119,554 (1) Identifiable long-lived assets exclude ROU assets, goodwill and intangible assets. 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 solutions 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 market for the periods presented: Fiscal Years Ended June 27, 2025 June 28, 2024 June 30, 2023 Domestic (1) $ 746,306 $ 704,115 $ 865,216 International/Foreign Military Sales (2) 165,714 131,160 108,666 Total Net Revenue $ 912,020 $ 835,275 $ 973,882 (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. 74 Table of Contents The following table presents the Company's net revenue by end application for the periods presented: Fiscal Years Ended June 27, 2025 June 28, 2024 June 30, 2023 Radar (1) $ 169,738 $ 102,084 $ 229,467 Electronic Warfare (2) 96,918 107,211 144,554 Other Sensor and Effector (3) 98,833 129,035 112,659 Total Sensor and Effector 365,489 338,330 486,680 C4I (4) 398,161 383,012 414,143 Other (5) 148,370 113,933 73,059 Total Net Revenues $ 912,020 $ 835,275 $ 973,882 (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: Fiscal Years Ended June 27, 2025 June 28, 2024 June 30, 2023 Components (1) $ 189,983 $ 192,473 $ 197,180 Modules and Sub-assemblies (2) 246,097 185,587 200,281 Integrated Solutions (3) 475,940 457,215 576,421 Total Net Revenues $ 912,020 $ 835,275 $ 973,882 (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. Additional examples include integrated radio frequency and microwave multi-function assemblies and radio frequency tuners and transceivers. (3) Integrated solutions 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: Fiscal Years Ended June 27, 2025 June 28, 2024 June 30, 2023 Airborne (1) $ 410,677 $ 431,277 $ 506,264 Land (2) 166,250 115,781 157,505 Naval (3) 86,888 78,967 136,954 Space (4) 55,972 60,546 42,643 Other (5) 192,233 148,704 130,516 Total Net Revenues $ 912,020 $ 835,275 $ 973,882 (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) Space platform includes products that relate to personnel, equipment or pieces of equipment designed for space operations. (5) All platforms other than Airborne, Land, Naval or Space. 75 Table of Contents Customers comprising 10% or more of the Company’s revenues for the periods shown below are as follows: Fiscal Years Ended June 27, 2025 June 28, 2024 June 30, 2023 RTX Corporation 13 % 10 % 14 % Lockheed Martin Corporation 10 % 11 % 13 % U.S. Navy 10 % * * L3Harris * 12 % * Northrop Grumman * * 11 % 33 % 33 % 38 % * 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 years ended June 27, 2025, June 28, 2024 and June 30, 2023. Q. Derivatives The Company utilizes interest rate derivatives to mitigate interest rate exposure with respect to its financing arrangements. On September 7, 2022, the Company entered into an interest rate Swap (the “Initial Swap”) with JP Morgan Chase Bank, N.A. (“JPMorgan”) for a notional amount of $ 300,000 in order to fix the interest rate associated with a portion of the total $ 511,500 existing borrowings on the Revolver at a rate of 3.25 %. The Initial Swap agreement was designated and qualified for hedge accounting treatment as a cash flow hedge. The Initial Swap was scheduled to mature on February 28, 2027, coterminous with the maturity of the Revolver. On September 29, 2022, the Company terminated the Initial Swap. At the time of termination, the fair value of the Initial Swap was an asset of $ 5,995 . The Company received the cash settlement of $ 5,995 and these proceeds are classified within Operating Activities of the Consolidated Statements of Cash Flows for the year ended June 30, 2023. Following the termination of the Initial Swap, the Company entered into the September 2022 Swap agreement with JPMorgan on September 29, 2022. The September 2022 Swap fixed $ 300,000 of total $ 511,500 existing borrowings on the Revolver at the time of the Swap at a rate of 3.79 %. 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. On September 28, 2023, the Company terminated the September 2022 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 for the year ended June 30, 2024. Following the termination of the September 2022 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 June 27, 2025, the fair value of the September 2023 Swap was a liability of $ 5,391 and is included within Other non-current liabilities in the Company's Consolidated Balance Sheets. During fiscal year 2025, the Company amortized $ 3,524 of the gains associated with the interest swaps terminated on September 29, 2022 and September 28, 2023, which is included within Accumulated other comprehensive income. The market risk associated with the Company’s derivative instrument is the result of interest rate movements that are expected to offset the market risk of the underlying arrangement. The counterparty to the Swap is JPMorgan. Based on the credit ratings of the Company’s counterparty as of June 27, 2025, 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. 76 Table of Contents R. 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. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.