SECURITIES AND EXCHANGE COMMISSION x ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 28, 201027, 2011
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO 
| DELAWARE | 52-0729657 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| 11126 McCormick Road, Hunt Valley, Maryland | 21031 | |
| (Address of principal executive offices) |
| Title of each class | Name of each exchange on which registered | |||
|---|---|---|---|---|
| Common Stock, $0.01 par value | NASDAQ Global Market |
$77,988,214. 7,627,273. Risk Factors Unresolved Staff Comments Legal Proceedings Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services Exhibits, Financial Statement Valuation and Qualifying Accounts TESSCO Technologies Incorporated (TESSCO, we, or the Company) The products that we use in these solutions come from world class manufacturers and fall within the following broad business segment 27, 2011. As of March total consolidated revenues. Our customer base consists of commercial customers and consumers, which accounted for approximately SMUs and government customers include commercial entities, major utilities, transportation companies, installation centers, federal agencies and state and local governments. addition to our affinity programs, we maintain our own internally developed consumer Web site, We operate as a team of teams structured to enhance marketing innovation, customer focus and operational excellence and consist of these integrated units: other TESSCO customers and vendors. Customer relationship representatives pursue these customer inquiries through distribution of our Knowledge Tools and through phone contact, electronic communications and field visits. The information technology system tracks potential customer identification from the initial marketing effort through the establishment and development of a purchasing relationship. Once a customer relationship is established, we carefully analyze purchasing patterns and identify opportunities to encourage customers to make more frequent purchases of a broader array of products. Scheduled contacts are made to each regularly purchasing customer for the purpose of information dissemination, order generation, database maintenance and the overall enhancement of the business relationship. The process is aimed at commercial customers who design, build, run, maintain and use wireless systems, its feature-rich capabilities include: Our Knowledge Tools empower our customers to make better decisions by delivering product knowledge, rather than just information. These tools also afford our manufacturers the opportunity to develop their brands and promote their products to a broad and diverse customer base. Customer Support and Order Entry: Our customer support teams are responsible for responding to what we refer to as "the moments of truth" by delivering sales and customer support services through an effective and efficient transaction system. We also continually monitor our customer service performance through report cards sent for each product delivery, customer surveys and regular interaction with customers. By combining our broad product offering with a commitment to superior customer service, we seek to reduce a customer's overall procurement costs by enabling the customer to consolidate the number of suppliers from which it obtains products, while also reducing the customer's need to maintain high inventory levels. We believe that we have been successful to date in pursuing a highly integrated, technologically advanced and efficient method of operations; however, disruption to our day-to-day operations, including failure of our information technology system, distribution system, or freight carrier interruption, could impair our ability to receive and process orders or to ship products in a timely and cost-efficient manner. The wireless communications distribution industry is competitive and fragmented, and is comprised of distributors, such as Hutton Communications, Brightpoint, We believe, however, that our strength in service, the breadth and depth of our product offering, our information technology system, and our large customer base and purchasing relationships with approximately 380 manufacturers, provide us with a significant competitive advantage over new entrants to the market. believe we differentiate ourselves from our competitors based on the breadth of our product offering, our ability to quickly provide products and supply chain solutions in response to customer demand and technological advances, our knowledge and expertise in wireless technologies and the wireless marketplace, the level of our customer service and the reliability of our order fulfillment process. As of March or sales pursuant to this relationship, could terminate at any time with little or no notice. As a result, if this relationship were to terminate, and unless and until replaced from other sources, our revenue and earnings would substantially decrease and our stock price would likely decline. We have experienced the loss and changes in the business habits of significant customer and vendor relationships in the past and expect to do so in the future. It is the nature of the business. Over the past decade, however, we have generally been successful in replacing significant customer and vendor relationships when lost, and notwithstanding these losses, our revenues over this period have generally increased. There can be no assurance, however, that we will be successful in replacing any of our current relationships if and when lost, or in the event of a substantial reduction in revenues from any such relationship, including our relationship with AT&T Mobility. Unless and until replaced, any such loss will likely have a material adverse affect on our business, results of operations and financial condition, and our stock price will likely be adversely affected. We may be unable to successfully execute our merchandising and marketing strategic initiatives. At present, there are 4,303 shares available for future awards under our incentive plan and we have no immediate plan to get shareholder approval for an increase in such number. This may have an adverse effect on our continued ability to attract and retain, and motivate, our employees. conduct our business in the ordinary course could be materially and adversely affected. Similarly, if our office locations in Maryland, Nevada or Texas were to be significantly damaged or destroyed, our ability to conduct marketing, sales and other corporate activities in the ordinary course could be adversely affected. All goodwill and intangible assets have been allocated to the Network Infrastructure segment. then a valuation allowance must be established with a corresponding charge to net income. Such charges could have a material adverse effect on our results of operations or financial condition. other regulatory legislation for that quarter, and therefore such a sales shortfall would have a disproportionate effect on our net income for the quarter. Applicable. Fiscal Year 2009 First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year 2010 First Quarter Second Quarter Third Quarter Fourth Quarter 2,072. fiscal year 2010 at an average price of without violating this covenant. TESSCO Technologies Incorporated Russell 2000 Peer Group(1) STATEMENT OF INCOME DATA Revenues Cost of goods sold Gross profit Selling, general and administrative expenses Income from operations Interest, net Income before provision for income taxes Provision for income taxes Net income Diluted earnings per share(1)(2) Cash dividends declared per common share(1) Percentage of Revenues Revenues Cost of goods sold Gross profit Selling, general and administrative expenses Income from operations Interest, net Income before provision for income taxes Provision for income taxes Net income SELECTED OPERATING DATA Average commercial buyers per month Average consumer buyers per month Return on assets(3) Return on equity(4) BALANCE SHEET DATA Working capital Total assets Short-term debt Long-term debt Shareholders' equity Revenues Cost of goods sold Gross profit Selling, general and administrative expenses Income from operations Interest, net Income before provision for income taxes Provision income taxes Net income Diluted earnings per share(1)(2) Cash dividends declared per common share(1) Percentage of Revenues Revenues Cost of goods sold Gross profit Selling, general and administrative expenses Income from operations Interest, net Income before provision for income taxes Provision for income taxes Net income SELECTED OPERATING DATA Average commercial buyers per month Average consumer buyers per month Return on assets(3) Return on equity(4) The wireless communications distribution industry is competitive and fragmented, and is comprised of several national distributors. In addition, many manufacturers sell direct. Barriers to entry for distributors are relatively low, particularly in the mobile devices and accessory market, and the risk of new competitors entering the market is high. Consolidation of larger wireless carriers has and will most likely continue to impact our current and potential customer base. In addition, the agreements or arrangements with our customers or vendors looking to us for product and supply chain solutions are typically of limited duration and are terminable by either party upon several months or otherwise short Commercial Revenues Network Infrastructure: Public Carriers and Network Operators Resellers SMUs and Governments Total Network Infrastructure Mobile Devices and Accessories: Public Carriers and Network Operators Resellers SMUs and Governments Total Mobile Devices and Accessories Installation, Test and Maintenance: Public Carriers and Network Operators Resellers SMUs and Governments Total Installation, Test and Maintenance Total Commercial Revenues Consumer Revenues—Mobile Devices and Accessories Total Revenues Commercial Gross Profit Network Infrastructure: Public Carriers and Network Operators Resellers SMUs and Governments Total Network Infrastructure Mobile Devices and Accessories: Public Carriers and Network Operators Resellers SMUs and Governments Total Mobile Devices and Accessories Installation, Test and Maintenance: Public Carriers and Network Operators Resellers SMUs and Governments Total Installation, Test and Maintenance Total Commercial Gross Profit Consumer Gross Profit—Mobile Devices and Accessories Total Gross Profit Selling, general and administrative expenses Income from operations Interest, net Income before provision for income taxes Provision for income taxes Net income Diluted earnings per share(1)(2) 6.7%, respectively, compared with fiscal year 2010. Interest, Net.Net interest expense decreased from $664,300 in fiscal year 2009 to $318,300 in fiscal year 2010, primarily due to decreased average borrowings on our revolving credit facility and lower interest rates. As noted below, beginning October 1, 2005, we entered into a receive variable/pay fixed interest rate swap on our existing term loan, thus fixing the interest rate on this loan at 6.38%. Interest expense on our other debt instruments had only minor variances from year-to-year in total. Liquidity and Capital Resources Cash flow provided by operating activities Cash flow used in investing activities Cash flow used in financing activities Net increase (decrease) in cash and cash equivalents accounts payable is largely due to the timing and credit terms of inventory receipts. fiscal year 2011 as compared to 2010. 27, 2011. $207,800. factors. customers. 2009. purchase order or a web-based order. We record revenues when risk of loss has passed to the customer. In most cases, shipments are made using FOB shipping terms. For a portion of our sales, we use FOB destination terms and record the revenue when the product is received by the customer. Our prices are always fixed at the time of sale. Historically, there have not been any material concessions provided to or by customers, future discounts, or other incentives subsequent to a sale. We sell under normal commercial terms and, therefore, we only record revenues on transactions where collectibilty is reasonably assured. due 30 days from the date of the invoice. We charge-off receivables deemed to be uncollectible to the allowance for doubtful accounts. Accounts receivable balances are not collateralized. measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of March subject ASSETS ASSETS Current assets: Current assets: Cash and cash equivalents Trade accounts receivable, net of allowance for doubtful accounts of $1,516,600 and $1,874,700, respectively Product inventory Deferred tax assets Prepaid expenses and other current assets Total current assets Property and equipment, net Property and equipment, net Goodwill, net Goodwill, net Other long-term assets Other long-term assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current liabilities: Trade accounts payable Payroll, benefits and taxes Income and sales tax liabilities Accrued expenses and other current liabilities Revolving line of credit Current portion of long-term debt Total current liabilities Deferred tax liabilities Deferred tax liabilities Long-term debt, net of current portion Long-term debt, net of current portion Other long-term liabilities Other long-term liabilities Total liabilities Commitments and Contingencies Shareholders' equity: Shareholders' equity: Preferred stock, $0.01 par value, 500,000 shares authorized and no shares issued and outstanding Common stock, $0.01 par value, 15,000,000 shares authorized 12,282,045* shares issued and 7,231,878* shares outstanding as of March 28, 2010, and 12,061,936* shares issued and 7,085,418* shares outstanding as of March 29, 2009 Additional paid-in capital Treasury stock, at cost, 5,050,167* shares and 4,976,518* shares, respectively Retained earnings Accumulated other comprehensive loss, net of tax Total shareholders' equity Total liabilities and shareholders' equity Revenues Cost of goods sold Gross profit Selling, general and administrative expenses Income from operations Interest, net Income before provision for income taxes Provision for income taxes Net income Basic earnings per share* Diluted earnings per share* Cash dividends declared per common share* Balance at April 1, 2007 Cumulative effect of adoption of FASB Interpretation No. 48 Proceeds from issuance of stock Treasury stock purchases Non-cash stock compensation expense Excess tax benefit from stock-based compensation Comprehensive Income: Net income Other comprehensive loss, net of tax Total comprehensive income Balance at March 30, 2008 Balance at March 30, 2008 Proceeds from issuance of stock Treasury stock purchases Non-cash stock compensation expense Excess tax benefit from stock-based compensation Comprehensive Income: Net income Other comprehensive loss, net of tax Total comprehensive income Balance at March 29, 2009 Proceeds from issuance of stock Treasury stock purchases Non-cash stock compensation expense Excess tax loss from stock-based compensation Cash dividends paid Comprehensive Income: Net income Other comprehensive income, net of tax Total comprehensive income Balance at March 28, 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Gain on the sale of property and equipment Non-cash stock compensation expense Deferred income taxes and other Change in trade accounts receivable Change in product inventory Change in prepaid expenses and other current assets Change in trade accounts payable Change in payroll, benefits and taxes Change in income and sales tax liabilities Change in accrued expenses and other current liabilities Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment Proceeds from sale of property and equipment Acquisition of business in purchase transaction Additional earn-out payments on acquired businesses Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings from revolving line of credit Payments on long-term debt Proceeds from debt issuance Proceeds from issuance of stock Cash dividends paid Purchases of treasury stock and repurchases of stock from employees and directors for minimum tax withholdings Payments of debt issue costs Excess tax (loss) benefit from stock-based compensation Net cash used in financing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS, beginning of period CASH AND CASH EQUIVALENTS, end of period Information technology equipment and software Configuration, Fulfillment and Delivery technology system Furniture, telephone system, equipment and tooling Building, building improvements and leasehold improvements indefinite lived intangible assets are not amortized, but rather are tested for impairment at least annually or whenever an impairment indicator is identified. The Company performs its annual impairment test on the first day of its fourth quarter. Intangible assets that are not considered to have an indefinite useful life are amortized over their useful life of 4 to 6 years using the straight-line method. Intangible assets other than goodwill are recorded within other long-term assets in the 2009. Prices are always fixed at the time of sale. Historically, there have not been any material concessions provided to or by customers, future discounts, or other incentives subsequent to a sale. The Company sells under normal commercial terms and, therefore, only records sales on transactions where collectibilty is reasonably assured. The Company recognizes revenues net of sales tax. 2009. share using the two-class method for all periods presented. The standard reduced full fiscal year 2009 Land Land Building, building improvements and leasehold improvements Building, building improvements and leasehold improvements Information technology equipment and computer software Information technology equipment and computer software Furniture, telephone system, equipment and tooling Furniture, telephone system, equipment and tooling Less accumulated depreciation and amortization Less accumulated depreciation and amortization Property and equipment, net Amortized Intangible Assets: Customer contracts Covenants not to compete Other Unamortized Intangible Assets: Trademarks Total Other Intangible Assets 2011 2012 2013 2014 2015 Balance at March 30, 2008 Current year acquisitions Earn-outs on acquisitions Balance at March 29, 2009 Current year acquisitions Earn-outs on acquisitions Balance at March 28, 2010 the amount of common stock permitted to be repurchased by the Company (beginning on the inception date of the Credit Agreement) from $10 million to $15 million, during the term of the credit facility. in any 12 month period, assuming continued compliance by the Company with the otherwise applicable terms of the Credit Agreement. Pursuant to the relevant documents, the financial covenants included in the Credit Agreement for the unsecured revolving credit facility are also applicable to the 2011 2012 2013 2014 2015 Thereafter 2011 2012 2013 Thereafter and/or use taxes which have been claimed and remitted. No federal, state and local income tax returns are currently under examination. Year ended March 28, 2010 Commercial revenues: Public carriers and network operators Resellers SMUs and governments Total commercial revenues Consumer revenues Total revenues Commercial gross profit: Public carriers and network operators Resellers SMUs and governments Total commercial gross profit Consumer gross profit Total gross profit Selling, general and administrative expenses Income from operations Interest expense, net Income before provision for income taxes Provisions for income taxes Net income Product inventory Year ended March 29, 2009 Commercial revenues: Public carriers and network operators Resellers SMUs and governments Total commercial revenues Consumer revenues Total revenues Commercial gross profit: Public carriers and network operators Resellers SMUs and governments Total commercial gross profit Consumer gross profit Total gross profit Selling, general and administrative expenses Income from operations Interest expense, net Income before provision for income taxes Provisions for income taxes Net income Product inventory Year ended March 30, 2008 Commercial revenues: Public carriers and network operators Resellers SMUs and governments Total commercial revenues Consumer revenues Total revenues Commercial gross profit: Public carriers and network operators Resellers SMUs governments Total commercial gross profit Consumer gross profit Total gross profit Selling, general and administrative expenses Income from operations Interest expense, net Income before provision for income taxes Provisions for income taxes Net income Product inventory Consolidated Financial Statements (Continued) Statutory federal rate State taxes, net of federal benefit Non-deductible expenses Other Effective rate Federal: Current Deferred State: Current Deferred Provision for income taxes Deferred tax assets: Accrued expenses and reserves Stock based compensation Deferred tax liabilities: Depreciation Other assets consolidated statement of income for fiscal year $220,100. The total amount of interest and penalties related to tax uncertainties recognized in the consolidated statement of income for fiscal year 2009 was $80,000, and the total amount included in the unrecognized tax benefits liability was $145,600. Beginning balance of unrecognized tax benefit Increases related to prior period tax positions Increases related to current period tax positions Reductions as a result of a lapse in the applicable statute of limitations Reductions as a result of settlements Ending balance of unrecognized tax benefits Earnings per share—Basic: Net earnings Less: Distributed and undistributed earnings allocated to nonvested stock Earnings available to common shareholders—Basic Weighted average common shares outstanding—Basic Earnings per common share—Basic Earnings per share—Diluted: Net earnings Less: Distributed and undistributed earnings allocated to nonvested stock Earnings available to common shareholders—Diluted Weighted average common shares outstanding—Basic Effect of dilutive options Weighted average common shares outstanding—Diluted Earnings per common share—Diluted shares, respectively, of the Outstanding, non-vested beginning of period Granted Vested Forfeited/canceled Outstanding, non-vested end of period 2010 2011 2012 2013 In addition, the Compensation Committee, with the concurrence of the full Board of Directors, also granted restricted stock awards to the non-employee directors of the Company, providing them with the opportunity to have issued to them at a later date, upon vesting, up to 6,000 shares each, or up to 36,000 additional shares of the Company’s common stock in the aggregate. Restricted stock awards are subject to time vesting but not performance vesting. These restricted stock awards will vest 25% on or about each of May 1 of 2012, 2013, 2014 and 2015, provided that the participant remains associated with the Company (or meets other criteria as prescribed in the agreement) on each such date. interest rates over time, provided that the option remains outstanding. The following table summarizes the pertinent option information for outstanding options: Outstanding, beginning of year Granted Exercised Cancelled Outstanding, end of year Exercisable, end of year Liabilities: Interest rate swap agreement, net of tax Total liabilities at fair value Note payable to a Bank Note payable to the Maryland Economic Development Corporation Note payable to Baltimore County common stock of the Company having a market value equal to twice the exercise price of a right. Form 10-K. Annual Report on Form 10-K. Consolidated Statements of Income for the fiscal years ended March 27, 2011, March 28, 2010 and March 29, 2009 Consolidated Statements of Changes in Shareholders' Equity for the fiscal years ended March 27, 2011, March 28, 2010 and March 29, 2009 Consolidated Statements of Cash Flows for the fiscal years ended March 27, 2011, March 28, 2010, and March 29, 2009 Notes to Consolidated Financial Statements Allowance for doubtful accounts: Balance, beginning of period Provision for bad debts Write-offs and other adjustments Balance, end of period Inventory Reserve: Balance, beginning of period Inventory reserve expense Write-offs and other adjustments Balance, end of period Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.Noneýxýxý xNo oý oLarge accelerated filer oAccelerated filer oNon-accelerated filer oSmaller reporting company ýýx27, 2009,26, 2010, was $46,328,339.20, 2010,18, 2011, was 7,401,196. The shares have been adjusted to reflect the April 2010 announcement of a stock dividend in order to effect a three-for-two stock split (see Note 3 to the Consolidated Financial Statements of this Annual Report on Form 10-K).registrant's 2010registrant’s 2011 Annual Meeting of Shareholders, scheduled to be held July 28, 2010,21, 2011, are incorporated by reference into Part III of this Annual Report on Form 10-K. Business Business3 14112219 Properties 20 Properties222220Item 4. (Removed (Removed and Reserved)2220 232126232825423843397466Item 9A(T).74667568 75687568756875687568 SchedulesSchedule756873 79Signatures7480Generalarchitects better productis Your Total Source® to build, use and value chain solutions, at lower costs, to support the construction, operation and use of mobility and datamaintain wireless systems. The convergence of wireless and the internet is revolutionizing the way the world lives and works. New systems and applications are creating challenges and opportunities at an unprecedented rate. TESSCO is there, thinking in new ways for exceptional outcomes. TESSCO architects and delivers, with innovation, productivity and speed, the product and value chain solutions to organizations responsible for building, operating and maintaining wireless voice, data and video systems. TESSCO is committed to delivering, fast and complete, the needs of wireless system operators, contractors, resellers and self-maintained utility, transportation, enterprise and government organizations.the following applications:•· Mobile Radio and Unified Communications · Base Station Infrastructure · Wire Area Networks · Local Area Network · Security and Surveillance Networks · Remote Monitoring and Control · Mobility and User Devices Mobile Radio Communications•Base Station Infrastructure•Wire Area Networks•Local Area Network•Security and Surveillance Networks•Remote Monitoring and Control•Mobility and User Devicescategories ofcategories: network infrastructure, mobile devices and accessories, and installation, test and maintenance products.(KCDC™(KCDCTM), allows customers and manufacturers the opportunity to streamline the supply chain process and lower total inventories and costs by providing guaranteed availability and complete, on-time delivery to the point of use."total source"“total source” operations in 1982, reincorporated as a Delaware corporation in 1987, and have been listed on the NASDAQ Global Market (symbol: TESS), since 1994. Today, we operate 24 hours a day, seven days a week, under ISO 9001:2008 registration.12,40012,700 commercial customers per month including a diversified mix of carrier and public network operators, infrastructure sitetower owners, program managers, contractors and integrators, wireless internet service providers, industrial and enterprise self-maintained users (including railroads, utilities, mining operators, oil and gas operators and technicians), governments, manufacturers, repair centers, retailers, dealers and value-added resellers. Additionally, we currently serve an average of approximately 800700 consumers per month, including through affinity partners and direct-to-consumer programs.April 28,May 26, 2010, our Board of Directors announcedwe issued a stock dividend in order to effect a three-for-two stock split of our common stock. Each holder of our common stock, par value $0.01 per share, as of the close of business on May 12, 2010, will receive on May 26, 2010, a stock dividend of one additional share of common stock for every two outstanding shares held. AllThe share prices and number of shares included in this Annual Report on Form 10-K prior to the May 26, 2010 stock split have been retroactively restated to reflect the stock dividend for all periods presented, unless otherwise indicated.presented. The referencereferences from time to time herein to "split adjusted"“split adjusted” shares is for convenience of the reader; and the absence in some places of such reference should not be construed to mean that such numbers or values are not "split“split adjusted,"” unless noted as such.35%37%, 55% and 10%8% of fiscal year 20102011 revenues, respectively. Network infrastructure products are used to build, repair and upgrade wireless telecommunications, computing and Internet networks. Products include towers, site hardware, enclosures, cable, connectors, jumpers, base station antennas, cable and transmission lines, fixed and mobilepower systems, grounding, base station radios, bi-directional amplifiers, wireless broadband equipment,radios, wireless networking gear, wireless local area network (WLAN) products, wireless networking, filtering systems, small towers, lightning protection devices, connectors,and security and surveillance products, power systems and miscellaneous hardware.products. Our network infrastructure service offering includes connector installation, custom jumper assembly, filter product tuning, site kitting, logistics integration, application engineering network design and wireless network training. Mobile devices and accessory products include cellular phone and data device accessories such as replacement batteries, cases, speakers,hands-free kits, mobile amplifiers, power supplies, bluetooth and corded headsets, mounts, car antennas, music accessories and data and memory cards as well as two-way radios and related accessories. Retail merchandising displays, promotional programs, customized order fulfillment services and affinity-marketing programs, including providing outsourced call centers and private label Internet sites, complement our mobile devices and accessory product offering. Installation, test and maintenance products are used to install, tune, maintain and repair wireless communications equipment. Products include sophisticated analysis equipment and various frequency-, voltage- and power-measuring devices, as well as an assortment of tools, hardware, GPS, safety and replacement and component parts and supplies required by service technicians. For more detailed financial information regarding our business segments for each of the past three fiscal years, see Note 10 to the Consolidated Financial Statements included in Item 8 to this Annual Report on Form 10-K for the fiscal year ended March 28, 2010.which are primarily subscriber accessory products and infrastructure accessory components, are developed and offered under TESSCO owned-brands including, Wireless Solutions®SolutionsÒ, Ventev TerraWave®Ò, TerraWave® and Airstream. The products we offer under the TESSCO-owned brands generally consist of device accessory products that fall into the mobile device and accessory segment as well as WLAN and network infrastructure accessory products and remote monitoring and control solutions that fall into the network infrastructure segment. Also, our WLAN certification training is offered under our GigaWave®GigaWave® trade name.name and is reported in the network infrastructure segment. We have not incurred significant research and development expenditures in any of the last three fiscal years."just-in-time"“just-in-time” delivery, to specific delivery locations, designed to eliminate the customer'scustomer’s need for staging and warehousing. Our services that increase customer control include predetermined monthly pricing levels, the ability to monitor multi-site purchasing with pre-approved, customized parameters indicating who is able to order how much of which specific products, order delivery tracking, product usage tracking, history reporting and alternative financing options.Table of Contents28, 2010,27, 2011, we offered products purchased from approximately 420380 manufacturers. A substantial portion of our inventory purchases areis concentrated with a small number of vendors. In fiscal year 2010,2011, sales of products purchased from our largest vendor, Otter Products, generated approximately 13% of our revenue, the majority of which was sold to our largest customer AT&T Mobility. Sales of products from our next nine top vendors accounted for approximately 27% of our fiscal year 2011 revenues, thus resulting in revenue from sales of products purchased from our top ten vendors generatedof approximately 40% of our total revenues. There were no vendors whose products sold by us accounted for 10% of more of our total revenues in fiscal year 2010. Although we do not maintain long-term supply contracts with our vendors, we believe that for other than those products purchased by us as part of our relationship with Nokia Inc. (Nokia) as described below, alternative sources of supply are available for many of the product types we carry. The agreements and arrangements on which most of our larger vendor and customer relationships are based are of limited duration and terminable by either party upon several months or otherwise short notice.supplypreviously supplied repair and replacement materials to authorized service centers for Nokia primarily in the United States and Canada. Sales of the Nokia repair and replacement materials, that we purchase from Nokia and sell to or fulfill to service centers, accounted for approximately 3% of our total revenues in fiscal year 2010. This relationship is a complete supply chain relationship and, therefore, we have no alternative sources of supply. Nokia has recently notified us of their intent to terminateterminated our repair and replacement parts arrangement effective July 31,September 30, 2010. Accordingly, revenues and gross profits from this relationship will cease on that date. We also sell products otherhave ceased. During fiscal year 2011, sales from the Nokia relationship represented less than Nokia repair and replacement materials to many1% of these customers. When this arrangement with Nokia terminates in July 2010, we will maintain the ability to sell our other products to these customers.Customers97%98% and 3%2%, respectively, of fiscal year 20102011 revenues. Commercial customers share the characteristic that they are organizations that design, install, operate, repair or sell some type of wireless communications system and/or products. We categorizegroup our commercial customers into three different categories: 1) public carriers and network operators, 2) resellers and 3) self-maintained users (SMUs) and governments, which accounted for approximately 13%15%, 64%67% and 20%18%, respectively, of fiscal year 20102011 commercial revenues.marketsell to their customers under their brands. In many cases, we act as the merchant on behalf of the affinity-marketing client, interfacing with the customer, accepting the order, shipping from our inventory and collecting payment. Our affinity-marketing programs create a high level of customer service and supplementary income for the client through revenue share payments. InYourWirelessSource.com™YourWirelessSource.comTM, which offers cellular phone accessories and other complementary consumer wireless products.30%26% of our revenues during fiscal year 2010.2011. Our next nine largest customer relationships accounted for 10%11% of our total revenues during fiscal year 2010,2011, and therefore, our top ten customer relationships totaled 40%37% of our total revenues.servicesell to customers in over 100 countries, approximately 97% of our sales have been made to customers in the United States during each of the past three fiscal years. Due to our diverse product segments and our wide customer base, our business is not significantly affected by seasonality in the aggregate. However, sales to our retailers generally peak in our second and third quarters in preparation for the winter holiday season. Also, our network infrastructure sales are typically affected by weather conditions in the United States, especially in our fourth quarter.•· Understanding and anticipating customers' needs and building solutions by cultivating lasting relationships; · · Responding to what we refer to as "the moments of truth" by providing customers with sales, service and technical support, 24 hours a day, 7 days a week, 365 days a year; · Providing customers what they need, when and where they need it by delivering integrated product and supply chain solutions; and · Helping customers enhance their operations by providing real-time order tracking and performance measurement. Understanding and anticipating customers' needs and building solutions by cultivating lasting relationships;•Allowing customers to make the best decisions by delivering product knowledge, not just information, through our knowledge tools, includingThe Wireless Guide®, and TESSCO.com®, our Internet-based Solution and Transaction System;•Responding to what we refer to as "the moments of truth" by providing customers with sales, service and technical support, 24 hours a day, 7 days a week, 365 days a year;•Providing customers what they need, when and where they need it by delivering integrated product and supply chain solutions; and•Helping customers enhance their operations by providing real-time order tracking and performance measurement.infrastructure sitetower owners, program site managers, wireless Internet service providers, contractors and integrators); SMUs and governments (e.g., self-maintained users, governments, manufacturers, repair centers); resellers (e.g. retailers, dealers and value-added resellers); and consumers (e.g., affinity programs, Web store programs and fulfillment and consumer services). This organization allows for the development of unique product and solution offerings to meet the needs of our diverse customer base.TESSCO.com®TESSCO.com®, direct-marketing materials, advertisements in trade journals and industry trade shows, as well as through referrals fromthe attraction ofattracting prospects to TESSCO, the conversion ofconverting these prospects to buying customers, and the ultimate migrationultimately migrating them to loyal, total-source monthly buyers.SKUstock keeping unit (SKU) offered, including full product descriptions, category classifications, technical specifications, illustrations, product cost, pricing and delivery information, alternative and associated products, and purchase and sales histories. This information is available on a real-time basis to all of our personnel for product development, procurement, technical support, cataloging and marketing.TESSCO'sTESSCO’s marketing materials are used for both educating the industry and for promoting TESSCO'sTESSCO’s value. We utilize our WPKS to develop both broad-based and customized product solution information materials. These materials are designed to encourage both existing and potential customers to realize the value we provide in their product solution and supply chain decisions. These Knowledge Tools are an integrated suite of informational print and electronic media. They include:The Wireless Guide®, our product catalogue which is distributedavailable electronically on TESSCO.com and has periodically been sent to our current and prospective buyers;customers in hard copy form in the past; The Wireless Journal®, a trade journal with a bi-monthly circulation of approximately 80,000, which is designed to introduce the reader to our capabilities and product offerings, and contains information on significant industry trends and product reviews;The Wireless Update®, which is emailed monthly to more than 120,000 different individuals and is uniquely produced for various portions of our customer base;The Wireless Bulletin®Bulletin® family, includingThe Wireless Bulletin for Accessories for Handsets & Music Devices, The Wireless Bulletin for Installation, Test & Maintenance Products, The Wireless Bulletin for Security & Surveillance, The Wireless Bulletin for Site Planning, The Wireless Bulletin for Training,and andThe Wireless Bulletin for Wireless Networking Solutions,which are distributed throughout different times of the year and have an annual circulation of approximately 200,000; Technical Application Notes, Application Drawings and White Papers, which provide in-depth planning and installation instructions and diagrams; Tech Tips, which offer suggestions and ideas from TESSCO customers; and TESSCO.com®TESSCO.com®. In addition, TESSCO publishes online, Web-browser-enabled, companion versions of its many printed publications, including the newThe Wireless Bulletin Online, The Wireless Guide Onlineand which is updated three times each year.The Wireless Journal Online TESSCO.com®.•· · 13 product search options, ranging from keyword searches to product category browsing; · Real-time pricing and product availability; · Easy ordering capabilities, including a worksheet ordering tool which allows for the construction and configuration of a total-source order; additionally, worksheets can be saved with or without protection, as well as copied, shared, uploaded and emailed; · RSS Feeds that allow customers to see TESSCO’s newest products; · Order confirmation – specifying the contents, order status, delivery date, tracking number and total cost of an order; · Order reservations, order status, back-order details and four-month order history; · The ability to view invoices online and customer-specific pricing, based on our tiered pricing levels tied to a customer's aggregate purchase volume; · Comprehensive, targeted marketing pages for more than 250 product solutions; · Interactive, how-to illustrations for a range of wireless applications; · Library of videos and other valuable content; · Variety of useful customer service, financial and technical support pages; and · Feedback Center that makes it easy for customers to provide input on our services, Knowledge Tools and website. Electronic versions of various Knowledge Tools, including:The Wireless Update®,The Wireless Journal® and several customized versions ofThe Wireless Bulletin®;•13 product search options, ranging from keyword searches to product category browsing;•Real-time pricing and product availability;•Easy ordering capabilities, including a recently improved worksheet ordering tool which allows for the construction and configuration of a total-source order; additionally, worksheets can be saved with or without protection, as well as copied, shared, uploaded and emailed;•RSS feeds that allow customers to see TESSCO's newest products;•Order confirmation—specifying the contents, order status, delivery date, tracking number and total cost of an order;•Order reservations, order status, back-order details and four-month order history;•The ability to view invoices online and customer-specific pricing, based on our tiered pricing levels tied to a customer's aggregate purchase volume;•Comprehensive, targeted marketing pages for more than 250 product solutions;•Interactive, how-to illustrations for a range of wireless applications;•Library of videos and other valuable content;•Variety of useful customer service, financial and technical support pages; and•Feedback Center that makes it easy for customers to provide input on our services, Knowledge Tools and Web site.ourthe return on our inventory investment.28, 201027, 2011 and March 29, 2009,28, 2010, we had an immaterial level of backlog orders. Most backlog orders as of March 28, 2010,27, 2011, are expected to be filled within 90 days of fiscal year-end. For the fiscal years ended March 28, 201027, 2011 and March 29, 2009,28, 2010, inventory write-offs, excluding purchases from vendors for whom we hold goods on consignment, were 0.6%0.9% and 0.7%0.6% of total purchases, respectively. In many cases, we have been able to return slow-moving inventory to our vendors pursuant to stock rotation agreements. Inventory turns for fiscal years 2011 and 2010 were 10.4 and 2009 were 9.8, and 8.4, respectively. This increase is largely due to higher overall 16% increase in sales in fiscal year 2010, including higher sales to our large tier one carrier customer,2011, as compared to fiscal year 2009.2010 while maintaining approximately the same inventory levels.Table of Contents12,200 in fiscal year 2009 to 12,400 in fiscal year 2010.2010 to 12,700 in fiscal year 2011. An average of 800700 consumer end-users were served per month in fiscal year 20102011 as compared with 1,500800 in fiscal year 2009.2010. This decline in consumers is due to changes in relationships with some of our affinity partners.materials-handlingwarehouse management system, which is integrated with the product planning and procurement system, allows us to ensure inventory control, to minimize multiple product shipments to complete an order and to limit inventory duplication. Bar-coded labels are applied to every product, allowing distribution center personnel to utilize radio frequency scanners to locate products, fill orders and update inventory records in real-time, thus reducing overhead associated with the distribution functions. Orders are delivered to customers byWe contract with a variety of freight line and parcel transportation carrier partners with whom we contract.to deliver orders to customers.("PDG")(PDG) charges are generally calculated on the basis of the weight of the products ordered and on the delivery service requested, notrather than on distance to the customer. We believe that this approach emphasizes on-time delivery instead of shipment dates, enablesenabling customers to minimize their inventories and reduce their overall procurement costs while guarantying date specific delivery, thereby encouraging them to make us their total source supplier. Critical Our information technology system is critical to the success of our operations is our information technology system.operations. We have made substantial investments in the development of this system, which integrates cataloging, marketing, sales, fulfillment, inventory control and purchasing, financial control and internal and external communications. The information technology system includes highly developed customer and product databases and is integrated with our Configuration, Fulfillment and Delivery system. The information contained in the system is available on a real-time basis to all of our employees as needed and is utilized in every area of our operations.Webweb sites for certain affinity partners. These sites include control capabilities, including partner branding, independent landing pages and URLs, product filtering and purchase authorization limits that allow us to seamlessly interact with the customer, fulfill online orders and provide required information to these affinity partners.Table of ContentsWe expect theThe total purchase price, including earn-out payments, to bewas approximately $12.7$13.1 million.CompetitionEmbarqKGP Logistics, Westcon, Comstor, Tech Data, Ingram Micro, Superior Communications, Site Pro 1, Wincomm, Talley Communications and Alliance Semiconductor.Corporation. In addition, many manufacturers sell and fulfill directly to customers. Barriers to entry for distributors are relatively low, particularly in the mobile devices and accessory market, and the risk of new competitors entering the market is high. In addition, thenotice.notice. Accordingly, our ability to maintain these relationships is subject to competitive pressures and challenges. We believe, however, that our strength in service, the breadth and depth of our product offering, our information technology system, and our large customer base and purchasing relationships with approximately 420 manufacturers, provide us with a significant competitive advantage over new entrants to the market. Some of our current competitors have substantially greater capital resources and sales and distribution capabilities than we do. In response to competitive pressures from any of our current or future competitors, we may be required to lower selling prices in order to maintain or increase market share, and such measures could adversely affect our operating results.including "TESSCO®including: A Simple Way of Doing Business Better®," "DeliveringDelivering Everything for Wireless®, Delivering What You Need...WhenNeed…When and Where You Need It®It®," "Your Total Source®GigaWave Technologies®," "Your Virtual Inventory®Going Beyond the Ordinary®," "YourLinkUPS®, ORDERflow®, Solutions That Make Wireless Success. Nothing Less®," "The Wireless JournalWork®," "Wireless Solutions®," "The Wireless GuideTerraWave Solutions®," "The Wireless UpdateTESSCO®," "TESSCO TechnologiesThe Wireless Bulletin®®, TESSCO.com®," "TheVentev®, Ventev Innovations®, The Vital Link to a Wireless World®World®," "Transmitter®The Wireless Bulletin®," "T-Flash®The Wireless Guide®," "Techdirect®The Wireless Journal®," "A Simple Way of Doing Business®Wireless Solutions®," "TerraWave Solutions®"The Wireless Update®, Your Total Source®, and "GigaWave Technologies®."Your Virtual Inventory®, among others. Our general policy is to file for trademark and service mark protection for each of our trademarks and trade names and to enforce our rights against any infringement.20102011 and there are no material expenditures planned for such purposes in fiscal year 2011.2012.Employees28, 2010,27, 2011, we had 918874 full-time equivalent employees. Of our full-time equivalent employees, 442409 were engaged in customer and vendor service, marketing, sales and product management, 387373 were engaged in fulfillment and distribution operations and 8992 were engaged in administration and technology systems services. No employees are covered by collective bargaining agreements. We consider our employee relations to be excellent.Name Age Position NameAgePositionRobert B. Barnhill, Jr. 6667 Chairman, President and Chief Executive Officer Robert B. Barnhill, Jr. has served as president and chief executive officer since founding the current business in 1982. Mr. Barnhill has been a director of the Company since 1982, and has served, and continues to serve, as Chairman of the Board since November 1993. 39
Company'sCompany’s controller. Since March 2004, Mr. Young has served, and continues to serve, as Corporate Secretary. Prior to joining the Company, Mr. Young served as assistant vice president and assistant corporate controller at Integrated Health Services, Inc.NameAgePosition59 Company'sCompany’s chief financial officer from September 1993 to September 1999.50
55
experiencesexperience significant changes in demand internally or from their own customer bases, becomesbecome financially unstable, or are acquired by another company, our ability to generate revenues from these customers may be significantly affected, resulting in an adverse affect on our financial position and results of operations.2010,2011, sales to our largest customer relationship, AT&T Mobility, a top tier cellular carrier purchasing phone accessories, accounted for approximately 30%26% of total revenues.currentongoing weakness in the global financial crisiseconomic environment may have significant effects on our customers and suppliers that could result in material adverse effects on our business, operating results, and stock price. The currentfinancial crisis—economic environment – which has included, among other things, significant reductions in available capital and liquidity from banks and other providers of credit, substantial reductions and/or fluctuations in equity and currency values worldwide, significant decreases in consumer confidence and consumer and business spending, risinghigh rates of unemployment and concerns that the worldwide economy may enter into a prolonged recessionary period—continue to experience significant challenges – may materially adversely affect our customers'customers’ access to capital or willingness to spend capital on our products, and/or their levels of cash liquidity with which to pay for our products. In addition, the current global financial crisis may materially adversely affect our suppliers'suppliers’ access to capital and liquidity may continue to be affected, which may in turn adversely impact their ability to maintain inventories, production levels, and/or product quality, or cause them to raise prices or lower production levels, or result in their ceasing operation.currentweakness in the global financial crisiseconomic environment are difficult to forecast and mitigate. As a consequence, our operating results for a particular period may be more difficult to predict. Any of the foregoing effects could have a material adverse effect on our results of operations and financial condition, and could adversely affect our stock price.Our ability to borrow funds under our credit agreement could be constrained by the level of eligible receivables and inventory. Our borrowing availability under our existing revolving credit facility is limited to certain amounts of eligible accounts receivable and inventory. If the value of eligible accounts receivable and inventory were to decrease significantly, the amount available for borrowing under the facility could decrease.othersother carriers, or are otherwise involved in any significant transaction that results in them ceasing to do business with us, or significantly reducing the level of business that they do with us, our revenues from those customers could be significantly affected, possibly resulting in an adverse affect on our financial position and results of operations.TESSCO.com®TESSCO.com® and other affinity websites) for a significant percentage of our orders and information exchanges with our customers. The Internet and individual websites have experienced a number of disruptions and slowdowns, some of which were caused by organized attacks. In addition, some websites have experienced security breakdowns. There can be no assurances that our website will not experience any material breakdowns, disruptions or breaches in security. If we were to experience a security breakdown, disruption or breach that compromised sensitive information, this could harm our relationship with our customers or suppliers. Disruption of our website or the Internet in general could impair our order processing or more generally prevent our customers and suppliers from accessing information or placing orders. This could have an adverse affect on our business, financial position and results of operations.inunder our current and/or future stock incentive plans, which may be subject to shareholder approval.management'smanagement’s judgment in applying these factors. Goodwill and indefinite lived asset valuations have been calculated using an income approach based on the present value of future cash flows of each reporting unit. We could be required to evaluate the recoverability of goodwill and indefinite lived assets prior to the annual assessment if we experience disruptions to the business, unexpected significant declines in operating results, divestiture of a significant component of our business or sustained market capitalization declines. These types of events and the resulting analyses could result in goodwill and indefinite lived asset impairment charges in the future. Impairment charges could substantially affect our financial results in the periods of such charges. In addition, impairment charges would negatively impact our financial ratios and could limit our ability to obtain financing in the future. As of March 28, 2010,27, 2011, we had $9.9$12.5 million of goodwill and indefinite lived intangible assets, which represented approximately 6.5%7.8% of total assets.management'smanagement’s determination include the performance of the business, projections of future taxable income, and the feasibility of ongoing tax planning strategies. If based on available information, it is more likely than not that the deferred income tax asset will not be realizedcustomers'customers’ inability to repay us. This risk may increase if there is a general economic downturn affecting a large number of our customers and in the event our customers do not adequately manage their business or properly disclose their financial condition.crisisenvironment in 2008, certain of our suppliers, particularly those in the far east, have experienced financial difficulties and we believe it is possible that a limited number of suppliers may either cease operations or require additional financial assistance from usincreased prices in order to fulfill their obligations. Changes in our relationships with suppliers or increases in the costs of purchased raw materials, component parts or finished goods could result in delays, inefficiencies or our inability to market products. In addition, our profit margins would decrease if prices of purchased raw materials, component parts, or finished goods increase and we are unable to pass on those increases to our customers.Income Taxincome tax and Other Regulatory Legislationregulations.regulations and make plans for our structure and operations based upon existing laws and anticipated future changes in the law. When new legislation is enacted with minimal advance notice, or when new interpretations or applications of existing laws are made, we may need to implement changes in our policies or structure. We make plans for our structure and operations based upon existing laws and anticipated future changes in the law. We are susceptible to unanticipated changes in legislation, especially relating to income and other taxes, import/export laws, hazardous materials and other laws related to trade, accounting and business activities. Such changes in legislation may have a significant adverse effect on our business.66%52% of our outstanding common stock as of March 28, 2010.27, 2011. Robert B. Barnhill, Jr., our chairman, president and chief executive officer beneficially owned approximately 27%24% of our outstanding common stock as of March 28, 2010.27, 2011. Should these shareholders decide to act together, they would have the ability to significantly influence all matters requiring shareholder approval, including the election of directors and any significant corporate transaction requiring shareholder approval. a classified Board of Directors with staggered three-year terms, advance notice bylaws and limitations on the removal of directors other than for cause, and then only upon the affirmative vote of 75% of our outstanding common stock. We are also afforded the protections of Section 203 of the DGCL, which will prevent us from engaging in a business combination with a person who acquires at least 15% of our common stock for a period of three years from the date such person acquired such common stock, unless Board of Director or shareholder approval were obtained. Some believe that the provisions described above, as well as any resulting delay or prevention of a change of control transaction or changes in our Board of Directors or management, could deter potential acquirers or prevent the completion of a transaction in which our shareholders could receive a substantial premium over the then current market price for their shares. We, on the other hand, believe that these provisions serve to protect our shareholders against abusive takeover tactics, and to preserve and maximize the value of the Company for all shareholders, and to better ensure that each shareholder will be treated fairly in the event of an unsolicited offer to acquire the Company.investors'investors’ expectations. Most of our operating expenses, such as compensation expense,expenses, do not vary directly with the amount of sales and are difficult to adjust in the short term. As a result, if sales in a particular quarter are below expectations for that quarter, we may not proportionately reduce operating expensesapplicable.May 1, 2007,February 15, 2011, this lease was amended and now expires on December 31, 2012.2017. Monthly rent payments range from $124,700$141,900 to $144,600$169,400 throughout the lease term. In addition, we lease 66,000 square feet of office and warehouse space adjacent to the GLC in Hunt Valley, Maryland. On February 23, 2011, this lease was amended and now expires on July 31, 2014 and provides us with an ongoing annual option to terminate the lease. Monthly rent for the facility ranges from $27,500 to $33,000 throughout the lease term. Additional sales and marketing offices are located in leased office space in San Antonio, Texas. Monthly rent there is approximately $7,000 and the lease expires in November 2011. West coast sales and fulfillment isare facilitated by our Company-owned 115,000 square-foot Americas Sales & Logistics Center (ALC) located in Reno, Nevada. The ALC is used to configure and fulfill product and supply chain solutions, provide disaster backup for the GLC, and allow for future growth of staffing and increased fulfillment capabilities. On June 1, 2007, we entered into a four year lease for 66,000 square feet of office and warehouse space adjacent to our GLC in Hunt Valley, Maryland. Monthly rent for the facility is approximately $35,000. While we anticipate the need for additional space, we believe our existing facilities are generally adequate for our current requirements and that suitable additional space will be available as needed to accommodate future expansion of our operations. The GLC is encumbered by a deed of trust as security for a term loan. See Note 8 to our Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K. Each of our three business segments useuses all of our properties for either sales or fulfillment purposes. On April 28, 2010, we announced a stock dividend in order to effect a three-for-two stock split of our common stock. Each holder of our common stock, par value $0.01 per share, as of the close of business on May 12, 2010, will receive on May 26, 2010, a stock dividend of one additional share of common stock for every two outstanding shares held.20092010 and 20102011 are as follows (all values split adjusted): High Low $ 10.39 $ 7.25 10.13 7.86 9.56 4.42 7.77 3.70 $ 8.33 $ 4.66 12.27 7.07 12.16 8.77 16.66 10.31 High Low Dividends Declared Fiscal Year 2011 First Quarter $ 20.53 $ 15.05 $ 0.10 Second Quarter 18.26 10.00 0.10 Third Quarter 16.90 13.94 0.10 Fourth Quarter 16.96 10.50 0.10 Fiscal Year 2010 First Quarter $ 8.33 $ 4.66 $ -- Second Quarter 12.27 7.07 0.07 Third Quarter 12.16 8.77 0.07 Fourth Quarter 16.66 10.31 0.07 2010,2011, the number of shareholders of record of the Company was 69.87. We estimate that the number of beneficial owners as of that date was approximately 1,800.that our Board of Directors hadwe have since declared an initial quarterly cash dividend of $0.067 ($0.10 pre-split) per share of common stock, par value $0.01 per share, of the Company. Cash dividends were paid in the same per share amount on August 26, 2009, November 25, 2009 and March 1, 2010. On April 28, 2010, we declared a quarterly cash dividend of ten cents ($0.10) per share of common stock (equivalent to $0.15 per pre split share), par value $0.01 per share, of the Company, payable on June 2, 2010, to shareholders of record as of May 19, 2010.basis. Any future declaration of dividends and the establishment of any corresponding record and payment dates remains subject to further determination from time to time by the Board of Directors. Additional information with respect to the quarterly dividends declared in fiscal yearyears 2011 and 2010 is contained in our Selected Financial Data. The declaration and payment of future dividends will depend on many factors, including, but not limited to, our earnings, financial condition, business development needs and regulatory considerations, and is at the discretion of our Board of Directors. Until April 28, 2010, our revolving credit facility limited the amount of cash dividends that we may pay to $2.5 million annually. As of April 28, 2010, this amount was increased to $5.0 million in any twelve month period.28, 2010,27, 2011, the Board of Directors has authorized the purchase of up to 3,593,350 split adjusted shares of outstanding common stock under the stock buyback program. Shares may be purchased from time to time in the open market, by block purchase, or through negotiated transactions, or possibly other transactions managed by broker-dealers. No time limit has been set for completion or expiration of the program. Through the end of the fiscal year 2010,2011, we had repurchased 3,502,887 split adjusted3,505,187 shares through the program for approximately $30.7 million, or an average price of $8.76 per split adjusted share. Of the total shares repurchased, 2,300 were repurchased in fiscal year 2011 at an average price of $13.96 per share and 36,195 were repurchased in$9.90 per share and 255,231 were repurchased in fiscal year 2009 at an average price of $8.07$9.91 per share. An aggregate of 90,46388,163 shares remain available for repurchase under this program. No repurchases were made in any month during the fourth quarter of fiscal year 2010.2011. We also withhold shares from our employees and directors from time to time to facilitate employees'employees’ minimum federal and state tax withholdings related to vested performance stock units, restricted stock and exercised stock options. For fiscal years 20102011 and 20092010 this totaled $1,536,900 and $126,500, and $230,200, respectively. On July 1, 2008, separate from, and inourthe shares repurchased in the stock buyback program discussed immediately above, we repurchased all 705,000 split adjusted shares of our common stock held by Brightpoint, Inc. (Brightpoint) in a privately negotiated transaction. Pursuant to an agreement entered into between us and Brightpoint, we purchased Brightpoint's share holdings, comprisingtransaction on July 1, 2008 for approximately 9% of our total then outstanding common stock, for$6.4 million, or $9.09 per split adjusted share, or a totalshare. Our revolving credit facility and term loan with Wells Fargo Bank, National Association (formerly Wachovia Bank, National Association) and SunTrust Bank limit to $25.0 million the aggregate dollar value of $6,410,800. The price per share was determined based onshares that may be repurchased from May 31, 2007 forward. At March 27, 2011, we had the seven trading day trailing average closing priceability to repurchase approximately $11.3 million in additional shares of our common stock on the NASDAQ Global Market determined as of the close of trading on June 30, 2008. The purchase was funded through available cash and borrowings under our revolving credit facility. This transaction does not affect the number of shares available for repurchase under our stock buyback program."Equity“Equity Compensation Plan Information"Information” in the Company'sCompany’s Proxy Statement for the 20102011 Annual Meeting of Shareholders, which is anticipated to be filed pursuant to Regulation 14A no later than one hundred twenty (120) days following the end of the fiscal year reported on.27, 200526, 2006 in each of the Company'sCompany’s Common Stock, the Russell 2000 Index and a peer group for the period of March 27, 200526, 2006 to March 28, 2010.27, 2011. The graph assumes that all dividends, if any, were reinvested.COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURNAmong TESSCO Technologies Incorporated, The Russell 2000 IndexAnd A Peer Group
3/27/2005 3/26/2006 4/1/2007 3/30/2008 3/29/2009 3/28/2010 $ 100.00 $ 123.45 $ 276.32 $ 153.03 $ 80.49 $ 242.46 100.00 123.96 133.32 115.18 73.56 117.99 100.00 122.96 125.22 118.41 93.26 142.84 (1)
3/26/2006 4/1/2007 3/30/2008 3/29/2009 3/28/2010 3/27/2011 TESSCO Technologies Incorporated $ 100.00 $ 223.83 $ 123.96 $ 65.20 $ 196.40 $ 151.34 Russell 2000 100.00 107.56 92.92 59.34 95.18 116.89 100.00 101.84 96.31 75.84 116.17 147.79 Company'sCompany’s determination that they are engaged in business similar to that of the Company. Fiscal Years Ended March 27, 2011 March 28, 2010 March 29, 2009 March 30, 2008 April 1, 2007 STATEMENT OF INCOME DATA Revenues $ 605,219,200 $ 522,031,500 $ 483,007,200 $ 520,968,200 $ 492,327,800 Cost of goods sold 471,938,600 398,706,300 361,155,000 403,978,800 370,916,400 Gross profit 133,280,600 123,325,200 121,852,200 116,989,400 121,411,400 Selling, general and administrative expenses 117,305,100 108,269,000 110,656,400 108,875,700 109,208,800 Income from operations 15,975,500 15,056,200 11,195,800 8,113,700 12,202,600 Interest, net 420,600 318,300 664,300 574,100 879,400 Income before provision for income taxes 15,554,900 14,737,900 10,531,500 7,539,600 11,323,200 Provision for income taxes 5,536,700 5,599,100 4,203,500 2,720,900 4,281,100 Net income $ 10,018,200 $ 9,138,800 $ 6,328,000 $ 4,818,700 $ 7,042,100 $ 1.27 $ 1.19 $ 0.82 $ 0.58 $ 0.77 $ 0.40 $ 0.20 $ -- $ -- $ -- Percentage of Revenues Revenues 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Cost of goods sold 78.0 76.4 74.8 77.5 75.3 Gross profit 22.0 23.6 25.2 22.5 24.7 Selling, general and administrative expenses 19.4 20.7 22.9 20.9 22.2 Income from operations 2.6 2.9 2.3 1.6 2.5 Interest, net 0.1 0.1 0.1 0.1 0.2 Income before provision for income taxes 2.6 2.8 2.2 1.4 2.3 Provision for income taxes 0.9 1.1 0.9 0.5 0.9 Net income 1.7 % 1.8 % 1.3 % 0.9 % 1.4 % Average commercial buyers per month 12,700 12,400 12,200 12,300 11,900 Average consumer buyers per month 700 800 1,500 3,200 7,100 6.4 % 6.8 % 4.8 % 3.6 % 5.6 % 13.5 % 14.1 % 10.5 % 8.2 % 11.5 % Working capital $ 51,837,800 $ 46,793,200 $ 36,625,000 $ 36,714,400 $ 33,527,300 Total assets 161,160,600 151,346,700 118,652,600 143,798,600 123,682,700 Short-term debt 359,100 380,000 361,400 3,713,900 356,200 Long-term debt 2,959,100 3,328,000 3,481,700 3,842,600 4,203,200 Shareholders' equity 78,880,100 69,645,200 60,166,200 60,151,600 57,151,300 (1) All per share numbers prior to March 27, 2011 have been retroactively restated for all periods presented to reflect the May 26, 2010 stock dividend in order to effect a 3-for-2 stock split. (2) Diluted earnings per share prior to March 28, 2010 have been adjusted to show the effects of adoption of the FASB standard addressing accounting for participating securities under the two-class method. See Notes 2 and 14 to the Consolidated Financial Statements included in Item 8 to this Annual Report on Form 10-K for the fiscal year ended March 27, 2011 for further discussion. (3) (4) Net income divided by the average total equity. Fiscal Years Ended March 28, 2010 March 29, 2009 March 30, 2008 April 1, 2007 March 26, 2006 $ 522,031,500 $ 483,007,200 $ 520,968,200 $ 492,327,800 $ 477,329,300 398,706,300 361,155,000 403,978,800 370,916,400 374,316,300 123,325,200 121,852,200 116,989,400 121,411,400 103,013,000 108,269,000 110,656,400 108,875,700 109,208,800 94,268,800 15,056,200 11,195,800 8,113,700 12,202,600 8,744,200 318,300 664,300 574,100 879,400 358,500 14,737,900 10,531,500 7,539,600 11,323,200 8,385,700 5,599,100 4,203,500 2,720,900 4,281,100 3,270,500 $ 9,138,800 $ 6,328,000 $ 4,818,700 $ 7,042,100 $ 5,115,200 $ 1.19 $ 0.82 $ 0.58 $ 0.77 $ 0.53 $ 0.20 $ — $ — $ — $ — 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 76.4 74.8 77.5 75.3 78.4 23.6 25.2 22.5 24.7 21.6 20.7 22.9 20.9 22.2 19.7 2.9 2.3 1.6 2.5 1.8 0.1 0.1 0.1 0.2 0.1 2.8 2.2 1.4 2.3 1.8 1.1 0.9 0.5 0.9 0.7 1.8 % 1.3 % 0.9 % 1.4 % 1.1 % 12,400 12,200 12,300 11,900 10,900 800 1,500 3,200 7,100 20,600 6.8 % 4.8 % 3.6 % 5.6 % 3.6 % 14.1 % 10.5 % 8.2 % 11.5 % 8.1 % $ 46,793,200 $ 36,625,000 $ 36,714,400 $ 33,527,300 $ 45,704,400 151,346,700 118,652,600 143,798,600 123,682,700 126,800,400 380,000 361,400 3,713,900 356,200 442,500 3,328,000 3,481,700 3,842,600 4,203,200 4,559,400 69,645,200 60,166,200 60,151,600 57,151,300 65,106,800 (1)All earnings per share numbers have been retroactively restated for all periods presented to reflect the April 2010 announcement of a stock dividend in order to effect a 3-for-2 stock split. All earnings per share numbers prior to April 1, 2007, have also been retroactively restated for all periods presented to reflect the November 29, 2006 stock dividend in order to effect a previous 3-for-2 stock split.(2)Prior year diluted earnings per share have been adjusted to show the effects of adoption of the FASB standard addressing accounting for participating securities under the two-class method. See Notes 2 and 14 to the Consolidated Financial Statements included in Item 8 to this Annual Report on Form 10-K for the fiscal year ended March 28, 2010 for further discussion.(3)Net income divided by the average total assets.(4)Net income divided by the average total equity.Fiscal Year 2011 Quarters Ended Fiscal Year 2010 Quarters Ended Fiscal Year 2010 Quarters Ended Fiscal Year 2009 Quarters Ended Mar. 28,
2010 Dec. 27,
2009 Sept. 27,
2009 Jun. 28,
2009 Mar 29,
2009 Dec. 28,
2008 Sept. 28,
2008 Jun. 29,
2008 Mar. 27, 2011 Dec. 26, 2010 Sept 26, 2010 Jun. 27, 2010 Mar. 28, 2010 Dec. 27, 2009 Sept. 27, 2009 Jun. 28, 2009 $ 130,555,300 $ 149,721,200 $ 132,953,700 $ 108,801,300 $ 98,221,900 $ 118,943,300 $ 143,773,700 $ 122,068,300 $ 130,300,200 $ 167,940,000 $ 165,026,400 $ 141,952,600 $ 130,555,300 $ 149,721,200 $ 132,953,700 $ 108,801,300 100,647,600 116,932,800 101,340,200 79,785,700 70,870,600 89,675,900 109,553,100 91,055,400 99,942,400 134,137,000 128,256,400 109,602,800 100,647,600 116,932,800 101,340,200 79,785,700 29,907,700 32,788,400 31,613,500 29,015,600 27,351,300 29,267,400 34,220,600 31,012,900 30,357,800 33,803,000 36,770,000 32,349,800 29,907,700 32,788,400 31,613,500 29,015,600 27,245,600 27,939,700 27,322,300 25,761,400 25,995,600 26,868,200 30,298,000 27,494,600 27,724,000 29,465,800 31,203,600 28,911,700 27,245,600 27,939,700 27,322,300 25,761,400 2,662,100 4,848,700 4,291,200 3,254,200 1,355,700 2,399,200 3,922,600 3,518,300 2,633,800 4,337,200 5,566,400 3,438,100 2,662,100 4,848,700 4,291,200 3,254,200 42,100 90,600 76,300 109,300 147,900 213,700 165,900 136,800 94,100 118,900 129,800 77,800 42,100 90,600 76,300 109,300 2,620,000 4,758,100 4,214,900 3,144,900 1,207,800 2,185,500 3,756,700 3,381,500 2,539,700 4,218,300 5,436,600 3,360,300 2,620,000 4,758,100 4,214,900 3,144,900 893,000 1,850,900 1,622,400 1,232,800 422,600 944,100 1,518,000 1,318,800 897,900 1,257,100 2,090,900 1,290,800 893,000 1,850,900 1,622,400 1,232,800 $ 1,727,000 $ 2,907,200 $ 2,592,500 $ 1,912,100 $ 785,200 $ 1,241,400 $ 2,238,700 $ 2,062,700 $ 1,641,800 $ 2,961,200 $ 3,345,700 $ 2,069,500 $ 1,727,000 $ 2,907,200 $ 2,592,500 $ 1,912,100 $ 0.22 $ 0.37 $ 0.34 $ 0.25 $ 0.11 $ 0.17 $ 0.29 $ 0.25 $ 0.07 $ 0.07 $ 0.07 $ — $ — $ — $ — $ — $ 0.21 $ 0.38 $ 0.43 $ 0.26 $ 0.22 $ 0.37 $ 0.34 $ 0.25 $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.07 $ 0.07 $ 0.07 $ -- 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 77.1 78.1 76.2 73.3 72.2 75.4 76.2 74.6 76.7 79.9 77.7 77.2 77.1 78.1 76.2 73.3 22.9 21.9 23.8 26.7 27.8 24.6 23.8 25.4 23.3 20.1 22.3 22.8 22.9 21.9 23.8 26.7 20.9 18.7 20.6 23.7 26.5 22.6 21.1 22.5 21.3 17.5 18.9 20.4 20.9 18.7 20.6 23.7 2.0 3.2 3.2 3.0 1.4 2.0 2.7 2.9 2.0 2.6 3.4 2.4 2.0 3.2 3.2 3.0 0.0 0.1 0.1 0.1 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.1 0.1 0.1 2.0 3.2 3.2 2.9 1.2 1.8 2.6 2.8 1.9 2.5 3.3 2.4 2.0 3.2 3.2 2.9 0.7 1.2 1.2 1.1 0.4 0.8 1.1 1.1 0.7 0.7 1.3 0.9 0.7 1.2 1.2 1.1 1.3 % 1.9 % 1.9 % 1.8 % 0.8 % 1.0 % 1.6 % 1.7 % 1.3 % 1.8 % 2.0 % 1.5 % 1.3 % 1.9 % 1.9 % 1.8 % 12,300 12,400 12,500 12,200 11,800 11,900 12,500 12,500 12,500 12,700 13,000 12,800 12,300 12,400 12,500 12,200 800 700 800 800 1,000 1,300 1,800 1,900 700 700 700 700 800 700 800 800 4.5 % 7.5 % 7.3 % 6.1 % 2.5 % 3.5 % 6.2 % 5.7 % 10.1 % 17.5 % 16.3 % 12.5 % 5.3 % 8.5 % 14.8 % 13.4 % 3.9 % 6.5 % 7.6 % 5.2 % 4.5 % 7.5 % 7.3 % 6.1 % 8.5 % 15.7 % 18.4 % 11.8 % 10.1 % 17.5 % 16.3 % 12.5 % (1)All earnings per share numbers have been retroactively restated for all periods presented to reflect the April 2010 announcement of a stock dividend in order to effect a 3-for-2 stock split .(2)Prior year diluted earnings per share have been adjusted to show the effects of adoption of the FASB standard addressing accounting for participating securities under the two-class method. See Notes 2 and 14 to the Consolidated Financial Statements included in Item 8 to this Annual Report on Form 10-K for the fiscal year ended March 28, 2010 for further discussion.(3)Net income divided by the average total assets.(4)Net income divided by the average total equity.(1) All per share numbers prior to June 27, 2010 have been retroactively restated for all periods presented to reflect the May 26, 2010 stock dividend in order to effect a 3-for-2 stock split.. (2) Net income divided by the average total assets. (3) Net income divided by the average total equity. Management'sManagement’s Discussion and Analysis of Results of Operations and Financial Condition (MD&A) should be read in conjunction with the other sections of this Annual Report on Form 10-K, including Part I, "Item“Item 1: Business,"” Part II, "Item“Item 6: Selected Financial Data,"” and Part II, "Item“Item 8: Financial Statements and Supplementary Data."” The various sections of this MD&A contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing, including Part I, "Item“Item 1A: Risk Factors."” Our actual results may differ materially from those described in any such forward-looking statement.betterand delivers innovative product and value chain solutions at lower costs, to support the construction, operation and use of mobility and data wireless systems. Although we sell products to customers in over 100 countries, approximately 97% of our sales are to customers in the United States. We have operations and office facilities in Hunt Valley, Maryland, Reno, Nevada and San Antonio, Texas.54%47% of all of our mobile devices and accessory products sales for fiscal year 20102011 were generated from the sales of accessory products to AT&T Mobility. Installation, test and maintenance products, which are sold to our commercial customers, are used to install, tune, maintain and repair wireless communications equipment. This segment is made up of sophisticated analysis equipment and various frequency-, voltage- and power-measuring devices, replacement parts and components as well as an assortment of tools, hardware and supplies required by service technicians.•Commercial Public Carriers and Network Operators. Public carriers and network operators include systems operators that are generally responsible for building and maintaining the infrastructure system and providing airtime service to individual subscribers.•Commercial Resellers. Resellers include dealers and resellers that sell, install and/or service cellular telephone, wireless networking, broadband and two-way radio communications equipment primarily for the enterprise market, and to a lesser extent, the consumer market. These resellers include local and national value-added resellers and retailers, as well as sales and installation centers operated by cellular and paging carriers.· Commercial Public Carriers and Network Operators. Public carriers and network operators include systems operators that are generally responsible for building and maintaining the infrastructure system and providing airtime service to individual subscribers. · Commercial Resellers. Resellers include dealers and resellers that sell, install and/or service cellular telephone, wireless networking, broadband and two-way radio communications equipment. These resellers include local and national value-added resellers and retailers, as well as sales and installation centers operated by cellular and paging carriers. · Commercial Self-Maintained Users (SMUs) and Governments. SMUs and government customers include commercial entities such as major utilities and transportation companies, federal agencies and state and local governments. · Commercial Self-Maintained Users (SMUs) and Governments. SMUs and government customers include commercial entities such as major utilities and transportation companies, federal agencies and state and local governments.•Consumers. Consumers are customers buying through any of our affinity-partner relationships or directly from our consumer website, YourWirelessSource.comTM.notice.notice. Our ability to maintain these relationships is subject to competitive pressures and challenges. We believe, however, that our strength in service, the breadth and depth of our product offering, our information technology system, our large customer base and our purchasing relationships with approximately 420380 manufacturers provide us with a significant competitive advantage over new entrants to the market.2009 and 2008: 2009 to 2010 2008 to 2009 (Dollars in thousands, except per share data) 2010 2009 $ Change % Change 2008 $ Change % Change $ 52,731 $ 46,591 $ 6,140 13.2 % $ 46,977 $ (386 ) (0.8 )% 70,631 72,952 (2,321 ) (3.2 )% 69,839 3,113 4.5 % 56,665 53,445 3,220 6.0 % 49,400 4,045 8.2 % 180,027 172,988 7,039 4.1 % 166,216 6,772 4.1 % 2,178 2,094 84 4.0 % 2,193 (99 ) (4.5 )% 257,191 205,867 51,324 24.9 % 243,549 (37,682 ) (15.5 )% 14,451 14,334 117 0.8 % 13,746 588 4.3 % 273,820 222,295 51,525 23.2 % 259,488 (37,193 ) (14.3 )% 10,655 12,874 (2,219 ) (17.2 )% 13,199 (325 ) (2.5 )% 7,078 9,476 (2,398 ) (25.3 )% 9,548 (72 ) (0.8 )% 36,152 54,173 (18,021 ) (33.3 )% 62,534 (8,361 ) (13.4 )% 53,885 76,523 (22,638 ) (29.6 )% 85,281 (8,758 ) (10.3 )% 507,732 471,806 35,926 7.6 % 510,985 (39,179 ) (7.7 )% 14,300 11,201 3,099 27.7 % 9,983 1,218 12.2 % $ 522,032 $ 483,007 $ 39,025 8.1 % $ 520,968 $ (37,961 ) (7.3 )% (Dollars in thousands, except per share data) 2010 to 2011 2009 to 2010 2011 2010 $ Change % Change 2009 $ Change % Change Commercial Revenues Network Infrastructure: Public Carriers and Network Operators $ 65,965 $ 52,731 $ 13,234 25.1 % $ 46,591 $ 6,140 13.2 % Resellers 89,154 70,631 18,523 26.2 % 72,952 (2,321 ) (3.2 %) SMUs and Governments 72,176 56,665 15,511 27.4 % 53,445 3,220 6.0 % Total Network Infrastructure 227,295 180,027 47,268 26.3 % 172,988 7,039 4.1 % Mobile Devices and Accessories: Public Carriers and Network Operators 2,410 2,178 232 10.7 % 2,094 84 4.0 % Resellers 298,317 257,191 41,126 16.0 % 205,867 51,324 24.9 % SMUs and Governments 16,179 14,451 1,728 12.0 % 14,334 117 0.8 % Total Mobile Devices and Accessories 316,906 273,820 43,086 15.7 % 222,295 51,525 23.2 % Installation, Test and Maintenance: Public Carriers and Network Operators 18,240 10,655 7,585 71.2 % 12,874 (2,219 ) (17.2 %) Resellers 8,000 7,078 922 13.0 % 9,476 (2,398 ) (25.3 %) SMUs and Governments 21,356 36,152 (14,796 ) (40.9 %) 54,173 (18,021 ) (33.3 %) Total Installation, Test and Maintenance 47,596 53,885 (6,289 ) (11.7 %) 76,523 (22,638 ) (29.6 %) Total Commercial Revenues 591,797 507,732 84,065 16.6 % 471,806 35,926 7.6 % Consumer Revenues – Mobile Devices and Accessories 13,422 14,300 (878 ) (6.1 %) 11,201 3,099 27.7 % Total Revenues $ 605,219 $ 522,032 $ 83,187 15.9 % $ 483,007 $ 39,025 8.1 % (Dollars in thousands, except per share data) 2010 to 2011 2009 to 2010 2011 2010 $ Change % Change 2009 $ Change % Change Commercial Gross Profit Network Infrastructure: Public Carriers and Network Operators $ 15,754 $ 12,442 $ 3,312 26.6 % $ 11,912 $ 530 4.4 % Resellers 24,608 19,589 5,019 25.6 % 20,583 (994 ) (4.8 %) SMUs and Governments 19,899 15,639 4,260 27.2 % 14,861 778 5.2 % Total Network Infrastructure 60,261 47,670 12,591 26.4 % 47,356 314 0.7 % Mobile Devices and Accessories: Public Carriers and Network Operators 608 563 45 8.0 % 596 (33 ) (5.5 %) Resellers 52,299 54,000 (1,701 ) (3.2 %) 47,573 6,427 13.5 % SMUs and Governments 4,173 4,121 52 1.3 % 4,564 (443 ) (9.7 %) Total Mobile Devices and Accessories 57,080 58,684 (1,604 ) (2.7 %) 52,733 5,951 11.3 % Installation, Test and Maintenance: Public Carriers and Network Operators 3,503 2,554 949 37.2 % 2,973 (419 ) (14.1 %) Resellers 2,124 1,699 425 25.0 % 2,466 (767 ) (31.1 %) SMUs and Governments 5,607 8,162 (2,555 ) (31.3 %) 12,445 (4,283 ) (34.4 %) Total Installation, Test and Maintenance 11,234 12,415 (1,181 ) (9.5 %) 17,884 (5,469 ) (30.6 %) Total Commercial Gross Profit 128,575 118,769 9,806 8.3 % 117,973 796 0.7 % Consumer Gross Profit – Mobile Devices and Accessories 4,706 4,556 150 3.3 % 3,879 677 17.5 % Total Gross Profit $ 133,281 $ 123,325 $ 9,956 8.1 % $ 121,852 $ 1,473 1.2 % Selling, general and administrative expenses $ 117,305 $ 108,269 $ 9,036 8.3 % $ 110,656 $ (2,387 ) (2.2 %) Income from operations 15,976 15,056 920 6.1 % 11,196 3,860 34.5 % Interest, net 421 318 103 32.4 % 664 (346 ) (52.1 %) Income before provision for income taxes 15,555 14,738 817 5.5 % 10,532 4,206 39.9 % Provision for income taxes 5,537 5,599 (62 ) (1.1 %) 4,204 1,395 33.2 % Net income $ 10,018 $ 9,139 $ 879 9.6 % $ 6,328 $ 2,811 44.4 % $ 1.27 $ 1.19 $ 0.08 6.7 % $ 0.82 $ 0.37 45.1 % (1) All earnings per share numbers prior to March 27, 2011 have been retroactively restated for all periods presented to reflect the May 26, 2010 stock dividend in order to effect a 3-for-2 stock split. (2) Effective March 30, 2009, we retrospectively adopted the FASB standard addressing accounting for participating securities under the two-class method. See Notes 2 and 14 to the Consolidated Financial Statements for a discussion of the impact of the change in accounting standards. 2009 to 2010 2008 to 2009 (Dollars in thousands, except per share data) 2010 2009 $ Change % Change 2008 $ Change % Change $ 12,442 $ 11,912 $ 530 4.4 % $ 11,387 $ 525 4.6 % 19,589 20,583 (994 ) (4.8 )% 18,121 2,462 13.6 % 15,639 14,861 778 5.2 % 12,778 2,083 16.3 % 47,670 47,356 314 0.7 % 42,286 5,070 12.0 % 563 596 (33 ) (5.5 )% 633 (37 ) (5.8 )% 54,000 47,573 6,427 13.5 % 46,979 594 1.3 % 4,121 4,564 (443 ) (9.7 )% 4,319 245 5.7 % 58,684 52,733 5,951 11.3 % 51,931 802 1.5 % 2,554 2,973 (419 ) (14.1 )% 3,248 (275 ) (8.5 )% 1,699 2,466 (767 ) (31.1 )% 3,030 (564 ) (18.6 )% 8,162 12,445 (4,283 ) (34.4 )% 12,798 (353 ) (2.8 )% 12,415 17,884 (5,469 ) (30.6 )% 19,076 (1,192 ) (6.2 )% 118,769 117,973 796 0.7 % 113,293 4,680 4.1 % 4,556 3,879 677 17.5 % 3,696 183 5.0 % $ 123,325 $ 121,852 $ 1,473 1.2 % $ 116,989 $ 4,863 4.2 %
$
108,269
$
110,656
$
(2,387
)
(2.2
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$
108,875
$
1,781
1.6
% 15,056 11,196 3,860 34.5 % 8,114 3,082 38.0 % 318 664 (346 ) (52.1 )% 574 90 15.7 % 14,738 10,532 4,206 39.9 % 7,540 2,992 39.7 % 5,599 4,204 1,395 33.2 % 2,721 1,483 54.5 % $ 9,139 $ 6,328 $ 2,811 44.4 % $ 4,819 $ 1,509 31.3 % $ 1.19 $ 0.82 $ 0.37 45.1 % $ 0.58 $ 0.24 41.4 % (1)numbers have been retroactively restated for all periods presented to reflect the April 2010 announcement of a stock dividend in order to effect a 3-for-2 stock split(2)Effective March 30, 2009, we retrospectively adopted the FASB standard addressing accounting for participating securities under the two-class method. See Notes 2fiscal year 2011 increased 9.6% and 14 to the Consolidated Financial Statements for a discussion of the impact of the change in accounting standards.productsproduct was in sales to public carriers and network operations as well as SMUs and governments, as we have continued to focus on diversification beyond the traditional infrastructure carrier customer.In January 2009, we extended our repair components relationship withAs discussed above and in prior reports, Nokia through December 2010. As part of the extension, Nokia has played a larger role, and we a lesser role, in servicing a group of larger customers. We continue at present to earn fees from Nokia to fulfill product to these larger customers, but as a result of our reduced role in these transactions, we receive a smaller fee and we account for these sales on a net basis. We continue at present to manage the complete supply chain as primary obligor for smaller customers so we continue to record sales to these smaller customers on a gross basis. Because of the evolution of our relationship with Nokia, it has become less material to our consolidated financial statements, and we expect that trend to continue. Nokia has recently notified us of their intent to terminatehad terminated our arrangement effective July 31,September 30, 2010. Accordingly, revenues and gross profits from this relationship will cease on that date.have ceased. During fiscal year 2010, revenues from the Nokia relationship represented approximately 3% of total consolidated revenues.sales as discussed above.sales. The gross profit margin for our consumer sales decreased from 34.6% to 31.9% in fiscal year 2010. We account for inventory at the lower of cost or market, and as a result, write-offs/write-downs occur due to damage, deterioration, obsolescence, changes in prices and other causes.TESSCO'sTESSCO’s private labels. While sales of these directly sourced products and services represented only 11% of our total sales in fiscal year 2010, we believe that this direct sourcing initiative has allowed us to realize lower costs of goods sold on sales of these products, after accounting for additional supply chain costs and lead times. We also believe that these cost savings have allowed us to be more competitive in the market.customer'scustomer’s or vendor'svendor’s business, the supply and demand for the product or service, including price stability, changing customer or vendor requirements, and our ability to support the customer or vendor and to continually demonstrate that we can improve the way they do business. In addition, the agreements or arrangements on which our customer and vendor relationships are based are typically of limited duration, typically do not include any obligation in respect of any specific product purchase or sale and are terminable by either party upon several months or otherwise short notice. Our customer relationships could also be affected by wireless carrier consolidation or the global financial crisis. including AT&T Mobility, increase, we occasionally experience and expect to continue to experience, pricing pressures that may adversely affect future results. We are currently experiencing pricing pressures from our large tier-one carrier, AT&T Mobility, and as discussed elsewhere, future business with this customer is at risk. In an effort to mitigate the overall effect of these pressures and to meet these consistent challenges, we are focused on our continuing efforts to grow revenues and gross profits from other customer and vendor relationships.customers'customers’ ability to pay their open balances. During fiscal year 2009, bad debt expense was higher due to additional reserves needed largely related to the downturn in the economy.Table of ContentsFiscal Year 2009 Compared to Fiscal Year 2008 Revenues. Revenues for fiscal year 2009 decreased 7.3% as compared to fiscal year 2008, primarily due to a 7.7% decrease in commercial revenues, partially offset by a 12.2% increase in consumer revenues. The decrease in commercial revenues was driven primarily by a decline in our mobile devices and accessories, and in our installation, test, and maintenance commercial lines of business, partially offset by an increase in our network infrastructure commercial line of business. Our mobile devices and accessories revenues, including both commercial and consumer sales, decreased 13.4% for fiscal year 2009 compared to fiscal year 2008. We experienced a significant decline in commercial sales of mobile devices and accessory products, partially offset by an increase in consumer sales. Commercial revenues for mobile devices and accessories, which are sold primarily to resellers, but are also sold to SMUs, governments and public carriers and network operators, decreased 14.3% over the prior year. This decrease is due in part to decreased commercial sales to AT&T Mobility, our largest customer, as well as to other smaller resellers and public carriers and network operators. Compared to fiscal year 2008, our sales mix in fiscal year 2009 changed from a significant amount of high-revenue low-margin cordless headsets to more low-revenue, higher-margin aftermarket accessory products. Sales to retailers declined due in part to deteriorating economic conditions in the United States and carrier consolidation resulting in the closing of many retail stores. The 4.1% increase in our network infrastructure sales from fiscal year 2008 to fiscal year 2009 is primarily attributable to an increase in sales of radio frequency (RF) propagation and site support products, partially offset by lower sales of broadband products. Our growth in sales of network infrastructure product was in sales to resellers as well as SMUs and governments, as we have continued to focus on diversification beyond the traditional infrastructure carrier customer. Revenues from our installation, test and maintenance line of business decreased 10.3% in fiscal year 2009 as compared to the prior fiscal year, primarily due to a decline in sales of repair parts related to our major repair components relationship with Nokia, as well as decreased sales of test and bench equipment partially offset by an increase in sales of safety products. In January 2009, we extended our repair components relationship with Nokia through December 2010. As part of this extension, Nokia has played a larger role, and we a lesser role, in servicing a group of larger customers. We continue to earn fees from Nokia to fulfill product to these larger customers, but as a result of our reduced role in these transactions, we receive a smaller fee and we account for these sales on a net basis. We continue currently to manage the complete supply chain as primary obligor for smaller customers so we continue to record sales to these smaller customers on a gross basis. Because of the evolution of our relationship with Nokia, it has become less material to our consolidated financial statements, and we expect that trend to continue. Nokia has recently notified us of their intent to terminate our arrangement effective July 31, 2010, at which time revenues and gross profits from this arrangement will cease. During the first nine months of fiscal year 2009, Nokia represented approximately 7% of total consolidatedrevenues, and in our fourth quarter of fiscal year 2009 (the first quarter under our revised relationship), it represented 4% of total consolidated revenues. Gross Profit. Gross profit increased 4.2% in fiscal year 2009 compared to fiscal year 2008, driven by an increase in our network infrastructure and mobile devices and accessories commercial business segments, partially offset by a decline in our installation, test and maintenance commercial line of business. Total commercial gross profit increased 4.1%, while consumer gross profits increased 5.0%. Gross profit margin increased to 25.2% in fiscal year 2009, from 22.5% in fiscal year 2008. Except as noted below, our gross margins by product within each segment have been sustained and variations are related to sales mix within the segment product offerings. Gross profit margin increased to 27.4% in fiscal year 2009 in our network infrastructure segment, from 25.4% in fiscal year 2008. This increase in gross profit margin is the result of the change in product mix described above, as radio frequency and site support products typically have a higher gross margin than broadband products, which declined in sales. In our installation, test and maintenance segment, gross profit margin increased to 23.4% in fiscal year 2009, from 22.4% in fiscal year 2008, partially due to the change in the structure of our Nokia arrangement as discussed above. Gross profit margin in our mobile devices and accessories segment increased to 24.2% in fiscal year 2009, from 20.6% in fiscal year 2008. This increase is primarily attributable to the commercial gross profit margin for our mobile devices and accessories segment, which increased from 20.0% for fiscal year 2008 to 23.7% for fiscal year 2009, principally due to product mix in sales as discussed above. The gross profit margin for our consumer sales decreased from 37.0% to 34.6% in fiscal year 2009. We account for inventory at the lower of cost or market, and as a result, write-offs/write-downs occur due to damage, deterioration, obsolescence, changes in prices and other causes. Selling, General and Administrative Expenses. Total selling, general and administrative expenses increased by 1.6% during fiscal year 2009 as compared to fiscal year 2008. Total selling, general and administrative expenses as a percentage of revenues increased from 20.9% in fiscal year 2008 to 22.9% in fiscal year 2009, due to the decline of revenues as discussed above, particularly the decline in sales of mobile devices and accessory products as well as the increases in expenses discussed below. The largest factors contributing to the increase in total selling, general and administrative expenses during fiscal year 2009 were increased compensation expense and bonus accruals, partially offset by decreased marketing, sales promotion, freight expense, corporate support and information technology expenses. Compensation expenses primarily related to business generation activities increased from fiscal year 2008 to fiscal year 2009. Compensation costs have also increased over the last fiscal year due to increased accruals related to our cash and equity bonus programs. Our bonus programs are performance based, and therefore, the increase in bonus accruals is due to improved results during fiscal year 2009, as applied to pre-defined performance targets. Total compensation costs, including benefits and bonus expense, increased by approximately $8.3 million, or 15.3%, from fiscal year 2008 to fiscal year 2009. Marketing and sales promotion expenses decreased in fiscal year 2009 as compared with fiscal year 2008. During the second quarter of fiscal year 2008, we incurred marketing expenses related to a corporate branding initiative which was completed by the beginning of fiscal year 2009. In fiscal year 2009, we also reduced marketing expenses related to market research, publications, and print and online advertising. Also in fiscal year 2009, we had decreased sales promotion expense due to the lower merchandising racks and graphics expenditures associated with our retail business. Total marketing and sales promotion expenses decreased by approximately $2.4 million, or 21.0%, from fiscal year 2008 to fiscal year 2009. Freight costs in fiscal year 2009 decreased approximately $2.4 million, or 14.9%, over the prior year, primarily due to increased productivity in our distribution operations and lower sales revenues, partially offset by higher fuel surcharges. Corporate support expenses decreased approximately $1.4 million, or 14.7%, over the prior year, primarily due to lower sales tax expense/reserves. The decrease was driven by changes in estimates related to sales and use tax reserves during fiscal year 2009. Recruiting expenses also declined, but were primarily offset by higher bad debt expense as discussed below. Information technology expenses decreased by approximately $1.0 million, or 18.4%, in fiscal year 2009 as compared with fiscal year 2008, primarily due to a decrease in depreciation expense resulting from changes in property and equipment purchases and the corresponding estimated useful lives. We continually evaluate the credit worthiness of our existing customer receivable portfolio and provide an appropriate reserve based on this evaluation. We also evaluate the credit worthiness of prospective and current customers and make decisions regarding extension of credit terms to such based on this evaluation. Accordingly, we recorded a provision for bad debts of $1,593,600 and $937,900 for fiscal year 2009 and fiscal year 2008, respectively. This increase in bad debt expense is related to customer write-offs during fiscal year 2009 and the anticipation for further increases in write-offs related to outstanding receivables as of March 29, 2009, due to the downturn in the global economy. Interest, Net. Net interest expense increased from $574,100 in fiscal year 2008 to $664,300 in fiscal year 2009, primarily due to increased average borrowings on our revolving credit facility partially offset by lower interest rates. As noted below, beginning October 1, 2005, we entered into a receive variable/pay fixed interest rate swap on our existing bank loan, thus fixing the interest rate on this loan at 6.38%. Interest expense on our other debt instruments had only minor variances from year-to-year in total. Income Taxes, Net Income and Diluted Earnings Per Share. The effective tax rates in fiscal year 2009 and 2008 were 39.9% and 36.1%, respectively. The effective tax rate for fiscal year 2009 increased due to changes in our state tax effective rate as well as a reduction of $196,300 in unrecognized tax benefits due to the lapse of an applicable statute of limitations in fiscal year 2008. As a result of the factors discussed above, net income and diluted earnings per share for fiscal year 2009 increased 31.3% and 41.4%, respectively, compared with fiscal year 2008. Diluted earnings per share was positively impacted by the stock buyback program further discussed in the liquidity and capital resources section below. 2010 2009 2008 $ 14,811,000 $ 15,155,800 $ 4,160,100 (5,440,100 ) (4,538,400 ) (4,837,400 ) (2,312,000 ) (12,103,800 ) (1,412,800 ) $ 7,058,900 $ (1,486,400 ) $ (2,090,100 ) 2011 2010 2009 Cash flow provided by operating activities $ 12,038,100 $ 14,811,000 $ 15,155,800 Cash flow used in investing activities (7,694,200 ) (5,440,100 ) (4,538,400 ) Cash flow used in financing activities (3,824,400 ) (2,312,000 ) (12,103,800 ) Net increase (decrease) in cash and cash equivalents $ 519,500 $ 7,058,900 $ (1,486,400 ) 2010,2011, our cash inflow from operating activities was driven by net income net(net of depreciation and amortization and non-cash stock compensation expense,expense), as well as a significantan increase in trade accounts payable, andpartially offset by an increase in trade accounts receivables and a decrease in accrued payroll, benefits and taxes, partially offset by significant increases in trade accounts receivables and product inventory.taxes. The increase in trade The accrual for payroll, benefits and taxes increased primarily due to an increase in accruals for our bonus programs in fiscal year 2010 as compared to fiscal year 2009. The increase in trade accounts receivable is primarily due to the timing of sales and collections, largely relatedas well as the fact that we have granted extended payment terms to our largest customer, AT&T Mobility.certain large customers. The increased inventory levels aredecrease in accrued payroll, benefits and taxes is primarily due to improve our inventory availabilitythe decline in bonuses accrued for our customers.waswere largely comprised of capital expenditures, which primarily consisted of investments in information technology.technology as well as leasehold improvements and furniture and fixtures for our leased office space in Hunt Valley, Maryland. In addition to investments in capital expenditures, cash flow used in investing activities was also impacted by cash earn-out payments under our acquisition agreement with TerraWave Solutions, Ltd. and GigaWave Technologies, Ltd. On April 21, 2006, we acquired substantially all the non-cash net assets of TerraWave Solutions, Ltd. and its commonly owned affiliate, GigaWave Technologies, Ltd. for an initial cash payment of approximately $3.9 million, and potential additional cash earn-out payment obligations accruing over a four-year period, contingent on the achievement by the TerraWave/GigaWave business unit post-acquisition of certain minimum earnings thresholds. During fiscal year 2010,2011, approximately $2.4$2.9 million in earn-out payments were made, based on the achievement of certain earnings thresholds during the thirdfinal year of the four-year earn-out period under the acquisition agreement. An interim performance analysis of the business unit as of fiscal year end 2010, indicated that approximately $2.7 million in additional earn-out payments would become due and payable in respect of achievement of earnings thresholds during the final year of the four-year earn-out period, although all conditions to payment of this amount under the terms of the acquisition agreement were not satisfied until the close of that fourth year in April 2010 (during the first quarter of fiscal year 2011) and, therefore, the potential obligation was not accrued during fiscal year 2010. During fiscal year 2010, however, an additional $185,000 in earn-out payments was accrued in respect of quarterly earnings performance, for which all conditions to payment had been met. We expect theThe total purchase price of the acquisition, including earn-out payments, to bewas approximately $12.7$13.1 million.iswere primarily related to cash dividends paid to shareholders and repurchases of treasury stock purchases as well as payments on long-term debt,and stock from employees and directors for minimum tax withholdings related to equity compensation, partially offset by the proceedsexcess tax benefit from our term loan with Baltimore County Economic Development Fund.stock-based compensation. During fiscal year 2010,2011, we purchased 36,195 split adjusted2,300 shares of our outstanding common stock pursuant to our stock buyback program, compared with 255,23136,195 shares purchased in fiscal year 2009.2010. From the beginning of our stock buyback program (the first quarter of fiscal year 2004), through the end of fiscal year 2010,2011, a total of 3,502,887 split adjusted3,505,187 shares have been purchased under this program for approximately $30.7 million, or an average price of $8.76 per share. The Board of Directors has authorized the purchase of up to 3,593,350 shares in the aggregate, and therefore, 90,46388,163 shares remained available to be purchased as of the end of fiscal year 2010.2011. We expect to fund future purchases, if any, from working capital and/or our revolving credit facility. No timetable has been set for the completion or expiration of this program. We also withhold shares from our employees and directors, at their request, equal to the minimum federal and state tax withholdings related to vested performance stock units. For fiscal years 20102011 and 20092010 this totaled $1,536,900 and $126,500, and $230,200, respectively. On July 1, 2008, separate from, and in addition to, our stock buyback program, we repurchased all 705,000 split adjusted shares of our common stock then held by Brightpoint in a privately negotiated transaction. Pursuant to an agreement entered into between us and Brightpoint, we purchased Brightpoint's share holdings, comprising approximately 9% of our total then outstanding common stock, for $9.09 per split adjusted share, or a total of $6.4 million. The price per share was determined based on the seven trading day trailing average closing price of our common stock on the NASDAQ Global Market determined as of the close of trading on June 30, 2008. The purchase price per share approximated the price of our common stock on the transaction date. The purchase was funded through available cash and borrowings under our revolving credit facility. This transaction does not affect the number of shares available for repurchase under our stock buyback program.withfrom Wells Fargo Bank, National Association (formerly Wachovia Bank, National AssociationAssociation) and SunTrust Bank, that is payable in monthly installments of principal and interest with the balance due at maturity, which until the loan was recently modified as described below, was scheduled for June 30, 2011. The note bears interest at a floating rate of LIBOR plus 1.75%. until June 30, 2011, whereupon the modified terms, as described below, take effect. The note is secured by a first position deed of trust encumbering the Company-owned real property in Hunt Valley, Maryland. The loan is subject to generally the same financial covenants as are applicable to our revolving credit facility, which, as discussed below, have recently been amended. This loanand had a balance of $3.2$3.0 million as of March 28, 2010.AssociationAssociation) to avoid the risks associated with fluctuating interest rates on our existing term bank loan discussed above, and to eliminate the variability in the cash outflow for interest payments. The interest rate swap agreement locks the interest rate for the outstanding principal balance of the loan at 6.38% through June 30, 2011. There was no payment due or received at inception of the swap. No hedge ineffectiveness will be recognized as the interest rate swap provisions match the applicable provisions of the term bank loan. This cash flow hedge qualified for hedge accounting using the short-cut method since the swap terms match the critical terms of the hedged debt.Association,Association), with interest payable monthly and any principal balance outstanding, at the LIBOR rate plus an applicable margin. Borrowing availability under this facility is determined in accordance with a borrowing base and the applicable credit agreement includes financial covenants, including a minimum tangible net worth, minimum cash flow coverage of debt service, and a maximum funded debt to EBITDA ratio. These financial covenants also apply to the separate but related term loan secured by our Hunt Valley, Maryland facility discussed above. The terms applicable to our revolving credit facility and term loan also limit our ability to engage in certain transactions or activities, including (but not limited to) investments and acquisitions, sales of assets, payment of dividends, issuance of additional debt and other matters. As of March 28, 2010,27, 2011, we had a zero balance outstanding on our $35.0 million revolving credit facility; therefore, we had $35.0 million available on our revolving line of credit facility subject to the limitations imposed by the borrowing base and our continued compliance with the other applicable terms, including the covenants discussed above.to repurchasefrom inception of up to $25.0 million of our common stock, (beginning at the inception date of the Credit Agreement) and allows for the payment of up to $5.0 million of dividends in any 12 month period. As of March 27, 2011, we had the ability to repurchase approximately $11.3 million in additional shares of our common stock without violating this covenant. The financial covenants associated with this credit facility and the related term loan have also been modified. See Note 7 to the Consolidated Financial Statements included in Item 8 to this Annual Report on Form 10-K for the fiscal year ended March 28, 201027, 2011 for additional information regarding this credit facility.lenders, having an original principal amount of $5.5 million.lenders. Accordingly, the Third Modificationamendments to the Credit Agreement also hadhave the effect of amending the financial covenants applicable to the Term Loan.28, 2010,27, 2011, the principal balance of this term loan was approximately $229,100.from $36.6 million as of March 29, 2009, primarily due to the increase in product inventory and accounts receivable partially offset by increased accounts payable. Shareholders' equity increased to $78.9 million as of March 27, 2011, from $69.6 million as of March 28, 2010, from $60.2 million as of March 29, 2009, primarily due to increased retained earnings due to fiscal year 20102011 net income and net increases in additional paid-in-capital.28, 2010,27, 2011, we do not have any material capital expenditure commitments.facts.2009,2010, our cash inflow from operating activities was driven by net income, net of depreciation and amortization and non-cash stock compensation expense, as well as a significant decreaseincrease in trade accounts receivable and product inventorypayable and an increase in accrued payroll, benefits and taxes, partially offset by significant decreasesincreases in trade accounts payable.receivables and product inventory. The decreaseincrease in trade accounts payable is largely due to the timing and credit terms of inventory receipts. The accrual for payroll, benefits and taxes increased primarily due to an increase in accruals for our bonus programs in fiscal year 2010 as compared to fiscal year 2009. The increase in trade accounts receivable is primarily due to the timing of sales and collections largely related to our largest customer, AT&T Mobility, as well as lower sales near the end of fiscal year 2009.Mobility. The accrual for payroll, benefits and taxes increased primarily dueinventory levels are to an increase in accrualsimprove our inventory availability for our bonus programs in fiscal year 2009 as compared to fiscal year 2008. The decrease in accounts payable and inventory is largely a result of a significant inventory reduction effort undertaken during the fourth quarter of fiscal year 2009.yearyears 2010 and 2009, comprised primarily of investments in information technology.respectively. In both fiscal year 2008,years, capital expenditures totaled $2.5 million, primarily related to investments in information technology, as well as the acquisitiontechnology.2009,2010, we purchased 255,231 split adjusted36,195 shares of our outstanding common stock pursuant to our stock buyback program, compared with 519,160255,231 shares purchased in fiscal year 2008.meetmeets the conditions set forth in the Financial Accounting Standards Board ("FASB"(“FASB”) standard on revenue recognition, we recognize revenues from sales transactions containing sales returns provisions at the time of the sale. These conditions require that 1) our price be substantially fixed and determinable at the date of sale, 2) the buyer is obligated to pay us, and such obligation is not contingent on their resale of the product, 3) the buyer'sbuyer’s obligation to us does not change in the event of theft or physical destruction or damage of the product, 4) the buyer has economic substance apart from us, 5) we do not have significant obligations for future performance to directly bring about resale of the product by the buyer, and 6) the amount of future returns can be reasonably estimated. Because our normal terms and conditions of sale are consistent with conditions 1-5 above, and we are able to perform condition 6, we make a reasonable estimate of product returns in sales transactions and accrue a sales return reserve based on this estimate.5%1% of our total revenues). If applying this revenue recognition guidance resulted in recording revenues on a different basis from which we have previously concluded, or if the factors above change significantly, revenues could increase or decrease; however, our gross profit and net income would remain constant.$9.0$11.7 million (all related to our network infrastructure segment) and other indefinite lived intangible assets of $850,000. We perform annual impairment tests for goodwill and other indefinite lived assets on the first day of our fourth quarter. We also periodically evaluate our long-lived assets for potential impairment indicators. Our judgments regarding the existence of impairment indicators are based on estimated future cash flows, market conditions, operational performance and legal factors. The key assumptions used to determine the fair value of our goodwill reporting units include (a) a cash flow period; (b) a terminal value based on a growth rate; and (c) a discount rate, which is based on our weighted average cost of capital adjusted for risks associated with our operations. Future events, such as significant changes in cash flow assumptions, could cause us to conclude that impairment indicators exist and that the net book value of goodwill, long-lived assets or intangible assets are impaired. During the fiscal year, our market capitalization increased as compared to the prior fiscal year and as compared to the net book value of goodwill. We will continue to monitor our market capitalization as a potential impairment indicator considering overall market conditions and specific industry events. Had the determination been made that the goodwill and other indefinite lived intangible assets were impaired, the value of these assets would have been reduced by an amount up to $9.9$12.5 million, resulting in a corresponding charge to operations.enterprise'senterprise’s financial statements. This standard prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition,28, 2010,27, 2011, we had total net unrecognized tax benefits of approximately $793,200,$502,600, all of which, if recognized, would favorably affect the effective income tax rate in future periods. In December 2007, the FASB issued a new standard establishing principles and guidance regarding the information provided in financial reports about a business combination and its effects. The standard requires that the acquisition method of accounting be used for all business combinations and that an acquirer be identified for each business combination. The standard requires the assets, liabilities, noncontrolling interests, certain acquired contingencies and contingent consideration during a business combination to be measured at their fair value as of the acquisition date. The standard is effective for fiscal years beginning on or after December 15, 2008. In April 2009, the FASB issued an amendment to this standard to clarify the initial and subsequent accounting disclosures of contingencies in a business combination. We adopted this standard effective March 30, 2009 for any acquisitions made subsequent to that date. The adoption of the standard did not impact the accounting for acquisitions made by us prior to March 30, 2009, however it will impact the accounting treatment of all acquisitions made after such date. In March 2008, the FASB issued a new standard requiring entities to provide enhanced disclosure of derivative instruments. Under the accounting standard, entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under other accounting standards and the related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance and cash flows. The provisions of this standard are effective for periods beginning after November 15, 2008. The adoption of this standard did not have a material impact on our consolidated financial statements. In April 2009, the FASB issued a new standard requiring disclosures about the fair value of financial instruments for interim financial statements in addition to annual financial statements. The standard is effective for interim reporting periods ending after June 15, 2009. We adopted the standard effective June 28, 2009. The adoption of the standard did not have a material impact on our interim consolidated financial statements. In May 2009, the FASB issued a new standard establishing general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The standard requires an entity to evaluate subsequent events through the date its financial statements are filed. The standard is effective for interim or annual financial periods ending after June 15, 2009. The adoption of the standard did not have a material impact on our consolidated financial statements. In July 2009, the FASB established "The FASB Accounting Standards Codification" (the "Codification" or "ASC"). The Codification replaced the United States Generally Accepted AccountingPrinciples ("GAAP") and became the single source of authoritative nongovernmental U.S. GAAP. All guidance included in the Codification is authoritative, even guidance that comes from what used to be deemed a non-authoritative section of a standard. All non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. Other than resolving certain minor inconsistencies in current GAAP, the Codification does not change GAAP, but is intended to make it easier to find and research GAAP applicable to particular transactions or specific accounting issues. The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics. The Codification is effective for interim and annual periods ending after September 15, 2009. The adoption of the Codification did not have a material impact on our consolidated financial statements."may," "will," "believes," "should," "expects," "anticipates," "estimates,"“may,” “will,” “believes,” “should,” “expects,” “anticipates,” “estimates,” and similar expressions. Our future results of operations and other forward-looking statements contained in this report involve a number of risks and uncertainties, including those described throughout this Annual Report on Form 10-K and in Item 1A above. For a variety of reasons, actual results may differ materially from those described in any such forward-looking statement. Consequently, the reader is cautioned to consider all forward-looking statements in light of the risks to which they are subject.Available Information.Available Information March 28, 2010 March 29, 2009 March 27, 2011 March 28, 2010 ASSETS $ 7,658,700 $ 599,800 60,675,000 44,601,300 44,991,500 36,540,400 4,615,000 4,366,700 1,597,000 2,168,500 Cash and cash equivalents $ 8,178,200 $ 7,658,700 65,708,700 60,675,000 45,709,800 44,991,500 Deferred tax assets 5,004,500 4,615,000 Prepaid expenses and other current assets 1,668,900 1,597,000 Total current assets 126,270,100 119,537,200 119,537,200 88,276,700 20,679,900 21,566,900 21,148,100 20,679,900 9,017,700 6,550,700 11,684,700 9,017,700 2,111,900 2,258,300 2,057,700 2,111,900 $ 151,346,700 $ 118,652,600 Total assets $ 161,160,600 $ 151,346,700 $ 59,548,900 $ 40,481,600 8,974,200 6,494,400 2,528,000 2,908,400 1,312,900 1,405,900 — — 380,000 361,400 Trade accounts payable $ 62,913,000 $ 59,548,900 Payroll, benefits and taxes 7,342,500 8,974,200 Income and sales tax liabilities 2,539,300 2,528,000 Accrued expenses and other current liabilities 1,278,400 1,312,900 Revolving line of credit -- -- Current portion of long-term debt 359,100 380,000 Total current liabilities 74,432,300 72,744,000 72,744,000 51,651,700 3,650,800 2,416,000 3,407,900 3,650,800 3,328,000 3,481,700 2,959,100 3,328,000 1,978,700 937,000 1,481,200 1,978,700 Total liabilities 82,280,500 81,701,500 Commitment and Contingencies 81,701,500 58,486,400 — — 81,500 80,100 36,937,700 34,503,700 (42,819,400 ) (42,155,700 ) 75,543,000 67,880,900 (97,600 ) (142,800 ) 69,645,200 60,166,200 $ 151,346,700 $ 118,652,600 Preferred stock, $0.01 par value, 500,000 shares authorized and no shares issued and outstanding -- -- 84,100 81,500 Additional paid-in capital 40,668,100 36,937,700 Treasury stock, at cost, 5,158,199 shares outstanding as of March 27, 2011 and 5,050,167 shares outstanding as of March 28, 2010, respectively (44,388,400 ) (42,819,400 ) Retained earnings 82,540,900 75,543,000 Accumulated other comprehensive loss, net of tax (24,600 ) (97,600 ) Total shareholders’ equity 78,880,100 69,645,200 Total liabilities and shareholders' equity $ 161,160,600 $ 151,346,700 *All share numbers have been retroactively restated for all periods presented to reflect the April 2010 announcement of a stock dividend in order to effect a three-for-two stock split.Consolidated Statements of Income Fiscal Years Ended March 27, 2011 March 28, 2010 March 29, 2009 Revenues $ 605,219,200 $ 522,031,500 $ 483,007,200 Cost of goods sold 471,938,600 398,706,300 361,155,000 Gross profit 133,280,600 123,325,200 121,852,200 Selling, general and administrative expenses 117,305,100 108,269,000 110,656,400 Income from operations 15,975,500 15,056,200 11,195,800 Interest, net 420,600 318,300 664,300 Income before provision for income taxes 15,554,900 14,737,900 10,531,500 Provision for income taxes 5,536,700 5,599,100 4,203,500 Net income $ 10,018,200 $ 9,138,800 $ 6,328,000 Basic earnings per share $ 1.33 $ 1.24 $ 0.84 Diluted earnings per share $ 1.27 $ 1.19 $ 0.82 Cash dividends declared per common share $ 0.40 $ 0.20 $ -- Consolidated Statements of Income Fiscal Years Ended March 28, 2010 March 29, 2009 March 30, 2008 $ 522,031,500 $ 483,007,200 $ 520,968,200 398,706,300 361,155,000 403,978,800 123,325,200 121,852,200 116,989,400 108,269,000 110,656,400 108,875,700 15,056,200 11,195,800 8,113,700 318,300 664,300 574,100 14,737,900 10,531,500 7,539,600 5,599,100 4,203,500 2,720,900 $ 9,138,800 $ 6,328,000 $ 4,818,700 $ 1.24 $ 0.84 $ 0.59 $ 1.19 $ 0.82 $ 0.58 $ 0.20 $ — $ — *Prior years basic and diluted earnings per share have been adjusted to show the effects of adoption of the FASB standard addressing accounting for participating securities under the two-class method. See Note 14 for further discussion. Also, all earning per share numbers have been retroactively restated for all periods presented to reflect the April 2010 announcement of a stock dividend in order to effect a three-for-two stock split. Common Stock Accumulated
Other
Comprehensive
Loss Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Comprehensive
Income (Loss) Total
Shareholders'
Equity Shares* Amount Accumulated
Other
Comprehensive
Loss 7,987,600 $ 75,800 $ 27,463,700 $ (27,216,200 ) $ 56,806,300 $ 21,700 — $ 57,151,300 — — — — (72,100 ) — — (72,100 349,342 2,200 666,500 — — — — 668,700 (598,474 ) — — (6,238,100 ) — — — (6,238,100 ) 22,500 200 2,797,700 — — — — 2,797,900 — — 1,159,500 — — — — 1,159,500 — — — — 4,818,700 — 4,818,700 — — — — — (134,300 ) (134,300 ) 4,684,400 4,684,400 Common Stock Additional Accumulated Other Total Shares Amount Paid-in Capital 7,760,968 78,200 32,087,400 (33,454,300 ) 61,552,900 (112,600 ) 60,151,600 7,760,968 $ 78,200 $ 32,087,400 $ (33,454,300 ) $ 61,552,900 $ (112,600 ) -- $ 60,151,600 Proceeds from issuance of stock 69,880 400 399,300 -- -- -- -- 399,700 Treasury stock purchases (989,346 ) -- -- (8,701,400 ) -- -- -- (8,701,400 ) Non-cash stock compensation expense 243,916 1,500 1,829,100 -- -- -- -- 1,830,600 Excess tax benefit from stock-based compensation -- -- 187,900 -- -- -- -- 187,900 Comprehensive Income: Net income -- -- -- -- 6,328,000 -- 6,328,000 Other comprehensive loss, net of tax -- -- -- -- -- (30,200 ) (30,200 ) Total comprehensive income 6,297,800 6,297,800 Balance at March 29, 2009 7,085,418 80,100 34,503,700 (42,155,700 ) 67,880,900 (142,800 ) 60,166,200 Proceeds from issuance of stock 39,794 300 434,900 -- -- -- -- 435,200 (57,627 ) -- -- (663,700 ) -- -- -- (663,700 ) Non-cash stock compensation expense 164,293 1,100 2,161,500 -- -- -- -- 2,162,600 Excess tax loss from stock-based compensation -- -- (162,400 ) -- -- -- -- (162,400 ) -- -- -- -- (1,476,700 ) -- -- (1,476,700 ) Comprehensive Income: Net income -- -- -- -- 9,138,800 -- 9,138,800 Other comprehensive loss, net of tax -- -- -- -- -- 45,200 45,200 Total comprehensive income 9,184,000 9,184,000 Balance at March 28, 2010 7,231,878 81,500 36,937,700 (42,819,400 ) 75,543,000 (97,600 ) 69,645,200 Proceeds from issuance of stock 80,436 800 706,600 -- -- -- -- 707,400 (108,032 ) -- -- (1,569,000 ) -- -- -- (1,569,000 ) Non-cash stock compensation expense 260,663 1,800 2,272,200 -- -- -- -- 2,274,000 Excess tax benefit from stock-based compensation -- -- 751,600 -- -- -- -- 751,600 -- -- -- -- (3,020,300 ) -- -- (3,020,300 ) Comprehensive Income: Net income -- -- -- -- 10,018,200 -- 10,018,200 Other comprehensive income, net of tax -- -- -- -- -- 73,000 73,000 Total comprehensive income 10,091,200 10,091,200 Balance at March 27, 2011 7,464,945 $ 84,100 $ 40,668,100 $ (44,388,400 ) $ 82,540,900 $ (24,600 ) $ 78,880,100 291,296 1,700 398,000 — — — — 399,700 (989,346 ) — — (8,701,400 ) — — — (8,701,400 ) 22,500 200 1,830,400 — — — — 1,830,600 — — 187,900 — — — — 187,900 — — — — 6,328,000 — 6,328,000 — — — — — (30,200 ) (30,200 ) 6,297,800 6,297,800 7,085,418 80,100 34,503,700 (42,155,700 ) 67,880,900 (142,800 ) 60,166,200 181,587 1,200 434,000 — — — — 435,200 (57,627 ) — — (663,700 ) — — — (663,700 ) 22,500 200 2,162,400 — — — — 2,162,600 — — (162,400 ) — — — — (162,400 ) — — — — (1,476,700 ) — — (1,476,700 ) — — — — 9,138,800 — 9,138,800 — — — — — 45,200 45,200 9,184,000 9,184,000 7,231,878 $ 81,500 $ 36,937,700 $ (42,819,400 ) $ 75,543,000 $ (97,600 ) $ 69,645,200 *All share numbers have been retroactively restated for all periods presented to reflect the April 2010 announcement of a stock dividend in order to effect a three-for-two stock split.
TESSCO TECHNOLOGIES INCORPORATED AND SUBSIDIARIESConsolidated Statements of Cash Flows Fiscal Years Ended March 28, 2010 March 29, 2009 March 30, 2008 $ 9,138,800 $ 6,328,000 $ 4,818,700 4,116,300 4,218,300 4,814,300 — (157,600 ) — 2,162,600 1,830,600 2,797,900 2,165,300 (681,900 ) (798,000 ) (16,073,700 ) 11,097,300 (10,541,000 ) (8,451,100 ) 12,516,900 (11,608,500 ) 629,800 44,900 132,000 18,982,300 (22,883,400 ) 17,535,400 2,479,800 3,480,000 (3,656,300 ) (380,400 ) (1,066,200 ) 555,800 41,300 428,900 109,800 14,811,000 15,155,800 4,160,100 (3,058,100 ) (3,449,400 ) (2,507,400 ) — 220,000 — — — (659,500 ) (2,382,000 ) (1,309,000 ) (1,670,500 ) (5,440,100 ) (4,538,400 ) (4,837,400 ) — (3,353,500 ) 3,353,500 (385,200 ) (359,900 ) (356,400 ) 250,000 — — 122,200 123,100 668,700 (1,476,700 ) — — (484,900 ) (8,701,400 ) (6,238,100 ) (175,000 ) — — (162,400 ) 187,900 1,159,500 (2,312,000 ) (12,103,800 ) (1,412,800 )
7,058,900
(1,486,400
)
(2,090,100
)
599,800
2,086,200
4,176,300
$
7,658,700
$
599,800
$
2,086,200 Consolidated Statements of Cash Flows Fiscal Years Ended March 27, 2011 March 28, 2010 March 29, 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 10,018,200 $ 9,138,800 $ 6,328,000 Depreciation and amortization 4,445,200 4,116,300 4,218,300 Gain on the sale of property and equipment -- -- (157,600 ) Non-cash stock compensation expense 2,274,000 2,162,600 1,830,600 Deferred income taxes and other (1,073,900 ) 2,165,300 (681,900 ) Change in trade accounts receivable (5,033,700 ) (16,073,700 ) 11,097,300 Change in product inventory (718,300 ) (8,451,100 ) 12,516,900 (71,900 ) 629,800 44,900 Change in trade accounts payable 3,549,100 18,982,300 (22,883,400 ) Change in payroll, benefits and taxes (1,631,700 ) 2,479,800 3,480,000 Change in income and sales tax liabilities 11,300 (380,400 ) (1,066,200 ) 269,800 41,300 428,900 Net cash provided by operating activities 12,038,100 14,811,000 15,155,800 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment (4,842,200 ) (3,058,100 ) (3,449,400 ) Proceeds from sale of property and equipment -- -- 220,000 Additional earn-out payments on acquired businesses (2,852,000 ) (2,382,000 ) (1,309,000 ) Net cash used in investing activities (7,694,200 ) (5,440,100 ) (4,538,400 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings from revolving line of credit -- -- (3,353,500 ) Payments on long-term debt (389,800 ) (385,200 ) (359,900 ) Proceeds from debt issuance -- 250,000 -- Proceeds from issuance of stock 403,100 122,200 123,100 Cash dividends paid (3,020,300 ) (1,476,700 ) -- Purchases of treasury stock and repurchases of stock from employees and directors for minimum tax withholdings (1,569,000 ) (484,900 ) (8,701,400 ) Payments of debt issue costs -- (175,000 ) -- Excess tax benefit (loss) from stock-based compensation 751,600 (162,400 ) 187,900 Net cash used in financing activities (3,824,400 ) (2,312,000 ) (12,103,800 ) 519,500 7,058,900 (1,486,400 ) 7,658,700 599,800 2,086,200 $ 8,178,200 $ 7,658,700 $ 599,800 Company'sCompany’s sales are made to customers in the United States. The Company takes orders in several ways, including phone, fax, online and through electronic data interchange. Over 99% of the Company'sCompany’s sales are made in United States Dollars, with the remainder in Canadian Dollars.and March 30, 2008 contained 52 weeks.Company'sCompany’s stability as it relates to its current customer base. Typical payments from a large majority of commercial customers are due 30 days from the date of the invoice. The Company charges-off receivables deemed to be uncollectible to the allowance for doubtful accounts. Accounts receivable balances are not collateralized.("FIFO"(“FIFO”) method and includes certain charges directly and indirectly incurred in bringing product inventories to the point of sale. Inventory is written down for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value, based upon specifically known inventory-related risks (such as technological obsolescence and the nature of vendor terms surrounding price protection and product returns), and assumptions about future demand. At fiscal year end 20102011 and 2009,2010, the Company has a reserve for excess and/or obsolete inventory of $4,183,200 and $3,461,700, and $2,681,100, respectively.Useful lives Useful lives1–53–102–40Company'sCompany’s product planning and procurement system. The Company believes this CFD system has an estimated useful life that is longer than its other software assets, and thus, is depreciating the system over a seven-year life.Notes to Consolidated Financial Statements (Continued)Note 2. Summary of Significant Accounting Policies (Continued)Company'sCompany’s Consolidated Balance Sheets. The goodwill impairment test involves a two-step approach. Under the first step, the Company determines the fair value of each reporting unit to which goodwill has been assigned. The Company then compares the fair value of each reporting unit to its carrying value, including goodwill. The Company estimates the fair value of each reporting unit using various valuation techniques, with the primary technique being a discounted cash flow or income approach, under which the Company estimates the present value of the reporting unit'sunit’s future cash flows. Key assumptions used to determine the present value of a reporting unit'sunit’s future cash flows in fiscal year 20102011 include (a) a cash flow period; (b) a terminal value based on a growth rate; and (c) a discount rate, which is based on the Company'sCompany’s weighted average cost of capital adjusted for risks associated with our operations. If the fair value exceeds the carrying value, no impairment loss is recognized. If the carrying value exceeds the fair value, the goodwill of the reporting unit is considered potentially impaired and the second step is completed in order to measure the impairment loss. Under the second step, the Company calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets, including any unrecognized intangible assets, of the reporting unit from the fair value of the reporting unit as determined in the first step. The Company then compares the implied fair value of goodwill to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, the Company recognizes an impairment loss equal to the difference.Company'sCompany’s impairment testing performed, the Company did not recognize an impairment loss on goodwill or other indefinite lived intangible assets in fiscal years 2011, 2010 2009 or 2008.Company'sCompany’s revenue recognition policy includes evidence of arrangements for significant revenue transactions through either receipt of a customer purchase order or a web-based order. The Company records revenues when risk of loss has passed to the customer. In most cases, shipments are made using FOB shipping terms. FOB destination terms are used for a portion of sales, and revenue for these sales is recorded when the product is received by the customer.Notes to Consolidated Financial Statements (Continued)Note 2. Summary of Significant Accounting Policies (Continued)Company'sCompany’s sales transactions meet the conditions set forth in the FASB standard on revenue recognition, it recognizes revenues from sales transactions containing sales returns provisions at the time of the sale. These conditions require that 1) the price be substantially fixed and determinable at the date of sale, 2) the buyer is obligated to pay, and is not contingent on their resale of the product, 3) the buyer'sbuyer’s obligation to the Company does not change in the event of theft or physical destruction or damage of the product, 4) the buyer has economic substance apart from the Company, 5) the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer, and 6) the amount of future returns can be reasonably estimated. Because the Company'sCompany’s normal terms and conditions of sale are consistent with conditions 1-5 above, and the Company is able to perform condition 6, it makes a reasonable estimate of product returns in sales transactions and accrues a sales return reserve based on this estimate.Company'sCompany’s solutions offerings continually evolve to meet the needs of its customers, the Company constantly evaluates its revenue accounting based on the guidance set forth in accounting standards generally accepted in the United States. When applying this guidance in accordance with the FASB standard regarding revenue recognition for principal-agent considerations, the Company looks at the following indicators: whether it is the primary obligor in the transaction; whether it has general inventory risk; whether it has latitude in establishing price; the extent to which it changes the product or performs part of the service; whether it has discretion in supplier selection; whether it is involved in the determination of product and service specifications; whether it has physical inventory risk; whether it has credit risk; and whether the amount it earns is fixed. Each of the Company'sCompany’s customer relationships is independently evaluated based on the above guidance and revenues are recorded on the appropriate basis. Based on a review of the factors above, in the majority of the Company'sCompany’s sales relationships, the Company has concluded that it is the principal in the transaction and records revenues based upon the gross amounts earned and booked. However, the Company has several relationships where it is not the principal and records revenues on a net fee basis, regardless of amounts billed (less than 5%1% of total revenues). If applying this revenue recognition guidance resulted in recording revenues on a different basis from which the Company has previously concluded, or if the factors above change significantly, revenues could increase or decrease; however, gross profit and net income would remain constant.2009 and 2008.Company'sCompany’s private brands, we offer no product warranties in excess of original equipment manufacturers'manufacturers’ warranties. The Company'sCompany’s warranty expense is estimated and accrued at the time of sale. Warranty expense was immaterial for fiscal years 2011, 2010 2009 and 2008.2009.Notes to Consolidated Financial Statements (Continued)Note 2. Summary of Significant Accounting Policies (Continued)$13,801,900, and $16,226,700$13,801,900 for fiscal years ended March 27, 2011, March 28, 2010 and March 29, 2009, and March 30, 2008, respectively.and totaled $719,300 at March 29, 2009. Theas the Company tracks orders and revenue directly sourced from its catalog.did not produce a catalog in either fiscal year 2010 or 2011. Total advertising and marketing expense was $807,400, $1,932,200 $2,787,300 and $3,646,700$2,787,300 for fiscal years 2011, 2010 and 2009, and 2008, respectively.June 2006,accordance with the FASB issued a new standard clarifying theon accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The standard prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax, position taken or expected to be taken in a tax return. It also provides guidance on de-recognition,Notes to Consolidated Financial Statements (Continued)Note 2. Summary of Significant Accounting Policies (Continued)measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company adopted the standard effective as of April 2, 2007. As a result of the adoption, the Company recognizedrecognizes a $72,100 decreaseprovision for tax uncertainties in beginning retained earnings as of April 2, 2007.its financial statements. See Note 12 for further discussion of the standard and its impact on the Company'sCompany’s consolidated financial statements. In December 2007, the FASB issued a new standard establishing principles and guidance regarding the information provided in financial reports about a business combination and its effects. The standard requires that the acquisition method of accounting be used for all business combinations and that an acquirer be identified for each business combination. The standard requires the assets, liabilities, noncontrolling interests, certain acquired contingencies and contingent consideration during a business combination to be measured at their fair value as of the acquisition date. The standard is effective for fiscal years beginning on or after December 15, 2008. In April 2009, the FASB issued an amendment to this standard to clarify the initial and subsequent accounting disclosures of contingencies in a business combination. The Company adopted this standard effective March 30, 2009 for any acquisitions made subsequent to that date. The adoption of the standard did not impact the accounting for acquisitions made by the Company prior to March 30, 2009, however it will impact the accounting treatment of all acquisitions made after such date. In March 2008, the FASB issued a new standard requiring entities to provide enhanced disclosure of derivative instruments. Under the accounting standard, entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under other accounting standards and the related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance and cash flows. The provisions of this standard are effective for periods beginning after November 15, 2008. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. In April 2009, the FASB issued a new standard requiring disclosures about the fair value of financial instruments for interim financial statements in addition to annual financial statements. The standard is effective for interim reporting periods ending after June 15, 2009. The Company adopted the standard effective June 28, 2009. The adoption of the standard did not have a material impact on the Company's interim consolidated financial statements.Notes to Consolidated Financial Statements (Continued)Note 2. Summary of Significant Accounting Policies (Continued) In May 2009, the FASB issued a new standard establishing general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The standard requires an entity to evaluate subsequent events through the date its financial statements are filed. The standard is effective for interim or annual financial periods ending after June 15, 2009. The adoption of the standard did not have a material impact on the Company's consolidated financial statements. In July 2009, the FASB established "The FASB Accounting Standards Codification" (the "Codification" or "ASC"). The Codification replaced the United States Generally Accepted Accounting Principles ("GAAP") and became the single source of authoritative nongovernmental U.S. GAAP. All guidance included in the Codification is authoritative, even guidance that comes from what used to be deemed a non-authoritative section of a standard. All non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. Other than resolving certain minor inconsistencies in current GAAP, the Codification does not change GAAP, but is intended to make it easier to find and research GAAP applicable to particular transactions or specific accounting issues. The Codification is a new structure which takes accounting pronouncements and organizes them by approximately ninety accounting topics. The Codification is effective for interim and annual periods ending after September 15, 2009. The adoption of the Codification did not have a material impact on the Company's consolidated financial statements.Company'sCompany’s consolidated financial statements. split adjusted shares as of March 27, 2011 and March 28, 2010, respectively, are considered participating securities since the award contains a non-forfeitable right to dividends irrespective of whether the stock ultimately vests. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. Upon adoption, the Company retrospectively adjusted earnings per share data to conform to the provisions of the standard. Accordingly, the Company adopted the standard effective March 30, 2009 and computed earnings perNotes to Consolidated Financial Statements (Continued)Note 2. Summary of Significant Accounting Policies (Continued)2008 and 2007 diluted earnings per split adjusted common share by $0.02, $0.01 and $0.01, respectively. Prior to 2007, the Company did not have any securities that qualified as participating securities.$0.02. See Note 14 for additional disclosures.April 28,May 26, 2010, the Company's Board of Directors announcedCompany issued a stock dividend in order to effect a three-for-two-stock split of the Company'sCompany’s common stock. Each holder of the Company's common stock, par value $0.01 per share, as of the close of business on May 12, 2010, will receive on May 26, 2010, a stock dividend of one additional share of common stock for every two outstanding shares held. All share and earnings per share numbers prior to the May 26, 2010 split have been retroactively restated to reflect the stock dividend for all periods presented. The number of authorized shares of common stock remains at 15 million. The reference from time to time herein to "split adjusted"“split adjusted” is for the convenience of the reader; and the absence in some places of such reference should not be construed to mean such numbers or values are not "split“split adjusted,"” unless noted as such.2010,2011, the Company increased the amount of goodwill by $2,467,000,$2,667,000, corresponding to additional earn-outs based on achievement of certain earnings thresholds in accordance with the terms of the acquisition agreement. Of this amountThe fourth and final earn-out payment of $2,852,000, representing $2,667,000 plus an additional $185,000 was accrued as of fiscal 2010 year-end and will be paid induring fiscal year 2011. The remaining $2,282,0002010, was paid in May 2009 as part of a $2.4 million paymentJune 2010 for the earn-out period of May 20082009 through April 2009.2010. In accordance with the acquisition agreement, these payments were madethis payment was net of $375,000, per year, representing one quarter of the $1.5 million non-refundable prepayment made against future earn-out payments. As of March 28, 2010, $6,565,50027, 2011, $9,232,400 has been recorded as goodwill relating to this acquisition. Also, an interim performance analysis of the business unit as of fiscal year end 2010, indicated that approximately $2.7 million in additional earn-out payments would become due and payable in respect of achievement of earnings thresholds during the final year of the four-year earn-out period, although all conditions to payment of this amount under the terms of the acquisition agreement were not satisfied until the close of that fourth year in April 2010 (during the first quarter of fiscal year 2011) and therefore, the potential obligation was not accrued during fiscal year 2010. Upon completion of the contingency period, this amount will be paid (and will be recorded) in fiscal year 2011.Company'sCompany’s property and equipment is located in the United States. Property and equipment, excluding land, is depreciated using the straight-line method, and is summarized as follows: 2011 2010 2010 2009 $ 4,740,800 $ 4,740,800 $ 4,740,800 $ 4,740,800 15,485,400 15,374,300 16,483,500 15,485,400 17,481,300 18,943,300 19,446,900 17,481,300 5,539,600 4,979,700 6,559,100 5,539,600 47,230,300 43,247,100 43,247,100 44,038,100 (22,567,200 ) (22,471,200 ) (26,082,200 ) (22,567,200 ) $ 20,679,900 $ 21,566,900 $ 21,148,100 $ 20,679,900 $3,998,500 and $4,606,800$3,998,500 for fiscal years 2011, 2010 and 2009, and 2008, respectively.March 29, 2009 was $2,769,200, and $2,215,900, respectively. Depreciation of capitalized computer software was $1,460,300, $1,041,900 $881,700 and $1,083,600$881,700 for fiscal years 2011, 2010 and 2009, and 2008, respectively.28, 201027, 2011 and March 29, 200928, 2010 are summarized as follows: 2010 2009 Gross
Carrying
Amount Accumulated
Amortization Gross
Carrying
Amount Accumulated
Amortization $ 696,100 $ 574,300 $ 696,100 $ 417,400 377,600 229,400 377,600 166,500 878,500 878,500 878,500 878,500 1,952,200 1,682,200 1,952,200 1,462,400 850,000 — 850,000 — $ 2,802,200 $ 1,682,200 $ 2,802,200 $ 1,462,400 2011 2010 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortized intangible assets: $ 696,100 $ 618,800 $ 696,100 $ 574,300 377,600 292,400 377,600 229,400 878,500 878,500 878,500 878,500 1,952,200 1,789,700 1,952,200 1,682,200 Unamortized intangible assets: 850,000 -- 850,000 -- $ 2,802,200 $ 1,789,700 $ 2,802,200 $ 1,682,200 2009 and $207,500 for fiscal year 2008.2009. At March 28, 2010,27, 2011, amortizable intangible assets have an average remaining life of 2.71.9 years. Other amortized intangible assets primarily relate toNotes to Consolidated Financial Statements (Continued)Note 6. Goodwill and Other Intangible Assets (Continued)trademarks. Estimated amortization expense for current intangible assets for the next five years is as follows:Fiscal year: 2012 $ 97,300 2013 53,000 2014 12,200 2015 -- 2016 -- $ 162,500 $ 107,500 97,300 53,000 12,200 — $ 270,000 Company'sCompany’s goodwill is recorded in its Network Infrastructure segment. The changes in the carrying amount of goodwill for the years ended March 28, 201027, 2011 and March 29, 200928, 2010 are as follows: Net Carrying
Amount $ 6,310,100 — 240,600 6,550,700 — 2,467,000 $ 9,017,700 Also, an interim performance analysis of the TerraWave/GigaWave business unit as of fiscal year end 2010, indicated that approximately $2.7 million in additional earn-out payments would become due and payable in respect of achievement of earnings thresholds during the final year of the four-year earn-out period, although all conditions to payment of this amount under the terms of the acquisition agreement were not satisfied until the close of that fourth year in April 2010 (during the first quarter of fiscal year 2011) and therefore, the potential obligation was not accrued during fiscal year 2010. Upon completion of the contingency period, this amount will be paid (and will be recorded) in fiscal year 2011 (See Note 4). Net Carrying Amount Balance at March 29, 2009 $ 6,550,700 Current year acquisitions -- Earn-outs on acquisitions 2,467,000 Balance at March 28, 2010 9,017,700 Current year acquisitions -- Earn-outs on acquisitions 2,667,000 Balance at March 27, 2011 $ 11,684,700 $50.0 million revolving credit facility (Credit Agreement) with both Wells Fargo Bank, National Association (formerly Wachovia Bank, National Association,Association) and SunTrust Bank, replacing a $30.0 million revolving credit facility established in September 2003.Bank. The facility is unsecured and provides for monthly payments of interest accruing at a LIBOR rate plus an applicable margin. The terms of the revolving credit facility require the Company to meet certain financial convenantscovenants and ratios and containscontain other limitations, including certain restrictions on dividend payments. Borrowing availability under the facility is also subject to a borrowing base, based on levels of trade accounts receivable and inventory. The replacementInitially, the maximum borrowing amount under the facility was $50.0 million and it had a term initially expiring in May 2010.Association,Association) to amend a negative covenant included in the Credit Agreement for the Company's existing $50 million unsecured revolving line of credit facility, to increaseNotes to Consolidated Financial Statements (Continued)Note 7. Borrowings Under Revolving Credit Facility (Continued)Association,Association) pursuant to which the Credit Agreement for the $50.0 million unsecured revolving credit facility was again amended. The Second Modification Agreement amended a negative covenant in the Credit Agreement by increasing from $15.0 million to $25.0 million the amount of stock permitted to be repurchased over the term of the revolving credit facility. In addition, the Second Modification Agreement positively adjusted on a going forward basis certain other of the financial covenants applicable to the Company under the Credit Agreement, to adjust the definitions of "cash flow"“cash flow” and "tangible“tangible net worth"worth” and to afford the Company limited relief from dividend restrictions. This limited relief allowed for the payment of up to $2.0 million annually in dividends on Company stock, provided that the Company otherwise remains in compliance with the terms of the Credit Agreement.Association, Association) amending both the Credit Agreement and related promissory note for the Company's existing unsecured revolving credit facility. Pursuant to and in connection with the Third Modification Agreement, the maximum available principal amount under the unsecured revolving credit facility was reduced to $35 million from $50 million, and the term of the revolving credit facility, as so modified, was extended to May 31, 2012. The Third Modification Agreement also provided for the modification of certain of the several financial covenants applicable to the borrowers on a going forward basis, including the "tangible“tangible net worth"worth” and "maximum“maximum funded debt to EBITDA"EBITDA” covenants. In addition, the amount of allowable dividend payments under the Credit Facility was increased from $2.0 million to $2.5 million in any 12 month period, assuming continued compliance with the otherwise applicable terms. The facility provides for monthly payments of interest accruing at a LIBOR rate plus an applicable margin ranging from 2.25% to 3.25%. The weighted average interest rate on borrowings under the Company's revolving credit facilities was 2.46%, 3.27% and 5.73% for fiscal years 2010, 2009 and 2008, respectively. Interest expense on this revolving credit facility for fiscal years 2010, 2009 and 2008 totaled $22,200, $264,000 and $364,000, respectively. Average borrowings under this revolving credit facility totaled $899,200, $5,545,800 and $3,274,100 and maximum borrowings totaled $9,695,600, $19,458,100 and $19,353,100, for fiscal years 2010, 2009 and 2008, respectively. At March 28, 2010 and March 29, 2009, the Company had a zero balance on its revolving credit facility. Subsequent to the Company's year end, onfurther amended to increase the allowable dividend payments in any 12 month periodincreased from $2.5 million to $5.0 million (see Note 20).Company'sCompany’s existing Term Loan with the same lenders (see Note 8), having an original principal amount of $5.5 million.lenders. Accordingly, each of the modifications described aboveamendments to the Credit Agreement also hadhave the effect of amending the financial covenants applicable to the Term Loan.convenantscovenants applicable to each of the revolving credit facility and term loan facility at the end of fiscal years 2011, 2010 2009 and 2008.2009.Notes to Consolidated Financial Statements (Continued)new term loan had an original principal amount of the loan was $4.5 million, and is payable in monthly installments of principal and interest with the balance due at the initial maturity date, June 30, 2011. The note currently bears interest at a floating rate of LIBOR plus 1.75%. On May 20, 2011, the Company entered into an agreement with Wells Fargo Bank, National Association, and SunTrust Bank, effective July 1, 2011, to extend the maturity date to July 1, 2016. The other key provisions of the loan remain the same, except that the interest rate will adjust to LIBOR plus 2.00%. Because of the agreed maturity date extenstion, this term loan has been recorded on the Company's Consolidated Balance Sheet as long-term debt, except for the principal payments due in the next twelve months. The note is secured by a first position deed of trust encumbering Company-owned real property in Hunt Valley, Maryland. The loan is generally subject to the same financial covenants as the Company'sCompany’s revolving credit facility (see Note 7), which requires the Company to meet certain financial covenants and ratios and contains other limitations, including certain restrictions on dividend payments. The balance of this note at March 27, 2011 and March 28, 2010 was $3,000,000 and March 29, 2009 was $3,225,000, and $3,450,000, respectively. The weighted average interest rate on borrowings under this note was 2.06%2.53%, 3.85%2.06% and 5.82%3.85% for fiscal years 2011, 2010 2009 and 2008,2009, respectively. Interest expense under this note was $64,200, $60,000 $147,900 and $265,900$147,900 for fiscal years 2011, 2010 and 2009, and 2008, respectively.Association Association) to avoid the risks associated with fluctuating interest rates on the Company's existing term loan, which bears interest at a floating rate of LIBOR plus 1.75%, and to eliminate the variability in the cash outflow for interest payments. The interest rate swap agreement locks the interest rate for the outstanding principal balance of the loan at 6.38% through June 30, 2011. The Company anticipates retaining at least some portion of the interest rate swap agreement throughout the period of the loan. As such, no amount of the loss on the agreement, currently recorded in other comprehensive income (loss), has been, or is anticipated to be reclassified into earnings. There was no payment due or received at inception of the swap. No hedge ineffectiveness will be recognized as the interest rate swaps'swaps’ provisions match the applicable provisions of the term bank loan. This cash flow hedge qualified for hedge accounting using the short-cut method since the swap terms match the critical terms of the hedged debt. As such, no amount of the loss on the agreement, currently recorded in other comprehensive income (loss), has been, or is anticipated to be reclassified into earnings. The fair value of this interest rate swap, net of tax, at March 28, 201027, 2011 and March 29, 200928, 2010 was an unrealized loss of $(97,600)$(24,600) and $(142,800)$(97,600), respectively, and is included in other long-termcurrent liabilities and accumulated other comprehensive income (loss) on the accompanying Consolidated Balance Sheets. and March 29, 2009, the Company had a note payable outstanding to the Maryland Economic Development Corporation of $253,900$110,400 and $393,100,$253,900, respectively. The note is payable in equal quarterly installments of principal and interest of $37,400, with the balance due at maturity, October 10, 2011. The note bears interest at 3.00% per annum. Interest expense under this note was $6,000, $10,200 $14,600 and $18,100$14,600 for fiscal years 2011, 2010 2009 and 2008,2009, respectively. The note is secured by a subordinate position on Company-owned real property located in Hunt Valley, Maryland.$229,100.$207,800 and $229,100, respectively. The term loan is payable in equal monthly installments of principal and interest of $2,300, with the balance due at maturity on April 1, 2019. The term loan bears interest at 2.00% per annum. Interest expense under this note was $4,000 and $4,400 for fiscal year 2010.years 2011 and 2010, respectively. The term loan is secured by a subordinate position on Company-owned real property located in Hunt Valley, Maryland.Notes to Consolidated Financial Statements (Continued)Note 8. Long-Term Debt (Continued)28, 2010,27, 2011, and after accounting for the term loan extension discussed above, scheduled annual maturities of long-term debt are as follows: $ 379,900 3,134,100 $ 359,100 24,200 249,200 24,700 249,700 25,200 250,100 2016 250,700 119,900 1,959,400 $ 3,318,200 $ 3,708,000 2008 totaled $2,762,800, $2,631,600, and $2,560,200, respectively.Company'sCompany’s sales, marketing and administrative offices are located. The Agreement of Lease provided for a term beginning June 1, 2004 and expiring May 31, 2007. On January 23, 2007, the Company entered into a First Amendment to Agreement of Lease, which among other things, provided for a six month extension, until November 30, 2007, of the lease term provided for under the Agreement of Lease. The Company entered into a Second Amendment of Agreement of Lease, dated May 1, 2007, which among other things, provided for an extension, from November 30, 2007 to December 31, 2012, of the lease term provided for under the Agreement of Lease. On February 15, 2011, the Company entered into a Third Amendment to Agreement of Lease, which among other things, provided for a five year extension, until December 31, 2017, of the lease term provided for under the Agreement of Lease. Under the terms of the Third Amendment, the Company also increased its leased space by approximately 3,843 square feet for a total of approximately 97,392 square feet of rentable area. The monthlybase rental feerate ranges from $124,700$141,900 to $144,600 throughout$169,400 per month at the leaseclose of the extended term.Company'sCompany’s Global LogisticLogistics Center, for a term beginning July 1, 2007 and expiring July 31, 2011. On February 28, 2011, the Company entered into an extension of a Lease, which among other things, provided for a three year extension, from August 1, 2011 to July 31, 2014 of the lease term provided for under the Lease. Under the terms of the extension of the Lease, the Company has the ongoing annual option to terminate the Lease. The monthly rental fee ranges from $35,700$27,500 to $38,500$33,000 throughout the lease term.Company'sCompany’s minimum future obligations as of March 28, 201027, 2011 under existing operating leases are as follows: $ 2,504,300 2,169,500 1,421,400 — $ 6,095,200 Fiscal year: $ 2,495,800 1,944,600 1,803,400 1,857,200 1,903,900 3,469,000 $ 13,473,900 Company'sCompany’s financial condition or results of operations. In addition, from time to time, the Company is also subject to review from federal and state taxing authorities in order to validate the amounts of income, salesNotes to Consolidated Financial Statements (Continued)Note 9. Commitments and Contingencies (Continued)cable and transmission lines, fixed and mobilepower systems, grounding, base station radios, bi-directional amplifiers, wireless broadband equipment,radios, wireless networking gear, wireless local area network (WLAN) products, wireless networking, filtering systems, small towers, lightning protection devices, connectors,and security and surveillance products, power systems and miscellaneous hardware.products. Our network infrastructure service offering includes connector installation, custom jumper assembly, filter product tuning, site kitting, logistics integration, application engineering network design and wireless network training. (2) Mobile devices and accessory products include cellular phone and data device accessories such as replacement batteries, cases, speakers,hands-free kits, mobile amplifiers, power supplies, Bluetooth and corded headsets, mounts, car antennas, music accessories and data and memory cards as well as two-way radios and related accessories. Retail merchandising displays, promotional programs, customized order fulfillment services and affinity-marketing programs, including providing outsourced call centers and private label Internet sites, complement our mobile devices and accessory product offering. (3) Installation, test and maintenance products are used to install, tune, maintain and repair wireless communications equipment. Products include sophisticated analysis equipment and various frequency-, voltage- and power-measuring devices, as well as an assortment of tools, hardware, GPS, safety and replacement and component parts and supplies required by service technicians. Within the mobile devices and accessories line of business, the Company sells to both commercial and consumer markets. The network infrastructure and installation, test and maintenance lines of business sell primarily to commercial markets. The Company also regularly reviews its results of operations in three commercial customer categories and the consumer customer category, as described further below:•Commercial Public Carriers and Network Operators. Public carriers and network operators include systems operators that are generally responsible for building and maintaining the infrastructure system and provide airtime service to individual subscribers.•Commercial Resellers. Resellers include dealers and resellers that sell, install and/or service cellular telephone, wireless networking, broadband and two-way radio communications equipment primarily for the enterprise market, and to a lesser extent, the consumer market. These resellers include local and national value-added resellers and retailers, as well as sales and installation centers operated by cellular and paging carriers.•Commercial Self-Maintained Users and Governments. Self-maintained user (SMU) and government customers include commercial entities such as major utilities and transportation companies, federal agencies and state and local governments.•Consumers. Consumers include customers that buy through any of our affinity partner relationships or directly from our consumer website, YourWirelessSource.com™.· Commercial Public Carriers and Network Operators. Public carriers and network operators include systems operators that are generally responsible for building and maintaining the infrastructure system and provide airtime service to individual subscribers. · Commercial Resellers. Resellers include dealers and resellers that sell, install and/or service cellular telephone, wireless networking, broadband and two-way radio communications equipment primarily for the enterprise market, and to a lesser extent, the consumer market. These resellers include local and national value-added resellers and retailers, as well as sales and installation centers operated by cellular and paging carriers. · Commercial Self-Maintained Users and Governments. Self-maintained user (SMU) and government customers include commercial entities such as major utilities and transportation companies, federal agencies and state and local governments. · Notes to Consolidated Financial Statements (Continued)Note 10. Business Segments (Continued)28, 201027, 2011 and March 29, 200928, 2010 have been allocated to the Network Infrastructure segment. Product delivery revenues and certain cost of sales expenses have been allocated to each segment based on a percentage of revenues and/or gross profit, as applicable. The Company'sCompany’s largest customer relationship, AT&T Mobility, accounted for approximately 30%26%, 22%30% and 26%22% of total revenues in fiscal years 2011, 2010 2009 and 2008,2009, respectively. Purchases from this customer primarily consist of mobile devices and accessories. Segment activity for fiscal years 2010, 2009 and 2008 is as follows:(Amounts in thousands) Network
Infrastructure Mobile Devices
and Accessories Installation, Test
and Maintenance Total $ 52,731 $ 2,178 $ 10,655 $ 65,564 70,631 257,191 7,078 334,900 56,665 14,451 36,152 107,268 180,027 273,820 53,885 507,732 — 14,300 — 14,300 $ 180,027 $ 288,120 $ 53,885 $ 522,032 $ 12,442 $ 563 $ 2,554 $ 15,559 19,589 54,000 1,699 75,288 15,639 4,121 8,162 27,922 47,670 58,684 12,415 118,769 — 4,556 — 4,556 $ 47,670 $ 63,240 $ 12,415 $ 123,325 108,269 15,056 318 14,738 5,599 9,139 $ 19,897 $ 22,523 $ 2,572 $ 44,992 (Amounts in thousands) Network
Infrastructure Mobile Devices
and Accessories Installation, Test
and Maintenance Total $ 46,591 $ 2,094 $ 12,874 $ 61,559 72,952 205,867 9,476 288,295 53,445 14,334 54,173 121,952 172,988 222,295 76,523 471,806 — 11,201 — 11,201 $ 172,988 $ 233,496 $ 76,523 $ 483,007 $ 11,912 $ 596 $ 2,973 $ 15,481 20,583 47,573 2,466 70,622 14,861 4,564 12,445 31,870 47,356 52,733 17,884 117,973 — 3,879 — 3,879 $ 47,356 $ 56,612 $ 17,884 $ 121,852 110,656 11,196 664 10,532 4,204 6,328 $ 18,854 $ 14,316 $ 3,370 $ 36,540 $ 46,977 $ 2,193 $ 13,199 $ 62,369 69,839 243,549 9,548 322,936 49,400 13,746 62,534 125,680 166,216 259,488 85,281 510,985 — 9,983 — 9,983 $ 166,216 $ 269,471 $ 85,281 $ 520,968 $ 11,387 $ 633 $ 3,248 $ 15,268 18,121 46,979 3,030 68,130 12,778 4,319 12,798 29,895 42,286 51,931 19,076 113,293 — 3,696 — 3,696 $ 42,286 $ 55,627 $ 19,076 $ 116,989 108,875 8,114 574 7,540 2,721 4,819 $ 22,875 $ 22,168 $ 4,014 $ 49,057 (Amounts in thousands) Network Infrastructure Mobile Devices and Accessories Installation, Test and Maintenance Total Year ended March 27, 2011 Commercial revenues: Public carriers and network operators $ 65,965 $ 2,410 $ 18,240 $ 86,615 Resellers 89,154 298,317 8,000 395,471 SMUs and governments 72,176 16,179 21,356 109,711 Total commercial revenues 227,295 316,906 47,596 591,797 Consumer revenues -- 13,422 -- 13,422 Total revenues $ 227,295 $ 330,328 $ 47,596 $ 605,219 Commercial gross profit: Public carriers and network operators $ 15,754 $ 608 $ 3,503 $ 19,865 Resellers 24,608 52,299 2,124 79,031 SMUs and governments 19,899 4,173 5,607 29,679 Total commercial gross profit 60,261 57,080 11,234 128,575 Consumer gross profit -- 4,706 -- 4,706 Total gross profit $ 60,261 $ 61,786 $ 11,234 $ 133,281 Selling, general and administrative expenses 117,305 Income from operations 15,976 Interest expense, net 421 Income before provision for income taxes 15,555 Provisions for income taxes 5,537 Net income $ 10,018 Product inventory $ 22,518 $ 20,244 $ 2,948 $ 45,710 Year ended March 28, 2010 Commercial revenues: Public carriers and network operators $ 52,731 $ 2,178 $ 10,655 $ 65,564 Resellers 70,631 257,191 7,078 334,900 SMUs and governments 56,665 14,451 36,152 107,268 Total commercial revenues 180,027 273,820 53,885 507,732 Consumer revenues -- 14,300 -- 14,300 Total revenues $ 180,027 $ 288,120 $ 53,885 $ 522,032 Commercial gross profit: Public carriers and network operators $ 12,442 $ 563 $ 2,554 $ 15,559 Resellers 19,589 54,000 1,699 75,288 SMUs and governments 15,639 4,121 8,162 27,922 Total commercial gross profit 47,670 58,684 12,415 118,769 Consumer gross profit -- 4,556 -- 4,556 Total gross profit $ 47,670 $ 63,240 $ 12,415 $ 123,325 Selling, general and administrative expenses 108,269 Income from operations 15,056 Interest expense, net 318 Income before provision for income taxes 14,738 Provisions for income taxes 5,599 Net income $ 9,139 Product inventory $ 19,897 $ 22,523 $ 2,572 $ 44,992 Network Infrastructure Mobile Devices and Accessories Installation, Test and Maintenance Total Year ended March 29, 2009 Commercial revenues: Public carriers and network operators $ 46,591 $ 2,094 $ 12,874 $ 61,559 Resellers 72,952 205,867 9,476 288,295 SMUs and governments 53,445 14,334 54,173 121,952 Total commercial revenues 172,988 222,295 76,523 471,806 Consumer revenues -- 11,201 -- 11,201 Total revenues $ 172,988 $ 233,496 $ 76,523 $ 483,007 Commercial gross profit: Public carriers and network operators $ 11,912 $ 596 $ 2,973 $ 15,481 Resellers 20,583 47,573 2,466 70,622 SMUs governments 14,861 4,564 12,445 31,870 Total commercial gross profit 47,356 52,733 17,884 117,973 Consumer gross profit -- 3,879 -- 3,879 Total gross profit $ 47,356 $ 56,612 $ 17,884 $ 121,852 Selling, general and administrative expenses 110,656 Income from operations 11,196 Interest expense, net 664 Income before provision for income taxes 10,532 Provisions for income taxes 4,204 Net income $ 6,328 Product inventory $ 18,854 $ 14,316 $ 3,370 $ 36,540 Company'sCompany’s Board of Directors approved a stock buyback program. As of March 28, 2010,27, 2011, the Board of Directors has authorized the purchase of up to 3,593,350 split adjusted shareshares of outstanding common stock under the buyback program. Shares may be purchased from time to time in the open market, by block purchase, or through negotiated transactions, or possibly other transactions managed by broker-dealers. No time limit has been set for completion or expiration of the program. As of March 28, 2010,27, 2011, the Company had purchased 3,502,8873,505,187 shares for approximately $30.7 million, or an average of $8.76 per share. Of the total shares repurchased, 2,300 shares were repurchased in fiscal year 2011 at an average price of $13.96 per share, 36,195 shares were repurchased in fiscal year 2010 at an average price of $9.90$9.91 per share 255,231and 255,232 shares were repurchased in fiscal year 2009 at an average price of $8.07 per share and 519,160 shares were repurchased in fiscal year 2008 at an average price of $9.31 per share. The Company also withholds shares from its employees and directors, at their request, equal to the minimum federal and state tax withholdings related to vested performance stock units, stock options and restricted stock awards. For fiscal year 20102011 and 20092010 this totaled $1,569,000 and $126,500, and $230,200, respectively.on July 1, 2008 the Company repurchased all 705,000 split adjusted shares of its common stock then held by Brightpoint, Inc. (Brightpoint) in a privately negotiated transaction. Pursuant to an agreement entered into between the Company and Brightpoint, the Company purchased Brightpoint's share holdings, comprisingtransaction on July 1, 2008 for approximately 9% of the Company's total then outstanding common stock, for$6.4 million, or $9.09 per split adjusted share, or a totalshare.amend a negative covenant included in the Credit Agreement for the Company's then existing $50.0 million unsecured revolving line of credit facility, to increase the amount of common stock permitted to be repurchased by the Company (beginning on the inception date of the Credit Agreement) from $10.0 million to $15.0 million, during the term of the credit facility (also See Notes 7 and 20 for a discussion of additional modifications to the credit facility). 2010 2009 2008 34.2 % 34.0 % 34.0 % 1.4 2.8 1.4 1.1 1.6 2.1 1.3 1.5 (1.4 ) 38.0 % 39.9 % 36.1 % 2011 2010 2009 Statutory federal rate 34.4 % 34.2 % 34.0 % State taxes, net of federal benefit 2.1 1.4 2.8 Non-deductible expenses 1.0 1.1 1.6 Other (1.9 ) 1.3 1.5 Effective rate 35.6 % 38.0 % 39.9 % Notes to Consolidated Financial Statements (Continued)Note 12. Income Taxes (Continued) 2010 2009 2008 $ 4,216,700 $ 3,386,600 $ 3,625,800 914,000 255,700 (1,024,000 ) 395,900 571,200 194,900 72,500 (10,000 ) (75,800 ) $ 5,599,100 $ 4,203,500 $ 2,720,900 2011 2010 2009 Current $ 5,493,000 $ 4,216,700 $ 3,386,600 Deferred (581,400 ) 914,000 255,700 Current 676,100 395,900 571,200 Deferred (51,000 ) 72,500 (10,000 ) Provision for income taxes $ 5,536,700 $ 5,599,100 $ 4,203,500 28, 201027, 2011 and March 29, 2009,28, 2010, and the sources of the differences between financial accounting and tax basis of the Company's assets and liabilities which give rise to the deferred tax assets and liabilities are as follows: 2010 2009 $ 3,399,300 $ 3,403,000 1,215,700 963,700 $ 4,615,000 $ 4,366,700 $ 2,300,400 $ 1,841,800 1,350,400 574,200 $ 3,650,800 $ 2,416,000 2011 2010 Deferred tax assets: Accrued expenses and reserves $ 3,697,700 $ 3,399,300 Stock based compensation 1,306,800 1,215,700 $ 5,004,500 $ 4,615,000 Deferred tax liabilities: Depreciation $ 2,255,900 $ 2,300,400 Other assets 1,152,000 1,350,400 $ 3,407,900 $ 3,650,800 28, 201027, 2011 or March 29, 2009. Effective April 2, 2007, the Company adopted a new standard clarifying the accounting for uncertainty in income taxes recognized in the Company's financial statements. As a result of the adoption, the Company recognized a $72,100 decrease in beginning retained earnings as of April 2, 2007. 28, 2010.28, 2010,27, 2011, the gross amount of unrecognized tax benefits was $723,300 and if the Company were to prevail on all uncertain tax positions, the net effect would be a benefit to the Company’s effective tax rate of $502,600. The remaining $220,700 represents federal tax benefits that would be received in the event that the Company did not prevail on all uncertain state tax positions. As of March 28, 2010, the Company had gross unrecognized tax benefits of $1,001,600 and if the Company were to prevail on all uncertain tax positions, the net effect would be a benefit to the Company'sCompany’s effective tax rate of $793,200. The remaining $208,400 represents federal tax benefits that would be received in the event that the Company did not prevail on all uncertain state tax positions. As of March 29, 2009, theThe Company had grossdoes not expect any material changes in unrecognized tax benefits of $792,000 and if the Company were to prevail on all uncertain tax positions, the net effect would be a benefit to the Company's effective tax rate of $650,100. The remaining $141,900 represents federal tax benefits that would be received in the event that the Company did not prevail on all uncertain state tax positions. Based on the potential outcome of the Company's tax examinations and the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the unrecognized tax benefits will decrease withinover the next 12 months.associated net tax benefits, which would favorably impact the effective tax rate, are estimated to be in the range of $0 to $410,400. The Company's historicalCompany’s accounting policy with respect to interest and penalties related to tax uncertainties has beenis to classify these amounts as income taxes, and the Company continued this classification upon the adoption of the new standard on income tax uncertainties recognized in financial statements.taxes. The total amount of interest and penalties related to tax uncertainties recognized in theNotes to Consolidated Financial Statements (Continued)Note 12. Income Taxes (Continued)20102011 was $82,100$59,000 and the total amount included in the unrecognized tax benefits liability was $115,600.$203,100. The total amount of interest and penalties related to tax uncertainties recognized in the consolidated statement of income for fiscal year 20092010 was $82,600$81,100 and the total amount included in the unrecognized tax benefits liability was $125,200. 2010 2009 2008 $ 792,000 $ 266,400 $ 319,000 65,800 28,400 143,700 219,600 497,200 — — — (196,300 ) (75,800 ) — — $ 1,001,600 $ 792,000 $ 266,400 2011 2010 2009 Beginning balance of unrecognized tax benefit $ 1,001,600 $ 792,000 $ 266,400 Increases related to prior period tax positions 176,700 65,800 28,400 Increases related to current period tax positions -- 219,600 497,200 Reductions as a result of a lapse in the applicable statute of limitations (455,000 ) -- -- Reductions as a result of settlements -- (75,800 ) -- Ending balance of unrecognized tax benefits $ 723,300 $ 1,001,600 $ 792,000 20062007 and earlier are no longer subject to examination by U.S. federal, state and local tax authorities. No federal, state and local income tax returns are currently under examination. Certain income tax returns for fiscal years 20072008 through 20092010 remain open to examination by U.S. federal, state and local tax authorities.$414,100 and $505,800$414,100 during fiscal years 2011, 2010 2009 and 2008,2009, respectively. As of March 28, 201027, 2011 plan assets included 126,811132,257 shares of common stock of the Company.Amounts in thousands, except per share amounts 2010 2009 2008 $ 9,139 $ 6,328 $ 4,819 (196 ) (152 ) (121 ) $ 8,943 $ 6,176 $ 4,698 7,199 7,325 7,896 $ 1.24 $ 0.84 $ 0.59 $ 9,139 $ 6,328 $ 4,819 (189 ) (147 ) (117 ) $ 8,950 $ 6,181 $ 4,702 7,199 7,325 7,896 341 208 281 7,540 7,533 8,177 $ 1.19 $ 0.82 $ 0.58 Amounts in thousands, except per share amounts 2011 2010 2009 Earnings per share – Basic: Net earnings $ 10,018 $ 9,139 $ 6,328 (180 ) (196 ) (152 ) Earnings available to common shareholders – Basic $ 9,838 $ 8,943 $ 6,176 Weighted average common shares outstanding – Basic 7,394 7,199 7,325 Earnings per common share – Basic $ 1.33 $ 1.24 $ 0.84 Earnings per share – Diluted: Net earnings $ 10,018 $ 9,139 $ 6,328 (174 ) (189 ) (147 ) Earnings available to common shareholders – Diluted $ 9,844 $ 8,950 $ 6,181 Weighted average common shares outstanding – Basic 7,394 7,199 7,325 Effect of dilutive options 362 341 208 Weighted average common shares outstanding – Diluted 7,756 7,540 7,533 Earnings per common share – Diluted $ 1.27 $ 1.19 $ 0.82 outstandingstock options with respect to 202,500 shares of common stock were outstanding. Stock options in respect of 90,000112,500 shares (of the 202,500 aggregate number of shares covered by outstanding options), were antidilutive and all earned but not yet vested PSUs, were included in the computation of diluted earnings per share because all such instruments were dilutive. All remaining awardstherefore were not included in the computation of dilutive earnings per share as the impact was considered anti-dilutive. As of March 30, 2008, there were no anti-dilutiveshare. The remaining stock options, Performance Stock Units orand Restricted Stock outstanding.then outstanding were dilutive and therefore included in the computation of dilutive earnings per share.Company'sCompany’s selling, general and administrative expenses for the fiscal years ended March 27, 2011, March 28, 2010 and March 29, 2009 include $2,274,000, $2,162,600 and March 30, 2008 include $2,162,600, $1,830,600, and $2,797,900, respectively, of stock compensation expense. Provision for income taxes for the fiscal years ended March 27, 2011, March 28, 2010 and March 29, 2009 includes $809,500, $821,800 and March 30, 2008 includes $821,800, $730,600, and $1,010,000, respectively, of income tax benefits related to our stock-based compensation arrangements. Stock compensation expense is primarily related to our Performance Stock Unit Program as described below.Company'sCompany’s stock incentive plan is the Second Amended and Restated 1994 Stock and Incentive Plan (the 1994 Plan). On July 24, 2008, the Company'sCompany’s shareholders approved an amendment to the 1994 Plan increasing the number of shares of common stock available for the grant of awards by 225,000 shares, from 2,638,125 to an aggregate of 2,863,125 split adjusted shares of the Company's common stock. As of March 28, 2010, 414,73327, 2011, 137,608 shares were available for issue in respect of future awards under the 1994 Plan. Subsequent to the Company's 2010Company’s 2011 fiscal year end, on May 1, 2010,2011, based on fiscal year 20102011 results, 10,500142,699 shares related to PSUsPerformance Stock Units (PSUs) were cancelled, and as a result, those shares were made available for future grants. In addition, 15,000 shares related to Restricted Stock Award granted to various non-executive employees have been cancelled as certain participants are no longer employed by the Company, and as a result, those shares were also made available for future grants. Also in April 2010,2011, additional PSUs and Restricted Stock Unitsrestricted stock awards were issued, providing recipients with the opportunity to earn up to 267,000255,000 and 22,50036,000 additionalNotes to Consolidated Financial Statements (Continued)Note 15. Stock-Based Compensation (Continued)Company'sCompany’s common stock in the aggregate. Accordingly, on May 1, 2010,2011, an aggregate of 135,7334,303 shares were available for issue pursuant to future awards under the 1994 Plan. The 1994 Plan allows for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units and other performance awards. On July 24, 2008, the Company'sCompany’s shareholders also approved an amendment to extend the date through which awards may be granted under the 1994 Plan from July 22, 2009 to July 22, 2014. No additional awards can be made under the 1994 Plan after July 22, 2014, without shareholder approval of an extension of the plan term. Options, restricted stock and Performance Stock Unit (PSU)PSU awards have been granted as awards under the 1994 Plan. Shares which are subject to outstanding PSU or other awards under the 1994 Plan, and which are not earned, are returned to the 1994 Plan and become available for future issuance in accordance with and otherwise subject to the terms of the 1994 Plan.Company'sCompany’s equity-based compensation philosophy and practice shifted away from awarding stock options to granting performance-based and time-vested stock grants. Accordingly, in April 2004, the Company'sCompany’s Board of Directors established a Performance Stock Unit Award Program under the 1994 Plan. Under the program, PSUs have been granted to selected individuals. Each PSU entitles the participant to earn TESSCO common stock, but only after earnings per share and, for non-director employee participants, individual performance targets are met over a defined performance cycle. Performance cycles, which are fixed for each grant at the date of grant, are one year. Once earned, shares vest and are issued over a specified period of time determined at the time of the grant, provided that the participant remains employed by or associated with the Company at the time of share issuance. Earnings per share targets, which take into account the earnings impact of this program, are set by the Board of Directors in advance for the complete performance cycle at levels designed to grow shareowner value. If actual performance does not reach the minimum annual or threshold targets, no shares are issued. In accordance with the FASB standard on stock compensation, the Company records compensation expense on its PSUs over the service period, based on the number of shares management estimates will ultimately be issued. Accordingly, the Company determines the periodic financial statement compensation expense based upon the stock price at the PSU grant date, management'smanagement’s projections of future EPS performance over the performance cycle, and the resulting amount of estimated share issuances, net of estimated forfeitures. The Company estimated the forfeiture rate primarily based on historical experience and expectations of future forfeitures. The Company'sCompany’s calculated estimated forfeiture rate has ranged fromis less than 1% to 5%.Company'sCompany’s PSU program for fiscal years 2011, 2010 2009 and 2008: 2010 2009 2008 Shares Weighted-
Average
Fair Value
at Grant Shares Weighted-
Average
Fair Value
at Grant Shares Weighted-
Average
Fair Value
at Grant 539,241 $ 8.07 658,546 $ 11.19 1,305,258 $ 6.77 396,000 5.85 412,500 7.81 282,000 15.97 (141,794 ) 8.19 (234,775 ) 7.04 (247,247 ) 7.11 (113,820 ) 7.81 (297,030 ) 15.55 (681,465 ) 6.17 679,627 $ 6.75 539,241 $ 8.07 658,546 $ 11.19 2011 2010 2009 Shares Weighted- Average Fair Value at Grant Shares Weighted- Average Fair Value at Grant Shares Weighted-Average Fair Value at Grant Outstanding, non-vested beginning of period 679,627 $ 6.75 539,241 $ 8.07 658,546 $ 11.19 274,500 16.00 396,000 5.85 412,500 7.81 (238,163 ) 7.24 (141,794 ) 8.19 (234,775 ) 7.04 (19,875 ) 9.42 (113,820 ) 7.81 (297,030 ) 15.55 Outstanding, non-vested end of period 696,089 $ 10.15 679,627 $ 6.75 539,241 $ 8.07 28, 2010,27, 2011, there was approximately $1.6 million of total unrecognized compensation costs, net of forfeitures, related to PSUs. These costs are expected to be recognized over a weighted average period of 1.51.4 years. Total fair value of shares vested during fiscal years 2011, 2010 and 2009 was $3,639,100, $833,700 and 2008 was $833,700, $1,601,700, and $4,545,200, respectively.679,627696,089 non-vested shares as of March 28, 2010,27, 2011, PSUs covering 10,500142,699 shares were cancelled in May 2010,2011, based on fiscal year 20102011 activity. These PSUs were cancelled primarily because fiscal year 2011 earnings per share performance of the Company did not reach the target performance set forth in the PSU grants, but also because individual performance targets for certain non-director employee participants did not fully reach the target performance set forth in the PSU grants for fiscal year 2010.2011. The remaining 669,127553,390 shares have been earned based on past performance, but not yet vested as of March 28, 2010.27, 2011. Assuming the respective participants remain employed by or affiliated with the Company on these dates, these shares will vest and be paid on or about May 1 of 2010, 2011, 2012, 2013 and 20132014, as follows: Number
of Shares 238,162 167,295 167,295 96,375 669,127 Number of Shares 197,490 197,490 126,570 31,840 553,390 Company's 2010Company’s 2011 fiscal year end, on April 23, 2010,25, 2011, the Compensation Committee, with the concurrence of the full Board of Directors, granted additional PSUs to selected key individuals,employees, providing them with the opportunity to earn up to 267,000255,000 additional shares of the Company'sCompany’s common stock in the aggregate, depending upon whether certain threshold or goal earnings per share targets are met and individual performance metrics are satisfied in fiscal year 2011.2012. These PSUs have only one measurement year (fiscal year 2011)2012), with any shares earned at the end of fiscal year 20112012 to vest 25% on or about each of May 1 of 2011, 2012, 2013, 2014 and 2014,2015, provided that the participant remains employed by or associated with the Company on each such date.Options:Options: In accordance with the FASB standard on stock compensation, the fair value of the Company'sCompany’s stock options have been determined using the Black-Scholes-Merton option pricing model, based upon facts and assumptions existing at the date of grant. Stock options granted have exercise prices equal to the market price of the Company'sCompany’s common stock on the grant date.Notes to Consolidated Financial Statements (Continued)Note 15. Stock-Based Compensation (Continued)Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding, beginning of year 180,000 $ 5.26 Granted -- -- Exercised (45,000 ) 5.72 Cancelled -- -- Outstanding, end of year 135,000 $ 5.11 1.42 $ 895,100 Exercisable, end of year 135,000 $ 5.11 1.42 $ 895,100 Shares Weighted Average
Exercise Price Weighted Average
Remaining
Contractual Life Aggregate
Intrinsic Value 202,500 $ 5.57 — — (22,500 ) 7.95 — — 180,000 $ 5.26 2.11 $ 1,868,000 180,000 $ 5.26 2.11 $ 1,868,000 20102011 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 28, 2010.27, 2011. This amount changes based on the fair market value of the Company'sCompany’s common stock.2009 and 2008.2009. The total intrinsic value of options exercised during fiscal years 2011 and 2010 was $299,300 and 2008 was $72,300 and $815,100.$72,300. No options were exercised during fiscal year 2009.28, 2010,27, 2011, there was no unrecognized compensation costs related to stock options.split adjusted shares of the Company'sCompany’s common stock to its Chairman and Chief Executive Officer as a restricted stock award under the 1994 Plan. These shares vest ratably over ten fiscal years based on service, beginning on the last day of fiscal year 2007 and ending on the last day of fiscal year 2016, subject, however, to the terms applicable to the award, including terms providing for possible acceleration of vesting upon death, disability, change in control or certain other events. The weighted average fair value for these shares at the grant date was $10.56. No other shares of restricted stock are currently issued as awards under the 1994 Plan. On both March 28, 201027, 2011 and March 29, 2009,28, 2010, 22,500 shares of restricted stock were released and vested. As of March 28, 2010,27, 2011, there were 135,000112,500 unvested shares and approximately $1.4$1.2 million of total unrecognized compensation costs related to restricted stock. Unrecognized compensation costs related to this award are expected to be recognized ratably over a period of approximately five years.sixthree years. To the extent the forfeiture rates are different from what is anticipated, stock-based compensation related to the restricted awards will be different from the Company’s expectations. Subsequent to the Company’s 2011 fiscal year end, two of the non-executive employees are no longer employed by the Company and thus 15,000 shares have been cancelled and made available for future grants under the 1994 Plan. split adjusted shares of the Company's common stock at 85% of the lower of the market price on the first day of a six-month period or the market price on the last day of that same six-month period. The Company's expenses relating to this plan are for its administration and expense associated with the fair value of this benefit in accordance with the FASB standard on employee share purchase plans. Expenses incurred for the Team Member Stock Purchase Plan during the fiscal years ended March 27, 2011, March 28, 2010 and March 29, 2009 and March 30, 2008 related to the FASB standard were $51,200, $42,100 $42,400 and $29,100,$42,400, respectively. During the fiscal years ended March 27, 2011, March 28, 2010 and March 29, 2009, 16,662, 21,319 and March 30, 2008, 21,319, 23,308 and 9,612 shares were sold to employees under this plan, having a weighted average market value of $8.95, $5.73 and $5.28, and $8.79, respectively.•Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.· Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. · Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, and quoted prices for identical or similar assets or liabilities in markets that are not active. · Level 3: Unobservable inputs for the asset or liability that reflect the reporting entity’s own assumptions about the inputs used in pricing the asset or liability. •Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, and quoted prices for identical or similar assets or liabilities in markets that are not active.•Level 3: Unobservable inputs for the asset or liability that reflect the reporting entity's own assumptions about the inputs used in pricing the asset or liability.Company'sCompany’s Consolidated Balance Sheet: Balance at
March 28, 2010 Quoted Prices
in Active
Markets for
Identical Assets
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) $ (97,600 ) $ — $ (97,600 ) $ — $ (97,600 ) $ — $ (97,600 ) $ — Liabilities: $ (24,600 ) $ -- $ (24,600 ) $ -- $ (24,600 ) $ -- $ (24,600 ) $ -- Liabilities: $ (97,600 ) $ -- $ (97,600 ) $ -- $ (97,600 ) $ -- $ (97,600 ) $ -- Company'sCompany’s fair value of its interest rate swap is derived from valuation models commonly used for derivatives. Valuation models require a variety of inputs, including contractual terms, market fixed prices, inputs from forward price yield curves, notional quantities, measures of volatility and correlations of such inputs. The Company's derivatives trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment.28, 201027, 2011 and March 29, 200928, 2010 due to their short term nature.28, 201027, 2011 and March 29, 200928, 2010 is estimated as follows: 2010 2009 Carrying
Amount Fair
Value Carrying
Amount Fair
Value $ 3,225,000 $ 3,121,000 $ 3,450,000 $ 3,228,500 $ 253,900 $ 248,100 $ 393,100 $ 391,100 $ 229,100 $ 201,900 $ — $ — 2011 2010 Carrying Amount Carrying Amount $ 3,000,000 $ 2,979,600 $ 3,225,000 $ 3,121,000 $ 110,400 $ 109,400 $ 253,900 $ 248,100 $ 207,800 $ 185,400 $ 229,100 $ 201,900 2008 totaled $3,940,000, $4,635,300, and $2,790,900, respectively. Cash paid for interest during fiscal years 2011, 2010 and 2009 totaled $427,700, $375,100 and 2008 totaled $375,100, $666,300, and $634,100, respectively. No interest was capitalized during fiscal years 2011, 2010 2009 or 2008.2009.Company'sCompany’s ability to generate revenues from these customers may be significantly affected, resulting in an adverse affect on its financial position and results of operations.2009 and 2008,2009, sales of products purchased from the Company's top ten vendors accounted for 40%, 41%40% and 49%41% of total revenues, respectively. In fiscal year 2011, sales of product purchased from the Company’s largest vendor, Otter Products, accounted for approximately 13% of total revenues. In fiscal year 2010, the Company did not have any vendors that accounted for 10% of more of its total revenues. In fiscal yearsyear 2009, and 2008, sales of product purchased from the Company'sCompany’s then largest vendor, Motorola Inc., accounted for approximately 11% and 16% of total revenues, respectively.revenues. The Company is dependent on the ability of its vendors to provide products on a timely basis and on favorable pricing terms. Although the Company believes that alternative sources of supply are available for many of the product types it carries, the loss of certain principal suppliers, or the loss of one or more of certain ongoing affinity relationships, could have a material adverse effect on the Company.2009 and 2008,2009, sales of products to the Company's top ten customer relationships accounted for 40%36%, 31%40% and 31% of total revenues, respectively. In fiscal years 2011, 2010 2009 and 2008,2009, sales to the Company'sCompany’s largest customer relationship, AT&T Mobility, a top tier cellular carrier purchasing phone accessories, accounted for approximately 30%26%, 22%30% and 26%22% of total revenues, respectively.Notes to Consolidated Financial Statements (Continued)Note 19. Shareholder Rights Plan (Continued)As of March 28, 2010, theThe rights hadwere not been triggered and were set to expire on February 11, 2011.Company's Board of Directors amendedCompany terminated its Shareholder Rights Plan by entering into a First Amendment to the Rights Agreement to accelerate(the “Amendment”), dated as of February 1, 2008, between the expiration dateCompany and Mellon Investor Services LLC, as Rights Agent (collectively the “Rights Agreement”). The Amendment accelerates the Final Expiration Date of the rightsCompany’s Series A Junior Preferred Stock Purchase Rights (the “Rights”) from February 11, 2011 to April 26, 2010 and as(“the Final Expiration Date”). As a result of the ShareholderAmendment, (i) the rights to purchase the Rights Plan terminatedpursuant to the Rights Agreement expired at 5:00 p.m. on that date (See Note 20).the Final Expiration Date and there no longer will be a Right associated with each outstanding share of the Company’s common stock after the Final Expiration Date, (ii) the Rights Agreement will expire on the Final Expiration Date, and (iii) no person will have any rights pursuant to the Rights Agreement. On26, 201025, 2011, approved an amendment and restatement of the Company terminated its Shareholder Rights Plan by entering intoCompany’s By-Laws to provide that in an uncontested election, if a First Amendmentnominee to the Rights Agreement (the "Amendment"), dated asCompany’s Board does not receive a majority of February 1, 2008, between the Companyvotes cast in his or her election, such nominee shall, within ten business days after the certification of the election results, submit to the Board a letter of resignation for consideration by the Nominating and Mellon Investor Services LLC, as Rights Agent (collectivelyGovernance Committee. The Nominating and Governance Committee shall then assess the "Rights Agreement").appropriateness of the continued service of such nominee and recommend to the Board the action to be taken on such tendered resignation. The Amendment acceleratesBoard will determine what action to take within ninety days after the Final Expiration Datedate of the certification of election results. The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the full text of the Company's Series A Junior Preferred Stock Purchase Rights (the "Rights") from February 11, 2011Six Amended and Restated By-Laws which are incorporated herein by reference as Exhibit 3.2.4 to April 26, 2010 ("the Final Expiration Date"). As a result of the Amendment, (i) the rights to purchase the Rights pursuant to the Rights Agreement expired at 5:00 p.m.this Annual Report on the Final Expiration Date and there no longer will be a Right associated with each outstanding share of the Company's common stock after the Final Expiration Date, (ii) the Rights Agreement will expire on the Final Expiration Date, and (iii) no person will have any rights pursuant to the Rights Agreement.28, 2010, the Company and its primary operating subsidiaries, as borrowers, executed and delivered a Fourth Modification Agreement (the "Fourth Amendment"), with SunTrust Bank and Wachovia Bank, National Association, amending the Credit Agreement for the Company's existing unsecured revolving credit facility. Pursuant to the Fourth Amendment, the amount of dividend payments allowed to be made by the Company under the Credit Facility was increased from $2.5 million to $5.0 million in any 12 month period, assuming continued compliance by the Company with the otherwise applicable terms of the Credit Agreement. Pursuant to the relevant documents, the financial covenants included in the Credit Agreement for the unsecured revolving credit facility are also applicable to the Company's existing Term Loan with the same lenders. Accordingly, the Fourth Amendment also has the effect of amending the financial covenants applicable to the Term Loan. On April 28, 2010, the Company announced a stock dividend in order to effect a three-for-two stock split of the Company's common stock. To effect the split, each holder of the Company's common stock, par value $0.01 per share, as of the close of business on May 12, 2010, will receive on May 26, 2010, a stock dividend of one additional share of common stock for every two outstanding shares held. All share and earnings per share numbers presented in this document have been adjusted to reflect the stock split. The reference from time to time herein to "split adjusted" shares is for convenience of the reader; and the absence in some places of such reference should not be construed to mean that such numbers or values are not "split adjusted," unless noted as such. Also on April 28, 2010,27, 2011, the Company declared a quarterly cash dividend of ten cents ($0.10) per share of common stock, (equivalent to $0.15 per pre split share), par value $0.01 per share, of the Company, payable on June 2, 2010,May 25, 2011, to shareholders of record as of May 19, 2010.11, 2011. Any future declaration of dividends and the establishment of any corresponding record and payment dates remains subject to further determination from time to time by the Board of Directors.StockholdersShareholders of28, 201027, 2011 and March 29, 2009,28, 2010, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the three years in the period ended March 28, 2010.27, 2011. Our audits also included the financial statement schedule listed in the Index at Item 15(a)15 (a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,statements. An audit also includes assessing the accounting principles used and significant estimates made by management, andas well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.28, 201027, 2011 and March 29, 2009,28, 2010, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 28, 2010,27, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basicbasis financial statements taken as a whole, presents fairly in all material respects the information set forth therein.As discussedWe also have audited, in Note 12accordance with the standards of the Notes toPublic Company Accounting Oversight Board (United States), TESCCO Technologies Incorporated's internal control over financial reporting as of March 27, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Consolidated Financial Statements,Committee of Sponsoring Organizations of the Company adopted the provisions of Accounting Standards Codification (ASC) Topic 740—Treadway Commission and our report dated May 24, 2011 expressed an unqualified opinion thereon.Income Taxes (formerly Financial Accounting Standards Board Interpretation No. 48), effective April 2, 2007./s/ Ernst & Young, LLPBaltimore, MarylandMay 27, 2010 Not applicable.Management's28, 2010. This annual report does not include an attestation report27, 2011.regarding internal control over financial reporting. Management'sas stated in their report was not subject to attestation by our independent registered public accounting firm pursuant to temporary ruleswhich is included in Part II of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.20102011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. None.(a)The following documents are filed as part of this report:1.The following consolidated financial statements are included in Item 8 of this report:(a) The following documents are filed as part of this report: 1. The following consolidated financial statements are included in Item 8 of this report: 43 and March 30, 2008 and March 30, 2008 and March 30, 2008 47Report of Independent Registered Public Accounting Firm732.The following financial statement schedules are required to be filed by Item 8 and paragraph (b)2. The following financial statement schedules are required to be filed by Item 8 and paragraph (b) of this Item 15 included herewith: 3.Exhibits3. Exhibits 3.1.1 Amended and Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on September 29, 1993 (incorporated by reference to Exhibit 3.1.1 to the Company's Registration Statement on Form S-1 (No. 33-81834)).
3.1.2
Certificate of Retirement of the Registrant filed with the Secretary of State of Delaware on January 13, 1994 (incorporated by reference to Exhibit 3.1.2 to the Company's Registration Statement on Form S-1 (No. 33-81834)).
3.1.3First Certificate of Amendment to Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on July 20, 1994 (incorporated by reference to Exhibit 3.1.3 to the Company's Registration Statement on Form S-1 (No. 33-81834)).
3.1.4
Certificate of Amendment to Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on September 6, 1996 (incorporated by reference to Exhibit 3.1.4 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 1997).3.1.5 Certificate of Correction filed with the Secretary of State of Delaware on February 7, 2007 to Certificate of Amendment to Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on September 6, 19991996 (incorporated by reference to Exhibit 3.1.5 to the Company'sCompany’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on February 7, 2007).
3.1.6
Certificate of DesignationsDesignation of Series A Junior Participating Preferred Stock, datedfiled with the Secretary of State of Delaware on February 1, 2008 (incorporated by reference to the Company'sCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 1, 2008).
3.1.7
Certificate of Elimination of Series A Junior Participating Preferred Stock of the Company, dated as of April 26, 2010 (incorporated by reference to Exhibit 3.1 to the Company'sCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 26, 2010).
3.2.1ThirdFifth Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2.13.1 to the Company'sCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 1, 2008)January 21, 2011).
3.2.2FourthSixth Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Company'sCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 26, 2010)28, 2011).
4.1.1
Rights Agreement, dated as of February 1, 2008, between the Company and Mellon Investor Services, LLC, as rights agent (which includes the Form of Rights Certificate as Exhibit B) (incorporated by reference to the Company'sCompany’s Registration Statement on Form 8-A, filed with the Securities and Exchange Commission on February 1, 2008).
4.1.2
First Amendment to Rights Agreement, dated as of April 26, 2010, between the Company and Mellon Investor Services, LLC, as rights agent (incorporated by reference to the Company'sCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 26, 2010).
10.1.1
Employment Agreement, dated August 31, 2006 with Robert B. Barnhill, Jr. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 1, 2006).
10.1.2
Amendment No. 1 to Employment Agreement, dated December 31, 2008 with Robert B. Barnhill, Jr. (filed herewith)(incorporated by reference to Exhibit 10.1.2 to the Company’s Annual Report on Form 10-K filed for the fiscal year ended March 29, 2009).10.2.110.1.3
Amendment No. 2 to Employment Agreement, dated May 7, 2010 with Robert B. Barnhill, Jr. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 11, 2010).10.2.1
Employee Incentive Stock Option Plan, as amended (incorporated by reference to Exhibit 10.21 to the Company's Registration Statement on Form S-1 (No. 33-81834)).
10.3.1
Team Member Stock Purchase Plan (incorporated by reference to Appendix No. 2 to the Company's Definitive Proxy Statement filed with the Securities and Exchange Commission on July 15, 1999).
10.4.1
TESSCO Technologies Incorporated Second Amended and Restated 1994 Stock and Incentive Plan, dated as of July 24, 2008 (incorporated herein by reference to Exhibit 10.3 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2008).
10.4.2
TESSCO Technologies Incorporated Performance Share Unit Agreement—Agreement – Officer and Employees (incorporated by reference to Exhibit 10.1 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2004).
10.4.3
TESSCO Technologies Incorporated Performance Share Unit Agreement—Agreement – Non-employee Director (incorporated by reference to Exhibit 10.2 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2004).
10.5.1
Stock Repurchase Agreement, dated as of July 1, 2008, between the Registrant and Brightpoint, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2008).10.6.1 Agreement of Lease By and Between Atrium Building, LLC and TESSCO Technologies Incorporated (incorporated by reference to Exhibit 10.1 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2003).10.7.110.6.2
Third Amendment to Agreement of Lease By and Between Atrium Building, LLC and TESSCO Technologies Incorporated (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 18, 2011).10.7.1
Credit Agreement dated June 30, 2004, by and among the Registrant and affiliates, and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association,Association), SunTrust Bank and the lenders party thereto from time to time (Term Loan) (incorporated by reference to Exhibit 10.2 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2004).
10.7.2
Joinder, Assumption, Ratification and Modification Agreement, dated as of August 29, 2006 by and among the Registrant, various affiliates of the Registrant and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association) and SunTrust Bank, as lenders (Term Loan) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 24, 2006).10.7.3
Second Amendment, dated as of May 31, 2007, by and among the Registrant, various affiliates of the Registrant and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association) and SunTrust Bank, as lenders (Term Loan) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 6, 2007).10.7.4 Third Amendment, dated as of May 20, 2011, by and among the Registrant, various affiliates of the Registrant and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association) and SunTrust Bank, as lenders (Term Loan) (filed herewith). 10.7.5 Term Note of Registrant and affiliates dated June 30, 2004, payable to Wells Fargo Bank, National Association (as successor to Wachovia Bank, N.A.National Association) and SunTrust Bank (Term Loan) (incorporated by reference to Exhibit 10.3 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2004).10.7.310.7.6
Guaranty Agreement dated June 30, 2004, of TESSCO Incorporated, to and for the benefit of Wells Fargo Bank, National Association (as successor to Wachovia Bank, N.A.National Association), as agent (Term Loan) (incorporated by reference to Exhibit 10.4 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2004).10.7.410.7.7
Credit Agreement, dated as of May 31, 2007, by and among the Registrant and its primary operating subsidiaries as borrowers, and SunTrust Bank and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association), as lenders (Revolving Line of Credit Facility) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 6, 2007).10.7.8
First Modification Agreement, made effective as of June 30, 2008, to Credit Agreement dated as of May 31, 2007, by and among the Registrant and its primary operating subsidiaries as borrowers, and SunTrust Bank and Wells Fargo Bank, National Association (as successor to Wachovia Bank, N.A.National Association), as lenders (Revolving Line of Credit Facility) (incorporated herein by reference to Exhibit 10.2 to the Company's QuarterlyCompany’s Current Report on Form 10-Q for8-K, filed with the fiscal quarter ended September 28,Securities and Exchange Commission on July 7, 2008).10.7.510.7.9
Second Modification Agreement, made effective as of November 26, 2008, to Credit Agreement dated as of May 31, 2007, by and among the Registrant and its primary operating subsidiaries as borrowers, and SunTrust Bank and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association,Association), as lenders (Revolving Line of Credit Facility) (incorporated herein by reference to Exhibit 10.1 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 28, 2008).10.7.610.7.10
Third Modification Agreement, made effective July 22, 2009, to Credit Agreement dated as of May 31, 2007, by and among the Registrant and its primary operating subsidiaries as borrowers, and SunTrust Bank and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association,Association), as lenders (Revolving Line of Credit Facility) (incorporated by reference to Exhibit 10.1 to the Company'sCompany’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 12, 2009).10.7.710.7.11
Fourth Modification Agreement, made effective April 28, 2010, to Credit Agreement dated as of May 31, 2007, by and among the Registrant and its primary operating subsidiaries as borrowers, and SunTrust Bank and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association, as lenders (filed herewith).10.7.8Joinder, Assumption, Ratification and Modification Agreement, dated as of August 29, 2006 by and among the Registrant, various affiliates of the Registrant and Wachovia Bank, N.A. and SunTrust Bank,Association), as lenders (Revolving Line of Credit Facility) (incorporated by reference to Exhibit 10.110.7.7 to the Company's QuarterlyCompany’s Annual Report on Form 10-Q10-K filed for the fiscal quarteryear ended September 24, 2006)March 28, 2010).10.7.910.7.12 Joinder, Assumption, Ratification andFifth Modification Agreement, made effective May 20, 2011, to Credit Agreement dated as of August 29, 2006May 31, 2007, by and among the Registrant various affiliates of the Registrant and Wachovia Bank, N.A.its primary operating subsidiaries as borrowers, and SunTrust Bank and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association), as lenders (Term Loan)(Revolving Line of Credit Facility) (filed herewith).10.7.13 Revolving Credit Note of Registrant and its primary operating subsidiaries, dated as of May 31, 2007, payable to SunTrust Bank and Wells Fargo Bank, National Association (as successor to Wachovia Bank, National Association), as lenders (Revolving Line of Credit Facility) (incorporated by reference to Exhibit 10.2 to the Company's QuarterlyCompany’s Current Report on Form 10-Q for8-K, filed with the fiscal quarter ended September 24, 2006)Securities and Exchange Commission on June 6, 2007).
10.8.1
Asset Purchase Agreement, dated as of April 5, 2006, by and among TerraWave Solutions, Ltd., Gigawave Solutions, Ltd. and TESSCO Incorporated and GW Services Solutions, Inc. (incorporated by reference to Exhibit 10.1 to the Company'sCompany’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 24, 2006).10.9.1 Supplemental Executive Retirement Plan, between the Company and Robert B. Barnhill, Jr., (originally filed as Exhibit C to Exhibit 10.2 to the Company'sCompany’s Registration Statement on Form S-1 (No. 33-81834)) (filed again herewith)(incorporated by reference to Exhibit 10.9.1 to the Company’s Annual Report on Form 10-K filed for the fiscal year ended March 28, 2010).
10.9.2
Amendment No. 1 to Supplemental Executive Retirement Plan, dated as of December 31, 2008 (filed herewith)(incorporated by reference to Exhibit 10.9.2 to the Company’s Annual Report on Form 10-K filed for the fiscal year ended March 28, 2010).
10.10.1
Form of Severance and Restrictive Covenant Agreement, dated February 9, 2009, and entered into between the Company and each of Gerald T. Garland, Douglas A. Rein, Said Tofighi and David M. Young (filed herewith)(incorporated by reference to Exhibit 10.10.1 to the Company’s Annual Report on Form 10-K filed for the fiscal year ended March 28, 2010).
11.1.1
Statement re: Computation of Per Share Earnings (filed herewith).
21.1.1
Subsidiaries of the Registrant (filed herewith).
23.1.1
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith).
31.1.1
Rule 15d-14(a) Certification of Robert B. Barnhill, Jr., Chief Executive Officer (filed herewith).
31.2.1
Rule 15d-14(a) Certification of David M. Young, Chief Financial Officer (filed herewith).
32.1.1
Section 1350 Certification of Robert B. Barnhill, Jr., Chief Executive Officer (filed herewith).
32.2.1
Section 1350 Certification of David M. Young, Chief Financial Officer (filed herewith). 2010 2009 2008 $ 1,874,700 $ 1,200,700 $ 910,400 743,500 1,593,600 937,900 (1,101,600 ) (919,600 ) (647,600 ) $ 1,516,600 $ 1,874,700 $ 1,200,700 2010 2009 2008 $ 2,681,100 $ 2,655,600 $ 2,984,100 2,634,900 1,983,800 3,285,800 (1,854,300 ) (1,958,300 ) (3,614,300 ) $ 3,461,700 $ 2,681,100 $ 2,655,600 2011 2010 2009 Allowance for doubtful accounts: Balance, beginning of period $ 1,516,600 $ 1,874,700 $ 1,200,700 Provision for bad debts 1,050,500 743,500 1,593,600 Write-offs and other adjustments (950,600 ) (1,101,600 ) (919,600 ) Balance, end of period $ 1,616,500 $ 1,516,600 $ 1,874,700 2011 2010 2009 Inventory Reserve: Balance, beginning of period $ 3,461,700 $ 2,681,100 $ 2,655,600 Inventory reserve expense 4,759,000 2,634,900 1,983,800 Write-offs and other adjustments (4,037,500 ) (1,854,300 ) (1,958,300 ) Balance, end of period $ 4,183,200 $ 3,461,700 $ 2,681,100 SignaturesTESSCO Technologies Incorporated By: /s/ Robert B. Barnhill, Jr. TESSCO TECHNOLOGIES INCORPORATEDBy:/s/ Robert B. Barnhill, Jr.27, 201024, 2011/s/ ROBERT B. BARNHILL, JR.
Robert B. Barnhill, Jr.Chairman of the Board, President and Chief Executive Officer (principal executive officer) May 27, 201024, 2011
Robert B. Barnhill, Jr./s/ DAVID M. YOUNG
David M. Young (principal
May 27, 201024, 2011
David M. Young/s/ JAY G. BAITLER
Jay G. BaitlerDirector
May 27, 201024, 2011
Jay G. Baitler/s/ JOHN D. BELETIC
John D. Beletic
DirectorDirector
May 27, 201024, 2011
John D. Beletic/s/ BENN R. KONSYNSKI
Benn R. Konsynski
DirectorDirector
May 27, 201024, 2011/s/ DANIEL OKRENTDaniel OkrentBenn R. Konsynski
DirectorMay 27, 2010
/s/ DENNIS J. SHAUGHNESSY
Daniel OkrentDirector May 24, 2011 Daniel Okrent /s/ Dennis J. Shaughnessy
DirectorDirector
May 27, 201024, 2011
Dennis J. Shaughnessy/s/ MORTON F. ZIFFERER
Morton F. Zifferer
DirectorDirectorMay 24, 2011Morton F. Zifferer
May 27, 2010