ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . |
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Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
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ITEM 1. | BUSINESS |
• | Components. Components include technology elements typically performing a single, discrete technological function, which when physically combined with other components may be used to create a module or subassembly. Examples include but are not limited to power amplifiers and limiters, switches, oscillators, filters, equalizers, digital and analog converters, chips, MMICs (monolithic microwave integrated circuits), and memory and storage devices. |
• | Modules and Subassemblies. Modules and subassemblies include combinations of multiple functional technology elements and/or components that work together to perform multiple functions but are typically resident on or within a single board or housing. Modules and subassemblies may in turn be combined to form an integrated subsystem. Examples of modules and subassemblies include but are not limited to embedded processing modules, embedded processing boards, switch fabric boards, high speed input/output boards, digital receiver boards, graphics and video processing and Ethernet and input-output (“I/O”) boards, multi-chip modules, integrated radio frequency and microwave multi-function assemblies, tuners, and transceivers. |
• | Integrated Subsystems. Integrated subsystems include multiple modules and/or subassemblies combined with a backplane or similar functional element and software to enable a solution. These are typically but not always integrated within a chassis and with cooling, power and other elements to address various requirements and are also often combined with additional technologies for interaction with other parts of a complete system or platform. Integrated subsystems also include spare and replacement modules and subassemblies sold as part of the same program for use in or with integrated subsystems sold by us. |
• | The aerospace and defense electronics market is expected to grow in 2019 and beyond. According to Renaissance Strategic Advisors (“RSA”), the global aerospace and defense electronics market is estimated to be $125 billion in 2019, growing to $151 billion by 2023. Within this global market, RSA estimates that the U.S. defense electronics market will be approximately $69 billion in 2019, growing to $85 billion in 2023. The aerospace and defense electronics marketplace consists of two primary subsegments: (i) C4I and (ii) sensor and effector mission systems. C4I encompasses platform and mission management, which include avionics and vetronics, C2I, which includes command and control and intelligence, and dedicated communications processing. Sensor and effector mission systems are primarily different types of sensor modalities such as EW, radar, EO/IR, and acoustics as well as weapons systems such as missiles and munitions. Within the tier 2 C4I market in which we participate, RSA estimates the market for 2019 to be $6.7 billion for platform and mission management, $8.1 billion for C2I, and $8.2 billion for dedicated communications. RSA estimates the compound annual growth rate (“CAGR”) from 2018-2023 for these markets to be 6.5% for platform and mission management, 6.2% for C2I, and 5.8% for dedicated communications. Within the tier 2 sensor and effector mission systems market in which we participate, RSA estimates the market for 2019 to be $4.5 billion for EW, $5.1 billion for radar, $1.9 billion for EO/IR, $1.2 billion for acoustics, and $3.1 billion for weapons systems. RSA estimates the 2018-2023 CAGR for these markets to be 5.2% for EW, 6.2% for radar, 6.5% for EO/IR, 6.5% for acoustics, and 8.1% for weapons systems. Within the context of the overall U.S. defense budget and spending for defense electronics specifically, we believe the C4ISR, EW, guided missiles and precision munitions, and ballistic missile defense market segments have a high priority for future DoD spending. We continue to build on our strengths in the design and development of performance optimized electronic subsystems for these markets, and often team with multiple defense prime contractors as they bid for projects, thereby increasing our chance of a successful outcome. We expect to continue our above industry-average growth. |
• | The rapidly expanding demand for tactical ISR is leading to significant growth in sensor data being generated, leading to even greater demand for the capability of our products to securely store and process data onboard platforms. An increase in the prevalence and resolution of ISR sensors is generating significant growth in the associated data that needs to be stored and turned into information for the warfighter in a timely manner. In addition, several factors are driving the defense and intelligence industries to demand greater capability to collect, store, and process data onboard the aircraft, UAVs, ships and other vehicles, which we refer to collectively as platforms. These factors include the limited communications bandwidth of existing platforms, the need for platforms that can operate more autonomously and possibly in denied communications environments, the need for platforms with increased persistence to enable them to remain in or fly above the battlefield for extended periods, and the need for greater onboard processing capabilities. In addition, the advent of sophisticated AI algorithms is beginning to revolutionize the ability of sensor processing systems to intelligently and efficiently process and act upon these large data sets. Standard computing architectures and computing platforms currently do not offer the level of performance needed to optimize existing AI algorithms, creating an additional opportunity for advanced processing capabilities onboard the platform. |
• | Rogue nations’ missile programs and threats from peer nations are causing greater investment in advanced new radar, EW and ballistic missile defense capabilities. There are a number of new and emerging threats, such as peer nations developing stealth technologies, including stealth aircraft, new anti-ship ballistic missiles and a variety of other advanced missile capabilities. Additionally, U.S. armed forces require enhanced signals intelligence and jamming capabilities. In response to these emerging threats, we have participated in key DoD programs, including Aegis, Patriot, SEWIP, a large ground-based radar, F-22, Raptor, F-35 Joint Strike Fighter and upgrade programs for the F-15 and F-16. |
• | The long-term DoD budget pressure is pushing more dollars toward upgrades of the electronic subsystems on existing platforms, which may increase demand for our products. The DoD is moving from major new weapons systems developments to upgrades of the electronic subsystems on existing platforms. These upgrades are expected to include more sensors, signal processing, ISR algorithms, multi-intelligence fusion and exploitation, computing and communications. We believe that upgrades to provide new urgent war fighting capability, driven by combatant commanders, are occurring more rapidly than traditional defense prime contractors can easily react to. We believe these trends will cause defense prime contractors to increasingly seek out our high-performance, cost-effective open architecture products. |
• | Defense procurement reform is causing the defense prime contractors to outsource more work to commercial companies and we believe that prime contractor outsourcing is our largest secular growth opportunity. RSA estimates that in 2019 the U.S. defense tier 2 embedded computing and RF market addressable by suppliers such as Mercury is approximately $19 billion. RSA estimates that the U.S. defense prime contractors currently outsource only a small percentage of their work. On a global basis the tier 2 embedded computing and RF market in 2019 is estimated by RSA to be $39 billion. The U.S. government is intensely focused on making systems more affordable and shortening their development time. In addition, the U.S. government is challenging defense prime contractors to leverage commercial technology wherever possible. This trend, along with a scarcity of technical and engineering talent in the market, is causing defense prime contractors to outsource to companies like Mercury, which we believe is our largest secular growth opportunity. As a company that provides commercial items to the defense industry, we believe our products and subsystem solutions are often more affordable than solutions with the same functionality developed by a defense prime contractor. Several factors are providing incentives for defense prime contractors to outsource more work to subcontractors with significant expertise and cost-effective technology capabilities and solutions, and we have transformed our business model over the last several years to address these long-term outsourcing trends and other needs. |
• | DoD security and program protection requirements are creating new opportunities for domestic sourcing and our advanced secure processing capabilities. The government is focused on ensuring that the U.S. military protects its defense electronic systems and the information held within them from nefarious activities such as tampering, reverse engineering, and other forms of advanced attacks, including cyber. The requirement to add security comes at a time when the commercial technology world continues to offshore more of the design, development, manufacturing, and support of such capabilities, making it more difficult to protect against embedded vulnerabilities, tampering, reverse engineering and other undesired activities. The DoD has a mandate to ensure both the provenance and integrity of the technology and its associated supply chain. These factors have created a unique opportunity for us to expand beyond sensor processing into the provision of technologies ranging from advanced secure processing subsystems to miniaturized custom microelectronics devices and capabilities for other on-board critical computing applications designed, developed, manufactured, and supported in the U.S.A. In addition, advanced systems sold to foreign military buyers also require protection so that the technologies, techniques and data associated with them do not become more widely available, which further enhances our market opportunity. |
• | Subsystem Solutions Provider for the C4ISR and EW Markets. Through our commercially developed, specialized processing subsystem solutions, we address the challenges associated with the collection and processing of massive, continuous streams of data and dramatically shorten the time that it takes to give information to U.S. armed forces at the tactical edge. Our solutions are specifically designed for flexibility and interoperability, allowing our products to be easily integrated into larger system-level solutions. Our ability to integrate subsystem-level capabilities allows us to provide solutions that most effectively address the mission-critical challenges within the C4ISR market, including multi-intelligence data fusion and AI processing onboard the platform. We leverage our deep expertise in embedded multicomputing, embedded sensor processing, with the addition of our RF microwave and millimeter subsystems and components, along with strategic investments in research and development to provide solutions across the sensor processing chain. |
• | Diverse Mix of Stable, Growth Programs Aligned with DoD Funding Priorities. Our products and solutions have been deployed on more than 300 different programs and over 25 different defense prime contractors. We serve high priority markets for the DoD and foreign militaries, such as UAVs, ballistic missile defense, guided missiles and precision munitions, airborne reconnaissance, EW, and have secured positions on mission-critical programs including Aegis, Predator and Reaper UAVs, F-35 Joint Strike Fighter, Patriot missile, SEWIP, and Paveway. In addition, we consistently leverage our technology and capabilities across multiple programs, providing significant operating leverage and cost savings. Our recent acquisitions allow us to participate in a broader array of programs, many with key strategic customers of ours. |
• | We are a leading commercial provider of secure processing subsystems designed and made in the U.S.A. We have a portfolio of Open Standards Architecture (“OSA”) technology building blocks across the entire sensor processing chain. We offer embedded secure processing capabilities with advanced packaging and cooling technologies that ruggedize commercial technologies while allowing them to stay cool for reliable operation. These capabilities allow us to help our customers meet the demanding SWaP requirements of today’s defense platforms. Our pre-integrated subsystems improve affordability by substantially reducing customer system integration costs and time-to-market for our solutions. System integration costs are one of the more substantial costs our customers bear in developing and deploying technologies in defense programs and platforms. Our pre-integrated solutions approach allows for more rapid and affordable modernization of existing platforms and faster deployment of new platforms. |
• | We provide advanced, integrated security features for our products and subsystems, addressing an increasingly prevalent requirement for DoD program security. We offer secure processing expertise that is built-in to our pre-integrated subsystems. By doing this we are able to provide secure building blocks that allow our customers to also incorporate their own security capabilities. This assists our customers in ensuring program protection as they deploy critical platforms and programs, all in support of DoD missions. The acquisition of the Carve-Out Business brought us new security technologies and also allowed us to provide enhanced security capabilities in areas such as memory and storage devices. Our acquisitions of the Carve-Out Business, LIT, and Athena also added to our portfolio of sophisticated firmware and software specifically designed to secure microelectronic devices that can be leveraged across our product portfolio. |
• | We are pioneering a next generation business model. The DoD and the defense industrial base is currently undergoing a major transformation. Domestic political and budget uncertainty, geopolitical instability and evolving global threats have |
• | We continue to leverage our expertise in building pre-integrated subsystems in support of critical defense programs, driving out procurement costs by lowering integration expenses of our customers. |
• | We have been a pioneer in driving OSA for both embedded computing and RF. |
• | The DoD has asked defense industry participants to invest their own resources into R&D. This approach is a pillar of our business model. |
• | Security and program protection are now critical considerations for both program modernizations as well as for new program deployment. We are now in our third generation of building secure embedded processing solutions. |
• | Value-Added Subsystem Solution Provider for Defense Prime Contractors. Because of the DoD’s continuing shift toward a firm fixed price contract procurement model, an increasingly uncertain budgetary and procurement environment, and increased budget pressures from both the U.S. and allied governments, defense prime contractors are accelerating their move toward outsourcing opportunities to help mitigate the increased program and financial risk. Our differentiated secure sensor and safety-critical processing solutions offer meaningful capabilities upgrades for our customers and enable the rapid, cost-effective deployment of systems to the end customer. We believe our open architecture subsystems offer differentiated sensor processing and data analytics capabilities that cannot be easily replicated. Our solutions minimize program risk, maximize application portability, and accelerate customers’ time to market, all within a fixed-pricing contracting environment. |
• | Delivery of Platform-Ready Solutions for Classified Programs. We believe our integration work through our Cypress, California facility provides us with critical insights as we implement and incorporate key classified government intellectual property, including critical intelligence and signal processing algorithms, into advanced systems. This integration work provides us the opportunity to combine directly and integrate our technology building blocks along with our intellectual property into our existing embedded processing products and solutions, enabling us to deliver more affordable, platform-ready integrated ISR subsystems that leverage our OSA and address key government technology and procurement concerns. Our operations in this environment also help us identify emerging needs and opportunities to influence our future product development, so that critical future needs can be met in a timely manner with commercially-developed products and solutions. |
• | We have invested in advanced, domestic design and manufacturing capabilities. Over the past several years we have prioritized investments to build our internal capabilities and capacity for defense electronics design and manufacturing in the U.S. These investments include the consolidation of a number of sub-scale microelectronics manufacturing facilities into our modern AMCs as well as the establishment of our USMO in Phoenix, Arizona. In addition to the consolidation of facilities into scalable engineering and manufacturing centers of excellence, we have made the necessary investments to outfit these facilities with modern, scalable, and redundant tools and equipment to promote quality, efficiency, throughput, and redundancy. In addition we invested in our information technology (“IT”) infrastructure and business systems to meet Defense Federal Acquisition Regulation Supplement (“DFARS”) requirements for cybersecurity. These investments taken together are intended to demonstrate our commitment to meeting DoD expectations for a trusted and secure defense industrial base. Our AMCs in Hudson, New Hampshire, West Caldwell, New Jersey, Oxnard, California, Huntsville, Alabama and Phoenix, Arizona are strategically located near key customers and are purpose-built for the design, build and test of RF components and subsystems in support of a variety of key customer programs. Our USMO is built around scalable, repeatable, secure, affordable, and predictable manufacturing. The USMO is a DMEA certified secure trusted site, certified to AS9100 quality standards and it utilizes Lean Six Sigma methodologies throughout manufacturing. The USMO is designed for efficient manufacturing, enabling our customers to access the best proven technology and high performing, secure processing solutions. This allows for the most repeatable product performance, while optimizing affordability and production responsiveness. |
• | Long-Standing Industry Relationships. We have established long-standing relationships with defense prime contractors, the U.S. government and other key organizations in the defense industry over our 30 years in the defense electronics industry. Our customers include Airbus, BAE Systems, Boeing, General Atomics, General Dynamics, L3Harris Technologies, Leonardo, Lockheed Martin, Northrop Grumman, and Raytheon. Over this period, we have become recognized for our ability to develop new technologies and meet stringent program requirements. We believe we are well-positioned to maintain these high-level customer engagements and enhance them through the additional relationships that our recently acquired businesses have with many of the same customers. |
• | Proven Management Team. Our senior management team has developed a long-term compelling strategy for the aerospace and defense markets. Our senior management team has a history of identifying and evaluating successful business acquisition opportunities, performing in-depth due diligence, negotiating with owners and management, structuring, financing, and closing transactions and then integrating the acquired business resulting in the creation of synergies and enhanced overall returns. Having completed these critical steps with a senior management team with significant experience in growing, scaling and acquiring businesses, we believe that we have demonstrated our operational capabilities and we are well-positioned to continue growing and scaling our business. |
• | Leading M&A Origination and Execution Capability. We have a strong track-record of identifying and executing strategic acquisitions. Since July 1, 2015 we have acquired ten businesses, successfully completing integration of the earlier acquired businesses with the integration of the more recent acquisitions progressing well, which are strategically aligned with Mercury. We have established an internal team that brings decades of experience across more than 100 transactions. We have developed internal processes to identify and source strategic acquisitions on a proprietary basis. A number of our acquisitions have been sourced on a proprietary basis and negotiated directly with owners. In addition, we have developed relationships with a number of investment banks and other sell-side advisors, as well as a reputation as a preferred acquirer, which allow us access to targeted or widely-marketed M&A processes. Our internal capabilities include financial, legal, and other transaction diligence, deal valuation, and deal negotiations. Where appropriate, we leverage third party advisors to supplement our internal diligence. We have a proven ability to execute numerous transactions simultaneously effectively and efficiently. |
• | Proven M&A Integration Capability. We have developed the internal processes and capability to integrate acquired businesses to deliver value through revenue and cost synergies. We leverage our common cultures and values as well as common processes, business systems, tools, channels and manufacturing infrastructure to accelerate growth and improve profitability in our acquired businesses. |
• | reduced and delayed demand for our products; |
• | increased risk of order cancellations or delays; |
• | downward pressure on the prices of our products; |
• | greater difficulty in collecting accounts receivable; and |
• | risks to our liquidity, including the possibility that we might not have access to our cash and short-term investments or to our line of credit when needed. |
• | Changes in government administration and national and international priorities, including developments in the geo-political environment, could have a significant impact on national or international defense spending priorities and the efficient handling of routine contractual matters. These changes could have a negative impact on our business in the future. |
• | Our contracts with the U.S. and foreign governments and their defense prime contractors and subcontractors are subject to termination either upon default by us or at the convenience of the government or contractor if, among other reasons, the program itself has been terminated. Termination for convenience provisions generally entitle us to recover costs |
• | Because we contract to supply goods and services to the U.S. and foreign governments and their prime and subcontractors, we compete for contracts in a competitive bidding process. We may compete directly with other suppliers or align with a prime or subcontractor competing for a contract. We may not be awarded the contract if the pricing or product offering is not competitive, either at our level or the prime or subcontractor level. In addition, in the event we are awarded a contract, we are subject to protests by losing bidders of contract awards that can result in the reopening of the bidding process and changes in governmental policies or regulations and other political factors. In addition, we may be subject to multiple rebid requirements over the life of a defense program in order to continue to participate on such program, which can result in the loss of the program or significantly reduce our revenue or margin from the program. The government’s requirements for more frequent technology refreshes on defense programs may lead to increased costs and lower long term revenues. |
• | Consolidation among defense industry contractors has resulted in a few large contractors with increased bargaining power relative to us. The increased bargaining power of these contractors may adversely affect our ability to compete for contracts and, as a result, may adversely affect our business or results of operations in the future. |
• | Our customers include U.S. government contractors who must comply with and are affected by laws and regulations relating to the formation, administration, and performance of U.S. government contracts. In addition, when we contract with the U.S. government, we must comply with these laws and regulations, including the organizational conflict-of-interest regulations. A violation of these laws and regulations could result in the imposition of fines and penalties to us or our customers or the termination of our or their contracts with the U.S. government. As a result, there could be a delay in our receipt of orders from our customers, a termination of such orders, or a termination of contracts between us and the U.S. government. |
• | We sell many products and services to U.S. and international defense contractors or directly to the U.S. government on a commercial item basis, eliminating the requirement to disclose and certify cost data. To the extent that there are interpretations or changes in the Federal Acquisition Regulations (“FAR”) regarding the qualifications necessary to sell commercial items, there could be a material impact on our business and operating results. For example, there have been legislative proposals to narrow the definition of a “commercial item” (as defined in the FAR) or to require cost and pricing data on commercial items that could limit or adversely impact our ability to contract under commercial item terms. Changes could be accelerated in our mix of business, in federal regulations, or in the interpretation of federal regulations, which may subject us to increased oversight by the Defense Contract Audit Agency (“DCAA”) for certain of our products or services. Such changes could also trigger contract coverage under the Cost Accounting Standards (“CAS”), further impacting the commercial operating model and requiring compliance with a defined set of business systems criteria. Failure to comply with applicable CAS requirements could adversely impact our ability to win future CAS-type contracts. |
• | We are subject to the DFARS, in connection with our defense work for the U.S. government and defense prime contractors. Amendments to the DFARS, such as the DFARS cybersecurity requirements, may increase our costs or delay the award of contracts if we are unable to certify that we satisfy such cybersecurity requirements at our Company level and into our supply chain. |
• | The U.S. government or a defense prime contractor customer could require us to relinquish data rights to a product in connection with performing work on a defense contract, which could lead to a loss of valuable technology and intellectual property in order to participate in a government program. |
• | The U.S. government or a defense prime contractor customers could require us to enter into cost reimbursable contracts that could offset our cost efficiency initiatives. |
• | We are subject to various U.S. federal export-control statutes and regulations which affect our business with, among others, international defense customers. In certain cases the export of our products and technical data to foreign persons, and the provision of technical services to foreign persons related to such products and technical data, may require licenses from the U.S. Department of Commerce or the U.S. Department of State. The time required to obtain these licenses, and the restrictions that may be contained in these licenses, may put us at a competitive disadvantage with respect to competing with international suppliers who are not subject to U.S. federal export control statutes and regulations. In addition, violations of these statutes and regulations can result in civil and, under certain circumstances, criminal liability as well as administrative penalties which could have a material adverse effect on our business and operating results. |
• | We anticipate that sales to our U.S. prime defense contractor customers as part of foreign military sales (“FMS”) programs will be an increasing part of our business going forward. These FMS sales combine several different types of risks and uncertainties highlighted above, including risks related to government contracts, risks related to defense contracts, timing and budgeting of foreign governments, and approval from the U.S. and foreign governments related to the programs, all of which may be impacted by macroeconomic and geopolitical factors outside of our control. |
• | Certain of our employees with appropriate security clearances may require access to classified information in connection with the performance of a U.S. government contract. We must comply with security requirements pursuant to the National Industrial Security Program Operating Manual, or NISPOM, and other U.S. government security protocols when accessing sensitive information. Failure to comply with the NISPOM or other security requirements may subject us to civil or criminal penalties, loss of access to sensitive information, loss of a U.S. government contract, or potentially debarment as a government contractor. Further, the Defense Counterintelligence and Security Agency ("DCSA") is transitioning its review of a contractor's security program to focus on the protection of critical unclassified information and assets. Failure to meet DCSA's new, broader requirements could adversely impact the ability to win new business as a government contractor. |
• | We may need to invest additional capital to build out higher level security infrastructure at certain of our facilities to capture new design wins on defense programs with higher level security requirements. Failure to invest in such infrastructure may limit our ability to obtain new design wins on defense programs. In addition, we may need to invest in additional secure laboratory space to integrate efficiently subsystem level solutions and maintain quality assurance on current and future programs. |
• | our ability to create demand for products in new markets; |
• | our ability to respond to changes in our customers’ businesses by updating existing products and introducing, in a timely fashion, new products which meet the needs of our customers; |
• | our ability to increase our market visibility and penetration with the prime defense contractors; |
• | the quality of our new products; |
• | our ability to respond rapidly to technological change; |
• | our ability to increase our in-house manufacturing capacity and utilization; and |
• | our ability to successfully integrate any acquisitions that we make and achieve revenue and cost synergies and economies of scale. |
• | problems and increased costs in connection with the integration of the personnel, operations, technologies, IT infrastructure, or products of the acquired businesses; |
• | layering of integration activity due to multiple overlapping acquisitions; |
• | unanticipated costs; |
• | failure to achieve anticipated increases in revenues and profitability; |
• | diversion of management’s attention from our organic business; |
• | adverse effects on business relationships with suppliers and customers and those of the acquired company; |
• | acquired assets becoming impaired as a result of technical advancements or worse-than-expected performance by the acquired company; |
• | failure to rationalize manufacturing capacity, locations, and operating models to achieve anticipated economies of scale, or disruptions to manufacturing and product design operations during the combination of facilities; |
• | failure to rationalize business and information systems and to expand the IT infrastructure and security protocols throughout the enterprise; |
• | volatility associated with accounting for earn-outs in a given transaction; |
• | entering markets in which we have no, or limited, prior experience; |
• | poor export control programs pre-acquisition at acquired companies, which may lead to liabilities for export violation, or impact the business acquired when placed under our export compliance program; |
• | potential loss of key employees; and |
• | adversely affect our internal control over financial reporting before the acquiree's complete integration into our control environment. |
• | issue stock that would dilute our existing shareholders’ ownership percentages; |
• | incur debt and assume liabilities; |
• | obtain financing on unfavorable terms, or not be able to obtain financing on any terms at all; |
• | incur amortization expenses related to acquired intangible assets or incur large and immediate write-offs; |
• | incur large expenditures related to office closures of the acquired companies, including costs relating to the termination of employees and facility and leasehold improvement charges resulting from our having to vacate the acquired companies’ premises; and |
• | reduce the cash that would otherwise be available to fund operations or for other purposes. |
• | failure to implement our business plan for the combined business; |
• | unanticipated issues in integrating manufacturing, logistics, business systems, information and communications systems, and other infrastructure items; |
• | unanticipated changes in applicable laws and regulations; |
• | failure to retain key employees; |
• | failure to retain key customers; |
• | failure to rationalize our supply chain; |
• | operating risks inherent in these companies and our organic business; |
• | the impact of any assumed legal proceedings; |
• | the impact of our export compliance program on these companies; |
• | the impact on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002; and |
• | unanticipated issues, expenses, charges, and liabilities related to the acquisitions. |
• | making it more difficult for us to satisfy our obligations under our debt instruments, including, without limitation, the Revolver; and if we fail to comply with these requirements, an event of default could result; |
• | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, or other general corporate requirements; |
• | requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions, and other general corporate purposes; |
• | increasing our vulnerability to general adverse economic and industry conditions; |
• | exposing us to the risk of increased interest rates as certain of our borrowings may have variable interest rates, which could increase the cost of servicing our financial instruments and could materially reduce our profitability and cash flows; |
• | limiting our flexibility in planning for and reacting to changes in the industry in which we compete; |
• | placing us at a disadvantage compared to other, less leveraged competitors; and |
• | increasing our cost of borrowing. |
• | changes in applicable laws and regulatory requirements; |
• | export and import restrictions; |
• | export controls relating to technology; |
• | tariffs and other trade barriers; |
• | less favorable intellectual property laws; |
• | difficulties in staffing and managing foreign operations; |
• | longer payment cycles; |
• | problems in collecting accounts receivable; |
• | adverse economic conditions in foreign markets; |
• | political instability; |
• | fluctuations in currency exchange rates; |
• | expatriation controls; and |
• | potential adverse tax consequences. |
• | delays in completion of internal product development projects; |
• | delays in shipping hardware and software; |
• | delays in acceptance testing by customers; |
• | a change in the mix of products sold to our served markets; |
• | changes in customer order patterns; |
• | production delays due to quality problems with outsourced components; |
• | inability to scale quick reaction capability products due to low product volume; |
• | shortages and costs of components; |
• | delays due to the implementation of new tariffs or other trade barriers; |
• | the timing of product line transitions; |
• | declines in quarterly revenues from previous generations of products following announcement of replacement products containing more advanced technology; |
• | inability to realize the expected benefits from acquisitions and restructurings, or delays in realizing such benefits; |
• | potential asset impairment, including goodwill and intangibles, or restructuring charges; and |
• | changes in estimates of completion on fixed price service engagements. |
• | investors’ perception of, and demand for, securities of technology and aerospace and defense companies; |
• | conditions of the United States and other capital markets in which we may seek to raise funds; |
• | our future results of operations, financial condition, and cash flows; and |
• | prevailing interest rates. |
• | further develop or enhance our customer base; |
• | acquire necessary technologies, products, or businesses; |
• | expand operations in the United States and elsewhere; |
• | hire, train, and retain employees; |
• | market our software solutions, services, and products; or |
• | respond to competitive pressures or unanticipated capital requirements. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
Location | Size in Sq. Feet | Commitment | ||
Andover, MA | 145,262 | Leased, expiring 2032 | ||
Hudson, NH | 121,553 | Leased, expiring 2024 | ||
Phoenix, AZ | 73,729 | Leased, expiring 2020 | ||
Oxnard, CA | 72,673 | Leased, expiring 2025 | ||
Fremont, CA | 53,713 | Leased, expiring 2023 | ||
Cypress, CA | 42,770 | Leased, expiring 2021 | ||
Chantilly, VA | 32,789 | Leased, expiring 2025 | ||
Mesa, AZ | 31,820 | Leased, expiring 2022 | ||
Geneva, CH | 27,287 | Leased, expiring 2027 | ||
Camarillo, CA | 25,017 | Leased, expiring 2020 |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 4.1. | EXECUTIVE OFFICERS OF THE REGISTRANT |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
High | Low | ||||||
2019 Fourth quarter | $ | 79.83 | $ | 63.39 | |||
Third quarter | $ | 67.85 | $ | 43.01 | |||
Second quarter | $ | 55.82 | $ | 41.16 | |||
First quarter | $ | 57.26 | $ | 37.55 | |||
2018 Fourth quarter | $ | 49.35 | $ | 30.11 | |||
Third quarter | $ | 52.59 | $ | 41.64 | |||
Second quarter | $ | 55.00 | $ | 47.69 | |||
First quarter | $ | 52.00 | $ | 39.96 |
Period of Net Share Settlement | Total Number of Shares Net Settled (1) | Average Price Per Share | |||||
July 1, 2018 - September 30, 2018 | 136 | $ | 49.30 | ||||
October 1, 2018 - December 31, 2018 | 4 | $ | 49.62 | ||||
January 1, 2019 - March 31, 2019 | 9 | $ | 58.96 | ||||
April 1, 2019 - June 30, 2019 | 7 | $ | 70.78 | ||||
Total | 156 |
ITEM 6. | SELECTED FINANCIAL DATA |
For the Years Ended June 30, | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Statement of Operations Data: | |||||||||||||||||||
Net revenues | $ | 654,744 | $ | 493,184 | $ | 408,588 | $ | 270,154 | $ | 234,847 | |||||||||
Income from operations | $ | 76,584 | $ | 46,985 | $ | 37,403 | $ | 23,973 | $ | 18,355 | |||||||||
Net income (1) | $ | 46,775 | $ | 40,883 | $ | 24,875 | $ | 19,742 | $ | 10,369 | |||||||||
Adjusted EBITDA(2) (3) | $ | 145,326 | $ | 114,567 | $ | 92,575 | $ | 56,137 | $ | 43,628 | |||||||||
Adjusted EPS(2) | $ | 1.84 | $ | 1.42 | $ | 1.15 | $ | 0.96 | $ | 0.82 | |||||||||
Net earnings per share: | |||||||||||||||||||
Basic | $ | 0.98 | $ | 0.88 | $ | 0.59 | $ | 0.58 | $ | 0.45 | |||||||||
Diluted | $ | 0.96 | $ | 0.86 | $ | 0.58 | $ | 0.56 | $ | 0.44 |
As of June 30, | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
Balance Sheet Data: | |||||||||||||||||||
Working capital | $ | 484,140 | $ | 260,063 | $ | 173,351 | $ | 177,748 | $ | 142,472 | |||||||||
Total assets | $ | 1,416,977 | $ | 1,064,480 | $ | 815,745 | $ | 736,496 | $ | 386,880 | |||||||||
Long-term obligations | $ | 34,206 | $ | 220,909 | $ | 17,483 | $ | 195,808 | $ | 3,457 | |||||||||
Total shareholders’ equity | $ | 1,284,739 | $ | 771,891 | $ | 725,417 | $ | 473,044 | $ | 350,138 |
(1) | Fiscal year 2015 net income of $10.4 million includes a $4.0 million impact from discontinued operations. Net income from continuing operations for the fiscal year ended June 30, 2015 was $14.4 million. |
(2) | In our periodic communications, we discuss key measures that are not calculated according to U.S. generally accepted accounting principles (“GAAP”), adjusted EBITDA and adjusted EPS. Adjusted EBITDA is defined as net income before other non-operating adjustments, interest income and expense, income taxes, depreciation, amortization of intangible assets, restructuring and other charges, impairment of long-lived assets, acquisition and financing costs, fair value adjustments from purchase accounting, litigation and settlement income and expense, and stock-based and other non-cash compensation expense. We define adjusted income, a non-GAAP financial measure, as net income before amortization of intangible assets, restructuring and other charges, impairment of long-lived assets, acquisition and financing costs, fair value adjustments from purchase accounting, litigation and settlement income and expense, and stock-based and other non-cash compensation expense. The impact to income taxes includes the impact to the effective tax rate, current tax provision and deferred tax provision. Adjusted EPS, a non-GAAP financial measure, expresses adjusted income from continuing operations on a per share basis using weighted average diluted shares outstanding. We use adjusted EBITDA and adjusted EPS as important indicators of the operating performance of our business. We use adjusted EBITDA and adjusted EPS in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our board of directors, determining the portion of bonus compensation for executive officers and other key employees based on operating performance, evaluating short-term and long-term operating trends in our operations and allocating resources to various initiatives and operational requirements. We believe that adjusted EBITDA and adjusted EPS permit a comparative assessment of our operating performance, relative to our performance based on our GAAP results, while isolating the effects of charges that may vary from period to period without any correlation to underlying operating performance. We believe that these non-GAAP financial adjustments are useful to investors because it allows investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making. We believe that trends in our adjusted EBITDA and adjusted EPS are valuable indicators of our operating performance. |
(3) | As of July 1, 2018, the Company has revised its definition of adjusted EBITDA to incorporate other non-operating adjustments, net, which includes gains or losses on foreign currency remeasurement and fixed assets sales and disposals among other adjustments. Adjusted EBITDA for prior periods has been recast for comparative purposes. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
(In thousands) | Fiscal 2019 | As a % of Total Net Revenue | Fiscal 2018 | As a % of Total Net Revenue | |||||||||
Net revenues | $ | 654,744 | 100.0 | % | $ | 493,184 | 100.0 | % | |||||
Cost of revenues | 368,588 | 56.3 | 267,326 | 54.2 | |||||||||
Gross margin | 286,156 | 43.7 | 225,858 | 45.8 | |||||||||
Operating expenses: | |||||||||||||
Selling, general and administrative | 110,717 | 16.9 | 88,365 | 17.9 | |||||||||
Research and development | 68,925 | 10.5 | 58,807 | 11.9 | |||||||||
Amortization of intangible assets | 27,914 | 4.3 | 26,004 | 5.3 | |||||||||
Restructuring and other charges | 560 | 0.1 | 3,159 | 0.7 | |||||||||
Acquisition costs and other related expenses | 1,456 | 0.2 | 2,538 | 0.5 | |||||||||
Total operating expenses | 209,572 | 32.0 | 178,873 | 36.3 | |||||||||
Income from operations | 76,584 | 11.7 | 46,985 | 9.5 | |||||||||
Interest income | 932 | 0.1 | 32 | — | |||||||||
Interest expense | (9,109 | ) | (1.4 | ) | (2,850 | ) | (0.6 | ) | |||||
Other expense, net | (8,880 | ) | (1.3 | ) | (1,594 | ) | (0.3 | ) | |||||
Income before income taxes | 59,527 | 9.1 | 42,573 | 8.6 | |||||||||
Tax provision | 12,752 | 2.0 | 1,690 | 0.3 | |||||||||
Net income | $ | 46,775 | 7.1 | % | $ | 40,883 | 8.3 | % |
• | the acquisition of other companies or businesses; |
• | the repayment and refinancing of debt; |
• | capital expenditures; |
• | working capital; and |
• | other purposes as described in the prospectus supplement. |
For the Years Ended | |||||||||||
(In thousands) | June 30, 2019 | June 30, 2018 | June 30, 2017 | ||||||||
Net cash provided by operating activities | $ | 97,517 | $ | 43,321 | $ | 59,146 | |||||
Net cash used in investing activities | $ | (153,774 | ) | $ | (200,877 | ) | $ | (111,087 | ) | ||
Net cash provided by financing activities | $ | 247,765 | $ | 182,937 | $ | 11,338 | |||||
Net increase (decrease) in cash and cash equivalents | $ | 191,411 | $ | 24,884 | $ | (40,054 | ) | ||||
Cash and cash equivalents at end of year | $ | 257,932 | $ | 66,521 | $ | 41,637 |
(In thousands) | Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | ||||||||||||||
Operating leases | $ | 69,630 | $ | 10,205 | $ | 17,229 | $ | 13,910 | $ | 28,286 | |||||||||
Purchase obligations | 73,762 | 73,762 | — | — | — | ||||||||||||||
$ | 143,392 | $ | 83,967 | $ | 17,229 | $ | 13,910 | $ | 28,286 |
Year Ended June 30, | |||||||||||
(In thousands) | 2019 | 2018 | 2017 | ||||||||
Net income | $ | 46,775 | $ | 40,883 | $ | 24,875 | |||||
Other non-operating adjustments, net (1) | 364 | (795 | ) | (1,345 | ) | ||||||
Interest expense, net | 8,177 | 2,818 | 7,106 | ||||||||
Tax provision | 12,752 | 1,690 | 6,193 | ||||||||
Depreciation | 18,478 | 16,273 | 12,589 | ||||||||
Amortization of intangible assets | 27,914 | 26,004 | 19,680 | ||||||||
Restructuring and other charges (2) | 560 | 3,159 | 1,952 | ||||||||
Impairment of long-lived assets | — | — | — | ||||||||
Acquisition and financing costs (3) | 9,628 | 4,928 | 2,389 | ||||||||
Fair value adjustments from purchase accounting (4) | 713 | 1,992 | 3,679 | ||||||||
Litigation and settlement expense (income), net | 344 | — | 117 | ||||||||
Stock-based and other non-cash compensation expense | 19,621 | 17,615 | 15,341 | ||||||||
Adjusted EBITDA | $ | 145,326 | $ | 114,567 | $ | 92,576 |
Year Ended June 30, | |||||||||||||||||||||||
(In thousands, except per share data) | 2019 | 2018 | 2017 | ||||||||||||||||||||
Net income and diluted earnings per share | $ | 46,775 | $ | 0.96 | $ | 40,883 | $ | 0.86 | $ | 24,875 | $ | 0.58 | |||||||||||
Amortization of intangible assets | 27,914 | 26,004 | 19,680 | ||||||||||||||||||||
Restructuring and other charges (1) | 560 | 3,159 | 1,952 | ||||||||||||||||||||
Impairment of long-lived assets | — | — | — | ||||||||||||||||||||
Acquisition and financing costs (2) | 9,628 | 4,928 | 2,389 | ||||||||||||||||||||
Fair value adjustments from purchase accounting (3) | 713 | 1,992 | 3,679 | ||||||||||||||||||||
Litigation and settlement expense (income), net | 344 | — | 117 | ||||||||||||||||||||
Stock-based and other non-cash compensation expense | 19,621 | 17,615 | 15,341 | ||||||||||||||||||||
Impact to income taxes (4) | (16,552 | ) | (27,269 | ) | (18,602 | ) | |||||||||||||||||
Adjusted income and adjusted earnings per share | $ | 89,003 | $ | 1.84 | $ | 67,312 | $ | 1.42 | $ | 49,431 | $ | 1.15 | |||||||||||
Diluted weighted-average shares outstanding | 48,500 | 47,471 | 43,018 |
Year Ended June 30, | |||||||||||
(In thousands) | 2019 | 2018 | 2017 | ||||||||
Cash provided by operating activities | $ | 97,517 | $ | 43,321 | $ | 59,146 | |||||
Purchase of property and equipment | (26,691 | ) | (15,106 | ) | (32,844 | ) | |||||
Free cash flow | $ | 70,826 | $ | 28,215 | $ | 26,302 |
(In thousands) | Fiscal 2019 | As a % of Total Net Revenue | Fiscal 2018 | As a % of Total Net Revenue | $ Change | % Change | ||||||||||||||
Organic revenue | $ | 541,487 | 83 | % | $ | 433,438 | 88 | % | $ | 108,049 | 25 | % | ||||||||
Acquired revenue (1) | 113,257 | 17 | % | 59,746 | 12 | % | 53,511 | 90 | % | |||||||||||
Total revenues | $ | 654,744 | 100 | % | $ | 493,184 | 100 | % | $ | 161,560 | 33 | % |
• | estimated step-ups for the fixed assets and inventory; |
• | estimated fair values of intangible assets; and |
• | estimated income tax assets and liabilities assumed from the acquiree. |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
June 30, | |||||||
2019 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable, net of allowance for doubtful accounts of $1,228 and $359 at June 30, 2019 and 2018, respectively | |||||||
Unbilled receivables and costs in excess of billings | |||||||
Inventory | |||||||
Prepaid income taxes | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Property and equipment, net | |||||||
Goodwill | |||||||
Intangible assets, net | |||||||
Other non-current assets | |||||||
Total assets | $ | $ | |||||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Accrued expenses | |||||||
Accrued compensation | |||||||
Deferred revenues and customer advances | |||||||
Total current liabilities | |||||||
Deferred income taxes | |||||||
Income taxes payable | |||||||
Long-term debt | |||||||
Other non-current liabilities | |||||||
Total liabilities | |||||||
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; 54,247,532 and 46,924,238 shares issued and outstanding at June 30, 2019 and 2018, respectively | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Accumulated other comprehensive (loss) income | ( | ) | |||||
Total shareholders’ equity | |||||||
Total liabilities and shareholders’ equity | $ | $ |
For the Years Ended June 30, | |||||||||||
2019 | 2018 | 2017 | |||||||||
Net revenues | $ | $ | $ | ||||||||
Cost of revenues | |||||||||||
Gross margin | |||||||||||
Operating expenses: | |||||||||||
Selling, general and administrative | |||||||||||
Research and development | |||||||||||
Amortization of intangible assets | |||||||||||
Restructuring and other charges | |||||||||||
Acquisition costs and other related expenses | |||||||||||
Total operating expenses | |||||||||||
Income from operations | |||||||||||
Interest income | |||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | |||||
Other (expense) income, net | ( | ) | ( | ) | |||||||
Income before income taxes | |||||||||||
Tax provision | |||||||||||
Net income | $ | $ | $ | ||||||||
Basic net earnings per share | $ | $ | $ | ||||||||
Diluted net earnings per share | $ | $ | $ | ||||||||
Weighted-average shares outstanding: | |||||||||||
Basic | |||||||||||
Diluted | |||||||||||
Comprehensive income: | |||||||||||
Net income | $ | $ | $ | ||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | |||||
Pension benefit plan, net of tax | ( | ) | |||||||||
Total other comprehensive (loss) income, net of tax | ( | ) | |||||||||
Total comprehensive income | $ | $ | $ |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance at June 30, 2016 | $ | $ | $ | $ | $ | |||||||||||||||||
Issuance of common stock under employee stock incentive plans | — | — | ||||||||||||||||||||
Issuance of common stock under employee stock purchase plan | — | — | ||||||||||||||||||||
Retirement of common stock | ( | ) | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||
Follow-on public stock offering | — | — | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Foreign currency translation adjustments | — | — | — | ( | ) | ( | ) | |||||||||||||||
Pension benefit plan, net of tax | — | — | — | — | ||||||||||||||||||
Balance at June 30, 2017 | ||||||||||||||||||||||
Issuance of common stock under employee stock incentive plans | — | — | ||||||||||||||||||||
Issuance of common stock under employee stock purchase plan | — | — | ||||||||||||||||||||
Retirement of common stock | ( | ) | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Pension benefit plan, net of tax | — | — | — | — | ||||||||||||||||||
Balance at June 30, 2018 | ||||||||||||||||||||||
Issuance of common stock under employee stock incentive plans | ( | ) | — | — | ||||||||||||||||||
Issuance of common stock under employee stock purchase plan | — | — | ||||||||||||||||||||
Retirement of common stock | ( | ) | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||
Follow-on public stock offering | — | — | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Pension benefit plan, net of tax | — | — | — | — | ( | ) | ( | ) | ||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ |
For the Years Ended June 30, | |||||||||||
2019 | 2018 | 2017 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | $ | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization expense | |||||||||||
Stock-based compensation expense | |||||||||||
Benefit for deferred income taxes | ( | ) | ( | ) | ( | ) | |||||
Non-cash interest expense | |||||||||||
Termination of interest rate swap | |||||||||||
Other non-cash items | ( | ) | |||||||||
Changes in operating assets and liabilities, net of effects of businesses acquired: | |||||||||||
Accounts receivable, unbilled receivables, and costs in excess of billings | ( | ) | ( | ) | ( | ) | |||||
Inventory | ( | ) | ( | ) | ( | ) | |||||
Prepaid income taxes | ( | ) | |||||||||
Prepaid expenses and other current assets | ( | ) | ( | ) | ( | ) | |||||
Other non-current assets | |||||||||||
Accounts payable, accrued expenses and accrued compensation | ( | ) | |||||||||
Deferred revenues and customer advances | ( | ) | ( | ) | |||||||
Income taxes payable | ( | ) | |||||||||
Other non-current liabilities | ( | ) | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Acquisition of businesses, net of cash acquired | ( | ) | ( | ) | ( | ) | |||||
Purchases of property and equipment | ( | ) | ( | ) | ( | ) | |||||
Other investing activities | ( | ) | ( | ) | |||||||
Net cash used in investing activities | ( | ) | ( | ) | ( | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from equity offering, net | |||||||||||
Proceeds from employee stock plans | |||||||||||
Payments for retirement of common stock | ( | ) | ( | ) | ( | ) | |||||
Payments under credit facilities | ( | ) | ( | ) | ( | ) | |||||
Borrowings under credit facilities | |||||||||||
Termination of interest rate swap | ( | ) | |||||||||
Payments of deferred financing and offering costs | ( | ) | ( | ) | |||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | |||||||
Net increase (decrease) in cash and cash equivalents | ( | ) | |||||||||
Cash and cash equivalents at beginning of year | |||||||||||
Cash and cash equivalents at end of year | $ | $ | $ | ||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | $ | $ | ||||||||
Income taxes | $ | $ | $ | ||||||||
Supplemental disclosures—non-cash activities: | |||||||||||
Non-cash financing activity - accrued and unpaid equity offering costs | $ | $ | $ |
• | 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. |
Fiscal 2019 | Fiscal 2018 | Fiscal 2017 | |||||||||
Beginning balance at July 1, | $ | $ | $ | ||||||||
Warranty assumed from Germane | |||||||||||
Warranty assumed from Themis | |||||||||||
Warranty assumed from CES | |||||||||||
Warranty assumed from Delta | |||||||||||
Accruals for warranties issued during the period | |||||||||||
Settlements made during the period | ( | ) | ( | ) | ( | ) | |||||
Ending balance at June 30, | $ | $ | $ |
Years Ended June 30, | ||||||||
2019 | 2018 | 2017 | ||||||
Basic weighted-average shares outstanding | ||||||||
Effect of dilutive equity instruments | ||||||||
Diluted weighted-average shares outstanding |
Amounts | |||
Consideration transferred | |||
Cash paid at closing | $ | ||
Working capital and net debt adjustment | ( | ) | |
Less cash acquired | ( | ) | |
Net purchase price | $ | ||
Estimated fair value of tangible assets acquired and liabilities assumed | |||
Cash | $ | ||
Accounts receivable | |||
Fixed assets | |||
Other current and non-current assets | |||
Accounts payable | ( | ) | |
Accrued expenses | ( | ) | |
Other current and non-current liabilities | ( | ) | |
Deferred tax liability | ( | ) | |
Estimated fair value of net tangible liabilities acquired | ( | ) | |
Estimated fair value of identifiable intangible assets | |||
Estimated goodwill | |||
Estimated fair value of net assets acquired | |||
Less cash acquired | ( | ) | |
Net purchase price | $ |
Amounts | |||
Consideration transferred | |||
Cash paid at closing | $ | ||
Less cash acquired | ( | ) | |
Net purchase price | $ | ||
Estimated fair value of tangible assets acquired and liabilities assumed | |||
Cash | $ | ||
Accounts receivable | |||
Inventory | |||
Fixed assets | |||
Other current and non-current assets | |||
Accounts payable | ( | ) | |
Accrued expenses | ( | ) | |
Estimated fair value of net tangible assets acquired | |||
Estimated fair value of identifiable intangible assets | |||
Estimated goodwill | |||
Estimated fair value of net assets acquired | |||
Less cash acquired | ( | ) | |
Net purchase price | $ |
Amounts | |||
Consideration transferred | |||
Cash paid at closing | $ | ||
Net purchase price | $ | ||
Estimated fair value of tangible assets acquired and liabilities assumed | |||
Accounts receivable | $ | ||
Inventory | |||
Fixed assets | |||
Accounts payable | ( | ) | |
Accrued expenses | ( | ) | |
Estimated fair value of net tangible assets acquired | |||
Estimated fair value of identifiable intangible assets | |||
Estimated goodwill | |||
Estimated fair value of net assets acquired | |||
Net purchase price | $ |
Amounts | |||
Consideration transferred | |||
Cash paid at closing | $ | ||
Working capital and net debt adjustment | ( | ) | |
Less cash acquired | ( | ) | |
Net purchase price | $ | ||
Estimated fair value of tangible assets acquired and liabilities assumed | |||
Cash | $ | ||
Accounts receivable | |||
Inventory | |||
Fixed assets | |||
Other current and non-current assets | |||
Accounts payable | ( | ) | |
Accrued expenses | ( | ) | |
Other current and non-current liabilities | ( | ) | |
Estimated fair value of net tangible assets acquired | |||
Estimated fair value of identifiable intangible assets | |||
Estimated goodwill | |||
Estimated fair value of net assets acquired | |||
Less cash acquired | ( | ) | |
Net purchase price | $ |
Amounts | ||||
Consideration transferred | ||||
Cash paid at closing | $ | |||
Working capital and net debt adjustment | ( | ) | ||
Less cash acquired | ( | ) | ||
Net purchase price | $ | |||
Fair value of tangible assets acquired and liabilities assumed | ||||
Cash | $ | |||
Accounts receivable | ||||
Inventory | ||||
Fixed assets | ||||
Other current and non-current assets | ||||
Accounts payable | ( | ) | ||
Accrued expenses | ( | ) | ||
Other current and non-current liabilities | ( | ) | ||
Deferred tax liability | ( | ) | ||
Fair value of net tangible assets acquired | ||||
Fair value of identifiable intangible assets | ||||
Goodwill | ||||
Fair value of net assets acquired | ||||
Less cash acquired | ( | ) | ||
Net purchase price | $ |
D. | Fair Value of Financial Instruments |
Fair Value Measurements | |||||||||||||||
June 30, 2019 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Certificates of deposit | $ | $ | $ | $ | |||||||||||
Total | $ | $ | $ | $ |
Fair Value Measurements | |||||||||||||||
June 30, 2018 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Certificates of deposit | $ | $ | $ | $ | |||||||||||
Total | $ | $ | $ | $ |
June 30, | |||||||
2019 | 2018 | ||||||
Raw materials | $ | $ | |||||
Work in process | |||||||
Finished goods | |||||||
Total | $ | $ |
F. | Property and Equipment |
Estimated Useful Lives (Years) | June 30, | ||||||||
2019 | 2018 | ||||||||
Computer equipment and software | 3-4 | $ | $ | ||||||
Furniture and fixtures | |||||||||
Leasehold improvements | lesser of estimated useful life or lease term | ||||||||
Machinery and equipment | 5-10 | ||||||||
Less: accumulated depreciation | ( | ) | ( | ) | |||||
$ | $ |
SMP | AMS | MDS | Total | |||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | ||||||||||||
Goodwill adjustment for the Themis acquisition | ||||||||||||||||
Goodwill arising from the Germane acquisition | 23,111 | 23,111 | ||||||||||||||
Goodwill arising from the GECO acquisition | 21,223 | 21,223 | ||||||||||||||
Goodwill arising from the Syntonic acquisition | ||||||||||||||||
Goodwill arising from the Athena acquisition | ||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ |
H. | Intangible Assets |
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life | ||||||||||
June 30, 2019 | |||||||||||||
Customer relationships | $ | $ | ( | ) | $ | ||||||||
Licensing agreements and patents | ( | ) | |||||||||||
Completed technologies | ( | ) | |||||||||||
Backlog | ( | ) | |||||||||||
$ | $ | ( | ) | $ | |||||||||
June 30, 2018 | |||||||||||||
Customer relationships | $ | $ | ( | ) | $ | ||||||||
Licensing agreements and patents | ( | ) | |||||||||||
Completed technologies | ( | ) | |||||||||||
Backlog | ( | ) | |||||||||||
$ | $ | ( | ) | $ |
Fiscal Year | Totals | |||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total future amortization expense | $ |
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life | ||||||||||
Completed technologies | $ | 23,700 | $ | (358 | ) | $ | 23,342 | 11.0 years | |||||
$ | 23,700 | $ | (358 | ) | $ | 23,342 |
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life | ||||||||||
Customer relationships | $ | 4,200 | $ | (70 | ) | $ | 4,130 | 10.0 years | |||||
Completed technologies | 2,500 | (46 | ) | 2,454 | 9.0 years | ||||||||
Backlog | 400 | (67 | ) | 333 | 1.0 year | ||||||||
$ | 7,100 | $ | (183 | ) | $ | 6,917 |
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life | ||||||||||
Customer relationships | $ | 6,700 | $ | (254 | ) | $ | 6,446 | 11.0 years | |||||
Completed technologies | 4,800 | (200 | ) | 4,600 | 10.0 years | ||||||||
Backlog | 1,000 | (208 | ) | 792 | 2.0 years | ||||||||
$ | 12,500 | $ | (662 | ) | $ | 11,838 |
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Weighted Average Useful Life | ||||||||||
Customer relationships | $ | 8,500 | $ | (708 | ) | $ | 7,792 | 11.0 years | |||||
Completed technologies | 4,200 | (482 | ) | 3,718 | 8.0 years | ||||||||
Backlog | 210 | (193 | ) | 17 | 1.0 year | ||||||||
$ | 12,910 | $ | (1,383 | ) | $ | 11,527 |
Severance & Related | Facilities & Other | Total | |||||||||
Restructuring liability at June 30, 2017 | $ | $ | $ | ||||||||
Restructuring charges | |||||||||||
Cash paid | ( | ) | ( | ) | ( | ) | |||||
Reversals (*) | ( | ) | ( | ) | ( | ) | |||||
Restructuring liability at June 30, 2018 | |||||||||||
Restructuring charges | |||||||||||
Cash paid | ( | ) | ( | ) | ( | ) | |||||
Reversals (*) | ( | ) | ( | ) | ( | ) | |||||
Restructuring liability at June 30, 2019 | $ | $ | $ |
Year Ended June 30, | |||||||||||
2019 | 2018 | 2017 | |||||||||
Income before income taxes: | |||||||||||
United States | $ | $ | $ | ||||||||
Foreign | ( | ) | |||||||||
$ | $ | $ | |||||||||
Tax provision (benefit): | |||||||||||
Federal: | |||||||||||
Current | $ | $ | $ | ||||||||
Deferred | ( | ) | ( | ) | ( | ) | |||||
( | ) | ||||||||||
State: | |||||||||||
Current | |||||||||||
Deferred | ( | ) | ( | ) | ( | ) | |||||
Foreign: | |||||||||||
Current | |||||||||||
Deferred | ( | ) | ( | ) | |||||||
( | ) | ||||||||||
$ | $ | $ |
Year Ended June 30, | ||||||||
2019 | 2018 | 2017 | ||||||
Tax provision at federal statutory rates | % | % | % | |||||
State income tax, net of federal tax benefit | ||||||||
Research and development credits | ( | ) | ( | ) | ( | ) | ||
Excess tax benefits on stock compensation | ( | ) | ( | ) | ( | ) | ||
Domestic manufacturing deduction | ( | ) | ( | ) | ||||
Deemed repatriation of foreign earnings | ( | ) | ||||||
Foreign income tax rate differential | ||||||||
Officer and equity compensation | ||||||||
Acquisition costs | ||||||||
Reserves for tax contingencies | ( | ) | ||||||
Benefit from tax rate changes | ( | ) | ||||||
Impacts related to acquired tax attributes | ( | ) | ||||||
Other | ||||||||
% | % | % |
June 30, | |||||||
2019 | 2018 | ||||||
Deferred tax assets: | |||||||
Inventory valuation and receivable allowances | $ | $ | |||||
Accrued compensation | |||||||
Equity compensation | |||||||
Federal and state research and development tax credit carryforwards | |||||||
Other accruals | |||||||
Deferred compensation | |||||||
Acquired net operating loss carryforward | |||||||
Capital loss carryforwards | |||||||
Other temporary differences | |||||||
Valuation allowance | ( | ) | ( | ) | |||
Total deferred tax assets | |||||||
Deferred tax liabilities: | |||||||
Prepaid expenses | ( | ) | ( | ) | |||
Property and equipment | ( | ) | ( | ) | |||
Intangible assets | ( | ) | ( | ) | |||
Other temporary differences | ( | ) | ( | ) | |||
Total deferred tax liabilities | ( | ) | ( | ) | |||
Net deferred tax liabilities | $ | ( | ) | $ | ( | ) | |
As reported: | |||||||
Deferred tax liabilities | $ | ( | ) | $ | ( | ) | |
$ | ( | ) | $ | ( | ) |
Year Ended June 30, | |||||||
2019 | 2018 | ||||||
Unrecognized tax benefits, beginning of period | $ | $ | |||||
Increases for previously recognized positions | |||||||
Settlements of previously recognized positions | |||||||
Reductions as a result of a lapse of the applicable statute of limitations | ( | ) | |||||
Increases for currently recognized positions | |||||||
Reductions for previously recognized positions | ( | ) | |||||
Unrecognized tax benefits, end of period | $ | $ |
Fiscal Year | Totals | |||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total minimum lease payments | $ |
Fiscal Year | Total | |||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter (next 5 years) | ||||
Total | $ |
Year Ended June 30, | |||||||
2019 | 2018 | ||||||
Service cost | $ | $ | |||||
Interest cost | |||||||
Expected return on assets | ( | ) | ( | ) | |||
Amortization of prior service cost | ( | ) | |||||
Net periodic benefit cost | $ | $ |
Year Ended June 30, | |||||
2019 | 2018 | ||||
Discount rate | % | % | |||
Expected rate of return on Plan assets | % | % | |||
Expected inflation | % | % | |||
Rate of compensation increases | % | % |
Year Ended June 30, | |||||||
2019 | 2018 | ||||||
Projected benefit obligation, beginning | $ | $ | |||||
Service cost | |||||||
Interest cost | |||||||
Employee contributions | |||||||
Actuarial gain | |||||||
Benefits paid | ( | ) | ( | ) | |||
Plan amendment | ( | ) | |||||
Foreign exchange loss (gain) | ( | ) | |||||
Projected benefit obligation at end of year | $ | $ |
Year Ended June 30, | |||||||
2019 | 2018 | ||||||
Fair value of Plan assets, beginning | $ | $ | |||||
Actual return on Plan assets | |||||||
Company contributions | |||||||
Employee contributions | |||||||
Benefits paid | ( | ) | ( | ) | |||
Foreign exchange gain (loss) | ( | ) | |||||
Fair value of Plan assets at end of year | $ | $ |
June 30, 2019 | June 30, 2018 | ||||||
Projected benefit obligation at end of year | $ | 24,274 | $ | ||||
Fair value of plan assets at end of year | |||||||
Funded status | $ | ( | ) | $ | ( | ) |
Options Outstanding | ||||||||||||
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value as of 6/30/2019 | |||||||||
Outstanding at June 30, 2017 | $ | |||||||||||
Granted | ||||||||||||
Exercised | ( | ) | ||||||||||
Cancelled | ||||||||||||
Outstanding at June 30, 2018 | $ | |||||||||||
Granted | — | — | ||||||||||
Exercised | — | — | ||||||||||
Cancelled | — | — | ||||||||||
Outstanding at June 30, 2019 | $ | $ | ||||||||||
Vested and expected to vest at June 30, 2019 | $ | $ | ||||||||||
Exercisable at June 30, 2019 | $ | $ |
Non-Vested Restricted Stock Awards | ||||||
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Outstanding at June 30, 2017 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited | ( | ) | ||||
Outstanding at June 30, 2018 | $ | |||||
Granted | ||||||
Vested | ( | ) | ||||
Forfeited | ( | ) | ||||
Outstanding at June 30, 2019 | $ |
Year Ended June 30, | |||||||||||
2019 | 2018 | 2017 | |||||||||
Cost of revenues | $ | $ | $ | ||||||||
Selling, general and administrative | |||||||||||
Research and development | |||||||||||
Stock-based compensation expense before tax | |||||||||||
Income taxes | ( | ) | ( | ) | ( | ) | |||||
Stock-based compensation expense, net of income taxes | $ | $ | $ |
U.S. | Europe | Asia Pacific | Eliminations | Total | |||||||||||||||
YEAR ENDED JUNE 30, 2019 | |||||||||||||||||||
Net revenues to unaffiliated customers | $ | $ | $ | $ | $ | ||||||||||||||
Inter-geographic revenues | ( | ) | |||||||||||||||||
Net revenues | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Identifiable long-lived assets (1) | $ | $ | $ | $ | $ | ||||||||||||||
YEAR ENDED JUNE 30, 2018 | |||||||||||||||||||
Net revenues to unaffiliated customers | $ | $ | $ | $ | $ | ||||||||||||||
Inter-geographic revenues | ( | ) | |||||||||||||||||
Net revenues | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Identifiable long-lived assets (1) | $ | $ | $ | $ | $ | ||||||||||||||
YEAR ENDED JUNE 30, 2017 | |||||||||||||||||||
Net revenues to unaffiliated customers | $ | $ | $ | $ | $ | ||||||||||||||
Inter-geographic revenues | ( | ) | |||||||||||||||||
Net revenues | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Identifiable long-lived assets (1) | $ | $ | $ | $ | $ |
Year Ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Domestic (1) | $ | $ | $ | |||||||||
International/Foreign Military Sales (2) | ||||||||||||
Total Net Revenue | $ | $ | $ |
Year Ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Radar (1) | $ | $ | $ | |||||||||
Electronic Warfare (2) | ||||||||||||
Other Sensor and Effector (3) | ||||||||||||
Total Sensor and Effector | ||||||||||||
C4I (4) | ||||||||||||
Other (5) | ||||||||||||
Total Net Revenues | $ | $ | $ |
Year Ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Components (1) | $ | $ | $ | |||||||||
Modules and Sub-assemblies (2) | ||||||||||||
Integrated Subsystems (3) | ||||||||||||
Total Net Revenues | $ | $ | $ |
Year Ended June 30, | ||||||||
2019 | 2018 | 2017 | ||||||
Raytheon Company | % | % | % | |||||
Lockheed Martin Corporation | % | % | % | |||||
% | % | % |
Q. | Derivatives |
2019 (In thousands, except per share data) | 1ST QUARTER | 2ND QUARTER | 3RD QUARTER | 4TH QUARTER | |||||||||||
Net revenues | $ | $ | $ | $ | |||||||||||
Gross margin | $ | $ | $ | $ | |||||||||||
Income from operations | $ | $ | $ | $ | |||||||||||
Income before income taxes | $ | $ | $ | $ | |||||||||||
Income tax provision (benefit) | $ | $ | $ | $ | ( | ) | |||||||||
Net income | $ | $ | $ | $ | |||||||||||
Net income per share: | |||||||||||||||
Basic net income per share | $ | $ | $ | $ | |||||||||||
Diluted net income per share | $ | $ | $ | $ | |||||||||||
2018 (In thousands, except per share data) | 1ST QUARTER | 2ND QUARTER | 3RD QUARTER | 4TH QUARTER | |||||||||||
Net revenues | $ | $ | $ | $ | |||||||||||
Gross margin | $ | $ | $ | $ | |||||||||||
Income from operations | $ | $ | $ | $ | |||||||||||
Income before income taxes | $ | $ | $ | $ | |||||||||||
Income tax (benefit) provision | $ | ( | ) | $ | $ | $ | |||||||||
Net income | $ | $ | $ | $ | |||||||||||
Net income per share: | |||||||||||||||
Basic net income per share | $ | $ | $ | $ | |||||||||||
Diluted net income per share | $ | $ | $ | $ |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
(a) | EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES |
(b) | INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS |
(c) | MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING |
(d) | CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING |
ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
1. | Financial statements: |
2. | Financial Statement Schedule: |
II. | Valuation and Qualifying Accounts |
BALANCE AT BEGINNING OF PERIOD | ADDITIONS | REVERSALS | WRITE- OFFS | BALANCE AT END OF PERIOD | |||||||||||||||
2019 | $ | 359 | $ | 1,223 | $ | 264 | $ | 90 | $ | 1,228 | |||||||||
2018 | $ | 83 | $ | 359 | $ | 31 | $ | 52 | $ | 359 | |||||||||
2017 | $ | 92 | $ | 22 | $ | — | $ | 31 | $ | 83 |
BALANCE AT BEGINNING OF PERIOD | CHARGED TO COSTS & EXPENSES | CHARGED TO OTHER ACCOUNTS | DEDUCTIONS | BALANCE AT END OF PERIOD | |||||||||||||||
2019 | $ | 16,992 | $ | (326 | ) | $ | — | $ | — | $ | 16,666 | ||||||||
2018 | $ | 16,570 | $ | 422 | $ | — | $ | — | $ | 16,992 | |||||||||
2017 | $ | 18,472 | $ | (1,902 | ) | $ | — | $ | — | $ | 16,570 |
MERCURY SYSTEMS, INC. | ||
By | /s/ MICHAEL D. RUPPERT | |
Michael D. Ruppert EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND TREASURER [PRINCIPAL FINANCIAL OFFICER] |
Signature | Title(s) | Date | ||
/s/ MARK ASLETT | President, Chief Executive Officer and Director (principal executive officer) | August 15, 2019 | ||
Mark Aslett | ||||
/S/ MICHAEL D. RUPPERT | Executive Vice President, Chief Financial Officer, and Treasurer (principal financial officer) | August 15, 2019 | ||
Michael D. Ruppert | ||||
/S/ MICHELLE M. MCCARTHY | Vice President, Controller, and Chief Accounting Officer (principal accounting officer) | August 15, 2019 | ||
Michelle M. McCarthy | ||||
/S/ VINCENT VITTO | Chairman of the Board of Directors | August 15, 2019 | ||
Vincent Vitto | ||||
/S/ JAMES K. BASS | Director | August 15, 2019 | ||
James K. Bass | ||||
/S/ MICHAEL A. DANIELS | Director | August 15, 2019 | ||
Michael A. Daniels | ||||
/S/ LISA S. DISBROW | Director | August 15, 2019 | ||
Lisa S. Disbrow | ||||
/S/ MARY LOUISE KRAKAUER | Director | August 15, 2019 | ||
Mary Louise Krakauer | ||||
/S/ BARRY R. NEARHOS | Director | August 15, 2019 | ||
Barry R. Nearhos | ||||
/S/ WILLIAM K. O’BRIEN | Director | August 15, 2019 | ||
William K. O’Brien |
ITEM NO. | DESCRIPTION OF EXHIBIT | |
ITEM NO. | DESCRIPTION OF EXHIBIT | |
ITEM NO. | DESCRIPTION OF EXHIBIT | |
101† | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheet, (ii) Consolidated Statement of Operations, (iii) Consolidated Statement of Shareholders’ Equity, (iv) Consolidated Statement of Cash Flows, and (v) Notes to Consolidated Financial Statements | |
101.INS | eXtensible Business Reporting Language (XBRL) Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of the Company participates. |
† | Filed with this Form 10-K. |
+ | Furnished herewith. This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
• | a market survey of Board compensation to peer companies at the 50th and 75th percentiles; |
• | a review of Board and Committee meeting frequency; |
• | Board member personal preparation time for Board and Committee meetings; and |
• | Board member responsibilities. |
1. | Section 5(b)(i) of the Employment Agreement is amended by deleting said section and substituting therefor the following: |
2. | Section 5(b)(iv) of the Employment Agreement is amended by deleting said section and substituting therefor the following: |
3. | A new Section 5(b)(vi) is added with the following: |
4. | All other provisions of the Employment Agreement shall remain in full force and effect according to their respective terms, and nothing contained herein shall be deemed a waiver of any right or abrogation of any obligation otherwise existing under the Employment Agreement except to the extent specifically provided for herein. |
5. | The validity, interpretation, construction, and performance of this Third Amendment shall be governed by the laws of The Commonwealth of Massachusetts. |
6. | This Third Amendment may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. |
MERCURY SYSTEMS, INC. | |
By: /s/ Emma Woodthorpe | |
Name: Emma Woodthorpe | |
Title: Senior Vice President, Chief Human Resources Officer | |
EXECUTIVE | |
/s/ Mark Aslett | |
Mark Aslett |
Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2017 | Year Ended June 30, 2016 | Year Ended June 30, 2015 | ||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 59,527 | $ | 42,573 | $ | 31,068 | $ | 25,286 | $ | 18,795 | ||||||||||
Fixed charges: | ||||||||||||||||||||
Interest expense | $ | 9,109 | $ | 2,850 | $ | 7,568 | $ | 1,172 | $ | 34 | ||||||||||
Portion of rental expense representative of interest factor (1) | 2,874 | 2,156 | 2,565 | 1,325 | 1,246 | |||||||||||||||
Total fixed charges | $ | 11,983 | $ | 5,006 | $ | 10,133 | $ | 2,497 | $ | 1,280 | ||||||||||
Income from continuing operations before income taxes plus fixed charges | $ | 71,510 | $ | 47,579 | $ | 41,201 | $ | 27,783 | $ | 20,075 | ||||||||||
Ratio of earnings to fixed charges (2) | 6.0 | 9.5 | 4.1 | 11.1 | 15.7 | |||||||||||||||
Coverage deficiency | $ | — | $ | — | $ | — | $ | — | $ | — |
NAME | JURISDICTION OF ORGANIZATION |
Mercury Defense Systems, Inc. | California |
Mercury Mission Systems, LLC | Delaware |
Arxan Research, Inc. | Delaware |
Nihon Mercury Computer Systems K.K. | Japan |
Mercury Computer Systems Limited | United Kingdom |
Mercury Mission Systems Canada, Inc. | Canada |
Mercury Mission Systems International Holding, SA | Switzerland |
Mercury Mission Systems International, SA | Switzerland |
Mercury Mission Systems Spain, SL | Spain |
CES do Brasil Creative Electronic Systems Participacces Ltda. | Brazil |
Mercury Systems - Trusted Mission Solutions, Inc. | California |
Mercury Systems - Trusted Mission Solutions SARL | France |
1. | I have reviewed this annual report on Form 10-K of Mercury Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ MARK ASLETT |
Mark Aslett |
PRESIDENT AND CHIEF EXECUTIVE OFFICER [PRINCIPAL EXECUTIVE OFFICER] |
1. | I have reviewed this annual report on Form 10-K of Mercury Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ MICHAEL D. RUPPERT |
Michael D. Ruppert |
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND TREASURER [PRINCIPAL FINANCIAL OFFICER] |
/S/ MARK ASLETT |
Mark Aslett PRESIDENT AND CHIEF EXECUTIVE OFFICER |
/S/ MICHAEL D. RUPPERT |
Michael D. Ruppert EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND TREASURER |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 83 | $ 83 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 85,000,000 | 85,000,000 |
Common stock, shares issued | 46,303,075 | 46,303,075 |
Common stock, shares outstanding | 46,303,075 | 46,303,075 |
Description of Business |
12 Months Ended |
---|---|
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Mercury Systems, Inc. (the “Company” or “Mercury”) is a leading commercial provider of secure sensor and safety-critical mission processing subsystems. Headquartered in Andover, Massachusetts, the Company is delivering solutions that power a broad range of critical aerospace, defense and intelligence programs, configured and optimized for mission success in some of the most challenging and demanding environments. The Company's innovative next-generation defense electronics business model is designed to meet the industry’s current and emerging technology and business needs by delivering affordable state-of-the-art solutions, rapid time-to-value, service and support to the Company's defense prime contractor customers. The Company's products and solutions have been successfully deployed in more than 300 programs with over 25 different defense prime contractors, a testament to its deep domain expertise and culture of innovation. On May 20, 2019, the Company announced the commencement of an underwritten public offering of its common stock, par value $0.01 per share. On May 31, 2019 the Company closed the offering, including the full over-allotment allocation, selling an aggregate of 6,900 shares of common stock at a price to the public of $69.00 for total net proceeds of $454,343. On April 18, 2019, the Company acquired The Athena Group, Inc. (“Athena”) and Syntonic Microwave LLC (“Syntonic”) on a cash-free, debt-free basis for a combined total purchase price of $46,000, prior to net working capital and net debt adjustments. Athena was a privately-held company based in Gainesville, Florida and a leading provider of cryptographic and countermeasure IP vital to securing defense computing systems. Syntonic was a privately held company based in Campbell, California and a leading provider of advanced synthesizers, wideband phase coherent tuners and microwave converters optimized for signals intelligence and electronic intelligence applications demanding frequency coverage up to 40 GHz with 2 GHz instantaneous bandwidth. On January 29, 2019, the Company acquired GECO Avionics, LLC (“GECO”) on a cash-free, debt-free basis for a total purchase price of $36,500. Based in Mesa, Arizona, GECO has over twenty years of experience designing and manufacturing affordable safety-critical avionics and mission computing solutions. On July 31, 2018, the Company acquired Germane Systems, LC (“Germane”) on a cash-free, debt-free basis for a total purchase price of $45,000, prior to net working capital and net debt adjustments. Based in Chantilly, Virginia, Germane is an industry leader in the design, development and manufacturing of rugged servers, computers and storage systems for command, control and intelligence (“C2I”) applications. On February 1, 2018, the Company acquired Themis Computer (“Themis”) on a cash-free, debt-free basis for a total purchase price of approximately $180,000, prior to net working capital and net debt adjustments. Based in Fremont, California, Themis is a leading designer, manufacturer and integrator of commercial, SWaP-optimized rugged servers, computers and storage systems for U.S. and international defense programs. The acquisition of Themis is consistent with the Company's strategy and will expand its position in the Command, Control, Communications, Computers, and Intelligence (“C4I”) market. For further details on the acquisitions, see Note C to consolidated financial statements.
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Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. USE OF ESTIMATES 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. BUSINESS COMBINATIONS The Company utilizes the acquisition method of accounting under ASC 805, Business Combinations, (“ASC 805”), for all transactions and events 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:
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. DERIVATIVES The Company records the fair value of its derivative financial instruments in its condensed consolidated financial statements in other non-current assets or other non-current liabilities depending on their net position, regardless of the purpose or intent for holding the derivative contract. Changes in the fair value of the derivative financial instruments are either recognized periodically in earnings or in shareholders’ equity as a component of other comprehensive (loss) income (“OCI”). Changes in the fair value of cash flow hedges that qualify for hedge accounting treatment are recorded in OCI and reclassified into earnings in the same line item on the Consolidated Statements of Operations and Comprehensive Income as the impact of the hedged transaction when the underlying contract matures and, for interest rate exposure derivatives, over the term of the corresponding debt instrument. Changes in the fair values of derivatives not qualifying for hedge accounting are reported in earnings as they occur. The Company had no outstanding derivative instruments as of June 30, 2019 and 2018. REVENUE RECOGNITION The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, (“ASC 606”), which was adopted on July 1, 2018, using the retrospective method. Revenue is recognized in accordance with the five step model set forth by 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. The adoption of ASC 606 did not have a material impact to the amount or timing of revenue recognition related to the Company's legacy accounting methods for contracts including ship and bill, multiple-deliverable, and contract accounting. Such adoption did not have a material impact, individually or in the aggregate, to any amounts in the Company's Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income, Consolidated Statements of Shareholders’ Equity or Consolidated Statements of Cash Flows. Refer to Note P for disaggregation of revenue for the period. 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 decision 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 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 provider of secure sensor and safety-critical mission processing subsystems. Revenues are derived from the sales of products that are grouped into one of the following three categories: (i) components; (ii) modules and sub-assemblies; and (iii) integrated subsystems. The Company also generates revenues from the performance of services, including systems engineering support, consulting, maintenance and other support, testing and installation. Each promised good or service within a contract is accounted for separately under the guidance of ASC 606 if they are distinct, i.e., if a good or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. 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 forecasts 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 subsystems and related system integration or other services. Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, totaled 77%, 79% and 77% of revenues in the years ended June 30, 2019, 2018, and 2017, 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 shipment (for goods) or completion (for services). The Company engages in long-term contracts for development, production and service activities and recognizes revenue for performance obligations over time. These long-term 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 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 long-term 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 reimburseable 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 elected to use a practical expedient permitted by ASC 606 whereby revenue is recognized in the amount for which the Company has a right to invoice the customer based on the control transferred to the customer. For all types of contracts, the Company recognizes anticipated contract losses as soon as they become known and estimable. Accounting for long-term contracts 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. The Company’s estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each long-term 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. Total revenue recognized under long-term contracts over time was 23%, 21% and 23% of revenues in the years ended June 30, 2019, 2018, and 2017, respectively. 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 long-term 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 long-term 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). COSTS TO OBTAIN AND FULFILL A CONTRACT The Company has elected to use a practical expedient available under ASC 606 whereby sales commissions are expensed as incurred for contracts where the amortization period would have been one year or less. The Company has not deferred sales commissions for contracts where the amortization period is greater than one year because such amounts that would qualify for deferral are not significant. 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. CONTRACT BALANCES 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 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 $57,387 and $39,774 as of June 30, 2019 and 2018, respectively. The contract asset balance increased due to growth in revenue recognized under long-term contracts over time during the year ended June 30, 2019. The contract liability balances were $12,362 and $13,425 as of June 30, 2019 and 2018, respectively. These balances remained consistent period over period. Revenue recognized during fiscal 2019 that was included in the contract liability balance at June 30, 2018 was $10,513. REMAINING PERFORMANCE OBLIGATIONS The Company has elected to use a practical expedient available under ASC 606 whereby contracts with original expected durations of one year or less are excluded from the remaining performance obligations, while these contracts are included within backlog. The Company includes in its computation of remaining performance obligations customer orders for which it has accepted signed sales orders. The definition of remaining performance obligations excludes 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 30, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $186,066. The Company expects to recognize approximately 61% of its remaining performance obligations as revenue in the next 12 months and the balance thereafter. CASH AND CASH EQUIVALENTS 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. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures at fair value certain financial assets and liabilities, including cash equivalents, restricted cash 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. CONCENTRATION OF CREDIT RISK Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. The Company places its cash and cash equivalents with financial institutions of high credit quality. At June 30, 2019 and 2018, the Company had $257,932 and $66,521, 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. At June 30, 2019, five customers accounted for 56% of the Company's accounts receivable, unbilled receivables and costs in excess of billings. At June 30, 2018, five customers accounted for 54% of the Company’s accounts receivable, unbilled receivables and costs in excess of billings. INVENTORY Inventory is stated at the lower of cost (first-in, first-out) or net realizable value, and consists of materials, labor and overhead. On a quarterly basis, the Company 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. SEGMENT INFORMATION 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 commercial provider of secure sensor and safety critical mission processing subsystems for a broad range of critical aerospace, defense and intelligence programs. GOODWILL AND INTANGIBLE ASSETS Goodwill is the amount by which the cost of the net assets obtained in a business acquisition exceeded the fair values of the net identifiable assets on the date of purchase (see Note G). Goodwill is not amortized in accordance with the requirements of ASC 350, Intangibles-Goodwill and Other (“ASC 350”). Goodwill is assessed for impairment at least annually, on a reporting unit basis, or when events and circumstances occur indicating that the recorded goodwill may be impaired. If the book value of a reporting unit exceeds its fair value, the implied fair value of goodwill is compared with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recorded in an amount equal to that excess. Intangible assets result from the Company’s various business acquisitions (see Note H) 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. LONG-LIVED ASSETS Long-lived assets primarily include property and equipment and acquired intangible 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 F). 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 2019, 2018 and 2017, the Company capitalized $749, $733 and $508 of software development costs. INCOME TAXES 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. PRODUCT WARRANTY ACCRUAL 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.
RESEARCH AND DEVELOPMENT COSTS 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. STOCK-BASED COMPENSATION 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 are 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. The Company uses the Black-Scholes valuation model for estimating the fair value on the date of grant of stock options. RETIREMENT OF COMMON STOCK Stock that is repurchased or received in connection with the exercise of stock options or in order to cover tax payment obligations triggered by exercise of stock options or 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. NET EARNINGS PER SHARE Basic net 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 income is the control number for determining whether securities are dilutive or not. Basic and diluted weighted average shares outstanding were as follows:
Equity instruments to purchase 32, 329 and 16 shares of common stock were not included in the calculation of diluted net earnings per share for the fiscal years ended June 30, 2019, 2018 and 2017, respectively, because the equity instruments were anti-dilutive. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) (“AOCI”) includes foreign currency translation adjustments and pension benefit plan adjustments. The components of accumulated other comprehensive (loss) income included $(232), $(137) and $(93) of foreign currency translation adjustments for the years ended June 30, 2019, 2018 and 2017, respectively. In addition, pension benefit plan adjustments totaled $(2,350), $354 and $220 for the years ended June 30, 2019, 2018 and 2017 respectively. There were no material net unrealized gains on investments for the years ended June 30, 2019, 2018 and 2017. FOREIGN CURRENCY Local currencies are the functional currency for the Company’s subsidiaries in Switzerland, the United Kingdom, France, Japan, Spain and Canada. The accounts of foreign subsidiaries are translated using exchange rates in effect at period-end for assets and liabilities and at average exchange rates during the period for results of operations. The related translation adjustments are reported in accumulated other comprehensive income in shareholders’ equity. Gains (losses) resulting from non-U.S. currency transactions are included in other (expense) income, net in the Consolidated Statements of Operations and Comprehensive Income and were immaterial for all periods presented. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), an amendment of the FASB Accounting Standards Codification. This ASU requires lessees to recognize a right-of-use asset and lease liability for most lease arrangements. The new standard is effective for the Company on July 1, 2019. The standard mandates a modified retrospective transition method for all entities and early adoption is permitted. This ASU, among other things, allows companies to elect an optional transition method to apply the new lease standard through a cumulative-effect adjustment in the period of adoption. The Company plans to adopt the new standard using the optional transition method. As of June 30, 2019, the Company had $69,630 of future minimum lease payments under non-cancelable operating leases, primarily for facilities. The future minimum lease payments have not yet been adjusted to the present value, as the Company is still assessing the impact of each applicable discount rate. The Company will leverage the rate implicit in the lease unless that rate cannot be readily determined, in which case the Company's incremental borrowing rate will be used to determine the discount rate applicable for the calculation of our lease liabilities. See Note K to consolidated financial statements for more information about the timing and amount of future operating lease payments, which the Company believes is indicative of the materiality of adoption of the ASU to the Company's consolidated financial statements. The Company intends to elect the package of practical expedients which allows the Company to not reassess 1) whether any expired or existing contracts are or contain leases; 2) the lease classification for any expired or existing leases; and 3) initial direct costs for any existing leases. The Company has completed the identification of the population of leases subject to the ASU and is in the process of calculating the financial impact that the adoption will have on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, an amendment of the FASB Accounting Standards Codification. This ASU eliminates the requirement to measure the implied fair value of goodwill by assigning the fair value of a reporting unit to all assets and liabilities within that unit (“the Step 2 test”) from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited by the amount of goodwill in that reporting unit. For public business entities, the new standard is effective for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The ASU requires prospective adoption and permits early adoption for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect this guidance to have a material impact to its consolidated financial statements. In March 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects for Accumulated Other Comprehensive Income, an amendment of the FASB Accounting Standards Codification. This ASU permits a company to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act of 2017 on items within AOCI to retained earnings. The amounts applicable for reclassification should include the effect of the change in the U.S. Federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of the enactment of the Tax Cuts and Jobs Act of 2017 related to the items remaining in AOCI. The effect of the change in the U.S. Federal corporate income tax rate on gross valuation allowances that were originally charged to income from continuing operations shall not be included. For all entities, the new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that annual period, and early adoption is permitted. The Company is evaluating the effect that ASU 2018-02 will have on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715) Changes to the Disclosure Requirements for Defined Benefit Plans, an amendment of the FASB Accounting Standards Codification. The amendments in this ASU remove disclosures that no longer are considered cost-beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. For public business entities, the standard is effective for fiscal years ending after December 15, 2020. The ASU requires retrospective adoption and permits early adoption for all entities. The Company does not expect this guidance to have a material impact to its consolidated financial statements or related disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40), an amendment of the FASB Accounting Standards Codification. The ASU provides guidance to determine whether to capitalize implementation costs of cloud computing arrangement that is a service contract or expense as incurred. Costs of arrangements that do not include a software license should be accounted for as a service contract and expensed as incurred. This ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The ASU permits two methods of adoption: prospectively to all implementation costs incurred after the date of adoption, or retrospectively to each prior reporting period presented. The Company does not expect this guidance to have a material impact to its consolidated financial statements or related disclosures. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS Effective July 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaces most existing revenue recognition guidance in GAAP. The new standard permits adoption by using either (i) a retrospective approach for all periods presented in the period of adoption or (ii) a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. In accordance with this standard, the Company has adopted the new standard using the retrospective method. The Company has completed the assessment phase and implemented the new standard accordingly. Further, it has evaluated the Company's policies in relation to its internal controls framework. This assessment included identification, consideration, and quantification of the impact of the new standard on our financial statements, accounting policies, processes, control environment and systems. The outcome of this assessment included implementation of supporting processes and systems that enable timely and accurate reporting under the new standard. Adoption of the new standard did not result in a significant change in the Company's control environment. Such adoption has resulted in additional disclosures around the nature and timing of our performance obligations, contract liabilities, deferred contract cost assets, as well as significant judgments and practical expedients used by us. The Company has applied the standard’s practical expedient that permits the omission of prior-period information about our remaining performance obligations. The Company has also elected to use a practical expedient available under the new standard whereby contracts with original expected durations of one year or less are excluded from the Company's remaining performance obligations. Adoption of the new standard did not have a material impact to the amount or timing of revenue recognition related to the Company's legacy accounting methods for contracts including ship and bill, multiple-deliverable, and contract accounting, which encompassed the legacy percentage-of-completion, completed contract and time and materials methods. For T&M contracts, the Company has elected to use a practical expedient permitted by the new standard whereby revenue is recognized in the amount for which the Company has a right to invoice the customer based on the control transferred to the customer. Such adoption did not have a material impact to its consolidated financial statements. In connection with the adoption of the new standard, there is a requirement to capitalize certain incremental costs of obtaining a contract, which for the Company, primarily comprises commission expenses for internal and external sales representatives. Any such costs required to be capitalized would be amortized over the period of performance for the underlying contracts. The Company has elected the practical expedient under the new standard whereby costs associated with contracts that have a duration less than one year are expensed as incurred. The Company has completed the evaluation of capitalizing costs to obtain a contract, noting that the impact related to these costs would be limited to commissions on contracts with a duration exceeding one year. The impact was not material to its consolidated financial statements. Effective July 1, 2018, the Company adopted ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, an amendment of the FASB Accounting Standards Codification. This ASU will reduce diversity in practice for classifying cash payments and receipts in the statement of cash flows for a number of common transactions. It will also clarify when identifiable cash flows should be separated versus classified based on their predominant source or use. Such adoption has not and will not have any impact to its consolidated financial statements. Effective July 1, 2018, we adopted ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, an amendment of the FASB Accounting Standards Codification. This ASU requires the seller and buyer to recognize at the transaction date the current and deferred income tax consequences of intercompany asset transfers (except transfers of inventory). Under current U.S. GAAP, the seller and buyer defer the consolidated tax consequences of an intercompany asset transfer from the period of the transfer to a future period when the asset is transferred out of the consolidated group, or otherwise affects consolidated earnings. This standard will cause volatility in companies’ effective tax rates, particularly for those that transfer intangible assets to foreign subsidiaries. Such adoption has not and will not have any impact to the Company's consolidated financial statements. Effective July 1, 2018, we adopted ASU No. 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, an amendment of the FASB Accounting Standards Codification. This ASU requires employers that sponsor defined benefit pension and/or other post-retirement benefit plans to report the service cost component of net benefit cost in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Employers are required to present the other components of net benefit costs in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component of net periodic pension cost will be eligible for asset capitalization. The ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. Such adoption has not and will not have a material impact to the Company's consolidated financial statements. Effective January 1, 2019, the Company adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, an amendment of the FASB Accounting Standards Codification. This ASU provides improved financial reporting of hedging relationships to better portray the economic result of an entity's risk management activities in its financial statements. In addition, the amendments in this update make certain targeted improvements to simplify the application of hedge accounting guidance. The ASU requires modified retrospective adoption and permits early adoption in any interim period after issuance of the ASU. Disclosures reflect the adoption of ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, in the third quarter of fiscal 2019. Prior period amounts have not been restated. See Note Q for additional disclosures. Effective January 1, 2019, the Company adopted SEC Final Rule 33-10532, Disclosure Update and Simplification, which requires disclosure of the changes in each caption of shareholders’ equity for the current and comparative year-to-date periods, with subtotals for each interim period and the amount of dividends per share for each class of shares. Such adoption has not and will not have a material impact to the Company's consolidated financial statements.
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Acquisitions |
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Acquisitions | Acquisitions THE ATHENA GROUP ACQUISITION On April 18, 2019, the Company acquired The Athena Group, Inc. (“Athena”). Athena was a privately-held company based in Gainesville, Florida and a leading provider of cryptographic and countermeasure IP vital to securing defense computing systems. The Company acquired Athena for an all cash purchase price of $34,000, prior to net working capital and net debt adjustments, which was funded through the revolving credit facility (“the Revolver”). The following table presents the net purchase price and the fair values of the assets and liabilities of Athena on a preliminary basis:
The amounts above represent the preliminary fair value estimates as of June 30, 2019 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. The preliminary identifiable intangible asset estimate includes completed technology of $23,700 with a useful life of 11 years. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill. The goodwill of $15,999 largely reflects the potential synergies and expansion of the Company's offerings across product lines and markets complementary to the Company's existing products and markets. The goodwill from this acquisition is reported under the Mercury Defense Systems (“MDS”) reporting unit. The Company has not furnished pro forma information relating to Athena because such information is not material to the Company's financial results. The revenues and loss before income taxes from Athena included in the Company's consolidated results for the fiscal year ended June 30, 2019 were $1,071 and $93, respectively. The Athena results include expenses resulting from purchase accounting which include amortization of intangible assets. SYNTONIC MICROWAVE LLC ACQUISITION On April 18, 2019, the Company acquired Syntonic Microwave LLC (“Syntonic”). Syntonic was a privately held company based in Campbell, California and a leading provider of advanced synthesizers, wideband phase coherent tuners and microwave converters optimized for signals intelligence and electronic intelligence applications demanding frequency coverage up to 40 GHz with 2 GHz instantaneous bandwidth. The Company acquired Syntonic for an all cash purchase price of $12,000, prior to net working capital and net debt adjustments, which was funded through the Revolver. The following table presents the net purchase price and the fair values of the assets and liabilities of Syntonic on a preliminary basis:
The amounts above represent the preliminary fair value estimates as of June 30, 2019 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. The preliminary identifiable intangible asset estimates include customer relationships of $4,200 with a useful life of 10 years, completed technology of $2,500 with a useful life of 9 years and backlog of $400 with a useful life of one year. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill. The goodwill of $4,232 largely reflects the potential synergies and expansion of the Company's offerings across product lines and markets complementary to the Company's existing products and markets. The goodwill from this acquisition is reported under the Advanced Microelectronic Solutions (“AMS”) reporting unit. Since Syntonic was a limited liability company, the acquisition is treated as an asset purchase for tax purposes. The Company has estimated the tax value of the intangible assets from this transaction and is amortizing the amount over 15 years for tax purposes. As of June 30, 2019, the Company had $3,092 of goodwill deductible for tax purposes. The Company has not furnished pro forma information relating to Syntonic because such information is not material to the Company's financial results. The revenues and income before income taxes from Syntonic included in the Company's consolidated results for the fiscal year ended June 30, 2019 were $993 and $133, respectively. The Syntonic results include expenses resulting from purchase accounting which include amortization of intangible assets. GECO AVIONICS AQUISITION On January 29, 2019, the Company acquired GECO Avionics, LLC (“GECO”). Based in Mesa, Arizona, GECO has over twenty years of experience designing and manufacturing affordable safety-critical avionics and mission computing solutions. The Company acquired GECO for an all cash purchase price of $36,500, prior to net working capital and net debt adjustments, which was funded through the Revolver. The following table presents the net purchase price and the fair values of the assets and liabilities of GECO on a preliminary basis:
The amounts above represent the preliminary fair value estimates as of June 30, 2019 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. The preliminary identifiable intangible asset estimates include customer relationships of $6,700 with a useful life of 11 years, completed technology of $4,800 with a useful life of 10 years and backlog of $1,000 with a useful life of two years. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill. The goodwill of $21,223 largely reflects the potential synergies and expansion of the Company's offerings across product lines and markets complementary to the Company's existing products and markets. The goodwill from this acquisition is reported under the Sensor and Mission Processing (“SMP”) reporting unit. Since GECO was a limited liability company, the acquisition is treated as an asset purchase for tax purposes. The Company has estimated the tax value of the intangible assets from this transaction and is amortizing the amount over 15 years for tax purposes. As of June 30, 2019, the Company had $20,984 of goodwill deductible for tax purposes. The Company has not furnished pro forma information relating to GECO because such information is not material to the Company's financial results. The revenues and loss before income taxes from GECO included in the Company's consolidated results for the fiscal year ended June 30, 2019 were $6,834 and $112, respectively. The GECO results include expenses resulting from purchase accounting which include amortization of intangible assets and inventory step-up. GERMANE SYSTEMS ACQUISITION On July 31, 2018, the Company acquired Germane Systems, LC (“Germane”). Based in Chantilly, Virginia, Germane is an industry leader in the design, development and manufacturing of rugged servers, computers and storage systems for command, control and intelligence (“C2I”) applications. The Company acquired Germane for an all cash purchase price of $45,000, prior to net working capital and net debt adjustments. The Company funded the acquisition with borrowings obtained under the Revolver. On December 12, 2018 the Company and former owners of Germane agreed to post-closing adjustments totaling $1,244, which decreased the Company's net purchase price. The following table presents the net purchase price and the fair values of the assets and liabilities of Germane on a preliminary basis:
The amounts above represent the preliminary fair value estimates as of June 30, 2019 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. The preliminary identifiable intangible asset estimates include customer relationships of $8,500 with a useful life of 11 years, completed technology of $4,200 with a useful life of eight years and backlog of $210 with a useful life of one year. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill. On July 31, 2019, the measurement period for Germane expired. The goodwill of $23,111 largely reflects the potential synergies and expansion of the Company's offerings across product lines and markets complementary to the Company's existing products and markets. The goodwill from this acquisition is reported under the MDS reporting unit. Since Germane was a limited liability company, the acquisition is treated as an asset purchase for tax purposes. The Company has estimated the tax value of the intangible assets from this transaction and is amortizing the amount over 15 years for tax purposes. As of June 30, 2019, the Company had $22,102 of goodwill deductible for tax purposes. The Company has not furnished pro forma information relating to Germane because such information is not material to the Company's financial results. The revenues and income before income taxes from Germane included in the Company's consolidated results for the fiscal year ended June 30, 2019 were $46,767 and $3,132, respectively. The Germane results include expenses resulting from purchase accounting which include amortization of intangible assets and inventory step-up. THEMIS COMPUTER ACQUISITION On December 21, 2017, the Company and Thunderbird Merger Sub, Inc., a newly formed, wholly-owned subsidiary of the Company (the “Merger Sub”), entered into a Merger Agreement (the “Merger Agreement”) with Ceres Systems (“Ceres”), the holding company that owned Themis Computer (“Themis”, and together with Ceres, collectively the “Acquired Company”). On February 1, 2018, the Company closed the transaction and the Merger Sub merged with and into Ceres with Ceres continuing as the surviving company and a wholly-owned subsidiary of Mercury (the “Merger”). By operation of the Merger, the Company acquired both Ceres and its wholly-owned subsidiary, Themis. Based in Fremont, California, Themis is a leading designer, manufacturer and integrator of commercial, SWaP-optimized rugged servers, computers and storage systems for U.S. and international markets. Under the terms of the Merger Agreement, the merger consideration (including payments with respect to outstanding stock options) consisted of an all cash purchase price of approximately $180,000, prior to net working capital and net debt adjustments. The merger consideration is subject to post-closing adjustments based on a determination of closing net working capital, transaction expenses and net debt (all as defined in the Merger Agreement). The Company funded the acquisition with borrowings obtained under the Revolver. On July 13, 2018, the Company and former owners of Ceres agreed to post-closing adjustments totaling $700, which decreased the Company's net purchase price. The following table presents the net purchase price and the fair values of the assets and liabilities of Themis:
On February 1, 2019, the measurement period for Themis expired. The identifiable intangible asset estimates include customer relationships of $52,600 with a useful life of 12.5 years, completed technology of $17,150 with a useful life of 9.5 years and backlog of $1,970 with a useful life of one year. The goodwill of $112,987 largely reflects the potential synergies and expansion of the Company's offerings across product lines and MDS reporting unit and is not tax deductible.
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2019:
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2018:
The carrying values of cash and cash equivalents, including money market funds, restricted cash, accounts receivable and payable, and accrued liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The fair value of the Company’s certificates of deposit are determined through quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable. The Company terminated its interest rate swap during the fourth quarter of fiscal 2019 in conjunction with the net proceeds generated by the follow-on equity offering. As such, the Company had no interest rate swaps as of June 30, 2019.
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Inventory |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory Inventory was comprised of the following:
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Property and Equipment |
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Property and Equipment | Property and Equipment Property and equipment consisted of the following:
The $9,021 increase in property and equipment was primarily due to current year additions and property and equipment associated with the acquisitions of Germane, GECO, Athena and Syntonic. These increases were partially offset by ongoing depreciation expense. During fiscal 2019 and 2018, the Company retired $3,980 and $611, 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 30, 2019, 2018 and 2017 was $18,478, $16,273 and $12,589, respectively.
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Goodwill |
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Goodwill | Goodwill The following table sets forth the changes in the carrying amount of goodwill by reporting unit for the year ended June 30, 2019:
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Intangible assets consisted of the following:
Estimated future amortization expense for intangible assets remaining at June 30, 2019 is as follows:
The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the Athena acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2019.
The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the Syntonic acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2019.
The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the GECO acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2019.
The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the Germane acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2019.
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Restructuring Plan |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Plan | Restructuring During fiscal 2019, the Company incurred $560 of net restructuring and other charges primarily related to severance costs associated with the recently acquired Germane business. Restructuring and other charges are typically related to acquisitions and organizational redesign programs initiated as part of discrete post-acquisition integration activities. During fiscal 2018, the Company incurred $3,159 of restructuring and other charges primarily related to the elimination of 38 positions predominantly in R&D and operations functions as well as executive severance. During the fourth quarter of fiscal 2017, the Company initiated a plan to close its Manteca, California facility as a result of the acquisition of Delta. The Company incurred $910 of severance and related expenses in conjunction with the elimination of 33 positions primarily in operations functions related to the planned closure of the facility. Additionally, the Company incurred $1,042 in restructuring expenses related to other various restructuring events during fiscal 2017. All of the restructuring and other charges are classified as operating expenses in the consolidated statements of operations 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 expenses for the Company’s restructuring plans:
(*) Reversals result from the unused outplacement services and operating costs.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of income before income taxes and income tax expense were as follows:
The following is the reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate:
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was enacted by the U.S. government. The Tax Act impacted the U.S. corporate tax rate that the Company will use going forward, which has been reduced to 21% from 35%. As the Company has a June 30 fiscal year-end, the lower U.S. corporate tax rate was phased in, resulting in a U.S. corporate tax rate of approximately 28% for the Company's fiscal year ended June 30, 2018, and 21% for fiscal year ended June 30, 2019 and subsequent fiscal years. The Tax Act also includes items that increase the Company’s tax expense including, but not limited to, the elimination of the domestic manufacturing deduction and increased limitations on deductions for executive compensation. In addition, the actual effective tax rate may be materially different than the statutory Federal tax rate (including being higher) based on the availability and impact of various other adjustments including, but not limited to, state taxes, Federal research and development credits, discrete tax benefits related to stock compensation, and the inclusion or exclusion of various items in taxable income which may differ from GAAP income. The effective tax rate for fiscal 2019 differed from the federal statutory rate primarily due to benefits related to research and development tax credits and excess tax benefits for equity compensation. These benefits are offset by additional tax expense for state and local income taxes, non-deductible officer compensation and non-deductible equity compensation. During fiscal 2019 and 2018, the Company recognized a discrete tax benefit of $2,672 and $7,897, respectively, related to excess tax benefits on stock-based compensation. The components of the Company’s net deferred tax liabilities were as follows:
At June 30, 2019, the Company evaluated the need for a valuation allowance on deferred tax assets. In assessing whether the deferred tax assets are realizable, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the Company's past operating results, its forecast of future earnings, future taxable income, and tax planning strategies. The Company continues to conclude that it is more likely than not that most domestic deferred tax assets would be realizable based on recent financial performance, projected future taxable income and the reversal of existing deferred tax liabilities. The Company continues to record a full valuation allowance on capital loss carryforwards and certain state research and development credits as of June 30, 2019 as management continues to believe that it is not more likely than not that these deferred tax assets would be realized. Any future reversals of the valuation allowance will impact income tax expense. The Company had federal research and development credit carryforwards of $345, which will begin to expire in 2029. The Company had state research and development credit carryforwards of $15,165, which will expire from 2019 through 2033. The Company files income tax returns in all jurisdictions in which it operates. The Company has established reserves to provide for additional income taxes that management believes will more likely than not be due in future years as these previously filed tax returns are audited. These reserves have been established based upon management’s assessment as to the potential exposures. All tax reserves are analyzed quarterly and adjustments are made as events occur and warrant modification. On August 21, 2018, the Internal Revenue Service (“IRS”) provided initial guidance on amendments made to the limitation on executive compensation by the Tax Act. During the three months ended September 30, 2018, the Company recorded an unrecognized tax position as a result of this guidance. Upon further technical and legal analysis, the Company determined that it’s position no longer required a reserve. No other material changes to the Company’s unrecognized tax positions occurred during fiscal 2019. The changes in the Company’s reserves for unrecognized income tax benefits are summarized as follows:
The $1,273 of unrecognized tax benefits as of June 30, 2019, if released, would reduce income tax expense. The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. The total amount of gross interest and penalties accrued was $84 as of June 30, 2019 and 2018. In connection with tax matters, the Company recognized interest and penalty expense in fiscal 2019, 2018 and 2017 of $101, $42 and $30, respectively. The Company’s major tax jurisdiction is the U.S. and the open tax years are fiscal 2016 through 2019.
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Commitments and Contingencies |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies LEGAL CLAIMS 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. INDEMNIFICATION OBLIGATIONS 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. PURCHASE COMMITMENTS As of June 30, 2019, the Company has entered into non-cancelable purchase commitments for certain inventory components and services used in its normal operations. The purchase commitments covered by these agreements are for less than one year and aggregate to $73,762. LEASE COMMITMENTS The Company leases certain facilities, machinery and equipment under various cancelable and non-cancelable operating leases that expire at various dates through fiscal 2032. The leases contain various renewal options. Rental charges are subject to escalation for increases in certain operating costs of the lessor. For tenant improvement allowances and rent holidays, the Company records a deferred rent liability on the consolidated balance sheets and amortizes the deferred rent over the terms of the leases as reductions to rent expense on the consolidated statements of operations. Rental expense during the fiscal years ended June 30, 2019, 2018 and 2017 was $8,710, $6,534 and $7,774, respectively. Minimum lease payments under the Company’s non-cancelable operating leases are as follows:
OTHER As part of the Company's strategy for growth, the Company continues to explore acquisitions or strategic alliances. The associated acquisition costs incurred in the form of professional fees and services may be material to the future periods in which they occur, regardless of whether the acquisition is ultimately completed. The Company may elect from time to time to purchase and subsequently retire shares of common stock in order to settle an individual employees’ tax liability associated with vesting of a restricted stock award or exercise of stock options. These transactions would be treated as a use of cash in financing activities in the Company's statement of cash flows.
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Debt |
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Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt Revolving Credit Facilities On May 2, 2016, the Company and certain of its subsidiaries, as guarantors, entered into a Credit Agreement (the “Credit Agreement”) with a syndicate of commercial banks and Bank of America, N.A acting as the administrative agent. The Credit Agreement provided for a $200,000 term loan facility (“the Term Loan”) and a $100,000 revolving credit facility. On June 27, 2017, the Company amended the Credit Agreement to increase and extend the borrowing capacity of the Revolver to $400,000 expiring in June 2022 (“the Amended Credit Agreement”). In connection with the amendment, the Company also repaid the remaining principal and accrued and unpaid interest outstanding on the Term Loan using cash on hand at which point the Term Loan portion of the Credit Agreement was cancelled. On September 28, 2018, the Company amended the Revolver to increase and extend the borrowing capacity to a $750,000, 5-year revolving credit line, with the maturity extended to September 28, 2023. The Company evaluated the amended Credit Agreement under ASC 470, Debt, and determined that the amendment represented a modification of the Credit Agreement. Due to the increase in the borrowing capacity of the Revolver, new costs associated with the amendment and the previous balance of unamortized deferred financing costs totaling $5,713, are being amortized to other income (expense), net on a straight line basis over the new term of the Revolver. As of June 30, 2019, there were no outstanding borrowings against the Revolver. The Company incurred interest expense from the Revolver of $9,109 and $2,850 for the years ended June 30, 2019 and 2018, respectively. There were also outstanding letters of credit of $1,737 as of June 30, 2019. Maturity The Revolver has a five years maturity, which was extended to September 28, 2023. Interest Rates and Fees Borrowings under the Revolver bear interest, at the Company’s option, at floating rates tied to LIBOR or the prime rate plus an applicable percentage. The applicable percentage is set at LIBOR plus 1.5% and is 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. The applicable percentage is pursuant to a pricing grid based on the Company's total net leverage ratio. As of June 30, 2019, the stated interest rate for unutilized commitments was 0.25% per annum. The Company will also pay customary letter of credit and agency fees. Covenants and Events of Default The Revolver provides for customary negative covenants. 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. If an event of default occurs, the lenders under the Revolver will be entitled to take 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. As of June 30, 2019, the Company was in compliance with all covenants and conditions under the Revolver. Guarantees and Security The Company's obligations under the Revolver are guaranteed by certain of its 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 its 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.
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | 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. On January 1, 2019, the independent pension fund changed the conversion rate for accumulated retirement savings. 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 10 years. At June 30, 2019, the accumulated benefit obligation of the Plan equals the fair value of the Plan's assets. The Plan's funded status at June 30, 2019 and 2018 was a net liability of $9,186 and $6,098, respectively, which is recorded in other non-current liabilities on the consolidated balance sheets. The Company recorded a net loss of $2,350 and a net gain of $354 in AOCI during the year ended June 30, 2019 and 2018, respectively. Total employer contributions to the Plan were $741 during the year ended June 30, 2019, and the Company's total expected employer contributions to the Plan during fiscal 2020 are $822. 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.
The following table outlines the components of net periodic benefit cost of the Plan for the year ended June 30, 2019 and 2018:
The following table reflects the related actuarial assumptions used to determine net periodic benefit cost of the Plan for the year ended June 30, 2019 and 2018:
The calculation of the projected benefit obligation (“PBO”) utilized BVG 2015 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:
The following table presents the change in Plan assets for the periods presented:
The following table presents the Company's reconciliation of funded status for the period presented:
The fair value of Plan assets were $15,088 at June 30, 2019. 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 years ended June 30, 2019 or 2018. The Plan’s assets are administered by an independent pension fund foundation (the “foundation”). As of June 30, 2019, 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. During fiscal 2019, 2018 and 2017, the Company matched employee contributions up to 3% of eligible compensation. The Company may also make optional contributions to the plan for any plan year at its discretion. Expense recognized by the Company for matching contributions related to the 401(k) plan was $4,525, $3,684 and $3,206 during the fiscal years ended June 30, 2019, 2018, and 2017, respectively.
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Shareholders' Equity |
12 Months Ended |
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Jun. 30, 2019 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity PREFERRED STOCK The Company is authorized to issue 1,000 shares of preferred stock with a par value of $0.01 per share. SHELF REGISTRATION STATEMENT On August 28, 2017, 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. Additionally, as part of the shelf registration statement, the Company has entered into an equity distribution agreement which allows the Company to sell an aggregate of up to $200,000 of its common stock from time to time through its agents. FOLLOW-ON EQUITY OFFERING On May 20, 2019 the Company announced the commencement of an underwritten public offering of 5,000 shares of its common stock, par value $0.01 , with an over-allotment allocation of an additional 750 shares. On May 23, 2019, the Company announced it upsized the initial 5,000 share public offering to 6,000 shares, with an over-allotment allocation of 900 shares. On May 31, 2019 the Company closed the offering, including the full over-allotment allocation, selling an aggregate of 6,900 shares of common stock at a price to the public of $69.00 for total net proceeds of $454,343.
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Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation STOCK INCENTIVE PLANS The Board of Directors approved the Company’s 2018 Stock Incentive Plan (the “2018 Plan”) on July 23, 2018. The 2018 Plan became effective upon the approval of shareholders at the Company’s annual meeting held on October 24, 2018. The aggregate number of shares authorized for issuance under the 2018 Plan is 2,862 shares, with an additional 710 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”) at the time of shareholder approval of the 2018 Plan. The 2018 Plan replaced the 2005 Plan. The shares authorized for issuance under the 2018 Plan will be increased by any future cancellations, forfeitures or terminations (other than by exercise) of awards under the 2005 Plan. The foregoing does not affect any outstanding awards under the 2005 Plan, which remain in full force and effect in accordance with their terms. The 2018 Plan provides for the grant of non-qualified and incentive stock options, restricted stock, stock appreciation rights and deferred stock awards to employees and non-employees. All stock options are granted with an exercise price of not less than 100% of the fair value of the Company’s common stock at the date of grant and the options generally have a term of seven years. There were 3,512 shares available for future grant under the 2018 Plan at June 30, 2019. 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 include: (i) the achievement of internal performance targets only, and (ii) the achievement of internal performance targets in relation to a peer group of companies. EMPLOYEE STOCK PURCHASE PLAN The number of shares authorized for issuance under the Company’s 1997 Employee Stock Purchase Plan, as amended and restated (“ESPP”), is 1,800 shares. Under the ESPP, rights are granted to purchase shares of common stock at 85% of the lesser of the market value of such shares at either the beginning or the end of each six-month offering period. The ESPP permits employees to purchase common stock through payroll deductions, which may not exceed 10% of an employee’s compensation as defined in the ESPP. The number of shares issued under the ESPP during fiscal years 2019, 2018, and 2017 was 102, 82 and 96, respectively. Shares available for future purchase under the ESPP totaled 118 at June 30, 2019. STOCK OPTION AND AWARD ACTIVITY The following table summarizes activity of the Company’s stock option plans since June 30, 2017:
There were no options exercised during fiscal 2019. The intrinsic value of the options exercised during fiscal years 2018, and 2017 was $1,780 and $3,762, respectively. Non-vested stock options are subject to the risk of forfeiture until the fulfillment of specified conditions. As of June 30, 2019, 2018 and 2017, there was no unrecognized compensation cost related to non-vested options granted under the Company’s stock plans. There were no stock options granted during fiscal years 2019, 2018 or 2017. The following table summarizes the status of the Company’s non-vested restricted stock awards since June 30, 2017:
The total fair value of restricted stock awards vested during fiscal years 2019, 2018, and 2017 was $24,596, $38,344 and $19,402, respectively. Non-vested restricted stock awards are subject to the risk of forfeiture until the fulfillment of specified conditions. As of June 30, 2019, there was $32,886 of total unrecognized compensation cost related to non-vested restricted stock awards granted under the Company’s stock plans that is expected to be recognized over a weighted-average period of 2.5 years from June 30, 2019. As of June 30, 2018, there was $24,740 of total unrecognized compensation cost related to non-vested restricted stock awards granted under the Company’s stock plans that is expected to be recognized over a weighted-average period of 2.3 years from June 30, 2018. STOCK-BASED COMPENSATION EXPENSE The Company recognizes expense for its share-based payment plans in the consolidated statements of operations for the fiscal years 2019 and 2018 in accordance with ASC 718. The Company had $241 and $317 of capitalized stock-based compensation expense on the consolidated balance sheet as of June 30, 2019 and 2018, 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 statement of operations:
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Operating Segment, Geographic Information and Significant Customers |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment, Geographic Information and Significant Customers | Operating Segment, Geographic Information and Significant Customers Operating segments are defined as components of an enterprise evaluated regularly by the Company's chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company is comprised of one operating and reportable segment. The Company utilized the management approach for determining its operating segment in accordance with ASC 280, Segment Reporting. 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:
(1) Identifiable long-lived assets exclude 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 increased the proportion of its revenue derived from the sale of components in different technological areas, and also increased the amount of revenue associated with combining technologies into more complex and diverse products including modules, sub-assemblies and integrated subsystems. 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 and/or product grouping is attained, the categorization of these products can vary over time. When this occurs, the Company reclassifies revenue by end user, application and/or product grouping for prior periods. Such reclassifications typically do not materially change the sizing of, or 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:
(1) Domestic revenues consist of sales where the end user is within the U.S., as well as sales to prime defense contractor customers where the ultimate end user location is not defined. (2) International/Foreign Military Sales consist of sales to U.S. prime defense contractor customers where the end user is outside the U.S., foreign military sales through the U.S. government, and direct sales to non-U.S. based customers intended for end use outside of the U.S. The following table presents the Company's net revenue by end application for the periods presented:
(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:
(1) Components include technology elements typically performing a single, discrete technological function, which when physically combined with other components may be used to create a module or sub-assembly. Examples include but are not limited to 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 include combinations of multiple functional technology elements and/or components that work together to perform multiple functions but are typically resident on or within a single board or housing. Modules and sub-assemblies may in turn be combined to form an integrated subsystem. Examples of modules and sub-assemblies include but are not limited to embedded processing modules, embedded processing boards, switch fabric boards, high speed input/output boards, digital receiver boards, graphics and video processing and Ethernet and IO (input-output) boards, multi-chip modules, integrated radio frequency and microwave multi-function assemblies, tuners, and transceivers. (3) Integrated Subsystems include multiple modules and/or sub-assemblies combined with a backplane or similar functional element and software to enable a solution. These are typically but not always integrated within a chassis and with cooling, power and other elements to address various requirements and are also often combined with additional technologies for interaction with other parts of a complete system or platform. Integrated subsystems also include spare and replacement modules and sub-assemblies sold as part of the same program for use in or with integrated subsystems sold by the Company. Customers comprising 10% or more of the Company’s revenues for the periods shown below are as follows:
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 year ended June 30, 2019, 2018 and 2017.
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Derivatives |
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Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives The Company utilizes interest rate derivatives to mitigate interest rate exposure with respect to its financing arrangements. On January 11, 2019, the Company entered into an interest rate swap (the “Swap”) with Bank of America, N.A. for a notional amount of $175,000 in order to fix the interest rate associated with a portion of the Revolver. The Swap agreement was designated and qualified for hedge accounting treatment as a cash flow hedge. The Swap would have matured on September 28, 2023, coterminous with the maturity of the Revolver. The Swap established a fixed interest rate on the first $175,000 of the Company's outstanding borrowings against the Revolver obligation at 2.54%. The Company incurred $5,400 in expense associated with the termination of the interest rate swap in conjunction with leveraging the net proceeds generated by our follow-on equity offering to pay down the balance on the Revolver during the fourth quarter of fiscal 2019. There were no outstanding interest rate derivatives at June 30, 2019.
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Subsequent Events |
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Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 30, 2019, the Company announced the pending purchase agreement to acquire American Panel Corporation (“APC”). Based in Alpharetta, Georgia, APC is a leading innovator in large area display technology. Their capabilities are deployed on a wide range of Defense and Commercial aviation platforms. The Company's agreement to acquire APC is for an all cash purchase price of $100,000, subject to net working capital and net debt adjustments. The acquisition and associated transaction expenses will be funded with cash on hand. Effective as of July 1, 2019, the Company's fiscal year has changed to the 52-week or 53-week period ending on the Friday closest to the last day in June. The Company has evaluated subsequent events from the date of the consolidated balance sheet through the date the consolidated financial statements were issued.
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Supplementary Information (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Information (Unaudited) | SUPPLEMENTARY INFORMATION (UNAUDITED) The following sets forth certain unaudited consolidated quarterly statements of operations data for each of the Company’s last eight quarters. In management’s opinion, this quarterly information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation for the periods presented. Such quarterly results are not necessarily indicative of future results of operations and should be read in conjunction with the audited consolidated financial statements of the Company and the notes thereto.
Due to the effects of rounding, the sum of the four quarters does not equal the annual total.
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Receivables, Policy [Policy Text Block] | |||||||||||||
Principles Of Consolidation | PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.
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Business Combinations | BUSINESS COMBINATIONS The Company utilizes the acquisition method of accounting under ASC 805, Business Combinations, (“ASC 805”), for all transactions and events 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:
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.
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Use Of Estimates | USE OF ESTIMATES 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.
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Revenue Recognition | REVENUE RECOGNITION The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, (“ASC 606”), which was adopted on July 1, 2018, using the retrospective method. Revenue is recognized in accordance with the five step model set forth by 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. The adoption of ASC 606 did not have a material impact to the amount or timing of revenue recognition related to the Company's legacy accounting methods for contracts including ship and bill, multiple-deliverable, and contract accounting. Such adoption did not have a material impact, individually or in the aggregate, to any amounts in the Company's Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income, Consolidated Statements of Shareholders’ Equity or Consolidated Statements of Cash Flows. Refer to Note P for disaggregation of revenue for the period. 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 decision 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 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 provider of secure sensor and safety-critical mission processing subsystems. Revenues are derived from the sales of products that are grouped into one of the following three categories: (i) components; (ii) modules and sub-assemblies; and (iii) integrated subsystems. The Company also generates revenues from the performance of services, including systems engineering support, consulting, maintenance and other support, testing and installation. Each promised good or service within a contract is accounted for separately under the guidance of ASC 606 if they are distinct, i.e., if a good or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. 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 forecasts 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 subsystems and related system integration or other services. Contracts with distinct performance obligations recognized at a point in time, with or without an allocation of the transaction price, totaled 77%, 79% and 77% of revenues in the years ended June 30, 2019, 2018, and 2017, 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 shipment (for goods) or completion (for services). The Company engages in long-term contracts for development, production and service activities and recognizes revenue for performance obligations over time. These long-term 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 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 long-term 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 reimburseable 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 elected to use a practical expedient permitted by ASC 606 whereby revenue is recognized in the amount for which the Company has a right to invoice the customer based on the control transferred to the customer. For all types of contracts, the Company recognizes anticipated contract losses as soon as they become known and estimable. Accounting for long-term contracts 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. The Company’s estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each long-term 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. Total revenue recognized under long-term contracts over time was 23%, 21% and 23% of revenues in the years ended June 30, 2019, 2018, and 2017, respectively. 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 long-term 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 long-term 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).
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Cash And Cash Equivalents | CASH AND CASH EQUIVALENTS 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.
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Fair Value Measurement, Policy [Policy Text Block] | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures at fair value certain financial assets and liabilities, including cash equivalents, restricted cash 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.
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Concentration Of Credit Risk | CONCENTRATION OF CREDIT RISK Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. The Company places its cash and cash equivalents with financial institutions of high credit quality. At June 30, 2019 and 2018, the Company had $257,932 and $66,521, 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. At June 30, 2019, five customers accounted for 56% of the Company's accounts receivable, unbilled receivables and costs in excess of billings. At June 30, 2018, five customers accounted for 54% of the Company’s accounts receivable, unbilled receivables and costs in excess of billings.
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Inventory | INVENTORY Inventory is stated at the lower of cost (first-in, first-out) or net realizable value, and consists of materials, labor and overhead. On a quarterly basis, the Company 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.
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Goodwill And Acquired Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill is the amount by which the cost of the net assets obtained in a business acquisition exceeded the fair values of the net identifiable assets on the date of purchase (see Note G). Goodwill is not amortized in accordance with the requirements of ASC 350, Intangibles-Goodwill and Other (“ASC 350”). Goodwill is assessed for impairment at least annually, on a reporting unit basis, or when events and circumstances occur indicating that the recorded goodwill may be impaired. If the book value of a reporting unit exceeds its fair value, the implied fair value of goodwill is compared with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recorded in an amount equal to that excess. Intangible assets result from the Company’s various business acquisitions (see Note H) 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.
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Long-Lived Assets | LONG-LIVED ASSETS Long-lived assets primarily include property and equipment and acquired intangible 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.
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Property And Equipment | 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 F). 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 2019, 2018 and 2017, the Company capitalized $749, $733 and $508 of software development costs.
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Income Taxes | INCOME TAXES 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.
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Product Warranty Accrual | PRODUCT WARRANTY ACCRUAL 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.
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Research And Development Costs | RESEARCH AND DEVELOPMENT COSTS 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.
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Stock-Based Compensation | STOCK-BASED COMPENSATION 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 are 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. The Company uses the Black-Scholes valuation model for estimating the fair value on the date of grant of stock options.
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Segment Reporting, Policy [Policy Text Block] | SEGMENT INFORMATION 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 commercial provider of secure sensor and safety critical mission processing subsystems for a broad range of critical aerospace, defense and intelligence programs.
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Retirement of Common Stock | RETIREMENT OF COMMON STOCK Stock that is repurchased or received in connection with the exercise of stock options or in order to cover tax payment obligations triggered by exercise of stock options or 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.
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Net Earnings Per Share | NET EARNINGS PER SHARE Basic net 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 income is the control number for determining whether securities are dilutive or not.
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Accumulated Other Comprehensive Income | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) (“AOCI”) includes foreign currency translation adjustments and pension benefit plan adjustments. The components of accumulated other comprehensive (loss) income included $(232), $(137) and $(93) of foreign currency translation adjustments for the years ended June 30, 2019, 2018 and 2017, respectively. In addition, pension benefit plan adjustments totaled $(2,350), $354 and $220 for the years ended June 30, 2019, 2018 and 2017 respectively. There were no material net unrealized gains on investments for the years ended June 30, 2019, 2018 and 2017.
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Foreign Currency | FOREIGN CURRENCY Local currencies are the functional currency for the Company’s subsidiaries in Switzerland, the United Kingdom, France, Japan, Spain and Canada. The accounts of foreign subsidiaries are translated using exchange rates in effect at period-end for assets and liabilities and at average exchange rates during the period for results of operations. The related translation adjustments are reported in accumulated other comprehensive income in shareholders’ equity. Gains (losses) resulting from non-U.S. currency transactions are included in other (expense) income, net in the Consolidated Statements of Operations and Comprehensive Income and were immaterial for all periods presented.
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Recently Issued Accounting Pronouncements | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), an amendment of the FASB Accounting Standards Codification. This ASU requires lessees to recognize a right-of-use asset and lease liability for most lease arrangements. The new standard is effective for the Company on July 1, 2019. The standard mandates a modified retrospective transition method for all entities and early adoption is permitted. This ASU, among other things, allows companies to elect an optional transition method to apply the new lease standard through a cumulative-effect adjustment in the period of adoption. The Company plans to adopt the new standard using the optional transition method. As of June 30, 2019, the Company had $69,630 of future minimum lease payments under non-cancelable operating leases, primarily for facilities. The future minimum lease payments have not yet been adjusted to the present value, as the Company is still assessing the impact of each applicable discount rate. The Company will leverage the rate implicit in the lease unless that rate cannot be readily determined, in which case the Company's incremental borrowing rate will be used to determine the discount rate applicable for the calculation of our lease liabilities. See Note K to consolidated financial statements for more information about the timing and amount of future operating lease payments, which the Company believes is indicative of the materiality of adoption of the ASU to the Company's consolidated financial statements. The Company intends to elect the package of practical expedients which allows the Company to not reassess 1) whether any expired or existing contracts are or contain leases; 2) the lease classification for any expired or existing leases; and 3) initial direct costs for any existing leases. The Company has completed the identification of the population of leases subject to the ASU and is in the process of calculating the financial impact that the adoption will have on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, an amendment of the FASB Accounting Standards Codification. This ASU eliminates the requirement to measure the implied fair value of goodwill by assigning the fair value of a reporting unit to all assets and liabilities within that unit (“the Step 2 test”) from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited by the amount of goodwill in that reporting unit. For public business entities, the new standard is effective for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The ASU requires prospective adoption and permits early adoption for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect this guidance to have a material impact to its consolidated financial statements. In March 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects for Accumulated Other Comprehensive Income, an amendment of the FASB Accounting Standards Codification. This ASU permits a company to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act of 2017 on items within AOCI to retained earnings. The amounts applicable for reclassification should include the effect of the change in the U.S. Federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of the enactment of the Tax Cuts and Jobs Act of 2017 related to the items remaining in AOCI. The effect of the change in the U.S. Federal corporate income tax rate on gross valuation allowances that were originally charged to income from continuing operations shall not be included. For all entities, the new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that annual period, and early adoption is permitted. The Company is evaluating the effect that ASU 2018-02 will have on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715) Changes to the Disclosure Requirements for Defined Benefit Plans, an amendment of the FASB Accounting Standards Codification. The amendments in this ASU remove disclosures that no longer are considered cost-beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. For public business entities, the standard is effective for fiscal years ending after December 15, 2020. The ASU requires retrospective adoption and permits early adoption for all entities. The Company does not expect this guidance to have a material impact to its consolidated financial statements or related disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40), an amendment of the FASB Accounting Standards Codification. The ASU provides guidance to determine whether to capitalize implementation costs of cloud computing arrangement that is a service contract or expense as incurred. Costs of arrangements that do not include a software license should be accounted for as a service contract and expensed as incurred. This ASU is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The ASU permits two methods of adoption: prospectively to all implementation costs incurred after the date of adoption, or retrospectively to each prior reporting period presented. The Company does not expect this guidance to have a material impact to its consolidated financial statements or related disclosures. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS Effective July 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaces most existing revenue recognition guidance in GAAP. The new standard permits adoption by using either (i) a retrospective approach for all periods presented in the period of adoption or (ii) a modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. In accordance with this standard, the Company has adopted the new standard using the retrospective method. The Company has completed the assessment phase and implemented the new standard accordingly. Further, it has evaluated the Company's policies in relation to its internal controls framework. This assessment included identification, consideration, and quantification of the impact of the new standard on our financial statements, accounting policies, processes, control environment and systems. The outcome of this assessment included implementation of supporting processes and systems that enable timely and accurate reporting under the new standard. Adoption of the new standard did not result in a significant change in the Company's control environment. Such adoption has resulted in additional disclosures around the nature and timing of our performance obligations, contract liabilities, deferred contract cost assets, as well as significant judgments and practical expedients used by us. The Company has applied the standard’s practical expedient that permits the omission of prior-period information about our remaining performance obligations. The Company has also elected to use a practical expedient available under the new standard whereby contracts with original expected durations of one year or less are excluded from the Company's remaining performance obligations. Adoption of the new standard did not have a material impact to the amount or timing of revenue recognition related to the Company's legacy accounting methods for contracts including ship and bill, multiple-deliverable, and contract accounting, which encompassed the legacy percentage-of-completion, completed contract and time and materials methods. For T&M contracts, the Company has elected to use a practical expedient permitted by the new standard whereby revenue is recognized in the amount for which the Company has a right to invoice the customer based on the control transferred to the customer. Such adoption did not have a material impact to its consolidated financial statements. In connection with the adoption of the new standard, there is a requirement to capitalize certain incremental costs of obtaining a contract, which for the Company, primarily comprises commission expenses for internal and external sales representatives. Any such costs required to be capitalized would be amortized over the period of performance for the underlying contracts. The Company has elected the practical expedient under the new standard whereby costs associated with contracts that have a duration less than one year are expensed as incurred. The Company has completed the evaluation of capitalizing costs to obtain a contract, noting that the impact related to these costs would be limited to commissions on contracts with a duration exceeding one year. The impact was not material to its consolidated financial statements. Effective July 1, 2018, the Company adopted ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, an amendment of the FASB Accounting Standards Codification. This ASU will reduce diversity in practice for classifying cash payments and receipts in the statement of cash flows for a number of common transactions. It will also clarify when identifiable cash flows should be separated versus classified based on their predominant source or use. Such adoption has not and will not have any impact to its consolidated financial statements. Effective July 1, 2018, we adopted ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, an amendment of the FASB Accounting Standards Codification. This ASU requires the seller and buyer to recognize at the transaction date the current and deferred income tax consequences of intercompany asset transfers (except transfers of inventory). Under current U.S. GAAP, the seller and buyer defer the consolidated tax consequences of an intercompany asset transfer from the period of the transfer to a future period when the asset is transferred out of the consolidated group, or otherwise affects consolidated earnings. This standard will cause volatility in companies’ effective tax rates, particularly for those that transfer intangible assets to foreign subsidiaries. Such adoption has not and will not have any impact to the Company's consolidated financial statements. Effective July 1, 2018, we adopted ASU No. 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, an amendment of the FASB Accounting Standards Codification. This ASU requires employers that sponsor defined benefit pension and/or other post-retirement benefit plans to report the service cost component of net benefit cost in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Employers are required to present the other components of net benefit costs in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component of net periodic pension cost will be eligible for asset capitalization. The ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. Such adoption has not and will not have a material impact to the Company's consolidated financial statements. Effective January 1, 2019, the Company adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, an amendment of the FASB Accounting Standards Codification. This ASU provides improved financial reporting of hedging relationships to better portray the economic result of an entity's risk management activities in its financial statements. In addition, the amendments in this update make certain targeted improvements to simplify the application of hedge accounting guidance. The ASU requires modified retrospective adoption and permits early adoption in any interim period after issuance of the ASU. Disclosures reflect the adoption of ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, in the third quarter of fiscal 2019. Prior period amounts have not been restated. See Note Q for additional disclosures. Effective January 1, 2019, the Company adopted SEC Final Rule 33-10532, Disclosure Update and Simplification, which requires disclosure of the changes in each caption of shareholders’ equity for the current and comparative year-to-date periods, with subtotals for each interim period and the amount of dividends per share for each class of shares. Such adoption has not and will not have a material impact to the Company's consolidated financial statements.
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Employee Benefit Plans | 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.
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Summary of Significant Accounting Policies (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Product Warranty Liability | The following table presents the changes in the Company's product warranty accrual.
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Basic and Diluted Weighted Average Shares Outstanding | Basic and diluted weighted average shares outstanding were as follows:
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Acquisitions (Tables) |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired and Liabilities Assumed | The following table presents the net purchase price and the fair values of the assets and liabilities of Syntonic on a preliminary basis:
The following table presents the net purchase price and the fair values of the assets and liabilities of Athena on a preliminary basis:
The following table presents the net purchase price and the fair values of the assets and liabilities of GECO on a preliminary basis:
The following table presents the net purchase price and the fair values of the assets and liabilities of Themis:
The following table presents the net purchase price and the fair values of the assets and liabilities of Germane on a preliminary basis:
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Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Assets Measured at Fair Value on Recurring Basis | The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2019:
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2018:
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Inventory (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory was comprised of the following:
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Property and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and equipment consisted of the following:
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Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill | The following table sets forth the changes in the carrying amount of goodwill by reporting unit for the year ended June 30, 2019:
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Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Intangible Assets | Intangible assets consisted of the following:
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Estimated Future Amortization Expense for Acquired Intangible Assets | Estimated future amortization expense for intangible assets remaining at June 30, 2019 is as follows:
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Schedule of Acquired Finite-Lived Intangible Assets by Major Class | The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the Athena acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2019.
The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the Syntonic acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2019.
The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the GECO acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2019.
The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the Germane acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2019.
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Restructuring Plan (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses by Business Segment for Restructuring Plans | The following table presents the detail of expenses for the Company’s restructuring plans:
(*) Reversals result from the unused outplacement services and operating costs.
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Before Income Taxes and Income Tax Expense (Benefit) | The components of income before income taxes and income tax expense were as follows:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation Between Statutory Federal Income Tax Rate and Effective Income Tax Rate from Continuing Operations | The following is the reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Deferred Tax Assets (Liabilities) |
|
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Summary of Reserves for Unrecognized Income Tax Benefits | The changes in the Company’s reserves for unrecognized income tax benefits are summarized as follows:
|
Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum Lease Payments under Non Cancelable Operating Leases | Minimum lease payments under the Company’s non-cancelable operating leases are as follows:
|
Employee Benefit Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Expected Benefit Payments | 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.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The following table outlines the components of net periodic benefit cost of the Plan for the year ended June 30, 2019 and 2018:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assumptions Used | The following table reflects the related actuarial assumptions used to determine net periodic benefit cost of the Plan for the year ended June 30, 2019 and 2018:
|
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Schedule of Changes in Projected Benefit Obligations | The following table presents the change in projected benefit obligation for the periods presented:
|
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Schedule of Changes in Fair Value of Plan Assets | The following table presents the change in Plan assets for the periods presented:
|
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Schedule of Net Funded Status | The following table presents the Company's reconciliation of funded status for the period presented:
|
Stock-Based Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Plans | The following table summarizes activity of the Company’s stock option plans since June 30, 2017:
|
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Summary of Nonvested Restricted Stock | The following table summarizes the status of the Company’s non-vested restricted stock awards since June 30, 2017:
|
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Stock Based Compensation Expenses | The following table presents share-based compensation expenses from continuing operations included in the Company’s consolidated statement of operations:
|
Operating Segment, Geographic Information and Significant Customers (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Distribution of Revenues and Long Lived Assets from Continuing Operations | 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:
(1) Identifiable long-lived assets exclude goodwill and intangible assets.
|
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Revenue from External Customers by Geographic Areas | The following table presents the Company's net revenue by end market for the periods presented:
(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.
|
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Revenue from External Customers by Products and Services | The following table presents the Company's net revenue by end application for the periods presented:
(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:
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Customers Comprising Ten Percent or more Revenues | Customers comprising 10% or more of the Company’s revenues for the periods shown below are as follows:
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Schedules of Concentration of Risk, by Risk Factor | . |
Supplementary Information (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Quarterly Statements of Operations | The following sets forth certain unaudited consolidated quarterly statements of operations data for each of the Company’s last eight quarters. In management’s opinion, this quarterly information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation for the periods presented. Such quarterly results are not necessarily indicative of future results of operations and should be read in conjunction with the audited consolidated financial statements of the Company and the notes thereto.
|
Description of Business (Details) $ / shares in Units, $ in Thousands |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Apr. 18, 2019
USD ($)
|
Jan. 29, 2019
USD ($)
|
Jul. 31, 2018
USD ($)
|
Jun. 30, 2019
USD ($)
program
contractor
$ / shares
|
Jun. 30, 2018
USD ($)
$ / shares
|
Jun. 30, 2017
USD ($)
|
May 31, 2019
$ / shares
|
May 29, 2019
USD ($)
|
|
Number of programs using products and services, more than 300 | program | 300 | |||||||
Number of contractors using products and services, more than 25 | contractor | 25 | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||||||
Equity Securities, FV-NI | $ 6,900 | |||||||
Price of stock sold (in dollars per share) | $ / shares | $ 69.00 | |||||||
Proceeds from Issuance of Common Stock | $ 454,343 | $ 0 | $ 215,725 | |||||
The Athena Group, Inc And Syntonic Microwave LLC | ||||||||
Total purchase price | $ 46,000 | |||||||
GECO Avionics, LLC | ||||||||
Total purchase price | $ 36,500 | |||||||
Germane Systems, LC | ||||||||
Total purchase price | $ 45,000,000 |
Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) |
12 Months Ended |
---|---|
Jun. 30, 2019 | |
Maximum | |
Restricted Cash and Cash Equivalents Items [Line Items] | |
Maturity of cash and cash equivalents | 90 days |
Summary of Significant Accounting Policies - Restricted Cash (Details) $ in Thousands |
Jun. 30, 2016
USD ($)
|
---|---|
Accounting Policies [Abstract] | |
Restricted cash | $ 0 |
Summary of Significant Accounting Policies - Concentration of Risk (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2019
USD ($)
customer
|
Jun. 30, 2018
USD ($)
customer
|
|
Concentration Risk [Line Items] | ||
Cash and cash equivalent | $ | $ 257,932 | $ 66,521 |
Customer Concentration Risk | Accounts Receivable, Unbilled Receivables, and Costs in Excess of Billings [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, number | customer | 5 | 5 |
Concentration risk, percent | 56.00% | 54.00% |
Summary of Significant Accounting Policies Summary of Significant Accounting Policies - Segment Information (Details) - segment |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Accounting Policies [Abstract] | ||
Number of reportable segments | 1 | 1 |
Summary of Significant Accounting Policies - Intangible Assets (Detail) |
12 Months Ended |
---|---|
Jun. 30, 2019 | |
Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired intangible assets, estimated useful lives | 12 years 6 months |
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Accounting Policies [Abstract] | |||
Property and equipment, estimated useful lives | 3 years | ||
Capitalized software development cost | $ 749 | $ 733 | $ 508 |
Summary of Significant Accounting Policies - Income Taxes (Details) |
Jun. 30, 2019 |
---|---|
Accounting Policies [Abstract] | |
Minimum likelihood of tax benefits being recognized upon ultimate settlement | 50.00% |
Summary of Significant Accounting Policies - Basic and Diluted Weighted Average Shares Outstanding (Detail) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Accounting Policies [Abstract] | |||
Basic weighted-average shares outstanding | 47,831 | 46,719 | 41,986 |
Effect of dilutive equity instruments | 669 | 752 | 1,032 |
Diluted weighted-average shares outstanding | 48,500 | 47,471 | 43,018 |
Summary of Significant Accounting Policies - Net Earnings Per Share Additional Information (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Accounting Policies [Abstract] | |||
Common stock excluded from diluted earning per share (in shares) | 32 | 329 | 16 |
Summary of Significant Accounting Policies - Accumulated Other Comprehensive Income (Details) - USD ($) |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
---|---|---|---|---|
Operating Leases, Future Minimum Payments Due | $ 69,630,000 | |||
Accumulated other comprehensive income adjustment for foreign currency | (232,000) | $ (137,000) | $ (93,000) | |
Accumulated other comprehensive income adjustment for pension plans | (2,350,000) | $ 354,000 | $ 220,000 | |
Accumulated other comprehensive income, available-for-sale securities gains (losses) | $ 0 | $ 0 |
Summary of Significant Accounting Policies Revenue Recognition (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Deferred Revenue Arrangement [Line Items] | |||
Percentage of revenue recognized | 61.00% | ||
Unbilled receivables and cost in excess of billings | $ 57,387 | $ 39,774 | |
Contract with customer, liability | 12,362 | $ 13,425 | |
Contract with customer, liability, revenue recognized | 10,513 | ||
Revenue, remaining performance obligation, amount | $ 186,066 | ||
Contract Accounting | |||
Deferred Revenue Arrangement [Line Items] | |||
Percentage of revenue recognized | 77.00% | 79.00% | 77.00% |
Transferred over Time | |||
Deferred Revenue Arrangement [Line Items] | |||
Percentage of revenue recognized | 23.00% | 21.00% | 23.00% |
Minimum | |||
Deferred Revenue Arrangement [Line Items] | |||
Product warranty period | 12 years | ||
Extended product warranty, period | 12 months | ||
Maximum | |||
Deferred Revenue Arrangement [Line Items] | |||
Product warranty period | 36 months | ||
Extended product warranty, period | 36 months |
Fair Value of Financial Instruments - Summary of Financial Assets Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Fair Value | ||
Assets: | ||
Fair value measurement disclosure | $ 31,522 | $ 1,056 |
Certificates of Deposit [Member] | Fair Value | ||
Assets: | ||
Fair value measurement disclosure | 31,522 | 1,056 |
Level 1 | ||
Assets: | ||
Fair value measurement disclosure | 0 | 0 |
Level 1 | Certificates of Deposit [Member] | ||
Assets: | ||
Fair value measurement disclosure | 0 | 0 |
Level 2 | ||
Assets: | ||
Fair value measurement disclosure | 31,522 | 1,056 |
Level 2 | Certificates of Deposit [Member] | ||
Assets: | ||
Fair value measurement disclosure | 31,522 | 1,056 |
Level 3 | ||
Assets: | ||
Fair value measurement disclosure | 0 | 0 |
Level 3 | Certificates of Deposit [Member] | ||
Assets: | ||
Fair value measurement disclosure | $ 0 | $ 0 |
Inventory (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 84,561 | $ 61,748 |
Work in process | 38,525 | 30,841 |
Finished goods | 14,026 | 15,996 |
Total | $ 137,112 | $ 108,585 |
Inventory - Additional Information (Details) $ in Thousands |
12 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Inventory Disclosure [Abstract] | |
Increase in inventory | $ 28,527 |
Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Property, Plant and Equipment [Line Items] | |||
Increase in property and equipment | $ 9,021 | ||
Depreciation and amortization expense related to property and equipment | 18,478 | $ 16,273 | $ 12,589 |
Computer equipment and software | |||
Property, Plant and Equipment [Line Items] | |||
Retirement of asset | $ 3,980 | $ 611 |
Goodwill Goodwill - Changes in Carrying Amount of Goodwill (Detail) $ in Thousands |
12 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning Balance | $ 497,442 |
Ending Balance | 562,146 |
Sensor And Mission Processing [Member] | |
Goodwill [Roll Forward] | |
Beginning Balance | 119,560 |
Ending Balance | 140,783 |
AMS [Member] | |
Goodwill [Roll Forward] | |
Beginning Balance | 218,147 |
Ending Balance | 222,379 |
MDS | |
Goodwill [Roll Forward] | |
Beginning Balance | 159,735 |
Ending Balance | 198,984 |
RTL | |
Goodwill [Roll Forward] | |
Goodwill arising from acquisition | 4,232 |
RTL | AMS [Member] | |
Goodwill [Roll Forward] | |
Goodwill arising from acquisition | 4,232 |
Themis | |
Goodwill [Roll Forward] | |
Goodwill adjustments | 139 |
Themis | MDS | |
Goodwill [Roll Forward] | |
Goodwill adjustments | 139 |
The Athena Group, Inc [Member] | |
Goodwill [Roll Forward] | |
Goodwill arising from acquisition | 15,999 |
The Athena Group, Inc [Member] | MDS | |
Goodwill [Roll Forward] | |
Goodwill arising from acquisition | $ 15,999 |
Restructuring Plan - Additional Information (Detail) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019
USD ($)
position
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and other charges | $ 560 | $ 3,159 | $ 1,952 |
Number of positions eliminated | position | 38 | ||
Other restructuring costs | $ 3,159 | 1,042 | |
2014 Plan Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Severance costs | $ 910 |
Restructuring Plan - Expenses by Business Segment for Restructuring Plans (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Restructuring Reserve [Roll Forward] | ||
Restructuring liability at beginning of period | $ 1,801 | $ 1,365 |
Provisions | 629 | 3,411 |
Cash paid | 2,357 | (2,723) |
Reversals | (69) | (252) |
Restructuring liability at end period | 4 | 1,801 |
Severance | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring liability at beginning of period | 1,801 | 1,365 |
Provisions | 549 | 3,181 |
Cash paid | 2,333 | (2,546) |
Reversals | (13) | (199) |
Restructuring liability at end period | 4 | 1,801 |
Other Members | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring liability at beginning of period | 0 | 0 |
Provisions | 80 | 230 |
Cash paid | 24 | (177) |
Reversals | (56) | (53) |
Restructuring liability at end period | $ 0 | $ 0 |
Income Taxes - Components of Income Before Income Taxes and Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income before income taxes: | |||||||||||
United States | $ 57,281 | $ 43,368 | $ 30,499 | ||||||||
Foreign | 2,246 | (795) | 569 | ||||||||
Income before income taxes | $ 12,587 | $ 19,466 | $ 16,866 | $ 10,608 | $ 16,628 | $ 5,905 | $ 10,468 | $ 9,572 | 59,527 | 42,573 | 31,068 |
Federal: | |||||||||||
Current | 11,454 | 4,470 | 11,476 | ||||||||
Deferred | (3,008) | (4,527) | (7,645) | ||||||||
Federal Income Tax Expense (Benefit), Continuing Operations, Total | 8,446 | (57) | 3,831 | ||||||||
State: | |||||||||||
Current | 5,194 | 2,370 | 3,650 | ||||||||
Deferred | (1,421) | (537) | (1,684) | ||||||||
State and Local Income Tax Expense (Benefit), Continuing Operations, Total | 3,773 | 1,833 | 1,966 | ||||||||
Foreign: | |||||||||||
Current | 546 | 186 | 240 | ||||||||
Deferred | (13) | (272) | 156 | ||||||||
Foreign, Income Tax expense benefit | 533 | (86) | 396 | ||||||||
Income tax expense (benefit) | $ (217) | $ 5,357 | $ 4,483 | $ 3,129 | $ 6,527 | $ 2,209 | $ 1,335 | $ (8,381) | $ 12,752 | $ 1,690 | $ 6,193 |
Income Taxes - Components of Net Deferred Tax Assets (Liabilities) (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Deferred tax assets: | ||
Inventory valuation and receivable allowances | $ 10,313 | $ 8,476 |
Accrued compensation | 4,644 | 3,803 |
Equity compensation | 4,595 | 3,944 |
Federal and state research and development tax credit carryforwards | 15,510 | 18,784 |
Other accruals | 1,128 | 1,085 |
Accrued compensation | 1,561 | 1,561 |
Operating Loss Carryforwards | 721 | 1,634 |
Capital loss carryforwards | 2,354 | 2,413 |
Other temporary differences | 2,258 | 1,565 |
Deferred tax Asset | 43,084 | 43,265 |
Valuation allowance | (16,666) | (16,992) |
Total deferred tax assets | 26,418 | 26,273 |
Deferred tax liabilities: | ||
Deferred revenue | (848) | (696) |
Property and equipment depreciation | (4,927) | (4,436) |
Acquired intangible assets | (38,399) | (34,546) |
Other temporary differences | (58) | (230) |
Total deferred tax liabilities | 44,232 | 39,908 |
Net deferred tax (liabilities) assets | (17,814) | (13,635) |
Non-current deferred tax assets | $ (17,814) | $ (13,635) |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Tax Credit Carryforward [Line Items] | ||
Reductions as a result of a lapse of the applicable statute of limitations | $ 0 | $ 81 |
Settlements of previously recognized positions | 0 | 0 |
Excess Tax Benefit from Share-based Compensation, Operating Activities | 2,672 | $ 7,897 |
Domestic Tax Authority | Research and development credit carryforwards | ||
Tax Credit Carryforward [Line Items] | ||
Tax credit carryforwards | $ 345 | |
Domestic Tax Authority | Research and development credit carryforwards | Maximum | ||
Tax Credit Carryforward [Line Items] | ||
Tax carryforward expiration year | 2029 | |
State and Local Jurisdiction | Research and development credit carryforwards | ||
Tax Credit Carryforward [Line Items] | ||
Tax credit carryforwards | $ 15,165 |
Income Taxes - Summary of Reserves for Unrecognized Income Tax Benefits (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits, beginning of period | $ 998 | $ 804 | |
Increases for previously recognized positions | 0 | 0 | |
Settlements of previously recognized positions | 0 | 0 | |
Reductions as a result of a lapse of the applicable statute of limitations | 0 | (81) | |
Increases for currently recognized positions | 275 | 315 | |
Reductions for previously recognized positions | 0 | (40) | |
Unrecognized tax benefits, end of period | 1,273 | 998 | $ 804 |
Unrecognized tax benefits that would impact effective tax rate | 1,273 | ||
Interest and penalties accrued | 84 | ||
interest and penalties recognized | $ 101 | $ 42 | $ 30 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Long-term Purchase Commitment [Line Items] | |||
Rental expenses | $ 8,710 | $ 6,534 | $ 7,774 |
Non-cancelable purchase commitments | |||
Long-term Purchase Commitment [Line Items] | |||
Purchase commitments for less than one year | $ 73,762 |
Commitments and Contingencies - Minimum Lease Payments under Non Cancelable Operating Leases (Detail) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2015 | $ 10,205 |
2016 | 8,949 |
2017 | 8,280 |
2018 | 7,414 |
2019 | 6,496 |
Thereafter | 28,286 |
Total minimum lease payments | $ 69,630 |
Debt - Additional Information (Detail) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
May 02, 2016 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 27, 2017 |
|
Line of Credit Facility [Line Items] | |||||
Interest Expense | $ 9,109,000 | $ 2,850,000 | $ 7,568,000 | ||
Letters of credit outstanding | $ 1,737,000 | ||||
Debt instrument borrowing term | 5 years | ||||
Collateral Capital Stock | 65.00% | ||||
Revolver | |||||
Line of Credit Facility [Line Items] | |||||
Interest Expense | $ 9,109,000 | $ 2,850 | |||
Term Loan [Member] | Credit Agreement [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 200,000,000 | ||||
Revolver [Member] | Credit Agreement [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 100,000,000 | ||||
Basis Spread on Variable Rate | 1.50% | ||||
Commitment Fee Percentage | 0.25% | ||||
Revolver [Member] | Amended Credit Agreement [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 400,000,000 |
Employee Benefit Plans - Pension, Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Net gain in accumulated other comprehensive income | $ (2,350) | $ 354 | $ 220 |
Company contributions | 741 | ||
Foreign Plan [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined Benefit Plan, Benefit Obligation, Actuarial Gain (Loss) | (2,859) | (466) | |
Funded status of plan | 9,186 | 6,098 | |
Net gain in accumulated other comprehensive income | 354 | ||
Company contributions | 741 | 608 | |
Fair value of plan assets | $ 15,088 | $ 12,029 | $ 10,925 |
Discount rate | 0.50% | 0.85% | |
Rate of compensation increases | 1.50% | 1.20% | |
Maximum | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay | 3.00% | 3.00% |
- Schedule of Expected Future Pension Benefits (Details) - Foreign Plan [Member] - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | $ 815 | $ 833 |
Defined Benefit Plan, Expected Future Benefit Payment [Abstract] | ||
2018 | 761 | |
2019 | 733 | |
2020 | 883 | |
2021 | 1,197 | |
2022 | 1,040 | |
Thereafter (next 5 years) | 5,529 | |
Total | $ 10,143 |
Employee Benefit Plans - Schedule of Net Periodic Benefit Cost (Details) - Foreign Plan [Member] - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | ||
Service cost | $ 903 | $ 835 |
Interest cost | 156 | 121 |
Expected return on assets | (183) | (162) |
Amortization of prior service cost | (61) | 39 |
Net periodic benefit cost | $ 815 | $ 833 |
Employee Benefit Plans - Schedule of Related Actuarial Assumptions (Details) - Foreign Plan [Member] |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 0.50% | 0.85% |
Expected rate of return on Plan assets | 1.50% | 1.50% |
Expected inflation | 1.20% | 1.20% |
Rate of compensation increases | 1.50% | 1.20% |
Employee Benefit Plans - Schedule of Projected Benefit Obligation (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||
Defined Benefit Plan, Benefit Obligation, Foreign Currency Translation Gain (Loss) | $ 259 | $ (596) |
Foreign Plan [Member] | ||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||
Projected benefit obligation, beginning | 18,127 | 17,526 |
Service cost | 903 | 835 |
Interest cost | 156 | 121 |
Defined Benefit Plan, Plan Assets, Contributions by Plan Participant | 3,577 | 1,931 |
Actuarial gain | 2,859 | 466 |
Defined Benefit Plan, Benefit Obligation, Benefits Paid | 1,607 | 1,215 |
Plan amendment | 0 | (941) |
Projected benefit obligation at end of year | $ 24,274 | $ 18,127 |
Employee Benefit Plans - Schedule of Change in Plan Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Company contributions | $ 741 | |
Foreign Plan [Member] | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||
Fair value of Plan assets, beginning | 12,029 | $ 10,925 |
Actual return on Plan assets | 167 | 167 |
Company contributions | 741 | 608 |
Defined Benefit Plan, Plan Assets, Contributions by Plan Participant | 3,577 | 1,931 |
Defined Benefit Plan, Benefit Obligation, Benefits Paid | 1,607 | 1,215 |
Foreign exchange gain (loss) | 181 | (387) |
Fair value of Plan assets at end of year | $ 15,088 | $ 12,029 |
Employee Benefit Plans - Reconciliation of Funded Status (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax | $ 2,350 | $ (354) | $ (220) |
Foreign Plan [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 0.50% | 0.85% | |
Projected benefit obligation at end of year | $ 24,274 | $ 18,127 | 17,526 |
Fair value of plan assets at end of year | 15,088 | 12,029 | $ 10,925 |
Funded status | $ (9,186) | $ (6,098) | |
Rate of compensation increases | 1.50% | 1.20% |
- 401(k) Plan (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Contribution Plan Disclosure [Line Items] | |||
Employer contributions | $ 4,525 | $ 3,684 | $ 3,206 |
Maximum | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employee Contribution of eligible compensation | 3.00% | 3.00% | |
401(k) Plan | Maximum | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Employee Contribution of eligible compensation | 3.00% |
Shareholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
May 23, 2019 |
May 20, 2019 |
Aug. 28, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
May 31, 2019 |
May 29, 2019 |
|
Class of Stock [Line Items] | ||||||||
Preferred stock shares authorized to issue (in shares) | 1,000,000 | 1,000,000 | ||||||
Preferred stock shares par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||
Shares sold (in shares) | 200,000 | |||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||
Equity Securities, FV-NI | $ 6,900 | |||||||
Price of stock sold (in dollars per share) | $ 69.00 | |||||||
Proceeds from Issuance of Common Stock | $ 454,343 | $ 0 | $ 215,725 | |||||
Public Stock Offering | ||||||||
Class of Stock [Line Items] | ||||||||
Shares sold (in shares) | 6,000,000 | 5,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | |||||||
Over-Allotment Option | ||||||||
Class of Stock [Line Items] | ||||||||
Shares sold (in shares) | 900,000 | 750,000 |
Stock-Based Compensation - Summary of Nonvested Restricted Stock (Detail) - Restricted Stock - $ / shares shares in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Number of Shares | ||
Beginning Balance | 1,135 | 1,564 |
Granted | 468 | 521 |
Vested | (478) | (821) |
Forfeited | (79) | (129) |
Ending Balance | 1,046 | 1,135 |
Weighted Average Grant Date Fair Value (in dollars per share) | ||
Beginning Balance | $ 27.26 | $ 18.93 |
Granted | 52.50 | 47.28 |
Vested | 51.50 | 46.71 |
Forfeited | 36.97 | 31.41 |
Ending Balance | $ 39.62 | $ 27.26 |
Stock-Based Compensation - Stock Based Compensation Expenses (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 241 | $ 317 | |
Stock-based compensation expense | 19,422 | 17,314 | $ 15,341 |
Income taxes | (5,263) | (5,713) | (5,874) |
Share-based compensation expense, net of income taxes | 14,159 | 11,601 | 9,467 |
Cost of revenues | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 820 | 502 | 531 |
Selling, general and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 16,188 | 14,828 | 13,212 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 2,414 | $ 1,984 | $ 1,598 |
Operating Segment, Geographic Information and Significant Customers - Additional Information (Details) - segment |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Segment Reporting [Abstract] | ||
Number of operating segments | 1 | |
Number of reportable segments | 1 | 1 |
Operating Segment, Geographic Information and Significant Customers - Net Revenue by End Market (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenues | $ 176,963 | $ 174,636 | $ 159,089 | $ 144,056 | $ 152,867 | $ 116,336 | $ 117,912 | $ 106,069 | $ 654,744 | $ 493,184 | $ 408,588 |
Domestic | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenues | 580,935 | 410,050 | 341,699 | ||||||||
International/Foreign Military Sales | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenues | $ 73,809 | $ 83,134 | $ 66,889 |
Operating Segment, Geographic Information and Significant Customers - Net Revenue by Product Grouping (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenue from External Customer [Line Items] | |||||||||||
Net revenues | $ 176,963 | $ 174,636 | $ 159,089 | $ 144,056 | $ 152,867 | $ 116,336 | $ 117,912 | $ 106,069 | $ 654,744 | $ 493,184 | $ 408,588 |
Components | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenues | 184,870 | 142,982 | 105,669 | ||||||||
Modules and Sub-assemblies | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenues | 180,873 | 194,377 | 161,973 | ||||||||
Integrated Subsystems | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenues | $ 289,001 | $ 155,825 | $ 140,946 |
Operating Segment, Geographic Information and Significant Customers - Customers Comprising Ten Percent or More of Revenues (Detail) - Customer Concentration Risk - Revenues |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenue, Major Customer [Line Items] | |||
Concentration risk, percent | 37.00% | 38.00% | 36.00% |
Raytheon Company | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percent | 17.00% | 19.00% | 20.00% |
Lockheed Martin Corporation | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percent | 20.00% | 19.00% | 16.00% |
Derivatives (Details) - Designated as Hedging Instrument - Interest Rate Swap - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jan. 11, 2019 |
|
Derivative [Line Items] | ||
Derivative, notional amount | $ 175,000,000 | |
Derivative, fixed interest rate | 2.54% | |
Derivative, termination of contract, expense | $ 5,400,000 |
Subsequent Events (Details) - Germane Systems, LC - USD ($) $ in Thousands |
Jul. 30, 2019 |
Jul. 31, 2018 |
---|---|---|
Subsequent Event [Line Items] | ||
Cash paid at closing | $ 47,166 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Cash paid at closing | $ 100,000 |
Supplementary Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Unaudited consolidated quarterly statements of operations data | |||||||||||
Net revenues | $ 176,963 | $ 174,636 | $ 159,089 | $ 144,056 | $ 152,867 | $ 116,336 | $ 117,912 | $ 106,069 | $ 654,744 | $ 493,184 | $ 408,588 |
Gross margin | 79,839 | 73,847 | 70,887 | 61,583 | 68,258 | 52,766 | 54,160 | 50,674 | 286,156 | 225,858 | 191,543 |
Income from operations | 20,851 | 22,062 | 19,861 | 13,810 | 18,888 | 6,838 | 10,888 | 10,371 | 76,584 | 46,985 | 37,403 |
Income before income taxes | 12,587 | 19,466 | 16,866 | 10,608 | 16,628 | 5,905 | 10,468 | 9,572 | 59,527 | 42,573 | 31,068 |
Income tax provision (benefit) | (217) | 5,357 | 4,483 | 3,129 | 6,527 | 2,209 | 1,335 | (8,381) | 12,752 | 1,690 | 6,193 |
Net income | $ 12,804 | $ 14,109 | $ 12,383 | $ 7,479 | $ 10,101 | $ 3,696 | $ 9,133 | $ 17,953 | $ 46,775 | $ 40,883 | $ 24,875 |
Earnings Per Share [Abstract] | |||||||||||
Basic net income per share (in dollars per share) | $ 0.26 | $ 0.30 | $ 0.26 | $ 0.16 | $ 0.22 | $ 0.08 | $ 0.20 | $ 0.39 | $ 0.98 | $ 0.88 | $ 0.59 |
Diluted net income per share (in dollars per share) | $ 0.25 | $ 0.29 | $ 0.26 | $ 0.16 | $ 0.21 | $ 0.08 | $ 0.19 | $ 0.38 | $ 0.96 | $ 0.86 | $ 0.58 |
Cost of revenues | $ 368,588 | $ 267,326 | $ 217,045 |
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