Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Sep. 24, 2017 | Oct. 27, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TESSCO TECHNOLOGIES INC | |
Entity Central Index Key | 927,355 | |
Current Fiscal Year End Date | --04-01 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 8,378,159 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 24, 2017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 24, 2017 | Mar. 26, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 245,700 | $ 8,540,100 |
Trade accounts receivable, net of allowance for doubtful accounts of $866,900 and $782,200, respectively | 92,945,900 | 64,778,900 |
Product inventory, net | 73,229,000 | 63,984,300 |
Prepaid expenses and other current assets | 4,429,200 | 3,864,100 |
Total current assets | 170,849,800 | 141,167,400 |
Property and equipment, net | 13,091,100 | 13,830,900 |
Goodwill, net | 11,677,700 | 11,677,700 |
Other long-term assets | 7,419,300 | 7,304,500 |
Total assets | 203,037,900 | 173,980,500 |
Current liabilities: | ||
Trade accounts payable | 69,170,600 | 53,581,400 |
Payroll, benefits and taxes | 6,836,000 | 6,772,100 |
Income and sales tax liabilities | 1,756,100 | 1,364,700 |
Accrued expenses and other current liabilities | 1,973,000 | 2,228,200 |
Revolving line of credit | 13,278,600 | |
Current portion of long-term debt | 26,900 | 26,500 |
Total current liabilities | 93,041,200 | 63,972,900 |
Deferred tax liabilities | 373,600 | 386,800 |
Long-term debt, net of current portion | 16,100 | 29,800 |
Other long-term liabilities | 1,749,600 | 1,574,700 |
Total liabilities | 95,180,500 | 65,964,200 |
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, 14,088,701 shares issued and 8,373,585 shares outstanding as of September 24, 2017, and 14,048,392 shares issued and 8,337,669 shares outstanding as of March 26, 2017 | 98,800 | 98,400 |
Additional paid-in capital | 59,801,300 | 59,006,000 |
Treasury stock, at cost, 5,715,116 shares as of September 24, 2017 and 5,710,723 shares as of March 26, 2017 | (57,502,400) | (57,437,600) |
Retained earnings | 105,459,700 | 106,349,500 |
Total shareholders' equity | 107,857,400 | 108,016,300 |
Total liabilities and shareholders' equity | $ 203,037,900 | $ 173,980,500 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 24, 2017 | Mar. 26, 2017 |
Current assets: | ||
Trade accounts receivable, allowance for doubtful accounts | $ 866,900 | $ 782,200 |
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 500,000 | 500,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars shares) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, issued (in shares) | 14,088,701 | 14,048,392 |
Common stock, outstanding (in shares) | 8,373,585 | 8,337,669 |
Treasury stock (in shares) | 5,715,116 | 5,710,723 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 24, 2017 | Sep. 25, 2016 | Sep. 24, 2017 | Sep. 25, 2016 | |
Consolidated Statements of Income | ||||
Revenues | $ 145,083,500 | $ 134,633,800 | $ 285,094,300 | $ 263,493,800 |
Cost of goods sold | 115,160,400 | 105,878,200 | 226,004,400 | 207,632,200 |
Gross profit | 29,923,100 | 28,755,600 | 59,089,900 | 55,861,600 |
Selling, general and administrative expenses | 26,674,400 | 26,709,500 | 54,555,900 | 53,665,200 |
Income from operations | 3,248,700 | 2,046,100 | 4,534,000 | 2,196,400 |
Interest expense, net | 156,500 | 17,200 | 225,100 | 28,600 |
Income before provision for income taxes | 3,092,200 | 2,028,900 | 4,308,900 | 2,167,800 |
Provision for income taxes | 1,318,300 | 1,034,700 | 1,852,100 | 1,093,100 |
Net income | $ 1,773,900 | $ 994,200 | $ 2,456,800 | $ 1,074,700 |
Basic earnings per share (in dollars per share) | $ 0.21 | $ 0.12 | $ 0.29 | $ 0.13 |
Diluted earnings per share (in dollars per share) | $ 0.21 | $ 0.12 | $ 0.29 | $ 0.13 |
Basic weighted-average common shares outstanding (in shares) | 8,365,383 | 8,310,300 | 8,357,213 | 8,300,000 |
Effect of dilutive options (in shares) | 27,614 | 13,900 | 40,643 | 20,900 |
Diluted weighted-average common shares outstanding (in shares) | 8,392,997 | 8,324,200 | 8,397,856 | 8,320,900 |
Cash dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.20 | $ 0.40 | $ 0.40 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Sep. 24, 2017 | Sep. 25, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 2,456,800 | $ 1,074,700 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities | ||
Depreciation and amortization | 2,031,000 | 2,275,600 |
Non-cash stock-based compensation expense | 501,900 | 192,400 |
Deferred income taxes and other | 218,800 | (370,300) |
Change in trade accounts receivable | (28,205,250) | (12,279,300) |
Change in product inventory | (9,244,700) | (18,348,000) |
Change in prepaid expenses and other current assets | (565,100) | 322,400 |
Change in trade accounts payable | 15,589,200 | 27,857,600 |
Change in payroll, benefits and taxes | 63,900 | 166,500 |
Change in income and sales tax liabilities | 391,400 | (338,800) |
Change in accrued expenses and other current liabilities | (37,800) | (45,700) |
Net cash (used in) provided by operating activities | (16,799,850) | 507,100 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of property and equipment | (284,100) | (382,300) |
Purchases of internal use software licenses eligible for capitalization | (1,179,000) | (808,300) |
Net cash used in investing activities | (1,463,100) | (1,190,600) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net borrowings from revolving line of credit | 13,278,600 | |
Proceeds from note receivable | 38,250 | |
Payments of debt issuance costs | (113,400) | |
Payments on long-term debt | (13,300) | (1,888,100) |
Proceeds from issuance of stock | 76,400 | 68,300 |
Cash dividends paid | (3,346,600) | (3,323,700) |
Purchases of treasury stock and repurchases of stock from employees | (64,800) | (187,600) |
Net cash provided by (used in) financing activities | 9,968,550 | (5,444,500) |
Net decrease in cash and cash equivalents | (8,294,400) | (6,128,000) |
CASH AND CASH EQUIVALENTS, beginning of period | 8,540,100 | 16,882,800 |
CASH AND CASH EQUIVALENTS, end of period | $ 245,700 | $ 10,754,800 |
Description of Business and Bas
Description of Business and Basis of Presentation | 6 Months Ended |
Sep. 24, 2017 | |
Organization | |
Description of Business and Basis of Presentation | Note 1. Description of Business and Basis of Presentation TESSCO Technologies Incorporated, a Delaware corporation (TESSCO, we, or the Company), architects and delivers innovative product and value chain solutions to support wireless systems. The Company provides marketing and sales services, knowledge and supply chain management, product-solution delivery and control systems utilizing extensive internet and information technology. Approximately 98% of the Company’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. Almost all of the Company’s sales are made in United States Dollars. In management’s opinion, the accompanying interim consolidated financial statements of the Company include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the Company’s financial position for the interim periods presented. These statements are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the Company’s annual financial statements have been omitted from these statements, as permitted under the applicable rules and regulations. The results of operations presented in the accompanying interim consolidated financial statements are not necessarily representative of operations for an entire year. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 26, 2017. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 6 Months Ended |
Sep. 24, 2017 | |
Recently Issued Accounting Pronouncements | |
Recently Issued Accounting Pronouncements | Note 2. Recently Issued Accounting Pronouncements Recently issued accounting pronouncements not yet adopted: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. This guidance will supersede Topic 605, Revenue Recognition, in addition to other industry specific guidance, once effective. The new standard requires a company to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periods beginning after December 15, 2016 (i.e. the original adoption date per ASU 2014-09). In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects of the principal-versus-agent guidance, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the indicators to focus on evidence that an entity is acting as a principal rather than as an agent. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time or at a point in time. The amendments also clarify when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. The Company continues to assess the impact this new standard may have on its ongoing financial reporting. The Company has identified its revenue streams both by contract and product type and is assessing each for potential impacts. For the revenue streams assessed, the Company does not anticipate a material impact in the timing or amount of revenue recognized. The Company may be required to adjust its accounting for its returns reserve. However, as the Company’s returns have historically been less than 3% of revenue and this change would only affect the balance sheet, the Company does not expect this to have a material impact on the Financial Statements. Based on this ongoing assessment, the Company intends to adopt the standard on a modified retrospective basis on April 1, 2018, the first day of fiscal 2019. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. This ASU requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The ASU also requires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements. In August 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The new standard will change the classification of certain cash payments and receipts within the cash flow statement. Specifically, payments for debt prepayment or debt extinguishment costs, including third-party costs, premiums paid, and other fees paid to lenders that are directly related to the debt prepayment or debt extinguishment, excluding accrued interest, will now be classified as financing activities. Previously, these payments were classified as operating expenses. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, with early adoption permitted, and will be applied retrospectively. The Company does not expect that the adoption of this new standard will have a material impact on its Consolidated Financial Statements. Recently issued accounting pronouncements adopted: In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation. The new standard modified several aspects of the accounting and reporting for employee share-based payments and related tax accounting impacts, including the presentation in the statements of operations and cash flows of certain tax benefits or deficiencies and employee tax withholdings, as well as the accounting for award forfeitures over the vesting period. One provision within this pronouncement requires that excess income tax benefits and tax deficiencies related to share-based payments be recognized within income tax expense in the statement of income, rather than within additional paid-in capital on the balance sheet. The Company adopted this provision in the first quarter of fiscal 2018. The adoption of this provision was applied prospectively. The impact to the Company's results of operations related to this provision in the first six months of fiscal 2018 was an increase in the provision for income taxes of $0.04 million, and a 0.9% higher effective tax rate than if the standard had not been adopted. There was no impact on the second quarter of fiscal 2018, as we had no stock issuances this quarter. The impact of this provision on the Company's future results of operations will depend in part on the market prices for the Company's shares on the dates there are taxable events related to share awards, but is not expected to be material. In connection with another provision within this pronouncement, the Company has elected to account for forfeitures as they occur rather than estimate expected forfeitures, with the change being applied prospectively. The Company does not expect this or other provisions within the pronouncement to have a material impact on its financial statements. In December 2016, the FASB issued ASU No. 2016-19, “Technical Corrections and Improvements”. Among other things, the ASU provides clarification on the presentation of the costs of computer software developed or obtained for internal use. The Company retrospectively adopted the ASU in the three months ended June 25, 2017 and reclassified the carrying value of internal-use computer software from Property, plant and equipment, net to Intangible assets, net. The net carrying value of internal-use computer software was $4. 4 million and $4.3 million, respectively, as of September 24, 2017 and March 26, 2017. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Sep. 24, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 3. Stock-Based Compensation The Company’s selling, general and administrative expenses for the fiscal quarter and six months ended September 24, 2017 includes $254,300 and $501,900, respectively, of non-cash stock-based compensation expense. The Company’s selling, general and administrative expenses for the fiscal quarter and six months ended September 25, 2016 include $76,600 and $192,400, respectively, of non-cash stock-based compensation expense. Stock-based compensation expense is primarily related to our Performance Stock Units (PSUs), Restricted Stock Units (RSUs) and Stock Options, granted or outstanding under our Third Amended and Restated Stock and Incentive Plan (the “1994 Plan”). Performance Stock Units: The following table summarizes the activity under the Company’s PSU program under the 1994 Plan, for the first six months of fiscal 2018: Six Months Weighted Ended Average Fair September 24, Value at Grant 2017 Date (per unit) Unvested shares available for issue under outstanding PSUs, beginning of period 170,100 $ 11.17 PSU’s Granted 86,000 12.67 PSU’s Vested (7,600) 19.58 PSU’s Forfeited/Cancelled (168,500) 10.85 Unvested shares available for issue under outstanding PSUs, end of period 80,000 $ 12.67 During fiscal 2018, the Compensation Committee of our Board of Directors, with concurrence of the full Board of Directors, granted PSUs to select key employees, providing them with the opportunity to earn up to 86,000 shares of the Company’s common stock in the aggregate, depending upon whether and to the extent which certain earnings per share targets and other Company and individual performance metrics are met. These not-yet-earned PSUs have a one-year measurement period (fiscal 2018), and assuming the performance metrics are met to a sufficient extent, any shares earned at the end of fiscal 2018 will vest and be issued ratably on or about May 1 of 2018, 2019, 2020 and 2021, provided that the respective employees remain employed by or associated with the Company on each such date. The PSUs cancelled during fiscal 2018 primarily related to the fiscal 2017 grant of PSUs, which had a one year measurement period (fiscal 2017). The PSUs were cancelled because the minimum applicable fiscal 2017 performance targets were not attained. Per the 1994 Plan, the shares related to these forfeited and cancelled PSUs were added back to the 1994 Plan and became available for future issuance under the 1994 Plan. If all PSUs granted thus far in fiscal 2018 are assumed to be earned on account of the applicable performance metrics being fully met, total unrecognized compensation costs on these PSUs would be approximately $0. 8 million, as of September 24, 2017, and would be expensed through fiscal 2021. To the extent the maximum number of PSUs granted in fiscal 2018 is not earned, stock-based compensation related to these awards will differ from this amount. Restricted Stock Units: The Company has made annual restricted stock unit (RSU) awards under the 1994 Plan to its non-employee directors over recent years. On May 10, 2017, the Compensation Committee, with the concurrence of the full Board of Directors, awarded an aggregate of 18,000 RSUs, ratably to the five non-employee directors of the Company, and to Mr. Barnhill. These awards provide for the issuance of shares of the Company’s common stock in accordance with a four-year annual vesting schedule, following the date of grant, provided that the director remains associated with the Company (or meets other criteria as prescribed in the applicable award agreement) on each anniversary date. On August 8, 2017, the Compensation Committee, with the concurrence of the full Board of Directors, awarded an aggregate of up to 56,000 RSUs to several senior executives. The number of shares earned by a recipient will be determined by multiplying the number of RSUs covered by the award by a fraction, the numerator of which is the cumulative amount of dividends (regular, ordinary and special) declared and paid, per share, on the Common Stock, if any, over an earnings period of up to four years, and the denominator of which is $3.20. Subject to earlier issuance upon the occurrence of certain events (as described in the applicable award agreement), any earned shares are issued and distributed to the recipient upon the fourth anniversary of the award date. As of September 24, 2017, there was approximately $1.0 million of total unrecognized compensation cost related to all outstanding RSUs, assuming all shares are earned. Unrecognized compensation costs are expected to be recognized ratably over a weighted average period of approximately three years. PSUs and RSUs are expensed based on the grant date fair value, calculated as the closing price of TESSCO common stock as reported by NASDAQ on the date of grant minus the present value of dividends expected to be paid on the common stock before the award vests, because dividends or dividend-equivalent amounts do not accrue and are not paid on unvested PSUs and RSUs. As discussed in Note 2, the Company will now account for forfeitures as they occur rather than estimate expected forfeitures. To the extent that forfeitures occur, stock based compensation related to the restricted awards may be different from the Company’s expectations. Stock Options: Following the initiation of our PSU award program for fiscal 2005, our Compensation Committee only occasionally employed stock options as an element of incentive compensation, but after more recently reevaluating its approach to executive compensation, has concluded that grants or awards of stock options are appropriate as a retention and recruiting tool, and beginning in fiscal 2016 has increased the number and frequency of stock option awards, primarily to senior management. As summarized below, in the first six months of fiscal 2018, stock options for an aggregate of 210,000 shares of common stock were awarded, all under the 1994 Plan. These stock options have exercise prices equal to the market price of the Company’s stock on the grant date, and the terms thereof provide for 25% vesting after one year and then 1/36 per month over the following three years. The grant date value of the Company’s stock options is determined using the Black-Scholes-Merton pricing model, based upon facts and assumptions existing at the date of grant. The value of each option at the date of grant is amortized as compensation expense over the service period. This occurs without regard to subsequent changes in stock price, volatility, or interest rates over time, provided the option remains outstanding. The following tables summarize pertinent information for outstanding options. Six Months Weighted Ended Average Fair September 24, Value at Grant 2017 Date (per unit) Unvested options, beginning of period 395,000 $ 1.96 Options Granted 210,000 2.38 Options Vested (70,000) 2.03 Options Forfeited/Cancelled — — Unvested options, end of period 535,000 $ 2.11 September 24, 2017 Grant Fiscal Year Options Granted Option Exercise Price Options Outstanding Options Exercisable 210,000 $ 14.62 210,000 - 410,000 $ 12.57 360,000 62,500 100,000 $ 22.42 60,000 32,500 Total 630,000 95,000 Grant Fiscal Year Expected Stock Price Volatility Risk-Free Interest rate Expected Dividend Yield Average Expected Term Resulting Black Scholes Value 2018 % % % 4.0 $ 2.38 2017 % % % 4.0 $ 1.85 2016 % % % 4.0 $ 3.43 As of September 24, 2017, there was approximately $1.0 million of total unrecognized compensation costs, related to these awards. These unrecognized compensation costs are expected to be recognized ratably over a period of approximately four years. |
Borrowings Under Revolving Cred
Borrowings Under Revolving Credit Facility | 6 Months Ended |
Sep. 24, 2017 | |
Borrowings Under Revolving Credit Facility | |
Borrowings Under Revolving Credit Facility | Note 4. Borrowings Under Revolving Credit Facility On June 24, 2016, the Company and its primary operating subsidiaries entered into a Credit Agreement (the “Credit Agreement”) with SunTrust Bank, as Administrative Agent and Lender, and Wells Fargo Bank, National Association, as a Lender, for a senior asset based secured revolving credit facility of up to $35 million (the “Revolving Credit Facility”). This replaced the Company’s previously existing $35 million unsecured revolving credit facility with both SunTrust Bank and Wells Fargo Bank, National Association, which had no outstanding principal balance at the time of replacement. The replacement Revolving Credit Facility included terms providing for its maturity after five years, on June 24, 2021, and for a $5.0 million sublimit for the issuance of standby letters of credit and a $10.0 million sublimit for swing line loans. Borrowing Availability under the replacement Revolving Credit Facility as it was initially established is determined in part in accordance with a Borrowing Base, defined in the Credit Agreement, generally, as 85% of Eligible Receivables minus Reserves. The Credit Agreement also set forth financial covenants, including a fixed charge coverage ratio that must be maintained at any time during which the borrowing availability, as determined in accordance with and subject to the terms of the Credit Agreement, falls below $10 million, as well as terms that could limit the Company’s ability to engage in specified transactions or activities, including (but not limited to) investments and acquisitions, sales of assets, payment of dividends, issuance of additional debt and other matters. Capitalized terms used but not otherwise defined in this Note have the meanings ascribed to each in the Credit Agreement or in the Amended and Restated Credit Agreement (discussed below), as applicable. Borrowings initially accrue interest from the applicable borrowing date, generally at the Eurodollar Rate plus an Applicable Margin ranging from 1.5% to 1.75%. On September 24, 2017, the interest rate applicable to borrowings under the replacement Revolving Credit Facility was 2.99%. Under certain circumstances, the applicable interest rate may change from the Eurodollar Rate plus the Applicable Margin to the Base Rate plus the Applicable Margin. Borrowings may be used for working capital and other general corporate purposes, and as further provided in, and subject to the applicable terms of, the Credit Agreement. As of September 24, 2017, borrowings under this Revolving Credit Facility totaled $13.3 million and, therefore, the Company had $21.7 million available, subject to the Borrowing Base limitation and compliance with the other applicable terms of the Credit Agreement, including the covenants referenced above. The line of credit has a lockbox arrangement associated with it and therefore the outstanding balance is classified as a current liability on our balance sheet. As of March 26, 2017, the Company had a zero balance on the Revolving Credit Facility. Pursuant to a related Guaranty and Security Agreement by and among the Company, the other borrowers under the Credit Agreement and other subsidiaries of the Company, who are referred to collectively as the Loan Parties, and SunTrust Bank, as Administrative Agent, the Loan Parties’ obligations, which include the obligations under the Credit Agreement, are guaranteed by those Loan Parties which are not otherwise borrowers, and secured by continuing first priority security interests in the Company’s and the other Loan Parties’ (including both borrowers and guarantors) inventory, accounts receivable and deposit accounts, and in all documents, instruments, general intangibles, letter of credit rights and chattel paper, in each case to the extent relating to inventory and accounts, and in all proceeds of the foregoing. The security interests are granted in favor of the Administrative Agent, for the benefit of the Lenders party to the Credit Agreement from time to time. The obligations secured also include certain other obligations of the Loan Parties to the Lenders and their affiliates arising from time to time, relating to swaps, hedges and cash management and other bank products. Effective July 13, 2017, the Company and its primary operating subsidiaries, as co-borrowers, and SunTrust Bank, as Administrative Agent and Lender, and Wells Fargo Bank, National Association, as a Lender, entered into a First Amendment to Credit Agreement (the “First Amendment”), to amend select terms of the Credit Agreement. Pursuant to the First Amendment, the term “Availability” as used in the Credit Agreement was amended for a period of time ending no later than October 31, 2017, to allow for the inclusion of an additional sum when calculating Availability for certain limited purposes. This additional sum equals the lesser of $10 million, and the amount by which the Borrowing Base exceeds $35 million. This First Amendment did not increase the $35 million Aggregate Revolving Commitment Amount, but allowed the Company greater flexibility under the Credit Agreement for a limited period of time, until October 31, 2017, and was sought by the Company in response to business opportunities identified by the Company. On October 19, 2017, the Company and its primary operating subsidiaries, as co-borrowers, and SunTrust Bank, as Administrative Agent and Lender, and Wells Fargo Bank, National Association, as a Lender, entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”). Pursuant to the Amended and Restated Credit Agreement, the Credit Agreement for the secured Revolving Credit Facility was amended and restated in order to, among other things, increase the Company’s borrowing limit from up to $35 million to up to $75 million. In addition to expanding the Company’s borrowing limit, the Revolving Credit Facility maturity date was extended to October 19, 2021. The Amended and Restated Credit Agreement otherwise includes representations, warranties, affirmative and negative covenants (including restrictions) and other terms generally consistent with those applicable to the facility as existing prior to the execution and delivery of the Amended and Restated Credit Agreement, but with certain modifications. The Amended and Restated Credit Agreement provides for a $5.0 million sublimit for the issuance of standby letters of credit, a $12.5 million sublimit for swingline loans, and an accordion feature which, subject to certain conditions, could increase the aggregate amount of the commitments to up to $125 million, with the optional commitments being provided by existing Lenders or new lenders reasonably acceptable to the Administrative Agent. No Lender is obligated to increase its commitment. Availability continues to be determined in accordance with a Borrowing Base, which has been expanded to include not only Eligible Receivables but also Eligible Inventory and is generally: (A) the sum of (i) 85% of Eligible Receivables; (ii) the Inventory Formula Amount for all Eligible Inventory which is aged less than 181 days; and (iii) the lesser of (x) $4 million and (y) the Inventory Formula Amount for all Eligible Inventory which is aged at least 181 days; minus (B) Reserves. Upon closing, there was $23.4 million outstanding under the Amended and Restated Credit Agreement. Like the secured Revolving Credit Facility as existing prior to execution and delivery of the Amended and Restated Credit Agreement, borrowings under the Amended and Restated Credit Agreement initially accrue interest from the applicable borrowing date at an Applicable Rate equal to the Eurodollar Rate plus the Applicable Margin. The Eurodollar Rate is the rate per annum obtained by dividing (i) LIBOR by (ii) a percentage equal to 1.00 minus the Eurodollar Reserve Percentage. When the Applicable Rate is the Eurodollar Rate plus the Applicable Margin, the Applicable Margin is 1.50% if Average Availability is greater than or equal to $15 million, and 1.75% otherwise. Under certain circumstances, the Applicable Rate is subject to change at the Lenders’ option from the Eurodollar Rate plus the Applicable Margin to the Base Rate plus the Applicable Margin. Following an Event of Default, in addition to changing the Applicable Rate to the Base Rate plus the Applicable Margin, the Lenders’ may at their option set the Applicable Margin at 0.50% if the Base Rate applies or 1.75% if the Eurodollar Rate applies, and increase the Applicable Rate by an additional 200 basis points. The Applicable Rate adjusts on the first Business Day of each calendar month. The Company is required to pay a monthly Commitment Fee on the average daily unused portion of the Revolving Credit Facility provided for pursuant to the Amended and Restated Credit Agreement, at a per annum rate equal to 0.25%. In connection with the entering into of the Amended and Restated Credit Agreement, the Company and other Loan Parties executed and delivered to SunTrust Bank, as Administrative Agent, a Reaffirmation Agreement, pursuant to which the obligations of the Loan Parties under the Guaranty and Security Agreement delivered by them in connection with the secured credit facility as previously existing (including the previously existing guaranty by the Loan Parties not otherwise Borrowers and the previously existing grant by the Company and the other Loan Parties of a continuing first priority security interest in inventory, accounts receivable and deposit accounts, and on all documents, instruments, general intangibles, letter of credit rights, and all proceeds) were ratified and confirmed as respects the Obligations arising under the Amended and Restated Credit Facility from time to time. |
Fair Value Disclosure
Fair Value Disclosure | 6 Months Ended |
Sep. 24, 2017 | |
Fair Value Disclosure | |
Fair Value Disclosure | Note 5. Fair Value Disclosure Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: · 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. The Company had no assets or liabilities required to be measured at fair value as of June 25, 2017, or as of March 26, 2017. The carrying amounts of cash and cash equivalents, trade accounts receivable, trade accounts payable, accrued expenses and other current liabilities approximate their fair values as of June 25, 2017, or as of March 26, 2017, due to their short-term nature. |
Income Taxes
Income Taxes | 6 Months Ended |
Sep. 24, 2017 | |
Income Taxes | |
Income Taxes | Note 6. Income Taxes As of September 24, 2017, the Company had a gross amount of unrecognized tax benefits of $206,300 ($133,800 net of federal benefit). As of March 26, 2017, the Company had a gross amount of unrecognized tax benefits of $204,500 ($147,800 net of federal benefit). The Company’s accounting policy with respect to interest and penalties related to tax uncertainties is to classify these amounts as part of the provision for income taxes. The total amount of interest and penalties related to tax uncertainties recognized in the consolidated statement of income for the first six months of fiscal 2018 was an expense of $24,200 (net of federal benefit). The cumulative amount included in the consolidated balance sheet as of September 24, 2017 was $353,900 (net of federal benefit). The total amount of interest and penalties related to tax uncertainties recognized in the consolidated statement of income for the first six months of fiscal 2017 was an expense of $27,000 (net of federal benefit). The cumulative amount of interest and penalties included in the consolidated balance sheet as of March 26, 2017 was $314,300 (net of federal benefit). A reconciliation of the changes in the gross balance of unrecognized tax benefits, excluding interest, is as follows: Beginning balance at March 26, 2017 of unrecognized tax benefit $ 204,500 Increases related to current period tax positions 1,800 Reductions as a result of a lapse in the applicable statute of limitations — Ending balance at September 24, 2017 of unrecognized tax benefits $ 206,300 The Company has adopted Accounting Standards Updated No. 2016-09 Topic 718, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), effective as of March 27, 2017. The new guidance requires all of the tax effects related to share-based payments to be recognized through the income statement and is effective for public entities for annual and interim reporting periods beginning after December 15, 2016. We will treat the tax effects of share-based compensation awards as discrete items in the interim reporting periods in which the windfalls or shortfalls occurred. As a result of the adoption of the ASU 2016-09, the effective rate is 0.9% higher than if the ASU 2016-09 was not adopted for the six months ended September 24, 2017. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Sep. 24, 2017 | |
Earnings Per Share | |
Earnings Per Share | Note 7. Earnings Per Share The Company presents the computation of earnings per share (“EPS”) on a basic and diluted basis. Basic EPS is computed by dividing net income by the weighted average number of shares outstanding during the reported period. Diluted earnings per share are computed similarly to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential additional common shares that were dilutive had been issued. Common shares are excluded from the calculation if they are determined to be anti-dilutive. At September 24, 2017, stock options with respect to 630,000 shares of common stock were outstanding, of which 290,000 were anti-dilutive. At September 25, 2016, stock options with respect to 330,000 shares of common stock were outstanding, all of which were anti-dilutive. There were no anti-dilutive PSUs or RSUs outstanding as of September 24, 201 7 or September 25, 2016, respectively. |
Business Segments
Business Segments | 6 Months Ended |
Sep. 24, 2017 | |
Operating Segment | |
Operating Segment | Note 8. Business Segments Beginning with the first quarter of fiscal year 2018, the Company modified the structure of its internal organization in an effort to better serve the market place. Retail inventory typically has a shorter more defined life cycle and is, typically, ultimately used by individual end users. Commercial inventory typically has a life cycle that tends to be tied to changes in regulation or technology and includes products typically used by business entities or governments. Reflective of these differences, our sales and product teams have been reorganized and will each now report to either a retail or commercial leader. The Company concluded that corresponding changes to its reportable segments are warranted and now evaluates its business within two segments: commercial and retail. The commercial segment consists of the following customer markets: (1) public carriers, that are generally responsible for building and maintaining the infrastructure system and provide airtime service to individual subscribers; (2) government including federal agencies and state and local governments that run wireless networks for their own use as well as value-added resellers who specialize in selling to the government; (3) private system operators including commercial entities such as enterprise customers, major utilities and transportation companies; and (4) value-added resellers that sell, install and/or service cellular telephone, wireless networking, broadband and two-way radio communications equipment primarily for the enterprise market. The retail segment consists of the market which includes retailers, independent dealer agents and carriers. All prior financial periods presented in this Quarterly Report on Form 10-Q reflect this change. During the first quarter of fiscal year 2018, in conjunction with the, modification of the structure of the internal organization of the Company, as described above, the Company reviewed several customer types, including a large repair center customer, and reclassified them from the private system operators market to either the value-added resellers market or the retail market, based on their purchase history. The Company has restated prior periods reflected in this Quarterly Report on Form 10-Q to reflect these changes. The Company evaluates goodwill at the reporting unit level. In conjunction with the change in segments, the Company evaluated its goodwill using Level 3 fair value input, and no impairment indicators were identified. To provide investors with better visibility, the Company also discloses revenue and gross profit by its four product categories: · Base station infrastructure products are used to build, repair and upgrade wireless telecommunications systems. Products include base station antennas, cable and transmission lines, small towers, lightning protection devices, connectors, power systems, miscellaneous hardware, and mobile antennas. Base station infrastructure service offerings include connector installation, custom jumper assembly, site kitting and logistics integration. · Network systems products are used to build and upgrade computing and internet networks. Products include fixed and mobile broadband equipment, distributed antenna systems (DAS), wireless networking, filtering systems, two-way radios and security and surveillance products. This product category also includes training classes, technical support and engineering design services. · 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. · Mobile device accessories include cellular phone and data device accessories such as replacement batteries, cases, speakers, mobile amplifiers, power supplies, headsets, mounts, car antennas, music accessories and data and memory cards. Retail merchandising displays, promotional programs, customized order fulfillment services and affinity-marketing programs, including private label internet sites, complement our mobile devices and accessory product offering. The Company evaluates revenue, gross profit, and income before provision for income taxes at the segment level. Certain cost of sales and other applicable expenses have been allocated to each segment based on a percentage of revenues and/or gross profit, where appropriate. Segment activity for the second quarter and first six months of fiscal years 2018 and 2017 are as follows (in thousands): Three Months Ended September 24, 2017 September 25, 2016 Commercial Retail Commercial Retail Segment Segment Total Segment Segment Total Revenues Public Carrier $ 27,423 $ — $ 27,423 $ 18,532 $ $ 18,532 Government 11,025 — 11,025 8,990 8,990 Private System Operators 24,207 — 24,207 20,990 20,990 Value-Added Resellers 34,951 — 34,951 33,409 33,409 Retail — 47,478 47,478 52,713 52,713 Total revenues $ 97,606 $ 47,478 $ 145,084 $ 81,921 $ 52,713 $ 134,634 Gross Profit Public Carrier $ 3,777 $ — $ 3,777 $ 3,236 $ $ 3,236 Government 2,412 — 2,412 2,092 2,092 Private System Operators 5,054 — 5,054 4,613 4,613 Value-Added Resellers 8,942 — 8,942 9,223 9,223 Retail — 9,738 9,738 9,592 9,592 Total gross profit $ 20,185 $ 9,738 $ 29,923 $ 19,164 $ 9,592 $ 28,756 Directly allocable expenses 7,796 3,716 11,512 7,910 4,240 12,150 Segment net profit contribution $ 12,389 $ 6,022 18,411 $ 11,254 $ 5,352 16,606 Corporate support expenses 15,319 14,577 Income before provision for income taxes $ 3,092 $ 2,029 Six Months Ended September 24, 2017 September 25, 2016 Commercial Retail Commercial Retail Segment Segment Total Segment Segment Total Revenues Public Carrier $ 54,021 $ — $ 54,021 $ 35,110 $ — $ 35,110 Government 19,470 — 19,470 18,842 — 18,842 Private System Operators 45,249 — 45,249 41,295 — 41,295 Value-Added Resellers 69,990 — 69,990 67,700 — 67,700 Retail — 96,364 96,364 — 100,547 100,547 Total revenues $ 188,730 $ 96,364 $ 285,094 $ 162,947 $ 100,547 $ 263,494 Gross Profit Public Carrier $ 7,905 $ — $ 7,905 $ 6,253 $ — $ 6,253 Government 4,416 — 4,416 4,232 — 4,232 Private System Operators 9,661 — 9,661 9,179 — 9,179 Value-Added Resellers 17,903 — 17,903 18,506 — 18,506 Retail — 19,205 19,205 — 17,692 17,692 Total gross profit $ 39,885 $ 19,205 $ 59,090 $ 38,170 $ 17,692 $ 55,862 Directly allocable expenses 16,318 7,466 23,784 16,245 7,758 24,003 Segment net profit contribution $ 23,567 $ 11,739 35,306 $ 21,925 $ 9,934 31,859 Corporate support expenses 30,997 29,691 Income before provision for income taxes $ $ Supplemental revenue and gross profit information by product category for the second quarter and first six months of fiscal years 2018 and 2017 are as follows (in thousands): Three Months Ended September 24, 2017 September 25, 2016 Revenues Base station infrastructure $ 59,448 $ 52,502 Network systems 29,180 21,461 Installation, test and maintenance 7,679 6,881 Mobile device accessories 48,777 53,790 Total revenues $ 145,084 $ 134,634 Gross Profit Base station infrastructure $ 14,086 $ 13,453 Network systems 3,921 3,421 Installation, test and maintenance 1,433 1,376 Mobile device accessories 10,483 10,506 Total gross profit $ 29,923 $ 28,756 Six Months Ended September 24, 2017 September 25, 2016 Revenues Base station infrastructure $ 118,518 $ 104,897 Network systems 53,017 39,891 Installation, test and maintenance 14,671 15,636 Mobile device accessories 98,888 103,070 Total revenues $ 285,094 $ 263,494 Gross Profit Base station infrastructure $ 28,143 $ 26,881 Network systems 7,750 6,319 Installation, test and maintenance 2,852 2,944 Mobile device accessories 20,345 19,718 Total gross profit $ 59,090 $ 55,862 |
Stock Buyback
Stock Buyback | 6 Months Ended |
Sep. 24, 2017 | |
Stock Buyback | |
Stock Buyback | Note 9. Stock Buyback The Company withholds shares of common stock from its employees and directors at their request, equal to the minimum federal and state tax withholdings related to vested performance stock units, stock option exercises and restricted stock awards. For the six months ended September 24, 2017 and September 25, 2016, the allocated value of the shares withheld totaled $64,800 and $187,600, respectively. |
Concentration of Risk
Concentration of Risk | 6 Months Ended |
Sep. 24, 2017 | |
Concentration of Risk | |
Concentration of Risk | Note 10. Concentration of Risk The Company’s future results could be negatively impacted by the loss of certain customer and/or vendor relationships. For the fiscal quarter and six months ended September 24, 2017 and September 25, 2016, no customer accounted for more than 10.0% of total consolidated revenues. For the fiscal quarter ended September 24, 2017, sales of products from the Company’s largest wireless infrastructure supplier and mobile device accessories supplier accounted for 10.3% and 7.9% of consolidated revenue, respectively. For the fiscal quarter ended September 25, 2016, sales of products from the Company’s largest wireless infrastructure supplier and largest mobile device accessories supplier accounted for 9.4% and 10.1% of consolidated revenue, respectively. For the six months ended September 24, 2017, sales of products from the Company’s largest wireless infrastructure supplier and mobile device accessories supplier accounted for 11.0% and 10.5% of consolidated revenue, respectively. For the six months ended September 25, 2016, sales of products from the Company’s largest wireless infrastructure supplier and largest mobile device accessories supplier accounted for 9.8% and 11.2% of consolidated revenue, respectively. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Sep. 24, 2017 | |
Subsequent Events | |
Subsequent Events | Note 11. Subsequent Events On October 19, 2017, the Company and its primary operating subsidiaries, as co-borrowers, and SunTrust Bank, as Administrative Agent and Lender, and Wells Fargo Bank, National Association, as a Lender, entered into an Amended and Restated Credit Agreement. Refer to Note 4 for details of this agreement. |
Recently Issued Accounting Pr17
Recently Issued Accounting Pronouncements (Policies) | 6 Months Ended |
Sep. 24, 2017 | |
Recently Issued Accounting Pronouncements | |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements not yet adopted: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. This guidance will supersede Topic 605, Revenue Recognition, in addition to other industry specific guidance, once effective. The new standard requires a company to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periods beginning after December 15, 2016 (i.e. the original adoption date per ASU 2014-09). In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects of the principal-versus-agent guidance, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the indicators to focus on evidence that an entity is acting as a principal rather than as an agent. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time or at a point in time. The amendments also clarify when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. The Company continues to assess the impact this new standard may have on its ongoing financial reporting. The Company has identified its revenue streams both by contract and product type and is assessing each for potential impacts. For the revenue streams assessed, the Company does not anticipate a material impact in the timing or amount of revenue recognized. The Company may be required to adjust its accounting for its returns reserve. However, as the Company’s returns have historically been less than 3% of revenue and this change would only affect the balance sheet, the Company does not expect this to have a material impact on the Financial Statements. Based on this ongoing assessment, the Company intends to adopt the standard on a modified retrospective basis on April 1, 2018, the first day of fiscal 2019. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. This ASU requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The ASU also requires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements. In August 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The new standard will change the classification of certain cash payments and receipts within the cash flow statement. Specifically, payments for debt prepayment or debt extinguishment costs, including third-party costs, premiums paid, and other fees paid to lenders that are directly related to the debt prepayment or debt extinguishment, excluding accrued interest, will now be classified as financing activities. Previously, these payments were classified as operating expenses. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, with early adoption permitted, and will be applied retrospectively. The Company does not expect that the adoption of this new standard will have a material impact on its Consolidated Financial Statements. Recently issued accounting pronouncements adopted: In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation. The new standard modified several aspects of the accounting and reporting for employee share-based payments and related tax accounting impacts, including the presentation in the statements of operations and cash flows of certain tax benefits or deficiencies and employee tax withholdings, as well as the accounting for award forfeitures over the vesting period. One provision within this pronouncement requires that excess income tax benefits and tax deficiencies related to share-based payments be recognized within income tax expense in the statement of income, rather than within additional paid-in capital on the balance sheet. The Company adopted this provision in the first quarter of fiscal 2018. The adoption of this provision was applied prospectively. The impact to the Company's results of operations related to this provision in the first six months of fiscal 2018 was an increase in the provision for income taxes of $0.04 million, and a 0.9% higher effective tax rate than if the standard had not been adopted. There was no impact on the second quarter of fiscal 2018, as we had no stock issuances this quarter. The impact of this provision on the Company's future results of operations will depend in part on the market prices for the Company's shares on the dates there are taxable events related to share awards, but is not expected to be material. In connection with another provision within this pronouncement, the Company has elected to account for forfeitures as they occur rather than estimate expected forfeitures, with the change being applied prospectively. The Company does not expect this or other provisions within the pronouncement to have a material impact on its financial statements. In December 2016, the FASB issued ASU No. 2016-19, “Technical Corrections and Improvements”. Among other things, the ASU provides clarification on the presentation of the costs of computer software developed or obtained for internal use. The Company retrospectively adopted the ASU in the three months ended June 25, 2017 and reclassified the carrying value of internal-use computer software from Property, plant and equipment, net to Intangible assets, net. The net carrying value of internal-use computer software was $4. 4 million and $4.3 million, respectively, as of September 24, 2017 and March 26, 2017. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Sep. 24, 2017 | |
Stock-Based Compensation | |
Schedule of Performance Stock Unit activity | Six Months Weighted Ended Average Fair September 24, Value at Grant 2017 Date (per unit) Unvested shares available for issue under outstanding PSUs, beginning of period 170,100 $ 11.17 PSU’s Granted 86,000 12.67 PSU’s Vested (7,600) 19.58 PSU’s Forfeited/Cancelled (168,500) 10.85 Unvested shares available for issue under outstanding PSUs, end of period 80,000 $ 12.67 |
Schedule of Stock Options | Six Months Weighted Ended Average Fair September 24, Value at Grant 2017 Date (per unit) Unvested options, beginning of period 395,000 $ 1.96 Options Granted 210,000 2.38 Options Vested (70,000) 2.03 Options Forfeited/Cancelled — — Unvested options, end of period 535,000 $ 2.11 September 24, 2017 Grant Fiscal Year Options Granted Option Exercise Price Options Outstanding Options Exercisable 210,000 $ 14.62 210,000 - 410,000 $ 12.57 360,000 62,500 100,000 $ 22.42 60,000 32,500 Total 630,000 95,000 |
Schedule of assumptions of Black-Scholes-Merton option pricing model | Grant Fiscal Year Expected Stock Price Volatility Risk-Free Interest rate Expected Dividend Yield Average Expected Term Resulting Black Scholes Value 2018 % % % 4.0 $ 2.38 2017 % % % 4.0 $ 1.85 2016 % % % 4.0 $ 3.43 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Sep. 24, 2017 | |
Income Taxes | |
Reconciliation of changes in unrecognized tax benefit amounts, net of interest | Beginning balance at March 26, 2017 of unrecognized tax benefit $ 204,500 Increases related to current period tax positions 1,800 Reductions as a result of a lapse in the applicable statute of limitations — Ending balance at September 24, 2017 of unrecognized tax benefits $ 206,300 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Sep. 24, 2017 | |
Operating Segment | |
Revenue and Gross Profit by Market | Segment activity for the second quarter and first six months of fiscal years 2018 and 2017 are as follows (in thousands): Three Months Ended September 24, 2017 September 25, 2016 Commercial Retail Commercial Retail Segment Segment Total Segment Segment Total Revenues Public Carrier $ 27,423 $ — $ 27,423 $ 18,532 $ $ 18,532 Government 11,025 — 11,025 8,990 8,990 Private System Operators 24,207 — 24,207 20,990 20,990 Value-Added Resellers 34,951 — 34,951 33,409 33,409 Retail — 47,478 47,478 52,713 52,713 Total revenues $ 97,606 $ 47,478 $ 145,084 $ 81,921 $ 52,713 $ 134,634 Gross Profit Public Carrier $ 3,777 $ — $ 3,777 $ 3,236 $ $ 3,236 Government 2,412 — 2,412 2,092 2,092 Private System Operators 5,054 — 5,054 4,613 4,613 Value-Added Resellers 8,942 — 8,942 9,223 9,223 Retail — 9,738 9,738 9,592 9,592 Total gross profit $ 20,185 $ 9,738 $ 29,923 $ 19,164 $ 9,592 $ 28,756 Directly allocable expenses 7,796 3,716 11,512 7,910 4,240 12,150 Segment net profit contribution $ 12,389 $ 6,022 18,411 $ 11,254 $ 5,352 16,606 Corporate support expenses 15,319 14,577 Income before provision for income taxes $ 3,092 $ 2,029 Six Months Ended September 24, 2017 September 25, 2016 Commercial Retail Commercial Retail Segment Segment Total Segment Segment Total Revenues Public Carrier $ 54,021 $ — $ 54,021 $ 35,110 $ — $ 35,110 Government 19,470 — 19,470 18,842 — 18,842 Private System Operators 45,249 — 45,249 41,295 — 41,295 Value-Added Resellers 69,990 — 69,990 67,700 — 67,700 Retail — 96,364 96,364 — 100,547 100,547 Total revenues $ 188,730 $ 96,364 $ 285,094 $ 162,947 $ 100,547 $ 263,494 Gross Profit Public Carrier $ 7,905 $ — $ 7,905 $ 6,253 $ — $ 6,253 Government 4,416 — 4,416 4,232 — 4,232 Private System Operators 9,661 — 9,661 9,179 — 9,179 Value-Added Resellers 17,903 — 17,903 18,506 — 18,506 Retail — 19,205 19,205 — 17,692 17,692 Total gross profit $ 39,885 $ 19,205 $ 59,090 $ 38,170 $ 17,692 $ 55,862 Directly allocable expenses 16,318 7,466 23,784 16,245 7,758 24,003 Segment net profit contribution $ 23,567 $ 11,739 35,306 $ 21,925 $ 9,934 31,859 Corporate support expenses 30,997 29,691 Income before provision for income taxes $ $ |
Revenue and Gross Profit by Product | Supplemental revenue and gross profit information by product category for the second quarter and first six months of fiscal years 2018 and 2017 are as follows (in thousands): Three Months Ended September 24, 2017 September 25, 2016 Revenues Base station infrastructure $ 59,448 $ 52,502 Network systems 29,180 21,461 Installation, test and maintenance 7,679 6,881 Mobile device accessories 48,777 53,790 Total revenues $ 145,084 $ 134,634 Gross Profit Base station infrastructure $ 14,086 $ 13,453 Network systems 3,921 3,421 Installation, test and maintenance 1,433 1,376 Mobile device accessories 10,483 10,506 Total gross profit $ 29,923 $ 28,756 Six Months Ended September 24, 2017 September 25, 2016 Revenues Base station infrastructure $ 118,518 $ 104,897 Network systems 53,017 39,891 Installation, test and maintenance 14,671 15,636 Mobile device accessories 98,888 103,070 Total revenues $ 285,094 $ 263,494 Gross Profit Base station infrastructure $ 28,143 $ 26,881 Network systems 7,750 6,319 Installation, test and maintenance 2,852 2,944 Mobile device accessories 20,345 19,718 Total gross profit $ 59,090 $ 55,862 |
Description of Business and B21
Description of Business and Basis of Presentation (Details) | 6 Months Ended |
Sep. 24, 2017 | |
US | Geographic Concentration Risk | Revenues | |
Concentration Risk | |
Concentration risk (as a percent) | 98.00% |
Recently Issued Accounting Pr22
Recently Issued Accounting Pronouncements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Sep. 24, 2017 | Sep. 25, 2016 | Sep. 24, 2017 | Sep. 25, 2016 | Mar. 26, 2017 | |
Recently Issued Accounting Pronouncements | |||||
Provision for income taxes | $ 1,318,300 | $ 1,034,700 | $ 1,852,100 | $ 1,093,100 | |
Stock issuances (in shares) | 0 | ||||
Internal-use computer software | $ 4,400,000 | $ 4,400,000 | $ 4,300,000 | ||
Maximum | |||||
Recently Issued Accounting Pronouncements | |||||
Historical sales returns, as a percent of revenue | 3.00% | 3.00% | |||
ASU 2016-09 | Adjustment | |||||
Recently Issued Accounting Pronouncements | |||||
Provision for income taxes | $ 40,000 | ||||
Effective tax rate (as a percent) | 0.90% |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 24, 2017 | Sep. 25, 2016 | Sep. 24, 2017 | Sep. 25, 2016 | |
Selling, general and administrative expenses | ||||
Stock-based compensation | ||||
Stock-based compensation (in dollars) | $ 254,300 | $ 76,600 | $ 501,900 | $ 192,400 |
Stock-Based Compensation - PSUs
Stock-Based Compensation - PSUs (Details) - Performance Stock Units - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended |
Sep. 24, 2017 | Mar. 26, 2017 | |
PSU Activity | ||
Unvested shares available for issue under outstanding PSUs, beginning of period (in shares) | 170,100 | |
Granted (in shares) | 86,000 | |
Vested (in shares) | (7,600) | |
Forfeited/cancelled (in shares) | (168,500) | |
Unvested shares available for issue under outstanding PSUs, end of period (in shares) | 80,000 | 170,100 |
Unvested PSUs, Weighted-Average Fair Value at Grant Date | ||
Unvested shares available for issue under outstanding PSUs, beginning of period (in dollars per share) | $ 11.17 | |
Granted (in dollars per share) | 12.67 | |
Vested (in dollars per share) | 19.58 | |
Forfeited/cancelled (in dollars per share) | 10.85 | |
Unvested shares available for issue under outstanding PSUs, end of period (in dollars per share) | $ 12.67 | $ 11.17 |
Additional stock based compensation information | ||
Measurement period | 1 year | 1 year |
Unrecognized compensation costs (in dollars) | $ 0.8 |
Stock-Based Compensation - RSUs
Stock-Based Compensation - RSUs (Details) $ in Millions | Aug. 08, 2017itemshares | May 10, 2017individualshares | Sep. 24, 2017USD ($) |
Senior executives | |||
Stock-based compensation | |||
Granted (in shares) | 56,000 | ||
Denominator in fraction used to calculate number of awards earned | item | 3.20 | ||
Senior executives | Maximum | |||
Stock-based compensation | |||
Vesting period | 4 years | ||
RSU awards | |||
Stock-based compensation | |||
Unrecognized compensation costs (in dollars) | $ | $ 1 | ||
Unrecognized compensation costs, period for recognition | 3 years | ||
RSU awards | Non-employee director | |||
Stock-based compensation | |||
Granted (in shares) | 18,000 | ||
Number of individuals that received stock awards | individual | 5 | ||
Vesting period | 4 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended | |
Sep. 24, 2017 | Mar. 26, 2017 | Mar. 27, 2016 | |
Shares | |||
Unvested options, beginning of period | 395,000 | ||
Options Granted (in shares) | 210,000 | 410,000 | 100,000 |
Options Vested (in shares) | (70,000) | ||
Unvested options, end of period | 535,000 | 395,000 | |
Weighted Average Fair Value at Grant | |||
Unvested shares available for issue under outstanding options, beginning of period | $ 1.96 | ||
Options Granted | 2.38 | $ 1.85 | $ 3.43 |
Options Vested | 2.03 | ||
Unvested shares available for issue under outstanding options, end of period | 2.11 | 1.96 | |
Additional Disclosures | |||
Option Exercise Price (in dollars per share) | $ 14.62 | $ 12.57 | $ 22.42 |
Options Outstanding (in shares) | 630,000 | ||
Options Exercisable (in shares) | 95,000 | ||
Valuation assumptions | |||
Expected Stock Price Volatility (as a percent) | 32.34% | 32.85% | 26.40% |
Risk-Free Interest rate (as a percent) | 1.92% | 1.32% | 1.67% |
Expected Dividend Yield (as a percent) | 5.47% | 6.30% | 3.50% |
Average Expected Term | 4 years | 4 years | 4 years |
Resulting Black Scholes Value (in dollars per share) | $ 2.38 | $ 1.85 | $ 3.43 |
Grant Fiscal Year 2018 | |||
Additional Disclosures | |||
Options Outstanding (in shares) | 210,000 | ||
Grant Fiscal Year 2017 | |||
Additional Disclosures | |||
Options Outstanding (in shares) | 360,000 | ||
Options Exercisable (in shares) | 62,500 | ||
Grant Fiscal Year 2016 | |||
Additional Disclosures | |||
Options Outstanding (in shares) | 60,000 | ||
Options Exercisable (in shares) | 32,500 | ||
Stock Options | |||
Stock Options: | |||
Unrecognized compensation costs (in dollars) | $ 1 | ||
Unrecognized compensation costs, period for recognition | 4 years | ||
First year vesting | Stock Options | |||
Stock Options: | |||
Vesting percentage | 25.00% | ||
Vesting period | 1 year | ||
Monthly vesting over 36 months | Stock Options | |||
Stock Options: | |||
Monthly percentage of vesting of share based compensation | 2.78% | ||
Additional vesting period after the initial period | 3 years |
Borrowings Under Revolving Cr27
Borrowings Under Revolving Credit Facility (Details) - USD ($) $ in Millions | Oct. 19, 2017 | Jul. 13, 2017 | Jun. 24, 2016 | Sep. 24, 2017 | Mar. 26, 2017 | Jun. 23, 2016 |
Previous Revolving Credit Facility | ||||||
Credit Facility | ||||||
Maximum borrowing capacity | $ 35 | |||||
Outstanding principal balance | $ 0 | |||||
Revolving Credit Facility | ||||||
Credit Facility | ||||||
Maximum borrowing capacity | $ 35 | $ 35 | ||||
Outstanding principal balance | $ 13.3 | $ 0 | ||||
Maturity period | 5 years | |||||
Borrowing base as a percent of eligible receivables | 85.00% | |||||
Borrowing availability threshold | $ 10 | |||||
Interest rate (as a percent) | 2.99% | |||||
Available borrowing capacity | $ 21.7 | |||||
Maximum additional borrowing capacity | $ 10 | |||||
Revolving Credit Facility | Standby letters of credit | ||||||
Credit Facility | ||||||
Maximum borrowing capacity | 5 | |||||
Revolving Credit Facility | Swingline loan | ||||||
Credit Facility | ||||||
Maximum borrowing capacity | $ 10 | |||||
Revolving Credit Facility | Minimum | Eurodollar rate | ||||||
Credit Facility | ||||||
Interest rate spread on variable rate basis (as a percent) | 1.50% | |||||
Revolving Credit Facility | Maximum | Eurodollar rate | ||||||
Credit Facility | ||||||
Interest rate spread on variable rate basis (as a percent) | 1.75% | |||||
Subsequent Event | Revolving Credit Facility | ||||||
Credit Facility | ||||||
Maximum borrowing capacity | $ 75 | |||||
Outstanding principal balance | 23.4 | |||||
Maximum aggregate commitment amount | $ 125 | |||||
Borrowing base as a percent of eligible receivables | 85.00% | |||||
Percentage from which Eurodollar Reserve Percentage is subtracted | 100.00% | |||||
Interest rate spread on variable rate when average availability is greater or equal to $15 million | 1.50% | |||||
Average availability threshold | $ 15 | |||||
Interest rate spread on variable rate when average availability otherwise | 1.75% | |||||
Increase of applicable rate upon event of default (as a percent) | 2.00% | |||||
Fee commitment (as a percent) | 0.25% | |||||
Subsequent Event | Revolving Credit Facility | Standby letters of credit | ||||||
Credit Facility | ||||||
Maximum borrowing capacity | $ 5 | |||||
Subsequent Event | Revolving Credit Facility | Swingline loan | ||||||
Credit Facility | ||||||
Maximum borrowing capacity | $ 12.5 | |||||
Subsequent Event | Revolving Credit Facility | Base rate | ||||||
Credit Facility | ||||||
Interest rate spread on variable rate basis upon event of default (as a percent) | 0.50% | |||||
Subsequent Event | Revolving Credit Facility | Eurodollar rate | ||||||
Credit Facility | ||||||
Interest rate spread on variable rate basis upon event of default (as a percent) | 1.75% | |||||
Subsequent Event | Revolving Credit Facility | Minimum | ||||||
Credit Facility | ||||||
Inventory age | 181 days | |||||
Subsequent Event | Revolving Credit Facility | Maximum | ||||||
Credit Facility | ||||||
Inventory age | 181 days | |||||
Amount included in formula to determine borrowing base | $ 4 |
Income Taxes - Unrecognized tax
Income Taxes - Unrecognized tax benefits (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Sep. 24, 2017 | Sep. 25, 2016 | Mar. 26, 2017 | |
Income Taxes | |||
Gross amount of unrecognized tax benefits | $ 206,300 | $ 204,500 | |
Unrecognized tax benefits, net of federal benefit | 133,800 | 147,800 | |
Amount of interest and penalties expense (benefit) related to tax uncertainties recognized, net of federal expense/benefit | 24,200 | $ 27,000 | |
Cumulative amount of interest and penalties related to tax uncertainties, net of federal expense/benefit | $ 353,900 | $ 314,300 |
Income Taxes - Reconciliation (
Income Taxes - Reconciliation (Details) | 6 Months Ended |
Sep. 24, 2017USD ($) | |
Reconciliation of unrecognized tax benefit amounts | |
Beginning balance of unrecognized tax benefit | $ 204,500 |
Increases related to current period tax positions | 1,800 |
Ending balance of unrecognized tax benefits | $ 206,300 |
Income Taxes - ASU 2016-09 (Det
Income Taxes - ASU 2016-09 (Details) | 6 Months Ended |
Sep. 24, 2017 | |
Adjustment | ASU 2016-09 | |
Recently Issued Accounting Pronouncements | |
Effective tax rate (as a percent) | 0.90% |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 6 Months Ended | |
Sep. 24, 2017 | Sep. 25, 2016 | |
Antidilutive Securities | ||
Options outstanding (in shares) | 630,000 | 330,000 |
Stock Options | ||
Antidilutive Securities | ||
Anti-dilutive equity awards (in shares) | 290,000 | 330,000 |
Performance Stock Units | ||
Antidilutive Securities | ||
Anti-dilutive equity awards (in shares) | 0 | 0 |
RSU awards | ||
Antidilutive Securities | ||
Anti-dilutive equity awards (in shares) | 0 | 0 |
Operating Segment - Market Acti
Operating Segment - Market Activity (Details) | 3 Months Ended | 6 Months Ended | ||
Sep. 24, 2017USD ($) | Sep. 25, 2016USD ($) | Sep. 24, 2017USD ($)segmentproduct | Sep. 25, 2016USD ($) | |
Operating Segment | ||||
Number of reportable segment | segment | 2 | |||
Goodwill impairment | $ 0 | |||
Number of product categories | product | 4 | |||
Market unit activity | ||||
Revenues | $ 145,083,500 | $ 134,633,800 | $ 285,094,300 | $ 263,493,800 |
Gross Profit | 29,923,100 | 28,755,600 | 59,089,900 | 55,861,600 |
Income before provision for income taxes | 3,092,200 | 2,028,900 | 4,308,900 | 2,167,800 |
Segments | ||||
Market unit activity | ||||
Directly allocable expenses | 11,512,000 | 12,150,000 | 23,784,000 | 24,003,000 |
Income before provision for income taxes | 18,411,000 | 16,606,000 | 35,306,000 | 31,859,000 |
Corporate | ||||
Market unit activity | ||||
Directly allocable expenses | 15,319,000 | 14,577,000 | 30,997,000 | 29,691,000 |
Commercial Segment | ||||
Market unit activity | ||||
Revenues | 97,606,000 | 81,921,000 | 188,730,000 | 162,947,000 |
Gross Profit | 20,185,000 | 19,164,000 | 39,885,000 | 38,170,000 |
Commercial Segment | Segments | ||||
Market unit activity | ||||
Directly allocable expenses | 7,796,000 | 7,910,000 | 16,318,000 | 16,245,000 |
Income before provision for income taxes | 12,389,000 | 11,254,000 | 23,567,000 | 21,925,000 |
Retail Segment | ||||
Market unit activity | ||||
Revenues | 47,478,000 | 52,713,000 | 96,364,000 | 100,547,000 |
Gross Profit | 9,738,000 | 9,592,000 | 19,205,000 | 17,692,000 |
Retail Segment | Segments | ||||
Market unit activity | ||||
Directly allocable expenses | 3,716,000 | 4,240,000 | 7,466,000 | 7,758,000 |
Income before provision for income taxes | 6,022,000 | 5,352,000 | 11,739,000 | 9,934,000 |
Public Carrier | ||||
Market unit activity | ||||
Revenues | 27,423,000 | 18,532,000 | 54,021,000 | 35,110,000 |
Gross Profit | 3,777,000 | 3,236,000 | 7,905,000 | 6,253,000 |
Public Carrier | Commercial Segment | ||||
Market unit activity | ||||
Revenues | 27,423,000 | 18,532,000 | 54,021,000 | 35,110,000 |
Gross Profit | 3,777,000 | 3,236,000 | 7,905,000 | 6,253,000 |
Government | ||||
Market unit activity | ||||
Revenues | 11,025,000 | 8,990,000 | 19,470,000 | 18,842,000 |
Gross Profit | 2,412,000 | 2,092,000 | 4,416,000 | 4,232,000 |
Government | Commercial Segment | ||||
Market unit activity | ||||
Revenues | 11,025,000 | 8,990,000 | 19,470,000 | 18,842,000 |
Gross Profit | 2,412,000 | 2,092,000 | 4,416,000 | 4,232,000 |
Private System Operators | ||||
Market unit activity | ||||
Revenues | 24,207,000 | 20,990,000 | 45,249,000 | 41,295,000 |
Gross Profit | 5,054,000 | 4,613,000 | 9,661,000 | 9,179,000 |
Private System Operators | Commercial Segment | ||||
Market unit activity | ||||
Revenues | 24,207,000 | 20,990,000 | 45,249,000 | 41,295,000 |
Gross Profit | 5,054,000 | 4,613,000 | 9,661,000 | 9,179,000 |
Value-Added Resellers | ||||
Market unit activity | ||||
Revenues | 34,951,000 | 33,409,000 | 69,990,000 | 67,700,000 |
Gross Profit | 8,942,000 | 9,223,000 | 17,903,000 | 18,506,000 |
Value-Added Resellers | Commercial Segment | ||||
Market unit activity | ||||
Revenues | 34,951,000 | 33,409,000 | 69,990,000 | 67,700,000 |
Gross Profit | 8,942,000 | 9,223,000 | 17,903,000 | 18,506,000 |
Retail | ||||
Market unit activity | ||||
Revenues | 47,478,000 | 52,713,000 | 96,364,000 | 100,547,000 |
Gross Profit | 9,738,000 | 9,592,000 | 19,205,000 | 17,692,000 |
Retail | Retail Segment | ||||
Market unit activity | ||||
Revenues | 47,478,000 | 52,713,000 | 96,364,000 | 100,547,000 |
Gross Profit | $ 9,738,000 | $ 9,592,000 | $ 19,205,000 | $ 17,692,000 |
Operating Segment - Product Cat
Operating Segment - Product Category (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 24, 2017 | Sep. 25, 2016 | Sep. 24, 2017 | Sep. 25, 2016 | |
Revenue and Gross Profit from External Customers | ||||
Revenues | $ 145,083,500 | $ 134,633,800 | $ 285,094,300 | $ 263,493,800 |
Gross Profit | 29,923,100 | 28,755,600 | 59,089,900 | 55,861,600 |
Base station infrastructure | ||||
Revenue and Gross Profit from External Customers | ||||
Revenues | 59,448,000 | 52,502,000 | 118,518,000 | 104,897,000 |
Gross Profit | 14,086,000 | 13,453,000 | 28,143,000 | 26,881,000 |
Network systems | ||||
Revenue and Gross Profit from External Customers | ||||
Revenues | 29,180,000 | 21,461,000 | 53,017,000 | 39,891,000 |
Gross Profit | 3,921,000 | 3,421,000 | 7,750,000 | 6,319,000 |
Installation, test and maintenance | ||||
Revenue and Gross Profit from External Customers | ||||
Revenues | 7,679,000 | 6,881,000 | 14,671,000 | 15,636,000 |
Gross Profit | 1,433,000 | 1,376,000 | 2,852,000 | 2,944,000 |
Mobile device accessories | ||||
Revenue and Gross Profit from External Customers | ||||
Revenues | 48,777,000 | 53,790,000 | 98,888,000 | 103,070,000 |
Gross Profit | $ 10,483,000 | $ 10,506,000 | $ 20,345,000 | $ 19,718,000 |
Stock Buyback (Details)
Stock Buyback (Details) - USD ($) | 6 Months Ended | |
Sep. 24, 2017 | Sep. 25, 2016 | |
Stock Buyback | ||
Tax withholding for share based compensation | $ 64,800 | $ 187,600 |
Concentration of Risk (Details)
Concentration of Risk (Details) - Revenues - Supplier Concentration Risk | 3 Months Ended | 6 Months Ended | ||
Sep. 24, 2017 | Sep. 25, 2016 | Sep. 24, 2017 | Sep. 25, 2016 | |
Largest wireless infrastructure suppliers | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 10.30% | 9.40% | 11.00% | 9.80% |
Largest mobile device accessories suppliers | ||||
Concentration Risk | ||||
Concentration risk (as a percent) | 7.90% | 10.10% | 10.50% | 11.20% |