Company: MRCY
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001049521-25-000062
Chunk: 27

Company: MERCURY SYSTEMS INC
Filing Date: 2025-11-04
Form: 10-Q
Item: Item 1
Chunk 27
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 2025 and September 27, 2024, respectively. During the first quarters ended September 26, 2025 and September 27, 2024, the Company recognized a tax benefit of $1,120 related to stock compensation windfalls and a tax provision of $219 related to stock compensation shortfalls, respectively.The effective tax rate for the first quarters ended September 26, 2025 and September 27, 2024 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, and state taxes.

The Company continues to maintain a valuation allowance on all of its foreign net operating loss carryforwards and the majority of its state research and developmental tax credit carryforwards. Based on forecasted taxable income and the scheduled reversal of the remaining deferred tax assets, the Company believes it is more likely than not that all other deferred tax assets will be recognized. 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes a broad range of tax provisions and extended and modified certain provisions of the Tax Cuts and Jobs Act ("TCJA"), including, but not limited to, restoration of 100% bonus depreciation, EBITDA-based interest expense limitation and immediate expensing of domestic research and development expenditures. The Company has evaluated the potential impact of this legislation and expects it to result primarily in a timing difference, with no material impact on the Company's effective tax rate.

I.Debt 

REVOLVING CREDIT FACILITYThe Company has a 5-year revolving credit facility (the "Revolver") with a maturity extended to February 28, 2027. The borrowing capacity as defined under the Revolver as of September 26, 2025 is approximately $900,000 less outstanding borrowings of $591,500. There were outstanding letters of credit of $5,883 as of September 26, 2025. During the first quarter ended September 26, 2025, the Company made no borrowings or repayments. As of September 26, 2025, the Company was in compliance with all covenants and conditions under the Revolver. The Company incurred interest expense of $7,886 for the first quarter ended September 26, 2025.As of September 26, 2025, the Company's outstanding balance of unamortized deferred financing costs was $2,994, which is being amortized to Other expense, net