Company: MRCY
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001049521-25-000062
Chunk: 41

Company: MERCURY SYSTEMS INC
Filing Date: 2025-11-04
Form: 10-Q
Item: Item 1
Chunk 41
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, all current or former Mercury officers or directors. This derivative action has been stayed while the Special Investigation Committee conducts its investigation. On July 17, 2025, the Company received a derivative demand on behalf of Pauline McKinnon alleging substantially the same claims as those covered in the federal securities class action and the James Jones and Robert Sawyer derivative demands. The Company believes the claims in the derivative demands and derivative action are without merit and intends to defend itself vigorously. It is too early to determine what responsibility, if any, the Company will have for this matter.On January 31, 2024, a former employee at the Company's Torrance, California location, filed a wage and hour class action lawsuit in California state court in Los Angeles County, along with a companion Private Attorneys General Act (“PAGA”) lawsuit, to act in a representative capacity for other Mercury Mission Systems, LLC employees in California, alleging a range of violations of California wage and hour regulations. On October 1, 2024, a second former employee at our Torrance location filed a PAGA notice to act in a representative capacity on allegations of a range of violations of California wage and hour regulations. On December 21, 2024, the Company reached an agreement in principle to settle these wage and hour class action claims for $450, which settlement in principle is subject to a final settlement agreement and review and approval by the court.In September 2025, an internal investigation was initiated, with the assistance of outside counsel, in connection with what the Company preliminarily believes may be inaccurately reported test results and certifications of conformance with certain product performance specifications under subcontracts involving approximately $15,000 in total revenue over approximately 20 years in support of a government program.  The Company has no evidence that the product has not been effective in its intended use or function, nor has it encountered reported safety issues.  The Company has reported the matter to the customer and, in an abundance of caution, to the government.  The Company cannot currently estimate the amount or range of cost or any loss associated with this matter.  Any determination that the Company’s operations were not in compliance with laws or regulations such as the False Claims Act could result in the imposition of civil or criminal fines, penalties, disgorgement, restitution, equitable relief, or other losses or conduct restrictions, and could be material to the Company’s financial results or business operations.INDEMNIFICATION OBLIGATIONSThe Company’s standard product sales and license agreements entered into in