What the changes say
- Scaling production to meet stronger backlog and bookings is a prominent new execution risk.
- Component inflation, tariffs and fixed-price contracts could pressure margins and cash flow.
- Customer concentration increased, while international revenue declined from 5% to 2%.
- Cybersecurity certification, systems changes and higher borrowing add operational and financial exposure.
What changed since the prior 10-K
New
- NewRisks Related to Business Operations and Our Industry
We may be unable to increase production to satisfy the increasing demand for our products
Mercury may fail to expand manufacturing throughput, quality, staffing and supplier capacity quickly enough to convert backlog and bookings into revenue.
- NewRisks Related to Business Operations and Our Industry
Ineffective inventory management may lead to excess or obsolete stock, higher costs, operational disruptions or inaccurate valuation
Poor forecasting, supply disruptions or production inefficiencies could create excess or obsolete inventory, carrying costs, write-downs and valuation errors.
- NewRisks Related to Business Operations and Our Industry
competitors into aerospace and defense electronics could reduce demand for our products, negatively impacting revenue and operating results
Technology shifts, complex secure-computing programs and premature inventory purchases could cause design losses, production delays, obsolescence and customer-confidence damage.
- NewRisks Related to Business Operations and Our Industry
Price escalation for semiconductor and memory components may adversely affect our profitability
Higher semiconductor, memory and specialized microelectronics prices could reduce margins, especially on firm-fixed-price contracts without customer-funded inventory.
- NewRisks Related to Business Operations and Our Industry
Trade policies and export controls could significantly increase our manufacturing costs, reduce gross margins and disrupt demand for our products
Tariffs, retaliatory trade measures and export-control changes could raise component costs, delay cash recovery, reduce margins and weaken demand.
- NewRisks Related to Our Growth Strategy, M&A and Acquisition Integration
On November 4, 2025, we amended our Revolver, providing for a new five-year revolving credit facility with a borrowing capacity of $850.0 million. As of July 3, 2026, we had $441.5 million of outstanding borrowings on the Revolver
The amended $850 million Revolver carried $441.5 million of borrowings, exposing Mercury to floating rates and potential additional-debt risks.
- NewRisks Related to Legal, Regulatory and Compliance Matters
system audit by DCAA. Going forward, we may also need to enhance our processes and information systems to support cost estimating, accounting, purchasing and earned value management systems
CMMC compliance, possible data-rights concessions and cost-reimbursable contracts could increase costs, disrupt suppliers or require Mercury to surrender valuable technology.
- NewRisks Related to Information Technology and Intellectual Property
and benefit of our current information technology and business tools could impact our ability to meet cost reduction and planned efficiency and operational improvement goals
Disruptions or deficiencies when changing enterprise resource planning and other systems could impair records, orders, inventory, operations, cash flow and efficiency goals.
- NewRisks Related to Information Technology and Intellectual Property
The unauthorized disclosure of our trade secrets could harm our business
Employees, contractors or third parties could disclose trade secrets, enabling similar competitor products and damaging Mercury’s reputation and demand.
Dropped
- DroppedRisks Related to Business Operations and Our Industry
Trade policies could increase the cost of our manufacturing operations, potentially reducing our gross margins and demand for our products
- DroppedRisks Related to Business Operations and Our Industry
fluctuations in the value of the Plan’s assets. As of June 27, 2025, we had a liability of $5.3 million in Other non-current liabilities representing the net under-funded status of the Plan
- DroppedRisks Related to M&A and Acquisition Integration
We may incur substantial indebtedness
- DroppedRisks Related to Legal, Regulatory and Compliance Matters
If we are unable to continue to obtain U.S. government authorization regarding the export of our products, or if current or future export laws limit or otherwise restrict our business, we could be prohibited from shipping our products to certain countries, which would harm our ability to generate revenue
Reworded
- 60% rewrittenRisks Related to Business Operations and Our Industry
Failure to respond to competition or evolving technology could lead to customer loss and missed business opportunities. The emergence of commodity-type substitutes may cause customers to delay purchases or seek alternatives
The current text removes the prior references to design wins and bookings being affected by delivery problems, narrowing the operational impact described.
- 55% rewrittenRisks Related to Legal, Regulatory and Compliance Matters
We face risks and uncertainties associated with defense-related contracts
The current text adds that Mercury could lose contract awards when its or a prime contractor’s pricing or product offering is not competitive.
- 48% rewrittenRisks Related to Business Operations and Our Industry
There can be no assurance that one or more of these factors will not have a material adverse effect on our future international activities and, consequently, on our business and results of operations
The Swiss pension disclosure updates the balance-sheet date from June 27, 2025 to July 3, 2026.
- 38% rewrittenRisks Related to Our Common Stock
The trading price of our common stock may continue to be volatile, which may adversely affect our business, and investors in our common stock may experience substantial losses
No substantive change is visible between the prior-year and current-year stock-price volatility risk.
- 38% rewrittenRisks Related to Business Operations and Our Industry
The loss of one or more of our largest customers or programs could adversely affect our results of operations
Customer concentration changed: fiscal 2026 revenue shares were RTX 15%, Lockheed Martin 11% and Northrop Grumman 10%.
- 35% rewrittenRisks Related to Business Operations and Our Industry
We are exposed to risks associated with international operations and markets
International revenue declined to 2% in fiscal 2026 from 5% in fiscal 2025 and 2024.
- 28% rewrittenRisks Related to Information Technology and Intellectual Property
We may need to invest in new information technology systems and infrastructure to scale our operations
The current text is truncated after discussing maximizing existing systems, so the prior explicit cost-reduction and efficiency warning is not shown.
- 28% rewrittenRisks Related to Business Operations and Our Industry
Price inflation for labor and materials could adversely affect our business, results of operations and financial condition
The current text specifies inflation has occurred since the pandemic and defines firm-fixed-price contracts as FFP.
- 21% rewrittenRisks Related to Business Operations and Our Industry
We may be unable to obtain critical components from suppliers, which could disrupt or delay our ability to deliver products to our customers
- 21% rewrittenRisks Related to Business Operations and Our Industry
Our need for continued or increased investment in R&D may increase expenses and reduce our profitability
- 21% rewrittenRisks Related to Business Operations and Our Industry
We may not be able to effectively manage our relationships with contract manufacturers
- 21% rewrittenRisks Related to Information Technology and Intellectual Property
If we suffer ransomware breaches, data breaches, or phishing diversions involving the designs, schematics or source code for our products or other sensitive information, our business and financial results could be adversely affected
All 37 risk factors
Headings as the filing states them, in filing order.
Risks Related to Business Operations and Our Industry
- 01We may be unable to increase production to satisfy the increasing demand for our productsNew
- 02We depend heavily on defense electronics programs that incorporate our products and services, which may be only partially funded and are subject to potential termination and reductions and delays in government spending
- 03Economic, capital market and political conditions could adversely affect our business, results of operations and financial condition
- 04Price inflation for labor and materials could adversely affect our business, results of operations and financial condition28% rewritten
- 05The loss of one or more of our largest customers or programs could adversely affect our results of operations38% rewritten
- 06Ineffective inventory management may lead to excess or obsolete stock, higher costs, operational disruptions or inaccurate valuationNew
- 07Failure to respond to competition or evolving technology could lead to customer loss and missed business opportunities. The emergence of commodity-type substitutes may cause customers to delay purchases or seek alternatives60% rewritten
- 08competitors into aerospace and defense electronics could reduce demand for our products, negatively impacting revenue and operating resultsNew
- 09Competition from existing or new companies could cause us to experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities and the loss of market share
- 10We may be unable to obtain critical components from suppliers, which could disrupt or delay our ability to deliver products to our customers21% rewritten
- 11Price escalation for semiconductor and memory components may adversely affect our profitabilityNew
- 12Trade policies and export controls could significantly increase our manufacturing costs, reduce gross margins and disrupt demand for our productsNew
- 13We may not be able to effectively manage our relationships with contract manufacturers21% rewritten
- 14We are exposed to risks associated with international operations and markets35% rewritten
- 15There can be no assurance that one or more of these factors will not have a material adverse effect on our future international activities and, consequently, on our business and results of operations48% rewritten
- 16Our need for continued or increased investment in R&D may increase expenses and reduce our profitability21% rewritten
- 17Our results of operations are subject to fluctuation from period to period and may not be an accurate indication of future performance
- 18We rely on the significant experience and specialized expertise of our senior management, engineering and operational staff and must retain and attract qualified and highly skilled personnel to grow our business successfully
- 19If we experience a disaster or other business continuity problem, we may not be able to recover successfully, which could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability
- 20Our insurance coverage, customer indemnifications or other liability protections may be inadequate to cover our significant business risks, which could have a material adverse effect on our financial position
Risks Related to Our Growth Strategy, M&A and Acquisition Integration
- 21Implementation of our growth strategy may not be successful, which could affect our ability to increase revenues and profits
- 22Acquisitions may adversely affect our financial condition
- 23On November 4, 2025, we amended our Revolver, providing for a new five-year revolving credit facility with a borrowing capacity of $850.0 million. As of July 3, 2026, we had $441.5 million of outstanding borrowings on the RevolverNew
- 24We have a significant amount of goodwill and intangible assets on our consolidated financial statements that are subject to impairment based upon future adverse changes in our business or prospects
Risks Related to Legal, Regulatory and Compliance Matters
- 25We face risks and uncertainties associated with defense-related contracts55% rewritten
- 26system audit by DCAA. Going forward, we may also need to enhance our processes and information systems to support cost estimating, accounting, purchasing and earned value management systemsNew
- 27Our products are complex, and undetected defects may increase our costs, harm our reputation with customers or lead to costly litigation
Risks Related to Information Technology and Intellectual Property
- 28We may need to invest in new information technology systems and infrastructure to scale our operations28% rewritten
- 29and benefit of our current information technology and business tools could impact our ability to meet cost reduction and planned efficiency and operational improvement goalsNew
- 30If we suffer ransomware breaches, data breaches, or phishing diversions involving the designs, schematics or source code for our products or other sensitive information, our business and financial results could be adversely affected21% rewritten
- 31We may be unsuccessful in protecting our intellectual property rights which could result in the loss of a competitive advantage. If we become subject to intellectual property infringement claims, we could incur significant expenses and could be prevented from selling specific products
- 32The unauthorized disclosure of our trade secrets could harm our businessNew
Risks Related to Our Common Stock
- 33The trading price of our common stock may continue to be volatile, which may adversely affect our business, and investors in our common stock may experience substantial losses38% rewritten
- 34We have never paid cash dividends on our common stock and we do not anticipate paying any dividends in the foreseeable future
- 35We may need additional capital and may not be able to raise funds on acceptable terms, if at all. In addition, any funding through the sale of additional common stock or other equity securities could result in additional dilution to our stockholders and any funding through indebtedness could restrict our operations
- 36Provisions in our organizational documents and Massachusetts law and other actions we have taken could make it more difficult for a third party to acquire us
- 37Shareholder activism could cause us to incur significant expense, disrupt our business, result in a proxy contest or litigation and impact our stock price
Other Mercury Systems 10-Ks
- FY2025 10-K risk factors32 risks
Heavy reliance on defense electronics programs and defense prime contractors accounting for up to 98% of net revenues. Customer concentration with RTX Corporation, Lockheed Martin, and others creates significant revenue exposure. Significant indebtedness with credit availability tied to meeting minimum consolidated EBITDA levels.
Filed Aug 11, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.