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Share Name | Share Symbol | Market | Type |
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Mercury Systems Inc | NASDAQ:MRCY | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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-0.30 | -1.02% | 29.04 | 25.00 | 30.23 | 29.87 | 28.86 | 29.75 | 546,852 | 01:00:00 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2016
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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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MASSACHUSETTS
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04-2741391
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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201 RIVERNECK ROAD
CHELMSFORD, MA
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01824
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, Par Value $.01 Per Share
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NASDAQ Global Select Market
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PAGE
NUMBER
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 4.1.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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ITEM 1.
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BUSINESS
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creating the defense industry’s largest commercial embedded secure processing company;
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adding secure solid-state drive (“SSDs”) capabilities to our industry leading pre-integrated sensor processing subsystems;
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increasing our existing RF and microwave business by approximately 66% and adding new capabilities, scale and synergies;
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adding new capabilities in embedded security and custom microelectronics; and
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providing access to new high-growth markets, customers and programs, such as precision-guided munitions and missiles.
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Achieve Design Wins on High-growth, High-priority Defense Programs.
We believe our advanced embedded sensor processing solutions position us well going forward to capture design wins on key high-growth, high-priority defense programs within our targeted segments of the C4ISR market. We have won designs in persistent ISR related signals intelligence-payloads on unmanned aerial vehicles (“UAVs”) and other aerial platforms. As a result of these successes, we now have significant content on major UAV platforms, including Global Hawk, Predator, Triton, Reaper and Gorgon Stare. Our ballistic missile defense wins include additional designs on the Aegis program, as well as wins on the Patriot missile program. In EW, we have won key designs related to the U.S. Navy’s SEWIP program and the Ships Signal Exploitation Equipment (“SSEE”) programs. Additional wins in the critical EW space include the Navy’s Filthy Badger and Filthy Buzzard programs, focusing on vulnerability assessment and training for manned aircraft. Together, these wins represent substantial opportunity for us in the years ahead.
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Continue to Provide Excellent Performance on Our Existing Programs.
The foundation for our growth remains our continued involvement with existing programs that are in late-stage development or currently in production. Such programs include Aegis, SEWIP, the F-35 Joint Strike Fighter, Patriot missile, the F-16 and F-15 aircrafts, the Global Hawk, Predator and Reaper UAVs, the P-8 Multimission Maritime Aircraft as well as the Suite of Integrated Radio Frequency Countermeasures (“SIRFC”) program. As part of a long-term reprioritization, the DoD is shifting its emphasis from major new weapons systems development to upgrades of existing programs and platforms. We believe the upgrades on these programs focus on four key areas: improved sensors; more advanced on-board embedded computing; enhanced ISR algorithms; and better communications on and off the platform. A key element of our strategy is to continue to provide high-performance, cost-effective solutions on these programs and for these customers.
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Pursue Additional Strategic, Capability-Enhancing Acquisitions.
We will continue to pursue strategic acquisitions to augment our businesses using the following strategies: adding technologies or products that expand our core business by competing more effectively in the C4I, Radar, EW, and missile-defense markets; adding content and services to the defense programs and platforms in which we currently participate or could participate in the future; and enhancing key customer relationships and forming relationships with potential new customers. Our acquisition strategy also focuses on scaling our operations and broadening our program and customer base.
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Capitalize on Outsourcing and Other Dynamics in the Defense Industry.
We are well-positioned to take advantage of several changing dynamics in the defense industry. Defense prime contractors are increasingly being awarded firm fixed-price contracts. These contracts shift risk to the defense prime contractors, and as a result they are beginning to outsource increasing levels of subsystem development and production and other higher value program content. In addition, the U.S. government is shifting toward shorter program timelines, which require increased flexibility and responsiveness from defense prime contractors. Finally, more programs are moving to open systems architectures that enable best-of-breed capabilities. We believe that these dynamics will result in defense prime contractors outsourcing increasing levels of program content to us as a provider of an increasingly wide array of differentiated products, subsystems engineering services and system integration.
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Leverage Our Research and Development Efforts to Anticipate Market Needs and Maintain our Technology Leadership.
We devote significant resources in order to anticipate the future requirements in our target defense markets,
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The defense electronics market is expected to grow in government fiscal 2017 and beyond as requested in President Obama’s recent budget submission.
According to The Teal Group, world defense electronics funding available to the U.S. was approximately $34.9 billion in fiscal 2016, or approximately 6.7% of the government fiscal 2016 appropriated U.S. DoD base budget. The defense electronics market is projected to increase to $36.6 billion in government fiscal 2017. Within the context of the overall defense budget and spending for defense electronics specifically we believe ISR, EW and ballistic missile defense 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 the ISR and EW markets. As a leader in these markets, we often team with multiple defense prime contractors as they bid for projects, thereby increasing our chance of a successful outcome.
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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
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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 that potentially threaten the U.S. naval fleet, 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, LRDR, F-22 Raptor, F-35 Joint Strike Fighter and upgrade programs for the F-15 and F-16.
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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.
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Defense procurement reform is causing the defense prime contractors to outsource more work to commercial companies
. According to the VDC Webcast: Budgetary & Strategic Shifts-Creating Opportunities for Merchant Embedded COTS Systems in Mil/Aero, the portion of the defense electronics market that is captive to the defense primes is estimated to be $35.1 billion and the portion in the merchant market is estimated to be $1.9 billion. The U.S. government is intensely focused on making systems more affordable and shortening their development time. 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 DoD and prime contractor factors are providing incentives for defense prime contractors to outsource more work to subcontractors with significant expertise and cost-effective technology capabilities, and we have transformed our business model over the last several years to address these long-term outsourcing trends and other needs.
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DoD security and program protection requirements are creating new opportunities for 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 from nefarious activities such as tampering, reverse engineering, and other forms of advanced attacks. 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 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 advanced secure processing subsystems and capabilities for other on-board critical compute applications-all 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.
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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 intelligence processing onboard the platform. We leverage our deep expertise in embedded multi-computing, embedded sensor processing, with the addition of our RF and microwave subsystems and components, along with strategic investments in research and development to provide solutions across the sensor processing chain.
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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, airborne reconnaissance, EW, ECM, and have secured positions on mission-critical programs including Aegis, Predator and Reaper UAVs, F-35 Joint Strike Fighter, Patriot missile, and SEWIP. In addition, we consistently leverage our technology and capabilities across 15 to 20 programs on an annual basis, providing significant operating leverage and cost savings. The Acquisition allows us to participate in a broader array of programs, many with customers that are already key strategic customers of ours.
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We are a leading commercial provider of secure processing subsystems designed and made in the U.S.A.
We have a portfolio of open system 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.
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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, not bolted on. By doing this we are able to provide secure building blocks that allow our customers to 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 will bring us new security technologies and also allow us to provide enhanced security capabilities in areas such as memory and storage devices. The Acquisition also provides us with a DMEA-(“Defense Micro-Electronics Association”) certified trusted manufacturing facility for microelectronics in the Carve-Out Business’ Phoenix, Arizona facility.
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We are pioneering a next generation business model.
The defense industrial base is currently undergoing a major transformation. Domestic political and budget uncertainty, geopolitical instability and evolving global threats have become constants. The defense budget, while stabilized in the short term, remains under pressure and R&D and technology spending are often in budgetary competition with the increasing costs of military personnel requirements, health care costs, and other important elements within the DoD and the federal budget generally. Finally, defense acquisition reform, under the banner of Better Buying Power 3.0 calls for the continued drive for innovation and competition within the defense industrial base, while also driving down acquisition cost. Our approach is built around a few key pillars:
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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.
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We have been a pioneer in driving open systems architectures.
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The DoD has asked defense industry participants to invest their own resources into R&D. This approach is a pillar of our business model.
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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.
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Value-Added Subsystem Solution Provider for Defense Prime Contractors.
Because of the DoD’s shift towards 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 advanced sensor processing solutions offer meaningful capabilities upgrades for our customers and enable the rapid, cost-effective
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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 directly combine 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.
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Advanced Microelectronics Centers.
Our Advanced Microelectronics Centers (“AMCs”) in Hudson, New Hampshire and West Caldwell, New Jersey, design, build and test both RF and microwave components and subsystems in support of a variety of key customer programs. With our fiscal 2014 move into our new AMC in Hudson, New Hampshire, including the installation of integrated business systems into both our AMCs, we have a platform for scalable, continued growth in our RF and microwave product lines. Our scalable microelectronics manufacturing operations at our AMCs enable rapid, cost-effective deployment of RF and microwave solutions to our customers. The Acquisition will give us a west coast location providing similar advanced capabilities and better proximity to certain key customer locations.
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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 BAE Systems, the Boeing Company, Harris, Lockheed Martin Corporation, Northrop Grumman Corporation, and Raytheon Company. 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 the Carve-Out Business has with many of the same customers.
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Proven Management Team.
Over the past several years, our senior management team has refocused the Company on its economic core, developed a long-term compelling strategy for the defense markets and restored profitability to the business. Having completed these critical steps to rebuild the Company and with a senior management team with significant experience in growing and scaling businesses, both through operating execution and acquisitions, we believe that we have demonstrated our operational capabilities and we are well-positioned for the next phase to transform, grow and scale our business.
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signal and image processing, multi-computer and sensor interfaces, including embedded processing boards, switch fabric boards, high speed input/output boards, digital receiver boards, high-density memory modules, secure solid-state drives, secure GPS receiver modules, and chassis-based systems using air, conduction, and proprietary cooling technologies;
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RF and microwave assemblies, including tuners, converters, transceivers, and switch filters; and
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RF and microwave components, including power amplifiers and limiters, switches, oscillators, and equalizers.
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ITEM 1A.
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RISK FACTORS:
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reduced and delayed demand for our products;
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increased risk of order cancellations or delays;
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downward pressure on the prices of our products;
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greater difficulty in collecting accounts receivable; and
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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.
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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.
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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 incurred, settlement expenses and profit on work completed prior to termination, but there can be no assurance in this regard.
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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 and, in the event we are awarded a contract, we are subject to protests by disappointed 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.
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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.
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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 our business units contract with the U.S. government, they 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 our business units and the U.S. government.
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We sell many products to U.S. and international defense contractors and also directly to the U.S. government as a commercial supplier such that cost data is not supplied. To the extent that there are interpretations or changes in the Federal Acquisition Regulations regarding the qualifications necessary to be a commercial item supplier, there could be a material adverse effect 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 Federal Acquisition Regulations) that could limit our ability to contract as a commercial item supplier. In addition, growth in our defense sales relative to our commercial sales could adversely impact our status as a commercial supplier, which could adversely affect our business and operating results. Changes in our mix of business, in federal regulations, or in the interpretation of federal regulations, may subject us to audit by the Defense Contract Audit Agency ("DCAA") for certain of our products or services. Such changes may require us to implement a DCAA cost-accounting system at our commercial item business unit. Operating under a cost-accounting business model rather than our historical commercial item business model could adversely impact our revenues and profitability.
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We qualify as a “small business” for government contracts purposes under the definition of that term in an applicable NAICS code because we have fewer than 1,250 employees. As we grow and potentially have over 1,250 employees in the future, we would no longer qualify as a small business. Loss of our small business status could negatively impact us, including our customers purchases from us would not qualify as purchases from a small business, customers may flow down additional Federal Acquisition Regulation, or FAR, clauses in their contracts with us that are less favorable than our existing contract terms and conditions, and the flow down of certain FAR clauses may require us to implement a DCAA cost-accounting system at our commercial item business unit.
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We are subject to the Defense Federal Acquisition Regulations Supplement, referred to as DFARS, in connection with our defense work for the U.S. government and defense prime contractors. Amendments to the DFARS, such as the amendment to the DFARS specialty metals clause requiring that the specialty metals in specified items be melted or produced in the U.S. or other qualifying countries, may increase our costs for certain materials or result in supply-chain difficulties or production delays due to the limited availability of compliant materials. Compliance with the new conflict minerals regulations enacted pursuant to the Dodd Frank legislation poses similar risks and increases our costs.
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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.
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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.
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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
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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.
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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 efficiently integrate subsystem level solutions and maintain quality assurance on current and future programs.
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our ability to create demand for products in new markets;
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our ability to manage growth effectively;
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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;
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our ability to develop a reputation as a best-of-breed technology provider;
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the quality of our new products;
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our ability to respond rapidly to technological change; and
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our ability to successfully integrate any acquisitions that we make and achieve revenue and cost synergies and economies of scale.
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problems and increased costs in connection with the integration of the personnel, operations, technologies, or products of the acquired businesses;
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unanticipated costs;
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failure to achieve anticipated increases in revenues and profitability;
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diversion of management’s attention from our core business;
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adverse effects on business relationships with suppliers and customers and those of the acquired company;
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acquired assets becoming impaired as a result of technical advancements or worse-than-expected performance by the acquired company;
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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;
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volatility associated with accounting for earn-outs in a given transaction;
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entering markets in which we have no, or limited, prior experience;
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potential loss of key employees; and
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adversely affect our internal control over financial reporting before the acquiree's complete integration into the Company’s control environment.
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issue stock that would dilute our existing shareholders’ ownership percentages;
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incur debt and assume liabilities;
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obtain financing on unfavorable terms, or not be able to obtain financing on any terms at all;
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incur amortization expenses related to acquired intangible assets or incur large and immediate write-offs;
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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
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reduce the cash that would otherwise be available to fund operations or for other purposes.
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failure to implement our business plan for the combined business;
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unanticipated issues in integrating manufacturing, logistics, information, communications and other systems;
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unanticipated changes in applicable laws and regulations;
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failure to retain key employees;
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failure to retain key customers;
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operating risks inherent in the Carve-Out Business and our business;
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the impact of any assumed legal proceedings;
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the impact on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002; and
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unanticipated issues, expenses costs, charges and liabilities related to the Acquisition.
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making it more difficult for us to satisfy our obligations with respect to our debt; and if we fail to comply with these requirements, an event of default could result;
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limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;
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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;
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increasing our vulnerability to general adverse economic and industry conditions;
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exposing us to the risk of increased interest rates as certain of our borrowings have variable interest rates, which could increase the cost of servicing our financial instruments and could materially reduce our profitability and cash flows;
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limiting our flexibility in planning for and reacting to changes in the industry in which we compete;
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placing us at a disadvantage compared to other, less leveraged competitors; and
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increasing our cost of borrowing.
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changes in applicable laws and regulatory requirements;
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export and import restrictions;
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export controls relating to technology;
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tariffs and other trade barriers;
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less favorable intellectual property laws;
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difficulties in staffing and managing foreign operations;
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longer payment cycles;
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problems in collecting accounts receivable;
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adverse economic conditions in foreign markets;
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political instability;
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fluctuations in currency exchange rates;
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expatriation controls; and
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potential adverse tax consequences.
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delays in completion of internal product development projects;
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delays in shipping hardware and software;
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delays in acceptance testing by customers;
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a change in the mix of products sold to our served markets;
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production delays due to quality problems with outsourced components;
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inability to scale quick reaction capability products due to low product volume;
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shortages and costs of components;
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the timing of product line transitions;
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declines in quarterly revenues from previous generations of products following announcement of replacement products containing more advanced technology;
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potential asset impairment, including goodwill and intangibles, or restructuring charges; and
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changes in estimates of completion on fixed price service engagements.
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investors’ perception of, and demand for, securities of defense technology companies;
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conditions of the United States and other capital markets in which we may seek to raise funds; and
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our future results of operations, financial condition and cash flows.
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further develop or enhance our customer base;
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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
|
|
Chelmsford, MA
|
|
185,327
|
|
|
Leased, expiring 2017, 2 buildings
|
Andover, MA
|
|
145,262
|
|
|
Leased, expiring 2029
|
Phoenix, AZ
|
|
116,858
|
|
|
Leased, expiring 2020
|
Hudson, NH
|
|
100,111
|
|
|
Leased, expiring 2024
|
Cypress, CA
|
|
42,770
|
|
|
Leased, expiring 2021
|
Camarillo, CA
|
|
25,195
|
|
|
Leased, expiring 2020
|
Huntsville, AL
|
|
25,950
|
|
|
Leased, expiring 2018
|
West Caldwell, NJ
|
|
23,000
|
|
|
Leased, expiring 2019
|
Manteca, CA
|
|
20,750
|
|
|
Leased, expiring 2017
|
San Jose, CA
|
|
10,089
|
|
|
Leased, expiring 2016
|
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
|
||||
2016 Fourth quarter
|
$
|
24.87
|
|
|
$
|
18.98
|
|
Third quarter
|
$
|
20.85
|
|
|
$
|
15.67
|
|
Second quarter
|
$
|
19.99
|
|
|
$
|
15.52
|
|
First quarter
|
$
|
16.44
|
|
|
$
|
13.56
|
|
2015 Fourth quarter
|
$
|
15.94
|
|
|
$
|
13.37
|
|
Third quarter
|
$
|
17.59
|
|
|
$
|
12.76
|
|
Second quarter
|
$
|
14.43
|
|
|
$
|
10.61
|
|
First quarter
|
$
|
12.34
|
|
|
$
|
10.47
|
|
Period of Net Share Settlement
|
|
Total Number of Shares Net Settled (1)
|
|
Average Price Per Share
|
|||
July 1, 2015 - September 30, 2015
|
|
232
|
|
|
$
|
16.00
|
|
October 1, 2015 - December 31, 2015
|
|
23
|
|
|
$
|
17.96
|
|
January 1, 2016 - March 31, 2016
|
|
5
|
|
|
$
|
17.02
|
|
April 1, 2016 - June 30, 2016
|
|
166
|
|
|
$
|
20.70
|
|
Total
|
|
426
|
|
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
For the Years Ended June 30,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
$
|
270,154
|
|
|
$
|
234,847
|
|
|
$
|
208,729
|
|
|
$
|
194,231
|
|
|
$
|
237,070
|
|
Income (loss) from operations
|
$
|
23,973
|
|
|
$
|
18,355
|
|
|
$
|
(7,405
|
)
|
|
$
|
(24,810
|
)
|
|
$
|
29,655
|
|
Income (loss) from continuing operations
|
$
|
19,742
|
|
|
$
|
14,429
|
|
|
$
|
(4,072
|
)
|
|
$
|
(13,782
|
)
|
|
$
|
22,323
|
|
Adjusted EBITDA(1)
|
$
|
57,274
|
|
|
$
|
44,414
|
|
|
$
|
23,522
|
|
|
$
|
9,940
|
|
|
$
|
47,994
|
|
Net earnings (loss) per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.58
|
|
|
$
|
0.45
|
|
|
$
|
(0.13
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
0.76
|
|
Diluted
|
$
|
0.56
|
|
|
$
|
0.44
|
|
|
$
|
(0.13
|
)
|
|
$
|
(0.46
|
)
|
|
$
|
0.74
|
|
|
As of June 30,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
$
|
177,748
|
|
|
$
|
142,472
|
|
|
$
|
127,375
|
|
|
$
|
115,483
|
|
|
$
|
170,761
|
|
Total assets
|
$
|
736,496
|
|
|
$
|
386,880
|
|
|
$
|
373,712
|
|
|
$
|
374,431
|
|
|
$
|
385,606
|
|
Long-term obligations
|
$
|
195,808
|
|
|
$
|
3,457
|
|
|
$
|
13,635
|
|
|
$
|
15,112
|
|
|
$
|
15,560
|
|
Total shareholders’ equity
|
$
|
473,044
|
|
|
$
|
350,138
|
|
|
$
|
327,147
|
|
|
$
|
328,501
|
|
|
$
|
333,104
|
|
(1)
|
In our periodic communications, we discuss a key measure that is not calculated according to U.S. generally accepted accounting principles (“GAAP”), adjusted EBITDA. Adjusted EBITDA is defined as earnings from continuing operations before 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 compensation expense. We use adjusted EBITDA as an important indicator of the operating performance of our business. We use adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our board of directors, determining components of bonus and equity compensation for executive officers based on operating performance and evaluating short-term and long-term operating trends in our operations. We believe the adjusted EBITDA financial measure assists in providing a more complete understanding of our underlying operational measures to manage our business, to evaluate our performance compared to prior periods and the marketplace, and to establish operational goals. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
(In thousands)
|
Fiscal 2016
|
|
As a % of
Total Net Revenue |
|
Fiscal 2015
|
|
As a % of
Total Net Revenue |
||||||
Net revenues
|
$
|
270,154
|
|
|
100.0
|
%
|
|
$
|
234,847
|
|
|
100.0
|
%
|
Cost of revenues
|
145,380
|
|
|
53.8
|
|
|
124,628
|
|
|
53.1
|
|
||
Gross margin
|
124,774
|
|
|
46.2
|
|
|
110,219
|
|
|
46.9
|
|
||
Operating expenses:
|
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
52,952
|
|
|
19.6
|
|
|
49,010
|
|
|
20.9
|
|
||
Research and development
|
33,543
|
|
|
12.4
|
|
|
32,554
|
|
|
13.9
|
|
||
Amortization of intangible assets
|
8,842
|
|
|
3.2
|
|
|
7,008
|
|
|
2.9
|
|
||
Restructuring and other charges
|
1,240
|
|
|
0.5
|
|
|
3,175
|
|
|
1.4
|
|
||
Impairment of long-lived assets
|
231
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||
Acquisition costs and other related expenses
|
3,993
|
|
|
1.5
|
|
|
117
|
|
|
—
|
|
||
Total operating expenses
|
100,801
|
|
|
37.3
|
|
|
91,864
|
|
|
39.1
|
|
||
Income from operations
|
23,973
|
|
|
8.9
|
|
|
18,355
|
|
|
7.8
|
|
||
Other income, net
|
1,313
|
|
|
0.5
|
|
|
440
|
|
|
0.2
|
|
||
Income from continuing operations before income taxes
|
25,286
|
|
|
9.4
|
|
|
18,795
|
|
|
8.0
|
|
||
Tax provision
|
5,544
|
|
|
2.1
|
|
|
4,366
|
|
|
1.9
|
|
||
Income from continuing operations
|
19,742
|
|
|
7.3
|
|
|
14,429
|
|
|
6.1
|
|
||
Loss from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
(4,060
|
)
|
|
(1.7
|
)
|
||
Net income
|
$
|
19,742
|
|
|
7.3
|
%
|
|
$
|
10,369
|
|
|
4.4
|
%
|
(In thousands)
|
Fiscal 2015
|
|
As a % of
Total Net Revenue |
|
Fiscal 2014
|
|
As a % of
Total Net Revenue |
||||||
Net revenues
|
$
|
234,847
|
|
|
100.0
|
%
|
|
$
|
208,729
|
|
|
100.0
|
%
|
Cost of revenues
|
124,628
|
|
|
53.1
|
|
|
113,985
|
|
|
54.6
|
|
||
Gross margin
|
110,219
|
|
|
46.9
|
|
|
94,744
|
|
|
45.4
|
|
||
Operating expenses:
|
|
|
|
|
|
|
|
||||||
Selling, general and administrative
|
49,010
|
|
|
20.9
|
|
|
53,685
|
|
|
25.7
|
|
||
Research and development
|
32,554
|
|
|
13.9
|
|
|
35,693
|
|
|
17.1
|
|
||
Amortization of intangible assets
|
7,008
|
|
|
2.9
|
|
|
7,328
|
|
|
3.5
|
|
||
Restructuring and other charges
|
3,175
|
|
|
1.4
|
|
|
5,443
|
|
|
2.6
|
|
||
Acquisition costs and other related expenses
|
117
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total operating expenses
|
91,864
|
|
|
39.1
|
|
|
102,149
|
|
|
48.9
|
|
||
Income (loss) from operations
|
18,355
|
|
|
7.8
|
|
|
(7,405
|
)
|
|
(3.5
|
)
|
||
Other income, net
|
440
|
|
|
0.2
|
|
|
1,492
|
|
|
0.7
|
|
||
Income (loss) from continuing operations before income taxes
|
18,795
|
|
|
8.0
|
|
|
(5,913
|
)
|
|
(2.8
|
)
|
||
Tax provision (benefit)
|
4,366
|
|
|
1.9
|
|
|
(1,841
|
)
|
|
(0.8
|
)
|
||
Income (loss) from continuing operations
|
14,429
|
|
|
6.1
|
|
|
(4,072
|
)
|
|
(2.0
|
)
|
||
Loss from discontinued operations, net of income taxes
|
(4,060
|
)
|
|
(1.7
|
)
|
|
(7,353
|
)
|
|
(3.5
|
)
|
||
Net income (loss)
|
$
|
10,369
|
|
|
4.4
|
%
|
|
$
|
(11,425
|
)
|
|
(5.5
|
)%
|
•
|
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.
|
(In thousands)
As of and for the fiscal year ended |
June 30, 2016
|
|
June 30, 2015
|
|
June 30, 2014
|
||||||
Net cash provided by operating activities
|
$
|
36,940
|
|
|
$
|
32,207
|
|
|
$
|
14,241
|
|
Net cash used in investing activities
|
$
|
(318,208
|
)
|
|
$
|
(5,598
|
)
|
|
$
|
(6,720
|
)
|
Net cash provided by financing activities
|
$
|
284,894
|
|
|
$
|
3,905
|
|
|
$
|
742
|
|
Net increase in cash and cash equivalents
|
$
|
4,105
|
|
|
$
|
30,299
|
|
|
$
|
8,161
|
|
Cash and cash equivalents at end of year
|
$
|
81,691
|
|
|
$
|
77,586
|
|
|
$
|
47,287
|
|
(In thousands)
|
Total
|
|
Less Than
1 Year |
|
2-3
Years |
|
4-5
Years |
|
More Than
5 Years |
||||||||||
Operating leases
|
$
|
43,631
|
|
|
$
|
6,018
|
|
|
$
|
9,811
|
|
|
$
|
8,357
|
|
|
$
|
19,445
|
|
Purchase obligations
|
32,195
|
|
|
32,195
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital lease obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Debt principal payment obligations
(1)
|
200,000
|
|
|
10,000
|
|
|
25,000
|
|
|
165,000
|
|
|
—
|
|
|||||
|
$
|
275,826
|
|
|
$
|
48,213
|
|
|
$
|
34,811
|
|
|
$
|
173,357
|
|
|
$
|
19,445
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Income (loss) from continuing operations
|
$
|
19,742
|
|
|
$
|
14,429
|
|
|
$
|
(4,072
|
)
|
Interest expense, net
|
1,041
|
|
|
13
|
|
|
40
|
|
|||
Tax provision (benefit)
|
5,544
|
|
|
4,366
|
|
|
(1,841
|
)
|
|||
Depreciation
|
6,900
|
|
|
6,332
|
|
|
7,625
|
|
|||
Amortization of intangible assets
|
8,842
|
|
|
7,008
|
|
|
7,328
|
|
|||
Restructuring and other charges
|
1,240
|
|
|
3,175
|
|
|
5,443
|
|
|||
Impairment of long-lived assets
|
231
|
|
|
—
|
|
|
—
|
|
|||
Acquisition and financing costs
|
4,701
|
|
|
451
|
|
|
—
|
|
|||
Fair value adjustments from purchase accounting
|
1,384
|
|
|
—
|
|
|
—
|
|
|||
Litigation and settlement (income) expense, net
|
(1,925
|
)
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation expense
|
9,574
|
|
|
8,640
|
|
|
8,999
|
|
|||
Adjusted EBITDA
|
$
|
57,274
|
|
|
$
|
44,414
|
|
|
$
|
23,522
|
|
|
Year Ended June 30,
|
||||||||||||||||||||||
(In thousands, except per share data)
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||
Income (loss) from continuing operations and diluted earnings (loss) per share
|
$
|
19,742
|
|
|
$
|
0.56
|
|
|
$
|
14,429
|
|
|
$
|
0.44
|
|
|
$
|
(4,072
|
)
|
|
$
|
(0.13
|
)
|
Amortization of intangible assets
|
8,842
|
|
|
|
|
7,008
|
|
|
|
|
7,328
|
|
|
|
|||||||||
Restructuring and other charges
|
1,240
|
|
|
|
|
3,175
|
|
|
|
|
5,443
|
|
|
|
|||||||||
Impairment of long-lived assets
|
231
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|||||||||
Acquisition and financing costs
|
4,701
|
|
|
|
|
451
|
|
|
|
|
—
|
|
|
|
|||||||||
Fair value adjustments from purchase accounting
(1)
|
1,384
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|||||||||
Litigation and settlement (income) expenses
|
(1,925
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|||||||||
Stock-based compensation expense
|
9,574
|
|
|
|
|
8,640
|
|
|
|
|
8,999
|
|
|
|
|||||||||
Impact to income taxes
(2)
|
(9,975
|
)
|
|
|
|
(6,733
|
)
|
|
|
|
(5,773
|
)
|
|
|
|||||||||
Adjusted income from continuing operations and adjusted earnings per share
|
$
|
33,814
|
|
|
$
|
0.96
|
|
|
$
|
26,970
|
|
|
$
|
0.82
|
|
|
$
|
11,925
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted weighted-average shares outstanding
|
|
|
35,097
|
|
|
|
|
32,939
|
|
|
|
|
31,000
|
|
|
Year Ended June 30,
|
||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Cash provided by operating activities
|
$
|
36,940
|
|
|
$
|
32,207
|
|
|
$
|
14,241
|
|
Purchases of property and equipment
|
(7,885
|
)
|
|
(5,984
|
)
|
|
(6,701
|
)
|
|||
Free cash flow
|
$
|
29,055
|
|
|
$
|
26,223
|
|
|
$
|
7,540
|
|
•
|
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.
|
|
Balance Sheet Line Item
|
|
Balance Prior to Adoption
|
|
Increase / (Decrease)
|
|
As Adjusted
|
||||||
Current deferred income tax assets
|
Deferred income taxes
|
|
$
|
12,407
|
|
|
$
|
(12,407
|
)
|
|
$
|
—
|
|
Long-term deferred income tax assets
|
Other non-current assets
|
|
1,275
|
|
|
9,299
|
|
|
10,574
|
|
|||
Total tax assets
|
|
|
$
|
13,682
|
|
|
$
|
(3,108
|
)
|
|
$
|
10,574
|
|
|
|
|
|
|
|
|
|
||||||
Long-term deferred income tax liabilities
|
Deferred income taxes
|
|
$
|
(3,108
|
)
|
|
$
|
3,108
|
|
|
$
|
—
|
|
Total tax liabilities
|
|
|
(3,108
|
)
|
|
3,108
|
|
|
—
|
|
|||
Net deferred tax asset
|
|
|
$
|
10,574
|
|
|
$
|
—
|
|
|
$
|
10,574
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
June 30,
|
||||||
2016
|
|
2015
|
|||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
81,691
|
|
|
$
|
77,586
|
|
Accounts receivable, net of allowance for doubtful accounts of $92 and $56 at June 30, 2016 and 2015, respectively
|
73,427
|
|
|
31,765
|
|
||
Unbilled receivables and costs in excess of billings
|
22,467
|
|
|
22,021
|
|
||
Inventory
|
58,284
|
|
|
31,960
|
|
||
Prepaid income taxes
|
3,401
|
|
|
3,747
|
|
||
Prepaid expenses and other current assets
|
6,122
|
|
|
8,678
|
|
||
Total current assets
|
245,392
|
|
|
175,757
|
|
||
Restricted cash
|
264
|
|
|
264
|
|
||
Property and equipment, net
|
28,337
|
|
|
13,226
|
|
||
Goodwill
|
344,027
|
|
|
168,146
|
|
||
Intangible assets, net
|
116,673
|
|
|
17,998
|
|
||
Deferred income taxes
|
—
|
|
|
10,574
|
|
||
Other non-current assets
|
1,803
|
|
|
915
|
|
||
Total assets
|
$
|
736,496
|
|
|
$
|
386,880
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
26,723
|
|
|
$
|
6,928
|
|
Accrued expenses
|
10,273
|
|
|
9,005
|
|
||
Accrued compensation
|
13,283
|
|
|
9,875
|
|
||
Deferred revenues and customer advances
|
7,365
|
|
|
7,477
|
|
||
Current portion of long-term debt
|
10,000
|
|
|
—
|
|
||
Total current liabilities
|
67,644
|
|
|
33,285
|
|
||
Deferred income taxes
|
11,842
|
|
|
—
|
|
||
Income taxes payable
|
700
|
|
|
1,459
|
|
||
Long-term debt
|
182,275
|
|
|
—
|
|
||
Other non-current liabilities
|
991
|
|
|
1,998
|
|
||
Total liabilities
|
263,452
|
|
|
36,742
|
|
||
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; 38,675,340 and 32,570,959 shares issued and outstanding at June 30, 2016 and 2015, respectively
|
387
|
|
|
326
|
|
||
Additional paid-in capital
|
357,500
|
|
|
254,568
|
|
||
Retained earnings
|
114,210
|
|
|
94,468
|
|
||
Accumulated other comprehensive income
|
947
|
|
|
776
|
|
||
Total shareholders’ equity
|
473,044
|
|
|
350,138
|
|
||
Total liabilities and shareholders’ equity
|
$
|
736,496
|
|
|
$
|
386,880
|
|
|
For the Years Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net revenues
|
$
|
270,154
|
|
|
$
|
234,847
|
|
|
$
|
208,729
|
|
Cost of revenues
|
145,380
|
|
|
124,628
|
|
|
113,985
|
|
|||
Gross margin
|
124,774
|
|
|
110,219
|
|
|
94,744
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
52,952
|
|
|
49,010
|
|
|
53,685
|
|
|||
Research and development
|
33,543
|
|
|
32,554
|
|
|
35,693
|
|
|||
Amortization of intangible assets
|
8,842
|
|
|
7,008
|
|
|
7,328
|
|
|||
Restructuring and other charges
|
1,240
|
|
|
3,175
|
|
|
5,443
|
|
|||
Impairment of long-lived assets
|
231
|
|
|
—
|
|
|
—
|
|
|||
Acquisition costs and other related expenses
|
3,993
|
|
|
117
|
|
|
—
|
|
|||
Total operating expenses
|
100,801
|
|
|
91,864
|
|
|
102,149
|
|
|||
Income (loss) from operations
|
23,973
|
|
|
18,355
|
|
|
(7,405
|
)
|
|||
Interest income
|
131
|
|
|
21
|
|
|
9
|
|
|||
Interest expense
|
(1,172
|
)
|
|
(34
|
)
|
|
(49
|
)
|
|||
Other income, net
|
2,354
|
|
|
453
|
|
|
1,532
|
|
|||
Income (loss) from continuing operations before income taxes
|
25,286
|
|
|
18,795
|
|
|
(5,913
|
)
|
|||
Tax provision (benefit)
|
5,544
|
|
|
4,366
|
|
|
(1,841
|
)
|
|||
Income (loss) from continuing operations
|
19,742
|
|
|
14,429
|
|
|
(4,072
|
)
|
|||
Loss from discontinued operations, net of income taxes
|
—
|
|
|
(4,060
|
)
|
|
(7,353
|
)
|
|||
Net income (loss)
|
$
|
19,742
|
|
|
$
|
10,369
|
|
|
$
|
(11,425
|
)
|
|
|
|
|
|
|
||||||
Basic net earnings (loss) per share:
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
$
|
0.58
|
|
|
$
|
0.45
|
|
|
$
|
(0.13
|
)
|
Loss from discontinued operations, net of income taxes
|
—
|
|
|
(0.13
|
)
|
|
(0.24
|
)
|
|||
Net income (loss)
|
$
|
0.58
|
|
|
$
|
0.32
|
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
||||||
Diluted net earnings (loss) per share:
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
$
|
0.56
|
|
|
$
|
0.44
|
|
|
$
|
(0.13
|
)
|
Loss from discontinued operations, net of income taxes
|
—
|
|
|
(0.13
|
)
|
|
(0.24
|
)
|
|||
Net income (loss)
|
$
|
0.56
|
|
|
$
|
0.31
|
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
||||||
Weighted-average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
34,241
|
|
|
32,114
|
|
|
31,000
|
|
|||
Diluted
|
35,097
|
|
|
32,939
|
|
|
31,000
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive income (loss):
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
19,742
|
|
|
$
|
10,369
|
|
|
$
|
(11,425
|
)
|
Foreign currency translation adjustments
|
171
|
|
|
(235
|
)
|
|
65
|
|
|||
Net unrealized loss on investments
|
—
|
|
|
—
|
|
|
(16
|
)
|
|||
Total comprehensive income (loss)
|
$
|
19,913
|
|
|
$
|
10,134
|
|
|
$
|
(11,376
|
)
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Shareholders’
Equity
|
|||||||||||||
Shares
|
|
Amount
|
|
|||||||||||||||||||
Balance at June 30, 2013
|
30,381
|
|
|
$
|
304
|
|
|
$
|
231,711
|
|
|
$
|
95,524
|
|
|
$
|
962
|
|
|
$
|
328,501
|
|
Issuance of common stock under employee stock incentive plans
|
811
|
|
|
8
|
|
|
698
|
|
|
—
|
|
|
—
|
|
|
706
|
|
|||||
Issuance of common stock under employee stock purchase plan
|
92
|
|
|
—
|
|
|
778
|
|
|
—
|
|
|
—
|
|
|
778
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
9,244
|
|
|
—
|
|
|
—
|
|
|
9,244
|
|
|||||
Tax shortfall from employee stock plan awards
|
—
|
|
|
—
|
|
|
(706
|
)
|
|
—
|
|
|
—
|
|
|
(706
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,425
|
)
|
|
—
|
|
|
(11,425
|
)
|
|||||
Net unrealized loss on investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(16
|
)
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
65
|
|
|||||
Balance at June 30, 2014
|
31,284
|
|
|
312
|
|
|
241,725
|
|
|
84,099
|
|
|
1,011
|
|
|
327,147
|
|
|||||
Issuance of common stock under employee stock incentive plans
|
1,275
|
|
|
13
|
|
|
3,697
|
|
|
—
|
|
|
—
|
|
|
3,710
|
|
|||||
Issuance of common stock under employee stock purchase plan
|
79
|
|
|
1
|
|
|
837
|
|
|
—
|
|
|
—
|
|
|
838
|
|
|||||
Retirement of common stock
|
(67
|
)
|
|
—
|
|
|
(944
|
)
|
|
—
|
|
|
—
|
|
|
(944
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
8,728
|
|
|
—
|
|
|
—
|
|
|
8,728
|
|
|||||
Tax benefit from employee stock plan awards
|
—
|
|
|
—
|
|
|
525
|
|
|
—
|
|
|
—
|
|
|
525
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
10,369
|
|
|
—
|
|
|
10,369
|
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(235
|
)
|
|
(235
|
)
|
|||||
Balance at June 30, 2015
|
32,571
|
|
|
326
|
|
|
254,568
|
|
|
94,468
|
|
|
776
|
|
|
350,138
|
|
|||||
Issuance of common stock under employee stock incentive plans
|
1,267
|
|
|
12
|
|
|
6,867
|
|
|
—
|
|
|
—
|
|
|
6,879
|
|
|||||
Issuance of common stock under employee stock purchase plan
|
88
|
|
|
1
|
|
|
1,217
|
|
|
—
|
|
|
—
|
|
|
1,218
|
|
|||||
Retirement of common stock
|
(426
|
)
|
|
(4
|
)
|
|
(7,951
|
)
|
|
—
|
|
|
—
|
|
|
(7,955
|
)
|
|||||
Follow-on public stock offering
|
5,175
|
|
|
52
|
|
|
92,726
|
|
|
—
|
|
|
—
|
|
|
92,778
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
9,666
|
|
|
—
|
|
|
—
|
|
|
9,666
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
19,742
|
|
|
—
|
|
|
19,742
|
|
|||||
Share-based business combination consideration
|
—
|
|
|
—
|
|
|
407
|
|
|
—
|
|
|
—
|
|
|
407
|
|
|||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
171
|
|
|
171
|
|
|||||
Balance at June 30, 2016
|
38,675
|
|
|
$
|
387
|
|
|
$
|
357,500
|
|
|
$
|
114,210
|
|
|
$
|
947
|
|
|
$
|
473,044
|
|
|
For the Years Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
19,742
|
|
|
$
|
10,369
|
|
|
$
|
(11,425
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
15,742
|
|
|
13,840
|
|
|
15,608
|
|
|||
Stock-based compensation expense
|
9,574
|
|
|
8,728
|
|
|
9,244
|
|
|||
Deferred income taxes
|
(3,061
|
)
|
|
(1,038
|
)
|
|
(5,499
|
)
|
|||
Impairment of goodwill and long-lived assets
|
231
|
|
|
2,283
|
|
|
6,687
|
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
(943
|
)
|
|
(21
|
)
|
|||
Loss on sale of discontinued operations
|
—
|
|
|
892
|
|
|
—
|
|
|||
Non-cash interest expense
|
301
|
|
|
—
|
|
|
—
|
|
|||
Other non-cash items
|
(722
|
)
|
|
(495
|
)
|
|
(619
|
)
|
|||
Changes in operating assets and liabilities, net of effects of businesses acquired:
|
|
|
|
|
|
||||||
Accounts receivable, unbilled receivables, and costs in excess of billings
|
(25,396
|
)
|
|
5,935
|
|
|
(12,428
|
)
|
|||
Inventory
|
(865
|
)
|
|
(345
|
)
|
|
5,818
|
|
|||
Prepaid income taxes
|
346
|
|
|
(2,265
|
)
|
|
887
|
|
|||
Prepaid expenses and other current assets
|
2,964
|
|
|
(4,964
|
)
|
|
3,728
|
|
|||
Other non-current assets
|
(778
|
)
|
|
565
|
|
|
1,006
|
|
|||
Accounts payable and accrued expenses
|
18,871
|
|
|
(475
|
)
|
|
1,163
|
|
|||
Deferred revenues and customer advances
|
(194
|
)
|
|
1,138
|
|
|
129
|
|
|||
Income taxes payable
|
253
|
|
|
(938
|
)
|
|
274
|
|
|||
Other non-current liabilities
|
(68
|
)
|
|
(80
|
)
|
|
(311
|
)
|
|||
Net cash provided by operating activities
|
36,940
|
|
|
32,207
|
|
|
14,241
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition of businesses, net of cash acquired
|
(309,756
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment
|
(7,885
|
)
|
|
(5,984
|
)
|
|
(6,701
|
)
|
|||
Proceeds from sale of discontinued operations
|
—
|
|
|
885
|
|
|
—
|
|
|||
Increase in other investing activities
|
(567
|
)
|
|
(499
|
)
|
|
(19
|
)
|
|||
Net cash used in investing activities
|
(318,208
|
)
|
|
(5,598
|
)
|
|
(6,720
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from equity offering, net
|
92,778
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from employee stock plans
|
8,097
|
|
|
4,548
|
|
|
1,484
|
|
|||
Payment for retirement of common stock
|
(7,955
|
)
|
|
(944
|
)
|
|
—
|
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
943
|
|
|
21
|
|
|||
Proceeds from issuance of term debt, net
|
194,900
|
|
|
—
|
|
|
—
|
|
|||
Payments of debt issuance cost
|
(2,926
|
)
|
|
—
|
|
|
—
|
|
|||
Payments of capital lease obligations
|
—
|
|
|
(642
|
)
|
|
(763
|
)
|
|||
Net cash provided by financing activities
|
284,894
|
|
|
3,905
|
|
|
742
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
479
|
|
|
(215
|
)
|
|
(102
|
)
|
|||
Net increase in cash and cash equivalents
|
4,105
|
|
|
30,299
|
|
|
8,161
|
|
|||
Cash and cash equivalents at beginning of year
|
77,586
|
|
|
47,287
|
|
|
39,126
|
|
|||
Cash and cash equivalents at end of year
|
$
|
81,691
|
|
|
$
|
77,586
|
|
|
$
|
47,287
|
|
Cash paid during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
1,041
|
|
|
$
|
34
|
|
|
$
|
49
|
|
Income taxes
|
$
|
7,975
|
|
|
$
|
7,875
|
|
|
$
|
3,192
|
|
Supplemental disclosures—non-cash activities:
|
|
|
|
|
|
||||||
Issuance of restricted stock awards to employees
|
$
|
9,051
|
|
|
$
|
10,177
|
|
|
$
|
8,904
|
|
Share-based business combination consideration
|
$
|
407
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Capital lease financings
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
494
|
|
•
|
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.
|
|
Fiscal
2016 |
|
Fiscal
2015 |
|
Fiscal
2014 |
||||||
Beginning balance at July 1,
|
$
|
1,974
|
|
|
$
|
2,078
|
|
|
$
|
2,522
|
|
Warranty assumed from Carve-Out Business
|
114
|
|
|
—
|
|
|
—
|
|
|||
Accruals for warranties issued during the period
|
1,976
|
|
|
1,465
|
|
|
1,951
|
|
|||
Settlements made during the period
|
(2,541
|
)
|
|
(1,569
|
)
|
|
(2,395
|
)
|
|||
Ending balance at June 30,
|
$
|
1,523
|
|
|
$
|
1,974
|
|
|
$
|
2,078
|
|
|
Years Ended June 30,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Basic weighted-average shares outstanding
|
34,241
|
|
|
32,114
|
|
|
31,000
|
|
Effect of dilutive equity instruments
|
856
|
|
|
825
|
|
|
—
|
|
Diluted weighted-average shares outstanding
|
35,097
|
|
|
32,939
|
|
|
31,000
|
|
|
Balance Sheet Line Item
|
|
Balance Prior to Adoption
|
|
Increase / (Decrease)
|
|
As Adjusted
|
||||||
Current deferred income tax assets
|
Deferred income taxes
|
|
$
|
12,407
|
|
|
$
|
(12,407
|
)
|
|
$
|
—
|
|
Long-term deferred income tax assets
|
Other non-current assets
|
|
1,275
|
|
|
9,299
|
|
|
10,574
|
|
|||
Total tax assets
|
|
|
$
|
13,682
|
|
|
$
|
(3,108
|
)
|
|
$
|
10,574
|
|
|
|
|
|
|
|
|
|
||||||
Long-term deferred income tax liabilities
|
Deferred income taxes
|
|
$
|
(3,108
|
)
|
|
$
|
3,108
|
|
|
$
|
—
|
|
Total tax liabilities
|
|
|
(3,108
|
)
|
|
3,108
|
|
|
—
|
|
|||
Net deferred tax asset
|
|
|
$
|
10,574
|
|
|
$
|
—
|
|
|
$
|
10,574
|
|
C.
|
Acquisitions
|
|
Amounts
|
||
Consideration transferred
|
|
|
|
Cash paid at closing
|
$
|
300,000
|
|
Value allocated to replacement awards
|
407
|
|
|
Net purchase price
|
$
|
300,407
|
|
|
|
|
|
Estimated fair value of tangible assets acquired and liabilities assumed
|
|
|
|
Accounts receivable and cost in excess of billings
|
$
|
17,082
|
|
Inventory
|
25,477
|
|
|
Fixed assets
|
14,021
|
|
|
Other current and non-current assets
|
524
|
|
|
Current liabilities
|
(4,263
|
)
|
|
Non-current deferred tax liabilities
|
(25,477
|
)
|
|
Estimated fair value of net tangible assets acquired
|
27,364
|
|
|
Estimated fair value of identifiable intangible assets
|
102,800
|
|
|
Estimated goodwill
|
170,243
|
|
|
Estimated fair value of assets acquired
|
$
|
300,407
|
|
Net purchase price
|
$
|
300,407
|
|
|
Year Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Pro forma net revenues
|
$
|
344,601
|
|
|
$
|
333,362
|
|
Pro forma net income
|
$
|
18,125
|
|
|
$
|
5,697
|
|
Basic pro forma net earnings per share
|
$
|
0.47
|
|
|
$
|
0.15
|
|
Diluted pro forma net earnings per share
|
$
|
0.46
|
|
|
$
|
0.15
|
|
|
Amounts
|
||
Consideration transferred
|
|
|
|
Cash paid at closing
|
$
|
10,290
|
|
Working capital adjustment
|
(244
|
)
|
|
Less cash and cash equivalents acquired
|
(290
|
)
|
|
Net purchase price
|
$
|
9,756
|
|
|
|
|
|
Estimated fair value of tangible assets acquired and liabilities assumed
|
|
|
|
Cash and cash equivalents
|
$
|
290
|
|
Accounts receivable and cost in excess of billings
|
290
|
|
|
Other current and non-current assets
|
132
|
|
|
Current liabilities
|
(264
|
)
|
|
Estimated fair value of net tangible assets acquired
|
448
|
|
|
Estimated fair value of identifiable intangible assets
|
3,960
|
|
|
Estimated goodwill
|
5,638
|
|
|
Estimated fair value of assets acquired
|
10,046
|
|
|
Less cash and cash equivalents acquired
|
(290
|
)
|
|
Net purchase price
|
$
|
9,756
|
|
D.
|
Fair Value of Financial Instruments
|
|
Fair Value Measurements
|
||||||||||||||
|
June 30, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
30,075
|
|
|
$
|
—
|
|
|
$
|
30,075
|
|
|
$
|
—
|
|
Total
|
$
|
30,075
|
|
|
$
|
—
|
|
|
$
|
30,075
|
|
|
$
|
—
|
|
|
Fair Value Measurements
|
||||||||||||||
|
June 30, 2015
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
30,000
|
|
|
$
|
—
|
|
|
$
|
30,000
|
|
|
$
|
—
|
|
Total
|
$
|
30,000
|
|
|
$
|
—
|
|
|
$
|
30,000
|
|
|
$
|
—
|
|
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
Raw materials
|
$
|
31,205
|
|
|
$
|
15,864
|
|
Work in process
|
15,967
|
|
|
11,190
|
|
||
Finished goods
|
11,112
|
|
|
4,906
|
|
||
Total
|
$
|
58,284
|
|
|
$
|
31,960
|
|
F.
|
Property and Equipment
|
|
Estimated Useful Lives
(Years)
|
|
June 30,
|
||||||
2016
|
|
2015
|
|||||||
Computer equipment and software
|
3-4
|
|
$
|
62,409
|
|
|
$
|
58,562
|
|
Furniture and fixtures
|
5
|
|
8,547
|
|
|
7,614
|
|
||
Leasehold improvements
|
lesser of estimated useful life or lease term
|
|
8,515
|
|
|
4,003
|
|
||
Machinery and equipment
|
5
|
|
29,078
|
|
|
16,383
|
|
||
|
|
|
108,549
|
|
|
86,562
|
|
||
Less: accumulated depreciation
|
|
|
(80,212
|
)
|
|
(73,336
|
)
|
||
|
|
|
$
|
28,337
|
|
|
$
|
13,226
|
|
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
Current portion
|
$
|
929
|
|
|
$
|
1,156
|
|
Non-current portion
|
—
|
|
|
929
|
|
||
Total unamortized deferred gain
|
$
|
929
|
|
|
$
|
2,085
|
|
|
MCE
|
|
MDS
|
|
Carve-Out Business
|
|
Total
|
||||||||
Balance at June 30, 2014 and 2015
|
$
|
134,378
|
|
|
$
|
33,768
|
|
|
$
|
—
|
|
|
$
|
168,146
|
|
Goodwill arising from the LIT acquisition
|
—
|
|
|
5,638
|
|
|
—
|
|
|
5,638
|
|
||||
Goodwill arising from the Carve-Out Business Acquisition
|
—
|
|
|
—
|
|
|
170,243
|
|
|
170,243
|
|
||||
Balance at June 30, 2016
|
$
|
134,378
|
|
|
$
|
39,406
|
|
|
$
|
170,243
|
|
|
$
|
344,027
|
|
H.
|
Intangible Assets
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Weighted
Average
Useful
Life
|
||||||
June 30, 2016
|
|
|
|
|
|
|
|
||||||
Customer relationships
|
$
|
105,370
|
|
|
$
|
(23,824
|
)
|
|
$
|
81,546
|
|
|
9.9 years
|
Licensing agreements and patents
|
756
|
|
|
(38
|
)
|
|
718
|
|
|
4.0 years
|
|||
Completed technologies
|
35,840
|
|
|
(3,545
|
)
|
|
32,295
|
|
|
7.6 years
|
|||
Backlog
|
2,330
|
|
|
(216
|
)
|
|
2,114
|
|
|
2.0 years
|
|||
|
$
|
144,296
|
|
|
$
|
(27,623
|
)
|
|
$
|
116,673
|
|
|
|
June 30, 2015
|
|
|
|
|
|
|
|
||||||
Customer relationships
|
$
|
33,880
|
|
|
$
|
(17,364
|
)
|
|
$
|
16,516
|
|
|
6.8 years
|
Licensing agreements and patents
|
2,245
|
|
|
(2,096
|
)
|
|
149
|
|
|
5.0 years
|
|||
Completed technologies
|
5,570
|
|
|
(4,237
|
)
|
|
1,333
|
|
|
5.3 years
|
|||
|
$
|
41,695
|
|
|
$
|
(23,697
|
)
|
|
$
|
17,998
|
|
|
|
|
Year Ending
June 30,
|
||
2017
|
$
|
17,703
|
|
2018
|
16,744
|
|
|
2019
|
12,957
|
|
|
2020
|
11,374
|
|
|
2021
|
10,860
|
|
|
Thereafter
|
47,035
|
|
|
Total future amortization expense
|
$
|
116,673
|
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
|
Weighted
Average Useful Life |
||||||
Customer relationships
|
$
|
70,900
|
|
|
$
|
(1,122
|
)
|
|
$
|
69,778
|
|
|
11.5 years
|
Completed technologies
|
29,700
|
|
|
(670
|
)
|
|
29,030
|
|
|
7.8 years
|
|||
Backlog
|
2,200
|
|
|
(183
|
)
|
|
2,017
|
|
|
2.0 years
|
|||
|
$
|
102,800
|
|
|
$
|
(1,975
|
)
|
|
$
|
100,825
|
|
|
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
|
Weighted
Average Useful Life |
||||||
Completed technologies
|
$
|
3,240
|
|
|
$
|
(231
|
)
|
|
$
|
3,009
|
|
|
7.0 years
|
Customer relationships
|
590
|
|
|
(42
|
)
|
|
548
|
|
|
7.0 years
|
|||
Backlog
|
130
|
|
|
(33
|
)
|
|
97
|
|
|
2.0 years
|
|||
Total
|
$
|
3,960
|
|
|
$
|
(306
|
)
|
|
$
|
3,654
|
|
|
|
|
Severance & Related
|
|
Facilities & Other
|
|
Total
|
||||||
Restructuring liability at June 30, 2014
|
$
|
1,371
|
|
|
$
|
772
|
|
|
$
|
2,143
|
|
Restructuring charges
|
1,663
|
|
|
1,812
|
|
|
3,475
|
|
|||
Cash paid
|
(2,164
|
)
|
|
(1,162
|
)
|
|
(3,326
|
)
|
|||
Reversals (*)
|
(213
|
)
|
|
(87
|
)
|
|
(300
|
)
|
|||
Restructuring liability at June 30, 2015
|
657
|
|
|
1,335
|
|
|
1,992
|
|
|||
Restructuring charges
|
752
|
|
|
589
|
|
|
1,341
|
|
|||
Cash paid
|
(1,118
|
)
|
|
(1,188
|
)
|
|
(2,306
|
)
|
|||
Reversals (*)
|
(101
|
)
|
|
—
|
|
|
(101
|
)
|
|||
Restructuring liability at June 30, 2016
|
$
|
190
|
|
|
$
|
736
|
|
|
$
|
926
|
|
|
Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Income (loss) from continuing operations before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
25,194
|
|
|
$
|
18,443
|
|
|
$
|
(6,068
|
)
|
Foreign
|
92
|
|
|
352
|
|
|
155
|
|
|||
|
$
|
25,286
|
|
|
$
|
18,795
|
|
|
$
|
(5,913
|
)
|
Tax provision (benefit):
|
|
|
|
|
|
||||||
Federal:
|
|
|
|
|
|
||||||
Current
|
$
|
6,707
|
|
|
$
|
4,267
|
|
|
$
|
3,184
|
|
Deferred
|
(2,627
|
)
|
|
(458
|
)
|
|
(5,281
|
)
|
|||
|
$
|
4,080
|
|
|
$
|
3,809
|
|
|
$
|
(2,097
|
)
|
State:
|
|
|
|
|
|
||||||
Current
|
$
|
1,839
|
|
|
$
|
1,372
|
|
|
$
|
594
|
|
Deferred
|
(424
|
)
|
|
(921
|
)
|
|
(375
|
)
|
|||
|
$
|
1,415
|
|
|
$
|
451
|
|
|
$
|
219
|
|
Foreign:
|
|
|
|
|
|
||||||
Current
|
$
|
59
|
|
|
$
|
58
|
|
|
$
|
(12
|
)
|
Deferred
|
(10
|
)
|
|
48
|
|
|
49
|
|
|||
|
$
|
49
|
|
|
$
|
106
|
|
|
$
|
37
|
|
|
$
|
5,544
|
|
|
$
|
4,366
|
|
|
$
|
(1,841
|
)
|
|
Year Ended June 30,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Tax provision (benefit) at federal statutory rates
|
35.0
|
%
|
|
35.0
|
%
|
|
(35.0
|
)%
|
State income tax, net of federal tax benefit
|
5.0
|
|
|
4.9
|
|
|
(3.1
|
)
|
Research and development credits
|
(8.4
|
)
|
|
(4.8
|
)
|
|
(14.7
|
)
|
Excess tax benefits on stock compensation
|
(4.4
|
)
|
|
—
|
|
|
—
|
|
Domestic manufacturing deduction
|
(3.5
|
)
|
|
(3.2
|
)
|
|
(5.3
|
)
|
Income from legal settlement excluded from taxable income
|
(2.8
|
)
|
|
—
|
|
|
—
|
|
Deemed repatriation of foreign earnings
|
(0.2
|
)
|
|
(0.4
|
)
|
|
0.7
|
|
Foreign tax credits
|
—
|
|
|
—
|
|
|
(13.3
|
)
|
Equity compensation
|
0.3
|
|
|
(0.1
|
)
|
|
2.2
|
|
Officers' compensation
|
2.3
|
|
|
2.8
|
|
|
11.1
|
|
Stock compensation shortfalls
|
—
|
|
|
—
|
|
|
24.1
|
|
Deferred tax asset and liability adjustments
|
—
|
|
|
(4.2
|
)
|
|
—
|
|
Change in state tax rates
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
Reserves for tax contingencies
|
(3.2
|
)
|
|
(5.0
|
)
|
|
—
|
|
Other
|
1.8
|
|
|
1.3
|
|
|
2.2
|
|
|
21.9
|
%
|
|
23.2
|
%
|
|
(31.1
|
)%
|
|
June 30,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Inventory valuation and receivable allowances
|
$
|
12,768
|
|
|
$
|
9,264
|
|
Accrued compensation
|
3,267
|
|
|
2,563
|
|
||
Equity compensation
|
3,201
|
|
|
4,229
|
|
||
Federal and state research and development tax credit carryforwards
|
15,870
|
|
|
16,262
|
|
||
Gain on sale-leaseback
|
371
|
|
|
834
|
|
||
Other accruals
|
1,570
|
|
|
1,889
|
|
||
Capital loss carryforwards
|
3,562
|
|
|
3,562
|
|
||
Other temporary differences
|
4,011
|
|
|
1,800
|
|
||
|
44,620
|
|
|
40,403
|
|
||
Valuation allowance
|
(18,472
|
)
|
|
(18,864
|
)
|
||
Total deferred tax assets
|
26,148
|
|
|
21,539
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Prepaid expenses
|
(773
|
)
|
|
(1,103
|
)
|
||
Property and equipment
|
(2,451
|
)
|
|
(1,578
|
)
|
||
Intangible assets
|
(33,826
|
)
|
|
(7,110
|
)
|
||
Tax method of accounting change
|
(570
|
)
|
|
(854
|
)
|
||
Other temporary differences
|
(370
|
)
|
|
(320
|
)
|
||
Total deferred tax liabilities
|
(37,990
|
)
|
|
(10,965
|
)
|
||
Net deferred tax (liabilities) assets
|
$
|
(11,842
|
)
|
|
$
|
10,574
|
|
|
|
|
|
||||
As reported:
|
|
|
|
||||
Deferred tax assets
|
$
|
—
|
|
|
$
|
10,574
|
|
Deferred tax liabilities
|
(11,842
|
)
|
|
—
|
|
||
|
$
|
(11,842
|
)
|
|
$
|
10,574
|
|
|
Year Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Unrecognized tax benefits, beginning of period
|
$
|
2,190
|
|
|
$
|
3,142
|
|
Increases for previously recognized positions
|
79
|
|
|
123
|
|
||
Reductions as a result of a lapse of the applicable statue of limitations
|
—
|
|
|
(1,197
|
)
|
||
Increases for currently recognized positions
|
302
|
|
|
122
|
|
||
Reductions for previously recognized positions deemed effectively settled
|
(681
|
)
|
|
—
|
|
||
Reductions for previously recognized positions
|
(324
|
)
|
|
—
|
|
||
Unrecognized tax benefits, end of period
|
$
|
1,566
|
|
|
$
|
2,190
|
|
|
Year Ending
June 30, |
||
2017
|
$
|
10,000
|
|
2018
|
10,000
|
|
|
2019
|
15,000
|
|
|
2020
|
20,000
|
|
|
2021
|
145,000
|
|
|
Total remaining cash payment obligations
|
$
|
200,000
|
|
Unamortized debt issuance costs
|
(7,725
|
)
|
|
Long-term debt, net
|
$
|
192,275
|
|
|
Options Outstanding
|
|||||||||||
|
Number of
Shares |
|
Weighted Average
Exercise Price |
|
Weighted Average
Remaining Contractual Term (Years) |
|
Aggregate
Intrinsic Value as of 6/30/2016 |
|||||
Outstanding at June 30, 2014
|
1,435
|
|
|
$
|
11.76
|
|
|
2.23
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(500
|
)
|
|
7.43
|
|
|
|
|
|
|||
Cancelled
|
(105
|
)
|
|
19.21
|
|
|
|
|
|
|||
Outstanding at June 30, 2015
|
830
|
|
|
$
|
13.43
|
|
|
1.66
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(524
|
)
|
|
13.12
|
|
|
|
|
|
|||
Cancelled
|
(48
|
)
|
|
17.25
|
|
|
|
|
|
|||
Outstanding at June 30, 2016
|
258
|
|
|
$
|
13.34
|
|
|
1.06
|
|
$
|
2,972
|
|
Vested and expected to vest at June 30, 2016
|
258
|
|
|
$
|
13.34
|
|
|
1.06
|
|
$
|
2,972
|
|
Exercisable at June 30, 2016
|
258
|
|
|
$
|
13.34
|
|
|
1.06
|
|
$
|
2,972
|
|
|
Non-Vested Restricted Stock Awards
|
|||||
|
Number of
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Outstanding at June 30, 2014
|
2,091
|
|
|
$
|
10.15
|
|
Granted
|
849
|
|
|
11.99
|
|
|
Vested
|
(776
|
)
|
|
10.56
|
|
|
Forfeited
|
(298
|
)
|
|
10.73
|
|
|
Outstanding at June 30, 2015
|
1,866
|
|
|
$
|
10.72
|
|
Granted
|
556
|
|
|
16.26
|
|
|
Vested
|
(743
|
)
|
|
10.93
|
|
|
Forfeited
|
(124
|
)
|
|
11.70
|
|
|
Outstanding at June 30, 2016
|
1,555
|
|
|
$
|
12.52
|
|
|
Year Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of revenues
|
$
|
441
|
|
|
$
|
493
|
|
|
$
|
601
|
|
Selling, general and administrative
|
7,864
|
|
|
6,751
|
|
|
7,024
|
|
|||
Research and development
|
1,269
|
|
|
1,396
|
|
|
1,374
|
|
|||
Share-based compensation expense before tax
|
9,574
|
|
|
8,640
|
|
|
8,999
|
|
|||
Income taxes
|
(3,727
|
)
|
|
(3,332
|
)
|
|
(3,420
|
)
|
|||
Share-based compensation expense, net of income taxes
|
$
|
5,847
|
|
|
$
|
5,308
|
|
|
$
|
5,579
|
|
|
Year Ended June 30,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Lockheed Martin Corporation
|
23
|
%
|
|
20
|
%
|
|
18
|
%
|
Raytheon Company
|
20
|
|
|
37
|
|
|
13
|
|
Northrop Grumman Corporation
|
*
|
|
|
*
|
|
|
12
|
|
|
43
|
%
|
|
57
|
%
|
|
43
|
%
|
|
For the Years Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
Net revenues of discontinued operations
|
$
|
3,493
|
|
|
$
|
9,414
|
|
Costs of discontinued operations:
|
|
|
|
||||
Cost of revenues
|
2,385
|
|
|
6,356
|
|
||
Selling, general and administrative
|
1,958
|
|
|
3,029
|
|
||
Research and development
|
305
|
|
|
585
|
|
||
Amortization of intangible assets
|
279
|
|
|
495
|
|
||
Restructuring and other charges
|
—
|
|
|
26
|
|
||
Impairment of goodwill
|
2,283
|
|
|
6,687
|
|
||
Loss from discontinued operations before income taxes
|
(3,717
|
)
|
|
(7,764
|
)
|
||
Loss on disposal of discontinued operations before income taxes
|
(892
|
)
|
|
—
|
|
||
Tax benefit
|
(549
|
)
|
|
(411
|
)
|
||
Loss from discontinued operations, net of income taxes
|
$
|
(4,060
|
)
|
|
$
|
(7,353
|
)
|
|
For the Years Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
Depreciation
|
$
|
100
|
|
|
$
|
160
|
|
Amortization of intangible assets
|
$
|
279
|
|
|
$
|
495
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
78
|
|
Impairment of goodwill
|
$
|
2,283
|
|
|
$
|
6,687
|
|
Stock-based compensation expense
|
$
|
88
|
|
|
$
|
245
|
|
2016 (In thousands, except per share data)
|
1ST QUARTER
|
|
2ND QUARTER
|
|
3RD QUARTER
|
|
4TH QUARTER
|
||||||||
Net revenues
|
$
|
58,409
|
|
|
$
|
60,417
|
|
|
$
|
65,898
|
|
|
$
|
85,430
|
|
Gross margin
|
$
|
27,529
|
|
|
$
|
28,578
|
|
|
$
|
30,491
|
|
|
$
|
38,176
|
|
Income from operations
|
$
|
3,131
|
|
|
$
|
6,369
|
|
|
$
|
6,819
|
|
|
$
|
7,654
|
|
Income from continuing operations before income taxes
|
$
|
3,224
|
|
|
$
|
6,473
|
|
|
$
|
6,999
|
|
|
$
|
8,590
|
|
Income tax provision
(1)
|
$
|
368
|
|
|
$
|
1,433
|
|
|
$
|
2,642
|
|
|
$
|
1,101
|
|
Income from continuing operations
|
$
|
2,856
|
|
|
$
|
5,040
|
|
|
$
|
4,357
|
|
|
$
|
7,489
|
|
Loss from discontinued operations, net of income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income
|
$
|
2,856
|
|
|
$
|
5,040
|
|
|
$
|
4,357
|
|
|
$
|
7,489
|
|
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic net income per share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.09
|
|
|
$
|
0.15
|
|
|
$
|
0.13
|
|
|
$
|
0.20
|
|
Loss from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income
|
$
|
0.09
|
|
|
$
|
0.15
|
|
|
$
|
0.13
|
|
|
$
|
0.20
|
|
Diluted net income per share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.08
|
|
|
$
|
0.15
|
|
|
$
|
0.13
|
|
|
$
|
0.19
|
|
Loss from discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income
|
$
|
0.08
|
|
|
$
|
0.15
|
|
|
$
|
0.13
|
|
|
$
|
0.19
|
|
2015 (In thousands, except per share data)
|
1ST QUARTER
|
|
2ND QUARTER
|
|
3RD QUARTER
|
|
4TH QUARTER
|
||||||||
Net revenues
|
$
|
54,061
|
|
|
$
|
57,089
|
|
|
$
|
59,578
|
|
|
$
|
64,119
|
|
Gross margin
|
$
|
23,999
|
|
|
$
|
27,035
|
|
|
$
|
27,918
|
|
|
$
|
31,267
|
|
Income from operations
|
$
|
728
|
|
|
$
|
3,539
|
|
|
$
|
6,157
|
|
|
$
|
7,931
|
|
Income from continuing operations before income taxes
|
$
|
717
|
|
|
$
|
3,933
|
|
|
$
|
6,163
|
|
|
$
|
7,982
|
|
Income tax provision
|
$
|
—
|
|
|
$
|
1,047
|
|
|
$
|
1,469
|
|
|
$
|
1,850
|
|
Income from continuing operations
|
$
|
717
|
|
|
$
|
2,886
|
|
|
$
|
4,694
|
|
|
$
|
6,132
|
|
Loss from discontinued operations, net of income taxes
|
$
|
(218
|
)
|
|
$
|
(2,621
|
)
|
|
$
|
(1,019
|
)
|
|
$
|
(202
|
)
|
Net income
|
$
|
499
|
|
|
$
|
265
|
|
|
$
|
3,675
|
|
|
$
|
5,930
|
|
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.02
|
|
|
$
|
0.09
|
|
|
$
|
0.14
|
|
|
$
|
0.19
|
|
Loss from discontinued operations
|
$
|
—
|
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.01
|
)
|
Net income
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.11
|
|
|
$
|
0.18
|
|
Diluted net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.02
|
|
|
$
|
0.09
|
|
|
$
|
0.14
|
|
|
$
|
0.18
|
|
Loss from discontinued operations
|
$
|
—
|
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
—
|
|
Net income
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.11
|
|
|
$
|
0.18
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
(a)
|
E
FFECTIVENESS
OF
D
ISCLOSURE
C
ONTROLS
AND
P
ROCEDURES
|
(b)
|
I
NHERENT
L
IMITATIONS
ON
E
FFECTIVENESS
OF
C
ONTROLS
|
(c)
|
M
ANAGEMENT
’
S
A
NNUAL
R
EPORT
ON
I
NTERNAL
C
ONTROL
O
VER
F
INANCIAL
R
EPORTING
|
(d)
|
C
HANGES
IN
I
NTERNAL
C
ONTROL
O
VER
F
INANCIAL
R
EPORTING
|
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
|
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 |
||||||||||
2016
|
$
|
56
|
|
|
$
|
425
|
|
|
$
|
—
|
|
|
$
|
389
|
|
|
$
|
92
|
|
2015
|
$
|
34
|
|
|
$
|
44
|
|
|
$
|
1
|
|
|
$
|
21
|
|
|
$
|
56
|
|
2014
|
$
|
33
|
|
|
$
|
133
|
|
|
$
|
14
|
|
|
$
|
118
|
|
|
$
|
34
|
|
|
BALANCE
AT BEGINNING OF PERIOD |
|
CHARGED
TO COSTS & EXPENSES |
|
CHARGED
TO OTHER ACCOUNTS |
|
DEDUCTIONS
|
|
BALANCE
AT END OF PERIOD |
||||||||||
2016
|
$
|
18,864
|
|
|
$
|
(392
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,472
|
|
2015
|
$
|
10,844
|
|
|
$
|
8,020
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,864
|
|
2014
|
$
|
9,032
|
|
|
$
|
1,812
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,844
|
|
|
|
|
|
MERCURY SYSTEMS, INC.
|
|
|
|
|
|
By
|
/s/ GERALD M. HAINES II
|
|
|
Gerald M. Haines II
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND TREASURER [PRINCIPAL FINANCIAL OFFICER] |
Signature
|
|
Title(s)
|
|
Date
|
/s/ M
ARK
A
SLETT
|
|
President, Chief Executive Officer and Director (principal executive officer)
|
|
August 16, 2016
|
Mark Aslett
|
|
|
|
|
/
S
/ G
ERALD
M. H
AINES
II
|
|
Executive Vice President, Chief Financial Officer, and Treasurer (principal financial officer)
|
|
August 16, 2016
|
Gerald M. Haines II
|
|
|
|
|
/
S
/ C
HARLES
A. S
PEICHER
|
|
Vice President, Controller, and Chief Accounting Officer (principal accounting officer)
|
|
August 16, 2016
|
Charles A. Speicher
|
|
|
|
|
/
S
/ J
AMES
K. B
ASS
|
|
Director
|
|
August 16, 2016
|
James K. Bass
|
|
|
|
|
/
S
/ M
ARK
S. N
EWMAN
|
|
Director
|
|
August 16, 2016
|
Mark S. Newman
|
|
|
|
|
/
S
/ M
ICHAEL
A. D
ANIELS
|
|
Director
|
|
August 16, 2016
|
Michael A. Daniels
|
|
|
|
|
/
S
/ G
EORGE
K. M
UELLNER
|
|
Director
|
|
August 16, 2016
|
George K. Muellner
|
|
|
|
|
/
S
/ W
ILLIAM
K. O’B
RIEN
|
|
Director
|
|
August 16, 2016
|
William K. O’Brien
|
|
|
|
|
/
S
/ V
INCENT
V
ITTO
|
|
Chairman of the Board of
Directors
|
|
August 16, 2016
|
Vincent Vitto
|
|
|
|
|
ITEM NO.
|
|
DESCRIPTION OF EXHIBIT
|
1.1
|
|
Underwriting Agreement, dated April 7, 2016, among Mercury Systems, Inc. as issuer and Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as representatives of the several underwriters named therein (incorporated herein by reference to Exhibit 1.1 of the Company's current report on Form 8-K filed on April 8, 2016)
|
3.1.1
|
|
Articles of Organization (incorporated herein by reference to Exhibit 3.1.1 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2009)
|
3.1.2
|
|
Articles of Amendment (incorporated herein by reference to Exhibit 3.1.2 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2010)
|
3.1.3
|
|
Articles of Amendment (incorporated herein by reference to Exhibit 1 of the Company’s registration statement on Form 8-A filed on December 15, 2005)
|
3.1.4
|
|
Articles of Amendment (incorporated herein by reference to Exhibit 3.1 of the Company's current report on Form 8-K filed on November 13, 2012)
|
3.1.5
|
|
Articles of Amendment (incorporated herein by reference to Exhibit 3.1 of the Company's current report on Form 8-K filed on June 30, 2015)
|
3.2
|
|
Bylaws, amended and restated effective as of May 4, 2011 (incorporated herein by reference to Exhibit 3.2 of the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2011)
|
4.1
|
|
Form of Stock Certificate (incorporated herein by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1 (File No. 333-41139))
|
10.1.1*
|
|
1997 Stock Option Plan, as amended and restated (incorporated herein by reference to Exhibit 10.1.1 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2010)
|
10.1.2*
|
|
Form of Stock Option Agreement under the 1997 Stock Option Plan (incorporated herein by reference to Exhibit 10.1.2 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2010)
|
10.1.3*
|
|
Form of Restricted Stock Award Agreement under the 1997 Stock Option Plan (incorporated herein by reference to Exhibit 10.1.3 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2010)
|
10.2*
|
|
1997 Employee Stock Purchase Plan, as amended and restated (incorporated herein by reference to Appendix B to the Company’s definitive proxy statement filed on October 29, 2015)
|
10.3*
|
|
Form of Indemnification Agreement between the Company and each of its current directors (incorporated herein by reference to Exhibit 10.4 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2009)
|
10.4*
|
|
Annual Executive Bonus Plan – Corporate Financial Performance (incorporated herein by reference to Appendix A to the Company’s definitive proxy statement filed on August 30, 2013)
|
10.5*
|
|
Annual Executive Bonus Plan – Individual Performance (incorporated herein by reference to Exhibit 10.7 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2009)
|
10.6*
|
|
2005 Stock Incentive Plan, as amended and restated (incorporated herein by reference to Appendix A to the Company’s definitive proxy statement filed on October 29, 2015)
|
10.7.1*
|
|
Form of Stock Option Agreement under the 2005 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.8.1 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2011)
|
10.7.2*
|
|
Form of Restricted Stock Award Agreement under the 2005 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.8.2 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2011)
|
ITEM NO.
|
|
DESCRIPTION OF EXHIBIT
|
10.7.3*
|
|
Form of Deferred Stock Award Agreement under the 2005 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.8.3 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2011)
|
10.7.4*
|
|
Form of Stock Option Agreement for performance stock options under the 2005 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 of the Company’s current report on Form 8-K filed on September 28, 2007)
|
10.7.5*
|
|
Form of Amended and Restated Performance-Based Restricted Stock Award Agreement under the 2005 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 of the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2014)
|
10.8.1*
|
|
Form of Change in Control Severance Agreement between the Company and Mark Aslett (incorporated herein by reference to Exhibit 10.9.1 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2011)
|
10.8.2*
|
|
Form of Change in Control Severance Agreement between the Company and Non-CEO Executives (incorporated herein by reference to Exhibit 10.9.2 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2011)
|
10.9*
|
|
Compensation Policy for Non-Employee Directors (incorporated herein by reference to Exhibit 10.10 of the Company's annual report on Form 10-K for the fiscal year ended June 30, 2012)
|
10.10.1*
|
|
Employment Agreement, dated as of November 19, 2007, by and between the Company and Mark Aslett (incorporated herein by reference to Exhibit 10.1 of the Company’s current report on Form 8-K filed on November 20, 2007)
|
10.10.2*
|
|
First Amendment to Employment Agreement, dated as of December 20, 2008, by and between the Company and Mark Aslett (incorporated by reference to Exhibit 10.2 of the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2008)
|
10.10.3*
|
|
Second Amendment to Employment Agreement, dated as of September 30, 2009, by and between the Company and Mark Aslett (incorporated by reference to Exhibit 10.1 of the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2009)
|
10.11*
|
|
Agreement, dated March 1, 2010, by and between the Company and Gerald M. Haines II (incorporated herein by reference to Exhibit 10.13 of the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2011)
|
10.12
|
|
Micronetics, Inc. 2006 Equity Incentive Plan (incorporated herein by reference to Exhibit 99.1 to the Company’s registration statement on Form S-8 filed on August 10, 2012)
|
10.13
|
|
Stock Purchase Agreement by and between Mercury Systems, Inc. and Microsemi Corporation, dated as of March 23, 2016 (incorporated by reference to Exhibit 10.1 of the Company's current report on Form 8-K filed on April 4, 2016)
|
10.14
|
|
Credit Agreement, dated May 2, 2016, among Mercury Systems, Inc., the Guarantors party thereto, the Lenders party thereto and Bank of America, N.A., as Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.1 of the Company's current report on Form 8-K filed on May 2, 2016)
|
ITEM NO.
|
|
DESCRIPTION OF EXHIBIT
|
12.1†
|
|
Computation of Ratio of Earnings to Fixed Charges
|
21.1†
|
|
Subsidiaries of the Company
|
23.1†
|
|
Consent of KPMG LLP
|
23.2†
|
|
Consent of PricewaterhouseCoopers LLP, independent accountants for the Carve-Out Business
|
31.1†
|
|
Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2†
|
|
Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1+
|
|
Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
99.1
|
|
Carve-Out Business audited consolidated balance sheets as of September 27, 2015 and September 28, 2014, and the related consolidated statements of operations and comprehensive income, consolidated statements of changes of invested equity and consolidated statements of cash flows for the years ended September 27, 2015, September 28, 2014 and September 29, 2013 (incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K filed with the Securities Exchange Commission on April 4, 2016)
|
99.2
|
|
Carve-Out Business unaudited interim consolidated balance sheets as of January 3, 2016 and December 28, 2014 and the related unaudited consolidated statements of operations and comprehensive income and consolidated statements of cash flows for three months ended January 3, 2016 and December 28, 2014 (incorporated by reference to Exhibit 99.3 of the Company’s Current Report on Form 8-K filed with the Securities Exchange Commission on April 4, 2016)
|
99.3
|
|
Mercury Systems, Inc. unaudited pro forma condensed consolidated balance sheet as of December 31, 2015, the unaudited pro forma condensed consolidated statements of operations for the six months ended December 31, 2015 and the unaudited pro forma condensed consolidated statement of operations for the year ended June 30, 2015 (incorporated by reference to Exhibit 99.4 of the Company’s Current Report on Form 8-K filed with the Securities Exchange Commission on April 4, 2016)
|
101†
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Statement of Operations, (ii) Consolidated Balance Sheet, (iii) Consolidated Statement of Shareholders’ Equity, (iv) Consolidated Statement of Cash Flows, and (v) Notes to Consolidated financial Statements
|
*
|
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.
|
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