ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2016 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO . |
MASSACHUSETTS | 04-2741391 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
201 RIVERNECK ROAD CHELMSFORD, MA | 01824 |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered |
Common Stock, Par Value $.01 Per Share | NASDAQ Global Select Market |
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ITEM 1. | BUSINESS |
• | creating the defense industry’s largest commercial embedded secure processing company; |
• | adding secure solid-state drive (“SSDs”) capabilities to our industry leading pre-integrated sensor processing subsystems; |
• | increasing our existing RF and microwave business by approximately 66% and adding new capabilities, scale and synergies; |
• | adding new capabilities in embedded security and custom microelectronics; and |
• | providing access to new high-growth markets, customers and programs, such as precision-guided munitions and missiles. |
• | 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. |
• | 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. |
• | 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. |
• | 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. |
• | 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, |
• | 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. |
• | 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 |
• | 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. |
• | The long-term DoD budget pressure is pushing more dollars toward upgrades of the electronic subsystems on existing platforms, which may increase demand for our products. The DoD is moving from major new weapons systems developments to upgrades of the electronic subsystems on existing platforms. These upgrades are expected to include more sensors, signal processing, ISR algorithms, multi-intelligence fusion and exploitation, computing and communications. We believe that upgrades to provide new urgent war fighting capability, driven by combatant commanders, are occurring more rapidly than traditional defense prime contractors can easily react to. We believe these trends will cause defense prime contractors to increasingly seek out our high-performance, cost-effective open architecture products. |
• | Defense procurement reform is causing the defense prime contractors to outsource more work to commercial companies. 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. |
• | 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. |
• | 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. |
• | 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. |
• | 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. |
• | 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. |
• | 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: |
• | We continue to leverage our expertise in building pre-integrated subsystems in support of critical defense programs, driving out procurement costs by lowering integration expenses of our customers. |
• | We have been a pioneer in driving open systems architectures. |
• | The DoD has asked defense industry participants to invest their own resources into R&D. This approach is a pillar of our business model. |
• | Security and program protection are now critical considerations for both program modernizations as well as for new program deployment. We are now in our third generation of building secure embedded processing solutions. |
• | Value-Added Subsystem Solution Provider for Defense Prime Contractors. Because of the DoD’s 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 |
• | 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. |
• | 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. |
• | 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. |
• | 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. |
• | 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; |
• | RF and microwave assemblies, including tuners, converters, transceivers, and switch filters; and |
• | RF and microwave components, including power amplifiers and limiters, switches, oscillators, and equalizers. |
ITEM 1A. | RISK FACTORS: |
• | reduced and delayed demand for our products; |
• | increased risk of order cancellations or delays; |
• | downward pressure on the prices of our products; |
• | greater difficulty in collecting accounts receivable; and |
• | risks to our liquidity, including the possibility that we might not have access to our cash and short-term investments or to our line of credit when needed. |
• | Changes in government administration and national and international priorities, including developments in the geo-political environment, could have a significant impact on national or international defense spending priorities and the efficient handling of routine contractual matters. These changes could have a negative impact on our business in the future. |
• | Our contracts with the U.S. and foreign governments and their defense prime contractors and subcontractors are subject to termination either upon default by us or at the convenience of the government or contractor if, among other reasons, the program itself has been terminated. Termination for convenience provisions generally entitle us to recover costs incurred, settlement expenses and profit on work completed prior to termination, but there can be no assurance in this regard. |
• | 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. |
• | Consolidation among defense industry contractors has resulted in a few large contractors with increased bargaining power relative to us. The increased bargaining power of these contractors may adversely affect our ability to compete for contracts and, as a result, may adversely affect our business or results of operations in the future. |
• | Our customers include U.S. government contractors who must comply with and are affected by laws and regulations relating to the formation, administration, and performance of U.S. government contracts. In addition, when 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. |
• | 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. |
• | 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. |
• | 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. |
• | 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. |
• | We are subject to various U.S. federal export-control statutes and regulations which affect our business with, among others, international defense customers. In certain cases the export of our products and technical data to foreign persons, and the provision of technical services to foreign persons related to such products and technical data, may require licenses from the U.S. Department of Commerce or the U.S. Department of State. The time required to obtain these licenses, and the restrictions that may be contained in these licenses, may put us at a competitive disadvantage with respect to competing with international suppliers who are not subject to U.S. federal export control statutes and regulations. In addition, violations of these statutes and regulations can result in civil and, under certain circumstances, criminal liability as well as administrative penalties which could have a material adverse effect on our business and operating results. |
• | We anticipate that sales to our U.S. prime defense contractor customers as part of foreign military sales (“FMS”) programs will be an increasing part of our business going forward. These FMS sales combine several different types of risks and |
• | 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. |
• | 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. |
• | our ability to create demand for products in new markets; |
• | our ability to manage growth effectively; |
• | our ability to respond to changes in our customers’ businesses by updating existing products and introducing, in a timely fashion, new products which meet the needs of our customers; |
• | our ability to develop a reputation as a best-of-breed technology provider; |
• | the quality of our new products; |
• | our ability to respond rapidly to technological change; and |
• | our ability to successfully integrate any acquisitions that we make and achieve revenue and cost synergies and economies of scale. |
• | problems and increased costs in connection with the integration of the personnel, operations, technologies, or products of the acquired businesses; |
• | unanticipated costs; |
• | failure to achieve anticipated increases in revenues and profitability; |
• | diversion of management’s attention from our core business; |
• | adverse effects on business relationships with suppliers and customers and those of the acquired company; |
• | acquired assets becoming impaired as a result of technical advancements or worse-than-expected performance by the acquired company; |
• | failure to rationalize manufacturing capacity, locations, and operating models to achieve anticipated economies of scale, or disruptions to manufacturing and product design operations during the combination of facilities; |
• | volatility associated with accounting for earn-outs in a given transaction; |
• | entering markets in which we have no, or limited, prior experience; |
• | potential loss of key employees; and |
• | adversely affect our internal control over financial reporting before the acquiree's complete integration into the Company’s control environment. |
• | issue stock that would dilute our existing shareholders’ ownership percentages; |
• | incur debt and assume liabilities; |
• | obtain financing on unfavorable terms, or not be able to obtain financing on any terms at all; |
• | incur amortization expenses related to acquired intangible assets or incur large and immediate write-offs; |
• | incur large expenditures related to office closures of the acquired companies, including costs relating to the termination of employees and facility and leasehold improvement charges resulting from our having to vacate the acquired companies’ premises; and |
• | reduce the cash that would otherwise be available to fund operations or for other purposes. |
• | failure to implement our business plan for the combined business; |
• | unanticipated issues in integrating manufacturing, logistics, information, communications and other systems; |
• | unanticipated changes in applicable laws and regulations; |
• | failure to retain key employees; |
• | failure to retain key customers; |
• | operating risks inherent in the Carve-Out Business and our business; |
• | the impact of any assumed legal proceedings; |
• | the impact on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002; and |
• | unanticipated issues, expenses costs, charges and liabilities related to the Acquisition. |
• | 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; |
• | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; |
• | requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; |
• | increasing our vulnerability to general adverse economic and industry conditions; |
• | exposing us to the risk of increased interest rates as certain of our borrowings have variable interest rates, which could increase the cost of servicing our financial instruments and could materially reduce our profitability and cash flows; |
• | limiting our flexibility in planning for and reacting to changes in the industry in which we compete; |
• | placing us at a disadvantage compared to other, less leveraged competitors; and |
• | increasing our cost of borrowing. |
• | changes in applicable laws and regulatory requirements; |
• | export and import restrictions; |
• | export controls relating to technology; |
• | tariffs and other trade barriers; |
• | less favorable intellectual property laws; |
• | difficulties in staffing and managing foreign operations; |
• | longer payment cycles; |
• | problems in collecting accounts receivable; |
• | adverse economic conditions in foreign markets; |
• | political instability; |
• | fluctuations in currency exchange rates; |
• | expatriation controls; and |
• | potential adverse tax consequences. |
• | delays in completion of internal product development projects; |
• | delays in shipping hardware and software; |
• | delays in acceptance testing by customers; |
• | a change in the mix of products sold to our served markets; |
• | production delays due to quality problems with outsourced components; |
• | inability to scale quick reaction capability products due to low product volume; |
• | shortages and costs of components; |
• | the timing of product line transitions; |
• | declines in quarterly revenues from previous generations of products following announcement of replacement products containing more advanced technology; |
• | potential asset impairment, including goodwill and intangibles, or restructuring charges; and |
• | changes in estimates of completion on fixed price service engagements. |
• | investors’ perception of, and demand for, securities of defense technology companies; |
• | conditions of the United States and other capital markets in which we may seek to raise funds; and |
• | our future results of operations, financial condition and cash flows. |
• | further develop or enhance our customer base; |
• | acquire necessary technologies, products or businesses; |
• | expand operations in the United States and elsewhere; |
• | hire, train and retain employees; |
• | market our software solutions, services and products; or |
• | respond to competitive pressures or unanticipated capital requirements. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
Location | Size in Sq. Feet | Commitment | |||
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 | $ | 6,018 | |
2018 | 4,960 | ||
2019 | 4,851 | ||
2020 | 4,683 | ||
2021 | 3,674 | ||
Thereafter | 19,445 | ||
Total minimum lease payments | $ | 43,631 |
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 |
US | Europe | Asia Pacific | Eliminations | Total | |||||||||||||||
YEAR ENDED JUNE 30, 2016 | |||||||||||||||||||
Net revenues to unaffiliated customers | $ | 259,781 | $ | 5,464 | $ | 4,909 | $ | — | $ | 270,154 | |||||||||
Inter-geographic revenues | 7,911 | 447 | — | (8,358 | ) | — | |||||||||||||
Net revenues | $ | 267,692 | $ | 5,911 | $ | 4,909 | $ | (8,358 | ) | $ | 270,154 | ||||||||
Identifiable long-lived assets | $ | 28,187 | $ | 127 | $ | 23 | $ | — | $ | 28,337 | |||||||||
YEAR ENDED JUNE 30, 2015 | |||||||||||||||||||
Net revenues to unaffiliated customers | $ | 229,849 | $ | 2,076 | $ | 2,922 | $ | — | $ | 234,847 | |||||||||
Inter-geographic revenues | 2,806 | 475 | — | (3,281 | ) | — | |||||||||||||
Net revenues | $ | 232,655 | $ | 2,551 | $ | 2,922 | $ | (3,281 | ) | $ | 234,847 | ||||||||
Identifiable long-lived assets | $ | 13,127 | $ | 68 | $ | 31 | $ | — | $ | 13,226 | |||||||||
YEAR ENDED JUNE 30, 2014 | |||||||||||||||||||
Net revenues to unaffiliated customers | $ | 202,845 | $ | 2,806 | $ | 3,078 | $ | — | $ | 208,729 | |||||||||
Inter-geographic revenues | 3,479 | 1,550 | 140 | (5,169 | ) | — | |||||||||||||
Net revenues | $ | 206,324 | $ | 4,356 | $ | 3,218 | $ | (5,169 | ) | $ | 208,729 | ||||||||
Identifiable long-lived assets | $ | 14,090 | $ | 48 | $ | 6 | $ | — | $ | 14,144 |
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 | % |
Year Ended June 30, | ||||||||
2016 | 2015 | 2014 | ||||||
SEWIP | 12 | % | * | * | ||||
Aegis | 10 | % | 12 | % | 15 | % | ||
Patriot | * | 18 | % | * | ||||
F-35 | * | 16 | % | * | ||||
22 | % | 46 | % | 15 | % |
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) | EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES |
(b) | INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS |
(c) | MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING |
(d) | CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING |
ITEM 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/ MARK ASLETT | President, Chief Executive Officer and Director (principal executive officer) | August 16, 2016 | ||
Mark Aslett | ||||
/S/ GERALD M. HAINES II | Executive Vice President, Chief Financial Officer, and Treasurer (principal financial officer) | August 16, 2016 | ||
Gerald M. Haines II | ||||
/S/ CHARLES A. SPEICHER | Vice President, Controller, and Chief Accounting Officer (principal accounting officer) | August 16, 2016 | ||
Charles A. Speicher | ||||
/S/ JAMES K. BASS | Director | August 16, 2016 | ||
James K. Bass | ||||
/S/ MARK S. NEWMAN | Director | August 16, 2016 | ||
Mark S. Newman | ||||
/S/ MICHAEL A. DANIELS | Director | August 16, 2016 | ||
Michael A. Daniels | ||||
/S/ GEORGE K. MUELLNER | Director | August 16, 2016 | ||
George K. Muellner | ||||
/S/ WILLIAM K. O’BRIEN | Director | August 16, 2016 | ||
William K. O’Brien | ||||
/S/ VINCENT VITTO | 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. |
NAME | JURISDICTION OF ORGANIZATION | |
Mercury Defense Systems, Inc. | California | |
Mercury Corp. - Memory and Storage Solutions | Indiana | |
Mercury LLC - RF Integrated Solutions | Delaware | |
Mercury Corp. - Security Solutions | Delaware | |
Arxan Research, Inc. | Delaware | |
Nihon Mercury Computer Systems K.K. | Japan | |
Mercury Computer Systems Ltd. | United Kingdom |
1. | I have reviewed this annual report on Form 10-K of Mercury Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ MARK ASLETT |
Mark Aslett |
PRESIDENT AND CHIEF EXECUTIVE OFFICER [PRINCIPAL EXECUTIVE OFFICER] |
1. | I have reviewed this annual report on Form 10-K of Mercury Systems, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ GERALD M. HAINES II |
Gerald M. Haines II |
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND TREASURER [PRINCIPAL FINANCIAL OFFICER] |
/S/ MARK ASLETT |
Mark Aslett PRESIDENT AND CHIEF EXECUTIVE OFFICER |
/S/ GERALD M. HAINES II |
Gerald M. Haines II EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, AND TREASURER |
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jul. 31, 2016 |
Dec. 31, 2015 |
|
Document Documentand Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Jun. 30, 2016 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | MRCY | ||
Entity Registrant Name | MERCURY SYSTEMS INC | ||
Entity Central Index Key | 0001049521 | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 40,360,389 | ||
Entity Public Float | $ 639.6 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 92 | $ 56 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 85,000,000 | 85,000,000 |
Common stock, shares issued | 38,675,340 | 32,570,959 |
Common stock, shares outstanding | 38,675,340 | 32,570,959 |
Description of Business |
12 Months Ended |
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Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Mercury Systems, Inc. (the “Company” or “Mercury”) is a leading commercial provider of secure processing subsystems designed and made in the U.S.A. Optimized for customer and mission success, its solutions power a wide variety of critical defense and intelligence programs. Headquartered in Chelmsford, Massachusetts, it is pioneering a next-generation defense electronics business model specifically designed to meet the industry's current and emerging technology and business needs. The Company delivers affordable innovative solutions, rapid time-to-value and service and support to its defense prime contractor customers. The Company's products and solutions have been deployed in more than 300 programs with over 25 different defense prime contractors. Key programs include Aegis, Patriot, Surface Electronic Warfare Improvement Program ("SEWIP"), Gorgon Stare, Predator, F-35 and Reaper. The Company's organizational structure allows it to deliver capabilities that combine technology building blocks and deep domain expertise in the defense sector. On May 2, 2016, the Company acquired the custom microelectronics, RF and microwave solutions, and embedded security operations from Microsemi Corporation (the “Carve-Out Business”), resulting in the entities comprising the Carve-Out Business becoming 100% owned direct or indirect subsidiaries of Mercury (the “Acquisition”). Under the terms of the Stock Purchase Agreement, the Company paid $300,000 in cash on a cash-free, debt-free basis, subject to working capital and other post-closing adjustments. On December 16, 2015, the Company acquired Lewis Innovative Technologies, Inc. (“LIT”) for $10,000 in cash on a cash-free, debt-free basis, subject to working capital and other post-closing adjustments. See Note C to consolidated financial statements. During fiscal 2016, the Company completed a series of important internal organizational changes in order to integrate, align and scale the Company into one business. In addition, over the past several years, the Company has completed several acquisitions, culminating with the Acquisition on May 2, 2016 to support its strategy of creating a better alternative for affordable, secure processing subsystems designed and made in the U.S.A. These strategic acquisitions and the associated operational and managerial changes finalized the transformation of the way the Company's executive management team, including the CEO as the chief operating decision maker (“CODM”), manage, evaluate and review the business, including how the CODM allocates resources and assesses performance. Therefore, during the fourth quarter ended June 30, 2016, the Company eliminated the use of Mercury Commercial Electronics (“MCE”) and Mercury Defense Systems (“MDS”) as reportable segments because the analogous operating segments ceased to exist. The Company is now comprised of one operating and reportable segment. The Company utilized the management approach for determining its operating segment in accordance with Financial Accounting Standard Boards (“FASB”) Accounting Standards Codification (“ASC”) 280, Segment Reporting (“FASB ASC 280”). In June 2014, the Company initiated a plan to divest its Mercury Intelligence Systems (“MIS”) business, based on the Company's strategic direction and investment priorities focusing on its core business. As a result, the Company's MIS business met the “held for sale” criteria in accordance with FASB ASC 205, Presentation of Financial Statements, as of June 30, 2014 (see Note Q to consolidated financial statements). On January 23, 2015, the Company completed the sale of its MIS business. The consolidated financial statements, excluding the statements of shareholders' equity and cash flows, and the notes to the consolidated financial statements were restated for all periods presented to reflect the discontinuation of the MIS business, in accordance with FASB ASC 205. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. BUSINESS COMBINATIONS The Company utilizes the acquisition method of accounting under FASB ASC 805, Business Combinations, (“FASB ASC 805”), for all transactions and events which it obtains control over one or more other businesses, to recognize the fair value of all assets and liabilities acquired, even if less than one hundred percent ownership is acquired, and in establishing the acquisition date fair value as measurement date for all assets and liabilities assumed. The Company also utilizes FASB ASC 805 for the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in business combinations. Other estimates include:
While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business acquisition date, the estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the purchase price allocation period, which is generally one year from the business acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. For changes in the valuation of intangible assets between the preliminary and final purchase price allocation, the related amortization is adjusted in the period it occurs. Subsequent to the purchase price allocation period, any adjustment to assets acquired or liabilities assumed is included in operating results in the period in which the adjustment is determined. REVENUE RECOGNITION The Company relies upon FASB ASC 605, Revenue Recognition, to account for its revenue transactions. Revenue is recognized upon shipment provided that title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, the sales price is fixed or determinable, collection of the related receivable is reasonably assured, and customer acceptance criteria, if any, have been successfully demonstrated. Out-of-pocket expenses that are reimbursable by the customer are included in revenue and cost of revenue. Certain contracts with customers require the Company to perform tests of its products prior to shipment to ensure their performance complies with the Company’s published product specifications and, on occasion, with additional customer-requested specifications. In these cases, the Company conducts such tests and, if they are completed successfully, includes a written confirmation with each order shipped. As a result, at the time of each product shipment, the Company believes that no further customer testing requirements exist and that there is no uncertainty of acceptance by its customer. The Company uses FASB Accounting Standards Update (“ASU”) No. 2009-13 (“FASB ASU 2009-13”), Multiple-Deliverable Revenue Arrangements. FASB ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable, which includes: (1) vendor-specific objective evidence (“VSOE”) if available; (2) third-party evidence (“TPE”) if VSOE is not available; and (3) best estimated selling price (“BESP”), if neither VSOE nor TPE is available. Additionally, FASB ASU 2009-13 expands the disclosure requirements related to a vendor’s multiple-deliverable revenue arrangements. The Company enters into multiple-deliverable arrangements that may include a combination of hardware components, related integration or other services. These arrangements generally do not include any performance-, cancellation-, termination- or refund-type provisions. In accordance with the provisions of FASB ASU 2009-13, the Company allocates arrangement consideration to each deliverable in an arrangement based on its relative selling price. The Company generally expects that it will not be able to establish VSOE or TPE due to limited single element transactions and the nature of the markets in which the Company competes, and, as such, the Company typically determines its relative selling price using BESP. The Company uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact if the product or service were sold by the Company on a standalone basis. The Company’s determination of BESP involves the consideration of several factors based on the specific facts and circumstances of each arrangement. Specifically, the Company considers the cost to produce the deliverable, the anticipated margin on that deliverable, the selling price and profit margin for similar parts, the Company’s ongoing pricing strategy and policies (as evident from the price list established and updated by management on a regular basis), the value of any enhancements that have been built into the deliverable and the characteristics of the varying markets in which the deliverable is sold. The Company analyzes the selling prices used in its allocation of arrangement consideration at a minimum on an annual basis. Selling prices will be analyzed on a more frequent basis if a significant change in the Company’s business necessitates a more timely analysis or if the Company experiences significant variances in its selling prices. Each deliverable within the Company’s multiple-deliverable revenue arrangements is accounted for as a separate unit of accounting under the guidance of FASB ASU 2009-13 if both of the following criteria are met: the delivered item or items have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. The Company’s revenue arrangements generally do not include a general right of return relative to delivered products. The Company considers a deliverable to have standalone value if the item is sold separately by the Company or another vendor or if the item could be resold by the customer. Deliverables not meeting the criteria for being a separate unit of accounting are combined with a deliverable that does meet that criterion. The appropriate allocation of arrangement consideration and recognition of revenue is then determined for the combined unit of accounting. The Company also engages in long-term contracts for development, production and services activities which it accounts for consistent with FASB ASC 605-35, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, and other relevant revenue recognition accounting literature. The Company considers the nature of these contracts and the types of products and services provided when determining the proper accounting for a particular contract. Generally for fixed-price contracts, other than service-type contracts, revenue is recognized primarily under the percentage of completion method or, for certain short-term contracts, by the completed contract method. Revenue from service-type fixed-price contracts is recognized ratably over the contract period or by other appropriate input or output methods to measure service provided, and contract costs are expensed as incurred. The Company establishes billing terms at the time project deliverables and milestones are agreed. Revenues recognized in excess of the amounts invoiced to clients are classified as unbilled receivables. The Company expects to bill substantially all of the unbilled receivables during fiscal 2017. The risk to the Company on a fixed-price contract is that if estimates to complete the contract change from one period to the next, profit levels will vary from period to period. For time and materials contracts, revenue reflects the number of direct labor hours expended in the performance of a contract multiplied by the contract billing rate, as well as reimbursement of other billable direct costs. For all types of contracts, the Company recognizes anticipated contract losses as soon as they become known and estimable. The Company also considers whether contracts should be combined or segmented in accordance with the applicable criteria under GAAP. The Company combines closely related contracts when all the applicable criteria under GAAP are met. The combination of two or more contracts requires judgment in determining whether the intent of entering into the contracts was effectively to enter into a single project, which should be combined to reflect an overall profit rate. Similarly, the Company may separate a project, which may consist of a single contract or group of contracts, with varying rates of profitability, only if the applicable criteria under GAAP are met. Judgment also is involved in determining whether a single contract or group of contracts may be segmented based on how the arrangement was negotiated and the performance criteria. The decision to combine a group of contracts or segment a contract could change the amount of revenue and gross profit recorded in a given period. The use of contract accounting requires significant judgment relative to estimating total contract revenues and costs, including assumptions relative to the length of time to complete the contract, the nature and complexity of the work to be performed, anticipated increases in wages and prices for subcontractor services and materials, and the availability of subcontractor services and materials. The Company’s estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each long-term contract monthly to assess the contract’s schedule, performance, technical matters and estimated cost at completion. Changes in estimates are applied retrospectively and when adjustments in estimated contract costs are identified, such revisions may result in current period adjustments to earnings applicable to performance in prior periods. Contract costs also may include estimated contract recoveries for matters such as contract changes and claims for unanticipated contract costs. The Company records revenue associated with these matters only when the amount of recovery can be estimated reliably and realization is probable. Assumed recoveries for claims included in contracts in process were not material at June 30, 2016 or 2015. The Company defines service revenues as revenue from activities that are not associated with the design, development, production, or delivery of tangible assets, software or specific capabilities sold. Examples of the Company's service revenues include: analyst services and systems engineering support, consulting, maintenance and other support, testing and installation. The Company combines its product and service revenues into a single class as service revenues are less than 10 percent of total revenues. The Company does not provide its customers with rights of product return, other than those related to warranty provisions that permit repair or replacement of defective goods. The Company accrues for anticipated warranty costs upon product shipment. Revenues from product royalties are recognized upon invoice by the Company. Additionally, all revenues are reported net of government assessed taxes (e.g. sales taxes or value-added taxes). CASH AND CASH EQUIVALENTS Cash equivalents, consisting of highly liquid money market funds and U.S. government and U.S. government agency issues with original maturities of 90 days or less at the date of purchase, are carried at fair market value which approximates cost. RESTRICTED CASH The Company had restricted cash balances of $264 at June 30, 2016 and 2015. The balances are classified as restricted cash on the accompanying consolidated balance sheet and are reflected in non-current assets. The balances at June 30, 2016 and 2015 included restrictions related to certain contracts with foreign customers that require a certificate of deposit to be held at a commercial bank until performance of the contracts have been completed. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures at fair value certain financial assets and liabilities, including cash equivalents, restricted cash and contingent consideration. FASB ASC 820, Fair Value Measurement and Disclosures, specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy: Level 1—Quoted prices for identical instruments in active markets; Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. CONCENTRATION OF CREDIT RISK Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. The Company places its cash and cash equivalents with financial institutions that management believes are of high credit quality. At June 30, 2016 and 2015, the Company had $81,691 and $77,586, respectively, of cash and cash equivalents on deposit or invested with its financial and lending institutions. The Company provides credit to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary. At June 30, 2016, five customers accounted for 50% of the Company's receivables, unbilled receivables and costs in excess of billings. At June 30, 2015, five customers accounted for 55% of the Company’s receivables, unbilled receivables and costs in excess of billings. INVENTORY Inventory is stated at the lower of cost (first-in, first-out) or market value, and consists of materials, labor and overhead. On a quarterly basis, the Company evaluates inventory for net realizable value. Once an item is written down, the value becomes the new inventory cost basis. The Company reduces the value of inventory for excess and obsolete inventory, consisting of on-hand and non-cancelable on-order inventory in excess of estimated usage. The excess and obsolete inventory evaluation is based upon assumptions about future demand, product mix and possible alternative uses. SEGMENT INFORMATION The Company uses the management approach for segment disclosure, which designates the internal organization that is used by management for making operating decisions and assessing performance as the source of its reportable segments. The Company manages its business on the basis of one reportable segment, as a commercial provider of secure processing subsystems for critical defense and intelligence applications. GOODWILL AND INTANGIBLE ASSETS Goodwill is the amount by which the cost of the net assets obtained in a business acquisition exceeded the fair values of the net identifiable assets on the date of purchase. Goodwill is not amortized in accordance with the requirements of FASB ASC 350, Intangibles-Goodwill and Other (“FASB ASC 350”). Goodwill is assessed for impairment at least annually, on a reporting unit basis, or when events and circumstances occur indicating that the recorded goodwill may be impaired. If the book value of a reporting unit exceeds its fair value, the implied fair value of goodwill is compared with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recorded in an amount equal to that excess. Intangible assets result from the Company’s various business acquisitions (see Note H) and certain licensed technologies, and consist of identifiable intangible assets, including completed technology, licensing agreements, customer relationships, trademarks, backlog, and non-compete agreements. Intangible assets are reported at cost, net of accumulated amortization and are either amortized on a straight-line basis over their estimated useful lives of up to twelve years or over the period the economic benefits of the intangible asset are consumed. LONG-LIVED ASSETS Long-lived assets primarily include property and equipment and acquired intangible assets. The Company regularly evaluates its long-lived assets for events and circumstances that indicate a potential impairment in accordance with FASB ASC 360, Property, Plant, and Equipment (“FASB ASC 360”). The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the estimated undiscounted cash flows of the asset as compared to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. Property and equipment are the long-lived, physical assets of the Company acquired for use in the Company’s normal business operations and are not intended for resale by the Company. These assets are recorded at cost. Renewals and betterments that increase the useful lives of the assets are capitalized. Repair and maintenance expenditures that increase the efficiency of the assets are expensed as incurred. Equipment under capital lease is recorded at the present value of the minimum lease payments required during the lease period. Depreciation is based on the estimated useful lives of the assets using the straight-line method (see Note F). As assets are retired or sold, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for major software purchases and software developed for internal use are capitalized and depreciated using the straight-line method over the estimated useful lives of the related assets, which are generally three years. For software developed for internal use, all external direct costs for material and services and certain payroll and related fringe benefit costs are capitalized in accordance with FASB ASC 350. During fiscal 2016, 2015 and 2014, the Company capitalized $0, $0 and $362 of software development costs. DEFERRED REVENUES AND CUSTOMER ADVANCES Deferred revenues consist of deferred product revenue, billings in excess of revenues, and deferred service revenue. Deferred product revenue represents amounts that have been invoiced to customers, but are not yet recognizable as revenue because one or more of the conditions for revenue recognition have not been met. Billings in excess of revenues represents milestone billing arrangements on percentage of completion projects where the billings of the contract exceed recognized revenues. Deferred service revenue primarily represents amounts invoiced to customers for annual maintenance contracts or extended warranty concessions, which are recognized ratably over the term of the arrangements. Customer advances represent deposits received from customers on an order. INCOME TAXES The Company accounts for income taxes under FASB ASC 740, Income Taxes (“FASB ASC 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates for the year in which the differences are expected to reverse. The Company records a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. FASB ASC 740 requires a two-step approach to recognizing and measuring uncertain tax positions. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. PRODUCT WARRANTY ACCRUAL The Company’s product sales generally include a 12 month standard hardware warranty. At time of product shipment, the Company accrues for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar transactions and any specifically identified warranty requirements. Product warranty accrual is included as part of accrued expenses in the accompanying consolidated balance sheets. The following table presents the changes in the Company's product warranty accrual.
RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred. Research and development costs are primarily made up of labor charges and prototype material and development expenses. STOCK-BASED COMPENSATION Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period, and includes an estimate of the awards that will be forfeited. Stock-based compensation expense for the Company’s performance-based restricted stock awards are amortized over the requisite service period using graded vesting. The Company’s other restricted stock awards recognize expense over the requisite service period on a straight-line basis. The Company uses the Black-Scholes valuation model for estimating the fair value on the date of grant of stock options. RETIREMENT OF COMMON STOCK Stock that is repurchased or received in connection with the exercise of stock options or in order to cover tax payment obligations triggered by exercise of stock options or the vesting of restricted stock is retired immediately upon the Company’s repurchase. The Company accounts for this under the cost method and upon retirement the excess amount over par value is charged against additional paid-in capital. NET EARNINGS PER SHARE Basic net earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net earnings per share computation includes the effect of shares which would be issuable upon the exercise of outstanding stock options and the vesting of restricted stock, reduced by the number of shares which are assumed to be purchased by the Company under the treasury stock method. For all periods presented, income (loss) from continuing operations is the control number for determining whether securities are dilutive or not. Basic and diluted weighted average shares outstanding were as follows:
Equity instruments to purchase 7, 453 and 3,526 shares of common stock were not included in the calculation of diluted net earnings per share for the fiscal years ended June 30, 2016, 2015 and 2014, respectively, because the equity instruments were anti-dilutive. ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated other comprehensive income includes foreign currency translation adjustments and unrealized gains on investments. The components of accumulated other comprehensive income were $947 and $776 of accumulated foreign currency translation adjustments at June 30, 2016 and 2015. There were no material accumulated net unrealized gains on investments at June 30, 2016 and 2015. FOREIGN CURRENCY Local currencies are the functional currency for the Company’s subsidiaries in Europe and Japan. The accounts of foreign subsidiaries are translated using exchange rates in effect at period-end for assets and liabilities and at average exchange rates during the period for results of operations. The related translation adjustments are reported in accumulated other comprehensive income in shareholders’ equity. Gains (losses) resulting from foreign currency transactions are included in other income (expense) and were immaterial for all periods presented. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on July 1, 2018 and can be early adopted for the fiscal year beginning July 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, an amendment of the FASB Accounting Standards Codification. The ASU has added additional disclosure requirements to the codification. It requires management to assess, at each interim and annual reporting period, whether substantial doubt exists about the Company’s ability to continue as a going concern. Substantial doubt exists if it is probable (the “probable” threshold under U.S. GAAP has generally been interpreted to be between 75 and 80 percent) that the Company will be unable to meet its obligations as they become due within one year after the date the financial statements are issued or available to be issued (assessment date). The ASU is effective for annual reporting periods beginning after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company does not expect a going concern uncertainty in the foreseeable future, and therefore this guidance is not expected to have a material impact to its consolidated financial statements. In January 2015, the FASB issued ASU No. 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, an amendment of the FASB Accounting Standards Codification. This ASU eliminates the separate presentation of extraordinary items, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or infrequently occurring. The ASU aligns U.S. GAAP more closely with IFRS (International Financial Reporting Standards). Entities will continue to evaluate whether items are unusual in nature or infrequent in their occurrence for disclosure purposes and when estimating the annual effective tax rate for interim reporting purposes. This ASU is effective for interim and annual periods in fiscal years beginning after December 15, 2015. The ASU allows prospective or retrospective applications. Early adoption is permitted if applied from the beginning of the fiscal year of adoption. The Company does not expect this guidance to have a material impact to its consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, an amendment of the FASB Accounting Standards Codification. This ASU changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value for entities that do not measure inventory using the last-in, first-out or retail inventory method. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. The ASU is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those years. The ASU requires prospective adoption and permits early adoption. The Company is evaluating the effect that ASU 2015-11 will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), an amendment of the FASB Accounting Standards Codification. This ASU requires lessees to recognize a right-of-use asset and lease liability for most lease arrangements. This ASU 2016-02 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. The standard mandates a modified retrospective transition method for all entities and early adoption is permitted. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS Effective October 1, 2015, the Company adopted FASB ASU No. 2014-17, Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force), an amendment of the FASB Accounting Standards Codification. This ASU allows an acquired entity to elect to apply pushdown accounting in its separate financial statements on a change-in-control event. The acquired entity elects whether to apply pushdown accounting individually for each change-in-control event, and may apply pushdown accounting during the reporting period in which the change-in-control event occurs. Such adoption did not have any impact to the consolidated financial statements. Effective January 1, 2016, the Company adopted FASB ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, an amendment of the FASB Accounting Standards Codification. This ASU eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. Such adoption did not have any impact to the consolidated financial statements. Effective April 1, 2016, the Company adopted FASB ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, an amendment of the FASB Accounting Standards Codification. This ASU simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as non-current on the balance sheet. The ASU is effective for the Company on July 1, 2017; however, the Company has elected to early adopt as permitted by the guidance. Upon adoption, the Company applied ASU 2015-17 to its deferred taxes and presented deferred taxes as non-current on the consolidated balance sheets on a retrospective basis. Such adoption did not have a material impact on our financial position or results of operations. The following table summarizes the adjustments made as of June 30, 2015 to conform prior period classifications under the new guidance:
Effective April 1, 2016, the Company adopted FASB ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, an amendment of the FASB Accounting Standards Codification. This ASU was issued as part of the FASB’s simplification initiative, and intends to improve the accounting for share-based payment transactions. The ASU changes several aspects of the accounting for share-based payment award transactions, including: (1) accounting for excess tax benefits and shortfalls, (2) forfeitures, (3) tax withholding requirements, and (4) cash flow classifications. The ASU is effective for the Company on July 1, 2017; however, the Company has elected to early adopt on a prospective basis as of the first day of its fiscal year (July 1, 2015) as permitted by the guidance. Upon adoption, recognition of excess tax benefits and tax shortfalls resulted in the recognition of $1,100 of excess tax benefits as a benefit to income taxes in its consolidated statements of operations and comprehensive income (loss). In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The Company has elected to continue to estimate expected forfeitures of employee equity awards to determine the amount of compensation expense to be recognized in each year and the changes in tax withholding requirements had no impact to the Company's consolidated financial statements in fiscal 2016. Effective April 1, 2016, the Company adopted FASB ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, an amendment of the FASB Accounting Standards Codification. This ASU requires entities to present debt issuance costs related to a recognized debt liability on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. Upon adoption, the Company no longer records the cost of issuing debt as a separate deferred financing asset. In the fourth quarter of fiscal 2016, the Company entered into an credit agreement that provided for a $200,000 term loan facility and a $100,000 revolving credit facility. The Company incurred debt issuance costs of $8,026 which were recorded as a direct deduction to the long-term debt and will be amortized over the term of the term loan. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions CARVE-OUT BUSINESS AQUISITION On March 23, 2016, the Company and Microsemi Corporation (“Microsemi”) entered into a Stock Purchase Agreement, pursuant to which, Microsemi agreed to sell all the membership interests in its custom microelectronics, RF and microwave solutions and embedded security operations (the "Carve-Out Business”) to the Company for $300,000 in cash on a cash-free, debt-free basis, subject to a working capital adjustment. On May 2, 2016, the transaction closed and the Company acquired the Carve-Out Business. Pursuant to the terms of the Stock Purchase Agreement, all outstanding Carve-Out Business employee stock awards that were unvested at the closing were replaced by Mercury. The replacement stock awards granted were determined based on a conversion ratio provided in the Stock Purchase Agreement. Mercury funded the acquisition with a combination of a new $200,000 bank term loan facility (see Note L) and cash on hand, which included net proceeds of approximately $92,788 raised from an underwritten common stock public offering (see Note M). The following table presents the net purchase price and the preliminary fair values of the assets and liabilities of the Carve-Out Business:
The amounts above represent the preliminary fair value estimates as of June 30, 2016 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. The preliminary identifiable intangible asset estimates include customer relationships of $70,900, completed technology of $29,700 and backlog of $2,200. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill. The goodwill of $170,243 largely reflects the potential synergies and expansion of the Company's offerings across product lines and markets complementary to the Company's existing products and markets. The Carve-Out Business provides the Company with additional capability and expertise related to embedded security custom microelectronics, and microwave and radio frequency technology. The acquisition is directly aligned with the Company's strategy of expanding its capabilities, services and offerings along the sensor processing chain. The goodwill from this acquisition is reported under the Carve-Out Business reporting unit. As of June 30, 2016, the Company had $29,684 of goodwill deductible for tax purposes. The revenues and net income from the Carve-Out Business included in the Company's consolidated results for the fiscal year ended June 30, 2016 were $16,638 and $1,345, respectively. The Carve-Out Business acquisition costs and other related expenses were $2,012 during the year ended June 30, 2016. Pro Forma Financial Information The following tables summarize the supplemental statements of operations information on an unaudited pro forma basis as if the Carve-Out Business acquisition had occurred on July 1, 2014:
The unaudited pro forma results presented above are for illustrative purposes only for the applicable periods and do not purport to be indicative of the actual results which would have occurred had the transaction been completed as of the beginning of the period, nor are they indicative of results of operations which may occur in the future. LEWIS INNOVATIVE TECHNOLOGIES ACQUISITION On December 16, 2015, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Lewis Innovative Technologies, Inc. (“LIT”) and the holders of the equity interests of LIT. Pursuant to the Share Purchase Agreement, the Company completed its purchase of all of the equity interests in LIT, and LIT became a wholly-owned subsidiary of the Company. Based in Decatur, Alabama, LIT provides advanced security technology and development services necessary for protecting systems critical to national security while meeting strict Department of Defense (“DoD”) program protection requirements. The Company acquired LIT for a cash purchase price of $9,756. The Company funded the purchase with cash on hand. The purchase price was subject to a post-closing adjustment based on a determination of LIT's closing net working capital. In accordance with the Share Purchase Agreement, $1,000 of the purchase price was placed into escrow to support the post-closing working capital adjustment and the sellers' indemnification obligations. The escrow is available for indemnification claims through June 16, 2017. The Company acquired LIT free of debt. The following table presents the net purchase price and the preliminary fair values of the assets and liabilities of LIT:
The amounts above represent the preliminary fair value estimates as of June 30, 2016 and are subject to subsequent adjustment as the Company obtains additional information during the measurement period and finalizes its fair value estimates. The preliminary identifiable intangible asset estimates include completed technology of $3,240, customer relationships of $590 and backlog of $130. Any subsequent adjustments to these fair value estimates occurring during the measurement period will result in an adjustment to goodwill. The goodwill of $5,638 arising from the LIT acquisition largely reflects the potential synergies and expansion of the Company's service offerings across product lines and markets complementary to the Company’s existing products and markets. The LIT acquisition provides the Company with additional capabilities and expertise related to secure embedded processing applications. The acquisition is directly aligned with the Company's strategy of assembling critical and differentiated capabilities across the entire sensor processing chain. The goodwill from the LIT acquisition is included in the Company's Mercury Defense Systems ("MDS") reporting unit. The Company and the shareholders of LIT have agreed to treat the acquisition of LIT as an asset purchase for tax purposes by filing the required election forms under IRC Section 338(h)(10). The Company has estimated the tax value of the intangible assets from this transaction and is amortizing the amount over 15 years for tax purposes. As of June 30, 2016, the Company had $5,638 of goodwill deductible for tax purposes. Pursuant to the completion of the LIT acquisition, the Company incurred $231 of impairment expense related to a pre-existing relationship between the Company and LIT. LIT acquisition costs and other related expenses were immaterial during the year ended June 30, 2016. Additionally, the Company has not furnished pro forma financial information relating to LIT because such information is not material to the Company's financial results. |
Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations During the fourth quarter of fiscal 2014, the Company conducted a strategic review of the Mercury Intelligence Systems (“MIS”) business which encompassed an assessment of MIS' financial performance and contemporaneous future financial projections. The Company, with Board of Director's approval, concluded that a plan to divest the MIS business would be in the best interests of the Company and its shareholders. On January 23, 2015, the Company completed the sale of MIS. In fiscal 2014, the Company's MIS business met the "held for sale" criteria in accordance with FASB ASC 205. As the Company did not anticipate continuing involvement in the operations of MIS after its divestiture, the MIS operating results have been reported as a discontinued operation for all periods presented. The classification as "held for sale" was considered a triggering event for impairment testing under FASB ASC 350 and FASB ASC 360. However, since the Company conducted its annual goodwill impairment testing in its fourth quarter of fiscal 2014, which coincided with the plan to divest the MIS business, the “held for sale” triggering event did not constitute a separate goodwill impairment test under FASB ASC 350 (see Note G). The triggering event, however, did require separate impairment testing of the MIS asset group’s long-lived assets under FASB ASC 360. The goodwill impairment testing conducted in the fourth quarter of fiscal 2014 determined the MIS reporting unit's carrying value of goodwill exceeded its implied fair value, resulting in a $6,687 impairment charge. The impairment charge is reflected within discontinued operations of the Company's accompanying consolidated financial statements. The failure of the first step of the goodwill impairment test was driven by a decline in forecasted results of the MIS reporting unit. The fair value of the MIS reporting unit from the first step of the goodwill impairment test exceeded the fair value of the assets and liabilities of the MIS reporting unit, as determined by the second step of the goodwill impairment test. Testing of the valuation of long-lived assets of the MIS asset group indicated no impairment, as the estimated undiscounted cash flows of the MIS asset group, less estimated costs to sell, significantly exceeded its carrying value. As MIS became a discontinued operation in the fourth quarter of fiscal 2014, the revenues, costs of revenue, and operating expenses of MIS have been reported separately as discontinued operations in the Consolidated Statements of Operations and Comprehensive Income (Loss) for all periods presented. The results of discontinued operations do not reflect interest expense or the allocation of the Company's corporate general and administrative expenses. During the second quarter of fiscal 2015, the Company determined that the MIS reporting unit's carrying value of goodwill exceeded its implied fair value, resulting in a further goodwill impairment charge of 2,283. This impairment charge is reflected within discontinued operations of the Company's accompanying fiscal 2015 consolidated financial statements. On January 23, 2015, the Company completed the sale of MIS for approximately $1,600. The sale resulted in net proceeds of $885 and a loss on disposal of $892, which is reflected within discontinued operations of the Company's accompanying consolidated financial statements. The Company does not have continuing involvement in the operations of MIS after its divestiture. The amounts reported in loss from discontinued operations, net of income taxes were as follows:
There were no balances for the assets and liabilities of the discontinued operations at June 30, 2016 and 2015. The depreciation, amortization, capital expenditures and significant operating and investing non-cash items of the discontinued operations were as follows:
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2016:
The carrying values of cash and cash equivalents, including money market funds, restricted cash, accounts receivable and payable, and accrued liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The fair value of the Company’s certificates of deposit are determined through quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable. The Company determined the face value of its long-term debt approximates fair value at June 30, 2016 due to the recent issuance and stability of interest rates during this period. The cost-method investment, which is presented within other non-current assets in the accompanying consolidated balance sheets, does not have a readily determinable fair value, as such the Company recorded the investment at cost and will continue to evaluate the asset for impairment on a quarterly basis. The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2015:
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Inventory |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory Inventory was comprised of the following:
The $26,324 increase in inventory was primarily due to the inclusion of inventory from the Carve-Out Business. There are no amounts in inventory relating to contracts having production cycles longer than one year. |
Property and Equipment |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment consisted of the following:
The $15,111 increase in property and equipment was primarily due to the inclusion of fixed assets from the Carve-Out Business. In fiscal 2016 and 2015, the Company retired $32 and $733, respectively, of fully depreciated computer equipment and software assets that were no longer in use by the Company. Depreciation expense related to property and equipment for the fiscal years ended June 30, 2016, 2015 and 2014 was $6,900, $6,332 and $7,625, respectively. On April 20, 2007, the Company entered into a sales agreement and a lease agreement in connection with a sale-leaseback of the Company’s headquarters in Chelmsford, Massachusetts. Pursuant to the agreements, the Company sold all land, land improvements, buildings and building improvements related to the facilities and leased back those assets. The term of the lease is ten years and includes two five year options to renew, which the Company does not plan to exercise. Under the provisions of sale-leaseback accounting, the transaction was considered a normal leaseback; thus the realized gain of $11,569 was deferred and will be amortized to other income on a straight-line basis over the initial lease term. The unamortized deferred gain consisted of the following of which the current portion is included in accrued expenses and the non-current portion is separately classified within other non-current liabilities in the accompanying consolidated balance sheets:
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Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill The following table summarizes the changes in goodwill at the Company's three reporting units for the years ended June 30, 2016 and 2015:
In accordance with FASB ASC 350, Intangibles-Goodwill and Other “FASB ASC 350”, the Company determines its reporting units based upon whether discrete financial information is available, if management regularly reviews the operating results of the component, the nature of the products offered to customers and the market characteristics of each reporting unit. A reporting unit is considered to be an operating segment or one level below an operating segment also known as a component. Component level financial information is reviewed by management at: Mercury Commercial Electronics ("MCE") and Mercury Defense Systems ("MDS"). On May 2, 2016, the Company completed the Carve-Out Business acquisition for which discrete financial information is reviewed by management. As defined by FASB ASC 350, goodwill is tested for impairment on an interim basis at the occurrence of certain triggering events or at a minimum on an annual basis. In fiscal 2016, there were no triggering events which required an interim goodwill impairment test. The Company follows FASB ASC 350 in assessing whether the fair value of a reporting unit is less than its carrying amount. As of June 30, 2016, MCE, MDS and the Carve-Out Business had goodwill balances and the annual impairment analysis was performed for each reporting unit in the fourth quarter of fiscal 2016. The results of the Company's step one interim goodwill impairment test indicated that the fair values of the MCE and MDS reporting units were substantially in excess of their carrying values, and the Carve-Out Business reporting unit carrying value was equal to its fair value. As such, step two of the goodwill impairment testing was not required. The valuation of the MCE, MDS reporting units was based upon a discounted cash flow model and corroborated by a market-based analysis which compares the trading multiples of public companies in similar lines of business. The valuation of the Carve-Out Business reporting unit, as of May 2, 2016, was determined using the income approach based upon a discounted cash flow model, which we also utilized for our May 31, 2016 impairment test because of the proximity in time and no changes in financial projections. |
Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets Intangible assets consisted of the following:
Estimated future amortization expense for intangible assets remaining at June 30, 2016 is as follows:
The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the Carve-Out Business acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2016.
The following table summarizes the preliminary estimated fair value of acquired intangible assets arising as a result of the LIT acquisition. These assets are included in the Company's gross and net carrying amounts as of June 30, 2016.
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Restructuring Plan |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Plan | Restructuring During fiscal 2016, the Company incurred restructuring and other charges of $1,240, primarily related to executive severance and facility consolidation. During fiscal 2015, the Company incurred restructuring and other charges of $3,175 as the Company completed its acquisition integration plan. Additionally, during the fourth quarter of fiscal 2015, the Company eliminated 16 positions, primarily in operations. During fiscal 2014, the Company announced a restructuring plan ("2014 Plan") that was implemented as part of the final phase of integration activities relating to the Company’s recent acquisitions. The acquisition integration plan included the consolidation of manufacturing facilities, centralization of administrative functions using common information systems and processes, and realignment of research and development resources. The acquisition integration plan included the elimination of 70 positions largely in engineering, manufacturing and administrative functions. Additionally, the Company closed four facilities relocating all related activities to the Company's Advanced Microelectronics Center ("AMC") in Hudson, New Hampshire. The Company also completed the first phase of the Chelmsford, Massachusetts headquarters consolidation in the fourth quarter of fiscal 2014. These restructuring and other charges associated with the Company's fiscal 2014 restructuring plan amounted to $5,443. In the event that the Company is unable to sublease the unoccupied portion of its headquarters complex in Chelmsford, Massachusetts, it will incur nominal, periodic restructuring charges through fiscal 2017. All of the restructuring and other charges are classified as operating expenses in the consolidated statements of operations and any remaining severance obligations are expected to be paid within the next twelve months. The remaining restructuring liability is classified as accrued expenses in the consolidated balance sheets. The following table presents the detail of expenses for the Company’s restructuring plans:
(*) Reversals result from the unused outplacement services and operating costs. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of income (loss) from continuing operations before income taxes and income tax expense (benefit) were as follows:
The following is the reconciliation between the statutory federal income tax rate and the Company’s effective income tax (benefit) rate for continuing operations:
The components of the Company’s net deferred tax assets (liabilities) for continuing operations were as follows:
At June 30, 2016, the Company evaluated the need for a valuation allowance on deferred tax assets. In assessing whether the deferred tax assets are realizable, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the Company's past operating results, its forecast of future earnings, future taxable income, and tax planning strategies. The Company continues to conclude that it is more likely than not that most domestic deferred tax assets would be realizable based on recent financial performance, projected future taxable income and the reversal of existing deferred tax liabilities. The Company continues to record a full valuation allowance on certain state research and development (“R&D”) and investment tax credits, and capital loss carryforwards as of June 30, 2016 as management continues to believe that it is not more likely than not that these deferred tax assets would be realized. Any future reversals of the valuation allowance will impact income tax expense. The Company had federal research and development credit carryforwards of $959, which will expire from 2032 through 2033. The Company had state research and development credit carryforwards of $14,798, which will expire from 2016 through 2029. The Company also had state investment tax credits carryforwards of $113. Upon consideration of changing business conditions and cash position in its foreign subsidiaries, management has determined that it does not need to indefinitely reinvest the earnings of certain foreign subsidiaries. Therefore, the Company has accrued deferred taxes in association with $724 in undistributed earnings and profits. The Company files income tax returns in all jurisdictions in which it operates. The Company has established reserves to provide for additional income taxes that management believes will more likely than not be due in future years as these previously filed tax returns are audited. These reserves have been established based upon management’s assessment as to the potential exposures. All tax reserves are analyzed quarterly and adjustments are made as events occur and warrant modification. The changes in the Company’s reserves for unrecognized income tax benefits are summarized as follows:
The $1,566 of unrecognized tax benefits as of June 30, 2016, if released, would reduce income tax expense. The Company’s major tax jurisdiction is the U.S. and the open tax years are fiscal 2011 through 2016. The Company is currently under audit by the Internal Revenue Service for fiscal year 2013. As of June 30, 2016, the IRS has presented an agreement that would lead to the conclusion of the audit; the Company continues to negotiate specific terms of this agreement. It is reasonably possible that within the next 12 months the Company’s unrecognized tax benefits, exclusive of interest, may decrease by up to $757 at the conclusion of the audit. We expect that the decrease, if recognized, would not affect the effective tax rate. The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. As of June 30, 2016 and 2015, the total amount of gross interest and penalties accrued was $258 and $62, respectively. In connection with tax matters, the Company recognized interest and penalty expense in fiscals 2016, 2015 and 2014 of $204, $26 and $5, respectively. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies LEGAL CLAIMS The Company is subject to litigation, claims, investigations and audits arising from time to time in the ordinary course of our business. Although legal proceedings are inherently unpredictable, the Company believes that it has valid defenses with respect to any matters currently pending against the Company and intends to defend itself vigorously. The outcome of these matters, individually and in the aggregate, is not expected to have a material impact on the Company's cash flows, results of operations, or financial position. INDEMNIFICATION OBLIGATIONS The Company's standard product sales and license agreements entered into in the ordinary course of business typically contain an indemnification provision pursuant to which the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party in connection with any patent, copyright or other intellectual property infringement claim by any third party with respect to the Company's products. Such provisions generally survive termination or expiration of the agreements. The potential amount of future payments the Company could be required to make under these indemnification provisions is, in some instances, unlimited. In connection with the sale of the Company’s former MIS business, the Company provided indemnification to the buyer of the business. The Company’s indemnification obligations generally cover the buyer for damages resulting from breaches of representations, warranties and covenants contained in the purchase and sale agreement and generally cover pre-closing tax liabilities of the business. The Company’s indemnification obligations regarding the MIS business are generally subject to caps. PURCHASE COMMITMENTS As of June 30, 2016, the Company has entered into non-cancelable purchase commitments for certain inventory components and services used in its normal operations. The purchase commitments covered by these agreements are for less than one year and aggregate to $32,195. LEASE COMMITMENTS The Company leases certain facilities, machinery and equipment under various cancelable and non-cancelable operating leases that expire at various dates through fiscal 2029. The leases contain various renewal options. Rental charges are subject to escalation for increases in certain operating costs of the lessor. For tenant improvement allowances and rent holidays, the Company records a deferred rent liability on the consolidated balance sheets and amortizes the deferred rent over the terms of the leases as reductions to rent expense on the consolidated statements of operations. Rental expense during the fiscal years ended June 30, 2016, 2015, and 2014 was $4,015, $3,777 and $4,213, respectively. Minimum lease payments under the Company’s non-cancelable operating leases are as follows:
OTHER As part of the Company's strategy for growth, the Company continues to explore acquisitions or strategic alliances. The associated acquisition costs incurred in the form of professional fees and services may be material to the future periods in which they occur, regardless of whether the acquisition is ultimately completed. The Company may elect from time to time to purchase and subsequently retire shares of common stock in order to settle an individual employees’ tax liability associated with vesting of a restricted stock award or exercise of stock options. These transactions would be treated as a use of cash in financing activities in the Company's statement of cash flows. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt TERM LOAN AND REVOLVING CREDIT FACILITIES On May 2, 2016, the Company and certain of its subsidiaries, as guarantors, entered into a Credit Agreement (the “Credit Agreement”) with a syndicate of commercial banks and Bank of America, N.A acting as the administrative agent. The Credit Agreement provides for a $200,000 term loan facility ("Term Loan") and a $100,000 revolving credit facility ("Revolver"). In connection with the issuance of Term Loan, the Company incurred $8,026 of debt issuance costs, which are recorded as a direct reduction to long-term debt on the face of the consolidated balance sheets. The debt issuance costs will be amortized to non-cash interest expense using the effective interest method over the term of the Term Loan. Maturity The Term Loan facility has a five year maturity subject to the amortization payments described below. The revolving credit facility has a five year maturity. Interest Rates and Fees Borrowings under the Credit Agreement bear interest, at the Company’s option, at floating rates tied to LIBOR or the prime rate plus an applicable percentage. The applicable percentage has initially been set at 2.0% and in future fiscal quarters will be established pursuant to a pricing grid based on the Company’s total net leverage ratio. In addition to interest on the aggregate outstanding principal amounts of any borrowings, the Company will also pay a quarterly commitment fee on the unutilized commitments under the Revolver, which fee has initially been set at 0.3% per annum and in future fiscal quarters will be established pursuant to a pricing grid based on the Company’s total net leverage ratio. The Company will also pay customary letter of credit and agency fees. The quarterly commitment fee, letter of credit and agency fees are reported as financing and other related cost in the accompanying consolidated financial statements. As of June 30, 2016, the stated interest rate of the Term Loan was 2.6%. Prepayments The Credit Agreement provides for quarterly amortization payments on the Term Loan, beginning with 5.0% per annum amortization and increasing to 12.5% per annum amortization over the five year term of the Term Loan. The Company is required to make mandatory prepayments of the Term Loan with the proceeds of certain non-ordinary course asset sales or the proceeds of certain debt issuances. Subject to minimum notice requirements, borrowings under the Credit Agreement may be voluntarily prepaid at any time without premium or penalty. Covenants and Events of Default The Credit Agreement provides for customary negative covenants, including, among other things and subject to certain significant exceptions, restrictions on the incurrence of debt or guarantees, the creation of liens, the making of certain investments, loans and acquisitions, mergers and dissolutions, the sale of assets including capital stock of subsidiaries, the payment of dividends, the repayment or amending of junior debt, altering the business conducted, engaging in transactions with affiliates and entering into agreements limiting subsidiary dividends and distributions. The Credit Agreement also requires the Company to comply with certain financial covenants, including a quarterly minimum consolidated cash interest charge ratio test and a quarterly maximum consolidated total net leverage ratio test. The Credit Agreement also provides for customary representations and warranties, affirmative covenants and events of default (including, among others, the failure to make required payments of principal and interest, certain insolvency events, and an event of default upon a change of control). If an event of default occurs, the lenders under the Credit Agreement will be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement and all actions permitted to be taken by a secured creditor. As of June 30, 2016, the Company was in compliance with all covenants and conditions under the Credit Agreement. Guarantees and Security The Company’s obligations under the Credit Agreement are guaranteed by certain of the Company’s material domestic wholly-owned restricted subsidiaries (the “Guarantors”). The obligations of both the Company and the Guarantors are secured by a perfected security interest in substantially all of the assets of the Company and the Guarantors, in each case, now owned or later acquired, including a pledge of all of the capital stock of substantially all of the Company’s domestic wholly-owned restricted subsidiaries and 65% of the capital stock of certain of its foreign restricted subsidiaries, subject in each case to the exclusion of certain assets and additional exceptions. The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which is filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated May 2, 2016. There were no borrowings under the Revolver as of June 30, 2016. The following summarizes the future cash payment obligations (excluding interest) as of June 30, 2016:
FORMER CREDIT AGREEMENT WITH KEYBANK On October 12, 2012, the Company entered into a credit agreement with a syndicate of commercial banks, with KeyBank National Association acting as the administrative agent. The credit agreement provided for a $200,000 senior unsecured revolving line of credit. In connection with the closing of the acquisition of the Carve-Out Business and entering into the new term loan and revolving credit facilities discussed above, the Company terminated its existing revolving credit agreement with KeyBank on May 2, 2016. Deferred costs of $230 associated with this agreement were recorded to other expenses upon termination of the credit agreement. |
Shareholders' Equity |
12 Months Ended |
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Jun. 30, 2016 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity PREFERRED STOCK The Company is authorized to issue 1,000 shares of preferred stock with a par value of $0.01 per share. EQUITY OFFERING On April 4, 2016, the Company commenced an offering of 4,500 shares of its common stock pursuant to an underwritten public offering (the “Offering”). In connection with the Offering, the Company granted the underwriters an over-allotment option for 30 days to purchase up to an additional 675 shares of its common stock. The Offering was made pursuant to a shelf registration statement previously filed with the SEC on August 15, 2014. On April 13, 2016, the Company closed the Offering, including the full over-allotment allocation, selling an aggregate of 5,175 shares of common stock for total net proceeds of $92,788 after $6,851 of expenses associated with the equity offering including underwriting fees and other related expenses. |
Employee Benefit Plans |
12 Months Ended |
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Jun. 30, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The Company maintains a qualified 401(k) plan (the “401(k) Plan”) for its U.S. employees. During fiscal 2016, 2015 and 2014, the Company matched employee contributions up to 3% of eligible compensation. The Company may also make optional contributions to the plan for any plan year at its discretion. Expense recognized by the Company for matching contributions related to the 401(k) plan was $1,874, $1,934 and $1,896 during the fiscal years ended June 30, 2016, 2015, and 2014, respectively. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation STOCK OPTION PLANS The number of shares authorized for issuance under the Company’s 2005 Stock Incentive Plan, as amended and restated (the “2005 Plan”), is 15,252 shares at June 30, 2016. As reflected in the Company's registration statement on Form S-8 filed on February 4, 2016, the Company's number of shares authorized for issuance under the 2005 Plan increased by 2 shares as a result of forfeitures, cancellations and/or terminations from the Company's 1997 Stock Option Plan (the "1997 Plan"). The 2005 Plan will be increased by any future cancellations, forfeitures or terminations (other than by exercise) under the 1997 Plan. The 2005 Plan provides for the grant of non-qualified and incentive stock options, restricted stock, stock appreciation rights and deferred stock awards to employees and non-employees. All stock options are granted with an exercise price of not less than 100% of the fair value of the Company’s common stock at the date of grant and the options generally have a term of seven years. There were 2,811 shares available for future grant under the 2005 Plan at June 30, 2016. The number of shares authorized for issuance under the 1997 Plan was 8,650 shares, of which 100 shares could be issued pursuant to restricted stock grants. The 1997 Plan provided for the grant of non-qualified and incentive stock options and restricted stock to employees and non-employees. All stock options were granted with an exercise price of not less than 100% of the fair value of the Company’s common stock at the date of grant. The options typically vest over periods of zero to four years and have a maximum term of 10 years. Following shareholder approval of the 2005 Plan on November 14, 2005, the Company’s Board of Directors determined that no further grants of stock options or other awards would be made under the 1997 Plan, and the 1997 Plan subsequently expired in June 2007. During fiscal 2015 and 2016, as part of the Company's ongoing annual equity grant program for employees, the Company granted performance-based restricted stock awards to certain executives pursuant to the 2005 Plan. These performance awards vest annually over a three year requisite service period subject to the achievement of specific financial performance targets related to adjusted EBITDA as a percentage of revenue. Based on the performance targets, these awards require graded vesting that results in more rapid expense recognition compared to traditional time-based vesting over the same vesting period. The Company monitors the probability of achieving the performance targets on a quarterly basis and may adjust periodic compensation expense accordingly. EMPLOYEE STOCK PURCHASE PLAN The number of shares authorized for issuance under the Company’s 1997 Employee Stock Purchase Plan, as amended and restated (“ESPP”), is 1,800 shares. Under the ESPP, rights are granted to purchase shares of common stock at 85% of the lesser of the market value of such shares at either the beginning or the end of each six-month offering period. The ESPP permits employees to purchase common stock through payroll deductions, which may not exceed 10% of an employee’s compensation as defined in the ESPP. The number of shares issued under the ESPP during fiscal years 2016, 2015, and 2014 was 88, 79 and 92, respectively. Shares available for future purchase under the ESPP totaled 398 at June 30, 2016. STOCK OPTION AND AWARD ACTIVITY The following table summarizes activity of the Company’s stock option plans since June 30, 2014:
The intrinsic value of the options exercised during fiscal years 2016, 2015, and 2014 was $1,976, $3,373 and $578, respectively. Non-vested stock options are subject to the risk of forfeiture until the fulfillment of specified conditions. As of June 30, 2016, there was $0 of total unrecognized compensation cost related to non-vested options granted under the Company’s stock plans. As of June 30, 2015, there was $6 of total unrecognized compensation cost related to non-vested options granted under the Company’s stock plans that was expected to be recognized over a weighted-average period of 0.13 years from June 30, 2015. There were no stock options granted during fiscal years 2016, 2015 or 2014. The following table summarizes the status of the Company’s non-vested restricted stock awards since June 30, 2014:
The total fair value of restricted stock awards vested during fiscal year 2016, 2015, and 2014 was $12,185, $9,078 and $6,543, respectively. Non-vested restricted stock awards are subject to the risk of forfeiture until the fulfillment of specified conditions. As of June 30, 2016, there was $10,938 of total unrecognized compensation cost related to non-vested restricted stock awards granted under the Company’s stock plans that is expected to be recognized over a weighted-average period of 1.6 years from June 30, 2016. As of June 30, 2015, there was $11,080 of total unrecognized compensation cost related to non-vested restricted stock awards granted under the Company’s stock plans that is expected to be recognized over a weighted-average period of 1.9 years from June 30, 2015. STOCK-BASED COMPENSATION EXPENSE AND ASSUMPTIONS The Company recognizes expense for its share-based payment plans in the consolidated statements of operations for the fiscal years 2016, 2015, and 2014 in accordance with FASB ASC 718. The Company had $93 of capitalized stock-based compensation expense on the consolidated balance sheet as of June 30, 2016. In the prior years, the Company did not capitalize any such costs on the consolidated balance sheets, as such costs that qualified for capitalization were not material. Under the fair value recognition provisions of FASB ASC 718, stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the service period. The following table presents share-based compensation expenses from continuing operations included in the Company’s consolidated statement of operations:
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Operating Segment, Geographic Information and Significant Customers |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment, Geographic Information and Significant Customers | Operating Segment, Geographic Information and Significant Customers Operating segments are defined as components of an enterprise evaluated regularly by the Company's chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. Prior to the fourth quarter of fiscal 2016, the Company's operating segments were: Mercury Commercial Electronics and Mercury Defense Systems. During fiscal 2016, the Company completed a series of important internal organizational structure changes to align and scale the Company into one business. In addition, over the past several years, the Company has completed several acquisitions to support its strategy of creating a better alternative for affordable, secure processing subsystems designed and made in the U.S.A. These acquisitions culminated with the $300,000 acquisition of the Carve-Out Business on May 2, 2016. These strategic changes finalized the transformation of the CODM’s management, evaluation and review of the business, including how he allocates resources and assesses performance. Therefore, during the fourth quarter ended June 30, 2016, the Company’s previous MCE and MDS operating segments no longer continued to exist and the Company is now comprised of one operating and reportable segment. The Company utilized the management approach for determining its operating segment in accordance with FASB ASC 280. The geographic distribution of the Company's revenues is summarized as follows:
Foreign revenue is based on the country in which the Company's legal subsidiary is domiciled. Identifiable long-lived assets exclude goodwill and intangible assets. Customers comprising 10% or more of the Company's revenues for the periods are as follows:
* Indicates that the amount is less than 10% of the Company's revenues for the respective period. While the Company typically has customers from which it derives 10% or more of its revenue, the sales to each of these customers are spread across multiple programs and platforms. Programs comprising 10% or more of the Company's revenues for the periods are as follows:
* Indicates that the amount is less than 10% of the Company's revenues for the respective period. |
Subsequent Events |
12 Months Ended |
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Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events from the date of the consolidated balance sheet through the date the consolidated financial statements were issued. |
Supplementary Information (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Information (Unaudited) | SUPPLEMENTARY INFORMATION (UNAUDITED) The following sets forth certain unaudited consolidated quarterly statements of operations data for each of the Company’s last eight quarters. In management’s opinion, this quarterly information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation for the periods presented. Such quarterly results are not necessarily indicative of future results of operations and should be read in conjunction with the audited consolidated financial statements of the Company and the notes thereto included elsewhere herein.
(1) Upon adoption of FASB ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, the Company recognized $1,100 of excess tax benefits in the fourth quarter as a benefit to income taxes in its consolidated statements of operations and comprehensive income (loss) for the year ended June 30, 2016. The tax benefit (provision) impacts were restated above to show the effect of this adoption as if it had occurred at the beginning of fiscal 2016. The tax benefit (provision) impacts were $896, $247, $(169), and $126 for the 1st quarter, 2nd quarter, 3rd quarter and 4th quarter, respectively. Income from continuing operations, net income, and net income amounts per share were also updated as a result of the adjustment to the income tax provision. Due to the effects of rounding, the sum of the four quarters does not equal the annual total. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles Of Consolidation | PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. |
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Business Combinations | BUSINESS COMBINATIONS The Company utilizes the acquisition method of accounting under FASB ASC 805, Business Combinations, (“FASB ASC 805”), for all transactions and events which it obtains control over one or more other businesses, to recognize the fair value of all assets and liabilities acquired, even if less than one hundred percent ownership is acquired, and in establishing the acquisition date fair value as measurement date for all assets and liabilities assumed. The Company also utilizes FASB ASC 805 for the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in business combinations. Other estimates include:
While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the business acquisition date, the estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the purchase price allocation period, which is generally one year from the business acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. For changes in the valuation of intangible assets between the preliminary and final purchase price allocation, the related amortization is adjusted in the period it occurs. Subsequent to the purchase price allocation period, any adjustment to assets acquired or liabilities assumed is included in operating results in the period in which the adjustment is determined. |
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Use Of Estimates | USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
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Revenue Recognition | REVENUE RECOGNITION The Company relies upon FASB ASC 605, Revenue Recognition, to account for its revenue transactions. Revenue is recognized upon shipment provided that title and risk of loss have passed to the customer, there is persuasive evidence of an arrangement, the sales price is fixed or determinable, collection of the related receivable is reasonably assured, and customer acceptance criteria, if any, have been successfully demonstrated. Out-of-pocket expenses that are reimbursable by the customer are included in revenue and cost of revenue. Certain contracts with customers require the Company to perform tests of its products prior to shipment to ensure their performance complies with the Company’s published product specifications and, on occasion, with additional customer-requested specifications. In these cases, the Company conducts such tests and, if they are completed successfully, includes a written confirmation with each order shipped. As a result, at the time of each product shipment, the Company believes that no further customer testing requirements exist and that there is no uncertainty of acceptance by its customer. The Company uses FASB Accounting Standards Update (“ASU”) No. 2009-13 (“FASB ASU 2009-13”), Multiple-Deliverable Revenue Arrangements. FASB ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable, which includes: (1) vendor-specific objective evidence (“VSOE”) if available; (2) third-party evidence (“TPE”) if VSOE is not available; and (3) best estimated selling price (“BESP”), if neither VSOE nor TPE is available. Additionally, FASB ASU 2009-13 expands the disclosure requirements related to a vendor’s multiple-deliverable revenue arrangements. The Company enters into multiple-deliverable arrangements that may include a combination of hardware components, related integration or other services. These arrangements generally do not include any performance-, cancellation-, termination- or refund-type provisions. In accordance with the provisions of FASB ASU 2009-13, the Company allocates arrangement consideration to each deliverable in an arrangement based on its relative selling price. The Company generally expects that it will not be able to establish VSOE or TPE due to limited single element transactions and the nature of the markets in which the Company competes, and, as such, the Company typically determines its relative selling price using BESP. The Company uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact if the product or service were sold by the Company on a standalone basis. The Company’s determination of BESP involves the consideration of several factors based on the specific facts and circumstances of each arrangement. Specifically, the Company considers the cost to produce the deliverable, the anticipated margin on that deliverable, the selling price and profit margin for similar parts, the Company’s ongoing pricing strategy and policies (as evident from the price list established and updated by management on a regular basis), the value of any enhancements that have been built into the deliverable and the characteristics of the varying markets in which the deliverable is sold. The Company analyzes the selling prices used in its allocation of arrangement consideration at a minimum on an annual basis. Selling prices will be analyzed on a more frequent basis if a significant change in the Company’s business necessitates a more timely analysis or if the Company experiences significant variances in its selling prices. Each deliverable within the Company’s multiple-deliverable revenue arrangements is accounted for as a separate unit of accounting under the guidance of FASB ASU 2009-13 if both of the following criteria are met: the delivered item or items have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company. The Company’s revenue arrangements generally do not include a general right of return relative to delivered products. The Company considers a deliverable to have standalone value if the item is sold separately by the Company or another vendor or if the item could be resold by the customer. Deliverables not meeting the criteria for being a separate unit of accounting are combined with a deliverable that does meet that criterion. The appropriate allocation of arrangement consideration and recognition of revenue is then determined for the combined unit of accounting. The Company also engages in long-term contracts for development, production and services activities which it accounts for consistent with FASB ASC 605-35, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, and other relevant revenue recognition accounting literature. The Company considers the nature of these contracts and the types of products and services provided when determining the proper accounting for a particular contract. Generally for fixed-price contracts, other than service-type contracts, revenue is recognized primarily under the percentage of completion method or, for certain short-term contracts, by the completed contract method. Revenue from service-type fixed-price contracts is recognized ratably over the contract period or by other appropriate input or output methods to measure service provided, and contract costs are expensed as incurred. The Company establishes billing terms at the time project deliverables and milestones are agreed. Revenues recognized in excess of the amounts invoiced to clients are classified as unbilled receivables. The Company expects to bill substantially all of the unbilled receivables during fiscal 2017. The risk to the Company on a fixed-price contract is that if estimates to complete the contract change from one period to the next, profit levels will vary from period to period. For time and materials contracts, revenue reflects the number of direct labor hours expended in the performance of a contract multiplied by the contract billing rate, as well as reimbursement of other billable direct costs. For all types of contracts, the Company recognizes anticipated contract losses as soon as they become known and estimable. The Company also considers whether contracts should be combined or segmented in accordance with the applicable criteria under GAAP. The Company combines closely related contracts when all the applicable criteria under GAAP are met. The combination of two or more contracts requires judgment in determining whether the intent of entering into the contracts was effectively to enter into a single project, which should be combined to reflect an overall profit rate. Similarly, the Company may separate a project, which may consist of a single contract or group of contracts, with varying rates of profitability, only if the applicable criteria under GAAP are met. Judgment also is involved in determining whether a single contract or group of contracts may be segmented based on how the arrangement was negotiated and the performance criteria. The decision to combine a group of contracts or segment a contract could change the amount of revenue and gross profit recorded in a given period. The use of contract accounting requires significant judgment relative to estimating total contract revenues and costs, including assumptions relative to the length of time to complete the contract, the nature and complexity of the work to be performed, anticipated increases in wages and prices for subcontractor services and materials, and the availability of subcontractor services and materials. The Company’s estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each long-term contract monthly to assess the contract’s schedule, performance, technical matters and estimated cost at completion. Changes in estimates are applied retrospectively and when adjustments in estimated contract costs are identified, such revisions may result in current period adjustments to earnings applicable to performance in prior periods. Contract costs also may include estimated contract recoveries for matters such as contract changes and claims for unanticipated contract costs. The Company records revenue associated with these matters only when the amount of recovery can be estimated reliably and realization is probable. Assumed recoveries for claims included in contracts in process were not material at June 30, 2016 or 2015. The Company defines service revenues as revenue from activities that are not associated with the design, development, production, or delivery of tangible assets, software or specific capabilities sold. Examples of the Company's service revenues include: analyst services and systems engineering support, consulting, maintenance and other support, testing and installation. The Company combines its product and service revenues into a single class as service revenues are less than 10 percent of total revenues. The Company does not provide its customers with rights of product return, other than those related to warranty provisions that permit repair or replacement of defective goods. The Company accrues for anticipated warranty costs upon product shipment. Revenues from product royalties are recognized upon invoice by the Company. Additionally, all revenues are reported net of government assessed taxes (e.g. sales taxes or value-added taxes). |
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Cash And Cash Equivalents | CASH AND CASH EQUIVALENTS Cash equivalents, consisting of highly liquid money market funds and U.S. government and U.S. government agency issues with original maturities of 90 days or less at the date of purchase, are carried at fair market value which approximates cost. RESTRICTED CASH The Company had restricted cash balances of $264 at June 30, 2016 and 2015. The balances are classified as restricted cash on the accompanying consolidated balance sheet and are reflected in non-current assets. The balances at June 30, 2016 and 2015 included restrictions related to certain contracts with foreign customers that require a certificate of deposit to be held at a commercial bank until performance of the contracts have been completed. |
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Fair Value Measurement, Policy [Policy Text Block] | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures at fair value certain financial assets and liabilities, including cash equivalents, restricted cash and contingent consideration. FASB ASC 820, Fair Value Measurement and Disclosures, specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy: Level 1—Quoted prices for identical instruments in active markets; Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
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Concentration Of Credit Risk | CONCENTRATION OF CREDIT RISK Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. The Company places its cash and cash equivalents with financial institutions that management believes are of high credit quality. At June 30, 2016 and 2015, the Company had $81,691 and $77,586, respectively, of cash and cash equivalents on deposit or invested with its financial and lending institutions. The Company provides credit to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary. At June 30, 2016, five customers accounted for 50% of the Company's receivables, unbilled receivables and costs in excess of billings. At June 30, 2015, five customers accounted for 55% of the Company’s receivables, unbilled receivables and costs in excess of billings. |
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Inventory | INVENTORY Inventory is stated at the lower of cost (first-in, first-out) or market value, and consists of materials, labor and overhead. On a quarterly basis, the Company evaluates inventory for net realizable value. Once an item is written down, the value becomes the new inventory cost basis. The Company reduces the value of inventory for excess and obsolete inventory, consisting of on-hand and non-cancelable on-order inventory in excess of estimated usage. The excess and obsolete inventory evaluation is based upon assumptions about future demand, product mix and possible alternative uses. |
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Goodwill And Acquired Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill is the amount by which the cost of the net assets obtained in a business acquisition exceeded the fair values of the net identifiable assets on the date of purchase. Goodwill is not amortized in accordance with the requirements of FASB ASC 350, Intangibles-Goodwill and Other (“FASB ASC 350”). Goodwill is assessed for impairment at least annually, on a reporting unit basis, or when events and circumstances occur indicating that the recorded goodwill may be impaired. If the book value of a reporting unit exceeds its fair value, the implied fair value of goodwill is compared with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recorded in an amount equal to that excess. Intangible assets result from the Company’s various business acquisitions (see Note H) and certain licensed technologies, and consist of identifiable intangible assets, including completed technology, licensing agreements, customer relationships, trademarks, backlog, and non-compete agreements. Intangible assets are reported at cost, net of accumulated amortization and are either amortized on a straight-line basis over their estimated useful lives of up to twelve years or over the period the economic benefits of the intangible asset are consumed. |
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Long-Lived Assets | LONG-LIVED ASSETS Long-lived assets primarily include property and equipment and acquired intangible assets. The Company regularly evaluates its long-lived assets for events and circumstances that indicate a potential impairment in accordance with FASB ASC 360, Property, Plant, and Equipment (“FASB ASC 360”). The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the estimated undiscounted cash flows of the asset as compared to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. |
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Property And Equipment | Property and equipment are the long-lived, physical assets of the Company acquired for use in the Company’s normal business operations and are not intended for resale by the Company. These assets are recorded at cost. Renewals and betterments that increase the useful lives of the assets are capitalized. Repair and maintenance expenditures that increase the efficiency of the assets are expensed as incurred. Equipment under capital lease is recorded at the present value of the minimum lease payments required during the lease period. Depreciation is based on the estimated useful lives of the assets using the straight-line method (see Note F). As assets are retired or sold, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for major software purchases and software developed for internal use are capitalized and depreciated using the straight-line method over the estimated useful lives of the related assets, which are generally three years. For software developed for internal use, all external direct costs for material and services and certain payroll and related fringe benefit costs are capitalized in accordance with FASB ASC 350. During fiscal 2016, 2015 and 2014, the Company capitalized $0, $0 and $362 of software development costs. |
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Deferred Revenues And Customer Advances | DEFERRED REVENUES AND CUSTOMER ADVANCES Deferred revenues consist of deferred product revenue, billings in excess of revenues, and deferred service revenue. Deferred product revenue represents amounts that have been invoiced to customers, but are not yet recognizable as revenue because one or more of the conditions for revenue recognition have not been met. Billings in excess of revenues represents milestone billing arrangements on percentage of completion projects where the billings of the contract exceed recognized revenues. Deferred service revenue primarily represents amounts invoiced to customers for annual maintenance contracts or extended warranty concessions, which are recognized ratably over the term of the arrangements. Customer advances represent deposits received from customers on an order. |
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Income Taxes | INCOME TAXES The Company accounts for income taxes under FASB ASC 740, Income Taxes (“FASB ASC 740”). The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates for the year in which the differences are expected to reverse. The Company records a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. FASB ASC 740 requires a two-step approach to recognizing and measuring uncertain tax positions. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. |
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Product Warranty Accrual | PRODUCT WARRANTY ACCRUAL The Company’s product sales generally include a 12 month standard hardware warranty. At time of product shipment, the Company accrues for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar transactions and any specifically identified warranty requirements. Product warranty accrual is included as part of accrued expenses in the accompanying consolidated balance sheets. |
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Research And Development Costs | RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred. Research and development costs are primarily made up of labor charges and prototype material and development expenses. |
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Stock-Based Compensation | STOCK-BASED COMPENSATION Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period, and includes an estimate of the awards that will be forfeited. Stock-based compensation expense for the Company’s performance-based restricted stock awards are amortized over the requisite service period using graded vesting. The Company’s other restricted stock awards recognize expense over the requisite service period on a straight-line basis. The Company uses the Black-Scholes valuation model for estimating the fair value on the date of grant of stock options. |
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Segment Reporting, Policy [Policy Text Block] | SEGMENT INFORMATION The Company uses the management approach for segment disclosure, which designates the internal organization that is used by management for making operating decisions and assessing performance as the source of its reportable segments. The Company manages its business on the basis of one reportable segment, as a commercial provider of secure processing subsystems for critical defense and intelligence applications. |
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Retirement of Common Stock | RETIREMENT OF COMMON STOCK Stock that is repurchased or received in connection with the exercise of stock options or in order to cover tax payment obligations triggered by exercise of stock options or the vesting of restricted stock is retired immediately upon the Company’s repurchase. The Company accounts for this under the cost method and upon retirement the excess amount over par value is charged against additional paid-in capital. |
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Net Earnings Per Share | NET EARNINGS PER SHARE Basic net earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net earnings per share computation includes the effect of shares which would be issuable upon the exercise of outstanding stock options and the vesting of restricted stock, reduced by the number of shares which are assumed to be purchased by the Company under the treasury stock method. |
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Accumulated Other Comprehensive Income | ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated other comprehensive income includes foreign currency translation adjustments and unrealized gains on investments. The components of accumulated other comprehensive income were $947 and $776 of accumulated foreign currency translation adjustments at June 30, 2016 and 2015. There were no material accumulated net unrealized gains on investments at June 30, 2016 and 2015. |
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Foreign Currency | FOREIGN CURRENCY Local currencies are the functional currency for the Company’s subsidiaries in Europe and Japan. The accounts of foreign subsidiaries are translated using exchange rates in effect at period-end for assets and liabilities and at average exchange rates during the period for results of operations. The related translation adjustments are reported in accumulated other comprehensive income in shareholders’ equity. Gains (losses) resulting from foreign currency transactions are included in other income (expense) and were immaterial for all periods presented. |
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Recently Issued Accounting Pronouncements | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on July 1, 2018 and can be early adopted for the fiscal year beginning July 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, an amendment of the FASB Accounting Standards Codification. The ASU has added additional disclosure requirements to the codification. It requires management to assess, at each interim and annual reporting period, whether substantial doubt exists about the Company’s ability to continue as a going concern. Substantial doubt exists if it is probable (the “probable” threshold under U.S. GAAP has generally been interpreted to be between 75 and 80 percent) that the Company will be unable to meet its obligations as they become due within one year after the date the financial statements are issued or available to be issued (assessment date). The ASU is effective for annual reporting periods beginning after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company does not expect a going concern uncertainty in the foreseeable future, and therefore this guidance is not expected to have a material impact to its consolidated financial statements. In January 2015, the FASB issued ASU No. 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, an amendment of the FASB Accounting Standards Codification. This ASU eliminates the separate presentation of extraordinary items, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or infrequently occurring. The ASU aligns U.S. GAAP more closely with IFRS (International Financial Reporting Standards). Entities will continue to evaluate whether items are unusual in nature or infrequent in their occurrence for disclosure purposes and when estimating the annual effective tax rate for interim reporting purposes. This ASU is effective for interim and annual periods in fiscal years beginning after December 15, 2015. The ASU allows prospective or retrospective applications. Early adoption is permitted if applied from the beginning of the fiscal year of adoption. The Company does not expect this guidance to have a material impact to its consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, an amendment of the FASB Accounting Standards Codification. This ASU changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value for entities that do not measure inventory using the last-in, first-out or retail inventory method. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. The ASU is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those years. The ASU requires prospective adoption and permits early adoption. The Company is evaluating the effect that ASU 2015-11 will have on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), an amendment of the FASB Accounting Standards Codification. This ASU requires lessees to recognize a right-of-use asset and lease liability for most lease arrangements. This ASU 2016-02 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. The standard mandates a modified retrospective transition method for all entities and early adoption is permitted. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS Effective October 1, 2015, the Company adopted FASB ASU No. 2014-17, Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force), an amendment of the FASB Accounting Standards Codification. This ASU allows an acquired entity to elect to apply pushdown accounting in its separate financial statements on a change-in-control event. The acquired entity elects whether to apply pushdown accounting individually for each change-in-control event, and may apply pushdown accounting during the reporting period in which the change-in-control event occurs. Such adoption did not have any impact to the consolidated financial statements. Effective January 1, 2016, the Company adopted FASB ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, an amendment of the FASB Accounting Standards Codification. This ASU eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. Such adoption did not have any impact to the consolidated financial statements. Effective April 1, 2016, the Company adopted FASB ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, an amendment of the FASB Accounting Standards Codification. This ASU simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as non-current on the balance sheet. The ASU is effective for the Company on July 1, 2017; however, the Company has elected to early adopt as permitted by the guidance. Upon adoption, the Company applied ASU 2015-17 to its deferred taxes and presented deferred taxes as non-current on the consolidated balance sheets on a retrospective basis. Such adoption did not have a material impact on our financial position or results of operations. The following table summarizes the adjustments made as of June 30, 2015 to conform prior period classifications under the new guidance:
Effective April 1, 2016, the Company adopted FASB ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, an amendment of the FASB Accounting Standards Codification. This ASU was issued as part of the FASB’s simplification initiative, and intends to improve the accounting for share-based payment transactions. The ASU changes several aspects of the accounting for share-based payment award transactions, including: (1) accounting for excess tax benefits and shortfalls, (2) forfeitures, (3) tax withholding requirements, and (4) cash flow classifications. The ASU is effective for the Company on July 1, 2017; however, the Company has elected to early adopt on a prospective basis as of the first day of its fiscal year (July 1, 2015) as permitted by the guidance. Upon adoption, recognition of excess tax benefits and tax shortfalls resulted in the recognition of $1,100 of excess tax benefits as a benefit to income taxes in its consolidated statements of operations and comprehensive income (loss). In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The Company has elected to continue to estimate expected forfeitures of employee equity awards to determine the amount of compensation expense to be recognized in each year and the changes in tax withholding requirements had no impact to the Company's consolidated financial statements in fiscal 2016. Effective April 1, 2016, the Company adopted FASB ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, an amendment of the FASB Accounting Standards Codification. This ASU requires entities to present debt issuance costs related to a recognized debt liability on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. Upon adoption, the Company no longer records the cost of issuing debt as a separate deferred financing asset. In the fourth quarter of fiscal 2016, the Company entered into an credit agreement that provided for a $200,000 term loan facility and a $100,000 revolving credit facility. The Company incurred debt issuance costs of $8,026 which were recorded as a direct deduction to the long-term debt and will be amortized over the term of the term loan. |
Summary of Significant Accounting Policies (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Product Warranty Liability | The following table presents the changes in the Company's product warranty accrual.
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Basic and Diluted Weighted Average Shares Outstanding | Basic and diluted weighted average shares outstanding were as follows:
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table summarizes the adjustments made as of June 30, 2015 to conform prior period classifications under the new guidance:
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Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carve-Out Business | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisition | The following table presents the net purchase price and the preliminary fair values of the assets and liabilities of the Carve-Out Business:
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Schedule of Pro Forma Information | The following tables summarize the supplemental statements of operations information on an unaudited pro forma basis as if the Carve-Out Business acquisition had occurred on July 1, 2014:
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Lewis Innovative Technologies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisition | The following table presents the net purchase price and the preliminary fair values of the assets and liabilities of LIT:
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Discontinued Operations (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of discontinued operations | The amounts reported in loss from discontinued operations, net of income taxes were as follows:
There were no balances for the assets and liabilities of the discontinued operations at June 30, 2016 and 2015. The depreciation, amortization, capital expenditures and significant operating and investing non-cash items of the discontinued operations were as follows:
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Fair Value of Financial Instruments (Tables) |
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Jun. 30, 2016 |
Jun. 30, 2015 |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Assets Measured at Fair Value on Recurring Basis | The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2016:
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The following table summarizes the Company’s financial assets measured at fair value on a recurring basis at June 30, 2015:
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Inventory (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory was comprised of the following:
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Property and Equipment (Tables) |
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and equipment consisted of the following:
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Unamortized Deferred Gain | The unamortized deferred gain consisted of the following of which the current portion is included in accrued expenses and the non-current portion is separately classified within other non-current liabilities in the accompanying consolidated balance sheets:
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Goodwill (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill | The following table summarizes the changes in goodwill at the Company's three reporting units for the years ended June 30, 2016 and 2015:
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Intangible Assets (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Intangible Assets | Intangible assets consisted of the following:
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Estimated Future Amortization Expense for Acquired Intangible Assets | Estimated future amortization expense for intangible assets remaining at June 30, 2016 is as follows:
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Restructuring Plan (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses by Business Segment for Restructuring Plans | The following table presents the detail of expenses for the Company’s restructuring plans:
(*) Reversals result from the unused outplacement services and operating costs. |
Income Taxes (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Before Income Taxes and Income Tax Expense (Benefit) | The components of income (loss) from continuing operations before income taxes and income tax expense (benefit) were as follows:
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Reconciliation Between Statutory Federal Income Tax Rate and Effective Income Tax Rate from Continuing Operations | The following is the reconciliation between the statutory federal income tax rate and the Company’s effective income tax (benefit) rate for continuing operations:
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Components of Net Deferred Tax Assets (Liabilities) | The components of the Company’s net deferred tax assets (liabilities) for continuing operations were as follows:
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Summary of Reserves for Unrecognized Income Tax Benefits | The changes in the Company’s reserves for unrecognized income tax benefits are summarized as follows:
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Commitments and Contingencies (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Minimum Lease Payments under Non Cancelable Operating Leases | Minimum lease payments under the Company’s non-cancelable operating leases are as follows:
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Debt (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | The following summarizes the future cash payment obligations (excluding interest) as of June 30, 2016:
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Stock-Based Compensation (Tables) |
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Plans | The following table summarizes activity of the Company’s stock option plans since June 30, 2014:
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Summary of Nonvested Restricted Stock | The following table summarizes the status of the Company’s non-vested restricted stock awards since June 30, 2014:
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Stock Based Compensation Expenses | The following table presents share-based compensation expenses from continuing operations included in the Company’s consolidated statement of operations:
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Operating Segment, Geographic Information and Significant Customers (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Distribution of Revenues and Long Lived Assets from Continuing Operations | The geographic distribution of the Company's revenues is summarized as follows:
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Customers Comprising Ten Percent or more Revenues | Customers comprising 10% or more of the Company's revenues for the periods are as follows:
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Schedules of Concentration of Risk, by Risk Factor [Table Text Block] | While the Company typically has customers from which it derives 10% or more of its revenue, the sales to each of these customers are spread across multiple programs and platforms. Programs comprising 10% or more of the Company's revenues for the periods are as follows:
* Indicates that the amount is less than 10% of the Company's revenues for the respective period. |
Supplementary Information (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Quarterly Statements of Operations | The following sets forth certain unaudited consolidated quarterly statements of operations data for each of the Company’s last eight quarters. In management’s opinion, this quarterly information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation for the periods presented. Such quarterly results are not necessarily indicative of future results of operations and should be read in conjunction with the audited consolidated financial statements of the Company and the notes thereto included elsewhere herein.
(1) Upon adoption of FASB ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, the Company recognized $1,100 of excess tax benefits in the fourth quarter as a benefit to income taxes in its consolidated statements of operations and comprehensive income (loss) for the year ended June 30, 2016. The tax benefit (provision) impacts were restated above to show the effect of this adoption as if it had occurred at the beginning of fiscal 2016. The tax benefit (provision) impacts were $896, $247, $(169), and $126 for the 1st quarter, 2nd quarter, 3rd quarter and 4th quarter, respectively. Income from continuing operations, net income, and net income amounts per share were also updated as a result of the adjustment to the income tax provision. Due to the effects of rounding, the sum of the four quarters does not equal the annual total. |
Description of Business (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 02, 2016
USD ($)
|
Dec. 16, 2015
USD ($)
|
Jun. 30, 2016
program
contractor
|
|
Number of programs using products and services, more than 300 | program | 300 | ||
Number of contractors using products and services, more than 25 | contractor | 25 | ||
Carve-Out Business [Member] | |||
Payments to Acquire Businesses, Gross | $ 300,000 | ||
Lewis Innovative Technologies [Member] | |||
Payments to Acquire Businesses, Gross | $ 10,290 |
Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) |
12 Months Ended |
---|---|
Jun. 30, 2016 | |
Maximum | |
Restricted Cash and Cash Equivalents Items [Line Items] | |
Maturity of cash and cash equivalents | 90 days |
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Accounting Policies [Abstract] | ||
Restricted cash | $ 264 | $ 264 |
Summary of Significant Accounting Policies - Concentration of Risk (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2016
USD ($)
customer
|
Jun. 30, 2015
USD ($)
customer
|
|
Concentration Risk [Line Items] | ||
Cash and cash equivalent | $ | $ 81,691 | $ 77,586 |
Customer Concentration Risk [Member] | Accounts Receivable, Unbilled Receivables, and Costs in Excess of Billings [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, number | customer | 5 | 5 |
Concentration risk, percent | 50.00% | 55.00% |
Summary of Significant Accounting Policies - Intangible Assets (Detail) |
12 Months Ended |
---|---|
Jun. 30, 2016 | |
Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired intangible assets, estimated useful lives | 12 years |
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Accounting Policies [Abstract] | |||
Property and equipment, estimated useful lives | 3 years | ||
Capitalized software development cost | $ 0 | $ 0 | $ 362 |
Summary of Significant Accounting Policies - Income Taxes (Details) |
Jun. 30, 2016 |
---|---|
Accounting Policies [Abstract] | |
Minimum likelihood of tax benefits being recognized upon ultimate settlement | 50.00% |
Summary of Significant Accounting Policies - Changes in Product Warranty Accrual (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Accounting Policies [Abstract] | |||
Product warranty term | 12 months | ||
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | |||
Beginning Balance | $ 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 | $ 1,523 | $ 1,974 | $ 2,078 |
Summary of Significant Accounting Policies - Basic and Diluted Weighted Average Shares Outstanding (Detail) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Accounting Policies [Abstract] | |||
Basic weighted-average shares outstanding | 34,241 | 32,114 | 31,000 |
Effect of dilutive equity instruments | 856 | 825 | 0 |
Diluted weighted-average shares outstanding | 35,097 | 32,939 | 31,000 |
Summary of Significant Accounting Policies - Net Earnings Per Share Additional Information (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Accounting Policies [Abstract] | |||
Common stock excluded from diluted earning per share (in shares) | 7 | 453 | 3,526 |
Summary of Significant Accounting Policies - Accumulated Other Comprehensive Income (Details) - USD ($) |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Accounting Policies [Abstract] | ||
Accumulated other comprehensive income | $ 947,000 | $ 776,000 |
Accumulated other comprehensive income, Available-for-sale securities gains (losses) | $ 0 | $ 0 |
Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2016 |
May 02, 2016 |
|
Line of Credit Facility [Line Items] | ||||||
Excess tax benefit from share-based compensation recognized as a benefit to income taxes | $ 126,000 | $ (169,000) | $ 247,000 | $ 896,000 | $ 1,100,000 | |
Long-term Debt, Gross | $ 200,000,000 | $ 200,000,000 | ||||
Term Loan | ||||||
Line of Credit Facility [Line Items] | ||||||
Long-term Debt, Gross | $ 200,000,000 | |||||
Debt issuance costs | 8,026,000 | |||||
Revolver | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum borrowing capacity | $ 100,000,000 |
Acquisitions - Schedule of Pro Forma Information (Details) - Carve-Out Business - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Business Acquisition [Line Items] | ||
Pro forma net revenues | $ 344,601 | $ 333,362 |
Pro forma net income | $ 18,125 | $ 5,697 |
Basic pro forma net earnings per share (in dollars per share) | $ 0.47 | $ 0.15 |
Diluted pro forma net earnings per share (in dollars per share) | $ 0.46 | $ 0.15 |
Discontinued Operations - Additional Disclosures (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2014 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Jan. 23, 2015 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Disposal Group, Including Discontinued Operation, Consideration | $ 1,600 | ||||
Proceeds from Divestiture of Businesses | $ 0 | $ 885 | $ 0 | ||
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax | $ 0 | 892 | 0 | ||
MIS [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Impairment of goodwill | $ 6,687 | 2,283 | $ 6,687 | ||
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax | $ 892 |
Discontinued Operations - Depreciation, Amortization, Capital Expenditures, and Significant Noncash Items (Details) - MIS [Member] - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Depreciation | $ 100 | $ 160 | |
Amortization of intangible assets | 279 | 495 | |
Capital expenditures | 0 | 78 | |
Impairment of goodwill | $ 6,687 | 2,283 | 6,687 |
Stock-based compensation expense | $ 88 | $ 245 |
Fair Value of Financial Instruments - Summary of Financial Assets Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Fair Value | ||
Assets: | ||
Fair value measurement disclosure | $ 30,075 | $ 30,000 |
Certificates of Deposit [Member] | Fair Value | ||
Assets: | ||
Fair value measurement disclosure | 30,075 | 30,000 |
Level 1 | ||
Assets: | ||
Fair value measurement disclosure | 0 | 0 |
Level 1 | Certificates of Deposit [Member] | ||
Assets: | ||
Fair value measurement disclosure | 0 | 0 |
Level 2 | ||
Assets: | ||
Fair value measurement disclosure | 30,075 | 30,000 |
Level 2 | Certificates of Deposit [Member] | ||
Assets: | ||
Fair value measurement disclosure | 30,075 | 30,000 |
Level 3 | ||
Assets: | ||
Fair value measurement disclosure | 0 | 0 |
Level 3 | Certificates of Deposit [Member] | ||
Assets: | ||
Fair value measurement disclosure | $ 0 | $ 0 |
Inventory (Detail) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 31,205 | $ 15,864 |
Work in process | 15,967 | 11,190 |
Finished goods | 11,112 | 4,906 |
Total | $ 58,284 | $ 31,960 |
Inventory - Additional Information (Details) |
12 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Inventory Disclosure [Abstract] | |
Increase in inventory primarily due to inclusion of inventory from acquisition | $ 26,324,000 |
Inventory for long-term contracts or programs | $ 0 |
Property and Equipment - Additional Information (Detail) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Apr. 20, 2007
USD ($)
OptionPlan
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2015
USD ($)
|
Jun. 30, 2014
USD ($)
|
|
Property, Plant and Equipment [Line Items] | ||||
Increase in property and equipment | $ 15,111 | |||
Depreciation and amortization expense related to property and equipment | 6,900 | $ 6,332 | $ 7,625 | |
Lease term | 10 years | |||
Number of five year term option to renew | OptionPlan | 2 | |||
Lease term, option to renew | 5 years | |||
Deferred gain on sale-leaseback transaction | $ 11,569 | |||
Computer equipment and software | ||||
Property, Plant and Equipment [Line Items] | ||||
Retirement of asset | $ 32 | $ 733 |
Property and Equipment - Unamortized Deferred Gain (Detail) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Jun. 30, 2015 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Current portion | $ 929 | $ 1,156 |
Non-current portion | 0 | 929 |
Total unamortized deferred gain | $ 929 | $ 2,085 |
Restructuring Plan - Additional Information (Detail) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2015
USD ($)
Person
|
Jun. 30, 2014
USD ($)
Person
facility
|
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and other charges | $ | $ 1,240 | $ 3,175 | $ 5,443 |
Number of positions eliminated | Person | 16 | ||
2014 Plan Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and other charges | $ | $ 5,443 | ||
Number of positions eliminated | Person | 70 | ||
Number of facilities closed | facility | 4 |
Restructuring Plan - Expenses by Business Segment for Restructuring Plans (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring liability at beginning of period | $ 1,992 | $ 2,143 | |||
Provisions | 1,341 | 3,475 | |||
Cash paid | (2,306) | (3,326) | |||
Reversals | [1] | (101) | (300) | ||
Restructuring liability at end period | 926 | 1,992 | |||
Severance | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring liability at beginning of period | 657 | 1,371 | |||
Provisions | 752 | 1,663 | |||
Cash paid | (1,118) | (2,164) | |||
Reversals | [1] | (101) | (213) | ||
Restructuring liability at end period | 190 | 657 | |||
Other Members | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring liability at beginning of period | 1,335 | 772 | |||
Provisions | 589 | 1,812 | |||
Cash paid | (1,188) | (1,162) | |||
Reversals | [1] | 0 | (87) | ||
Restructuring liability at end period | $ 736 | $ 1,335 | |||
|
Income Taxes - Components of Income Before Income Taxes and Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Income (loss) from continuing operations before income taxes: | |||||||||||
United States | $ 25,194 | $ 18,443 | $ (6,068) | ||||||||
Foreign | 92 | 352 | 155 | ||||||||
Income (loss) from continuing operations before income taxes | $ 8,590 | $ 6,999 | $ 6,473 | $ 3,224 | $ 7,982 | $ 6,163 | $ 3,933 | $ 717 | 25,286 | 18,795 | (5,913) |
Federal: | |||||||||||
Current | 6,707 | 4,267 | 3,184 | ||||||||
Deferred | (2,627) | (458) | (5,281) | ||||||||
Federal Income Tax Expense (Benefit), Continuing Operations, Total | 4,080 | 3,809 | (2,097) | ||||||||
State: | |||||||||||
Current | 1,839 | 1,372 | 594 | ||||||||
Deferred | (424) | (921) | (375) | ||||||||
State and Local Income Tax Expense (Benefit), Continuing Operations, Total | 1,415 | 451 | 219 | ||||||||
Foreign: | |||||||||||
Current | 59 | 58 | (12) | ||||||||
Deferred | (10) | 48 | 49 | ||||||||
Foreign, Income Tax expense benefit | 49 | 106 | 37 | ||||||||
Income tax expense (benefit) | $ 1,101 | $ 2,642 | $ 1,433 | $ 368 | $ 1,850 | $ 1,469 | $ 1,047 | $ 0 | $ 5,544 | $ 4,366 | $ (1,841) |
Income Taxes - Summary of Reserves for Unrecognized Income Tax Benefits (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
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 | 0 | (1,197) | |
Increases for currently recognized positions | 302 | 122 | |
Reductions for previously recognized positions deemed effectively settled | (681) | 0 | |
Reductions for previously recognized positions | (324) | 0 | |
Unrecognized tax benefits, end of period | 1,566 | 2,190 | $ 3,142 |
Unrecognized tax benefits that would impact effective tax rate | 1,566 | ||
Significant change in unrecognized tax benefits reasonably possible | 757 | ||
Interest and penalties accrued | 258 | 62 | |
interest and penalties recognized | $ 204 | $ 26 | $ 5 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Long-term Purchase Commitment [Line Items] | |||
Rental expenses | $ 4,015 | $ 3,777 | $ 4,213 |
Non-cancelable purchase commitments | |||
Long-term Purchase Commitment [Line Items] | |||
Purchase commitments for less than one year | $ 32,195 |
Commitments and Contingencies - Minimum Lease Payments under Non Cancelable Operating Leases (Detail) $ in Thousands |
Jun. 30, 2016
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2015 | $ 6,018 |
2016 | 4,960 |
2017 | 4,851 |
2018 | 4,683 |
2019 | 3,674 |
Thereafter | 19,445 |
Total minimum lease payments | $ 43,631 |
Debt (Debt Maturities) (Details) $ in Thousands |
Jun. 30, 2016
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2017 | $ 10,000 |
2018 | 10,000 |
2019 | 15,000 |
2020 | 20,000 |
2021 | 145,000 |
Long-term Debt, Gross | 200,000 |
Total remaining cash payment obligations | 192,275 |
Debt Issuance Costs, Net | $ (7,725) |
Shareholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
Apr. 13, 2016 |
Jun. 30, 2016 |
Apr. 04, 2016 |
Jun. 30, 2015 |
---|---|---|---|---|
Subsidiary, Sale of Stock [Line Items] | ||||
Preferred stock shares authorized to issue | 1,000,000 | 1,000,000 | ||
Preferred stock shares par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Shares available for offering | 4,500,000 | |||
Over-Allotment Option | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares available for offering | 675,000 | |||
Shares sold (in shares) | 5,175,000 | |||
Consideration received on transaction | $ 92,788 | |||
Offering costs | $ 6,851 |
Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Defined Contribution Plan, Employer Discretionary Contribution Amount | $ 1,874 | $ 1,934 | $ 1,896 |
Maximum | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employee Contribution of eligible compensation | 3.00% | 3.00% | 3.00% |
Stock-Based Compensation - Summary of Nonvested Restricted Stock (Detail) - Restricted Stock - $ / shares shares in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Number of Shares | ||
Beginning Balance | 1,866 | 2,091 |
Granted | 556 | 849 |
Vested | (743) | (776) |
Forfeited | (124) | (298) |
Ending Balance | 1,555 | 1,866 |
Weighted Average Grant Date Fair Value (in dollars per share) | ||
Beginning Balance | $ 10.72 | $ 10.15 |
Granted | 16.26 | 11.99 |
Vested | 10.93 | 10.56 |
Forfeited | 11.70 | 10.73 |
Ending Balance | $ 12.52 | $ 10.72 |
Stock-Based Compensation - Stock Based Compensation Expenses (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 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 |
Cost of revenues | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 441 | 493 | 601 |
Selling, general and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 7,864 | 6,751 | 7,024 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 1,269 | $ 1,396 | $ 1,374 |
Stock-Based Compensation - Weighed-Average Key Assumptions and Fair Value Results for Stock Options Granted (Detail) |
12 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Weighted-average key assumptions and fair value results for stock options granted | ||
Option life | 0 years | 0 years |
Operating Segment, Geographic Information and Significant Customers - Summary of Performance of Operations by Reportable Segment (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
May 02, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Net revenues | $ 85,430 | $ 65,898 | $ 60,417 | $ 58,409 | $ 64,119 | $ 59,578 | $ 57,089 | $ 54,061 | $ 270,154 | $ 234,847 | $ 208,729 | |
Carve-Out Business [Member] | ||||||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||||||
Payments to Acquire Businesses, Gross | $ 300,000 |
Operating Segment, Geographic Information and Significant Customers - Reconciles Net Income, Most Directly Comparable GAAP Financial Measure to Adjusted EBITDA (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract] | |||||||||||
Income (loss) from continuing operations | $ 7,489 | $ 4,357 | $ 5,040 | $ 2,856 | $ 6,132 | $ 4,694 | $ 2,886 | $ 717 | $ 19,742 | $ 14,429 | $ (4,072) |
Tax provision (benefit) | $ 1,101 | $ 2,642 | $ 1,433 | $ 368 | $ 1,850 | $ 1,469 | $ 1,047 | $ 0 | 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 | 1,341 | 3,475 | |||||||||
Stock-based compensation expense | $ 9,574 | $ 8,640 | $ 8,999 |
Operating Segment, Geographic Information and Significant Customers - Customers Comprising Ten Percent or more Revenues (Detail) - Revenues |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Revenue, Major Customer [Line Items] | |||
Concentration risk, percent | 22.00% | 46.00% | 15.00% |
Customer Concentration Risk [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percent | 43.00% | 57.00% | 43.00% |
Customer Concentration Risk [Member] | Lockheed Martin Corporation | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percent | 23.00% | 20.00% | 18.00% |
Customer Concentration Risk [Member] | Raytheon Company | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percent | 20.00% | 37.00% | 13.00% |
Customer Concentration Risk [Member] | Northrop Grumman Corporation [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percent | 12.00% |
Operating Segment, Geographic Information and Significant Customers - Additional Information (Detail) - Sales Revenue, Net [Member] |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Segment Reporting Information [Line Items] | |||
Concentration risk, percent | 22.00% | 46.00% | 15.00% |
SEWIP Program [Member] | Program Concentration Risk [Member] | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percent | 12.00% | ||
Aegis Program [Member] | Program Concentration Risk [Member] | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percent | 10.00% | 12.00% | 15.00% |
F-35 Program [Member] | Program Concentration Risk [Member] | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percent | 16.00% | ||
Patriot Program [Member] | Program Concentration Risk [Member] | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percent | 18.00% |
Supplementary Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2014 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Excess tax benefit from share-based compensation recognized as a benefit to income taxes | $ 126 | $ (169) | $ 247 | $ 896 | $ 1,100 | ||||||
Unaudited consolidated quarterly statements of operations data | |||||||||||
Net revenues | 85,430 | 65,898 | 60,417 | 58,409 | $ 64,119 | $ 59,578 | $ 57,089 | $ 54,061 | 270,154 | $ 234,847 | $ 208,729 |
Gross margin | 38,176 | 30,491 | 28,578 | 27,529 | 31,267 | 27,918 | 27,035 | 23,999 | 124,774 | 110,219 | 94,744 |
Income from operations | 7,654 | 6,819 | 6,369 | 3,131 | 7,931 | 6,157 | 3,539 | 728 | 23,973 | 18,355 | (7,405) |
Income from continuing operations before income taxes | 8,590 | 6,999 | 6,473 | 3,224 | 7,982 | 6,163 | 3,933 | 717 | 25,286 | 18,795 | (5,913) |
Income tax provision (1) | 1,101 | 2,642 | 1,433 | 368 | 1,850 | 1,469 | 1,047 | 0 | 5,544 | 4,366 | (1,841) |
Income (loss) from continuing operations | 7,489 | 4,357 | 5,040 | 2,856 | 6,132 | 4,694 | 2,886 | 717 | 19,742 | 14,429 | (4,072) |
Loss from discontinued operations, net of income taxes | 0 | 0 | 0 | 0 | (202) | (1,019) | (2,621) | (218) | 0 | (4,060) | (7,353) |
Net income (loss) | $ 7,489 | $ 4,357 | $ 5,040 | $ 2,856 | $ 5,930 | $ 3,675 | $ 265 | $ 499 | $ 19,742 | $ 10,369 | $ (11,425) |
Basic net earnings (loss) per share: | |||||||||||
(Loss) income from continuing operations (dollars per share) | $ 0.20 | $ 0.13 | $ 0.15 | $ 0.09 | $ 0.19 | $ 0.14 | $ 0.09 | $ 0.02 | $ 0.58 | $ 0.45 | $ (0.13) |
(Loss) income from discontinued operations (dollars per share) | 0.00 | 0.00 | 0.00 | 0.00 | (0.01) | (0.03) | (0.08) | 0.00 | 0.00 | (0.13) | (0.24) |
Basic net (loss) earnings per share (dollars per share) | 0.20 | 0.13 | 0.15 | 0.09 | 0.18 | 0.11 | 0.01 | 0.02 | 0.58 | 0.32 | (0.37) |
Diluted net earnings (loss) per share: | |||||||||||
(Loss) income from continuing operations (dollars per share) | 0.19 | 0.13 | 0.15 | 0.08 | 0.18 | 0.14 | 0.09 | 0.02 | 0.56 | 0.44 | (0.13) |
(Loss) income from discontinued operations (dollars per share) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | (0.03) | (0.08) | 0.00 | 0.00 | (0.13) | (0.24) |
Diluted net (loss) earnings per share (dollars per share) | $ 0.19 | $ 0.13 | $ 0.15 | $ 0.08 | $ 0.18 | $ 0.11 | $ 0.01 | $ 0.02 | $ 0.56 | $ 0.31 | $ (0.37) |
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