Company: MRCY
Filing Date: 2025-08-11
Form Type: 10-K
Source: 0001049521-25-000024
Chunk: 32

Company: MERCURY SYSTEMS INC
Filing Date: 2025-08-11
Form: 10-K
Item: Item 1A
Chunk 32
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 chain, manufacturing, or product design operations during the combination of facilities;

•failure to rationalize business, information and communication systems and to expand the IT infrastructure and security protocols throughout the enterprise;

•volatility associated with accounting for earn-outs in a given transaction;

•entering markets in which we have no, or limited, prior experience;

•environmental liabilities at current or previous sites of the acquired business;

•poor compliance and document retention and retrieval programs pre-acquisition at acquired companies, which may lead to liabilities for violations, or impact the business acquired when placed under our compliance programs;

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•unanticipated changes in applicable laws or regulations;

•potential loss of key employees; 

•the impact of any assumed legal proceedings; and 

•adverse effects on our internal control over financial reporting before the acquiree's complete integration into our control environment.

In addition, in connection with any acquisitions or investments we could:

•issue stock that would dilute our existing shareholders;

•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.

We may not be able to maintain the levels of revenue, earnings, or operating efficiency that we and our prior acquisitions had achieved or might achieve separately. You should not place undue reliance on any anticipated synergies. In addition, our competitors could try to emulate our strategy, leading to greater competition for acquisition targets which could lead to larger competitors if they succeed in emulating our strategy.

We may incur substantial indebtedness.

On August 13, 2024, we amended our Revolver, permanently decreased borrowing capacity to $900.0 million, with a temporary reduction in credit availability to $750.0 million until we meet a minimum consolidated EBITDA level of $75.0 million excluding (a) adjustments for cost savings, operating expense reductions and synergies, (b) estimate at completion (“EAC”) charges and other non-cash expenses, charges, and losses addbacks and (c) deducts to reverse EAC charges previously added back, in each case for a last twelve-month period. The temporary