Financial Analysis

Commitments and Contingencies L EGAL C LAIMS The Company is subject to litigation, claims, investigations and audits arising from time to time in the ordinary course of business. Although legal proceedings are inherently unpredictable, the Company believes that it has valid defenses with respect to those 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. On December 7, 2021, counsel for National Technical Systems, Inc. (NTS) sent the Company an environmental demand letter pursuant to Massachusetts General Laws Chapter 21E, Section 4A, and CERCLA 42 U.S.C. Section 9601, related to a site that NTS formerly owned at 533 Main Street, Acton, Massachusetts. NTS received a Notice of Responsibility from the Massachusetts Department of Environmental Protection (MassDEP) alleging trichloroethene, Freon and 1,4-dioxane contamination in the groundwater emanating from NTSs former site. NTS alleges that the operations of a predecessor company to Mercury that was acquired in the Company's acquisition of the Microsemi Carve-Out Business that once owned and operated a facility at 531 Main Street, Acton, Massachusetts (the Site) contributed to the groundwater contamination, and NTS is seeking payment from the Company of NTSs costs for any required environmental remediation. The C …

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"Debt R EVOLVING C REDIT F ACILITY The Company has a 5-year revolving credit facility (the ""Revolver"") with a maturity extended to November 4, 2030. The borrowing capacity as defined under the Revolver as of December 26, 2025 is $850,000 less outstanding borrowings of $591,500. There were outstanding letters of credit of $5,878 as of December 26, 2025. During the second quarter and six months ended December 26, 2025, the Company made no borrowings or repayments. As of December 26, 2025, the Company was in compliance with all covenants and conditions under the Revolver. The Company incurred interest expense of $7,849 and $15,735 for the second quarter and six months ended December 26, 2025, respectively. On November 4, 2025, the Company entered into Amendment No. 7 to the Revolver. This amendment extends the maturity date of the credit facility by five years to November 4, 2030 with a borrowing capacity of $850,000. In conjunction with Amendment No. 7 to the Revolver, the Company incurred $3,156 of new deferred financing costs that will be amortized over the remaining term of the Revolver. As part of the amendment, the Company wrote off $845 of previously deferred financing costs associated with the line of credit facility prior to the amendment. This write-off is included in Other expense, net in the Consolidated Statements of Operations and Comprehensive Loss. Refer to Exhibit 10.1 on Form 8-K filed by the Company with the SEC on November 4, 2025. As of December 26, 2025, …

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Stock-Based Compensation S TOCK I NCENTIVE P LANS The Companys 2025 Long Term Incentive Plan (as amended from time to time, the 2025 Plan) was adopted by the Companys Board of Directors in July 2025 and approved by the Companys shareholders on October 22, 2025. At December 26, 2025, the aggregate number of shares authorized for issuance under the 2025 Plan is 1,954 shares, including 1,900 shares approved by the Companys shareholders on October 22, 2025 and 54 shares by virtue of awards forfeited from and after October 22, 2025 under a predecessor stock incentive plan, the Companys Amended and Restated 2018 Stock Incentive Plan (the 2018 Plan). The 2025 Plan provides for the grant to employees and non-employees of non-qualified and incentive stock options, stock appreciation rights, time-based and performance-based restricted stock awards or units, and deferred stock awards or units. Stock options and stock appreciation rights must be granted with an exercise price of not less than 100% of the fair value of the Companys common stock on the date of grant and have a maximum exercisable term of ten years. Under the share counting rules applicable to the 2025 Plan, each share issued pursuant to a stock option or stock appreciation right counts as 0.5 shares against the available share reserve, and each share issued pursuant to any other award (a full value award) counts as one share against the available reserve. Accordingly, at December 26, 2025, a maximum of 3,859 shares underly …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Fair Value of Financial Instruments The following table summarizes the Companies' financial instruments measured at fair value on a recurring basis as of December 26, 2025: Fair Value Measurements December 26, 2025 Level 1 Level 2 Level 3 Liabilities: Interest rate swap $ 4,453 $ $ 4,453 $ Total measured at fair value $ 4,453 $ $ 4,453 $ The carrying values of cash and cash equivalents, including money market funds, restricted cash, accounts receivable and payable, contract assets and liabilities and accrued liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The Company determined the carrying value of long-term debt approximated fair value due to variable interest rates charged on the borrowings, which reprice frequently. During the first quarter ended September 29, 2023, the Company entered into an interest rate hedging agreement (the September 2023 Swap). The fair value of the September 2023 Swap is estimated using a discounted cash flow analysis based on the contractual terms of the derivative, leveraging observable inputs other than quoted prices, such as interest rates. As of December 26, 2025, the fair value of the September 2023 Swap was a liability of $4,453 a nd is included within Other non-current liabilities in the Company's Consolidated Balance Sheets. The following table summarizes the Companies' financial instruments measured at fair value on a recurring basis as of June 27, 2025: Fair Value Measurements June 27 …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

"Income Taxes The Company recorded an income tax benefit of $2,364 and $6,725 on a loss before income taxes of $17,459 and $24,304 for the second quarters ended December 26, 2025 and December 27, 2024, respectively. The Company recorded an income tax benefit of $6,385 and $12,319 on a loss before income taxes of $33,995 and $47,423 for the six months ended December 26, 2025 and December 27, 2024, respectively. During the second quarter and six months ended December 26, 2025, the Company recognized a tax benefit of $1,002 and $2,122 related to stock compensation windfalls, respectively, and during the second quarter and six months ended December 27, 2024, the Company recognized a tax provision of $138 and $357 related to stock compensation shortfalls, respectively. The effective tax rate for the second quarter and six months ended December 26, 2025 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation windfalls, and state taxes. The effective tax rate for the second quarter and six months ended December 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 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

"R ECENTLY I SSUED A CCOUNTING P RONOUNCEMENTS In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures , an amendment of the FASB Accounting Standard Codification. The amendments in this ASU address improvements to disclosures surrounding operating expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion, which are all normally included in common expense captions on the face of the income statement. Any expenses remaining in relevant expense captions that are not disaggregated should be accompanied with a qualitative disclosure as to their nature. This ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures. In May 2025, the FASB issued ASU No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, an amendment of the FASB Accounting Standards Codification. The amendments in this ASU are intended to clarify guidance surrounding who the accounting acquirer is in a business combination, specifically when a Variable Interest Entity (""VIE"") is involved. The ASU is effective for fiscal years beginni …

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Employee Benefit Plan P ENSION P LAN The Company maintains a defined benefit pension plan (the Plan) for its Swiss employees, which is administered by an independent pension fund. The Plan is mandated by Swiss law and meets the criteria for a defined benefit plan under ASC 715, CompensationRetirement Benefits (ASC 715), because participants of the Plan are entitled to a defined rate of return on contributions made. The independent pension fund is a multi-employer plan with unrestricted joint liability for all participating companies for which the Plans overfunding or underfunding is allocated to each participating company based on an allocation key determined by the Plan. The Company recognizes a net asset or liability for the Plan equal to the difference between the projected benefit obligation of the Plan and the fair value of the Plans assets as required by ASC 715. The funded status may vary from year to year due to changes in the fair value of the Plans assets and variations on the underlying assumptions of the projected benefit obligation of the Plan. The Plan's funded status at December 26, 2025 was a net liability of $5,458, which is recorded in Other non-current liabilities on the Consolidated Balance Sheet. The Company recognized net periodic benefit costs of $167 and $231 associated with the Plan and a net loss of $56 and $51 in AOCI during the second quarters ended December 26, 2025 and December 27, 2024, respectively. The Company recognized net periodic benefit c …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Restructuring During the six months ended December 26, 2025, the Company approved and initiated workforce reductions that eliminated approximately 100 positions, resulting in $5,639 of severance costs. The Company incurs restructuring and other charges in connection with management's decision to undertake certain actions to realign operating expenses through workforce reductions and the closure of certain Company facilities, businesses and lines of business. All of the restructuring and other charges are classified as Operating expenses in the Consolidated Statements of Operations and Comprehensive Loss and any remaining restructuring obligations are expected to be paid within the next twelve months. The restructuring liability is classified as Accrued expenses in the Consolidated Balance Sheets. The following table presents the detail of charges included in the Companys liability for restructuring and other charges: Severance & Related Balance at June 27, 2025 $ 1,206 Restructuring charges 5,639 Cash paid (2,547) Balance at December 26, 2025 $ 4,298 …

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"Operating Segment, Geographic Information and Significant Customers Operating segments are defined as components of an enterprise evaluated regularly by the Company's chief executive officer who acts as its Chief Operating Decision Maker (""CODM"") in deciding how to allocate resources and assess performance. The Company evaluated its internal organization under FASB ASC 280, Segment Reporting (ASC 280) to determine whether there has been a change to its conclusion of a single operating and reportable segment. The Company concluded there has been no changes given the CODM continues to evaluate and manage the Company on the basis of one operating and reportable segment. The Company utilized the management approach for determining its operating segment in accordance with ASC 280. The CODM utilizes Net loss that is reported on the Consolidated Statement of Operations and Comprehensive Loss to assess operating performance and make decisions related to resource allocation. The Company's significant segment expenses include stock-based compensation and depreciation which are disclosed in Note K and Note E, respectively. Any other significant segment expenses which are regularly provided to the CODM are provided on the Consolidated Statement of Operations and Comprehensive Loss. The Company's segment assets are reported on the Consolidated Balance Sheets as Total Assets and its segment purchase of property plant and equipment are disclosed in Note E. The geographic distribution of …

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"Summary of Significant Accounting Policies B ASIS OF P RESENTATION The accompanying consolidated financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles (GAAP) in the United States of America for interim financial information and with the instructions to the Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual consolidated financial statements have been condensed or omitted pursuant to those rules and regulations; however, in the opinion of management the financial information reflects all adjustments, consisting of adjustments of a normal recurring nature, necessary for fair presentation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended June 27, 2025, which are contained in the Companys Annual Report on Form 10-K filed with the SEC on August 11, 2025. The results for the second quarter and six months ended December 26, 2025 are not necessarily indicative of the results to be expected for the full fiscal year. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. All references to the second quarter of fiscal 2026 are to the quarter ended December 26, 2025. There were 13 weeks during the second quarters en …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

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 and noted no items requiring adjustment of the financial statements or additional disclosures.

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